The European Union and the Third World
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Previous Figure Next Figure. Automotive regulation: Turkey accepts that free movement of its automotive goods in the EU is conditional on its application of EU law harmonising automotive standards and type approval. Discriminatory taxation: Turkey agrees to comply with provisions on discriminatory taxation to ensure the free movement of goods. Trade defence legislation: Turkey agrees to consult and coordinate on provisions on trade defence legislation to ensure the free movement of goods.
Identical customs legislation. However, all movement of goods between Turkey and the EU still require customs declarations in order to distinguish between goods that are in scope and those that are not. Turkey must consult the Customs Union Joint Committee when drawing up its own legislation with relevance to the functioning of the EU-Turkey customs union.
The agreement is controversial in Turkey, but was agreed to as the Turks at that time believed the EU was going to accept it as a member state. By the same token, the Turkish arrangement should not be a model for Britain — we are leaving, not joining! Further, whenever the EU enters into a new trade agreement, Turkey must grant market access e. Turkey has FTAs with 19 countries.
To note:. Turkey runs an independent trade remedies system on goods destined for Turkey. For products destined for the EU and covered by the EU-Turkey customs union , this system relies on additional administrative checks either at first entry into Turkey to distinguish between goods destined for Turkey and the EU, or during the customs checks between Turkey and the EU.
I believe there are at least two cases where the third party has simply refused to do a deal with Turkey — Algeria and South Africa — even after they have concluded an EU trade agreement.
This is a big potential problem for the UK. We would be in a worse position than Turkey, both because our EU customs union would doubtless cover all goods and because the UK would probably have more difficult asks than Turkey. In short, when it comes to new trade agreements, tariff and other market access decisions made by the EU would have to be implemented by the UK. We would have no guarantee that the same privilege would be afforded to us.
Should it seek a customs union arrangement with the EU, the UK would, of course be in a different position to Turkey, both politically and economically. Nevertheless, some implications from the EU-Turkey customs union can be identified. These include the following. Trade defences like anti-dumping would be run by the EU with the UK having no say. Punitive tariffs have been placed on goods from China, the EU, Canada and more, particularly in steel and, probably soon, cars.
Currently in the UK, because all trade policy is an EU competence, all decisions relating to trade defences against unfair trade practices are taken in Brussels. There are more than a hundred such measures in place across the EU, notably in sectors like steel and ceramics. It is worth noting that these punitive tariffs are placed on specific products from specific countries, rather than sectors — e. The full list of current EU trade remedies is available here.
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To be WTO-compliant, trade remedies have to follow an investigation into dumping, subsidy, or some other unfair trading practice. This may become a UK competence in just a few weeks. The TRA is based in Reading and is expanding quickly to fill a need, actual or potential. It consulted last year on the roll over of existing EU trade remedies, and found — from the evidence provided by businesses and others — that 66 of these measures should no longer apply after we leave the EU.
However, if the UK set up a customs union with the EU, these trade remedies would be highly likely administered by Brussels. It is not clear what right they would have to raise punitive tariffs beyond the shores of the EU. It may even be that the EU would drag its feet over punitive measures on Chinese dumping of steel if the particular product were made only in the UK.
Either way, it is very hard to see the EU giving UK industries or consumers as fair a crack of the whip as those in the EU. Moreover, here again a democratic deficit kicks in. Trade remedies would be determined in Brussels, without any UK say. This could cost jobs, and those employees currently lobbying their UK MPs or MEPs I know — the steel and ceramics lobbies in Westminster are strong, and rightly so would have nowhere to go, if we were in an EU customs union.
The decision would be made in Brussels, and the UK would have no say. It is hard to see why any MPs representing steel and ceramic producing constituencies in particular, would favour such a customs union.
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It would be unsustainable for both economic and political reasons in the medium term. Trade Preferences for the developing world would be decided in Brussels, with no UK input, with a catastrophic impact on UK influence.
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Asymmetric trade preferences are given by developed countries to goods from developing countries, to benefit exporters from poorer countries. Under the WTO agreements, countries cannot normally discriminate between their trading partners. Grant someone a special favour such as a lower customs duty rate for one of their products and you have to do the same for all other WTO members.
This principle is known as most-favoured-nation MFN treatment. Exceptions allow for preferential treatment of developing countries, regional free trade areas and customs unions. Haiti, most African countries, Bangladesh, Burma. The EU carries out an assessment of each country on a regular basis and this can be very controversial. In the case of Sri Lanka and Pakistan, focus will be on their human rights and labour laws. Many of the more protectionist EU countries dislike some of the schemes, fearing for example Sri Lankan or Pakistani clothes competing with their own garment industries.
These schemes have also faced some criticism in this country, from two angles. First, some EU critics see them as driving production in the developing world towards raw material production and against finished products. Second, some development activists think they should be more generous still. Khanna emphasizes that within the same country there can be a coexistence of first and second; second and third; or first and third world characteristics.