Wed, Mar 18,
Insights
The EU-India FTA is unlikely to cause an immediate and destructive loss of market share for Turkiye, according to the Ankara Chamber of Industry.
Rather, it may lead to a gradual rise in competitive pressure, it noted.
The German Institute for International and Security Affairs also said that Ankara sees growing economic risks in the EU's FTAs with third countries, most recently India.
The European Union (EU)-India Free Trade Agreement (FTA) is unlikely to cause an immediate and destructive loss of market share for Turkiye, according to the Ankara Chamber of Industry (ASO). Rather, it may lead to a gradual rise in competitive pressure, it noted.
A research report by ASO says the EU now imports goods worth $115 billion from Turkiye and $81.8 billion from India. The agreement could enable India to boost its export performance in certain sectors, potentially weakening Turkiye’s strong position as a supplier to the EU market.
The report observed that the EU’s Carbon Border Adjustment Mechanism (CBAM) could actually provide Turkiye with a competitive edge, particularly in the steel industry.
If Turkiye accelerates its green transition and maintains this advantage, the cost burden imposed on India by CBAM could offset, or even neutralise, the tariff benefits India secures through the FTA, it noted.
Meanwhile, the German Institute for International and Security Affairs (SWP) also said that Ankara sees growing economic risks in the EU’s FTAs with third countries, most recently India.
From Turkey’s perspective, the agreement could also weaken its significance in the EU’s strategic calculus, SWP observed. Ankara is therefore making a strong case for the modernisation of the Customs Union.
“It cannot be ruled out that the structural asymmetries of the customs union will become even more entrenched to Turkey’s detriment: Market integration without political participation may place Turkey at a lasting disadvantage and strain its relations with the EU. Once the free trade agreement enters into force, Indian products will gain easier access to the Turkish market, whereas Turkish products will not gain corresponding access to India,” Yasar Aydin, researcher at SWP’s Centre for Applied Turkey Studies, wrote.
“Whereas the free trade agreement is seen as both an economic and a geopolitical gain in Germany and other EU countries, scepticism predominates in Turkey. From a Turkish perspective, the agreement is a warning sign: Europe’s economic and political geography is being reshaped, while Turkey—as a member of the Customs Union with the EU—risks having to comply with rules over which it has had no say,” he noted.
The EU-India FTA provides for the reduction of 90 per cent of customs duties.
Among experts and decision makers in Turkey, the FTA is widely perceived as a clear distortion of competition. The reason is that Indian industrial goods will in future be able to enter the EU internal market, and thus also the Turkish market, duty-free or at low tariff rates, while Turkish exporters will not have comparable access to the Indian market, Aydin added.