RESTRICTEDWORLD TRADE
ORGANIZATIONWT/REG60/3
21 January 1999
(99-0207)
Committee on Regional Trade Agreement Original:  English
FREE TRADE AGREEMENT BETWEEN TURKEY AND ISRAEL
Communication from the Parties
The following communication has been received from the Permanent Missions of Turkey and
Israel with the request that it be distributed to WTO Members.
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I. BACKGROUND INFORMATION ON THE AGREEMENT
1. Membership and Dates of Signature, Ratification and Entry into Force
The Parties to the Agreement are the Republic of Turkey and the State of Israel.  The
Agreement applies in respect of the territory to which the customs laws of Turkey and Israel are
applicable respectively.
The Free Trade Agreement between Turkey and Israel was signed on 14 March 1996 and was
ratified by Israel on 31 December 1996 and by Turkey on 25 July 1997.  It entered into force on
1 May 1997.
The Agreement was notified to the Council on Trade in Goods on 18 May 1998 in accordance
with Article XXIV:7(a) of GATT 1994.
2. Type of Agreement
The Agreement establishes a free-trade area in conformity with the definition set out in
Article XXIV:8(b) of GATT 1994.
3. Scope
The free-trade area established by the Agreement provides the framework for future trade
relations between Turkey and Israel.
The Agreement covers all trade in industrial products (HS Chapters 25-97) and a number of
agricultural, processed agricultural and fishery products (HS Chapters 1-24).  The products coveredare products originating in Israel or Turkey according to the rules of origin laid out in Protocol B of
the Agreement.
The agricultural products covered by the Agreemen t are those listed in Annex I to Protocol A
of the Agreement for Israel and Annex II to  Protocol A of the Agreement for Turkey.WT/REG60/3
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In addition, Article 9.3 of the Agreement provides that Israel and Turkey shall progressively
establish a greater liberalization of trade in agricultural products of interest to both Parties.
In order to ensure the proper functioning of the free-trade area, the Agreement contains, inter 
alia, provisions on state aid, state monopolies, competition, intellectual property rights and public
procurement.
4. Trade Data
See Annex 1.
II. TRADE PROVISIONS
1. Import Restrictions
1.1 Duties and charges
In accordance with Articles 3 and 4 of the Agreement, all customs duties and charges having
equivalent effect on originating industrial products (HS Chapters 25-97) shall be abolished on the
entry into force of the Agreement, with the exception of some sensitive products on which customs
duties and charges having equivalent effect shall be gradually eliminated by 1 January 2000 at thelatest.
Customs duties on industrial products originating in Turkey listed in Annex III to the
Agreement and on industrial products originating in Israel listed in Annexes VI(a), VI(b) and VII to
the Agreement, shall be gradually abolished by 1 January 1999.
Customs duties on industrial products originating in Turkey listed in Annex II to the
Agreement and on industrial products originating in Israel listed in Annexes IV and V to the
Agreement, shall be gradually abolished by 1 January 2000.
Customs duties on products listed in Annex VIII to the Agreement shall be eliminated on
1 January 1998.
In the case of agricultural products (HS Chapter 1-24 and products listed in Annex I to the
Agreement), specific concessions, in the form of preferential duty or tariff quotas, for a broad range of
products are listed in Annexes I and II of Protocol A of the Agreement.
1.2 Quantitative restrictions
Article 7 of the Agreement provides that no ne w quantitative restrictions or measures having
equivalent effect on imports shall be introduced, nor shall those existing be made more restrictive in
trade between the Parties.
2. Export Restrictions
2.1 Duties and charges
Article 6.1 of the Agreement provides that, for industrial products, no new customs duties on
exports or charges having equivalent effect shall be introduced in trade between the Parties.WT/REG60/3
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Article 6.2 of the Agreement provides that customs duties on exports and any charges having
equivalent effect shall be abolished upon entry into force of the Agreement.
2.2 Quantitative restrictions
Article 7 of the Agreement provides that no ne w quantitative restrictions or measures having
equivalent effect on exports shall be introduced, nor shall those existing be made more restrictive in
trade between the Parties.
