AN OVERVIEW TO THE CUSTOMS UNION BETWEEN TURKEY AND THE EUROPEAN UNION

The customs union between Turkey and the European Union (EU) is a system that allows states parties to freely move goods without quantity limits, free from all kinds of tariffs and imposing an all tax.

1. The customs union between Turkey and the EU is the final stage of the process formed by the Ankara Agreement.

• • In the Ankara Agreement, a three-stage strategic road map was set for Turkey to become a full member of the European Economic Community and Turkey’s entry into the European Union Common Market through the customs union between Turkey and the EU, including the preparatory period, transition period and final period, and with the completion of the transition period, the “Customs Union between Turkey and the European Union” decision came into force on January 1, 1996.

2. Exemptions applied in accordance with, the customs union between Turkey and the EU not only for the state party; it will be provided within the third countries with which the European Union has a free trade agreement. 

• • One of Turkey’s obligation is the customs unions tariffs between Turkey and the EU and Turkey is to apply to other countries that the European Union’s free trade agreement. For instance, although Japan is not a party to the Turkey and the EU customs union, it will not pay taxes, levy and fees such as customs duties and the like on the entry of its goods into Turkey, in regard of Turkey has committed to implement the common customs tariff due to the customs union between Turkey and the EU customs union against non-party third countries, due to the signing of a free trade agreement between the European Union and Japan, which comes into force in 2019.

3. Turkey has a free trade agreement with different countries to adapt to the preferential and autonomous regimes of the European Union in the framework of the customs union between Turkey and the EU.

• • Turkey can decide on the implementation of different regimes other than the common customs tariff by signing a free trade agreement with third states that are not parties to the customs union between Turkey and the EU. Although there are thirty-seven free trade agreements signed by Turkey, twenty of these agreements are still in force. In this context, countries that make up the other side of the agreements in force include Bulgaria, Iceland, Egypt, Chile, Jordan.

4. Goods covered by the customs union between Turkey and the EU are industrial products and processed agricultural products.

• • Customs union between Turkey and the EU, covering only industrial products and processed agricultural products, and traditional agricultural products are excluded from the scope. In the determination of processed agricultural products, the agricultural share and the Industrial share are separated, and the industrial share in the circulation of these goods is subject to tax exemption.
  • Coal and steel products are among the products that show characteristics. Accordingly, the customs union between Turkey and the EU does not apply in terms of tariffs to be applied on coal and steel products. The tariff to be applied to these products is based on the country of origin of the products.

5. The obligations of states parties under the customs union between Turkey and the EU are not solely related to the free movement of goods.

• • In addition to the free movement of goods under the customs union between Turkey and the EU, there is an obligation to comply with the legal obligations of the European Union in areas such as competition policy, intellectual and industrial property rights between countries.

• • Since there are not only obligations related to the free movement of goods under the customs union between Turkey and the EU, the obligations of states parties to the EU and Turkey are grouped under two main headings: obligations related to the free movement of goods and obligations related to compliance with legislation.

• • In accordance with obligations on the free movement of goods, Turkey, customs duty on goods covered by the customs union between Turkey and the EU, etc. taxes were abolished, the Community Common Customs Tariff was applied in business and transactions with non-party third states, the Industrial share of processed agricultural products was subject to tax exemption, and the states parties abolished the quantity restrictions applied to exports and imports.

• • The current legislative obligations within the scope of Turkey’s foreign trade with the European Union harmonised the European Union free trade agreements with different countries that has made several agreements with different countries and began to increase the number of CE marked products certification organizations, competition authority and Turkish patent Institute is founded for the protection of literary and artistic works and the protection of broadcasting organizations was becoming party to international agreements, patent, industrial design and trademark protection legislation and customs legislation origin, customs declaration, entry into free circulation, customs debt and the right to appeal issues such as updates were made in the legislation.

6. Although the customs union between Turkey and the EU is a trade model that should be implemented temporary, it has been implemented for a long time.

• • The customs union between Turkey and the EU is a trade model that goes beyond free trade agreements that were put into effect during the transition period for Turkey to become a full member of the European Union. But today, since the conditions for Turkey to become a full member of the European Union are not fully clear, the customs union between Turkey and the EU has become an implementation of which is still ongoing, rather than a temporary arrangement. For this reason, Turkey has a demand for updating the customs union between Turkey and the EU.

7. The customs union between Turkey and the EU needs to be updated because it does not include some important areas.

• • There are no provisions in the customs union between Turkey and the EU in areas such as agriculture, the service sector, investments, and public procurement. Since the European Union has signed free trade agreements with third countries that also cover these areas, the applicability of the customs union between Turkey and the EU compared to these agreements decreases.
  • In this context, Turkey and the European Union have been preparatory working for extend one’s scope of the customs union provisions between Turkey and the EU.

Consequently, the customs union between Turkey and the EU is a trade model created as a temporary adaptation process for Turkey to enter the European Union Common Market on the way to becoming a full member of the European Union, but it is trade model that has been in force for 25 years. 

In this context, the customs union between Turkey and the EU, which does not contain regulations, especially regarding service purchases, agricultural sector, public purchases, and electronic trade activities, is a trade model that needs to be revised. Therefore, the shortcomings of the customs union between Turkey and the EU are tried to be closed by the free trade agreements that the European Union and the Turkey have concluded with third countries, but these agreements sometimes have consequences that damage the competitive environment. 

Considering the function of legal regulations to respond to the needs of societies, all national and international regulations need to be updated in the developing and changing world order. Therefore, it is possible that the customs union between Turkey and the EU, which has been implemented for 25 years, will continue to be implemented under the same conditions for a long time, as well as an update on the customs union between Turkey and the EU can be made soon. However, this situation based on relationship on Turkey and the European Union.

Berk OZSENOGULLARI – Attorney at Law