Pavlos Xanthoulis
A significant effort is underway to modernize the Turkish Customs Union, a landmark economic arrangement that has governed trade between Turkey and the European Union (EU) since 1996. This initiative, described as a “dress rehearsal” by sources in Brussels, involves a coordinated effort between political leaders and business stakeholders from both sides.
According to an article by by Kathimerini's Pavlos Xanthoulis, European Commission President Ursula von der Leyen has taken the lead in advancing the discussions. During her recent visit to Ankara, she met with Turkish President Recep Tayyip Erdoğan to discuss the benefits of a potential upgrade. Both leaders acknowledged that modernizing the Customs Union could be transformative, with the potential to more than double the current €206 billion annual trade between Turkey and the EU. Some projections estimate trade could soar to €500 billion annually, making this one of the most consequential economic initiatives in Euro-Turkish relations.
Economic benefits and stakeholder engagement
The proposed upgrade would open European markets further to Turkish agricultural products, public procurement, and services, significantly expanding the scope of the existing agreement. The discussions have already brought together EU officials, representatives from member states, and Turkey’s influential business association TUSIAD. Joint forums and roundtable meetings have emphasized the mutual economic gains, with strong support from businesses eager to benefit from the enhanced trade framework.
Overcoming practical hurdles
Despite the enthusiasm, there are practical issues that need resolution. For instance, Turkey’s trade agreements with third countries could clash with the upgraded Customs Union’s requirements. Additionally, mechanisms for fair competition and proper market functioning must be established, including a dispute settlement process between Turkey and the EU.
These hurdles have been central to preparatory discussions, and officials on both sides are working to address them. According to sources, these obstacles are not insurmountable but require coordinated efforts to ensure the agreement’s success.
Political conditions and the Cyprus link
The modernization effort isn’t just about economics; it’s intertwined with politics. The EU has made clear that Turkey’s alignment with its foreign policy, particularly sanctions on Russia, is essential. While Ankara has recently shown a willingness to comply, its past role in facilitating circumvention of EU sanctions remains a sticking point.
Cyprus also looms large in the discussions. The EU has linked progress on the Customs Union to a “favorable environment” for resuming Cyprus reunification talks. Notably, the EU does not require a solution to the Cyprus problem but merely a conducive atmosphere for negotiations. This stance has drawn criticism from some quarters, particularly given Turkey’s ongoing refusal to apply the existing Customs Union to Cypriot trade.
Cyprus’s objections
Cyprus has raised strong objections to moving forward without addressing its concerns. Turkish ports remain closed to Cypriot ships, and Ankara’s non-compliance with the current agreement undermines trust in its commitment to a modernized framework. Critics argue that the Cypriot government missed opportunities to demand stronger guarantees during earlier EU meetings, including summits where President Christodoulides was present.
Despite these challenges, Brussels appears determined to proceed, citing Turkey’s recent cessation of illegal actions in Cypriot waters as evidence of a “favorable environment.” Cypriot officials, however, argue that their consent is crucial for advancing any deal that touches on their vital interests.
Strategic and economic stakes
The Customs Union upgrade is more than just an economic arrangement—it’s a litmus test for EU-Turkey relations. For Brussels, the agreement represents a chance to deepen ties with a key partner while unlocking substantial economic opportunities. For Ankara, it’s an opportunity to secure greater access to European markets and bolster its economy.
As discussions continue, the stakes are high. Whether Brussels can balance economic pragmatism with political sensitivities, particularly Cyprus’s concerns, will determine the initiative’s success. One thing is clear: the modernization of the Turkish Customs Union has the potential to reshape the economic and political landscape of the region.
This article was summarized and translated from its Greek original
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