December 21, 2016 / 2:46 PM / 8 months ago

EU offers Turkey deeper trade ties despite political tensions

* EU is candidate country Turkey's top trade partner

* Post-coup purge has overshadowed EU-Turkey talks

* Commission links expanded customs pact to human rights

By Robin Emmott and Alissa de Carbonnel

BRUSSELS, Dec 21 (Reuters) - The European Commission proposed on Wednesday an expansion of its customs union with Turkey to include services and most agricultural goods despite increased political tensions with Ankara since an attempted military coup in July.

The Commission, in a positive gesture after months of criticism of Ankara, said it had asked EU governments to endorse its bid to revamp a limited 1996 accord that eliminated tariffs on trade in industrial goods and processed farm products.

The customs union was long seen as a precursor to eventual EU membership for Turkey, but accession talks launched in 2005 moved very slowly amid concerns over human rights and other issues. Those concerns have increased sharply since Turkey's large-scale purges of state institutions following the failed coup, prompting calls for the membership talks to be frozen.

One EU official cast the plans for an updated trade deal, which will include sustainable development policies and public procurement, as a way to retain influence over a geopolitically important candidate country and neighbour.

Under the deal, the EU envisages an annual increase of its exports to Turkey, its fifth largest trading partner, worth 27 billion euros ($28.21 billion) and a rise in Turkish exports to the bloc of 5 billion euros, particularly useful as Turkey's economy slows. The EU is Turkey's largest trading partner.

However, the deal is likely to face some resistance in EU member states and the European Parliament, which called last month for a halt in Turkey's membership talks over the post-coup purges.

The Commission has also tied any deal on an expanded customs union to respect for democracy and human rights - a sensitive issue for Ankara, which says the EU showed a lack of solidarity after the coup. It says the purges are needed to root out supporters of a U.S.-based Muslim cleric it blames for the coup.

Turkey has long sought to extend its free trade ties with the world's biggest trading bloc and had sought to be included in talks on an EU-U.S. trade deal, but Brussels negotiators felt that would make already complex talks even more difficult.

Turkey has complained that trade deals the EU signs with other countries fail to consider Turkish interests because the customs union means more goods flow into Turkey free of tariffs.

The Council of Europe, a leading rights organisation with 47 member states including Turkey, said more than 125,000 Turks have been dismissed from work, as of Dec. 9, and almost 40,000 people arrested over suspected support for the coup. ($1 = 0.9572 euros) (Reporting by Robin Emmott and Alissa de Carbonnel; Editing by Gareth Jones)

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