From a European perspective Turkey is a large

Transcription

1 DOI: 1.17/s z From Europen perspective Turkey is lrge country, in regrd to both its re nd its popultion (cf. Tble1). Turkey s re exceeds tht of Frnce, the lrgest current EU member stte, by fr. With 72 m. inhbitnts Turkey hs only 1 m. inhbitnts less thn Germny nd round the sme number of inhbitnts more thn Frnce, Itly nd the United Kingdom. If Turkey becme member of the EU tody the re of the EU would increse by 2% nd its popultion by lmost 16% (cf. Tble 2 nd Figure 1). However, since Turkey s economy is much less productive thn tht of the EU even significntly less thn tht of the new member sttes its potentil contribution to the economic output of the EU is very smll. Turkey s GDP is only roughly equivlent to tht of Denmrk, Austri or the Germn stte of Lower Sxoni. In 25 the ccession of Turkey would hve incresed EU GDP by only 2.7%. Due to the low productivity of Turkey s economy the per cpit income of the country is lso very low (cf. Figure 2). In 25 Turkey s GDP per cpit mounted to only 17.2% of tht of the EU mesured t current prices nd 3.7% mesured in purchsing power prities (ppp). The Turkish economy hs been very dynmic in recent yers. Economic growth hs been significntly higher thn in the EU25, lthough not higher thn in the new member sttes in the period 2-25 (cf. Tble 3). Turkey s economic growth my lso exceed tht of the EU, nd especilly tht of the old member sttes, in the coming yers. Under the ssumption tht the observed growth differentil of the lst five yers will continue, Turkey s contribution to the output of the EU would be higher t the time of its ccession thn tody (3.2% in 215, cf. Tble 2 nd Figure 1). But not only economic growth hs been, nd my continue to be, comprtively high in Turkey: the popultion is lso growing t higher rte thn in the EU. Assuming tht the differences in economic nd popultion growth between Turkey nd the EU during the period 2- Konrd Lmmers* The EU nd Turkey Economic Effects of Turkey s Full Membership Since October 25 the EU nd Turkey hve been negotiting the ccession of Turkey to the EU. In June 26 they reched greement on the provisionl closure of the science nd reserch chpter, mtter which ws reltively esy to hndle. Thirty-four chpters remin to be negotited, indicting tht the pth to Turkey s full membership will be long one. Wht re the min economic chllenges fcing both Turkey nd the EU? 25 will continue (s reported in Tble 4), Turkey will still be very poor member stte t the moment of its possible ccession. According to these projections, in 215 Turkey s per cpit income will only rech round 2% of the EU27 verge (t mrket prices) or 33% (t ppp) (cf. Tble 2). Given the reltively minor economic importnce of Turkey compred to tht of the EU it might be concluded tht the effects of Turkey s ccession on the existing member sttes will be very limited. From this point of view, it is not esy to understnd the reservtions ginst Turkey s full membership which exist in severl member sttes. Aprt from rguments with culturl or religious bckground, it is the lrge number of inhbitnts in combintion with the low per cpit income in Turkey which seem to give cuse for concern nd discussion. In order to shed more light on the economic chllenges it hs to be considered, firstly, which chnges in the institutionl reltions between the EU nd Turkey will tke plce in the cse of Turkey s ccession nd, secondly, which economic effects could be the result of these chnges. In order to recognise the chllenges for Turkey nd the incumbent sttes it is ssumed in Tble 1 Bsic Economic Indictors for Turkey nd the EU (25) Turkey EU15 EU1 EU25 Bulgri nd Romni Popultion (in million) GDP (mrket prices; in billion ) GDP (in billion PPS) GDP per cpit (mrket prices, ) GDP per cpit (in PPS) New member sttes since 24. * Hed, Reserch Progrmme Integrtion Are Europe, Hmburg Institute of Interntionl Economics (HWWA), Germny. 282 Sources: Eurostt, Queen Tree (online dt bnk), 26; own clcultions.

