Path Dependence, Institutional (Non-)Change and Politicisation: The EU-Turkey Customs Union and the Evolution of German-Turkish Trade Ties

Abstract

How can one account for flourishing trade relations between Turkey and Germany despite multiple political crises? Adopting a historical institutionalist approach, combined with the politicisation literature, I make a twofold argument. First, the 1995 EU-Turkey Customs Union (CU) constitutes a critical juncture with important long-term consequences for bilateral trade and the integration of Turkish industry to European and global value chains. The CU has enforced the modernisation of administrative and regulatory structures of the Turkish industrial sector, which serve as a default stabiliser in maintaining relations between Germany and Turkey through turbulent political times. Second, the politicisation of Germany-Turkey relations, due to the dense EU-Turkey regime complex and the prominent role that the ‘Turkey question’ now plays in EU politics, has prevented the modernisation of the CU. The fact that this non-change has occurred despite strong support by German and Turkish business circles demonstrates the salience of politicisation, and the subordinate role economic ties play in boosting Turkey’s EU vocation.