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CHAPTER 10. TURKEY AND EUROPEAN COMMUNITY RELATIONS

CHAPTER 10. TURKEY AND EUROPEAN COMMUNITY RELATIONS. TABLE OF CONTENTS 1. INTRODUCTION 2. ANKARA AGREEMENT (ASSOCIATION AGREEMENT) 3. ECONOMIC ASPECTS OF THE ANKARA AGREEMENT 4. ADDITIONAL PROTOCOL AND THE TRANSITION PERIOD 5. DEVELOPMENTS AFTER THE ADDITIONAL PROTOCOL

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CHAPTER 10. TURKEY AND EUROPEAN COMMUNITY RELATIONS

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  1. CHAPTER 10. TURKEY AND EUROPEAN COMMUNITY RELATIONS TABLE OF CONTENTS 1. INTRODUCTION 2. ANKARA AGREEMENT (ASSOCIATION AGREEMENT) 3. ECONOMIC ASPECTS OF THE ANKARA AGREEMENT 4. ADDITIONAL PROTOCOL AND THE TRANSITION PERIOD 5. DEVELOPMENTS AFTER THE ADDITIONAL PROTOCOL 6. DEVELOPMENTS SINCE 1976 7. FULL MEMBERSHIP APPLICATION OF TURKEY 8. EXPECTATIONS OF TURKEY AND THE EC FROM MEMBERSHIP 9. RECENT DEVELOPMENTS

  2. INTRODUCTION • THE DESIRE TO BE A PART OF EUROPE DATES BACK TO TANZIMAT. • THE ANKARA AGREEMENT (ASSOCIATION AGREEMENT) SIGNED WITH THE EC IN 1963 IS BOTH AN ECONOMIC AND A POLITICAL STEP IN THE RIGHT DIRECTION. • AFTER FIVE YEARS OF "PREPARATORY PERIOD" (1964-1968), "TRANSITION PERIOD" OFFICIALLY STARTED WITH SIGNING OF THE ADDITIONAL PROTOCOL (KATMA PROTOCOL) IN 1973. • IN 1976 TURKEY FROZE ITS RELATIONS WITH THE EC. • THIS WAS DUE TO THE ECONOMIC DIFFICULTIES FACED BY TURKEY AND DUE TO THE EROSION OF THE CONCESSIONS GIVEN BY THE EC TO TURKEY.

  3. INTRODUCTION (CONT.) • TURKEY APPLIED FOR FULL MEMBERSHIP IN 1987. • THE EUROPEAN UNION POSTPONED TURKEY'S MEMBERSHIP DUE TO SOCIAL, ECONOMIC AND POLITICAL PROBLEMS OF TURKEY INDICATING THAT BOTH SIDES WERE NOT READY FOR THE ACCESSION OF TURKEY. • TURKEY SIGNED A CUSTOMS UNION AGREEMENT WITH THE EU IN 1995. • LUXEMBOURG COUNCIL DECISION (1997) DID NOT CONSIDER TURKEY AS A CANDIDATE COUNTRY AMONG THE COUNTRIES LISTED FOR ENLARGEMENT • HELSINKI COUNCIL DECISION (1999) GAVE TURKEY A CANDIDATE COUNTRY STATUS. • IN 2001 TURKEY SUBMITTED ITS NATIONAL PLAN EXPLAINING HOW IT WOULD ACHIEVE THE REQUIREMENTS OF THE COPENHAGEN CRITERIA.

  4. ANKARA AGREEMENT • TURKEY APPLIED TO BECOME A MEMBER TO EC ON 31 JULY, 1959 JUST AFTER THE APPLICATION OF THE GREECE ON 8 JUNE, 1959. • IT TOOK 2 YEARS FOR GREECE AND 5 YEARS FOR TURKEY TO BECAME AN ASSOCIATE MEMBER TO THE EC. • ASSOCIATION AGREEMENT WAS SIGNED IN ANKARA ON 12 SEPTEMBER, 1963 AND WAS PUT INTO EFFECT ON 1 DECEMBER, 1964. • FRANCE AND ITALY WERE AGAINST THE MEMBERSHIP OF TURKEY. THE ONLY COUNTRY IN FAVOR OF TURKEY'S MEMBERSHIP WAS GERMANY.

  5. ANKARA AGREEMENT (CONT.) • THROUGHOUT THE NEGOTIATIONS TURKEY INSISTED TO HAVE "A CUSTOMS UNION AGREEMENT WITH THE EC" THAT WOULD EVENTUALLY LEAD TO A MEMBERSHIP TO THE EC, WHILE EC WAS SUGGESTING AN "ECONOMIC CO-OPERATION" AGREEMENT WITH TURKEY. • WITH THE ANKARA AGREEMENT TURKISH SIDE'S VIEWS WERE ACCEPTED.

  6. 2.1 AIMS OF THE ANKARA AGREEMENT • STRUCTURALLY ANKARA AGREEMENT WAS VERY SIMILAR TO THE ROME TREATY AND IT HAD ECONOMIC AND POLITICAL AIMS: 1. ECONOMIC AIM WAS TO CLOSE THE ECONOMIC GAP BETWEEN THEM. 2. POLITICAL AIM WAS TO CREATE A POLITICAL UNION. THIS WAS TO BE ACHIEVED AFTER THE ECONOMIC UNION OF TURKEY WITH THE EC.

  7. 2.2 THE MAIN CHARACTERISTICS OF THE ANKARA AGREEMENT • ANKARA AGREEMENT HAD THE FOLLOWING CHARACTERISTICS: 1. IT WAS A PARTNERSHIP AGREEMENT. THE TWO SIDES WERE EQUAL AND IT WAS A BI-LATERAL AGREEMENT. 2. DECISIONS WERE TO BE MADE BY UNANIMITY. 3. THERE WOULD BE NO SACRIFICE OF SOVEREIGNTY OF TURKEY. 4. IT WAS A "FRAMEWORK AGREEMENT". 5. JUST LIKE THE ROME TREATY IT WAS AN EVOLUTIONARY AGREEMENT AND IT HAD STAGES.

