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Economic implications for Turkey of a Customs Union with the European Union

In: APPLIED TRADE POLICY MODELING IN 16 COUNTRIES Insights and Impacts from World Bank CGE Based Projects

Author

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  • Glenn W. Harrison
  • Thomas F. Rutherford
  • David G. Tarr

Abstract

With a CGE model, we quantify the impact of the Customs Union between Turkey and the European Union (EU). Since the average tariff on non-agricultural imports will be less than 2 percent, the trade diversion costs of the Customs Union are quite small. Improved access to third country markets (through reciprocal preferential access agreements of the EU) results in the largest gains from the Customs Union, estimated overall to be about 1–1.5 percent of Turkish GOP. Applying the VAT uniformly (rather than raising it to compensate for the tariff revenue loss) will increase the welfare gain from joining the EU.

Suggested Citation

  • Glenn W. Harrison & Thomas F. Rutherford & David G. Tarr, 2014. "Economic implications for Turkey of a Customs Union with the European Union," World Scientific Book Chapters,in: APPLIED TRADE POLICY MODELING IN 16 COUNTRIES Insights and Impacts from World Bank CGE Based Projects, chapter 16, pages 395-404 World Scientific Publishing Co. Pte. Ltd..
  • Handle: RePEc:wsi:wschap:9789814551434_0016
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    References listed on IDEAS

    as
    1. Glenn W. Harrison & Thomas F. Rutherford & David G. Tarr, 2014. "Trade Reform in the Partially Liberalized Economy of Turkey," World Scientific Book Chapters,in: APPLIED TRADE POLICY MODELING IN 16 COUNTRIES Insights and Impacts from World Bank CGE Based Projects, chapter 5, pages 95-121 World Scientific Publishing Co. Pte. Ltd..
    2. Richard Baldwin, 1989. "The Growth Effects of 1992," NBER Working Papers 3119, National Bureau of Economic Research, Inc.
    3. Morris Morkre & David Tarr, 2014. "Reforming Hungarian Agricultural Trade Policy: A Quantitative Evaluation," World Scientific Book Chapters,in: APPLIED TRADE POLICY MODELING IN 16 COUNTRIES Insights and Impacts from World Bank CGE Based Projects, chapter 3, pages 49-74 World Scientific Publishing Co. Pte. Ltd..
    4. Glenn W. Harrison & Thomas F. Rutherford & David G. Tarr, 2014. "Economic implications for Turkey of a Customs Union with the European Union," World Scientific Book Chapters,in: APPLIED TRADE POLICY MODELING IN 16 COUNTRIES Insights and Impacts from World Bank CGE Based Projects, chapter 16, pages 395-404 World Scientific Publishing Co. Pte. Ltd..
    5. Pritchett, Lant & Sethi, Geeta, 1994. "Tariff Rates, Tariff Revenue, and Tariff Reform: Some New Facts," World Bank Economic Review, World Bank Group, vol. 8(1), pages 1-16, January.
    6. Harrison, Glenn W. & Jones, Richard & Kimbell, Larry J. & Wigle, Randal, 1993. "How robust is applied general equilibrium analysis?," Journal of Policy Modeling, Elsevier, vol. 15(1), pages 99-115, February.
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    More about this item

    Keywords

    International Trade Policy; Developing Countries; Computable General Equilibrium; World Bank; Regional Trade Policy; Services Liberalization; Foreign Direct Investment; Trade and Poverty;

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • R10 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General

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