Turkey: Economic Reform and Accession to the European Union

Abstract

A copublication of the World Bank and the Centre for Economic Policy ResearchTurkey first applied for associate membership in the European Union (EU)—then the European Economic Community (EEC)—in 1959. The application resulted in an association agreement in 1963, whereby Turkey and the EU would, in principle, gradually create a customs union by 1995 at the latest. The customs union was seen as a step toward full EU membership at an unspecified future date. The EU unilaterally granted Turkey preferential tariffs and financial assistance, but the process of staged, mutual reductions in tariffs and nontariff barriers was delayed because of the economic and political conditions in Turkey. After pursuing inward-oriented development strategies throughout the 1960s and 1970s, Turkey switched over to a more outward-oriented policy stance in 1980. The opening up of the economy was pursued in part with the aim of integrating the country into the EU. Turkey applied for full membership in the EU in 1987. The response in 1990 was that accession negotiations could not be undertaken at the time because the EU was engaged in major internal changes, and that matters were further complicated by developments in Eastern Europe and the Soviet Union. However, the EU was prepared to extend and deepen economic relations without explicitly rejecting the possibility of full membership at a future date. Thus the plans for a customs union were revived