Turkey's Economy
The EU Customs Union
How Turkey's 1995 customs union with the EU boosted industrial trade, why EU membership talks stalled, and the limits of the arrangement.
Turkey has a customs union with the European Union, in force since 1996.
What it covers
- Industrial goods trade without tariffs between Turkey and the EU.
- Turkey applies the EU’s common external tariff on industrial goods from other countries.
Benefits
- Access to the EU market for Turkish manufacturers.
- Investment by European firms.
- Standards aligned with the EU.
Limits
- Agriculture and services are mostly excluded.
- Turkey must follow EU trade deals with other countries but doesn’t automatically get the same access to those markets.
EU membership
- Turkey applied for EU membership in 1987 and started talks in 2005.
- Talks stalled from around 2016 over democracy, rule of law and political disputes.
Modernisation
Both sides have discussed updating the customs union to include services and agriculture.
Lesson
Deep trade integration can boost industry even without full political membership.
The tariff-free car
A car made in Turkey enters Germany with no tariff under the customs union, just like a car made in Italy.
Thinking Turkey is an EU member
It has a customs union but membership talks stalled.
Key takeaways
- Turkey's customs union with the EU started in 1996.
- It covers industrial goods but not most agriculture or services.
- EU membership talks began in 2005 and stalled.
- Integration boosted Turkish industry.
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