  8. 2.3 STAGES OF THE ANKARA AGREEMENT • ANKARA AGREEMENT HAD THREE STAGES AND THE TRANSITION FROM ONE STAGE TO OTHER WOULD NOT BE AUTOMATIC. • TRANSITION WOULD BE DECIDED BY THE ASSOCIATION COUNCIL AT THE END OF EACH STAGE. • ALTHOUGH THE STAGES HAD TIME LIMITS, THE AGREEMENT DID NOT OBLIGE THE PARTIES WITH A DEADLINE AND LEFT IT TO THEIR DESCRATION TO EXTEND THE LIMIT OF ANY STAGE OR EVEN TO CANCEL THE WHOLE AGREEMENT.

  9. 2.3 STAGES OF THE ANKARA AGREEMENT (CONT.) • THREE STAGES PUT FOREWORD IN THE ANKARA AGREEMENT WERE AS FOLLOWS: 1. PREPARATORY PERIOD (1964-1968): THIS PERIOD WAS TO LAST FOR 5 YEARS BUT ACTUALLY LASTED FOR 7 YEARS UNTIL 1971. ALL THE CONCESSIONS WERE GIVEN BY THE EC TO STRENGTHEN AND PREPARE TURKISH ECONOMY TO CUSTOMS UNION. EC APPLIED TARIFF QUOTAS TO SOME AGRICULTURAL PRODUCTS EXPORTED FROM TURKEY AND AGREED TO PROVIDE FINANCIAL AID TO TURKEY.

  10. 2.3 STAGES OF THE ANKARA AGREEMENT (CONT.) 2. TRANSITION PERIOD (1971-1983): ALTHOUGH THIS PERIOD PRACTICALLY STARTED IN 1971, OFFICIALLY IT STARTED IN 1973. IT WAS AGREED TO LAST FOR 12 YEARS. AT THE END OF THIS PERIOD A CUSTOMS UNION WAS TO BE ACHIEVED. UNLIKE TO THE PREPARATORY PERIOD BOTH SIDES WERE EXPECTED TO GIVE CONCESSIONS. 3. FINAL PERIOD: THIS PERIOD WAS BASED ON THE CUSTOMS UNION TO BE ACHIEVED AT THE END OF THE TRANSITION PERIOD. IN THE FINAL PERIOD TURKEY WAS EXPECTED TO HARMONIZE ITS MACROECONOMIC POLICIES WITH THE EC.

  11. 2.4 ORGANIZATIONS OF THE ASSOCIATION AGREEMENT • IN ORDER TO CARRY OUT THE REQUIREMENTS OF THE ASSOCIATION AGREEMENT FOUR ORGANIZATIONS WERE ESTABLISHED. • THE COUNCIL OF ASSOCIATION, AND THE OTHER THREE ORGANIZATION SERVING FOR THEM, THE ASSOCIATION COMMITTEE, OTHER COMMITTEES AND THE ASSEMBLY OF PARLIAMENTARIANS. • ALL THESE ORGANIZATIONS HAD PARTNERSHIP AND BI-LATERAL PRINCIPLES. THAT IS, EACH SIDE HAD EQUAL VOTES.

  12. 2.4 ORGANIZATIONS OF THE ASSOCIATION AGREEMENT (CONT.) 1. COUNCIL OF ASSOCIATION • IT IS COMPOSED OF MEMBERS FROM, TURKEY, MEMBER STATES OF EC (3) COUNCIL OF MINISTERS AND FROM THE EUROPEAN COMMISSION. • THE MAIN AIM OF THE COUNCIL WAS TO SEE THAT THE REQUIREMENTS OF ASSOCIATION AGREEMENT WERE MET. • ALL DECISIONS IN THE COUNCIL WERE TAKEN BY UNANIMOUS DECISION. BOTH TURKEY AND EC HAD THE RIGHT TO VETO. • THE COUNCIL DID NOT HAVE A SUPRANATIONAL AUTHORITY. • IN CASE OF A DISAGREEMENT IN THE INTERPRETATION AND THE APPLICATION OF THE ANKARA AGREEMENT SIDES COULD TAKE THE MATTER TO A NEUTRAL INTERNATIONAL COURT.

  13. 2.4 ORGANIZATIONS OF THE ASSOCIATION AGREEMENT (CONT.) 2. ASSOCIATION COMMITTEE: CARRIES OUT THE WORK BETWEEN THE MEETINGS OF THE COUNCIL OF ASSOCIATIONS. IT HAS THE PRINCIPLE OF BILATERALISM. IT HAD PERMANENT MEMBERS WHO WERE AMBASSADORS. 3. OTHER COMMITTEES: ANKARA AGREEMENT AUTHORIZED THE COUNCIL OF ASSOCIATION TO ESTABLISH COMMITTEES. ONE SUCH EXAMPLE WAS THE COMMITTEE ORGANIZED IN 1975 IN ORDER TO SOLVE THE "TRADE DEFICIT" PROBLEM OF TURKEY. 4. ASSOCIATION OF PARLIAMENTARIANS: IT WAS ESTABLISHED IN 1975, WITH 18 PARLIAMENTARIANS FROM EACH SIDE. IT DID NOT HAVE ANY AUTHORITY AS IT WAS JUST RECOMMENDING TO THE COUNCIL OF ASSOCIATION.

