This paper shall investigate the trade integration between Turkey and the EU. The plan of the
book is as follows. At first the historical background of the development concerning the trade
relations between the two parties is conveyed. This includes the period from first association
to implementing a customs union (CU) between Turkey and the European Union (EU) and to deeper
integration abolishing barriers of trade until today. Subsequently an evaluation of the
influence of the customs union follows in chapter 3 which constitutes the main part of the
paper. Hereby the analysis is divided into the short-term static and long-term dynamic effects
of the CU with the EU that Turkey entered on 1st January 1996. To analyze the static effects
this paper adopts Viner's traditional approach by comparing the trade creation effects with
the trade diversion effects resulting from the removal of trade restrictions for Turkey and the
EU as a whole. Thus the predominant economical theory applied in this paper is the
neoclassical customs union theory. This theory was chosen because it still is the predominant
and widely recognized theory in analyzing trade data providing a variety of tools. Within the
neoclassical theory Ricardo as well as Heckscher-Ohlin play an important role as a tool of
analysis. In the relevant passages in the text the most important theoretical principles will
be explained with the help of the Turkish example. At the limits of the neoclassical theories
the new trade theory is supposed to help out especially where the assumptions of the
neoclassical theory limit further analysis. It is the purpose of this paper to analyze the
question how the trade liberalization in form of the CU between Turkey and the EU influences
the development of Turkish welfare specialization in different sectors economies of scale
competitiveness technological transfer and direct foreign investment. In some parts of the
paper the analysis also refers to some effects for the EU but main emphasis shall clearly be
laid upon the effects on the Turkish economy.