2 Tble 2 Sttisticl Effects of Turkey s EU membership Are Increse (in %) In In 215 b EU25; b EU27. Sources: Eurostt, Queen Tree (online dt bnk), 26; own clcultions. Popultion GDP (current prices) GDP (PPS) GDP per cpit in Turkey (EU=1) current prices PPS Tble 3 Economic nd Popultion Growth 2 to 25 (nnul verge growth rte in %) Turkey EU15 EU1 EU25 BG+RO GDP growth (mrket prices) GDP growth (PPS) Popultion growth New member sttes since 24. Sources: Eurostt, Queen Tree (online dt bnk), 26; own clcultions. the following tht Turkey will become full member nd will be integrted into the EU s it exists tody. Constitutionl Principles of the EU to be Adopted In order to become full member the cceding country in principle hs to ccept the cquis communutire. It contins ll the regultions which hve been implemented in the EU from its beginning. With regrd to economic ctivities it ims to ensure equl conditions for ll economic gents cross the entire EU. In order to ssess the economic effects of Turkey s ccession the following issues seem to be the most importnt. Customs Union: Full membership implies tht the ccession country will become member of the EU customs union. Any existing triffs between the EU nd the ccessing country hve to be bolished. Furthermore, the externl triff of the EU hs to be pplied to imports by the new member from third countries. Finlly, the new member country hs to trnsfer competence in trde issues with third countries to the EU. Between the EU nd Turkey customs union hs been in existence since With the exception of griculturl goods, which re subject of the common Figure 1 Sttisticl Effects of Turkey s EU Membership (increse in % of EU) Are Popultion GDP (current prices) GDP (PPS) 25, EU , ssumed membership of Bulgri nd Romni Sources: Eurostt, Queen Tree (online dt bnk), 26; own clcultions. griculturl policy, ll customs duties nd quntittive restrictions for industril products nd processed griculturl goods hve been bolished. Moreover, Turkey hs dopted the common externl triff nd the Community s commercil policy towrds third countries. Thus, in the cse of Turkey s EU membership no mjor institutionl chnges in regrd to trde issues re to be nticipted, t lest not s fr s mnufctured goods re concerned. 1 Internl Mrket: Full membership mens tht the internl mrket would be extended to the cceding country. The four principl freedoms, which re constitutive for the EU, would come into force between the incumbent sttes nd the new member country. These principl freedoms consist of the free movement of goods, services, cpitl nd people. Internl mrket rules should ensure tht trde flows of goods nd services s well s cross-border movements of cpitl nd lbour re not impeded nd tht firms nd citizens will be ble to settle in ny country in the EU re. 1 D. G r o s : Economic Aspects of Turkey s Quest for EU Membership, CEPS Policy Brief No. 69, Brussels, April 25; A. A dm, T. Moutos: Turkish Delight for Some, Cold Turkey for Others?: The Effect of the EU-Turkey Customs Union, CESifo Working Pper No. 155, Munich 25. Figure 2 GDP per cpit in Turkey nd in the EU, Turkey EU15 EU1 EU25 Bulgri in mrket prices, in PPS nd Romni New member sttes since 24. Sources: Eurostt, Queen Tree (online dt bnk), 26; own clcultions. 283

3 As fr s the free movement of mnufctured goods is concerned, pplying the internl mrket rules constitutes comprtively little chnge. Due to the existing customs union between Turkey nd the EU, trde in mnufctured goods is lredy liberlised to lrge extent. Certinly, through the doption of EU norms nd stndrds by Turkey nd the bolishing of still existing impediments to trde, especilly in services, the conditions for growing exports nd imports between Turkey nd the EU will be further improved. But this effect will presumbly be smll. Moreover, the doption of EU norms nd stndrds will cuse costs for Turkish enterprises, thus hmpering their competitiveness t lest in the short run. As fr s the free movement of cpitl is concerned, no generl rule hs impeded flows cross the borders between Turkey nd EU in recent yers. Nevertheless, the potentil for foreign direct investment from EU countries seemed to be underused. Thus, through the extension of the internl mrket to Turkey more legl certinty for investors from EU countries will be creted. This will lso improve the conditions for n intensified division of lbour between the EU nd Turkey with positive effects on welfre nd income within the integrting re. 284 Tble 4 Turkey nd the EU in