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According to Kathimerini's Pavlos Xanthoulis, Brussels and Berlin are working to upgrade the Turkish Customs Union, viewing it as a pathway to strengthen economic ties with Turkey. This initiative comes as Euro-Turkish trade reached a staggering €206 billion in 2023, marking a significant increase from previous years. Turkey now ranks as the fifth largest trading partner of the EU, contributing 4.1% to its total trade volume, up from 3.3% in 2022.
The potential modernization of the Customs Union could more than double the trade volume between Turkey and the EU, which would provide a significant boost to the Turkish economy. Countries like Germany and France, which have substantial investments in Turkey, are expected to gain the most from this upgrade. During a recent meeting between Turkish President Tayyip Erdogan and German Chancellor Olaf Scholz, this political and economic relationship was a central topic, particularly in light of Turkey's exports to the EU, valued at €95.5 billion, compared to €111 billion of EU exports to Turkey in 2023.
Nicosia's position has become increasingly complicated, especially as Turkey maintains its embargo on Cypriot trade while simultaneously engaging with EU representatives.
A Community source highlighted that this year marks eight years since the European Commission first assessed the modernization of the Customs Union. The time has come, they argue, to move forward with this agenda, as suggested in a joint report by EU High Representative Josep Borrell and the European Commission. For the first time, the proposal includes allowing duty-free exports of Turkish agricultural products to the EU, expanding economic benefits for Turkey.
The EU and Turkey recently engaged in a "High-Level Political Dialogue" on trade issues, aiming to explore the prospects of upgrading the Customs Union. While many EU member states support this move, the Republic of Cyprus remains opposed, citing Ankara's refusal to open its ports to Cypriot trade. Nicosia argues that it cannot reward Turkey with an upgraded Customs Union when Turkey does not fully implement the existing agreement.
Historically, the proposal to upgrade the Customs Union has faced setbacks, primarily due to concerns about Turkey's adherence to the rule of law. Germany had previously voiced objections but has since lifted these reservations. However, Cyprus continues to block progress, linking the Customs Union upgrade to the resolution of the ongoing Cyprus problem.
Despite Cyprus's opposition, the European Council recently endorsed the joint Borrell/Commission report that advocates for advancing work on the Euro-Turkish relationship, including the Customs Union. The Cypriot government has stated that it will oppose the upgrade in the Council, insisting it should be tied to the Cyprus issue. Yet, President Christodoulides’s recent actions suggest a willingness to proceed with discussions without directly linking them to Cyprus’s concerns.
Nicosia's position has become increasingly complicated, especially as Turkey maintains its embargo on Cypriot trade while simultaneously engaging with EU representatives. The Turkish Foreign Minister's participation in informal EU meetings has occurred without any acknowledgment of Turkey's unfulfilled obligations regarding Cyprus, raising questions about the integrity of EU processes.
As the situation unfolds, the EU's approach to Turkey's Customs Union upgrade is closely tied to broader geopolitical dynamics, economic interests, and the contentious Cyprus issue.
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