Jun 29 2018

Turkish business groups react to EU customs union decision

The European Council’s decision on Tuesday taking the modernisation of the customs union off the table will not only harm Turkey, but also the EU itself, according to the representatives of Turkish businesses, Deutsche Welle (DW) reported on Thursday.

The customs union between Turkey and the EU came into effect in January 1996 and the bilateral trade between two sides has increased to $150 billion from $37 billion over the 22 years since. An upgrading of the customs union was critical for Turkey given Turkey’s economic problems and the changes that have occurred in global trade since 1996. The expectation was that bilateral trade would increase to $300 billion by including agricultural products and the service sector into the customs union.

However, the European Council ruled out the modernisation of the customs union this week. “Turkey’s accession negotiations have therefore effectively come to a standstill and no further chapters can be considered for opening or closing and no further work towards the modernisation of the EU-Turkey customs union is foreseen,” the council stated on Tuesday.

Turkish Ministry of Foreign Affairs responded the same day to the European Council calling the decision another manifestation of the EU's prejudiced and unfair attitude towards Turkey. “Once again, the EU has failed to be fair and honest with Turkey. Despite the EU’s attitude, alleging that it is Turkey that is moving away from the process is hypocritical and inconsistent,” the ministry said. 

The trade relations between Turkey and the EU should be handled ignoring the political conjecture, according to Orhan Turan, the head of Turkish Enterprise and Business Confederation (TÜRKONFED), a non-governmental business organisation. “Europe is an important anchor for us. Our exports rise as the EU economy grows. Whatever possible should be done to take steps towards overcoming problems related to the customs union,” he told DW.

According to Ayhan Zeytinoğlu, the president of the Economic Development Organisation, the decision will negatively affect both Turkey and the EU. “Turkey entered a new era after June 24. A new government will be rapidly formed and Turkey will continue on its way. The decision of the General Council was a bit hasty. In the next days, we expect the state of emergency to be lifted. And we expect the EU to respond by taking a positive step for the Customs Union, after the state of emergency is lifted,” Zeytinoğlu told to DW. 

Bahadır Kaleağası, the general secretary of the Turkish Industry and Business Association (TÜSİAD) thinks that the EU made a decision that conflicts its own interests, as a reaction Turkey’s moving further away from the EU values and to the state of emergency. “I believe the EU will re-examine its decision after the state of emergency is lifted. Ina period when the global trade wars are expanding, failing to update the customs union will harm both sides,” he told to DW.

Turkey’s president Recep Tayyip Erdoğan promised in mid-just to lift the state of emergency after the elections on June 24, however, contrary to the expectations of the business world, the Nationalist Movement Party (MHP), president Erdogan’s nationalist ally in the new government insists that the state of emergency should be extended.