  14. ECONOMIC ASPECTS OF ANKARA AGREEMENT3.1 PREPARATORY PERIOD • THIS PERIOD STARTED WITH THE ANKARA AGREEMENT PUT INTO EFFECT IN DECEMBER 1964. • TO CLOSE THE ECONOMIC GAP BETWEEN TURKEY AND THE EC IN THIS PERIOD ALL THE CONCESSIONS WERE GIVEN BY THE EC. • MOST IMPORTANT CONCESSIONS GIVEN BY THE EC WERE THE TARIFF QUOTA APPLICATIONS MAINLY IN FOUR AGRICULTURAL PRODUCTS. 1. TOBACCO 2. DRIED GRAPES 3. DRIED FIG, AND 4. NUTS.

  15. 3.1 PREPARATORY PERIOD (CONT.) • THE AGREEMENT BROUGHT AN STRUCTURAL DEPENDENCY IN THE EXPORTS OF TURKEY TO EC. • 7% OF EXPORTS WERE NUTS, FRUIT AND COTTON. • 52% OF EXPORTS WERE TO GERMANY. • SUCH AN STRUCTURAL DEPENDENCE IN INTERNATIONAL TRADE IS RISKY. • EXAMINING TRADE STATISTICS BETWEEN TURKEY AND EC, TURKEY'S IMPORTS INCREASED BY 74% AND EXPORTS INCREASED BY 36.9% BETWEEN 1965-1969. • RATHER THAN CREATING A MARKET FOR TURKEY IN THE EC, TURKEY BECAME A MARKET TO THE EC.

  16. 3.2 FINANCIAL AID • DURING THE 5 YEARS OF THE PREPARATORY PERIOD, 175 M. ECU WAS GIVEN TO TURKEY. • THIS MONEY WAS SPENT MAINLY ON THE INFRASTRUCTURE PROJECTS. 145 M. ECU WAS SPENT ON PUBLIC PROJECTS AND 30 M. ECU WAS SPENT ON PRIVATE PROJECTS. • CONSIDERING THE TRADE DEFICIT OF TURKEY AGAINST THE EC (1965-69), 315 MILLION US$, FINANCIAL AID GIVEN TO TURKEY DURING THE PREPARATORY PERIOD (175 M. ECU) WAS NO MORE THAN A SYMBOLIC REFLECTION OF A GOODWILL.

  17. 3.3 FACTOR MOBILITY • AS FAR AS THE FREE MOVEMENT OF WORKERS, RIGHT OF SETTLEMENT, RIGHT OF ESTABLISHMENT OF WORKPLACE AND THE FREE MOVEMENT OF CAPITAL WAS CONCERNED, NOTHING WAS DONE APART FROM REFERRING TO THE ROME TREATY. • IT WAS NOT EXPECTED TO HAVE A SUBSTANTIAL DEVELOPMENT IN THIS AREA AT THAT TIME.

  18. 4. ADDITIONAL PROTOCOL AND THE TRANSITION PERIOD 4.1 SIGNING AND RATIFICATION OF THE PROTOCOL • ASSOCIATION AGREEMENT GAVE THE OPTION THAT IF TURKEY COULD NOT MEET THE REQUIREMENTS, THE "PREPARATORY PERIOD" COULD BE EXTENDED FOR ANOTHER 6 YEARS. • FURTHERMORE IF THE SIDES AGREE, THEY COULD ABOLISH THE WHOLE ASSOCIATION AGREEMENT. • IN DECEMBER 1968 THE COUNCIL OF ASSOCIATION AGREED THAT TURKEY COULD PROCEED INTO THE TRANSITION PERIOD AND THEY STARTED TO DISCUSS THE CONDITIONS, PROCEDURES, STEPS, AND THE DURATION OF THE TRANSITION PERIOD. • THE PROTOCOL WAS SIGNED ON 23 NOVEMBER, 1970.

  19. 4.1 SIGNING AND RATIFICATION OF THE PROTOCOL (CONT) • THE PROTOCOL HAD TO BE APPROVED BY THE PARLIAMENTS OF TURKEY AND THE EC MEMBER STATES BEFORE IT WAS PUT INTO FORCE. THE TRANSITION PERIOD IN PRACTICE STARTED ON 1 SEPTEMBER, 1971. • ADDITIONAL PROTOCOL WAS AIMING TO REDUCE THE TARIFFS STEP BY STEP IN ORDER TO ACHIEVE THE CUSTOMS UNION WITH THE EC. • OTHER AIMS OF THE PROTOCOL WAS TO PROVIDE FACTOR MOBILITY AND CONVERGENCE THE MACROECONOMIC POLICIES. • UNLIKE TO THE PREPARATORY PERIOD WHERE CONCESSIONS WERE GIVEN SOLELY BY THE EC, IN THIS PERIOD CONCESSIONS WERE TO BE GIVEN BY BOTH SIDES.

  20. 4.2 CUSTOMS UNION WITH THE EU4.2.1 CUSTOMS UNION • CUSTOM UNION INVOLVES THE ELIMINATION OF TARIFFS AND QUOTAS AND MEASURES HAVING SIMILAR EFFECTS BETWEEN MEMBER STATES AND APPLYING A COMMON EXTERNAL TARIFF IN TRADE FROM NON-MEMBER COUNTRIES. • SIGNING DATE OF THE ADDITIONAL PROTOCOL, 23 NOVEMBER, 1970 WAS TAKEN AS THE BASE YEAR FOR REDUCING THE TARIFFS. TARIFFS FOR IMPORTS FROM EC WOULD BE ELIMINATED IN 12 YEARS, AND 22 YEARS FOR CERTAIN PRODUCTS. • PRODUCTS WHOSE TARIFFS WERE TO BE ELIMINATED IN 12 YEARS WERE THOSE WHICH WERE EXPECTED TO COMPETE WITH THEIR EUROPEAN SUBSTITUTES OR THOSE WHICH WERE NOT PRODUCED IN TURKEY.

