EU-Turkey relations need structural solution

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A 1995 customs agreement with Turkey led to widespread benefits. Reform would help Brussels-Ankara ties and continue those benefits. [Shutterstock]

EU-Turkey relations were boosted in the mid-1990s, when economic ties were upgraded and the 1995 Customs Union Agreement came into effect. Its benefits were widespread. It now needs reform to continue doing good, writes Samuel Doveri Vesterbye.

Samuel Doveri Vesterbye is director of the European Neighbourhood Council (ENC).

The move was strategic, both in political and economic terms. The results were lasting and, arguably, the most anchoring part of EU-Turkey relations in recent history.

Despite political setbacks since 2013, the original Customs Union paved the way as a guiding economic and political motivator during the late 90s and mid-2000s.

It encapsulated not only political classes inside the EU and Turkey but equally co-integrated entire business communities in Anatolia, as well as boosting middle class consumers through jobs and growth generation across Turkey and Europe.

It is popularly mentioned that the value of bilateral trade in goods increased more than fourfold after 1996. Today it amounts to €140 billion, representing 41% of Turkey’s global trade and over 70% of Foreign Direct Investment (FDI).

But less commonly do we speak about the positive effects of the Customs Union on welfare and its growth and employment stimulus, improved technology and industries.

We sometimes forget to mention how the agreement developed our political and security ties during the post-Cold War period. Or the fact that Turkey, in 2017, continues to integrate itself into a European economic model.

But for that trajectory to continue, and to avoid stalling, the Customs Union between the EU and Turkey needs to be reformed.

Anti-establishment sceptics inside the EU and Turkey can rest assured that dealing with Turkey economically will not imply entering the EU, as the Juncker Commission already installed a minimum five-year accession freeze.

Such an economic reform is likely to strengthen Europe’s foreign policy in the region. It will also open up previously untapped growth potential for services and agriculture, thereby generating much needed stimulus and jobs.

Meanwhile, it will provide a counter-anchor to key European competitors like Russia, while regaining economic exports with proven welfare benefits.

But without a reformed Customs Union, the escalating tensions between Europe and Turkey are likely to continue. This is partly because of the Turkish government’s brass and often uncalculated approach.

It’s also because of a myriad of European elections, where it sadly pays off to be Turkophobic at the expense of our national security and non-partisan foreign policy objectives with long held strategic alliances.

But we mustn’t forget that it also has to do with structure.  An unreformed Customs Union remains an outdated instrument of cooperation that will push both sides further apart as issues like growth, dispute settlements, trade diversion and decision making widen the gap between the EU and Turkey.

The updating and signing of agreements are needed to anchor our societies and guide foreign policy. They help build structures that increase trust, cooperation and arbitration. That’s the benefit of regional integration and alliance-building – especially when it concerns your next door neighbors. Besides that, European countries are living proof that cooperation goes further than conflict.

So at a time when calls for openness and growth are high on everyone’s agenda, a modernised Customs Union with Turkey offers a strategic and visionary compromise.

It defends our long-held notions of innovation and free trade, while opting for welfare, foreign policy strength and growth under the regulated protection of an updated Customs Union.