Turkey - Internal market

Candidate countries conduct negotiations with the European Union (EU) in order to prepare themselves for accession. The accession negotiations cover the adoption and implementation of European legislation (acquis) and, more specifically, the priorities identified jointly by the Commission and the candidate countries in the analytical assessment (or ‘screening’) of the EU’s political and legislative acquis. Each year, the Commission reviews the progress made by candidates and evaluates the efforts required before their accession. This monitoring is the subject of annual reports presented to the Council and the European Parliament.

ACT

Commission Report [COM(2011) 666 final – SEC(2011) 1201 – Not published in the Official Journal].

SUMMARY

The 2011 Report notes limited progress concerning the free movement of goods, although alignment of the legislation with the acquis has progressed well. With regard to the freedom of movement for workers, no progress is noted, although the area of public procurement shows limited progress. In the area of company law, satisfactory advancements can be identified, specifically the adoption of a new Commercial Code. The application of legislation on intellectual property remains weak.

EUROPEAN UNION ACQUIS (according to the Commission’s words)

The principle of the free movement of goods implies that products must be traded freely from one part of the Union to another. In a number of sectors, this general principle is complemented by a harmonised regulatory framework, following the "old approach" (imposing precise product specifications) or the "new approach" (imposing general product requirements). The harmonised European product legislation, which has to be transposed, represents the largest part of the acquis under this chapter. In addition, sufficient administrative capacity to notify the restrictions to trade and to apply horizontal and procedural measures in areas such as standardisation, certification, accreditation, metrology and market surveillance is essential.

The acquis in respect of the free movement of workers states that citizens of an EU Member State have the right to work in another Member State. EU migrant workers must be treated in the same manner as national workers with regard to working conditions, social benefits and tax allowances. The acquis also provides a mechanism for coordinating national social security provisions for those tax contributors and their families who move to another Member State.

Member States are required to remove all restrictions with regard to the free movement of services. Member States must ensure that the right of establishment and the freedom to provide services anywhere in the EU is not hampered by national legislation. In some sectors, the acquis prescribes harmonised rules which must be respected if the internal market is to function; this concerns mainly the financial sector (banking, insurance, investment services and securities markets). Financial institutions may carry out their activities throughout the European Union according to the principle of ‘home country control’ by opening branches or by providing cross-border services. The acquis also provides harmonised rules for some specific professions (craftsmen, traders, farmers, commercial agents), for certain information society services, and matters relating to personal data protection.

Member States must remove all restrictions on the free movement of capital between themselves, within the European Union, but also with third countries (with some exceptions) and adopt EU rules applicable to cross-border payments and to credit transfers concerning transferable securities. The money laundering and financing of terrorism directives require banks and other economic operators to identify their clients and be aware of certain operations, particularly in the case of cash transactions for high-value items. In order to tackle financial crime, it is essential that administrative and enforcement capacities are put in place, particularly by establishing cooperation between those authorities responsible for surveillance, implementing law and carrying out criminal proceedings.

The acquis on public procurement covers the general principles of transparency, equal treatment, free competition and non-discrimination. In addition, specific Community rules apply to the coordination and granting of public works, supplies and services contracts for traditional contracting entities and specific sectors. The acquis also defines the rules relating to the court procedures and means of action available. Its implementation requires specialised bodies.

The acquis relating to intellectual property rights defines the harmonised rules for the legal protection of copyright and related rights. Specific provisions are applicable to the protection of databases, data processing programmes, topographies of semi-conductors, satellite broadcasting and cable retransmission. In the field of intellectual property rights, the acquis details harmonised rules for the legal protection of trademarks and designs. Other specific provisions apply to biotechnological inventions and to pharmaceutical and phytopharmaceutical products. The acquis also establishes a Community trademark system and a Community design system.

The acquis on company law includes rules applicable to the constitution, registration, merger and division of companies. In the field of financial information, the acquis specifies the rules to be complied with regarding the presentation of consolidated annual accounts and provides simplified rules for small and medium-sized enterprises, in particular. The application of international accounting standards is obligatory for certain entities of public interest. Furthermore, the acquis also includes provisions relating to the approval, professional integrity and independence of persons responsible for legal controls.

The Customs union acquis consists almost exclusively of legislation which is directly binding on the Member States. It includes the Community's Customs Code and its implementing provisions; the Combined Nomenclature, Common Customs Tariff and provisions on tariff classification, customs duty relief, duty suspensions and certain tariff quotas; and other provisions such as those on customs control of counterfeit and pirated goods, drugs precursors and the export of cultural goods and on mutual administrative assistance in customs matters and transit. Member States must also have the required implementing capacities, particularly connectivity with the EU’s computerised customs systems. Customs authorities must also have sufficient capacity for implementation and compliance with the specific provisions established in related fields of the acquis, such as foreign trade.

EVALUATION (according to the Commission’s words)

As regards free movement of goods, legislative alignment is advanced, but limited progress was made in the reporting period. Technical barriers to trade continue to prevent free movement of goods in breach of Turkey's obligations under the Customs Union.

Hardly any progress can be reported in the area of freedom of movement for workers where preparations for applying the acquis remain in the early stages.

Alignment in the areas of right of establishment and freedom to provide services also remains at an early stage. No progress has been recorded in the field of right of establishment, freedom to provide cross border services, postal services and the mutual recognition of professional qualifications.