  21. 4.2.1 CUSTOMS UNION (CONT.) • PRODUCTS OF 12 YEARS GROUP COMPRISED 55% OF THE IMPORTS FROM EC AND THE REST 45% WOULD BE SUBJECTED TO 22 YEARS REDUCTION PLAN. • TURKEY HAD TO ELIMINATE THOSE TAXES WHICH HAD THE SAME EFFECT AS THE TARIFFS, SUCH AS THE MUNICIPALITY TAXES, HOUSING FUNDS AND OTHER SIMILAR FUNDS TAKEN ON IMPORTS. • IN SEPTEMBER 1971 TURKEY REDUCED ITS TARIFFS ON IMPORTS FROM THE EC BY 10% FOR THE 12 YEARS GROUP AND 5% FOR THE 22 YEARS GROUP. • SECOND REDUCTIONS AT THE SAME RATES WERE CARRIED OUT IN JANUARY, 1976. THIRD SET OF REDUCTIONS WERE EXPECTED TO BE CARRIED OUT IN JANUARY, 1978 BUT THIS WAS NOT REALIZED.

  22. 4.2.2 COMMON EXTERNAL TARIFFS • PRODUCTS WHICH WERE LISTED IN "12 YEARS GROUP" WOULD FOLLOW A REDUCTION IN TARIFFS AND WOULD ACHIEVE THE SAME LEVEL COMMON EXTERNAL TARIFFS AS THE EC IN 12 YEARS. • LIKEWISE IT WAS PLANNED THAT "22 YEARS GROUP" WOULD ACHIEVE THE COMMON EXTERNAL TARIFF IN 22 YEARS. • FIRST REDUCTIONS FOR 12 YEARS GROUP WAS TO TAKE PLACE IN 1977 AND FOR THE 22 YEARS GROUP IN 1983. • TURKEY FROZEN ALL OF ITS RESPONSIBILITIES EMERGING FROM THE ADDITIONAL PROTOCOL IN 1976 AND NO TARIFF REDUCTION TOOK PLACE IN ACHIEVING THE COMMON EXTERNAL TARIFF.

  23. 4.2.3 ELIMINATION OF QUOTA RESTRICTIONS • INCREASES OR DECREASES IN TARIFFS EFFECT THE PRICE OF THE COMMODITY IMPORTED. THAT WILL EFFECT THE AMOUNT OF THE IMPORTS, WHICH IS DETERMINED BY THE PRICE ELASTICITY OF THE COMMODITY. FOR THIS REASON TARIFFS FOR SOME COMMODITIES ARE NOT EFFECTIVE, (SPECIALLY ON THOSE COMMODITIES WHOSE PRICE ELASTICITY IS INELASTIC). • ON THE OTHER HAND QUOTA RESTRICTIONS ARE VERY EFFECTIVE. IT IS NOT RELATED WITH PRICES AND IT HAS A GUARANTEED EFFECT.

  24. 4.2.3 ELIMINATION OF QUOTA RESTRICTIONS (CONT.) • TURKEY WAS EXPECTED TO ABOLISH SOME OF ITS QUOTAS AND LIBERATE ITS TRADE. IN 1971-1973, 45% - 55% OF THE TOTAL IMPORTS OF TURKEY WAS LIBERATED, BUT THE % OF THE LIBERATED IMPORTS FROM THE EC WERE ONLY 24.7%. • WHEN THE RELATIONS WITH THE EC WERE FROZEN IN 1976, 40% OF THE IMPORTS FROM THE EC WAS LIBERATED. • TURKEY BY 1985 WAS EXPECTED TO ABOLISH ALL THE TARIFFS ON 12 YEARS GROUP COMMODITIES AND TO LIBERATE IMPORTS FROM EC TRADE UP TO 45%. • TURKEY WOULD BE ABLE TO APPLY QUOTA RESTRICTIONS ON COMMODITIES LEFT OUTSIDE THE LIBERATION. • TRADE LIBERATIONS WERE EXPECTED TO BE 60% AND 80% BY THE END OF 1986 AND 1991 RESPECTIVELY. BY THAN TURKEY WOULD HAVE BEEN ALMOST COMPLETELY OPEN TO THE EC TRADE.

  25. 4.3 RESPONSIBILITIES OF THE EC • THE RESPONSIBILITIES OF THE EC WERE TO ABOLISH TARIFFS FOR ALL IMPORTS FROM TURKEY AND PROVIDE FINANCIAL AID TO TURKEY. FOUR INDUSTRIAL GOODS WERE EXCEPTED AND THEIR TARIFFS WERE NOT ABOLISHED: PETROLEUM PRODUCTS, COTTON AND COTTON THREATS, OTHER COTTON PRODUCTS AND CARPETS. IN QUOTA REMOVALS EC KEPT ITS RIGHT TO APPLY QUOTA ONLY ON RAW SILK. • CONCESSIONS GIVEN BY THE EC TO TURKEY APPLIED TO THE THREE NEW MEMBERS OF THE EC (UK, IRELAND, DENMARK). THIS PROVIDED A TEMPORARY ADVANTAGE TO TURKEY OVER THE SIX EC MEMBERS.

