CAN THE UPDATE OF THE CUSTOMS UNION BE ENOUGH?

CAN THE UPDATE OF THE CUSTOMS UNION BE ENOUGH?

SECT?ON 1: NON-FULF?LMENT OF THE COMM?TMENTS

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Being aware of the damages caused by the Customs Union to Turkey, Turkey makes efforts to update the Customs Union at various times. In this context, the EU and Turkey asked the World Bank to prepare a report on the damages caused to Turkey by the Customs Union. Various issues were addressed within the scope of this report dated 2014. In this context, technical negotiations between the Commission and Turkey were completed in 2015. Relevant ministries in Turkey held regular meetings with many relevant institutions and organizations. In the following process, there has not been much development regarding the updating of the customs union between Turkey and the EU.

Recently, Turkey's efforts to update the customs union have gained a new dimension. In 2020, 57 high-level meetings, 40 of which were at ministerial level, were held with representatives of European Union institutions and EU member states. Currently, this issue comes up frequently both in Turkey and in the dialogues with the member states. Turkey wants to reduce the damage done by the Customs Union and improve the situation, while at the same time promoting relations with the EU on a positive agenda.

Within the framework of these efforts, it is thought that EU-Turkey relations will be on a more positive track. However, updating the customs union alone is not enough for the EU-Turkey relations to improve and move in the right direction. The EU must fulfill its commitments and cover the losses suffered by Turkey and Turkish citizens throughout the partnership relationship. In this context, it should be noted that the protection of the rights of Turkish citizens and the solution of Turkey's problems cannot be achieved only by updating the Customs Union. The EU must first fulfill its obligations under the Ankara Agreement and its founding agreements.

In 1959, the European Union entered into negotiations with Turkey on an Association Agreement which was to be the first of its kind. The negotiations came to a conclusion when the Agreement was signed by the parties in Ankara on 01.09.1963. This Association Agreement, which entered into force on 01.12.1964, is known today as the Ankara Agreement.

The apparent goal of the Ankara Agreement was to establish a Customs Union between Turkey and the EU as on the foundation for Turkey’s path to full membership of the EU. The Agreement proposed to achieve this goal in three stages, namely the preparatory phase, the transitional phase and the final phase. This scheme was later supported by a multiplicity of financial protocols. In this way, the contracting parties aimed to improve the Turkish economy and progressively prepare it for integration into the European economic system. In addition, the parties intended to increase the level of employment and the living conditions of the Turkish people. These points are clearly stated in Article 2§1 of the Ankara Agreement. However, these objectives were not achieved in the period specified in the Agreement due to non-compliance with its provisions.

The provisions of the Ankara Agreement and its Annexed Protocols are based on European law and are predominantly inspired by the provisions of the Treaty of Rome, which remains in force today under the name of the TFEU. In addition to this, The Ankara Agreement was concluded under Article 216 of the TFEU entitled “International Agreements”.

The agreements which the EU has concluded with third states bind the Community institutions and the Member States because their provisions form an integral part of the Community legal order from their entry into force. The CJEU recalls in its settled case law that the Association Agreements that the EU concludes with third countries bind the institutions of the Community and the Member States since their provisions "form an integral part of the Community legal order from their entry into force" (CJEU, 30 April 1974, R. & V. Haegeman v. Belgian State, C-181-73). Moreover, ever since its decision in the Demirel case (1987), the CJEU has consistently underscored the position of the Ankara Agreement and its Protocols as an integral part of EU law.

In this context, it is necessary to evaluate the EU's obligations under the Ankara Agreement and its founding treaties and the losses incurred due to not fulfilling these obligations under 4 headings.

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NON-FULF?LMENT OF THE COMM?TMENTS

The Additional Protocol of the Ankara Agreement was signed on 23.11. 1970 and entered into force on 01.01.1973. According to this Protocol customs duties applying to manufactured products exported from Turkey to the EU were to be abolished immediately with the entry into force of the Protocol, while customs duties on goods exported from the EU to Turkey were to be reduced gradually over a period of 22 years. However, the immediate abolition of customs duties was not implemented by the EU de facto as of 1976. Furthermore, the customs duties imposed by Turkey on EU exports were not been abolished progressively over 22 years as foreseen in the Protocol but were lifted all of a sudden in the space of one year. Due to the improper implementation of the provisions of the Ankara Agreement and its Annexed Protocols, Turkish industry has suffered crucial damages and the Turkish economy has witnessed a significant boom in imports.