As regards the free movement of capital, Turkey made some progress, in particular on capital movements and payments. There has been no progress in the gradual liberalisation of real estate acquisition by foreigners, where various obstacles remain. Restrictions on capital movements remain in place in a number of sectors, including on direct investments originating from the EU. The legal framework against financing of terrorism remains incomplete and the Financial Action Task Force has blacklisted Turkey for its strategic deficiencies in this area.

Limited progress can be reported in the area of public procurement . The institutional set-up is in place, but administrative capacity needs improvement. The draft alignment strategy with a time-bound action plan is ready but has yet to be adopted. Turkey still maintains derogations contradicting the acquis. It needs to further align its legislation, particularly on utilities, concessions and public-private partnerships.

As regards company law, significant progress can be noted following adoption of the new Turkish Commercial Code, which is expected to promote openness, transparency and adherence to international accounting and auditing standards. The legal and institutional framework for auditing is not yet in place, nor is the necessary enhanced capacity of the commercial judiciary.

Alignment on intellectual property law is relatively advanced but enforcement remains poor. The recently launched IPR Working Group with the Commission addresses a key element for the accession negotiations. The adoption of updated draft laws regulating intellectual and industrial property rights, including deterrent criminal sanctions, is still pending. Coordination and cooperation between the different IPR stakeholders and public bodies is essential, as are general awareness campaigns on the risks of IPR infringements.

Turkey has achieved a high level of alignment in the field of customs legislation thanks to its Customs Union with the EU. Duty free status of the shops established at entry points and requirements for importers of products in free circulation in the EU to submit information of origin in any format prior to customs clearance is not in line with the Customs Union. Legislation on free zones, surveillance and tariff quotas are yet to be aligned. Improved risk-based controls and simplified procedures would facilitate egitimate trade by reducing the number of physical controls. There is still no effective enforcement of intellectual property rights at customs and measures to tackle counterfeit goods are still acking.

RELATED ACTS

Commission Report [COM(2010) 660 final – SEC(2010) 1327 – Not published in the Official Journal]. The 2010 Report noted improvements to the free circulation of capital between Turkey and the European Union (EU). However, little progress has been made in ensuring the free movement of goods, the free movement of workers, the right of establishment and the freedom to provide cross-border services. There were still obstacles to certain direct foreign investment, particularly in the area of property.

Commission Report [COM(2009) 533 final – SEC(2009) 1334 – Not published in the Official Journal].

Commission Report [COM(2008) 674 final - SEC (2008) 1436 - Not published in the Official Journal].

The 2008 Report noted progress in the free movement of goods, particularly with regard to legislation on products and horizontal measures. Alignment was at an early stage concerning the free movement of workers and freedom to provide services, whilst there was uneven progress on the free circulation of capital.

Commission Report [COM(2007) 663 final - SEC (2007) 1436 - Not published in the Official Journal].

In its 2007 Report, the Commission highlighted progress in the area of free circulation of goods and capital. Progress remained more limited in the areas of the freedom of movement for workers, the right of establishment and the freedom to provide services. Turkey had reached a high level of alignment in terms of the customs union. The chapters on company law and intellectual property noted steps in the right direction, but pointed out that further effort must be made.

Commission Report [COM(2006) 649 final - SEC (2004) 1390 - Not published in the Official Journal].

The 2006 Report highlighted progress in terms of the general principles applying to the free movement of goods, with improvements in accreditation, standardisation and conformity assessment, and a reduction in the number of mandatory standards in areas covered by the “new approach” Directives.

Commission Report [COM(2005) 561 final - SEC(2004) 1426 - Not published in the Official Journal]. The 2005 Report stated that, in spite of the progress made, the free movement of goods was not yet completely effective in Turkey. Alignment with the chapter on freedom of movement for workers had not resulted in any improvement and there had been very little progress as regards the movement of services and capital.

Commission Report [COM(2004) 656 final - SEC(2004) 1201 - Not published in the Official Journal]. The 2004 Report noted that Turkey had made further progress in the area of free movement of goods, particularly in the transposition of sector-specific legislation, but that it needed to step up its efforts to remove technical barriers to trade and to ensure correct implementation of the acquis and compliance with the obligations arising from the customs union.

Commission Report [COM(2003) 676 final - SEC(2003) 1212 - Not published in the Official Journal]. The 2003 Report noted little progress in the alignment of Turkey’s legislation with the Community acquis in the field of the customs union. Turkey had made progress in transposing the acquis with regard to the free movement of goods, particularly as regards sector-specific legislation.

Commission Report [COM(2002) 700 final – SEC(2002) 1412 final – Not published in the Official Journal]. In its 2002 Report the Commission stated that Turkey had made further progress in aligning its legislation with the acquis, particularly through the adoption of horizontal legislation in the field of conformity assessment and market surveillance. Some progress had been made in the field of customs.

Commission Report [COM(2001) 700 final – SEC(2001) 1756 final – Not published in the Official Journal].

The 2001 Report noted that Turkey had made some progress in aligning its legislation with the acquis. It had made limited progress in the field of customs.

Commission Report [COM(2000) 713 final – Not published in the Official Journal]. Since the entry into force of the customs union, there has generally been free movement of industrial products between Turkey and the Community. However, there had been little alignment of Turkish legislation with the Community acquis to eliminate technical trade barriers.

Commission Report [COM(1999) 513 final – Not published in the Official Journal].

Commission Report [COM(1998) 711 final – Not published in the Official Journal]. In its 1998 Report the Commission considered that Turkey had put considerable effort into establishing the necessary conditions for the customs union to function properly.

See also

• The website of the Directorate-General for Enlargement: Enlargement Strategy and Progress Reports 2011

Last updated: 29.12.2011