1. Groupe d'Economie Mondiale http://gem.sciences-po.fr New challenging issues : Strategies for the EC-Turkey Customs Union Patrick A. Messerlin Groupe d’Economie Mondiale (GEM) Yeditepe University & Economic Development Foundation Istanbul 14-15 May 2010

2. Groupe d'Economie Mondiale http://gem.sciences-po.fr Overview  Assessing the situation: the global environment.  Assessing the situation: the TC-Turkey Customs Union (ECTCU).  Options for strategies (for the next 5 years).

3. Groupe d'Economie Mondiale http://gem.sciences-po.fr Global environment (1/3)  Trade: back on track.  Trade regime: resilient WTO, but uncertainty on the Doha Round.  Macroeconomic situations: worrisome in the EC.  Global governance: diminishing vs. emerging giant syndromes.  Domestic governance: “tyranny of tiny majorities”

4. Global environment (2/3) Groupe d'Economie Mondiale http://gem.sciences-po.fr

5. Global environment (3/3) Groupe d'Economie Mondiale http://gem.sciences-po.fr

6. ECTCU environment: the EC (1/2)  The EC needs a “drastic review” of the following assumptions: The bigger, the better. Internal Market and the acquis communautaire. The euro as “the” discipline, regulatory reforms. Institutional structure. Time to value our neighbors.

7. Groupe d'Economie Mondiale http://gem.sciences-po.fr ECTCU environment: the EC (2/2)  Does the acquis delivers?

8. Groupe d'Economie Mondiale http://gem.sciences-po.fr ECTCU Environment: Turkey  The functioning of the ECTCU  The “Global Europe” strategy and Turkey  Turkey and the core emerging economies

9. Groupe d'Economie Mondiale http://gem.sciences-po.fr Options for strategies: the EC  Would the EC be an active partner vis-à- vis Turkey? Doubtful. Need for a “drastic review”. Deep shocks from the financial crisis. Crisis concentrated on Mediterranean EC Member States. Volatile Ukraine, Georgia, Armenia = > no Ostpolitk. Focus on Balkans: small but very difficult.

10. Groupe d'Economie Mondiale http://gem.sciences-po.fr Options for strategies: Turkey (1/2)  Are stricter international rules the solution? Doubtful at time of tectonic shifts in international relations.  The “best EC Member State” policy Industrial goods:  Turkish trade policy (tariffs, AD)  Bilaterals: expand in Balkans; “consolidate” the other existing bilaterals in one FTA; develop the maximum tariff approach with ECOTA.

11. Options for strategies: Turkey (2/2) Farm and food products (FTA option)  Farm products.  Food products and fisheries. Services: “mutual evaluation” (Services Directive)  Use the acquis for reviewing its own laws: take the pro-competitive provisions, screen between norm-setting provisions (cost- benefit analysis).  A plurilateral approach?  An approach beneficial for the EC itself. Groupe d'Economie Mondiale http://gem.sciences-po.fr

12. Thank You for Your Attention