Turkey’s Agricultural Integration with the EU: Quantifying the Implications

After long-lasting efforts for more than four decades, Turkey and the EU started accession negotiations on October 3, 2005. Accordingly, as a serious candidate for membership, the economic impact of Turkey’s accession to the EU has gained now special attention. The cost of integration is naturally one of the major issues of debate in both Turkey and the EU. Most of the economic effects for Turkey are expected to be felt notably in the agricultural sector. Therefore, during the process of negotiations, examination and detection of possible changes in agricultural sector while capturing general equilibrium effects is of particular importance. Such an evaluation will shed light not only on the determination of agricultural policies, but also on regional development and welfare issues. In addition, possible burden of absorbing Turkey’s agriculture on the EU budget is a major concern. In this context, this paper investigates the consequences of agricultural integration between Turkey and the EU in a multi-sector, multi-country computable general equilibrium framework. Using a modified version of standard GTAP model to address specifically budgetary implications and taxes, the paper looks into the impact of agricultural integration, sectoral reallocations and the welfare effects. One should stress that there is not a simple and clear-cut conclusion one can derive at this point. Depending on the sequence of integration steps, timing and the degree of harmonization, the results vary. The paper analyzes the effects of various possible integration scenarios.