Europe and Türkiye Are Rebuilding Their Economic Relationship

Türkiye is once again pressing the European Union to deepen economic integration, arguing that an updated Customs Union and progress towards visa liberalisation would serve the interests of both sides. Behind Ankara’s latest push, however, lies a broader attempt to redefine its relationship with Europe around practical economic and strategic cooperation rather than the increasingly stalled question of EU membership. President Recep Tayyip Erdoğan raised both issues during talks with Austrian Chancellor Christian Stocker in Ankara on 10 August, presenting closer economic integration and easier movement between Türkiye and Europe as areas where both sides could gain.

EU-Türkiye relations have spent years caught between strategic interdependence and political mistrust. Accession negotiations have effectively stalled, while disagreements over democratic standards, human rights and foreign policy have repeatedly limited the possibility of a broader political rapprochement. At the same time, Türkiye remains deeply integrated into European trade and supply chains, while its geographical position gives it importance for European transport, energy and security interests. This has created a relationship in which cooperation can continue to expand in selected areas even as full membership remains politically distant.

The Customs Union has outgrown its original design

The EU-Türkiye Customs Union dates back to 1995 and was designed for an economic relationship that looks very different from the one that exists today. The agreement covers industrial goods but leaves important areas such as most agricultural products, services and public procurement outside its main framework, while Türkiye remains outside the EU Single Market. As trade between the two sides has expanded and their economies have become more closely connected, the limitations of the existing arrangement have become increasingly visible.

Ankara has therefore long argued that the Customs Union should be modernised to reflect the structure of contemporary European and Turkish economies. A revised agreement could cover areas including services, agriculture, public procurement and digital trade while providing Turkish companies with more predictable access to European markets. For Türkiye, such changes would strengthen its position inside European supply chains and reduce some of the barriers faced by businesses operating across the customs border.

For the EU, the argument is increasingly strategic as well as economic. Türkiye is already deeply embedded in European manufacturing networks, particularly in sectors where proximity, transport infrastructure and production capacity matter. Strengthening those links could help European companies diversify supply chains at a time when the EU is attempting to reduce vulnerabilities caused by geopolitical fragmentation, disruptions to global trade and excessive dependence on distant suppliers.

The European Commission has already taken smaller steps towards improving the functioning of the existing Customs Union. In July, the EU and Türkiye agreed to mutually recognise authorised economic operator programmes, allowing customs authorities to take trusted-trader status into account when assessing risks and determining the level of customs controls. The measure is intended to make legitimate trade between the two sides more efficient and secure, although it falls well short of the comprehensive modernisation Ankara has been seeking for years.

Europe needs Türkiye beyond trade

The economic relationship is increasingly connected to a wider European interest in transport, energy, technology and strategic supply chains. During Erdoğan’s meeting with Stocker, the two sides discussed cooperation in green energy, critical minerals, advanced technology, transport and defence, while also identifying the Middle Corridor as an area where Türkiye and European countries could deepen cooperation. The route connects China and Central Asia with Europe through the South Caucasus and Türkiye, giving Ankara an increasingly important role in the diversification of Eurasian trade routes.

That importance has grown as European policymakers have begun to treat connectivity as part of economic security. Transport corridors linking Europe with Central Asia can provide alternatives to routes exposed to geopolitical instability, while Türkiye’s infrastructure and geographical position allow it to serve as a bridge between several regions that are becoming more important to European trade. The country sits between Europe, the Black Sea, the Caucasus, the Middle East and Central Asia, while maintaining extensive industrial and logistical links with the EU.

This gives Ankara leverage that extends beyond the traditional accession debate. Türkiye can offer European companies access to a large manufacturing base close to the EU, while its ports, railways and road networks can contribute to the development of alternative trade routes. For Ankara, deeper cooperation with Europe would similarly provide an opportunity to reinforce its position as a regional logistics and industrial hub rather than simply functioning as a neighbouring market for the EU.