  26. 4.3 RESPONSIBILITIES OF THE EC (CONT.) • EC DID NOT FAVOR A CUSTOMS UNION IN AGRICULTURAL PRODUCTS BUT RATHER SUGGESTED THAT TURKEY SHOULD HARMONIZE ITS AGRICULTURAL POLICIES SO THAT AT THE END OF THE 22 YEARS, AGRICULTURAL GOODS WOULD MOVE FREELY BETWEEN TURKEY AND THE EC. • IN THE ADDITIONAL PROTOCOL IT WAS AGREED THAT EC WOULD APPLY A PREFERENTIAL POLICY TO THE AGRICULTURAL PRODUCTS IMPORTED FROM TURKEY. THE EXTENT AND THE PROCEDURES OF THE APPLICATION WAS TO BE DETERMINED BY THE ASSOCIATION COUNCIL. • THE CONCESSIONS GIVEN BY THE EC TO THE AGRICULTURAL PRODUCTS FROM TURKEY INVOLVED ONLY 63.4% OF THE TOTAL AGRICULTURAL EXPORTS OF TURKEY TO THE EC.

  27. 4.3 RESPONSIBILITIES OF THE EC (CONT.) • SECOND FINANCIAL PROTOCOL SIGNED ON 23 NOVEMBER, 1970 PROVIDED 210 M. ECU UNTIL 23 MAY, 1976. THIS AMOUNT WAS INCREASED TO 257 M. ECU WITH THE ENLARGEMENT OF EC IN 1973. • ADDITIONAL PROTOCOL WAS FAVORING AN ECONOMIC INTEGRATION BETWEEN TURKEY AND THE EC BEYOND THE CUSTOMS UNION. • MOST OF THE PROPOSALS DID NOT HAVE BINDING RULES AND THEY WERE SIMPLY GOOD WISHES FOR THE FUTURE. IN THE CASE OF FREE MOVEMENT OF CAPITAL, ADDITIONAL PROTOCOL WAS ASKING TURKEY TO IMPROVE HER POLICIES RELATED TO FOREIGN CAPITAL COMING FROM ABROAD, MAINLY FROM THE EC COUNTRIES.

  28. 4.3 RESPONSIBILITIES OF THE EC (CONT.) • ACCORDING TO THE ADDITIONAL PROTOCOL AFTER 12 YEARS OF THE ENFORCEMENT OF THE ANKARA AGREEMENT IN 1 DECEMBER, 1964 TURKISH WORKERS WOULD HAVE FREE MOVEMENTS IN EC GRADUALLY. A COMPLETE FREEDOM OF TURKISH WORKERS IN EC WOULD BE ACHIEVED WITHIN 10 YEARS I.E. 22 YEARS AFTER THE ENFORCEMENT OF THE ANKARA AGREEMENT. • UNFORTUNATELY THIS WAS NOT REALIZED. IT IS STILL DISCUSSED WHETHER TURKEY LEGALLY OBTAINED THE RIGHT FOR FREE MOVEMENT OF WORKERS OR NOT BUT COURT OF JUSTICE DECIDED THAT TURKEY DID NOT HAVE THE RIGHT.

  29. 5. DEVELOPMENTS AFTER THE ADDITIONAL PROTOCOL 5.1 DEVELOPMENTS AFTER THE PROTOCOL • TURKEY WAS NOT HAPPY WITH THE ADDITIONAL PROTOCOL AND COMPLAINTS BEGAN BEFORE IT WAS OFFICIALLY EFFECTIVE ON 1 JANUARY, 1973. • SINCE THE APPLICATION OF THE TEMPORARY AGREEMENT ON 1 SEPTEMBER, 1971 TURKEY WANTED TO INCREASE THE CONCESSIONS GIVEN IN THE ADDITIONAL PROTOCOL. • WITH THE ACCESSION OF THE THREE NEW MEMBERS ON 1 JANUARY, 1973 COMPLEMENTARY AGREEMENTS WERE SIGNED ON 30 JUNE, 1973. THIS BROUGHT ADDITIONAL BURDEN ON TURKEY.

  30. 5.1 DEVELOPMENTS AFTER THE PROTOCOL (CONT.) • ON 25 DECEMBER, 1976 TURKEY FROZE ALL OF ITS RESPONSIBILITIES FROM THE AGREEMENTS AND ANNOUNCED THAT IT WOULD POSTPONE ITS TARIFFS REDUCTIONS IN 1977 AND 1978. • ON 12 MAY, 1977, 3RD FINANCIAL PROTOCOL GIVING 310 M. ECU TO TURKEY WITHIN A PERIOD OF 1977-1981 WAS SIGNED. • THE MAIN REASONS FOR TURKEY TO FREEZE THE ASSOCIATION AGREEMENT WAS THE EXPANSION OF THE EC AND EROSION OF THE CONCESSIONS GIVEN TO TURKEY, AND THE INABILITY OF TURKEY IN MEETING THE REQUIREMENTS OF THE AGREEMENTS MAINLY DUE TO ITS ECONOMIC DIFFICULTIES.

  31. 5.2 MAIN REASONS FOR FREEZING THE AGREEMENT BY TURKEY (1976) 1. EXPANSION OF EC IN 1973 WITH THE ACCESSION OF UK, IRELAND AND DENMARK INCREASED THE RESPONSIBILITIES OF TURKEY. 2. EC MADE FREE TRADE AREA AGREEMENTS WITH THE EFTA COUNTRIES IN INDUSTRIAL GOODS IN 1972-73. THIS CAUSED AN ADDITIONAL COMPETITION FOR TURKEY IN SELLING ITS INDUSTRIAL PRODUCTS TO EC. 3. AN INCREASE IN THE TRADE DEFICIT OF TURKEY WITH THE EC AND THE EXPECTATION THAT WITH FURTHER LIBERATION OF TRADE IT WOULD BE EVEN GREATER WAS ANOTHER IMPORTANT REASON FOR FREEZING THE ASSOCIATION AGREEMENT. ITS TRADE DEFICIT WITH THE EC INCREASED 16 TIMES BETWEEN 1970-1976, WHILE ITS TOTAL TRADE DEFICIT INCREASED BY 8.8 TIMES.

