A growing market for the Union’s exports

Date: 08/04/1999

EVER since the customs union came into effect in 1995, Turkey has had a large trade deficit with the EU.

In the first year of the union, Turkish exports to the EU rose by 3.4&percent; while imports from the Union went up by 32&percent;. In the first three-quarters of 1998, the surplus reached €7.5 billion.

Most of the trade deficit is made up of consumer goods. In 1996, Turkish imports of raw materials and capital goods such as industrial machinery went up by 19&percent; and 9&percent; respectively, but the growth in consumer goods was 50&percent;. The increase was not simply due to increased consumer demand in Turkey, but also to the fact that the customs union cut import tariffs on consumer products.

One of the biggest changes was in the EU's share of Turkey's car market, which rose from 23&percent; in 1993 to 74&percent; in 1998. Germany was the largest beneficiary, pushing up its proportion of the market by 53&percent; over the period. Asian companies saw their share of the market fall slightly, but the biggest losers were producers in Russia and central and eastern Europe. Turkey's own passenger car production dropped by 30&percent; in the five years to 1998.

Textile exports to the EU did not increase as much as might have been expected because of strong competition from Asian producers.

Turkey has moved from being the EU's eighth-largest trade partner to the sixth.

EU-Turkey trade, 1998 (in millions of euro)

Source: Eurostat; Tusiad