Projections Popultion (in million) GDP (mrket prices); in billion GDP (in billion PPS) GDP per cpit (mrket prices, ) GDP per cpit (in PPS) Turkey EU15 EU1 b Bulgri nd Romni EU Bsed on trends in 2-25; b New member sttes since 24. Source: Eurostt, Queen Tree (online dt bnk), 26; own clcultions. One very importnt chnge cused by the extension of the internl mrket to Turkey will be the free movement of people. Until now migrtion between the member sttes nd Turkey is strictly regulted. Abolishing ll impediments to cross-border movements of people will men substntil chnge for both Turkey nd the member sttes. However, it is not very probble tht the free movement of people will be grnted to Turkey t the moment of its ccession. In the cse of the Est Europen sttes which joined the EU in 24, the old member sttes hve been llowed to restrict immigrtion from these countries for up to seven yers. It seems very probble tht EU membership of Turkey would include similr regultions for certin period. If the free movement of people between Turkey nd the incumbent sttes were generlly excluded, constitutionl principle of the internl mrket would be violted. In this cse Turkey would not be grnted full membership. EU Budget: The new member country would be included in the EU budget system. On the one hnd, it hs to contribute to the budget. Under the rule of the forthcoming budget period (27-213) every member stte hs to py 1.4% of its GDP. On the other hnd, the cceding country would receive finncil resources from the budget. The mjor EU expenditures re ermrked for griculture nd for regions with low per cpit income. Under these conditions those countries benefit most from the EU budget which re comprtively poor nd hve lrge griculturl sector. Under the current nd forthcoming rules under which the member sttes re involved in the EU budget, Turkey s full membership would cuse substntil finncil cross-border flows between the integrting res. Due to its low per cpit income nd its huge popultion Turkey will presumbly become the lrgest net beneficiry, both in bsolute terms nd in reltion to its GDP. Tking the mount of ssistnce other poor member sttes hve received within the frmework of regionl policy s benchmrk, Turkey could expect trnsfers for regionl policy issues which could rech 4% of its GDP. Furthermore, extending the common griculturl policy to Turkey will chnge the economic conditions for frmers in tht country substntilly. As fr s the incumbent sttes re concerned, especilly those countries will hve to ccept deteriortion in their net trnsfer position which will become sttisticlly richer simply becuse n even poorer country joins the EU. Decision mking: The new member stte hs to be included in the institutions which re relevnt for mking decisions within the EU, nmely the Europen Council nd the Europen Prliment. The existing rules regrding the number of sets (Europen Prliment) nd votes (Europen Council) per country, nd concerning the voting procedure for reching decisions, re lid down in the Trety of Nice. The Trety estblishing Constitution for Europe includes new decision-mking rules. After the negtive votes in Frnce nd the Netherlnds ginst the Trety in 25 it is very uncertin whether nd when these rules will be modified.

4 Assuming the rules of the Trety of Nice re vlid t the moment of Turkey s ccession, the country would hve to receive the sme number of votes in the Europen Council s Germny, the United Kingdom, Frnce nd Itly. If modifiction of the decision-mking rules in line with those lid down in the Trety estblishing Constitution for Europe hs been decided upon in the mentime, Turkey s politicl influence would be even greter becuse the rules in the Trety estblishing Constitution for Europe reflect the number of inhbitnts of the member sttes more thn the Trety of Nice does. Turkey presumbly with more or less the sme number of inhbitnts in 215 s Germny would get more votes thn Frnce, Itly nd the United Kingdom. Of course, prediction regrding the consequences of Turkey s membership for this issue is rther specultive. But in ny cse it cn be tken s certin tht the politicl influence of Turkey s full membership on the EU would be considerble nd would exceed its economic importnce by fr. Europen Monetry Union (EMU): Full EU membership includes membership in the EMU. It is true tht the old member Sttes Denmrk, Sweden nd the United Kingdom do not tke prt in it, but for the new member sttes opting out is not llowed. In ny cse, it is probble tht Turkey