We have just celebrated the 20th anniversary of the Association Council Decision 1/95 between Turkey and the EU. It sounds strange that a simple decision taken by an association institution has created such an important influence in Turkey's economic and political development. But back in 1995, Turkey was still struggling to "normalize" its relations with the EU and with the international community after the 1980 coup. The association of Turkey with the EU dates back to 1963 and is the oldest model of integration the European Union has ever designed. Turkey had to go through three main stages, which would end up in a full-fledged membership - a preparation stage, intermediate stage and final stage. The preparation ended in 1970, when an additional protocol was signed. The protocol embedded a very large and detailed road map of Turkey completing a customs union with the EU in 22 years.
Mostly, this smooth and gradual passage of the Turkish economy from an import-substitution regime to a liberal regime by harmonizing with the EU has been disregarded by different governments. However, starting from 1991, Turkey decided to complete the Customs Union on time by drastically reducing customs taxes, already phased out by the EU in 1971. Turkey also has to harmonize with the Common Customs Tariff of the EU and take over a number of free trade agreements contracted by the EU at that time with third countries.
Turkey had to struggle its way to finalize the transitional phase of its membership because the regime was seen as dominated by the military and the EU was not very keen to accept deepening its economic integration. The Association Council Decision should have been taken in the form of an international agreement, but it was not possible, so a simple Association Council decision had to do. It is worth signaling that Association Council decisions remain an integral part of the Community aquis, the EU law. Member states of the EU wanted to supplement the decision with an assent procedure to be given by the European Parliament. This has never been done before in EU history, but this was the deal between Turkey and the EU to overcome remaining obstacles.
I remember the general assembly of the European Parliament in Strasbourg back in December 1995, when a very large Turkish delegation celebrated the yes vote obtained there. It should be noted that for the last 20 years, Turkish exports were multiplied by a factor of 10, the trade between Turkey and the EU has increased fourfold and Turkey has totally revised and bettered its industrial infrastructure.
On the negative side, there have been bottlenecks in the functioning of the Customs Union, especially pertaining to the free trade agreements signed by the EU with other countries, where Turkey had to insist on becoming a part of the agreement framework. Visa problems and transportation limitations also played a negative role. But as a whole, as given in the World Bank's report last year, the system has been a major success.
It is also customary for some politicians in Turkey to talk about "modifying and limiting the Customs Union scope" each time a problem surfaces. I believe that it is worth remembering a couple of issues. First, Custom Unions are designed to go deeper and wider and to be more successful. Second, the whole association agreement between Turkey and the EU has been consolidated close to World Trade Organization where a step back would create immense problems at the international level and problems whose repercussions could be devastating for the economic development of Turkey. The Customs Union system between Turkey and the EU still remains a very strong anchor for Turkey, which in the meantime has become an important global player.