  32. 5.2 MAIN REASONS FOR FREEZING THE AGREEMENT BY TURKEY (1976) (CONT.) 4. EXPANSION OF RELATIONS WITH NON-MEMBER COUNTRIES ERODED THE CONCESSIONS GIVEN TO TURKEY. MAIN AGREEMENTS THAT ERODED CONCESSIONS GIVEN TO TURKEY WERE AS FOLLOWS. A. FIRST AND SECOND YAOUNDE AGREEMENTS COVERING THE PERIODS OF 1964-1969 AND 1970-1975, BETWEEN THE EC AND THE OLD AFRICAN COLONIES OF FRANCE AND BELGIUM. B. IN 1975, LOME I AGREEMENT ADDED 21 MORE COUNTRIES WHICH WHERE BRITISH COLONIES IN AFRICA, PACIFIC AND CARIBBEAN AND 7 OTHER AFRICAN COUNTRIES.

  33. 5.2 MAIN REASONS FOR FREEZING THE AGREEMENT BY TURKEY (1976) (CONT.) C. EC SIGNED AGREEMENTS WITH PORTUGAL AND ISRAEL CONCERNING AGRICULTURAL PRODUCTS, AND MADE CO-OPERATION AGREEMENTS WITH EGYPT, LEBANON, SYRIA AND JORDAN. BESIDES EC SIGNED PREFERENTIAL TRADE AGREEMENTS WITH SPAIN AND YUGOSLAVIA AND ACCEPTED CYPRUS AND MALTA AS ASSOCIATE MEMBERS TO EC. D. SINCE 1971, EC WITH THE "GENERALIZED SYSTEM OF TARIFF PREFERENCES" STARTED TO ABOLISH THE TARIFFS BUT APPLYING QUOTAS ON INDUSTRIAL GOODS ORIGINATING FROM DEVELOPING COUNTRIES. E. THE GATT AGREEMENTS HAD BEEN REDUCING COMMON EXTERNAL TARIFFS AGAINST THE MOST COMPETITIVE COUNTRIES OF USA AND JAPAN. EC REDUCED ITS TARIFFS ON INDUSTRIAL GOODS SUBSTANTIALLY TARIFFS ON.

  34. 5.2 MAIN REASONS FOR FREEZING THE AGREEMENT BY TURKEY (1976) (CONT.) 5. AGREEMENTS DID NOT FIT INTO THE DEVELOPMENT STRATEGY OF TURKEY. FIVE YEARS DEVELOPMENT PLAN MADE IN 1960, WITH A 15 YEARS PERSPECTIVE DID NOT CONSIDER THE RELATIONS OF TURKEY WITH THE EC. DEVELOPMENT PLANS WERE BASED ON "IMPORT SUBSTITUTION STRATEGY" WHICH WAS NOT COMPATIBLE WITH THE LIBERATION OF TRADE AND ACHIEVE DEVELOPMENT THROUGH COMPARATIVE ADVANTAGE TRADE POLICIES.

  35. DEVELOPMENTS SINCE 19766.1 MAIN DEVELOPMENTS • PRIME MINISTER BULENT ECEVIT ON 25 MAY, 1978 SAID THAT TURKEY DID NOT GIVE UP TO BE A MEMBER OF EC, BUT THE RELATIONS HAD BE REORGANIZED. • IN 1979 THE GOVERNMENT ANNOUNCED THAT TURKEY WANTED TO START HER RELATIONS WITH THE EC. FOREIGN MINISTER OF TURKEY ANNOUNCED THAT TURKEY WOULD LIKE TO APPLY FOR FULL MEMBERSHIP AT THE END OF THE YEAR (1980). • WHEN ARMY INTERVENED ON 12 SEPTEMBER, 1980 THE RELATIONS GOT WORSENED AND ON 2 JANUARY, 1982 THE EUROPEAN COMMISSION AND THE EUROPEAN COUNCIL DECIDED TO FREEZE THE RELATIONS WITH TURKEY.

  36. 6.1 MAIN DEVELOPMENTS (CONT.) • AFTER NOVEMBER, 1983 TURKEY CONTINUED WITH THE LIBERAL ECONOMIC POLICIES AND INTRODUCED THE VALUE ADDED TAX (VAT) SYSTEM. • PRIME MINISTER OZAL IN JUNE, 1985 SAID THAT TURKEY WOULD APPLY TO THE EC FOR FULL MEMBERSHIP WHEN THE CONDITIONS WERE SUITABLE AND WHEN THE TIME WAS RIGHT. • TURKEY APPLIED FOR FULL MEMBERSHIP ON 14 APRIL, 1987. • THE APPLICATION WAS TAKEN AND SENT TO THE EUROPEAN COMMISSION TO PREPARE "AN OPINION" ON THE ELIGIBILITY OF TURKEY FOR MEMBERSHIP.

  37. 6.2 LIBERALIZATION OF TRADE • UNTIL 1985 TURKEY HAD BEEN VERY SLOW TO FULFILL HER RESPONSIBILITIES, BUT WITH THE REDUCTIONS IN CUSTOMS TARIFFS TURKEY SATISFIED MAJOR PART OF HER REQUIREMENTS FROM THE ASSOCIATION AGREEMENT. • TURKEY WAS REQUIRED TO ABOLISH ALL THE CUSTOMS TARIFFS OF 12 YEARS GROUP GOODS BY 1985. UNTIL 1993, SHE REDUCED THE CUSTOMS TARIFFS FOR 12 YEARS GROUP GOODS BY 80%. FOR 22 YEARS GROUP GOODS TURKEY WAS EXPECTED TO ABOLISH CUSTOMS TARIFFS UNTIL 1995. SHE REDUCED CUSTOMS TARIFFS ON THESE GOODS BY 70% UNTIL 1993.

