Customs union and the structural changes of the Turkish production industry (1990-2005)

The relationship between Turkey and European Union has a long history. Afterapplying to the European Economic Union in July, 31 1959 Turkey signed thePartnership Agreement (Ankara Treaty) after a debate period of four years and becamea full member of Customs Union in September, 12 1963. This partnership betweenTurkey and the European Union that began with the signing of Ankara Treaty continuedwith the Additional Protocol signed on November, 23 1970 in Brussels and that becameeffective from January, 1 1973 onwards and further developed in January, 1 1996 withthe establishment of Customs Union with all the involved parties. During this periodimportant steps were taken towards full membership and Turkey?s candidacy wasapproved.From 1980s until today Turkey adopted liberal policies in exports along theframework of export based industrialization strategy and with the Customs Unionsucceeded in joining world economy and trade. With Turkey-EU PartnershipCommittee Agreement important regulation changes were made in Turkey for trade andcompetition policies; discipline in the relationship between bureaucracy and privatesector along with a stability for the market stripped of custom barriers was established.As a result of Customs Union Turkey not only started making exports to EU countriesbut also gained equal competition conditions in the market with Free Trade Agreements.But since along with the increase of exports there was also an increase in imports, thenumber of rival goods coming in from EU countries increased and this not onlyimpeded the growth of companies in the market but also caused a decrease in theinternal market shares. Even though the imports made by Turkey from EU countriesshowed fluctuations due to macroeconomic developments, it exceeded the ratio ofTurkey?s export to EU countries. One of the reasons for Turkey?s exports notsucceeding in making the expected leap after Customs Union is that EU had no customstax for industrial goods imports made from Turkey prior to Customs Union as well. Theother reasons are the financial crises in international markets and the competitive powerobtained by Far Eastern countries in these sectors.During the last couple of years Turkey gained a global competition power with theadvancement of electronics industry and is now able to develop its own technology anddesigns. Since electronics sector has a high added value, involves high technologies andalways expands its market share, it has become one of the leading sectors in creatingnew job branches. Even though the share of Turkish Electronics Industry is not up topar with world standards and is not at its desired position in Turkish economy thedynamism of the electronics industry ensured the positive fulfillment of futureexpectations.