The Turkey-EU Customs Union constitutes the legal basis of Turkey’s free trade agreements (FTA) and autonomous preferential regimes. Under the Customs Union, Turkey shall align its commercial policy with the EU’s Common Commercial Policy. Together with the Common Customs Tariff, the preferential trade regime constitutes the most important part of the trade policy of Turkey applied towards third countries.
Customs Union is a type of economic integration model in which all the existing customs duties, duties having equivalent effect and quantity restrictions, measures having equivalent effect are eliminated and also in which a common customs tariff is implemented to the third countries. Customs Union is based on the principle of free movement of goods. In this respect, it is required by the parties that a common commercial policy and common competition rules are developed and implemented.
In free trade agreements the goods traded between the parties benefit from the preferences stipulated in the said agreements on the basis of the rules of origin. Besides, in the free trade agreements, there is no obligation to implement common commercial policies or common competition rules; on the contrary, the parties implement their own customs duties to the third countries.
FTAs are important in developing our foreign trade with the neighboring countries, ensuring our exporters compete at more advantageous or at least equal circumstances with other countries’ exporters and increasing mutual investments. In this context, Turkey is not obliged to adopt the identical content of the FTAs that the EU has signed as it is, therefore, in our FTA negotiations, our own priorities regarding industrial and commercial policy are taken into consideration.
So far, Turkey has concluded FTAs with 30 countries,11 of which were repealed due to the accession of these countries to the EU. Currently, Turkey has 17 FTAs in force; namely, EFTA, Macedonia, Bosnia-Herzegovina, Albania, Israel, Palestine, Morocco, Tunisia, Egypt, Syria1, Georgia, Serbia, Montenegro, Chile, Jordan, South Korea and Mauritius. The Agreements with Lebanon and Kosovo will be in effect after the completion of internal ratification procedures.
Meanwhile, there are 14 countries/country blocs that Turkey has started FTA negotiations; namely Ukraine, Colombia, Ecuador, Malaysia, Moldova, Dem. Rep of Congo, Ghana, Cameroon, Seychelles, Gulf Cooperation Council2, Libya, MERCOSUR, Faroe Islands and Peru. Moreover, Turkey has launched initiatives to start negotiations with 12 countries/country blocs, which are the USA, Canada, Japan, Thailand, India, Indonesia, Vietnam, Central American Countries, other ACP Countries, Algeria, Mexico and South Africa.
FTAs are ultimate tools to bring prosperity to our nations by establishing an environment leading to sustainable increase in foreign trade, which can be observed through the statistics. For the period of 2000-2012, while our total exports increased by 446%, our exports to our FTA partners3 has increased by 551%. Hence, our exports to our FTA partners, which was around 2,2 billion dollars in 2000, reached 14,5 billion dollars in 2012. For the same period, while our total imports increased by 340%, our imports from our FTA partners has increased by 280%. So, our imports from FTA partners, which was around 2,8 billion dollars in 2000, was recorded as 10,7 billion dollars in 2012.
Our FTA partners have a share of 9,5 % in our export markets and a share of 4,5 % in our imports, with a trade surplus of 3,9 billion dollars. In 2012, Turkey’s FTA exports have increased with Jordan, Egypt and EFTA countries. Additionally, there are 7 FTA partners in Turkey’s top 40 export destinations (Egypt, Israel, Switzerland, Georgia, Morocco, Lebanon and Tunisia).
Studies on FTAs show that regional integrations provide reduced costs and increased productivity of resources by giving opportunity to achieve economies of scale. FTAs also increase national income, social welfare and competitiveness of partner countries through the establishment of an open and competitive field of play. Furthermore, they raise awareness of partner countries about each other’s economic and commercial potentials and improve mutual understanding among business people, which contribute to the strengthening of friendly ties among partner countries.
1 The FTA between Turkey and Syria was suspended on 6 December 2011.
2 The Gulf Cooperation Council suspended its all FTA negotiations.
3 FTA partners include the FTAs which entered into force before 2013.