  38. 6.2 LIBERALIZATION OF TRADE (CONT.) • EC KEPT AGRICULTURAL PRODUCTS ORIGINATING FROM TURKEY OUTSIDE THE SCOPE OF CUSTOMS TARIFFS REDUCTION UNTIL THE END OF THE TRANSITION PERIOD. • TURKEY WAS EXPECTED TO HARMONIZE ITS AGRICULTURAL POLICIES WITH THE EC UNTIL 1995, IN 22 YEARS. STILL EC DECREASED ITS CUSTOMS TARIFFS FOR SOME TURKISH AGRICULTURAL PRODUCTS DURING THE PREPARATORY AND THE TRANSITION PERIODS. • FROM 1981 UNTIL 1987, EC ABOLISHED ALL THE CUSTOMS TARIFFS ON AGRICULTURAL PRODUCTS ORIGINATING FROM TURKEY IN FIVE STEPS. NOW WITH FEW EXCEPTIONS, ALL THE AGRICULTURAL PRODUCTS EXPORTED FROM TURKEY TO THE EC DO NOT FACE ANY CUSTOMS TARIFFS.

  39. 6.3 TRADE WITH EC • THE EC HAS BEEN A MAJOR TRADING PARTNER FOR TURKEY. • GERMANY RANKS AS THE FIRST TRADING PARTNER BOTH IN TOTAL FOREIGN TRADE AND IN TRADE WITH THE EC STATES. GERMANY IMPORTS 44.5% OF THE EXPORTS OF TURKEY AND EXPORTS 37.5% OF THE IMPORTS OF TURKEY. • ITALY (WITH 16% OF EXPORTS AND 18.5% OF IMPORTS), UNITED KINGDOM (WITH 10.8% OF EXPORTS AND 10.9% OF IMPORTS) AND FRANCE (WITH 10.7% OF EXPORTS AND 14.4% OF IMPORTS) TAKE THE SECOND, THIRD AND FOURTH PLACES AS TRADING PARTNERS OF TURKEY AMONG THE EC STATES.

  40. 6.4 FINANCIAL PROTOCOLS • ASSOCIATION AGREEMENT PUT FORWARD THAT THE EC WOULD PROVIDE FINANCIAL AID TO TURKEY IN ORDER TO PROMOTE A FASTER ECONOMIC DEVELOPMENT AND CLOSE THE ECONOMIC GAP BETWEEN THE TURKISH ECONOMY AND THE EC ECONOMIES. • THE FINANCIAL AIDS WERE GIVEN TO THE INFRASTRUCTURE AND TO THE INDUSTRIAL PROJECTS, IN TERMS OF LONG TERM AND LOW INTEREST CREDITS.

  41. 1. First Financial Protocol (1964‑1968) : 176 m. ECU. 2. Second Financial Protocol (1971‑1977) : 220 m. ECU. Complementary Protocol (1972‑1977) : 47 m. ECU. 3. Third Financial Protocol (1979‑1981) : 310 m. ECU. 4. Special Co-operation Fund (1980‑1982) : 75 m. ECU. Total 828 m. ECU. • FOURTH FINANCIAL PROTOCOL WAS AGREED IN 1980 FOR A PERIOD OF 1981 TO 1986, WITH AN AMOUNT OF 600 M. ECU. BECAUSE OF THE VETO OF GREECE IN THE COUNCIL OF MINISTERS UNTIL TODAY THE MONEY HAS NOT BEEN RELEASED. • WITHIN 28 YEARS EC PROVIDED A TOTAL OF 828 M. ECU. TO TURKEY. WITHIN THE SAME PERIOD OR EVEN IN A SHORTER PERIOD EC PROVIDED MORE FINANCIAL AIDS TO COUNTRIES WITH WHICH IT HAD ONLY PREFERENCIAL TRADE AGREEMENTS OR CO-OPERATION AGREEMENTS.

  42. 7. FULL MEMBERSHIP APPLICATION OF TURKEY7.1 REASONS FOR APPLICATION • IN 1980'S EC WAS A RELUCTANT TO REVITALIZE THE RELATIONS WITH TURKEY AND IT WAS GIVING CONCESSIONS TO MANY OTHER NON MEMBER COUNTRIES AND WAS ERODING THE CONCESSIONS GIVEN TO TURKEY. • TO SOLVE THESE PROBLEMS AND TAKE THE CUSTOMS UNION ONE STEP FORWARD, TURKEY APPLIED FOR FULL MEMBERSHIP ON 14 APRIL, 1987. • THE COUNCIL OF MINISTERS ON 27 APRIL, 1987 DECIDED TO SEND THE APPLICATION TO THE COMMISSION FOR AN "OPINION" ON THE ELIGIBILITY OF TURKEY FOR MEMBERSHIP.

  43. 7.2 FULL MEMBERSHIP APPLICATION OF TURKEY (1987) • TURKEY APPLIED FOR FULL MEMBERSHIP ON 14 APRIL 1987. • OPINION OF THE COMMISSION PRESENTED AFTER 3 YEARS IN 1990. THERE WAS NO NEITHER A DEFINITE REJECTION OR ACCEPTATION OF TURKEY'S APPLICATION. IT WAS STATED THAT TURKEY IS "ELIGIBLE" TO BECOME A MEMBER TO THE EC BUT THE EXISTENCE OF PROBLEMS ON BOTH SIDES AND THAT THE EC WAS NOT INTENDING TO ACCEPT A NEW MEMBER UNTIL 1993.

