EU–Turkey Customs Union and Asymmetrical Trade Structure

The EU–Turkey Customs Union obliges Turkey to apply the European Union’s Common Customs Tariff. This structure requires Turkey to automatically align with the free trade agreements that the EU signs with third countries, while reciprocity is not always ensured. When the European Union signs a Free Trade Agreement with another country, Turkey is required to reduce its tariffs toward that country as well.

However, this process operates in a one-sided manner. For instance, when the EU concludes a Free Trade Agreement with India, Turkey must lower its tariffs on Indian goods, while India has no obligation to offer the same concessions to Turkey. This asymmetry creates significant competitive disadvantages and market losses for Turkey.

One of the biggest beneficiaries of this system is the EU automotive industry. Import taxes on automobiles are first reduced from 110 percent to 35 percent and then further lowered to 10 percent. This provides EU automotive manufacturers with a substantial advantage in the Turkish market.

In addition, the absence of EU emission standards and relatively relaxed safety standards compared to the EU allows competitive products to enter the market first through exports and later through local production. In a market closed to China, this protectionist environment is particularly advantageous, with an annual quota of 250,000 vehicles, including 160,000 internal combustion engine vehicles and 90,000 electric vehicles.

A similar trade arrangement has also been concluded with Mercosur. This South American economic bloc, consisting of Argentina, Brazil, Paraguay, and Uruguay, represents another example of the EU’s global trade strategy. Venezuela is currently suspended from the bloc.

The EU often cites the Southern Cyprus issue as the reason for not updating the Customs Union agreement. However, the real problem lies with certain EU countries that use the one-million-population Southern Cyprus as a pretext to block progress.

In light of new geopolitical developments, the EU and Turkey will either find a way to work more closely together or move in entirely separate directions. The driving force pushing this trajectory toward a resolution is Turkey itself, as the current balance clearly favors the European Union.