Introduction

Relations between Turkey and the European Union are meant to progress on the basis of the association regime arising out of the Ankara Agreement. The said Agreement envisages that the association between Turkey and the European Community, whose final objective is membership, develop over three stages. These are the preparatory, transitional and final stages. Moreover, Article 28 of the Agreement states that “as soon as the operation of this Agreement has advanced far enough to justify envisaging full acceptance by Turkey of the obligations arising out of the Treaty establishing the Community, the Contracting Parties shall examine the possibility of the accession of Turkey to the Community.”

Relations between Turkey and the European Community in the transitional stage have been governed by the Additional Protocol, alongside the Ankara Agreement. In the transitional stage, the Additional Protocol provided for the progressive establishment of a Customs Union covering industrial products, the achievement of free movement of labour between the parties, a gradually expanding preferential trade regime for agricultural products, approximation of legislation and policies in areas determined by the Additional Protocol, and the initiation, to the extent possible, of a process of liberalisation of trade in services. In this framework, Association Council Decision 1/95 of 6 March 1995 set out the modalities for the completion of a Customs Union covering industrial products. With the completion of this Customs Union on 31 December 1995, the final stage of the association has been reached.

Nevertheless, it is clear that the Customs Union cannot be viable on its own as long as full membership, which constitutes the final objective of the association, is not firmly secured. The main aim of the two parties must be to make the Customs Union fully operational so as to ensure that it fulfils its intended role of preparing Turkey for full membership of the Union. Otherwise, the association may lose all meaning and the parties may neglect their legal obligations. This would pave the way for a situation where political will would disappear and relations between the two parties would loosen in an undesirable manner.

Despite the fact that Turkey has been included in the EU’s enlargement process at the Luxembourg Summit, it was excluded from the accession strategy put together by the Union for the other candidates. While the Cardiff Summit has produced some positive developments, it has failed to eliminate the discrimination which had been created at the Luxembourg Summit vis-à-vis Turkey. In particular, the Cardiff Summit has been unable to adopt a clear accession strategy for Turkey endowed with material means similar to the ones provided for the other candidates. Drawing up such a strategy which would respond to Turkey’s own needs, would be consistent with the spirit of our Association Agreement because unlike the other candidates, Turkey is already linked to the EU through a deep-rooted association. The Association Council should therefore take the steps necessary for such an accession strategy to be devised in the framework of the Association, and make Article 28 of the Ankara Agreement fully operational.

The Cardiff Summit did ask the Commission to submit at the end of 1998 the first of its regular reports on Turkey’s progress towards accession. Clearly, the inclusion into the strategy of all the technical areas where progress is necessary to help Turkey prepare for membership is essential to make the reporting process meaningful. Accordingly, the present note includes proposals which relate to such areas.

As indicated above, and in keeping with Article 5 of the Ankara Agreement, the final stage of the Association has begun with the completion of the Customs Union on 31 December 1995. During this period, the preferential trade regime applicable to agricultural products should be extended so as to lead to free movement of these products -after Turkey has approximated its agricultural policy to that of the EU-, concrete steps should be taken to ensure the free movement of services, capital and persons, the progressive coordination of economic and social policies between Turkey and the EU should be ensured and complete harmonisation of external trade policies should be achieved. Considering that Association Council Decision 1/95 only deals with the completion and functioning of the Customs Union, the modalities for the free circulation of goods not presently covered by the Customs Union, persons, services and capital should be set out in separate Decisions to be adopted by the Association Council after appropriate negotiations have been held on each of these subjects.

While the Resolution adopted by the Association Council on 6 March 1995 draws up the general framework of areas where the Association can be developed in its final stage through such negotiations, the coverage of that Resolution is insufficient. Moreover, the Resolution itself remains to be implemented. Additionally, the “Community Declaration concerning financial cooperation” which was adopted by the EU Council on the same day and gave effect to the principle of “solidarity” with Turkey, has not been properly implemented either because of the negative attitude adopted by one member state and the European Parliament. Thus, effective fulfilment of the commitments contained in the Financial Cooperation Declaration should be ensured through the adoption by the Association Council of a binding Decision.

