On Turkey's trade policy: is a customs union with Europe enough?

Abstract

Turkey has decided to harmonize its tarification structure with that of the European Union. For the country's authorities, this move to a Customs Union is only meant to be the first step toward integration in the European Union. There are signs, however, that political opposition to the government's procompetitive stance may be strong enough to block any further move toward fuller trade liberalization. We show, using applied intertemporal GE analysis, that to be welfare improving, the trade reform would have to be pursued further and nontariff barriers on European trade removed. Failure to do so could be more detrimental to domestic welfare than no reform at all. (C) 1997 Elsevier Science B.V.