3 THE OVERVIEW OF TURKEY
This part of the study is going to be about Turkey's accession and relationship with European Union
3.1 Brief history of Turkey's Accession
The story of Turkey-EU relations begins with the applications of Turkey for membership in the EEC in 1959. Brussels accepted it as associate member of the European Economic Community, with the vision of becoming full members of the EEC at a future. The Association Agreement in other words Ankara Agreement with Turkey was signed in 1963 . (Carikoglu and Rubin, 2003)
The Ankara Agreement was based on three main pillars: the customs union, free movement of labour, and financial assistance through financial protocols. The basis of the agreement was the establishment of a customs union, which was to be achieved in three main steps: a preparatory period of at least five years, the transitory period and final stage Customs Union. After a successful preparatory period, on a decision of the Association Council, the both side decided to initiate the so-called transitory period chosen by an Additional Protocol during which a customs union for industrial products between the EU and Turkey could be created step by step. During the transitory period, that covered the period 1973-1995, both sides undertook to eliminate all customs duties and non-tariff barriers (with some exceptions) on manufactured goods within twenty-two years. (Manisali, 2009)
The Association Agreement between Turkey and the EU was not only trade of industrial goods between the two sides but also wanted to improve relations of trade in agricultural products, trade in services, free movement of labour, freedom of settlement for professionals and free movement of capital, the management of tax systems, the coordination of transport policy, and competition rules and other regulations concerning economic integration. Another important aspect of the Ankara Agreement was to promote Turkey's commitment to introducing the EU's Common External Tariff (CET) in its trade with third and non-member countries. ( )
Turkey was to enter the final period of Association in 1996. This period is that essentially consisted of the customs union, the closer coordination of economic policies between the two sides, and the adjustment of Turkish economic policies to those of the Community. The final stage of the Association was not clearly defined in the Agreement with regard to how and under what conditions future relations between the two sides would be shaped and deepened. Turkey was formally accepted as candidate country in 1999 and the European Union conclude that Turkey suitably fulfilled the criteria agreed at the Copenhagen European accession negotiations. The new negotiation was opened in 2005. However, in 2006 the EU decided to postpone accession negotiations on eight chapters of the European Union body of law because of the Turkish rejection to meet its commitments under the Ankara Protocol to open its ports and airports to ship and aircraft from Cyprus.
3.2 Establishment of a Customs Union between Turkey and the EU
Radical changes were taking place in Europe at the beginning of the 1990s. The collapse of the Soviet Union and Turkey's entrance into the final stage of the transitory period as stated in the Ankara Agreement. Ankara was persuaded that, if the Customs Union could not be finalized as planned by the end of 1995, the country would be condemned to remain outside the third wave of the European integration process.
Turkey's strategic importance role in international politics and for Western interests remained and was even improved. Both sides together on 9th November 1992, at a meeting of the Turkish-European Union Council of Association in Brussels agreed on a new two-way approach to future relations. First, the political dialogue, that covered consultation on foreign policy issues of common interest, would be continued on a regular basis and would be intensified. Second, Turkish Government confirmed its intention to complete its transition to full participation in the EU customs union by January 1996.
The Association Council met on 9th November 1993 and Brussels agreed to a final negotiating timetable to take Turkey into the customs union with the European Union in 1996, marking the biggest change in economic relations between the two sides in thirty years. Brussels and Ankara were by now fully aware of the requirements of the agreement, and tried to catch up within a single year what they had failed to do over the past thirty-five years. By 1989, Turkey had already slowly begun to reduce tariffs on EU produced industrial goods. At the beginning of January 1995, over 80 percent of all Turkish imports were free of duties or taxes, which were based on two lists of products with two schedules of tariff reduction: a twelve-year list and a twenty-two-year list. The implementation had already reached 90 per-cent of the target on the first and 80 percent of that on the second list of the scheduled reductions.
At the same time, Turkey was also facing another economic crisis by increasing macro-economic imbalances. The expansionary demand policies followed by the governments induced the acceleration of inflation, deterioration in the balance of payments and a diminishing rate of growth. Simultaneously, there were mounting internal and external political difficulties, such as PKK terrorism, the rise of religious extremism, and unstable coalition governments. These economic and political difficulties, as well as concerns about missing the last train to Europe, worsened Turkey's bargaining position in its negotiations with Brussels on the establishment of the customs union. In addition to this, Turkey witnessed two general elections within the space of four years. It was a period of election campaigns in which the parties were primarily preoccupied with domestic policy issues, more or less overlooking the country's EU project. As always, foreign policy issues assumed a secondary role. As usual, there was often more euphoria and rhetoric during the election campaign than pragmatism.
3.2.1 Main outlines of the Customs Union:
The agreement to establish the Customs Union was signed on 6th March 1995. The final approval of the European Parliament in December 1995, the last barrier for accession into the customs union was to be removed as of January 1996.
This meant that:
* Turkey had to totally open its economy to international competition.
* The Customs Union only covers the free trade of manufacturing products and processed agricultural products and not primary products and services;
* It would adopt the Common Customs Tariff (CET) against third country imports by January 1996, and all of the preferential agreements the EU had concluded with third countries by the year 2001.
* The creation and full performance of a Customs Union did not only require trade-related measures; similarly important were activities regarding the regulatory frame-work of production like state aid, subsidies to enterprises, competition and anti-trust policy, and industrial and intellectual property rights. Turkey would have to conform to EU standards in all these spheres.
* With a view to harmonizing its commercial policy with that of the Community, Tur-key would align itself progressively with the preferential customs regime of the Com-munity within five years from the date of entry into this decision. In practice this meant that Turkey would lose its national sovereignty concerning foreign trade policy without any form of active participation to the decision making process in Brussels.
* An EU-Turkey Customs Union Joint Committee would be established. The Committee would carry out exchange of views and information and formulate recommendations to the Association Council.
On the other hand, the EU would bring round financial aid and the Financial Protocol in order to ease Turkey's adjustment process into the existing rough competition conditions and to close the gap in economic development between the two sides. The financial assistance comprised five fundamental components:12
* Within the framework of a five year program, ECU 375 million yearly from Com-munity budget sources, starting on January 1, 1996,
* Within the framework of the Mediterranean Program (1992-1996), ECU 300-400 million.
* An uncertain amount of financial assistance from the Mediterranean Fund amounting to ECU 5,5 billion, starting in 1996,
* Project loans of ECU 750 million yearly, financed by the European Investment Bank over a period of five years.
* Macroeconomic assistance, if necessary and upon the demand of the Turkish govern-ment, in coordination with the relevant international institutions; the total amount of financial aid planned for the following five years was around ECU 6 billion.