3. Rules of Origin
Protocol B of the Agreement lays down the rules of origin.In general, origin is confirmed when:- the good is wholly obtained or produced in the territory of a Party;  or
- each of the non-originating materials used in the production of the good undergoes an
applicable change in tariff classification set out in the specific rule for that good
(detailed in Annex II to Protocol B), and the good satisfies any other applicable
requirement set out in that rule, as a result of production occurring in the territory of a
Party;  and
- the good satisfies other particular circumstances as set out in Protocol B of the
Agreement
The rules of origin enable bila teral cumulation of origin between the Parties, i.e. materials
originating in a Party shall be considered as materi als originating in the other Party when incorporated
into a product obtained there.
In addition, the rules of origin provide for up to 10 per cent tolerance for non-originating
materials and up to 10 per cent tolerance for outward processing in a non-party country, except for
products falling within HS Chapters 50-63.
4. Standards
4.1 Technical barriers to trade
Article 19.1 of the Agreement stipulates that this area in the Parties' relations shall be
governed by the WTO Agreement on Technical Barriers to Trade.
Article 19.3 of the Agreement states that the Parties shall aim to reduce technical barriers to
trade.  To this end, the Parties will conclude when appropriate agreements on mutual recognition in
the field of conformity assessment.
4.2 Sanitary and phytosanitary measuresAccording to Article 10 of the Agreement, the Parties shall apply their sanitary and
phytosanitary measures in accordance with the relevant GATT Agreement.  Moreover, the Partiesshall not apply their regulations in veterinary, plant health matters as an arbitrary or unjustifiable
discrimination or a disguised restriction on trade between them.WT/REG60/3
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5. Safeguards
Article 18 of the Agreement establishes the administrative procedures for the application of
safeguard measures between the Parties in the case of dumping (Article 15), emergency action on
imports of particular products (Article 16) and measures relating to re-export and serious shortage(Article 17).
Article 16 of the Agreement enables the application of safeguard measures by a Party to the
Agreement, when a product is being imported in such quantities and under such conditions as to cause
or threaten to cause:
- serious injury to domestic producers of the like or directly competitive products in the
territory of the importing Party;  or
- serious disturbances in any sector of the economy;  or- difficulties which could bring about serious deterioration in the economic situation of
a region.
In the case of serious balance-of-payments difficulties, Article 26 of the Agreement allows
the Parties to adopt restrictive measures in acco rdance with the conditions laid down within the
framework of GATT and with Article VIII of the Articles of Agreement of the International MonetaryFund.
6. Anti-Dumping and Countervailing Measures
Article 15 of the Agreement provides that if a Pa rty finds that dumping is taking place in trade
with the other Party, within the meaning of Article VI of the GATT, it may take appropriate measures
against that practice in accordance with the Agreement on Implementation of Article VI of the
GATT 1994 and with its relevant internal legislation under the conditions and in accordance with the
procedure laid down in Article 18 of the Agreement.
7. Subsidies and State-Aid
Article 25 of the Agreement refers to "state aid" in the context of distortion of competition.According to Article 25.1(iii) of the Agreement, any state aid which distorts or threatens to
distort competition by favouring certain undertakings or the production of certain goods is
incompatible with the proper functioning of the Ag reement insofar as it may affect trade between the
Parties.
Article 25.2 of the Agreement provides that the Joint Committee shall, within three years of
the entry into force of the Agreement, adopt by decision the necessary rules for the implementation of
Article 25.1(iii).  Until these rules are adopted, the provisions of the Agreement on interpretation andapplication of Articles VI, XVI and XXIII of the GATT shall be applied.
Article 25.3 of the Agreement sets up appropriate means to ensure transparency in the area of
state aid.WT/REG60/3
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8. Sector-Specific Provisions
Agricultural
In Article 9 of the Agreement the Parties declar e their readiness to foster, insofar as their
agricultural policies allow, the harmonious development of trade in agricultural products and to
discuss this issue periodically in the Joint Committee.  In addition, the Parties accepted to further
liberalization of their trade in agricultural produc ts.  This issue will be assessed within the Joint
Committee.
Services
Articles 20.2 and 21.1 of the Agreement incorporate the General Agreement on Trade in
Services into the Agreement.
