Turkish business and EU accession By Sinan Ülgen Turkish accession prospects were becoming bleaker at the end of 2006, just over a year after the start of accession talks. Both Turkey’s political elite and its people are disillusioned with the EU. Opinion surveys show that support for accession among the Turkish electorate has fallen to around 32 per cent, a drop of 30 percentage points in just two years. Some Turkish politicians are advocating that Turkey should walk away from the accession process. Against this background of growing doubts and uncertainty, Turkish businesses have stood out as steadfast supporters of their country’s EU aspirations. Their support has remained strong throughout the turbulent history of EU-Turkey relations. However, now that business support is needed more than ever, there is a risk that it might be waning. Turkish business has influenced, and continues to influence, the country’s approach to the EU. Conversely, Turkey’s relations with the EU have been instrumental in shaping the relationship between business and government in Turkey. To understand this complex interaction, it is worth taking a brief look back at the history of the business community’s approach to the EU.
The triangle of business, government and Europe After the Second World War, Turkey’s development strategy was based on import substitution: high tariff walls and other barriers protected fledgling domestic industries from international competition. The Ankara Association Agreement of 1963 envisaged the gradual establishment of a customs union between Turkey and the EU (or European Community, as it was then called). Trade opening was to be ‘asymmetric’, with the EC scheduled to phase out all tariffs on Turkish industrial exports well ahead of reciprocal action from Turkey, which would enjoy a 22-year transition period. Turkish companies backed this plan. As long as international competition was limited, getting closer to the EU had few economic costs and many political benefits. To gain a voice in the forthcoming European journey, Turkish businesses set up the Economic Development Foundation (IKV), an early institutionalisation of business support for Turkey’s EU objectives. The IKV was unique in its focus on EU relations. In all other candidate countries, existing industrial associations just added EU-related questions to their extensive portfolios of business concerns. By the late 1970s, it was clear that the import substitution strategy had failed and Turkey entered a prolonged period of macro-economic instability. Political turmoil eventually followed, and the drive to deepen TurkishEU relations was put on ice. As Turkey was rocked by repeated economic crises and military coups, the question of Europe disappeared from the domestic agenda. The military government that took over in 1980 restored order and started a fairly radical programme of economic change – a watershed in Turkish economic history. Economic reform and competition replaced protectionism and import substitution. The military handed over to a civilian government in 1983. Economic recovery was accompanied by a revival of the European dream. Plans to build an EU-Turkey customs union by 1995 (spelled out in an ‘additional protocol’ from 1973) were dusted off. The EU kept its commitment to eliminate all industrial tariffs, but it was not shy to resort to protectionism in ‘sensitive’ sectors, for example by imposing strict quotas on Turkish textile exports in the 1980s. Turkey did not start to cut tariffs in earnest until 1987, the year the government of Turgut Özal applied to join the EC.
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