For Türkiye, the European Union’s (EU) accelerating trade diplomacy is no longer a distant story about Brussels’ external agenda. It is a direct stress test of Ankara’s structurally asymmetric position within Europe’s economic perimeter, at a moment when the EU is rapidly expanding its network of preferential market-access arrangements with major emerging economies. The EU–India agreement and the EU-Mercosur deal illustrate a broader shift: Brussels is using trade policy to build geo-economic infrastructure, redesigning competitive conditions, standards pathways, and connectivity priorities in ways that increasingly shape who benefits from Europe’s market power and on what terms. For Türkiye, the problem is not simply exclusion from individual agreements, but the compounding effect of being economically intertwined with the EU through an outdated Customs Union framework while remaining outside the decision-making and preference-setting mechanisms that new FTAs generate. This piece argues that the resulting governance gap is becoming strategically unsustainable for both sides: Türkiye risks gradual competitiveness erosion and corridor marginalization unless it improves legal certainty and investment credibility, while the EU risks strategic myopia by leaving a structurally relevant neighbor in institutional limbo precisely as it seeks resilience, de-risking, and stronger security partnerships in its wider region.

On 27 January 2026, the European Union and India concluded what both sides framed as a historic and commercially significant free trade agreement (FTA). The headline numbers are stark: India will eliminate or reduce tariffs covering 96.6% of EU exports by value, while the EU will cut tariffs on 99.5% of imports from India over a multi-year phase-in.  Auto tariffs in India are set to fall sharply over time, ultimately to 10% from levels as high as 110%, with staged implementation. The agreement also sits explicitly within the EU’s broader push to diversify economic partnerships amid renewed tariff politics and an increasingly transactional U.S. approach to alliances and market access.

Ten days earlier, on 17 January 2026, the EU and the Mercosur bloc signed a long-negotiated trade agreement in Paraguay, following a political deal reached in December 2024.  The Mercosur accord is already politically contentious inside the EU, with the European Parliament narrowly backing a referral to the EU Court of Justice that could delay implementation. Taken together, India and Mercosur illustrate a clear pattern: the EU is accelerating a network of preferential trade and partnership frameworks with large markets and strategically relevant regions. For Türkiye, the consequence is immediate: as the EU redraws its external trade map, Ankara remains bound to a Customs Union architecture that transmits competitive shocks without granting Türkiye a commensurate role in shaping the rules or securing reciprocal access.

The core contradiction: insider exposure, outsider rights

Türkiye has been in a Customs Union with the EU since 1995, allowing tariff-free circulation of industrial goods. Yet the arrangement remains limited in scope and governance, while the EU’s external trade policy has become denser and more strategic. Critically, Türkiye does not automatically receive reciprocal market access when the EU signs FTAs with third countries, even though Türkiye can be exposed to competitive effects through its integration with the EU market. Turkish business associations and trade experts have long framed this as an “asymmetry problem,” and the latest EU deals bring it back to the fore. 

The political reality is that the modernization of the EU–Türkiye Customs Union has been frozen for years. The European Commission recommended a mandate to launch modernization talks in late 2016, but the General Affairs Council concluded in June 2018 that no further work should be planned under the prevailing circumstances.   This is where India and Mercosur matter for Türkiye. The more the EU expands its preferential network with major economies, the greater Türkiye's risk of “preference erosion” and value chain displacement, while lacking the instruments to manage the consequences.

India is the competitiveness shock; Mercosur is the strategic signal

It is useful to separate the material from the symbolic. India is the bigger competitiveness shock because the EU–India deal covers sectors where Türkiye is deeply embedded in EU-oriented manufacturing and where price-based competition can be decisive. Under the agreement, the EU will phase out tariffs on a wide range of Indian exports, including textiles, chemicals, and other industrial product groups.  For Turkish exporters, this is where the risk concentrates: labor-intensive sectors such as textiles and ready-made clothing, and, increasingly, higher-value segments where India is scaling up. Turkish Exporters Assembly leadership has warned that proximity-based advantages are giving way to price-based competition, and that India’s industrial rise can challenge Türkiye in chemicals, electronics, automotive-related segments, and defence-adjacent manufacturing.

Mercosur, by contrast, is a strategic signal as much as an immediate industrial threat. The trade profile of Mercosur is heavily agricultural and commodity-oriented, and Turkish industry representatives have publicly suggested that the direct impact on Türkiye’s higher-tech exports to the EU may be more limited than the impact of India.  Yet Mercosur matters because it underscores a broader EU trajectory: Brussels is willing to take political risk to lock in large preferential frameworks, even amid domestic backlash from farmers and environmental constituencies.  The message for Ankara is that EU trade policy is being rebuilt at scale, and Türkiye is not part of the rebuild.

The democracy question: Does regime type explain the differential treatment?

For Brussels, it is more convenient to frame the EU–India FTA through a regime lens: India is portrayed as a “democratic partner,” Turkey as a politically difficult one, and therefore Brussels finds it easier to conclude an ambitious deal with New Delhi than to deepen institutional economic integration with Ankara. This reading captures something real about political messaging. EU leaders have not merely presented the agreement as a technocratic trade bargain, but as a geopolitical deepening of ties “between the world's biggest democracies”, and explicitly linking the FTA to a broader strategic upgrading of EU–India relations.