In Article 20 of the Agreement, Turkey and Israel agreed to widen the scope of the
Agreement to cover the right of establishment of firms and the liberalization of the provision ofservices.  To this end, the Joint Committee shall make the necessary recommendation.
9. Other
Customs Cooperation
Article 11 and Protocol B of the Agreement establish a framework for cooperation in customs
administration, with particular regard to methods co-operation in the administration of rules of origin.
State Monopolies
Under Article 13 of the Agreement the Parties agreed to adjust any state monopoly of a
commercial character so that no discrimination regarding the conditions under which goods are
procured and marketed exist between nationals of th e Parties, by the end of the second year following
the entry into force of the Agreement.
Competition Policy
Article 25.1 of the Agreement provides that all agreements and concerted practices between
undertakings, which have as their object or effect the restriction or distortion of competition, as well
as abuse by undertaking of dominant position, are incompatible with the proper functioning of the
Agreement.
Internal Taxation
Article 14 of the Agreement prohibits any measures or practice of an internal fiscal nature
establishing discrimination between the products originating from either Party.  This Article alsoprohibits repayment of indirect internal taxation in  excess of the amount of indirect or direct taxes.
Intellectual, Industrial and Commercial Property
The protection of intellectual, industrial and commercial property is addressed in Article 22
and Annex IX of the Agreement.  The Parties accept to accede to certain multilateral conventions on
intellectual, industrial and commercial property rights which are listed in Annex IX of the Agreement.WT/REG60/3
Page 6
Payments
Article 23 prohibits restrictions on payments in freely convertible currencies relating to
commercial transactions between the Parties, and refers to Article VIII of the Status of the
International Monetary Fund.
Public Procurement
In Article 24 of the Agreement, the Parties recognize the effective liberalization of their
respective public procurement markets as an integral objective of the free-trade area Agreement.
Progress in this field will be reviewed annually in the Joint Committee.
III. GENERAL PROVISIONS OF THE AGREEMENT
1. Exceptions and Reservations
Article 12 of the Agreement allows restrictions on imports, exports or goods in transit on
grounds of public morality, public policy or public security;  the protection of health and life of
humans, animals or plants and of the environmen t, the protection of national treasures possessing
artistic, historic or archaeological value or the protection of intellectual, industrial and commercial
property;  or rules concerning gold or silver.
Article 31 of the Agreement specifies security exceptions.
2. Accessions
The Agreement does not contain provisions regarding accession.
3. Dispute Settlement Procedures
Article 30 of the Agreement provides for a binding dispute settlement process to deal with
any dispute relating to the application or the interpretation of the Agreement, either through the Joint
Committee by decision or through a panel of three arbitrators who shall decide by majority vote.
4. Relation with Other Trade Agreements
The Agreement stipulates that rights and obligat ions relating to matters such as sanitary and
phytosanitary measures, standards and technical regulations, balance of payment issues, anti-dumpingmeasures and competition related measures shall be governed by the relevant WTO Agreements.
The Agreement also refers to GATS with regard to right of establishment and supply of
services and stipulates that measures concerning current payments connected with the movement of
goods shall be in conformity with Article VIII of the Status of the International Monetary Fund.
Regarding "basic duties" as defined in Article 2 of the Agreement, the Agreement provides
that any tariff reduction resulting from the GATT Uruguay Round and Turkey-EC Customs Union
shall replace the former basic duties.WT/REG60/3
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5. Institutional Framework
The Agreement establishes a Joint Committee which is responsible for the administration of
the Agreement and shall meet once a year to monitor its implementation.  The Joint Committee shallbe composed of the representatives of the Parties and shall act by common agreement.WT/REG60/3
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ANNEX 1
Imports of Turkey from Israel
(1,000 US$)
Year Total Trade Trade Covered % of Trade Covered
1994 125,891 121,515 97%
1995 166,635 160,728 96%
1996 192,627 186,188 97%
Imports of Israel from Turkey
(1,000 US$)
Year Total Trade Trade Covered % of Trade Covered
1994 220,841 210,841 95.5%
1995 299,719 285,031 95.1%
1996 287,993 274,557 95.3%
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