Abstract:

The customs union process between Turkey and European Union (EU) came into effect on January 1, 1996. The customs union has had some economic, social, and political effects on both Turkey and EU. Since customs union is basically a trade formation, the outcomes are mainly related with the field of foreign trade. Taking account the discussions and incidents into consideration, it can easily be noticed that there is not a complete agreement whether the foreign trade between Turkey and EU is for or against Turkey. In the process of customs trade, it is observed that while, in means of proportion, there is an increase in the export of investment and intermediate goods to EU, there is a decrease in the export of consumer goods and on the other hand, the situation in the import process is completely reverse. The unavoidable increase of foreign trade imbalance between Turkey and non-European countries after the customs union has exacerbated these discussions. This paper analyses the possible effects of customs union on the trade of Turkey with her most important commercial partner EU(15) by using panel data method. It is expected that the results will contribute to the discussions of gains and loses in the process of Turkey-EU customs union

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