One of the bases for future work would be the document prepared by the EU Commission in response to a request made at the Luxembourg Council and issued on 3 March 1998 as “the Commission’s initial operational proposals” on “a European Strategy for Turkey”. However, the document does not go beyond the objective of free circulation of agricultural products and services which was set out in the Ankara Agreement for the final stage of the Association. Indeed, it does not even provide for measures which would permit the Association Council to function effectively or ensure substantial financial cooperation, despite the fact that these are essential for progress to be made in the direction of the objectives of the Association. It is a well-known fact that financial cooperation has not been operating smoothly since 1980 and that the Association’s only decision-making body, namely the Association Council which was expected to meet twice a year, has been prevented from meeting regularly and/or fulfilling its functions. Additionally, there still exists a need to put together an effective consultation mechanism which would permit Turkey to be fully informed of developments in areas which are directly related to the functioning of the Customs Union, as well as to ensure that its views are fully taken into consideration whenever decisions are taken or legislation is adopted which might have an effect on the Customs Union. In this context, the parties may give consideration to examining ways of giving effect to Article 25 of the Ankara Agreement which deals with settlement of disputes.

It must also be recognised that even if they were fully implemented, the proposals contained in the “Strategy Document” would still fall far short of the possibilities made available to the other candidates and be insufficient to integrate Turkey with the EU. These proposals must therefore be seen as a starting point rather than an end in themselves and must be complemented by other steps which should aim at abolishing all restrictions on the movement of goods, services and capital between the two parties.

The present note contains proposals which take into account those prepared by the Commission. Together, they constitute a package which should not be subjected to selective implementation but be applied in full, in order to serve the purpose of bringing Turkey closer to the Union and preparing it for accession.

1. Functioning of the Customs Union 

External trade and customs

• Participation in the work of technical Committees: In view of the requirement for Turkey to adopt the EU’s external trade and customs regime, Articles 59-60 of Association Council Decision 1/95 provide for its involvement in the work of the technical committees which assist the Commission in “the exercise of its executive powers in areas of direct relevance to the functioning of the Customs Union.” However, the deepening of the Customs Union requires that the number of such Committees be increased. In the first place, Turkey should be involved in the work of the Standards and Technical Regulations Committee, the Committees on Motor Vehicles and Agricultural and Forestry Tractors.

• Consultation mechanisms: Articles 53-56 of the Additional Protocol provide for tight cooperation through exchanges of views and consultations within the Association Council in areas covered by Article 113 of the Treaty of Rome, in order to ensure that the parties effectively coordinate the management of their external trade policies. The same articles permit the two parties to conclude with third countries agreements which do not have a direct effect on the Association. However, an effective consultation mechanism is envisaged even for such agreements.

• The above-mentioned provisions have not been implemented. The European Union has not informed Turkey of its accession agreements, nor of agreements having a trade dimension and the consultation envisaged in the Association Council has not taken place.

• The Strategy Document does not contain any proposal with respect to this question. Instead, the Commission offers political and technical support to Turkey in the negotiation of free-trade agreements envisaged in Article 16 of Decision 1/95. While Turkey welcomes this proposal, it considers that the scope of Articles 53-56 of the Additional Protocol cannot be reduced to this topic since this would fall far short of the economic integration objectives of our relationship.

• Balkans, Black Sea, Caucasus, Central Asia: Turkey and the EU should enter into exploratory talks with regard to adopting preferential commercial arrangements for those states in the Balkans, Black Sea region, Caucasus and Central Asia with which Turkey has historical and cultural ties.

• Integration into the pan-European system of origin cumulation: It is important that the process of integration continue as foreseen and that Turkey be included in the system on 1 January 1999.

