Liberalizing Trade in Agriculture between Türkiye and the European Union: A Multi-Regional Computerized General Equilibrium Analysis

Abstract

Since its 1996 inception, the EU-Turkey Customs Union (CU) has notably excluded agriculture, with attempts to include it stalled by political issues. Recent diplomatic progress has sparked renewed hope for negotiations for an upgrade, focusing on agricultural trade liberalization. Employing a Multi-Regional Turkish Computerized General Equilibrium model, this study investigates the effects of such liberalization on Turkey’s diverse regions, examining scenarios with moderate (50%) and extensive (90%) reductions in tariffs and non-tariff barriers. Our findings reveal stark regional disparities in outcomes: while the Mediterranean and Aegean could gain from enhanced market access, regions like Central and East Anatolia may face stiff competition. Urban areas, especially Istanbul and Izmir, are likely to benefit from reduced consumer prices, bolstering the affordability of agricultural products post-COVID-19. Despite potential challenges, no region is expected to incur welfare losses, with certain areas, such as Southeast Anatolia, even seeing considerable welfare gains. The study highlights the necessity of strategic policies, including aligning with EU standards and improving competitiveness, to fully capitalize on the benefits of CU expansion and ensure equitable development across Turkey’s regions.

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