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In the Brexit negotiations the EU has rejected the British wish of being part of the single market but without free movement of people. Such a partial free market could lead to unfair competition and therefore threatens the integrity of the single market.

The single market consists of four aspects: free movement of goods, services, capital and people. The EU also has a customs union with Turkey, which involves free movement of goods but not of the other aspects of the single market.

I would think that free movement of goods, but not of services, capital and people threatens the single market in the same way and has the same potential for unfair competition as a single market without free movement of people. Why does the EU-Turkey customs union not violate the integrity of the single market?

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Different types of violations

Specific to the statement in question:

In the Brexit negotiations the EU has rejected the British wish of being part of the single market but without free movement of people. Such a partial free market could lead to unfair competition and therefore threatens the integrity of the single market.

These are two separate issues. The one regarding the freedom of movement of people is one of the things the EU sees as the so-called four freedoms, the EU does not like to split those.

The other thing about integrity of the single market and unfair competition is about having the benefits of the EU single markets on goods on the one hand and making free trade deals on the other hand. That's not possible, not just because the EU doesn't want that, it's also going against the most-favoured-nation principle.

With the Turkey deal, the first issue does arise, but with the consent of both relevant parties (the EU and Turkey). The second does not apply, because Turkey cannot make its own free trade deals on the goods that are covered by the agreement with the EU.

Restrictions on making trade deals

Infacts.org has an article on the EU-Turkish arrangement with Brexit in mind. Specifically, the arrangement applies to goods, not services, and with regard to goods Turkey has to follow EU rules. To quote the relevant part from infacts.org:

Unfortunately, there is a catch – or rather, several of them. The Turkish customs union covers only goods, not services or finance. So a Turkish-style deal would be denying us a big part of the single market. What’s more, the quid pro quo of even this limited access is that Turkey has to follow the EU’s rules for the production of goods – without any say on what those rules are. A pattern should be familiar by now: to the extent that a country gets access to the single market, it has to follow the EU’s rules.

Turkey’s customs union with the EU – a key difference from the Norwegian or Swiss models – creates further problems. It requires Turkey to align its trade policy with the EU’s, seeking to cut free trade deals on goods with whomever Brussels makes deals.

This includes having a common external tariff with the EU, quoting from ec.europa.eu:

In addition to providing for a common external tariff for the products covered, the Customs Union foresees that Turkey is to align to the acquis communautaire in several essential internal market areas, notably with regard to industrial standards.

Turkey: exception to splitting the four freedoms

When it comes to Turkey, the EU has split the four freedoms and it's quite an exception (and unique for a country of that size). To understand how this came to be, you have to understand that this agreement came into force a long time ago, back in 1995 (see timeline below, taken from the Future EU-Turkey relations document). Over the years, Turkey has been a candidate for EU membership, and as such, the EU and Turkey have worked on closer integration.

As one can read in that document as well, the EU-Turkey relationship has had its ups and downs, but all that time Turkey has been a candidate for EU membership. In fact, only in February of 2019 did the EU Foreign Affairs Committee vote to suspend that position, from Reuters:

The Foreign Affairs Committee called on the European Commission and member states on Wednesday to formally suspend EU accession negotiations with Turkey, citing disregard for human rights and civil liberties, influence on the judiciary, and disputes over territory with Cyprus and other neighbors.

As for the agreement in place, it seems to be beneficial to both parties and suspending it would not be in the EU's (or in Turkey's) interest. The previously cited report talks about leverage:

Despite these difficulties, however, the negotiation process has important value in itself: it creates an impetus and opportunities for Turkey to modernise and reform. None of the alternative scenarios for the future (such as purely economic integration) provide the same leverage for the EU or opportunities for Turkey

That argument obviously applied when there was the prospect of becoming an EU member, but it more or less continues today. The EU wants Turkey to stay aligned as much as possible, and Turkey wants the economic benefit.

Figure 1 – Timeline and prospects for EU-Turkey relations

  • While an interesting article, this doesn't address my question of if/why the Turkey customs union doesn't hurt the integrity of the single market. Like the British wish it is another form of a partial single market. – JanKanis Aug 7 '19 at 12:27
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    It's worth noting that EU-Turkey customs union doesn't include agricultural products and Turkey is not part of the common aggricultural policy. – Richard Aug 7 '19 at 12:33
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    @JanKanis I've clarified that (with respect to the EU-Turkey deal). As for Brexit, I don't think the British want this arrangement, they want to make their own trade deals. – JJ for Transparency and Monica Aug 7 '19 at 12:40
  • Access to the single market without free movement of people is a simplification of what the British want, they also want their own trade deals and other things. The EU says it doesn't want to split up the four freedoms, but you agree that a customs union does exactly that (even if not all goods are included). My question is exactly why this apparently is not a problem in the case of the Turkey customs union. – JanKanis Aug 7 '19 at 12:49
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    I'd say this answer proposes that the EU was willing to make that exception for Turkey because it was envisioning that Turkey would fully join the EU (with all of the four freedoms) relatively soon, while with Brexit, it is expected that Britain won't join again for an undefined amount of time, possibly never, and so a "transitional" splitting of the four freedom would not make sense. – LjL Aug 7 '19 at 14:03

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