• Support for Turkey’s participation in European transit arrangements: Turkey expects a specific timetable establishing a programme to ensure its rapid accession to the Common Transit and Single Administrative Document Conventions.

• Outward Processing of Textiles: Discussions at technical level should be held as soon as possible between Turkey and the Commission with a view to dealing with remaining problems in this area.

• Anti-dumping: As a result of the progress being made by Turkey in implementing relevant aspects of the “acquis communautaire” in the area of competition and state aids, and in keeping with Article 44 of Decision 1/95, the Association Council should review the application of trade defence instruments between the two parties and consider their elimination. Meanwhile, preferential procedures relating to exchanges of information between the parties on anti-dumping investigations should be adopted between the parties to reflect the unique nature of their relationship. An “Ad-Hoc Anti-Dumping Working Group” composed of Turkish and EU experts should be set up and entrusted with the task of finding to anti-dumping complaints, negotiated solutions consistent with the obligations arising out of our Association Agreements.

• TAIEX: Turkey should benefit from the services of TAIEX (Technical Assistance Information Exchange Office).

Harmonisation of legislation

• It is evident that the integration of Turkey with the European Union requires harmonisation of Turkey’s legislation and practices with those of the EU, in a large number of areas. That is why, since 1994 intensive and effective work has been carried out to harmonise legislation in areas particular relevant to the functioning of the Customs Union. This work progresses in parallel with activities aiming at aligning the Turkish legislative system and practices on the universal norms adopted in each of their field of competence by the World Trade Organisation, the OECD, the Council of Europe and even the United Nations. Therefore, harmonisation of legislation will facilitate the integration of Turkey into the globalised world order. For this reason, the Seventh Five-Year Development Plan sets out in detail and independently of Turkey’s association regime, the legal and institutional arrangements which will need to be adopted for this purpose. Nevertheless, the regrettable climate in which Turkey-EU relations find themselves as a result of the failure of the Luxembourg Summit to provide to Turkey the same treatment as to the other candidates, and the uncertainty which has thus arisen as to the future course of those relations, has inevitably slowed down the process of harmonisation of legislation. Therefore, improvements in those relations will facilitate that process.

• In addition to those general comments, the following points should be taken into consideration in order to ensure that activities relating to the harmonisation of legislation are conducted effectively:

Implementing the Consultation Mechanisms

• The basic documents instituting the Customs Union require that legislative changes proposed by each party in areas relevant to the functioning of the Customs Union be the subject of prior notification and consultation between them in order to ensure that each party’s point of view is taken into consideration before the proposed changes are made. Articles 54-58 of Decision 1/95 set out a procedure whereby Turkey is to be informed beforehand of proposed changes in EU legislation so that its interests are safeguarded and account is taken of any problems which the proposed changes may pose for it. However, it is a fact that those provisions have not been effectively implemented.

Intellectual and Industrial Property

• Consideration should be given to removing the provision on exhaustion of rights which is contained in Article 10:2 of Annex 8 to Decision 1/95, as this provision is deemed to be inconsistent with the principle of free movement of goods.

Technical legislation

• Turkey’s efforts to adopt the EU’s industrial legislation would be more productive if they were supported by technical and financial cooperation from the EU. As has been done for the CEECs, an action plan, equipped with a financial component, should be put together for Turkey, with a view to improving its access to the Single Market.

• Financial support from the EU will also be necessary to ensure that the structures to be established after adoption by Turkey of the EU’s technical legislation (automated information systems, testing laboratories, technical equipment) function smoothly.

• Preparations are underway to align Turkish legislation in this area with WTO and EU disciplines.

2. Agriculture

• Financial and technical support from the EU will be necessary to help Turkey adopt those elements of the Common Agricultural Policy which are necessary to ensure the free circulation of basic agricultural products between Turkey and the EU, which remains a long-standing objective of the Association. A regular dialogue at technical level should be held to identify those elements of the CAP whose adoption by Turkey will be necessary. Such a dialogue which already exists between the CEECs and the EU could be carried out through a specially established Joint Committee. It is equally important that, in accordance with Article 33 of the Additional Protocol, the EU inform Turkey of proposals from the Commission regarding developments in the Common Agricultural Policy and “of the opinions and decisions taken with regard to such proposals.”

