1/ With Theresa May’s proposed backstop placing the UK in a customs union with the EU, now is a good time to consider Turkey’s experience of being in an analogous (although inevitably not identical) arrangement. 🇹🇷
2/ Customs unions provide tariff free trade between members; remove the need for proving rules of origin between members; and apply a common external tariff for all goods covered by the agreement (“covered goods”).
3/ The covered goods in the Turkey-EU customs union include all industrial goods; but not agriculture (besides some processed agricultural products), some coal and steel products, services, or public procurement.
4/ These limitations mean that the few trade agreements which Turkey has been able to negotiate with third countries (e.g. Malaysia, Chile) have been limited in scope, covering only certain sectors, since it is not free to lower tariffs on goods.
5/ Crucially: in its trade negotiations the EU is able to grant FTA partners access to Turkey’s market, with no guarantee of reciprocal access for Turkey’s exporters.
6/ Turkey must negotiate its own access once the EU’s deal has already been agreed (and its market has already been opened); at which point FTA partners have less incentive to reciprocate.
7/7 This means that EU FTA partners have often dragged their feet in reciprocating access for Turkey (for example South Africa, Algeria and Mexico), and there is significant risk of EU FTA partners refusing to enter into reciprocal agreements entirely.
