The Opportunity Space of Overlapping Trade Regimes: Turkey, the Customs Union, and TTIP

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The Republic of Turkey (RoT) is closely observing negotiations of the first three mega-regional preferential trade agreements. Of greatest concern to the Republic is the US–EU Transatlantic Trade and Investment Partnership (TTIP), intended to establish the standards for preferential regimes beyond ambitious next generation free trade areas (FTAs). The Republic's primary concern is TTIP's potential impact on the Turkish economy given interaction with the RoT–EU Customs Union (CU). This interaction reflects the problem of outdated trade agreements’ overlap with the spaghetti bowls of next generation and now mega-regional agreements. Although immediate Turkish TTIP inclusion is unlikely, TTIP triggered a critical juncture for the Republic given the agreement's potential interaction with the CU's outdated features and hub-and-spoke structure. This juncture provides the Republic with strategic leverage to pursue the CU's review and possible revision. The RoT's strategic sequencing of its CU review with TTIP engagement may prove advantageous by altering its structural relationship with its hub and primary economic anchor of the EU as well as facilitating its entry into ambitious mega-regional agreements and contributing to its EU accession process. It also highlights the way in which states may strategically consolidate their particular cases of overlapping preferential trade agreements (PTAs).

Policy Implications

  • The Turkish CU-TTIP overlap creates a critical juncture that the RoT may use to revise the RoT-EU CU. Revision of this CU will affect the problems highlighted by the CU-TTIP overlap.
  • The Turkish CU-TTIP overlap highlights the problem of PTA-overlap resulting from preferential agreement proliferation. Although some suggest new mega-regional agreements such as TTIP may serve as a means of coordinating and consolidating this overlap, the CU-TTIP overlap suggests that other agreements – in this case a revised CU – may serve as the essential consolidation mechanism.
  • The RoT must sequence its engagement of PTAs associated with the CU-TTIP overlap, beginning with the CU as opposed to the TTIP, in terms of its current desire for immediate, full TTIP membership. This sequencing will facilitate the Republic's realization of its long-term goals in a revised CU, EU accession and achievable mega-regional agreement membership.
  • Mega-regional agreements, replacing next generation FTAs, will set international standards for trade and investment agreements including agreements’ non-tariff barrier (NTB) terms. The Turkish CU-TTIP overlap highlights the impact of these standards on third-party countries such as Turkey.
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