would hve to go through vrious stges comprble to those which the present members of the euro zone hd to go through before they becme members of the EMU. The new member sttes which joined the EU in 24 lso hve to follow this pth. Thus, EU membership for Turkey will not utomticlly include EMU membership t the moment of ccession, but Turkey will presumbly be committed to undertke ll mesures to fulfil the criteri which re necessry for joining EMU. Effects of Turkey s Full Membership The presumble institutionl chnges in economic reltions between the integrting res cused by Turkey s full membership re mnifold. In order to ssess the impct of these chnges on the Turkish economy s well s on the economies of the incumbent sttes in quntittive terms the following effects would hve to be tken into ccount: sttic gins from trde nd the dynmic effects of trde integrtion sttic nd dynmic gins of integrtion through cpitl flows sttic nd dynmic gins through migrtion costs of structurl chnge, especilly on the lbour mrkets Author Tble 5 Net Trnsfers for Turkey in the Cse of Full Membership Common Cohesion Agriculturl policy Policy Turkish Net Other policietion to EU contribu- trnsfer to Turkey budget billion Dervis et l Oskm et l Quisser/ Wood in p.c. of EU GDP Dervis et l referring to 24 in 24 prices. 2 referring to 215 in 215 prices in 24 prices. 4 in 215. Sources: K. Dervis, M. Emerson, D. Gros, S. Ülgen: The Europen Trnsformtion of Modern Turkey, Brussels: CEPS, 24; W. Quisser nd S. Wood: EU Member Turkey? Preconditions, Consequences nd Integrtion Alterntives. forost Arbeitsppier No. 25, Munich, 24; A. O skm, N. Longworth, I. M. Vilchez: Consequences for the EU-27 of Enlrgement to Turkey. In: A.Burrell, A. Oskm (eds.): Turkey in the Europen Union, Oxfordshire nd Cmbridge, MA, 25, pp ; own grouping nd ddendum. effects of the trnsfer of resources by EU policies, especilly with regrd to the common griculturl policy nd regionl policy, in fvour of regions with low per cpit income. In recent yers number of studies hve been undertken in order to shed light on these effects. But to the knowledge of the uthor no study exists considering ll the effects together within one consistent frmework. Most of the studies focus on specil issue. In prticulr, the migrtion issue nd the trnsfer of finncil resources cused by EU policies hve often been considered. As fr s the trnsfer of finncil resources is concerned, Tble 5 presents the results of severl studies. Although the studies differ in regrd to the yers under considertion nd the pplied estimtion method, the results show rther consistent picture. Turkey would receive considerble trnsfers within the frmework of the common griculturl policy nd, especilly, of regionl policy. In contrst to tht, the contributions which Turkey would hve to mke to the EU Budget re comprtively smll. As result, under current rules nd regultions Turkey s full membership would led to net trnsfers in the rnge of 14 to 25 billion from the incumbent sttes to Turkey (in 215 in 24 prices). As per- 285

5 Figure 3 Net Trnsfers of EU Member Countries nd Turkey (24) Greece Spin Irelnd Portugl Turkey totl (billion euro) Greece Spin Irelnd Portugl Turkey per cpit (euro) for the EU member countries: ctul trnsfers; for Turkey: trnsfers s clculted by Dervis et l. (24). Sources: Europäische Kommission: Bericht über die Aufteilung der EU-Ausgben 24 nch Mitgleidsstten, September 25, Sttistischer Anhng; Keml D ervis, Michel E merson, Dniel G r o s, Sinn Ü lgen: The Europen Trnsformtion of Modern Turkey, Brussels 24, p. 71; own clcultions. centge of the EU GDP the net trnsfer could mount to up to.2%. 2 These figures my be not very illustrtive in regrd to the consequences for the EU. More informtion cn be drwn from comprisons of Turkey s hypotheticl net trnsfers position with those of other net beneficiries. Such comprison revels tht Turkey, ssuming the country hd lredy been full member of the EU in 24, would hve received much greter volume of trnsfers thn the four old cohesion countries. However, in per cpit terms Turkey would hve received less thn Greece, Irelnd nd Portugl (cf. Figure 3). Of course, ny clcultion nd estimtion of the trnsfers involved in Turkey s EU membership is bsed on ssumptions which re uncertin. It could be rgued tht, especilly, the growth rtes ssumed for Turkey nd the EU up to the yer 215 re rther uncertin. Another rgument could be tht the policy regultions nd budget rules in force in 215 will be other thn those of tody. Indeed, it