Transcript Slides
Does Turkey meet the Copenhagen criteria? 1963: Association Agreement 1970: Additional Protocol 1980: Freeze 1995: Customs Union 1997: Rejection 1999: Acceptance 2004: Green light 2006: Partial suspension 1. Economic criteria 2. Political criteria 3. Other criteria 1. Functioning market economy 2. Capacity to compete 3. Economic and Monetary Union 4. Acquis Communautaire 1.1. Economic Policy Essentials 1.2. Macroeconomic stability 1.3. Free Interplay of Market Forces 1.4. Free Market Entry and Exit 1.5. Adequate Legal System 1.6. Sufficiently Developed Financial Sector GDP per capita in PPS (EU-25=100): 27.6 Human Development Index: 0.75 (EU: 0.94 ~ 0.79) Income inequality: 40 (EU: 24.6 ~ 38.5) Global competitiveness: 59 (EU: 2 ~ 72) -2 -4 -6 -8 -10 2005 2003 2001 1999 1997 1995 1993 1991 1989 1987 1985 1983 1981 1979 1977 1975 1973 1971 Economic growth: 12 10 8 6 4 2 0 19 83 19 85 19 87 19 89 19 91 19 93 19 95 19 97 19 99 20 01 20 03 20 05 Inflation 120% 100% 80% 60% 40% 20% 0% Turkey EU-15 Unemployment: Participation rate: 51.5 % (EU-25: 70.6) Employment rate: 45.5 % (EU-25: 62.9) Employment rate women: 25.2 % (EU-25: 55.1) Balance of Payments Current account (million dollar): -8,036 (2003) -15,604 (2004) -23,155 (2005) Privatization (65% of value added; 80% of employment) Price liberalization (share of administered prices in the CPI is 10% of total weight) Liberalization of entry and exit of firms (progress yet restrictions on foreign ownership) Imposition of hard budget constraints on both public and private enterprises Liberal trade regime (Customs Union; WTO) Privatization (slowed down) Enterprise restructuring (high concentration ratios; large holdings) Small and medium-size enterprises (27% of value added; 75% of employment) - “A well-functioning and stable public administration built on an efficient and impartial civil service, and an independent and efficient legal system” : Time lag is long Not familiar with (intellectual) property rights Bias against foreign investors Turkey 3.11 (85) Belgium 2.11 (22) Estonia 1.75 (7) Finland 1.85 (12) France 2.51 (44) Germany 1.96 (19) Bank reform is the cornerstone of the IMF aid program The Turkish Central Bank was accorded a status of independence State and private banks were put under the supervision of an independent institution Increased foreign participation In recent years Turkey has concentrated its efforts on privatization while not enough attention has been paid on creating fair competition in domestic markets. Turkey’s domestic industrial structure is too much concentrated, with large family-run companies dominating the scene. Turkey should stimulate private entrepreneurs to set up new companies. In order to attract new investors, both foreign and domestic, more legal transparency is required. Turkey’ financial sector is on the road of deregulation, yet requires sufficient attention from the government. 2.1. Positive physical infrastructure related factors 2.2. Sufficient investment in physical capital 2.3. Sufficient investment in human capital 2.4. Structural transformation of the economy 2.5. State Influence on competitiveness and enterprise restructuring 2.6. Growing trade integration of goods and services with the EU Share of households with internet access: 7 (EU-25: 42) Mobile phone subscriptions per 100 inhabitants: 40 (EU-25: 81) Number of hospital beds (per 100,000 inhabitants): 262.1 (EU-25: 639.1) Environmental expenditures by public sector in % of GDP: 0.22 (EU-25: 0.58) Gross capital formation as percentage of GDP: 17.8 (EU-15: 20.4) FDI intensity: 0.4 (1997) 0.5 (2000) 0.6 (2004); EU-15: 1.1 (1997) 3.5 (2000) 1.0 (2004) Total expenditure on education as % of GDP: 3.74 (EU-15: 5.20) % of adult population with tertiary education: 2.7 (EU-15: 3.1) % of tertiary graduates in science and technology per 1000 of population aged 2029: 5.6 (EU-25: 12.7) Sectoral distribution of value added in Turkey: Agriculture: 16%; Industry: 24%; Services: 60% EU: Agriculture: 2%; Industry:27%; Services: 71% Voice and accountability: Political stability/No violence: Government effectiveness: Regulatory quality: Rule of law: Control of corruption: -0.04 -0.54 +0.27 +0.18 +0.07 +0.08 Trade integration of goods: 16.9 (1995); 26.2 (2004); 55% (variation); EU-15: 7.9; (1995);10.5 (2004); 33% (variation) As far as specialization is concerned, we can see a tendency of upgrading, although the bulk of Turkey’s trade with the EU consists of traditional and low-technology product groups and is still disadvantaged in terms of quality. The average Specialization index increased from 0.48 (1995) to 0.51 (2005) After 1995 Turkey has maintained it comparative advantage in food products and beverages, other non-metallic mineral products, textiles and wearing apparel. Moreover it has developed a comparative advantage in new sectors: fabricated metal products, rubber and plastic products, communication equipment and furniture, jewels and other products. Trade integration with respect to services: Turkey: 5.8 (1995); 7.4 (2000); 5.5 (2004); EU15: 2.5 (1995); 3.6 (2000); 3.6 (2004) Outsourcing and in-sourcing of services: +1068 (1993); +4420 (2000); –104 (2005) Turkey should invest more in human capital. Compared to other developing countries, Turkey has only attracted a very limited number of foreign investors. Turkey is on the right track as regards the structural transformation of its economy. Industry and services become more important to the detriment of agriculture. Trade integration of goods between Turkey and the EU is strong. Both the Intra-industry Specialization and the Revealed Comparative Advantages Indexes prove that Turkish firms will be able to compete with European firms in the large internal market. Trade integration of services is weaker. From a net outsourcer of services Turkey turned into a net insourcer. Inflation rate (%): 9.85 (norm: 