Static Effects of the EU-Turkey Customs Union
Journal of International Trade and Diplomacy, Turkey Undersecretariat of the Prime Ministry for Foreign Trade, Autumn 2006, Volume 1, pp. 117-138
Eighth Meeting of the European Trade Study Group, September 7- 9, 2006, Vienna, Austria
17 Pages Posted: 16 Feb 2013
Date Written: September 1, 2006
Studies on the economic effects of Turkey- EU Customs Union increased considerably in the last years, as a result of the deepening of the relations between the two parties. This is mainly due to the opening of the accession negotiations between Turkey and the European Union in October 1995. The first part of this study focuses on the evaluation of Turkey’s trade figures. This study aims to investigate Turkey’s import demand function using an econometric panel data application.
First the analysis was made for Turkey’s general import demand function. A good reason for that is the removal of European Community’s tariffs on its imports from Turkey in 1971 while Turkey waited the entering into force of the Customs Union in 1996 for abolishing the trade barriers to the EU. Our findings show that Turkey’s import demand is income elastic and price inelastic. The analysis was repeated for the main import sectors and empirical findings indicate that Customs Union Agreement has trade creation effects among some sectors and trade diversion effects among some others, while no effects at all could be calculated for the remaining.
Keywords: Customs Union, Static Effects, Panel Data Modelling
JEL Classification: F14, F15
Suggested Citation: Suggested Citation