  44. 7.2.1 THE MAIN REASONS FROM TURKEY'S POINT OF VIEW: 1. LEVEL OF ECONOMIC DEVELOPMENT WAS VERY LOW. 2. HIGH LEVEL OF POPULATION GROWTH. 3. TURKISH ECONOMY WAS AGRICULTURE ORIENTED. 4. HIGH LEVEL OF PROTECTION IN INDUSTRIAL PRODUCTS. 5. NEGATIVE ASPECTS IN THE SOCIAL SECURITY AREA. 6. NEGATIVE ASPECTS IN THE MACRO ECONOMIC INDICATORS SUCH AS HIGH LEVEL OF INFLATION, HIGH RATE OF UNEMPLOYMENT AND UNBALANCED INCOME DISTRIBUTION.

  45. 7.2.2 THE MAIN REASONS FROM THE EC'S POINT OF VIEW: 1. FIRST PRIORITY OF THE EC WAS TO ESTABLISH THE SINGLE MARKET UNTIL 1992 AND THEN GET PREPARED FOR THE ECONOMIC AND MONETARY UNION. SO THE EC WAS BUSY WITH OTHER THINGS WHICH WERE MORE IMPORTANT FOR THEMSELVES. 2. EC HAD A STRATEGY TO DEEPEN THE EXISTING UNION PROCESS OF THE COMMUNITY RATHER THAN WIDENING IT. THUS IT HAD NO INTENTION TO START A NEGOTIATION ON A NEW MEMBERSHIP WITH ANY COUNTRY.

  46. 7.3 CO-OPERATION PROGRAM (MATUTES PACKAGE) • IN THE OPINION THE COMMISSION ALTHOUGH ASKED THAT TURKEY'S MEMBERSHIP WOULD NOT BE RE-EXAMINED BEFORE 1993, IT PROPOSED A CO-OPERATION PACKAGE IN ORDER TO DEVELOP ITS RELATIONS WITH TURKEY AND CONTRIBUTE ITS ECONOMIC AND POLITICAL DEVELOPMENT. • A CO-OPERATION PACKAGE WAS PREPARED BY A MEMBER OF THE COMMISSION, MR. ABEL MATUTES AND ACCEPTED BY THE COMMISSION ON 6 JUNE, 1990.

  47. 7.3 CO-OPERATION PROGRAM (MATUTES PACKAGE) (CONT.) • THE CO-OPERATION PACKAGE (MATUTES PLAN) WAS PLANNING THE FOLLOWINGS: 1. COMPLETION OF THE CUSTOMS UNION UNTIL THE END OF 1995. 2. DEVELOPMENT OF THE CO-OPERATION IN THE AREAS RELATED TO THE CUSTOMS UNION. 3. STARTING THE FINANCIAL CO-OPERATION. THAT IS RELEASING THE FOURTH FINANCIAL PROTOCOL. 4. DEVELOPMENT OF THE POLITICAL CO-OPERATION. UNFORTUNATELY AS THE CO-OPERATION PACKAGE WAS ASKING THE RELEASE OF THE FOURTH FINANCIAL AID AND AS THE GREECE VETO THIS PROTOCOL, THE CO-OPERATION PACKAGE COULD NOT BEEN PUT INTO APPLICATION.

  48. 8. EXPECTATIONS OF TURKEY AND THE EC FROM MEMBERSHIP 8.1 THE POSSIBLE EXPECTATIONS OF TURKEY FROM EU MEMBERSHIP 1. TURKEY IS ALREADY A MEMBER OF OECD, COUNCIL OF EUROPE, AGIK AND WEST EUROPEAN UNION (ASSOCIATE MEMBER), THUS WANTS TO BE A FULL MEMBER OF THE EU. 2. TURKEY WANTS TO HAVE A FULL ACCESS TO A RICH AND CONSISTENT MARKET OF THE EC. 3. TURKEY WANTS TO BE A FULL MEMBER BECAUSE THE CONCESSIONS GIVEN IN THE ASSOCIATION AGREEMENT ARE ERODED. 4. PROTECTIONIST BARRIERS OF THE EU CAN BEST BE ELIMINATED BY A FULL MEMBERSHIP.

  49. 8.1 THE POSSIBLE EXPECTATIONS OF TURKEY FROM EU MEMBERSHIP (CONT.) 5. BY HAVING AN ACCESS TO A VERY DYNAMIC, RICH AND CONSISTENT MARKET OF 380 MILLION PEOPLE, TURKEY EXPECTS THAT ITS INDUSTRIALIZATION WILL MODERNIZE AND GAIN MOMENTUM. 6. BY BECOMING A FULL MEMBER, TURKEY WILL TAKE PART IN THE DECISION MAKING MECHANISM. 7. TURKEY HOPES TO GET A BETTER SHARE OF THE STRUCTURAL FUNDS RESERVED FOR RELATIVELY UNDERDEVELOPED REGIONS OF THE EU. 8. TURKEY NEEDS THE EUROPEAN TECHNOLOGY AND THE CAPITAL FOR A FASTER ECONOMIC DEVELOPMENT.

  50. 8.2 THE POSSIBLE EXPECTATIONS OF THE EU FROM TURKEY'S FULL MEMBERSHIP 1. THE EU WANTS TO HAVE AN ACCESS TO THE TURKISH MARKET OF 70 MILLION PEOPLE. 2. THE EU HOPES TO HAVE AN ACCESS TO TURKEY'S NEIGHBORING MARKETS. 3. THE EU EXPECTS TO PENETRATE TO ISLAMIC COUNTRIES MARKET. 4. EC HOPES TO BE MORE INFLUENTIAL ON THE MARKETS OF BALKANS, BLACK SEA AND TURKISH ORIGIN CAUCASUS AND CENTRAL ASIAN REPUBLICS THROUGH TURKEY. 5. EC EXPECTS TO HAVE GREATER POLITICAL AND CULTURAL DOMINATION OVER THESE COUNTRIES AND REGIONS.

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