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A BRIEF HISTORY OF CUSTOMS UNION WHAT FUTURE
FOR IT? from an unusualist's view point M.
Haluk Nuray IKV Brussels Representative 32nd
Meeting of the EU-Turkey Joint Consultative
Committee Bruxelles, 7 Nov. 2013
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Although CU is an old and long story with many
ups and downs, in the last couple of years, when
the Turkish economy and business' actors mention
the CU, it is usually in the form of
complaints and with negative intonations.
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History of the Customs Union Episode 1 Great
Expectations (1969 - 1977)
The basic rules of CU were negotiated and decided
at 1969 put on paper at 1970 and implementation
partially started at 1971. For the Turkish
side, at the beginning, the CU was accepted
without calculating its economic implications but
because the integration model emerging in Western
Europe was based on it. In other words the
decision was political. The philosophy was to
extend to Turkey the same apparently successful
recipe of EEC.
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History of the Customs Union Episode 2
Hesitation and Political Downturn (1977 - 1986)
Turkey stopped tariff reductions. At that point I
see that Turkey's failing to fulfill the CU
commitments were partially linked to "economic"
grounds. The political ups and downs had been
corrosive in the EC-Turkey relationship and the
relationship was officially frozen from early
80s until 1986 and practically cool even until
1988 despite the membership application of April
1987.
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History of the Customs Union Episode 3
Revitalization (1) (1987 - 1995)
From 1987, the evaluations made by both sides
after the new membership application led to a
conclusion that the progress in the relationship
should (and could only) be based on CU. However,
in 1988-1991 period there was disappointment and
hesitations. Dissapointments on the EU side were
mainly due to the unfullfiled CU obligations.
On the Turkish side there were mainly two areas
of dissapointment failure to obtain free
movement of workers and failure to obtain new
financial assistance since 1981. But after 1992,
the process accelerated. As the Turkish economy
of the day was predicated upon a speedy
liberalization, at that point, economic and
political motives overlapped. That, in turn,
created a strong political will behind the CU.

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History of the Customs Union Episode 3
Revitalization (2) (1987 - 1995)
Not without problems of course. Easy one The
concept of CU changed.... Solution
Found Difficult one The EU did not stop and
wait it has completed its internal market and
headed towards the economic and political union.
So, the problem faced was not only to conclude a
trade agreement but also to determine Turkeys
place in this new EU and the question was if CU
would be enough to secure a good place for Turkey
in the new EU. Solution Not found !yet! EU has
viewed the CU in terms of strengthening its
economic and political relationship with Turkey.
For Turkey, in contrast, the CU is not considered
a self-standing trade agreement but seen as a
tool that should ultimately lead to full
membership. SENTIMENTAL DIMENSION of the
CU.
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History of the Customs Union Episode 4 From
Rejoice to Complaints (1) (1996 - today)
Against all these difficulties and challenges the
CU decision was adopted at March 6, 1995 and the
full implementation of the CU started as of
1.1.1996. The rules laid down by this very same
decision, today, form the foundation of the
system that regulates the commerce between Turkey
and the EU. Even more important than this the CU
is one of the key factors that helped shape the
Turkish industry into what it is today.
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History of the Customs Union Episode 4 From
Rejoice to Complaints (2) (1996 - today)
It was only 18 years ago when we rejoiced the
approval of the CU decision by the European
Parliament on March 6, 1995 by fireworks. "I
believe that in three to four years Turkey will
not only be in CU with the EU but will be a full
member said Prof. Dr. Tansu Çiller, Prime
Minister of Turkey on May 7, 1995.
We are a full member of the EU in 1998 latest
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History of the Customs Union Positive Effects
CU has brought significant benefits to both
Turkey and the EU.   Turkeys trade deficit with
the EU has increased (but it was a calculated
risk). As a whole, trade and investment linkages
between the EU and Turkey have deepened It
opened and consolidated the Turkish market in a
privileged way for EU producers but at the same
time, Turkey became an export base for
neighboring regions enabling Turkish companies to
penetrate and operate in those markets Turkey
also became an important investment base for EU
companies leading to an increasing degree of
integration of Turkey affiliates in EU supply and
production networks CU helped modernize a large
part of Turkeys economic legislation giving rise
to important micro and macro-economic dynamics.