is rther probble tht these regultions nd rules will be modified. But ssuming n unchnged frmework indictes exctly the chllenges the incumbent sttes hve to fce in the cse of Turkey s full membership. As fr s migrtion is concerned Tble 6 presents the results of vrious studies. Due to the different methods of estimtion, the different time periods considered nd the different scenrios ssumed, especilly concerning the speed of closing the income gp between Turkey nd the EU, the rnge of the reported figures 2 Keml D ervis, Michel E merson, Dniel G r o s, Sinn Ü lgen: The Europen Trnsformtion of Modern Turkey, Brussels 24, p. 71. The uthors regrd the results of their clcultions s n upper ceiling. 286 is rther lrge. Considering ll the reported figures together, totl number of 2 to 3 million persons seems to be the verge. The expected flow of immigrnts from Turkey is more or less in line with the number of Tble 6 EU Immigrtion from Turkey fter Turkey s Accession Authors/ Source Number of dditionl immigrnts per yer (thousnds) Totl number of dditionl immigrnts (thousnds) Additionl immigrnts in per cent of popultion in the EU-15/Germny in 23 totl EU re Lejour/De Mooij/Cpel b 27.7 Hughes Erzn/Kuzubvs/Yildis e.1-.4 Germny only Lejour/De Mooij/Cpel b 225 b 2.5 Quisser/ Reppegther c c Flm d 13 f 1.6 own clcultions. b 15 yers fter ccession. c potentil number of immigrnts from 213, depending on speed of convergence in per cpit income. d within 3 yers, depending on speed of convergence in per cpit income. e f from 2 to 23. Sources: A. M. Lejour, R. A. de Mooij, C. H. Cpel: Assessing the economic implictions of Turkish ccession to the EU, CPB document No. 56, The Hgue; K. H ughes: Turkey nd the Europen Union: Just nother enlrgement? A Friends of Europe working pper on the occsion of the Turkey`s EU end-gme? conference Brussels, June 24; R. E rzn, U. Kuzubs, N. Yildiz: Growth nd Immigrtion Scenrios for Turkey nd the EU, Centre for Europen Policy Studies, EU-Turkey Working Ppers No. 13, Brussels, December 24; W. Q uisser, A. Reppegther: EU-Beitrittsreife der Türkei und Konsequenzen einer EU-Mitgliedschft, Osteurop-Institut München, Working Ppers No. 252, Munich, Jnury 24; H. F lm: Turkey nd the EU. Politics nd Economics of Accession, CESifo Economic Studies, Vol. 5,1/24, pp ; own grouping nd ddendum.

6 Tble 7 Mcroeconomic Effects of Turkey s Accession Increse in GDP (%) Summrised results from Lejour et l. Effects considered in Turkey in EU15 in EU1 internl mrket (trde effect due to bolishment of NTBs).8.. institutionl reforms in Turkey (which improve the competitive position of Turkey nd led to dditionl exports) migrtion from Turkey (ssumed: sme skill composition s in EU15) migrtion from Turkey (ssumed: ll migrnts re unskilled) considered effects together 4.2 b.7 b 4.6 c.5 c - Not reported. b Sme skill composition. c All migrnts re unskilled. Source: A. M. Lejour, R. A. de Mooij, C. H. Cpel: Assessing the economic implictions of Turkish ccession to the EU, CPB document No 56, The Hgue 24. the expected immigrnts from the eight Est Europen member sttes which joined the EU in My In reltion to the popultion of the EU figure of 2 to 3 million dditionl migrnts does not seem to be importnt; it is less thn one per cent of the popultion of the EU15. However, it is very probble tht the immigrnts will prefer to move to those member countries in which lrge Turkish communities lredy exist, such s Germny nd the Netherlnds. Thus it could be expected tht the dditionl Turkish immigrnts will be concentrted in these countries. Integrting these people into the lbour mrket could be fr more difficult thn in the cse of immigrnts from the estern Europen member countries becuse their qulifictions cn be expected to be on verge superior to those of the ltter. The implictions of Turkish membership with regrd to trnsfer nd migrtion issues hve received much ttention in both cdemic nd public discussions. However, most of the studies do not show the effects in welfre or mcroeconomic frmework. Moreover, the sttic nd dynmic effects which my occur s result of integrting the mrkets for goods, services nd cpitl hve drwn much less ttention. As fr s trde effects re concerned study by Togn comes to the conclusion tht full membership will led to n increse of 1.5% in the Turkish GDP. 4 More comprehensive is study by Lejour et l. which covers trde 3 For the results of vrious studies cf. K. L mmers: How Will the Enlrgement Affect the Old Members of the Europen Union?, in: IN- TERECONOMICS, Vol. 39, No. 3, pp , Tble 5. 