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The Trade Effects of the EU–Turkey Customs Union

Author

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  • Antonis Adam
  • Thomas Moutos

Abstract

In the present study we argue that the salient features of both the EU‐15 countries and Turkey are conducive to making the effects of the 1995 EU–Turkey customs union asymmetric among the incumbent EU countries. In order to support our argument we rely on a model in which trade involves the exchange of vertically differentiated products. This model generates the prediction that the more contiguous an incumbent country is to the joining country in terms of technological sophistication, the larger will be the crowding out of this country's exports to the other incumbent countries as a result of the CU expansion. Using a gravity model we estimate the effects of the customs union between Turkey and the EU‐15 by differentiating between exports from (a) lower‐technology EU‐15 countries (we term this group of countries ‘South’) to higher‐technology EU‐15 countries (the ‘North’), (b) North to South, (c) South to Turkey, (d) North to Turkey, and (e) Turkey to EU‐15. Our econometric results indicate that, in contrast to North's exports to the other EU‐15 countries (which have remained intact), the Southern countries’ exports to the other EU‐15 countries have declined as a result of the CU. Moreover, the extra penetration of the Turkish market by the EU‐15 countries has not been more favourable to the Southern group.

Suggested Citation

  • 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.
  • Handle: RePEc:bla:worlde:v:31:y:2008:i:5:p:685-700
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    File URL: https://doi.org/10.1111/j.1467-9701.2008.01099.x
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    References listed on IDEAS

    as
    1. 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 Group Munich.
    2. Bilin Neyaptı & Fatma Taskın & Murat Ungor, 2007. "Has European Customs Union Agreement really affected Turkey's trade?," Applied Economics, Taylor & Francis Journals, vol. 39(16), pages 2121-2132.
    3. Jeffrey A. Frankel, 1997. "Regional Trading Blocs in the World Economic System," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 72, September.
    4. Julia Spies & Helena Marques, 2006. "Trade Effects of the Europe Agreements," Diskussionspapiere aus dem Institut für Volkswirtschaftslehre der Universität Hohenheim 274/2006, Department of Economics, University of Hohenheim, Germany.
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    Citations

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    Cited by:

    1. Natalya Ketenci, 2017. "The Effect of the European Union Customs Union on the Balance of Trade in Turkey," Foreign Trade Review, , vol. 52(4), pages 219-232, November.
    2. Christopher S. P. Magee, 2016. "Trade creation, trade diversion, and the general equilibrium effects of regional trade agreements: a study of the European Community–Turkey customs union," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 152(2), pages 383-399, May.
    3. repec:bla:jcmkts:v:48:y:2010:i:4:p:967-991 is not listed on IDEAS
    4. repec:spr:empeco:v:54:y:2018:i:2:d:10.1007_s00181-016-1220-3 is not listed on IDEAS
    5. Türkcan, Kemal, 2014. "Investigating the Role of Extensive Margin, Intensive Margin, Price and Quantity Components on Turkey’s Export Growth during 1998-2011," MPRA Paper 53292, University Library of Munich, Germany.
    6. repec:bla:jcmkts:v:55:y:2017:i:3:p:419-431 is not listed on IDEAS
    7. Antonis Adam & Thomas Moutos, 2012. "Capital Importers Pay More for their Imports," CESifo Working Paper Series 3723, CESifo Group Munich.
    8. Mehmet Ugur, 2010. "Open‐Ended Membership Prospect and Commitment Credibility: Explaining the Deadlock in EU–Turkey Accession Negotiations," Journal of Common Market Studies, Wiley Blackwell, vol. 48(4), pages 967-991, September.
    9. Antonis Adam, 2009. "Fiscal Reliance on Tariff Revenues: In Search of a Political Economy Explanation?," Review of Development Economics, Wiley Blackwell, vol. 13(4), pages 610-625, November.
    10. repec:kap:empiri:v:45:y:2018:i:3:d:10.1007_s10663-017-9369-3 is not listed on IDEAS
    11. Türkcan, Kemal, 2014. "Investigating the Role of Extensive Margin, Intensive Margin, Price and Quantity Components on Turkey’s Export Growth during 1998-2011," MPRA Paper 53292, University Library of Munich, Germany.
    12. Türkcan, Kemal & Pişkin, Erhan, 2014. "Ticaret Anlaşmalarının Türkiye’nin İhracat Dinamiğine Etkisi: Yaygın ve Yoğun Ticaret
      [The Effects of the Trade Agreements on the Dynamics of Turkey’s Export: Extensive and Intensive Margins]
      ," MPRA Paper 59841, University Library of Munich, Germany.

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