Yet regime type is a weak explanatory variable if taken literally. In global democracy assessment frameworks, India’s democratic credentials are increasingly contested, and prominent indices place India and Türkiye in broadly comparable categories of democratic erosion rather than in sharply different regime families. V-Dem’s Democracy Report explicitly classifies India as an electoral autocracy, and the institute has publicly grouped India and Türkiye below the threshold of electoral democracy. Freedom House, meanwhile, rates India “Partly Free” and Türkiye “Not Free,” underscoring that both sit on the wrong side of the EU’s ideal-type framing even if their scores differ. The implication is that the EU’s “democracy partnership” language functions less as an empirical judgement and more as a legitimizing narrative for a broader geo-economic pivot.

A more persuasive account, therefore, combines two elements. First, Türkiye’s own shortcomings still matter: domestic political and legal trajectories have made deeper institutional integration harder to defend in Brussels, and as a candidate country, Türkiye is judged against a higher standard of democratic and rule-of-law convergence than a strategic partner like India. Second, the main drivers of the India deal are geo-economic: scale, supply-chain diversification, and the EU’s effort to hedge against volatility and dependency in a more conflictual trading environment.

If that is the underlying logic, then the strategic question shifts. The issue is not whether the EU should “choose” India over Türkiye, but why it continues to treat the upgrading of its most structurally intertwined non-member partner as a politically frozen file, despite Türkiye’s direct relevance to Europe’s industrial resilience and security geography. In that sense, persistent reticence to advance cooperation in technically feasible areas begins to look like strategic myopia, particularly given that security cooperation is already deepening in practice through pragmatic, often bilateral, channels even as economic governance remains stuck.

Türkiye’s strategic relevance and the EU’s miscalculation

Türkiye’s relevance to the EU is structural rather than optional. Economically, it functions as a near-shore manufacturing base plugged into European production networks, with dense interdependencies across industrial supply chains. Geographically, it sits at the intersection of the Black Sea, the Eastern Mediterranean, and the Middle East, shaping the wider neighborhood environment in which European security and economic interests are increasingly entangled. And in hard security terms, Türkiye remains a key NATO actor on the Alliance’s southeastern flank, with leverage across multiple theatres that routinely spill over into European risk calculations.  From this angle, the strategic error is not that Brussels is widening its trade portfolio through deals with India and Mercosur. It is that the EU is upgrading its external economic architecture while keeping the governance of its most integrated non-member relationship stuck in an outdated framework. The result is a compounding asymmetry: every new EU FTA reconfigures competitive conditions in markets where Türkiye is already exposed through Customs Union-linked integration, yet Ankara remains outside the institutional channels that set those terms. That is why Customs Union modernization should be read less as a political favor and more as a functional resilience tool for the EU itself: a way to align rule-making with real-world interdependence, reduce frictions generated by an expanding EU FTA network, and stabilize a critical industrial neighborhood relationship at a time when Europe is prioritizing de-risking and supply-chain security.

Corridors and exclusion: IMEC as the parallel story

The trade policy is increasingly inseparable from the connectivity story. The India–Middle East–Europe Economic Corridor (IMEC) was announced at the G20 on 9 September 2023, with an MoU signed by India, the United States, Saudi Arabia, the UAE, the European Union, France, Germany, and Italy.  Türkiye was not included. IMEC remains contested and vulnerable to regional instability, but its political meaning is already clear: it signals who sits at the table when strategic routes, standards, and investment pipelines are imagined. When combined with the EU–India FTA, the message to Ankara is uncomfortable. The EU is developing both the preferential rulebook and the preferential route map of Eurasian connectivity with India, while Türkiye remains outside both, despite being geographically central to Europe’s neighborhood.

What should change: three moves for Ankara, one reassessment for Brussels

Türkiye cannot respond to the EU’s new trade acceleration with rhetoric alone. If the Customs Union upgrade is to become politically viable in Europe, Ankara must narrow the “trust gap” that has accumulated over the past decade. That means accelerating structural reforms, improving legal certainty, strengthening regulatory predictability, and upgrading the investment climate in ways that directly address European concerns about the rule of law, democracy, and enforceable commitments. It also means treating alignment with the EU acquis in trade-adjacent areas not as symbolic convergence, but as a competitiveness strategy: the more the EU externalizes its standards through FTAs, the more Türkiye’s access and industrial positioning will depend on credible compliance capacity.

But the burden is not Türkiye’s alone. Europe’s trade diplomacy is now being deployed as geo-economic infrastructure, shaping routes, standards, and preferential perimeters with major partners. If that is the logic underpinning deals like India and Mercosur, then keeping Türkiye locked into an outdated and politically frozen Customs Union is strategically shortsighted. It entrenches an asymmetry that generates predictable spillovers and discourages the very outcomes the EU claims to prioritize: supply-chain resilience, neighborhood stability, and an expanded circle of reliable economic partners. For Brussels, modernizing the Customs Union should be reframed as a resilience instrument, not a political concession. A structured pathway—sequenced, conditional, and benchmarked—would allow the EU to protect its normative red lines while reducing the costs of exclusion.

The policy implication is straightforward. Türkiye should move EU alignment and economic governance reform to the top of its agenda, because the alternative is gradual marginalization as the EU redraws its preferential trade map. The EU, in turn, should stop treating deeper trade integration with Türkiye as a permanently deferred option, because the costs of governance limbo compound with every new EU FTA and every new corridor initiative. The strategic choice on both sides is not between “values” and “interests,” but between managed interdependence and unmanaged exposure, and the latter is becoming the default.

***

Riccardo Gasco is the Foreign Policy Program Coordinator at IstanPol Institute. He is also a political analyst and PhD Researcher in International Relations at the University of Bologna. Based in Istanbul since 2019, he previously held research fellowships at the Istanbul Policy Center (IPC) and Sabancı University, where he worked on Turkish foreign policy.