Oscar T. Brookins
Kamran M. Dadkhah
Date of Award
Master of Arts
Department or Academic Unit
College of Social Sciences & Humanities, Department of Economics
economics, international relations, European studies, customs union, economic integration, european economic community, European Union, Turkey, Turkish economy
Since the declaration of the Republic in 1923, Turkey has always looked to the West for its modernization and development processes. Following the Second World War, several organizations were created among countries in order to maintain joint power against conflicts, including organizations that had just economic reasons. Being a founding member of the United Nations, a member of the North Atlantic Treaty Organization, the Council of Europe and the Organization of Economic Cooperation and Development, it was only sensible for Turkey, an ally of the West to follow the modernization and development processes by proving a part of the European Economic Community formed by six Western European countries in 1957. Making its first application in 1959, Turkey ended up signing the Ankara Agreement also known as the Association Agreement in 1963 that foresaw how the customs union would be established in order to secure Turkey's membership to the Community.
As stated by Appleyard (2010), customs union is the second stage of economic integration. Economic integration can be defined as the integration of countries in order to remove trade barriers among themselves. Customs union not only removes the customs tariffs among member countries but also holds a common trade policy towards non-member countries. Customs unions have static and dynamic effects on the countries' economies.
This study analyzes why the customs union between Turkey and the EU does not manifest the expected static effects, why the trade share of the EU decreased over time in spite of the customs union agreement and what measures should be taken in order to increase the trade between Turkey and the EU.
In order to identify the problems, Turkey's trade with the EU, OECD, OIC, BSEC, CIS, luggage trade with Russia, and the relations with Germany are observed. In addition, a basic econometric analysis is carried out to forecast the trade between Turkey and the EU.
Following the results of the study, some suggestions are tried to be put forward to enhance the likelihood in achieving a more effective customs union between Turkey and the European Union. In this regard, firstly it is argued that Turkey should create policies towards technological developments and innovations in the manufacturing sector in order to produce at a lower cost than other member countries in the customs union. Secondly, Turkey should pursue a policy of including all of its goods, including agricultural goods, in the customs union agreement with the EU. Thirdly, economic policies to increase income should be carried out. Also, considering the Turkish population in the other customs union member countries, trade policies should be adjusted accordingly. Finally, the luggage trade with Russia should be taken under control in order to reduce its volume to increase the trade with the EU.
Ali Murat Pala
Pala, Ali Murat, "The customs union between Turkey and the European Union and its effects on the Turkish economy" (2011). Economics Master's Theses. Paper 1. http://hdl.handle.net/2047/d20001149
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