On 31 December 1995 the Customs Union between Turkey and the European Union came into effect. Goods can travel between the two entities without any customs restrictions. The Customs Union does not cover essential economic areas, such as agriculture, to which bilateral trade concessions apply, services or public procurement. The EU-Turkey Customs Union is one of the steps towards full Turkish membership of the European Union itself.

Full European Union membership

Turkey has been an associate member of the European Community (EC) since 1963, and it has always been Turkey's desire to become a full member of the European Community. Turkey applied for full membership in 1987.

The decision to consider Turkey's application was deferred until 1993, because the European Community was in the process of becoming the even (politically and economically) tighter European Union. The fall of the Soviet Union and German reunification delayed the decision on Turkish membership even more. During those years the European Community had also become reluctant to consider Turkey's application, because a majority of the member States of the European Community objected to full Turkish membership for economic, social, and political reasons.

At the Helsinki summit in December 1999 Turkey was finally given the status of a candidate country. At the end of 2004, the European Commission has issued a report with positive recommendations to the European Council, indicating the degree of compliance by Turkey of the Copenhagen political criteria. On this basis, the European Council has decided to start accession negotiations with Turkey in 2005.

Euro-Mediterranean free trade area

Finally, Turkey is also member of the Euro-Mediterranean partnership and as such should conclude free trade agreements with all other Mediterranean partners, with a view to the creation of a Euro-Mediterranean free trade area in 2010.