TURK-SWITCH: The Tariff-Leverage and Legal Case for Turkey’s Switch from EU–Turkey Customs Union to FTAs with the European Union and Beyond

Soon after becoming a World Trade Organization Member, Turkey established a Customs Union with the European Union, its biggest trade partner. Despite negotiating an average 42.6 percent tariff on slightly more than one-third of industrial goods—leaving remaining industrial goods unbound from World Trade Organization commitments—Turkey, pursuant to the Customs Union, eliminated all tariffs on European Union industrial imports. Turkey also implemented the significantly lower European Union Common External Tariffs—bindings averaging 4.1 percent—on all industrial imports from other World Trade Organization Members. In return, Turkey expected the Customs Union to be the ticket to eventual, full European Union membership. Following the non-binding yet politically significant July 2017 European Union Parliament vote suspending accession talks and the recent European Union Council ‘conclusion’ foreclosing negotiations toward ‘modernization’ of the Customs Union, Turkey’s hopes for membership or a less asymmetric Customs Union have faded. This article explains why Turkey’s switch from Customs Union to pursuing free trade agreements with the European Union and other countries would advance its overall trade interests and sketches how this move could be operationalized, both legally and transactionally. (JEL: F13, F53, F55).