2.9) Budget deficit (% of GDP): -1.2 (norm: -3) Government debt (% of GDP): 69.6 (norm: 60) Interest rates, 10-year bonds: 28.5 (norm: 6.2) Exchange rate against parity: 16.3 (norm: 15) 4.1. The free movement of goods 4.2. The right of establishment + freedom to provide services 4.3. Competition policy and state aid 4.4. Freedom of movement for workers 4.5. Agriculture 4.6. Regional policy 4.7. Budgetary provisions 4.8. Foreign, security and defense policy 4.9. Justice, freedom and security 4.10. Education and culture. Turkish trade integration with the EU has remained stable Still problems remain with respect to antidumping procedures and technical and administrative barriers to trade Although the principle of free trade in services is mentioned in the Ankara agreement and subsequently in the Additional Protocol signed with Turkey it was left out of the Customs Union on EU insistence Whereas in the field of competition legislation in the view of the Commission, Turkey has made significant process, in the field of state aid, Turkey has still a long way to go In Turkey high markups go together with a highly concentrated industrial sector. Turkey realized that only as a Member State its workers might gain free access to the German labour market. Member States remain extremely reluctant The existing mechanisms for importing labor to supply European business work well enough. Contrasts between Turkey and the EU are significant EU: moved from a production support scheme to income support system and structural policies (Single Payment Scheme + Cross compliance) Land consolidation poses serious problems In contrast to the EU, Turkey does not have a structural policy The agricultural sector is left out of the Customs Union with Turkey Turkey would need considerable time to make a number of agricultural sectors more competitive in order to avoid substantial income losses for its farmers. There is a pronounced east-west divide in Turkey with the main centers of economic activity located in the western part of Turkey The inclusion of Turkey would seriously increase the socio-economic disparities across the EU Annual Budget Appropriations for Turkey (billion Euros): Hoekman et al: 7.756 Oskam et al: 10 to 26 Dervis et al: 15 Hughes: 13.630 Griffiths: 6.400 to 8.120 Turkey prioritizes regional and bilateral relations. Delegation of sovereignty to supranational EU organs and substate authorities inside the country is anathema to the Kemalist state elite According to the Commission Turkey aligns itself with significantly fewer EU declarations than other acceding and associated countries Turkey’s accession can help to secure better energy supply routes for the EU Turkey dreads the idea of the EU playing a role in matters of defense if it is not included in the EU Security Policy itself Member states have to apply the Schengen acquis in full before accession Turkey has about 2500 km of land borders and 8000 km of coastal borders and a large informal sector: it is a hub for illegal migrants The EU is expecting Turkey to adopt a series of measures to enhance the protection of its borders, thereby disregarding particularities of the Turkish case Implementing these measures would represent a major shift in Turkey’s immigration policy EU opponents of Turkey’s membership argue that Turkey is not of Europe: it does not share Europe’s Judeo-Christian heritage and rationalist tradition, seen as the roots on which European identity is founded The three most widespread fears in Turkey with respect to the EU are: abandoning language, end of national currency and loss of national identity and culture In Turkey the consensus on EU membership is much weaker than it was in East- and Central Europe and nationalist voices are much louder The EU wants Turkey to adopt the complete Acquis Communautaire before its accession Progress has been made in the fields related to the Customs Union There are at least three sensitive areas: free movement of workers, CAP and Regional Policy Turkey’s integration in the EU Common Foreign and Security Policy and in the EU Home Affairs and Justice Policy will be difficult because of conflicting visions. Public opinion in Turkey has not yet been sufficiently prepared for EU membership. 1. Democracy and the rule of law 2. Respect for human rights and the protection of minorities. Parliament: progress Government: progress Public Administration: progress Civil-Military Relations: no progress Judicial System: progress Anti-corruption measures: limited progress Observance of international law: progress Torture and Ill-treatment: progress Freedom of Expression: limited progress Freedom of Assembly: progress Freedom of Association: progress Freedom of Religion: no progress Women’s Rights: progress Children’s Rights: progress Trade Union’s Rights: progress Minority Rights: no progress Cultural Rights: no progress Protection of Minorities: no progress Turkey’s unequivocal commitment to good neighborly relations with Greece and Armenia Progress in the normalization of bilateral relations between Turkey and Cyprus. The fulfillment of Turkey’s obligations under the Association Agreement and its Additional Protocol extending the Association Agreement to all new EU Member States Enlargement should strengthen the process of continuous creation and integration in which the Union and its Member States are engaged. One should observe either small unions that centralize many prerogatives, or large unions in which few prerogatives are delegated above the national governments. By absorbing continuously new Member States who were not in favor of political integration the EU implicitly decided to abandon the federal model. Negotiations should focus on the economic Copenhagen criteria and on what is essential in the enlargement process: international trade, common market and business relations and in second order environment and monetary matters.