EXPECTATIONS IN CUSTOMS AND FOREIGN TRADE...

Remzi AKÇİN
UGM Chairman of the Board of Directors 

EXPECTATIONS IN CUSTOMS AND FOREIGN TRADE...

The biggest expectation in customs and foreign trade is European Union (EU) membership. The Customs Union (CU) Agreement, the last stage in this process that Turkey started in 1963, was implemented in 1996, but many problems and developments have emerged since then. Implementing the CU in its current form, which will end with EU membership, is difficult. On December 15, 2021, the EU Council decided to "keep the accession negotiations frozen," thus freezing the already stalled negotiations. 

The concept of Globalization or globalism, which lies at the core of the 'world is a small village' narrative, signifies the integration of nations not only in economic but also in social, cultural, and political spheres. This concept holds significant implications for EU-Türkiye relations and the future of customs and foreign trade. 

GLOBALIZATION 

At the turn of the millennium, there was a strong wind of globalization, especially in the economic sense, and this wind lasted for 20 years. After the 9/11 events in 2011, the US's focus on foreign trade only from a security perspective, ignoring the protective effect of tariffs, and China's accession to the World Trade Organization (WTO) combined to cause a steady increase in US-China foreign trade to the detriment of the US. At the beginning of the process, US companies made sweet profits by using China's cheap labor and manufacturing capabilities to sell their products directly to the world without bringing them to their own country. At the same time, China began to rival the US by transforming its manufacturing strength and technological experience into brands. Donald Trump, the "mercantile President," could not stand by and started the collapse of globalism. Naturally, this behavior was not in line with the rules of the WTO, but the WTO was powerless against the revolt of the quarterback. 

Then came the Arab Spring, which destroyed Iraq, Libya, and Syria. The migrant crisis erupted, especially when Syria became an arena for countries to flex their muscles. When Afghanistan was added to the mix, nationalism gained strength in countries that did not want to let migrants into their countries.

During this process, the Covid-19 pandemic lasted for three years, and international trade virtually ceased to function. The "every man for himself mentality" dealt another blow to globalism.

As if all this was not enough, the Ukraine-Russia War broke out before the pandemic ended. The world faces supply problems, especially in terms of grain and energy. The sanctions have been relentless. The world was divided into two.

OPENING TÜRKİYE'S RIFT WITH THE WESTERN WORLD

In this process, Türkiye's rift with the Western world widened. Relations with both the US and the EU deteriorated due to US policy in the Middle East, the F-16 embargo, the European Union's (EU) refusal to update the Customs Union (CU), and the EU Council's decision on December 15, 2021, to "keep membership negotiations with Türkye frozen." 

This process weakened the inflow of foreign investment into the country, leading to a decline in foreign exchange inflows. Actual foreign exchange interventions increased due to the implementation of an electoral economy. Hopes were pinned on the post-election period for the general economy and foreign trade, and the election result began to be seen as a milestone.

ECONOMIC PROSPECTS

External factors such as the pandemic, war, and migration and internal factors stemming from the election process, which was turned into a matter of life and death, deeply affected the Turkish economy. Not only that, structural problems emerged as a result of de facto interventions in the balance that should have been created by the economy's own structure.

The solution to a problem is first to accept the problem and then to seek a rational solution. We have a proverb that says, "Starting is half the battle." The important thing is to acknowledge the existence of a problem and seek solutions. From this point of view, when we scrutinize the first statements of Mehmet Şimşek, who was appointed as the Minister of Treasury and Finance, even these two titles show that the problem has been identified:

"- Türkiye has no choice but to return to a rational basis. A rule-based, predictable Turkish economy will be the key to achieving the prosperity we long for.

- Transparency, consistency, predictability, and compliance with international norms will be our fundamental principles in the period ahead."

Türkiye made its choice in 1980 with the January 24th Decision. It has to pursue policies that integrate with the world and comply with international norms. Time will tell how far we can achieve this.

TÜRKİYE'S E.U. MEMBERSHIP...

The biggest expectation (perhaps one should dream) in customs and foreign trade is EU membership. Türkiye started this process in 1963 and reached the final stage by starting the Customs Union in 1996; however, on December 15, 2021, the EU Council decided to “keep the accession negotiations frozen,” thus freezing the already stalled negotiations. Naturally, the first and most important expectation is that the talks will resume and conclude and that Türkiye will become an EU member. Developments to date suggest that this will not happen.

The Customs Union Agreement, the last stage on the road to membership, was implemented in 1996, but many problems and developments have emerged since then. The Customs Union, which will end with EU membership, is difficult to implement in its current form. To solve this, efforts have been made to update the CU since 2014. However, more progress still needs to be made. One of the expectations from the new period is to update the CU.

DRAFT CUSTOMS LAW

The Customs Law dated 19.11.2019 and numbered 4458, which is in force today, was prepared in line with the European Union Customs Code. The EU revised the Community Customs Code in 2008, which was reflected in the Customs Law in 2009. In 2013, the EU introduced the Community Customs Code, which is based on the principle of conducting all customs procedures in a paperless environment. However, an extension of time was granted for the preparation of the electronic infrastructure of the member states required for the implementation of some simplifications. The preparation of a draft Customs Code in line with this code started in 2016, and the draft was finalized in 2019; however, it failed to reach the agenda of the Turkish Grand National Assembly. One of the expectations is the enactment of the Customs Code.

EU CUSTOMS REFORM...

The most comprehensive and ambitious proposal for changes to the EU Customs Union since its establishment in 1968 was announced by the EU Commission on May 17, 2023 under the title “EU Customs Reform”. It was announced that the reform package was prepared to respond to the problems of EU customs, such as the increasing volume of trade, especially e-commerce, the increase in the number of EU standards requiring controls at the border (such as forced labor, deforestation and carbon regulation mechanism at the border), changing geopolitical realities and increasing pressures in times of crisis. Within the scope of the reform package, which is prepared with an understanding that focuses on digital transformation, it is envisaged to reduce burdensome customs procedures and to bring a data-driven and smarter approach to import control.

In Türkiye, in order to prevent an increase in the foreign trade deficit and to reduce the demand for foreign currency, practices that impose more financial burden than WTO norms based on physical inspection have increased in recent years. In parallel with the EU reform, it is expected that data-based import procedures will be expanded and burdensome customs procedures will be reduced.