Economics, Econometrics and Finance
4 years ago

Turkey's Customs Union with EU to Boost Economy, Reshape Trade Landscape

World Scientific Studies in International Economics
Economic implications for Turkey of a Customs Union with the European Union
Glenn W. Harrison, Thomas F. Rutherford, David G. Tarr

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Turkey and the European Union have agreed to a customs union, where Turkey will eliminate tariffs on EU imports and apply EU tariffs on imports from other countries. This will make Turkey more open to trade and give Turkish exporters better access to other markets. The customs union could boost Turkey's GDP by 1-1.5% annually, but it may also lead to a loss of tariff revenue. To offset this loss, Turkey could privatize state-owned companies and increase VAT rates. Uniform VAT application could help compensate for revenue losses and increase the benefits of the customs union.