• Turkey considers that a new round of negotiations on processed agricultural products should be initiated in the second half of 1998, to take account of the fact that the EU has raised its level of protection for basic agricultural products as a result of the Uruguay Round Agreement on Agriculture and that this has had the effect of increasing the level of the agricultural component in processed agricultural products and reducing the competitive edge of Turkish exports in the European market.

• Moreover, now that Turkey has concluded free-trade agreements with most CEECs and that Decision 1/98 of the Turkey-EC Association Council on agriculture has entered into force, steps should be taken to expedite the incorporation of agricultural trade between Turkey, the EU, EFTA countries and CEECs in the Pan-European System of Origin Cumulation.

• In view of increasing problems faced recently in the area of sanitation and hygiene, by trade in animal and fisheries products between the two parties, a veterinary agreement should be concluded rapidly between Turkey and the EU. Dialogue should also be initiated between the two parties with a view to dealing with problems of origin determination for agricultural, fisheries and animal products.

3. Freedom to Provide Services and Right of Establishment

• Freedom to provide services and the abolition of restrictions on establishment are long-standing objectives arising out of Articles 13-14 of the Ankara Agreement, and 41 of the Additional Protocol. The latter provision also entrusts the Association Council with the task of determining the timetable and rules for the progressive abolition of restrictions on the freedom of establishment and to provide services. With the completion of the Customs Union between Turkey and the EU, it has become all the more necessary for the two parties to adopt procedures giving effect to those provisions and ensuring a degree of integration between them which would permit liberalisation in trade in services.

• In this context, Turkey welcomes the guidelines contained in the EU Commission’s Communication of 15 July 1997 in relation to possible negotiations on services. As indicated during the first round of exploratory talks on services held in Ankara on 21 April 1998, Turkey is ready to enter with the EU into negotiations on that subject. Such negotiations can be initiated when the European Commission has obtained a mandate from the Council, or alternatively established that such a mandate is not necessary. The objective of such negotiations must be to attain a level of integration consistent with the Association regime in existence between Turkey and the EU.

• An initial step which could be taken in this area would be a technical study and negotiations on the mutual recognition of diplomas and certificates.

4. Liberalisation of Capital Movements and Coordination of Economic Policies

Macroeconomic dialogue should be initiated between the parties with a view to making Articles 49-52 of the Additional Protocol operational, and ensuring liberalisation in capital movements, the free circulation of financial services as well as improved coordination of economic policies.

5. Freedom of Movement for Workers

Despite the clear provisions ensuring freedom of movement of workers which are contained in the Association Agreement and Additional Protocol, Turkey is conscious of the employment situation in EU countries and is therefore ready to show flexibility on this matter. However, the Decisions adopted by the Association Council in 1980 on the rights of both parties’ citizens legally residing in the territory of the other, should be fully implemented. For this reason, Turkey-EU relations should be developed in the following areas:

• Turkish workers legally residing in EU countries should benefit from the rights which are granted to them under Association Council Decision 1/80. Additionally, and as provided for in the Resolution adopted by the Association Council on 6 March 1995, a regular dialogue on the situation of Turkish workers in regular employment in the Community and vice versa, should be set up between the two parties;

• As envisaged in Article 32 of Association Council Decision 3/80 on the coordination of social security rights, each party should take the necessary steps for the implementation of the Decision. In the case of the EU, this will require the adoption of a Regulation by the Council of Ministers;

• A cooperation mechanism should be set up between the parties in relation to measures enabling Turkish citizens legally resident in the EU and already possessing work permits, to enjoy the freedom to supply services. In this context, and as indicated in Article 14 of the Association Agreement, the conditions under which Turkish citizens possessing the required certificates and diplomas are to be allowed to supply services, should be regulated in detail.