Visa liberalisation remains the harder bargain

Visa liberalisation is considerably more politically sensitive because it touches directly on migration, border management and the functioning of the Schengen area. Türkiye has been pursuing visa liberalisation with the EU since 2013, but several requirements under the existing roadmap remain outstanding. The European Commission continues to identify unresolved benchmarks, while the European Parliament has maintained that progress towards visa-free travel should be linked to Türkiye meeting the remaining conditions.

This makes Ankara’s latest call more complicated than the economic case for updating the Customs Union. The EU can improve visa processing, reduce administrative delays and make travel easier for specific groups such as businesspeople, students and researchers without immediately moving to full visa-free access for Turkish citizens. The European Parliament has previously supported measures that would facilitate mobility for business and educational purposes while continuing to insist that Türkiye address the outstanding requirements of the visa liberalisation roadmap.

For Türkiye, however, easier access to Europe has implications far beyond tourism. Greater mobility would directly benefit businesses, students, professionals and researchers while strengthening the human and economic connections between Türkiye and EU member states. European governments, by contrast, view visa policy through the additional lenses of migration management, irregular migration and border security, making the issue much more politically sensitive than a conventional trade agreement.

The disagreement therefore reflects a broader difference in how the two sides understand deeper integration. Ankara sees easier mobility as a natural extension of the economic relationship that has developed over decades, while European governments continue to regard movement across the Schengen border as an area where political and security conditions must be met. That gap is likely to make visa liberalisation considerably harder to achieve than incremental improvements to trade and customs cooperation.

Austria offers a useful channel for engagement

Erdoğan’s decision to raise these issues during talks with Austria’s chancellor also reflects the importance of bilateral relationships within the wider EU-Türkiye equation. Austria has historically maintained a cautious position towards Türkiye’s EU membership ambitions, but the two countries have significant economic links and share interests in areas including migration, regional stability and the Balkans. Ankara can therefore use relationships with individual EU member states to advance practical cooperation even when consensus on Türkiye’s broader European future remains difficult to achieve.

Erdoğan said that more than 1,000 Austrian companies operate in Türkiye and that Austrian foreign direct investment in the country has exceeded $11 billion. Bilateral trade reached approximately $4.5 billion in 2025, while Ankara is targeting $5 billion in trade this year. Those figures illustrate why economic relations with Türkiye remain relevant for European businesses and governments even when political disagreements continue to constrain the broader relationship.

The same approach is increasingly visible at the EU level. During a high-level meeting in Ankara in June, Turkish and EU officials reaffirmed their intention to improve implementation of the existing Customs Union and work towards its modernisation. The discussions also covered visa liberalisation, visa processing procedures, migration management, trade, energy, transport and digitalisation, showing that the relationship is gradually being organised around areas where cooperation remains possible despite the lack of progress on accession.

A new model for EU-Türkiye relations

The central question for Europe is increasingly less about whether Türkiye will eventually become an EU member and more about what kind of relationship can realistically be built in the meantime. Full membership remains politically distant, with the European Parliament continuing to link deeper integration to concerns over human rights, fundamental freedoms, the rule of law and international obligations. At the same time, neither side has an interest in allowing the economic and strategic relationship to deteriorate simply because the accession process has stalled.

A modernised Customs Union could therefore provide a framework for deeper economic integration without requiring the political breakthrough that full membership would demand. Improved visa procedures could increase mobility without immediately creating visa-free travel, while cooperation on transport, energy, technology, critical minerals and defence could expand without resolving every dispute between Ankara and European capitals. Such an approach would amount to selective integration: closer cooperation where interests overlap, combined with continued political conditionality in areas where the two sides remain divided.

For Europe, the benefits would include stronger links with a major industrial economy positioned at the intersection of several strategic transport routes and regional markets. For Türkiye, deeper economic integration would strengthen access to its most important external market while giving Ankara a greater role in shaping Europe’s emerging connectivity and economic-security architecture. The relationship could consequently become more strategically valuable to both sides even without any immediate progress towards EU membership.

The challenge is that economic pragmatism cannot entirely remove the political disagreements that have accumulated between Türkiye and the EU over the past decade. European governments still have to balance the economic value of closer ties with concerns about democratic standards, migration and regional security, while Ankara has repeatedly shown that it wants greater access to European markets and institutions without accepting a relationship defined solely by EU conditions.