Levelling EU-Turkey Trade: An Assessment of the Asymmetrical Customs Union between the European Union and Turkey

While both Turkey and the European Union (EU) have benefited from the 1995 Customs Union, the structural asymmetries in the agreement mean that neither party has been able to take full advantage of the increase in trade in the past 20 years. Because two of the asymmetries particularly favour the EU, this situation is increasingly leading to trade complications for Turkey. The first issue relates to Free Trade Agreements (FTAs): the key point here is that Turkey is obliged to accept the FTAs concluded by the EU without receiving any corresponding benefits from the EU’s FTA partners. The second issue is that Turkey is not in a position to exercise influence on decisions by the EU relating to customs and trade policy that directly affect the functioning of the Customs Union. The most comprehensive solution, i.e. Turkish accession to the EU, would supersede the regulations of the Customs Union, but accession talks have stalled. Consequently, the best alternative is to modernise the Customs Union. This article analyses the current and historical situation, undertakes a comparison of how other customs unions have addressed similar points of contention, and concludes with reflections on how to improve the current framework.