Additionally, joint studies should be carried out to improve the legal status of Turkish citizens residing in the EU (reunification of families, right to vote in local elections, continued residence after retirement, expulsion), and vice versa.

6. Other Issues

Cooperation in industrial policies

As envisaged in the Resolution adopted by the Association Council on 6 March 1995, and in order to broaden industrial cooperation between Turkey and the EU, contacts between sectors and enterprises, and participation of Turkish firms in “Euro-partenariat” activities should be encouraged, and joint activities should be promoted between the enterprises of both parties particularly in the areas of vocational training and SME development. As indicated in the “Strategy Document”, the implementation of the Customs Union requires improvements in the competitiveness of Turkish industry, particularly SMEs. In this context, and as indicated in separate headings of this Note, measures should be taken for the participation of Turkey in Community programmes, harmonisation of industrial legislation and the establishment of quality control mechanisms. Additionally, the diversification of industry should be promoted through investment in new fields of activity and new branches of industry. Financial resources should be sought and entrepreneurs trained for that purpose.

Participation in EU financed programmes

Joint studies should be initiated between Turkey and the EU, with a view to providing for Turkey’s participation in EU Programmes administered by the Commission. In this context, the following programmes should receive priority:

• Education and vocational training programmes (SOCRATES, LEONARDO, YOUTH FOR EUROPE) which are already open to CEECs;

• Programmes such as PHILOXENIA on tourism, and/or ENVIREG, INTERREG and LEADER which promote the development of less-developed regions, amongst other things by increasing the contribution of tourism to them;

• The “Third Multi-Annual Programme” for SMEs which the Commission has put together for the period 1997-2000. Additionally, programmes administered by different services of the Commission and which relate to the consolidation of the Customs Union, the Information Society, Industrial Cooperation and Investment, Education etc.);

• Support for SMEs active in tourism which is a service-exporting sector; measures which will permit the Turkish tourism sector to benefit from EURO-INFOCENTRES, BC-NET, BRE, EUROPARTENARIAT, ENTREPRISE;

• Programmes in the area of energy: SAVE (improvement of energy efficiency), ALTENER (developing renewable energy resources), CARNOT (developing clean coal technologies and promoting their use), THERMIE (development and promotion of new and alternative energy sources);

• Environmental protection programmes, particularly those related to the preservation and management of ground and natural resources, including water; environmental control of products, industrial installations and biotechnology; LIFE (aid for environmental activities);

• Nuclear energy: nuclear safety programmes;

• Customs: Customs 2000 Programme;

• Culture: RAPHAEL (Action Programme on Cultural Heritage), KALEIDOSCOPE (Support for cultural activities having a European dimension), ARIANE (Support for contemporary literary translations), GUTENBERG (cooperation between libraries);

• Employment and Social Security: Programmes relating to trans-border exchanges of job-seekers, exchanges of information on employment conditions and trends in the jobs market;

• Press and Information: Programmes relating to the promotion of audio-visual services.

Cooperation in Justice and Home Affairs

• Measures should be taken to ease visa requirements, particularly for Turkish businessmen, transporters, academicians, students etc. travelling to EU countries.

• Effective measures should be taken to strengthen the legal structure against racism and xenophobia;

• Steps should be taken to equalise social security rights between Turkish and EU citizens;

• Contacts should be established at expert level to promote cooperation in the struggle against organised crime and the implementation of search and arrest warrants;

• Projects which provide for training and the supply of equipment for struggling against organised criminal activities such as drugs trafficking, money-laundering, terrorism and illegal migration, should be supported.