According to Article 1 of the Additional Protocol, its primary goal was to set out a framework for the transitional stage foreseen in the Ankara Agreement, during which the Turkish economy was intended to grow and achieve certain standards ahead of the establishment of a complete economic union with the EU. In other words, the expected outcome of the correct implementation of the Additional Protocol was to support the Turkish economy as it underwent the process of economic policy change which was required for the official establishment of the Customs Union.

According to Article 7 of the Additional Protocol, Turkey and the EU were to refrain from introducing new import duties on their trade with each other. By virtue of Article 9 of the Protocol, the EU was to abolish direct customs duties and charges having equivalent effect on the export of goods from Turkey to the EU as soon as the Protocol came into force.

The greatest privilege that was provided to the Turkish economy through the Additional Protocol was the immediate abolition of the customs duties which the EU charged on Turkey’s industrial exports. As per Article 9 of the Additional Protocol, Turkey was to start exporting its manufactured goods to the EU Member States free of customs duties starting in 1973. This provision was implemented properly between 1973 and 1976.?However, when the EU Member States noticed that Turkey’s low-cost industrial products had started to create significant competition in EU industrial products markets, they used their superior political power to begin to oblige Turkey to apply quotas to its own industrial products. Since Turkey was not a strong enough country to withstand such pressures at the time, it reluctantly chose to obey the wishes of the EU Member States as of 1976. In practice, therefore, Turkey was only able to benefit from the exclusive right provided for in Article 9 for the three years between 1973 and 1976. Turkey could not benefit from this right after 1976.

As an outcome of this infringement of EU Law, Turkey was unable to make any significant progress in terms of economic development during the 22-year transitional period between 1973 and 1995.

In coherence with the primary goals of the Additional Protocol, Turkey was not obliged to abolish customs duties on goods exported by the EU immediately. Articles 10 and 11 set out a road map for the gradual abolition of these customs duties over a period of 22 years.

Articles 10 and 11 provided two separate timetables for the process of abolishing customs duties on goods imported by Turkey from the EU. In specifying the timetable to apply, a distinction was made between different types of goods. In particular, it is fair to say that customs duties on industrial goods from the EU were to be lifted more slowly, as competition was already harsh in the Turkish industrial market.

Article 10 of the Protocol sets out the timetable for the lifting of customs duties on EU exports except for those which were listed in Annex 3. According to Article 10, Turkey was to make the first reduction of 10 per cent in the custom duties which it imposed on such goods immediately after the entry into force of the Protocol.

Following this first reduction, two further reductions of 10 per cent were to be made three years and five years, respectively, after the entry into force of the Protocol.

The fourth and subsequent reductions in customs duties imposed by Turkey were to be made on an annual basis; the final reduction would mark the end of the transitional stage.

Article 11 of the Additional Protocol sets out the roadmap for the abolition of customs duties by Turkey on the goods listed in Annex 3 of the Protocol (i.e, industrial products). Accordingly, the process of abolishing the customs duties, and charges having equivalent effect, imposed on the goods in this list was to be spread over a period of 22 years. The reductions were to start with an initial reduction of 5 per cent immediately after the entry into force of the Protocol. After the first reduction, three further 5 per cent reductions were to be made three, six and ten years after the entry into force of the Protocol. To emphasize, it was aimed that Turkish economy and industry to become competent with EU, it was going to be improved in remaining 19 years by EU incentives. However, this aim was never fulfilled, which resulted in absolute damages on Turkish industrial sector.

Article 12 of the Ankara Agreement and Article 36 of the Protocol stipulated the free movement of persons. Accordingly, Turkish workers would gain the right of free movement in 1986 at the latest.

In this context, it was necessary that EU to fulfill its obligations arising from the partnership law and the Additional Protocol. Because the EU's commitments and obligations under partnership law are an integral part of EU law. In this context, there is an exemplary CJEU decision below that clearly shows that the EU has to fulfill the obligations of association agreements.

V. Haegeman v. Belgian State (1974)

In 1974, a Greek national, V. Haegeman, brought the infringements that Greece encountered regarding the implementation of the Association Agreement between Greece and the EU at the hands of EU Member States before the CJEU. In its decision, the Court of Justice stated that the Association Agreements that the EU signs with third countries constitute an integral part of the EU law, and that their provisions are therefore binding for all the Member States and the organs of the EU. Accordingly, the Court ruled that all improper actions of EU Member States regarding the implementation of the Greece- EU Association Agreement should be lifted.