Recently, Turkey and the EU agreed that their Customs Union (CU), which has played a concrete role in improving their relations, needs complete modernization. To this end, a delegation of Presidents of European Chambers of Commerce met with European Union lawmakers and influential stakeholders to discuss business cooperation between the European Union and Turkey, in Brussels on 6 September.

In the wake of global events, European businesses face enormous challenges. The immediate economic ramifications of the Russian invasion of Ukraine, the recovery from the shutdowns resulting from the coronavirus pandemic, and the continuing geopolitical and competitive threats from China.

This is the right time, I believe, to discuss and find ways to channel opportunities in Turkey, especially with regard to the modernization of the EU-Türkiye Customs Union Agreement.

Ipek Tekdemir, Founder of Sustainable Value Hub

European companies and their representations must more than ever closely follow European legislation and market trends. This is particularly relevant in the areas of big data, the rise of e-commerce, remote workers, and the transition to greener and more sustainable manufacturing and supply chain processes.

There is a new momentum in the European business sector which is constantly reshaping itself, with innovative practices, increased digitization as well as innovative and best practices. Therefore, the European Union, national governments, international organizations and policy makers are looking for ways to facilitate and improve trade flows between countries in order to create a resilient supply chain and adhere to the ambitious goals of sustainability.

All the institutions gathered today are working on the same objective, which is to strengthen diplomatic relations between Turkey and the EU. We work together to stimulate commerce and facilitate networking. We hope that this visit will create a solid basis for future dialogue.

Veronique van Haaften, Secretary, European Bilateral Chambers of Commerce and Industry in Turkey

Dr. Markus Christian Slevogt, President of the German-Turkish Chamber of Commerce and Industry (AHK Türkiye) opened the meeting by presenting a joint position paper assessing the benefits and impact of a modernized UC between the two blocs .

The document highlights how the UC, which was created 25 years ago, is becoming obsolete and needs to be updated to keep up with changing times. “We didn’t even have the internet when the customs union was set up,” Dr Slevogt pointed out.

Dr. Markus Christian Slevogt © Aris Setya

New factors need to be taken into consideration and included in the UC, such as e-commerce, services and the strong agricultural sector in Turkey. In addition, geostrategic needs, such as the pandemic and the war in Ukraine, have shown that “the value chain built around Asian countries, whether it is China or Vietnam, must be brought closer to Europe”, continued Dr Slevogt. “Assets coming from China and the United States take 2, 3, 4 months, Turkey could be a closer supplier,” added Franck Mereyde, president of the French Chamber of Commerce in Istanbul.

We believe that this country, as it is, is significantly undervalued. People who want to take advantage of an undervalued asset need to position themselves early and countercyclically.

Dr. Markus Christian Slevogt, President of the German-Turkish Chamber of Commerce and Industry

The same remark was made by Livio Manzini, president of the Italian Chamber of Commerce in Istanbul, who reminded the room that the UK’s first post-Brexit trade deal was with Turkey. It only took a few weeks to negotiate, not years. The US Department of Commerce also had a lengthy meeting in the country which concluded with a trade deal. The EU should realize that the time has come to strengthen economic ties with Turkey.

We miss the train! The US takes it, the UK takes it, the EU is absent.

Livio Manzini, President of the Italian Chamber of Commerce in Istanbul

Livio Manzini, President of the Italian Chamber of Commerce in Istanbul © Aris Setya

Furthermore, in June 2020, more than 5 million people were working in agriculture in Turkey, representing 19% of total employment in Turkey and 4% of total employment in the EU. The country has the potential to replace Russia and Ukraine, or at least help strongly, in supplying agricultural products to the EU, but it has one of the highest tariff rates on products agriculture among OECD countries.

When it comes to EU standards for companies, such as EDG content, Dr. Slevogt said companies investing in Tukey always meet the standards of their parent companies. “I think the best term for it is spillover, when you enter certain production sites in Turkey,” he said, adding that foreign investors are also pushing very hard for digitalization.

Not only digitalization, but the private sector is also pushing very hard for CO2 taxation. Turkey is ready to meet the standards of investors, with the cooperation of the EU, I believe Turkey can overcome all these challenges.

Nevzat Tuğrul Şeremet, President of the Belgian-Luxembourg Chamber of Commerce in Istanbul

Finally, Mr. Mereyde underlined that although the Customs Union was launched in the context of Turkey’s accession to the EU, they should now be approached as completely separate issues.

Improving the customs union is not a tool to join the EU. Our goal is only to improve business. And business isn’t just about money, it’s about people.

Franck Mereyde, President of the French Chamber of Commerce in Istanbul

Franck Mereyde, President of the French Chamber of Commerce in Istanbul © Aris Setya

“If we improve the customs union, we will have more people working for European and Turkish companies. These companies must bring the same values ​​between the EU and Turkey, which requires a delicate balance. Again, we are here for the customs union, not for EU membership. This will create better understanding between the EU and Turkey,” he concluded.