Consumer protection

One of the areas identified in the Association Council’s Resolution of 6 March 1995 as suitable for the intensification of cooperation between the parties, is consumer protection. Accordingly, cooperation should be “designed to ensure compatibility between consumer protection systems in Turkey and in the Community.” In the common interest of both parties, the cooperation which should be carried out in this area should aim at harmonising legislation and aligning consumer protection in Turkey on that of the Community. The “Strategy Document” also underlines the importance of consumer protection and provides for cooperation in this field.

Turkey also believes that a network for the exchange of information in this field, similar to the one existing in the EU, should be established and be connected to the EU’s own network. The required financial and technical resources should be made available for that purpose.

Science and Technology

The Resolution of 6 March 1995 recommends Turkey’s participation in the EU’s Framework Programmes for R&D. This matter has been taken up in the “Strategy Document” which additionally envisages participation in the “Fifth Framework Programme”. However, cooperation in science and technology between Turkey and the EU has been linked in that Document to the Euromed process rather than to the need to deepen the Customs Union and the Association. Bearing this point in mind, means of improving the conditions under which Turkey can benefit from these programmes (EU financial and technical support for administrative restructuring) should be sought.

Transport and Telecommunications

In the course of the Uruguay Round negotiations, Turkey has made a number of commitments which relate to transport and telecommunication services. Negotiations with the EU on liberalisation of trade in such services should go beyond what has been agreed with third countries in the framework of the WTO. Moreover, matters such as regular dialogue, participation of Turkey in the extension and improvement of transport links, the conclusion of agreements between the parties in fields such as transit and market access stemming from the implementation of the Common Transport Policy of the EU which had been envisaged in the Resolution of 6 March 1995 have not materialised. It is therefore necessary to go beyond general statements and draw up instead a concrete framework. Hence, possible negotiations between the parties on the liberalisation of trade in services may include transportation and telecommunications as priority sectors. In this framework, exploratory talks as foreseen in the “Strategy Document” can be initiated in the field of civil aviation. Additionally, technical assistance from the EU for the extension and improvement of transport links, including the railway network, would be welcomed by Turkey.

As indicated in the “Strategy Document”, Pan-European Transport Corridors IV and X extend to İstanbul and Turkey participates in the discussions which are carried out in that framework. Moreover, and as stated in the same Document, Turkey falls within the geographical scope of two of the Pan European Transport Areas -Black Sea and Mediterranean Basin- which were adopted at the Third Pan-European Conference of Transport Ministers held in Helsinki in June 1997. Its participation in activities designed to develop those corridors as well as in the TINA ( Transport Infrastructure Needs Assessment) and TRACECA (Transport Corridor Europe-Caucasus-Asia) projects is therefore natural.

Problems continue to arise on the granting of authorisations to the Turkish fleet engaged in the transportation of passengers and goods by road, on their way to EU countries or when transiting through them. In this context, annual quotas which are justified on the grounds of the protection of the environment or road networks and which remain insufficient in number are imposed by some EU countries on Turkish transporters in such a way as to damage the interests of Turkish road haulage operators. A more conciliatory approach to be adopted by the EU in such talks where limited progress has yet been made at the bilateral level with the countries concerned, would greatly promote cooperation in the field of transportation. Additionally, the high transit tolls levied by some countries unnecessarily raise the costs faced by Turkish companies and visa requirements lead to loss of time and impair the competitiveness of the Turkish inland road transport fleet. Positive steps which may be taken in those areas by the countries concerned would also help promote cooperation.

In the field of telecommunications, initiation of a dialogue between the EU and Turkey on regulatory matters, with a view to approximating Turkish legislation with that of the EU would be beneficial. Technical assistance from the EU in this framework would be welcome by Turkey.

Energy

As cooperation in this field must fit into the fundamentals of the European Energy Charter and also facilitate the harmonisation of Turkish legislation with that of the EU, sectoral exchanges of views between the parties should be intensified. On that account, technical and financial assistance by the EU to help Turkey reduce its energy intensity and combat polluting emissions from thermal power stations, would be of particular value. Cooperation in this framework may include feasibility studies and/or environmental impact assessment for the improvement of electrostatic precipitators and for the installation of flue gas desulphurisation (FGD) units.

