The impact of the customs union on the EU – Turkey trade.

This study aims to empirically analyze the impact of the EU - Turkey Customs Union (CU) on bilateral trade flows through the gravity model, using two extensive datasets at the aggregate and disaggregate levels. Findings do not suggest any statistically significant impact on bilateral trade during the examined period. However, approximately in the first ten years of the CU, there was a positive impact, but it disappeared later on. In addition, results support the endogeneity of the CU decision. At the sectoral level, agriculture and fuel trade indicate a unidirectional increase. Still, trade in manufactured goods, which is the CU's main scope, does not suggest any significant change. At the disaggregated level for 69 product groups, few manufactures indicate a positive impact, mostly in favor of EU exports. Inspecting heterogeneous effects by countries and products implies some trends based on distance, membership years, and technological sophistication levels. [ABSTRACT FROM AUTHOR]