The European Union and Türkiye, an EU candidate and significant economic partner, have long shared a deep and multifaceted relationship shaped by geography, history, and mutual interests, writes Dr. Markus C. Slevogt.
While political tensions have intermittently overshadowed this relationship, stalling the accession process, economic interdependence has remained a steady anchor. Strengthening these economic ties offers both sides a route to shared prosperity, strategic stability, and enhanced competitiveness in an increasingly challenging global economy.
Despite fluctuations in political relations, the EU–Türkiye economic partnership has been a notable success. The EU is Türkiye’s largest trading partner, while Türkiye ranks as the EU’s sixth-largest trading partner.
This relationship is underpinned by the Customs Union agreement of 1995, which has facilitated significant trade flows and deepened economic integration. Trade volumes now exceed €200 billion annually, supported by thousands of European firms operating in Türkiye, driving investment and creating jobs. These ties have helped Türkiye integrate into the global economy while providing EU businesses access to a cost-effective and dynamic manufacturing base.
However, the Customs Union agreement, crafted nearly three decades ago, is no longer fit for purpose. It was designed for a time before the digital revolution, the prominence of climate change on policy agendas, and the expansion of global supply chains. Both the EU and Türkiye now face new challenges, including digital trade, sustainability standards, and the transition to a green economy, which the outdated agreement cannot address.
The Case for Modernisation
Modernising the Customs Union is not simply a matter of economic pragmatism; it is essential to ensure the partnership remains relevant in the 21st century. For Türkiye, this modernisation would provide enhanced access to the EU single market, attract greater foreign direct investment, and reinforce its strategic position as a bridge between Europe, Asia, and the Middle East.
For the EU, a stronger economic relationship with Türkiye would support supply chain diversification, secure access to critical materials, and tap into Türkiye’s efficient manufacturing capabilities at a time of geopolitical realignment.
Beyond trade, Türkiye plays a pivotal role in the EU’s energy security, serving as a key transit corridor for energy resources. With its expanding renewable energy sector, from wind power to hydrogen initiatives, Türkiye is an indispensable partner in Europe’s drive to reduce reliance on Russian energy. Türkiye also offers a geographically proximate and stable alternative to distant Asian markets, boasting a skilled workforce and developed infrastructure.
Addressing Challenges
Despite the clear benefits, challenges remain. Regulatory barriers, market access restrictions, and the need to align with evolving EU standards in areas such as sustainability and digitalisation hinder the full potential of the partnership. A modernised Customs Union would address these issues, establishing legal certainty and ensuring a level playing field for businesses. An efficient dispute resolution mechanism would also be critical to maintaining trust between the parties.
Innovative Platforms for Cooperation
Against this backdrop, initiatives such as the European Turkish Trade & Investment Council (ETTIC) have emerged to revitalise EU–Türkiye economic cooperation. Formalised in Brussels, ETTIC represents a collaborative effort by European chambers of commerce to harmonise business interests in Türkiye, advocate for policy reforms, and promote shared objectives such as digital transformation, green energy initiatives, and Customs Union modernisation. This platform aims to bridge gaps between policymakers and the private sector, acting as a catalyst for deeper engagement.
ETTIC’s focus on digitalisation, sustainability, and investment protection underscores the economic partnership’s untapped potential. Aligning with the EU’s Environmental, Social, and Governance (ESG) standards will be essential for Türkiye to maintain its competitive edge. Meanwhile, the EU could benefit from Türkiye’s commitment to the green transition, particularly as both regions strive to meet their climate targets under the Paris Agreement.
Economic and Strategic Gains
Modernising the Customs Union would also act as a catalyst for broader reforms in Türkiye, fostering a stable investment climate and supporting long-term economic growth. Enhanced alignment with EU standards could help Türkiye diversify its economy, moving beyond traditional sectors such as textiles and agriculture to high-value industries like technology and automotive manufacturing.
Negotiations on Customs Union modernisation have faced political obstacles, but focusing on shared economic benefits could provide momentum. A pragmatic approach, prioritising economic cooperation over political disputes, could reset EU–Türkiye relations on a constructive path.
A Win–Win Scenario
At a time when Europe faces economic challenges, from stagnant growth to geopolitical instability, the case for strengthening ties with Türkiye is compelling. Closer integration offers Türkiye economic resilience, job creation, and social stability, particularly as it addresses high inflation and a growing, youthful population.
The economic argument for deeper EU–Türkiye cooperation is clear. It is a mutually beneficial relationship that can drive growth, enhance competitiveness, and bolster strategic stability. By prioritising the modernisation of their economic relationship, the EU and Türkiye can unlock a new era of shared prosperity. In a divided world, this partnership could demonstrate how economic diplomacy transcends political differences, ensuring both the EU and Türkiye emerge stronger together.
