customs union

Definition
Agreement between two or more (usually neighboring)countries to remove trade barriers, and reduce or eliminatecustoms duty on mutual trade. A customs union (unlike afree trade area) generally imposes a common external-tariff (CTF) on imports from non-member countries and (unlike acommon market) generally does not allow free movement ofcapital and labor among member countries.
A customs union involves trading goods between countries without any customs duties and tariffs, the application of a common external tariff on imports from third countries and the application of common trade policies. In 1963, Turkey signed an Association Agreement with the EEC, which became known as the Ankara Agreement.

The Ankara Agreement envisioned three phases for Turkeys gradual accession to the EU Common Market through the establishment of a custom union: 1. preparatory phase (1964 1970) 2. transition (1973 1995) 3. completion phase (1996 to full economic integration). In 1973, at the end of the preparatory phase, an Additional Protocol was adopted which aimed to remove customs duties between the two sides. Whilst the EU completely removed customs duties on industrial goods of Turkish origin from the very beginning of the transition period, Turkeys removal of customs duties on the EUs industrial goods was to be more gradual. A 22 year transition period was foreseen for Turkey to complete the implementation of the Customs Union. In 1995, after the completion of the transition period, the Customs Union Decision was adopted, during which Turkey eliminated customs duties for EU industrial goods. The Decision took effect on the 1st January 1996. For an update on the current status of the customs union, please click here. Benefits of the Customs Union

Turkey has benefited from an early legislative alignment process before its accession negotiations started. Turkey is participating in the EU single market for goods.

Turkey has been implementing an EU aligned anti-trust legislation for 10 years. Turkey has benefited from an almost EU aligned customs legislation for 10 years. Turkish exporters are experienced in manufacturing according to EU technical standards. Turkey has adopted and implemented many intellectual property rights.

The scope The Customs Union mainly covers industrial and processed agricultural goods. Harmonisation to the Common External Tariff applied by the Community on some industrial goods from third countries was completed by 1 January 2001. These products are referred to as sensitive materials such as automobiles, shoes, leather products and furniture. Processed agricultural goods (which are listed in the Council Regulation 3448/93 of the European Community) are also included in the Customs Union. In line with the framework of new legislation developed in harmony with the Community's system, if any of the mentioned goods are imported, taxes are separated into agricultural and industrial shares; the industrial taxes are removed but the agricultural share is set to the tax proportions used in the EU. Turkey's participation in the Customs Union also extends to participation in several conventions on intellectual, industrial and commercial property rights as well as to harmonisation of the Turkish technical standards to EU requirements.