4 S. Togn: Towrd EU Accession, in: The World Economy, Vol. 27, No. 7, pp The uthor does not provide estimted GDP effects for the EU re. effects s result of the implementtion of the internl mrket, growth effects due to institutionl reforms in Turkey, nd the effects of migrtion. According to this study derived from grvity equtions for trde nd n pplied generl equilibrium model the ccession of Turkey would led to n increse of 4.2 to 4.6% in the GDP of tht country (cf. Tble 7). The incumbent sttes (EU15) could lso expect positive effect, lthough very smll one (.5 to.7% of their GDP). The most powerful effect in Turkey consists in reforming the ntionl institutions in response to EU membership, wheres the trde effect is comprtively smll. The model simultions show tht migrtion reduces GDP in Turkey nd increses tht of the old member sttes, ll the more so since the skill level of migrnts is high. It is noteworthy tht ccording to this study the migrtion effect is not only positive for the old member sttes but it is lso the most importnt effect for them. All in ll, the study confirms the expecttion of economists tht both prtners re winners in the integrtion process between them from mcroeconomic perspective. However, it should be noticed tht the nlysis does not consider the effects of trnsfers. The inclusion of this effect would surely enforce the positive impct in Turkey, wheres it would reduce the positive impct in the EU. It cnnot be precluded tht the overll impct including trnsfers would be negtive for some member countries, especilly for those losing their highly fvourble trnsfer position in the cse of Turkey s ccession. Furthermore, it hs to be noted tht the mcroeconomic perspective does not consider the djustment costs of structurl chnge necessry to relise the positive effects. It presumes for instnce tht the Turkish migrnts will be integrted into the production process of the countries which they fvour. As result, the lbour mrkets of the respective countries will come under pressure, clling for more flexibility in order to bsorb the dditionl workforce. Generlly, migrnts from Turkey will put dditionl pressure on workers wges nd jobs in the countries to which they move. Conclusions From purely mcroeconomic perspective Turkey s full membership could be n dvntge. This cn be tken s certin in the cse of Turkey. As fr s the incumbent sttes re concerned the dvntges or disdvntges in reltion to their GDP seem to be smll. They depend on the degree of the deteriortion which the sttes hve to fce in their trnsfer position. Although migrtion from Turkey into the current member sttes could led to positive production effects the costs necessry to relise them re regrded s high, t lest by some member countries. Thus, Turkey s 287

7 ccession is not problem for the EU economy s whole but it seems to be problem for some members. Furthermore, it is not the economic integrtion of two res itself which my crete negtive effects. Rther, it is the existing EU frmework of griculturl nd regionl policy estblishing certin pttern of fvoured member sttes. Of course, full EU membership of Turkey presumes nd implies high degree of structurl chnge in the privte sector s well s fundmentl institutionl reforms in tht country. The costs of the djustment processes will be high, but the economic benefits will be high too. Not only Turkey would hve to djust, however; the EU nd the member sttes would lso hve to implement chnges in order to be ble to integrte such lrge, poor country. The EU hs to reform its common griculturl policy s well s its regionl policy. The recent decisions on the EU budget for the period do not include ny substntil chnge reducing the distribution conflicts which hve to be envisged in the cse of Turkey s membership. It is true tht it hs been greed tht in 28 or 29 fresh decisions cn be tken on ll revenues nd expenditures. But it is still to be seen whether the EU is willing to come to decisions which re more pproprite for Europen Union including Turkey. As fr s the single member sttes re concerned, they hve to show tht they re willing nd ble to liberlise their lbour mrkets nd to ber nd hndle the costs involved. If the EU nd the member sttes do not move in this direction, Turkey s full membership will become very improbble. This holds true independently of considertions with politicl, culturl nd religious bckground, which my be much more importnt thn those mde from n economic perspective. 288