CUSTOMS UNION

The Single Market, established by the European Union following the Maastrich Treaty, is the most important manifestation of the EU's commitment to free trade, and particularly to multilateral trade free from the heavy customs duties and protectionism previously favoured by national governments. Turkey's efforts at liberalising its trade regime have been in line with EU norms. This point has been further accentuated with the entry into force of the Turkey-EU Customs Union on the 1st of January 1996, whereby Turkey has adapted its trade regime and other relevant legislation to that of the EU becoming the only non-member country - with the exception of Malta, San Marino and Andorre- which has signed a customs union agreement with the European Union. In this context:

In a wider context, the Customs Union means the harmonisation of the Common Commercial Policy, which includes the common external tariff as well as safeguard measures to provide direct protection with the EC quota system, anti-dumping and anti-subsidy measures. In order to achieve competitiveness in the long term, Turkey is adjusting herself to the Customs Union and taking the appropriate measures to harmonise her legal and institutional framework with that of the EU. Some of these measures can be listed as follows:

Representing 350 million consumers with high purchasing power, the EU's trade volume with Turkey surpassed the 20 million USD level for the first time in 1993 . With the entry into force of customs Union in 1996, Turkish imports have increased by 32.5% compared to the previous year, while its exports rose by 3.7%. The trade volume reached 35.7 billion USD in 1999. The European Commission predicts the trade volume with Turkey to exceed 40 billion USD by the end of 2000.

Turkey is well aware of the rapidly changing conditions of the international trade environment. In order to have a place in the globalisation of the world trade, Turkey has to keep up with the pace of change. The Customs Union with the EU is the most important step to achieve this goal where the Turkish and EU business communities will expand their relationships, and create new opportunities for both sides.

Turkey also adopted the common customs tariff of the EU vis-à-vis third countries. This shows that Turkish market became more open to third countries' competition through lower tariffs. Before the Customs Union, overall protection rates against third countries were 15 percent on average. With the adoption of the common customs tariff, these rates have decreased to almost 5,6 percent and will be reduced further with the conclusion of the multilateral trade liberalization negotiations within the WTO.

By January 1, 1999, Turkey has entered into the Pan-European Country of Origin Cumulation. That means European Union, European Free Trade Agreement (EFTA) and Central and Eastern European Countries (CEEC) can use the goods originating from each other in their production without any restriction of origin rules.

Another aspect of the adoption of the common commercial policy is to conclude agreements with the preferential countries - EFTA, CEEC and Mediterranean - of the EU on a mutually satisfactory basis. Within this frame, Free Trade Agreements have been signed with Israel, Hungary, Bulgaria, Romania, Lithuania, Estonia, Latvia, Slovenia, Czech and Slovak Republics, Macedonia and Poland. Preliminary contacts have been initiated with Morocco, Tunisia, Egypt, Jordan and Palestine.