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Turkish Delight for Some, Cold Turkey for Others?: The Effects of the EU-Turkey Customs Union

Author

Listed:
  • Antonis Adam
  • Thomas Moutos
Abstract
Following Turkey’s application for EU membership in 1987, a Customs Union (CU) between Turkey and the EU, mainly covering trade in manufacturing goods and processed agricultural products, came into effect in 1995. In addition to a large agricultural sector, Turkey also specializes in the production and exportation of relatively low-price, low-quality varieties of manufactured products. We use a theoretical framework in order to demonstrate that these features of the Turkish economy imply asymmetric changes in the trade volumes of the incumbent countries of the EU as a result of the EU-Turkey CU. By examining disaggregated trade data we find that the technologically sophisticated EU countries (e.g., mainly the Northern European countries) are also least similar to Turkey in terms of their export structure, whereas the degree of export similarity between the less technologically sophisticated EU members and Turkey is high. Our econometric results indicate that, in contrast to the “Northern” group’s exports to other EU15 countries (which have remained intact), the Southern countries’s exports to the other EU15 countries have declined as a result of the EU-Turkey CU. Moreover, the extra penetration of the Turkish market by EU countries has not been more favourable to the Southern group. These findings also imply that technologically sophisticated countries may see no significant further benefits from Turkey’s full accession to the EU (whereas the migration and political influence related costs for these countries may be large).

Suggested Citation

  • Antonis Adam & Thomas Moutos, 2005. "Turkish Delight for Some, Cold Turkey for Others?: The Effects of the EU-Turkey Customs Union," CESifo Working Paper Series 1550, CESifo.
    • Handle: RePEc:ces:ceswps:_1550
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    References listed on IDEAS

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    Cited by:

    1. Ahmet Faruk Aysan & Yavuz Selim Hacihasanoglu, 2007. "Investigation on the Determinants of Turkish Export-Boom in 2000s," Working Papers 2007/19, Bogazici University, Department of Economics.
    2. Kai Konrad & Stergios Skaperdas, 2012. "The market for protection and the origin of the state," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 50(2), pages 417-443, June.
    3. Antonis Adam & Thomas Moutos, 2008. "The Trade Effects of the EU–Turkey Customs Union," The World Economy, Wiley Blackwell, vol. 31(5), pages 685-700, May.
    4. Özler, Sule & Taymaz, Erol & YIlmaz, Kamil, 2009. "History Matters for the Export Decision: Plant-Level Evidence from Turkish Manufacturing Industry," World Development, Elsevier, vol. 37(2), pages 479-488, February.
    5. Adam, Antonis & Moutos, Thomas, 2014. "Do capital importing countries pay higher prices for their imports of goods?," Journal of International Money and Finance, Elsevier, vol. 40(C), pages 95-108.

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    More about this item

    Keywords

    European Union; Turkey; customs union; exports; gravity; differentiated products;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F15 - International Economics - - Trade - - - Economic Integration

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