Revise Customs Union or cancel it totally, Turkey tells EU

Sefer LEVENT - Hürriyet/ISTANBUL

Turkey's Economy Minister Zafer Çağlayan speaking at a conference in Ankara. AA photo

Turkey has urged the European Union to restructure the terms of the current Customs Union, or cancel the Customs Union altogether and make a separate free trade deal with Turkey.

“If this system aggrieves us then we tell the European Union: Let’s revise this system, lift the visas, lift the quotas on our goods and say ‘Turkey is also a side in this deal,’ while making free trade deals with other countries. Or we could leave the Customs Union and you could make a free trade deal with us,” Turkish Economy Minister Zafer Çağlayan told daily Hürriyet.

The minister was expressing his concerns over the damage that the EU’s free trade deals with other countries has on the Turkish economy, triggered by the possibility of the EU signing deals with the world’s largest economies, the United States and Japan.

The U.S. and EU launched moves on Feb. 13 to open negotiations on a new free trade pact, while Japan and EU have reached a separate agreement to kick-off talks on a comprehensive cooperation, including the elimination of barriers and restrictions on trade.

The free trade agreement between the EU and third parties enables these other countries’ goods to enter European markets or Turkish markets via Europe with zero duties, but the decision to provide the same privileges to Turkey is up to the discretion of the third party. Turkey is the only non-EU country included in the Customs Union.

Prime Minister Recep Tayyip Erdoğan has sent a letter to U.S. President Barack Obama to encourage Washington to continue talks with Turkey for a free trade agreement simultaneously with the EU.

Gearing up its efforts to prevent the neglecting of Turkey in the process, the government and Turkish businessmen have been pressuring the United States to make a separate deal with Turkey, but Çağlayan’s recent remark indicates that Ankara also has another potential path to follow.

“The Customs Union has begun to work completely against Turkey. Under these circumstances, to switch to a Free Trade Deal would be more in line with Turkey’s interests,” Çağlayan said during a meeting of automotive industrialists on March 27.

Since Turkey is the demanding side, the opposite party is asking for a number of compromises that put Turkey in a disadvantageous situation, the minister said.

South Africa, Mexico and Algeria are all countries that have inked free trade deals with the European Union in the last 10 years.

In 2012, Turkey bought $1.3 billion worth of goods from South Africa, while selling only $382 million. It bought $867 million worth of products from Mexico during the same period, but sold $206 million. It exported $1.8 million worth of goods to Algeria while importing $2.6 billion, according to figures provided by Çağlayan.