Inward Processing Regime: A Case Study of International Supply Chain Trade via EU-TR Customs Union

Inward processing is one of the customs regimes that may provide many advantages to the manufacturers and traders seeking to strengthen their international supply chain. Much of the cross-border trade is increasingly taking place through this regime enabling considerable financial and logistical advantages. Proper use of it to get its full benefit as well as to circumvent any of its potential pitfalls would then be critical for the business community at large. The use of the regime gets all the more complicated in this time of rising economic integration models where third country inputs are also considered to be still highly indispensable. Customs unions (CUs) being the most advanced form of those models may offer us distinct insights as to what benefits to accrue and what risks to avoid. European Union-Türkiye (EU-TR) CU that is in force for over three decades in this light stands a viable domain to draw real business cases and scenarios. This study therefore aims to analyse a case of supply chain trade and international production network via inward processing within EU-TR CU in which a manufacturer based in the former sourcing the intermediate parts from the latter, where third country inputs are also processed and bundled up via the latter to be finally exported to the former.