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History of the Customs Union Complaints
There are also a number of trade irritants, or
complaints regarding the implementation of the
CU, many of which have been unresolved for years
  Most of the complaints refer to the adverse
implications of the Free Trade Agreements (FTAs)
the EU signs with third countries. The complaints
concerning the FTAs are definitely well grounded
and right with some other criticism like visas
and transport quotas one can also agree with but
there is also unjust criticism with no scientific
basis which categorically discredits and rejects
the CU there is no possible way to agree with or
even acknowledge them.  
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History of the Customs Union Why and how did we
come from a national celebration to national
grievance?
Reason 1 The CU, as negotiated, was
imperfect   The asymmetric structure of the
agreement stems from the original perception that
it was meant to be temporary in the lead up to
accession. And let us not forget, Turkey did
negotiate only with the knowledge, understanding
and means of forecast of the day.
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History of the Customs Union Why and how did we
come from a national celebration to national
grievance?
Reason 2 Time Factor   CU after its completion,
greatly helped Turkish industry with its two
major needs opening up to new markets and
getting prepared for the challenges of
globalization. But everything has changed
gravely in the following years not only in
Turkey and in the EU but in the rest of the world
as well, and these changes in turn changed and
diversified the needs.
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History of the Customs Union
THE CUSTOMS UNION THAT WAS AN ANSWER TO SOME OF
TURKEYS ECONOMIC PROBLEMS OF THE PAST AND THE
STAR OF THE ECONOMIC AGENDA OF 90S, FALLS SHORT
OF FULFILLING THE NEEDS OF TODAYS TURKEY.
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History of the Customs Union
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History of the Customs Union
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History of the Customs Union Final Episode
What future for the EU? humble opinion of an
unusualist
Conclusion 1 - Renegotiating the CU It is
imperative and necessary to negotiate and debate
the parts of the CU subject to complaints from
Turkish industrialists like the daily operation
of the CU or the FTAs. Is it possible to find a
solution to "complaints" through renegotiating
the CU? My answer is NO. BOTH SIDE HAVE
COMPLAINTS BUT WHILE EU'S COMPLAINTS ARE MORE
OPERATIONAL AND EASIER TO SOLVE WITHIN THE
PRESENT STRUCTURES, TURKEYS COMPLAINTS ARE
SYSTEMATIC AND REQUIRES STRUCTURAL
CHANGES. Although CU is one of the earliest
attempts by the EU to share some its legal system
with another country, it has reached its limits.
The only definitive solution is MEMBERSHIP OF
TURKEY. If we will renegotiate the CU it could /
should only cover this trade aspect of it. It is
not a good idea to add new areas onto an proven
imperfect, old dated structure.
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History of the Customs Union Final Episode
What future for the EU? humble opinion of an
unusualist
Conclusion 2 - Renegotiating the CU Role of the
CU in Carrying the Relationship / and Turkish
Economy From Today to Future CU has changed the
fabric of Turkish industry and fulfilled its task
and made its time as a tool to carry the
relationship forward. TODAY THE CRITICAL
QUESTION THAT HAS TO BE ANSWERED IS WHAT SHOULD
REPLACE THOSE FEATURES OF THE CU THAT HAVE SO
SUCCESSFULLY PREPARED TURKEY FOR THE
GLOBALISATION OF 2000S AND THAT HELPED TURKISH
INDUSTRY BECAME WHAT IT IS TODAY. The Big
economies are trying to establihs a new
international trade order through economic
partnership networks (TPP, T-TIP) The aim is
making rules worthy of 21st Century. FROM A
STRATEGIC AND GLOBAL PERSPECTIVE TURKEY CANNOT
AND SHOULD NOT STAY OUT OF IT.
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Last Word of an unusualist
In any longstanding relationship, the economies
and societies of the two parties are likely to
evolve at different paces at different times and
even at different directions. Therefore, if the
development of the relationship is linked to
programs and timetables and the process takes too
long it is not surprising if one or the other
party falls behind or even find itself
backsliding. This might be damaging the further
harmonious development of the relationship.
Today, we are facing the exact same problem in
the negotiation process.