Participation in Trans-European Networks

Turkey’s participation in the Trans-European Networks is envisaged in the Resolution of 6 March 1995, as well as in the “Strategy Document.” Dialogue should be initiated between the two parties with a view to making progress towards that objective.

Environment

On environmental matters, Turkey considers that effective cooperation with the EU can take place in the following areas:

• Drawing up a “National Environment Database” with the technical and financial support of the European Environment Agency;

• Preparing and supporting financially joint projects aiming at implementing policies and strategies on the environment;

• Financial and technical support to help Turkey prepare the “National Action Plan on Climate Change” as described in Article 8 of the Convention on Climate Change;

• Training and consultancy services on environmental matters relating to the South-Eastern Anatolia Project (GAP), particularly for spatial and environmental management, environmental impact assessment, development and monitoring of integrated projects, ecological protection etc.

• Turkey should also participate in the European Environment Agency, as envisaged in the Association Council’s Resolution of 6 March 1995.

• Turkey should also be integrated in the CORINE programme in order to harmonise methods of data collection and evaluation.

Cooperation on Education

• Turkey considers that the high tuition fees levied on Turkish students in some EU countries discriminate against them since EU students are expected to pay much lower fees. As these fees also act as a deterrent, they should be the object of discussions with the EU aiming at eliminating the discrimination from which Turkish students suffer in this area;

• Training facilities should be made available in increased numbers at the European Commission for Turkish civil servants;

• There should be support and training-consultancy services from the EU for socio-cultural projects in the GAP Region.

Institutional cooperation and political dialogue

Despite the fact that these instruments constitute important elements of a strategy to bring Turkey closer to the EU, in line with the Resolutions adopted by the Association Council in March and October 1995, few, if any of the suggestions contained in those Resolutions have been implemented so far because of the absence of political will on the part of the EU. Turkey therefore expects these Resolutions to be implemented fully as part of the “European Strategy” decided at the Luxembourg Summit.

7. Financial Cooperation

The Declaration on Financial Cooperation which was adopted by the EU Council of Ministers on 6 March 1995 had envisaged the resumption of financial cooperation between Turkey and the EU in parallel with the completion of the Customs Union, with a view to helping Turkey adapt its industrial sector to the new competitive situation created by the Customs Union, improve infrastructure linkages with the European Union, as well as to reduce the difference between the Turkish economy and that of the Community. Despite the fact that this Declaration has been entered into the Minutes of the Association Council held on that day and has thus acquired legal status, and the solidarity obligation which arises out of the Association relationship, the Declaration has not been implemented as envisaged.

According to the Declaration, financial cooperation between Turkey and the EU was to be composed of the following elements:

• substantial budgetary resources which would take the form of grants. The amount of this facility was expected to reach 375 MECUs over a five-year period starting in 1996;

• continued access to EIB loans available under the 1992-1996 new Mediterranean policy for the financing of infrastructure projects in the fields of environment, energy, transport and telecommunications, (expected amount 300-400 MECU);

• additional EIB loans over a five-year period starting in 1996, in order to improve the competitiveness of the Turkish economy following the completion of the Customs Union, (expected amount 750 MECU);

• grants amounting to 375 MECU and EIB loans worth 700 MECU as part of the MEDA programme during the period 1996-1999;

• in cases of special need, and in coordination with international financial institutions, macro-economic financial assistance linked to the execution of IMF-approved programmes, (expected amount 200 MECU).

However, for the reasons which are set out below, this package of 2,8 MMECU has largely failed to materialise.

