The Influence of Customs Union on Turkey

The past 50 years, all of countries are getting globalization. For protecting strong competitiveness, mostly countries want to integrate with each other. Especially, free trade is important for international trade.  After the Second World War, mostly countries wanted to revive to external trade. So, they set up custom union with European Union. Custom Union means to favour equality trade and removing fiscal borders.

At the same time, Turkey entered in IBRD, IMF and also applied to be a member of the European Union. European Union removed quantity restrictions for imports from Turkey.

There are different approaches and analysis of customs impact on Turkey. The researcher Togan (1997) refers to nominal and effective protection impact, on average. He says there is no an important development because, especially, in Turkey, it didn’t changed exports but the imports have increased.  The countries which made free trade agreement with Turkey and Europe saw their trade reduced. Another thing Arslan (2002) says is that, after the Customs agreement with the European Union, the imports of Turkey changed and this changing was not useful for Turkey.

We can look to the impact of the Custom Union on Turkey by two sides.

First option is the static impact of the customs union. This approach has got two different perspective. The first relates to the influence it has in the internal market, that is, if the country can use cheaper import product it doesn’t have to expensive domestic production, which can be seen as being a good news for the country; the second perspective is commerce diversion, which can express in buying expensive products on common trade. It reduces welfare in a country. According to this analysis, the government has loss revenue because of custom unions. But, also, from this, the welfare can improve. In this regard, Wonnacot says the countries participating in customs union get closer from each other. So, they got less costs in trade, namely in what regards transportation.  So, it will be better to governments as well.

The second approach is dynamic impact from custom union on the growth rate of the country. This approach can be looked from various perspectives. There are the competitive effect, the encouragement of investments, the impact on technology, the external economy.

This information in the light, we can examine how custom unions influenced Turkey.

The researchers Hartler and Lairt (1999) say claim that enhancing trade is good for Turkey Because Turkey and other countries get close from each other and there isn’t exorbitant transportation costs involved. So, Turkey is getting and increased welfare level. According to Seyidoğlu and Kemer (2002), industrial goods of Turkey become less expensive. Concretly, Turkey textiles exports will become less expensive for Europe. Because of that, the share of imports of Europe will increase.

By another side, following Akkoyunlu and Wigley (2005), some sectors (paper and paper goods, chemical materials, optical instruments, etc.) will face a reduction on their protection when entering on Turkey. As a result, exports from the European Union are increasing.

Finally, I would like to leave to my opinion on the issue. That is that, as we know, this researchers take up seriously just two perspectives. The first one is commerce diversion, and the second one is making trade. When I made a literature review on this topic I noticed that there is a lot of view on that on Turkey. Some researchers believe that the costumes agreement is good for the Turkey economy, and some other believe that it is bad. To be honest, I don’t believe that customs Union will influence Turkey positively.

Turkey is a developing country and, also, it is not a member of the European Union. I mean, when Turkey decide about politics, economy etc.  Turkey is under the influence of external forces (developed countries, like US, UK, European Countries). As a result of this, unless Turkey is a member of European Union, it shouldn’t not be a member of the customs union because, from that, the share of export of Turkey will get reduced at the same time the imports from European will increase day by day. Moreover, Turkey cannot use this situation in its favour. Actually, Turkey can buy goods cheaper than domestic ones thanks to imports but, at the same time, Turkey should produce new goods and must export them more and more, but it cannot do that because it hasn’t got enough capital for doing it. And, also, Turkey cannot decide by itself. As a result, Turkey buys extra and unnecessary imported goods, which has resulted in into new debt it had to contract with IMF, etc. So, Turkey is getting worst in day by day.

On the upshot, according to my point of view, Turkey shouldn’t be a member of the Customs Unions. Turkey should enlarge its share of products exported, should go on producing industrial goods and enlarge its production and need to grow up its share of export to the European market.

Selin Çalışkan

[artigo de opinião produzido no âmbito da unidade curricular “Economia Portuguesa e Europeia” do 3º ano do curso de Economia (1º ciclo) da EEG/UMinho]