ECONOMY

Turkey, EU look to further harness growing economic cooperation

The third Turkey-EU high-level economic dialogue was held Thursday in Istanbul with the participation of Treasury and Finance Minister Berat Albayrak, Trade Minister Ruhsar Pekcan, EU Commission Vice President Jyrki Katainen and EU Turkey Delegation head Christian Berger.

Economic cooperation between Turkey and the European Union has seen substantial growth in the last decade with increasing investments and bilateral trade volume.

While the bloc is Turkey's largest export destination, the country is currently the fifth largest importer of European goods. In addition to bilateral trade, Europe is also the biggest source of the foreign direct investment (FDI) Turkey attracts annually.

The high-level economic dialogue meeting was to make significant and comprehensive contributions to the cooperation with fruitful discussions between the business world and the public sector, Minister Albayrak said during his address at the meeting.

The minister drew attention to a globally rising concern, namely, trade wars, and emphasized that economic cooperation and dialogue, as well as free trade, would create synergy for all trading partners.

To elaborate on the growing ties, Minister Albayrak highlighted that the bilateral trade volume between Turkey and European countries has significantly increased in the last 15 years. "In light of the growing commercial ties, the third high-level economic dialogue meeting offers an important road map for the future of Turkey-EU relations," Albayrak said.

Minister Albayrak also underscored the urgency to update the customs union agreement Turkey inked with the EU in 1996 and stressed Turkey's expectations of the EU to make progress in visa liberalization and refugees.

"Turkey and EU ties have profound depth with the issues to tackle, including refugees, security, logistics, transportation infrastructure and energy. These are significant issues for the political, economic and social stability of both partners," Albayrak said.

European Commission Vice President Jyrki Katainen pointed out four important areas in which Turkey makes a significant contribution to stability in Europe. "The first is the issue of migration, whereby Turkey and EU sustained a strong partnership," he said.

Turkey and the EU signed a refugee deal in March 2016, to discourage irregular migration across the Aegean Sea by taking stricter measures against human traffickers and improving the conditions of the nearly 4 million refugees in Turkey.

The March 2016 deal employs a one-for-one formula under which failed asylum seekers in Europe are returned to Turkey, while Syrian refugees are resettled in EU states in a quota system. As another part of the deal, the EU said it would open two chapters in Ankara's EU accession negotiations, provide funding for refugees and grant visa-free travel to Turkish citizens to the Schengen zone. Ankara has criticized the EU for not holding to its promises and for not granting visa-free travel within the Schengen zone.

The second area of strong cooperation, Katainen said, is security as part of anti-terrorism efforts. "The third one is trade. Turkey is a party to the expanded market, which means contribution to economic welfare and employment. Lastly, the investments of Turkish companies in the EU and the investments of the EU companies in Turkey have led to the emergence of a more competitive system, creating more jobs and securing social justice in economic terms," he concluded.

EU Commission Vice President Katainen said Turkey has so far fulfilled 68 criteria out 72 that were required for visa liberalization. Two criteria remain challenging for Turkey-EU agreement on visa liberalization, including anti-terrorism laws and the recognition of the Greek Cypriot administration.

Katainen also stressed that for deeper cooperation between Turkey and EU, the modernization of the customs union is necessary. "We need to continue negotiations for the customs union upgrade, which will beneficial for both sides," he said.

In its Dec. 21, 2016, assessment, the European Commission proposed the modernization of the current deal, which only covers a limited range of industrial products, and excludes agriculture, public procurement and services. Highlighting that the upgrade of Turkey-EU trade relations forms an essential part of efforts made by Turkey and the EU to deepen relations in key areas of common interest, the commission reiterated its resolution to continue delivering on the commitments it has made as part of the deal with Ankara. "Modernizing the customs union to reflect current EU-Turkey trade relations would bring substantial economic benefits for both partners," the commission said in its proposal.

Turkey's imports from the EU fell to 77 billion euros ($86.79 billion) in 2018 from 84.8 billion euros in 2017. Its exports to the bloc last year increased to 76.1 billion euros, up from 69.8 billion euros in 2017. As a result, Turkey's trade deficit with the EU, which stood at 15 billion euros in 2017, dropped to just 1.2 billion euros last year.

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