About the only part of the package which has been implemented relates to the EIB loans provided in the framework of the EU’s Mediterranean policy. A total of 339.5 MECU was made available in the period 1992-1996 and projects worth around 100 MECU have been approved since then as part of the MEDA programme. Under the same programme, 5 projects having an EU participation worth 33 MECU have been approved in 1996 and 35 projects with an EU participation of 70.2 MECU, some submitted without the knowledge of the Turkish government, have been approved in 1997. This part of the MEDA programme has suffered interference from the European Parliament which has, in a Resolution adopted on 19 September 1996, tried to impose on its implementation conditions that are inconsistent with the objectives of the programme and have been rejected by Turkey for that reason.

No progress has been made in relation to any of the other elements of the financial cooperation package. Moreover, no disbursement has occurred for any of the projects approved in 1996 or 1997.

The European Union appears unwilling to find a solution to this problem in the near future. In addition to the political difficulties which have arisen in this area, administrative problems have also been encountered which can be ascribed to the limited human resources made available to the relevant services of the Commission. As a result, the Commission has found it difficult to process the projects submitted to it by the Turkish authorities. This has moved it to changing the guidelines followed in the selection of projects, and in particular to ask for the submission of a small number of projects, having each a relatively large volume, this being the exact opposite of the position taken by the Commission originally.

Nevertheless, despite the political and administrative obstacles faced in the implementation of the MEDA programme, the Commission still apparently aims at financing in Turkey projects worth about 270 MECU in the years 1998 and 1999. Even if the obstacles faced by financial cooperation are overcome, the amounts envisaged still fall far below what is needed to fulfil the objectives of the Community Declaration adopted on 6 March 1995, namely help Turkish industry adapt to the competitive environment which has arisen out of the completion of the Customs Union, improve infrastructure linkages with the European Union and reduce the difference between the Turkish economy and that of the Union.

It follows from the above that a new financial cooperation programme is necessary for the implementation of the proposals contained in the “Strategy Document” since those proposals envisage deepening the Association between Turkey and the EU beyond the stage of the Customs Union, whereas the package envisaged in the Declaration of 6 March 1995 was only designed to help the Turkish economy face the challenge of the Customs Union. In view of the experience gained in the implementation of that package, a more binding mechanism should be negotiated in order to avoid repeating the same unhappy experience. The new programme should ensure that Turkey’s efforts to harmonise its legislation with that of the EU and pursue the adjustments necessary for integration with the EU are supported without interruption and in particular that adequate credit facilities are provided for improving infrastructure and the private sector’s competitiveness.

Conclusion

The proposals contained in the present Note can, if implemented, help deepen and strengthen relations between Turkey and the EU and progress towards the final objective of the Association, namely full membership of the EU for Turkey as foreseen in Article 28 of the Ankara Agreement. However, in order for that goal to be reached, it is essential that specific steps be taken in the following two important areas.

The first is naturally financial cooperation which must be implemented fully and without interruption in such a way as to help Turkey assume the obligations of full membership. This is essential to ensure that the principle of solidarity which underpins our Association is fully respected. It is up to the EU itself to find ways of overcoming the obstacles which are due to EU institutions or member states and are inconsistent with the principle of solidarity. It should be remembered in this context that the trade deficit between Turkey and the EU has considerably increased in the EU’s favour since the completion of the Customs Union and that the expected inflow of capital has largely failed to materialise.

The second area relates to decision-making where effective mechanisms are essential to ensure the smooth functioning of the Association and in particular the Customs Union. While the Association Council has been established as the only decision-making body of our Association, and alternative mechanisms cannot be devised, it is also a fact that a remedy needs to be found to the situation which arises out of the failure of the Council to accomplish the tasks which have been entrusted to it by our Agreements. As these tasks, as well as financial cooperation, are legal obligations which arise out of these Agreements, it is incumbent on the parties to ensure that they are accomplished as intended. In the case of the Union, it should give consideration to ensuring the application of Article 5 of the Treaty Establishing the European Community.

Positive steps taken in relation to the two important areas mentioned above, as well as support from the EU to the efforts made by Turkey to adapt itself to EU legislation and practices, would greatly help Turkey reach the objective of accession in the foreseeable future.