Union of Chambers and Commodity Exchanges of Turkey

Attending the meeting on Turkey - EU Customs Union Assessment Report which took place in İstanbul were TOBB President M. Rifat Hisarcıklıoğlu, EU – Turkey Delegation Assistant Representative Bela Szambodi, World Bank Turkey Director Martin Raiser, Ministry of Economy EU General Director Murat Yapıcı and many representatives from the business world.

Giving the opening speech of the meeting, TOBB President M. Rifat Hisarcıklıoğlu stated that Turkey had applied to join the European Union and the Customs Union 18 years ago, in 1996, and provided information in regards to the process to this day. Stating that the scope of the Customs Union is decided upon by the Partners Council, Hisarcıklıoğlu said:

“The Customs Union is a part of the Turkey – EU Partnership Relations. It is the end of the “Transition Period” in as per the Ankara Agreement. It is the final phase. However, due to certain reason the final phase has never been able to be finalized. In addition, the Customs Union, initially planned to be only a phase of the membership process has lasted almost 20 years. The EU has a high set of standards in regards to products. These standards prohibit entry into the market.

At the beginning of the procedures, the EU caused concern for Turkish manufacturers. There were many doomsayers. However, in time we saw that the structural changes and the competitive mentality brought on by the Customs Union have played an important role in Turkey’s transformation. The Customs Union is a milestone in Turkey’s financial development, an important one following the free market reforms enacted by the late Özal after 1980. Our relations with the EU and the Customs Union has been instrumental in the diversification of the industrial production structure; in ensuring production quality and continuity; in the facilitation of the rules of competition; in increasing competitive power. Thus, the integration of Turkey’s economy to that of the world has been achieved. With the Customs Union, a significant increase in Turkey’s industrial goods exports has occurred.”

- The other side of the medallion

TOBB President Hisarcıklıoğlu stated that there is also another side to this medallion; that there have been problems which have arisen in the implementation of the Customs Union.

Stating that, in the last 20 years, there have been great changes in the economies of Turkey and the European Union as well as the world in general, Hisarcıklıoğlu said, “The economic foundations on which we established the Customs Union have changed. The first of these changes took place in the structure of the European Union. At the time of the signing of the Customs Union agreement with the EU, the number of EU states was 15. Turkey signed a customs union agreement with 15 developed and prosperous EU countries. With the fall of the Soviet Union, the European Union was joined by 13 new members of a similar income and production level with Turkey.

The number of countries wanting to have a share of the developed European market increased.

While our new partners move freely within the EU, we are obstructed by land transportation quotas. While the competition travels with an EU passport, Turkish businessmen have to deal with visas.

We are not a part of the decision making process of the EU, even in an advisory capacity while the new EU members are enjoying the advantages of defining policy.”

- Customs Union is a tool to bring Turkish and EU economies closer

“The timing of the report is very important as the EU is preparing for a change. This year, the Parliament and the Commission will be handed off. I believe that the new staff, with a new game plan, can bring new momentum to Turkey – EU relations. That is why we, as the Turkish private sector, find this report to be of the utmost importance. There was a great need present. I am convinced that this report will form a great basis for discussion in the new term.

We view the Customs Union as a tool to bring the economies of Turkey and the EU closer together, aid in integration, not just a set of trade regulations.

For this reason, it is imperative that the Customs Union operates properly. The World Bank report vindicates the complaints of the Turkish private sector.

As emphasized in the World Bank report, the consultative mechanisms between the EU and Turkey should be strengthened and diversified. Turkey and the Turkish private sector should not be subjected to unfair competition from within the Customs Union as well as from without.

FTAs signed with third parties, including the USA, should be paired with simultaneous negotiations with Turkey. Transit transportation should be prioritized and land transportation should be made easier. A problem resolution center should be established to address issues with the Turkey – EU Customs Union. We are prepared to offer our expertise from our experiences from arbitration duties as TOBB and ICC. In closing, it is imperative that visas are waived. In this regard, I would like to congratulate the Berlin Legislative Court for the decision made on March 26^th, 2014; the businessman Osman Nuri Korca, by presenting the case has proven Turkey’s claims once again.

We must consider from this day forth how to establish a fair Customs Union. In this regard, I believe that the World Bank’s report will provide a good basis for discussion on the issue.”

- Other speakers

World Bank Turkey Director Martin Raiser assessed the Turkey – European Union Review Report and underlined the fact that the agreement needs a new package of preventative measures need to be enacted.

EU Turkey Delegation Vice President Bela Szombati stressed the need for new momentum for the Customs Union. In regards to the World Bank’s report, Szombati stated that the report utilizes the unfulfilled potential behind the Customs Union.

World Bank Senior Economist Kamer Karakurum Özdemir presented the EU – Turkey Customs Union Review Report.

European Commission Expansion Department Candidate Countries Director Alexandra Cas Granje stated that they are aware of the asymmetrical regulations in the Customs Union and went on to stated that the report would not be shelved but kept in mind.

Stating that more consistent and stronger relations are needed between Turkey and the EU, Granje emphasized the need for cooperation in addressing issues.