Mrs May has held talks with Jeremy Corbyn during which the Labour leader pressed his case for keeping the UK in a permanent customs union with the EU, whereby there would be no tariffs or non-tariff barriers to trade between members, with a common external tariff impose on all goods from outside the bloc. But ominous parallels with the controversy Turkish deal, highlighted by Politico, should make the Prime Minister think twice. Bahadir Kaleagasi, secretary-general of the Turkish business association TUSIAD, told Politico: “The entire customs union is eroding.”
Sinan Ulgen, a Turkish researcher at the Carnegie Europe think tank, said the “economic threat” to Turkey had become increasingly pressing as a result of EU trade deals with Canada, Japan and Singapore, which he said would “hurt the Turkish economy”.
The Turkish complaints related to a “fundamental problem” which would also affect Britain, Politico’s Hans Von Der Burchard claimed, namely the fact that as Brussels signs new trade deals around the world, goods from partner countries can enter the EU at reduced or zero tariff rates, and then flow on for free into Turkey.
He added: “The the EU’s customs union with Turkey is buckling under the strain. Ankara claims that it is getting a raw deal and last year started imposing protective tariffs on a number of imports from the EU.
“European officials warn that these new duties undermine the whole point of an agreement designed to promote tariff-free trade.”
Turkish companies do not benefit from reciprocal tariff cuts when exporting to those countries because Ankara is not part of the relevant EU trade deals.
Turkey’s response – to use a clause within its customs agreement with the EU, Article 16, to impose tariffs on EU imports – has set alarm bells ringing in Brussels, which is concerned it has implications for future economic relations with Britain.
A European Commission official commented: “It is crucial to correctly apply the terms of the current Customs Union.”
Turkey is demanding Turkey the deal be modernised to address what it calls ”important asymmetries and deficiencies”.
The Turkish Mission to the EU said a “crucial” way to eliminate the “structural problems in the customs union” would be to permit Turkish authorities “effective participation in the EU decision-making mechanisms” on trade policy.
However, Brussels has so far resisted such calls.
Tiziana Beghin, an Italian 5Star Movement lawmaker and the European Parliament’s rapporteur for the EU-Turkey deal, said: “Trade negotiations cover sensitive information of EU manufacturing and services sectors which could be misused by Turkey.”
Ankara is also hoping Brexit could change the landscape, with Mr Ulgen describing the prospect of Britain joining a customs union with the EU as an “opportunity”.
He said: “The economic weight of the UK will make this question much more politically expedient to resolve.”
The UK benefits from access to the EU’s trade policy committee, making it privy to sensitive discussions on trade talks, and the expectation in Brussels is that London will push to retain this after Brexit.
Pinar Artiran, a chair of the World Trade Organisation, said: “If this is being offered to the United Kingdom, I think Turkey – and rightfully so – would ask for the same possibilities.”