By Jacqueline Breidlid
Benefits of a possible EU-US Free Trade Agreement (FTA) are widely believed to be high. Mutual trade liberalisation would boost exports on both sides and could, according to Barroso, act as a “game changer” with regard to the current financial crisis. Yet for one player, ongoing negotiations have rung an alarm bell: Turkey.
Turkey has been a member of the Customs Union since 1995 and since then benefited from free circulation of industrial goods between itself and the EU internal market. The Customs Union however also meant that it had to, not only adopt the external tariff of the EU, but also to bring its trade policy in line with that of the EU. This again implies that every time the EU concludes an FTA with another party, Turkey has to negotiate a similar agreement with the same party… and that without having a say in the decision-making leading up to the conclusion of the FTA or a guarantee that the other party is actually interested in negotiating an extra-FTA with Turkey.
While Turkey’s situation might have been acceptable when the Customs Union was agreed, circumstances have now changed. The Customs Union was at that time seen as an intermediate step to membership – the lack of participation in decision-making was thus acceptable as a short-term compromise. As the intermediate step of the Customs Union, however, seems to remain at status quo for a while to come, the question of whether this solution is still viable now reappears with new strength. To make matters worse, the failure of the Doha Round has led to EU to focus its attention on bilateral and plurilateral agreements rather than multilateralism – an inconvenient development for Turkey, considering its lack of involvement in the negotiation of FTAs.
In case of a successful EU-US FTA without a similar agreement between Turkey and the U.S., Turkey would be trapped in the absurd situation where it would have to lower customs duties for U.S. products, while not being able to benefit from lower U.S. customs duties. In other words, it would have to pay for the EU concessions, while not benefiting from the gains. This would further increase the imports from the U.S. to Turkey, the value of which are already almost three times that of the exports to the U.S.
The EU would be wise not to turn a completely deaf ear on the rising perception of unfairness about the Customs Union and FTAs coming from Ankara. Granting a member of the Customs Union some access to for example the Trade Policy Committee or even concluding FTAs together, after all does not sound like a completely ludicrous demand to make. The soon-to-begin negotiations with the U.S. are a chance to show that the EU can deal with changing circumstances without turning one of its closest partners into the ‘odd one out’.