RESTRICTEDWORLD TRADE
ORGANIZATIONWT/REG107/M/1
18 September 2001
(01-4394)
Committee on Regional Trade Agreements
Thirtieth Session
EXAMINATION OF THE FREE TRADE AGREEMENT
BETWEEN TURKEY AND POLAND
Note on the Meeting of 3 July 2001
Chairman:  Mr. A.J. Dumont (Argentina)
1. The meeting was convened in document WTO/AIR/1568.
2. Under Agenda Item C.XVII of its Twenty-Ninth Session, the Committee on Regional Trade
Agreements (CRTA) took up the examination of the Free Trade Agreement (FTA) between Turkeyand Poland.  The following topics were discussed:
A. General Remarks
B. Section I – Background Information on the Agreement
C. Section II – Trade Provisions
D. Section III – General Provisions
3. The Chairman noted that this was the first round of examination of the Free Trade Agreement
between Turkey and Poland.  The notification of the Agreement had been distributed in
document WT/REG107/N/1, and the text of the Ag reement in document WT/REG107/1 and Corr.1.
He proposed to organize the examination by beginning with comments and thereafter, he would turn
to the specifics of the Agreement, using the Standard Format (WT/REG107/3) to guide the debate.
The terms of reference for the examination, adopted on 16 October 2000 by the Council for Trade inGoods, were contained in document WT/REG107/2:  "to  examine, in light of the relevant provisions
of the GATT 1994, the Free Trade Agreement between Turkey and Poland and to submit a report to
the Council for Trade in Goods."  These terms of reference applied in conjunction with the following
Understanding:  "It is understood that the understandi ng read out by the Chairman of the Council for
Trade in Goods under item 7 of the Agenda of the meeting of the Council on 20 February 1995, ascontained in document WT/REG3/1, will apply mutatis mutandis to the examination.  It is also
understood that, during the examination, due account will be taken of the intrinsic differences
between customs unions and free-trade areas."
A. G
ENERAL REMARKS
4. The representative of Turkey said that Turk ey was committed to an open and liberal trading
system and had concluded free trade agreements with 12 countries, most of which were Central and
Eastern European and Baltic countries.  Apart from these, Turkey had also signed an FTA with Israel,
while negotiations with some Mediterranean countries, South Africa, and the Faroe Islands were still
ongoing.  Some of the Agreements had already been examined by the Committee.  The FTAs already
concluded had proved to be stimulating trade between Parties.  His country strongly believed that anopen and liberal trading system would make substantial contributions to the general welfare of
countries participating in world trade, through rational allocation of resources and promoting greater
investment, which increased production and employment.  While the provisions of the WTOWT/REG107/M/1
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substantially served the eventual target of a world-wide liberal trading system, numerous regional
trade agreements (RTAs), the trade among which accounted for over 50 per cent of global trade, also
constituted contributing steps to this end.  He added that Members of the Committee might recall from
the examination of the Customs Union between Turkey and the EC that Turkey was committed to
aligning progressively the preferential arrangements of the European Communities with Article 16 ofthe Customs Union, which had been established in 1995.  His delegation was of the view that the
Turkey-Poland FTA was in compliance with the requirements of GATT 1994, in particular with
Article XXIV.  More specifically, the provisions of Article XXIV:5(b) had been respected since "…
the duties and other regulations of commerce were applicable at the formation of the free-trade area…
to the trade of Parties not included in such area were not higher or more restrictive than corresponding
duties and other regulations of commerce prior to the formation of the FTA…"  That was to say the
Agreement did not introduce any barriers for third countries.  The Agreement provided for theelimination of duties and other restrictive regulations of commerce covering all industrial products
(HS Chapters 25-97), with the exception of a few sensitive items for which a transitional period was
set forth, as well as a number of agricultural and fishery products.  To this end, the provisions of the
Agreement were in line with Article XXIV:8(b), which stipulated the elimination of duties and other
restrictive regulations of commerce on "substantially all the trade."  The Agreement covered all tradein industrial products and a number of agricultural, processed agricultural and fishery products.  At
this point, it was important to stress that the share of industrial products imported to Turkey from
Poland in the years 1998 and 1999, before the agreement entered into force, was 98.1 per cent and
94.4 per cent respectively, which represented quite a high degree of "substantiality".  In the first
implementation year, the year 2000, industrial products constituted 97.6 per cent of all imports fromPoland.  Other FTAs examined in the Committee also included transitional periods for certain groups
of products.  The transitional period for sensitive products laid down in the FTA between Turkey and
Poland would end by 2002 and customs duties and charges having equivalent effect would be
gradually eliminated by this date.  On the other hand, within the context of the Agreement, Parties had
granted each other preferential market access opportunities for a number of agricultural and processedagricultural goods under positive lists.  The Evolutionary Clause (Article 32) included in the
Agreement provided Parties with the legal basis to expand the scope of products and provide further
concessions on these products within the Joint Committee meetings that met, whenever necessary, but
at least once every year.
5. The representative of Turkey continued, saying that the negotiations to reach a free trade
agreement between Turkey and Poland had been initiated in January 1997.  The Agreement had been
signed on 4 October 1999 and had entered into force on 1 May 2000.  It had been notified to the WTOon 14 June 2000 and the text of the Agreement had been circulated as document WT/REG107/1.  The
Standard Format had been published as WT/REG107/3.  The import figures of the year 2000,
indicated that the Agreement covered almost 100 per cent of the trade between Parties.  On the entry
into force of the Agreement, Turkey had eliminated  immediately the duties on the great majority of
total imports of industrial products and duties on the rest would be eliminated by the beginning of2002.  The sensitive industrial products subject to two different timetables, both ending on 1 January
2002 constituted 11.3 per cent and 12.9 per cent, respectively, of total imports from Poland.  On the
other hand, agricultural and processed agricultural  products, which constituted 2.3 per cent of total
imports of Turkey from Poland, had a coverage ratio of 88 per cent.  The Protocol relating to rules of
origin annexed to the Agreement was similar to those of all other FTAs that Turkey had signed sinceall these countries were part of the pan-European Cumulation System, which was based on the
principle of diagonal cumulation of origin between its member countries.  The principles of the
system had been notified to WTO Members.  His delegation considered FTAs as "building blocks"
rather than "stumbling blocks" vis-à-vis the multilateral process.  He reminded the Committee of the
findings of two studies conducted by the WTO Secretariat stating that "RTAs, by moving at a fasterpace than the Multilateral Trading System and sharing its goals, represented a way of strengthening
the latter" and "there had been a definite trend towards broader as well as faster market access
liberalization of non-tariff measures in RTAs, in parallel to the developments in Multilateral TradingWT/REG107/M/1
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System."  He stressed that the FTA between Turkey and Poland was in full compliance with the
principles of the WTO, as it provided greater trade possibilities between the Parties and did not raise
any barriers to trade for third countries.  He concluded by saying that he was ready to answer any
specific questions that might arise in the course of the examination.
6. The representative of the European Communities said that given that the EC was in a
Customs Union with Turkey and had an FTA with Poland, his delegation had a positive attitude
towards this Agreement, especially as it was evidence of the way in which the two Parties to the
Customs Union had had to align their trade policy in the area of preferential trade agreements.  Just as
the FTA between the European Communities and Poland foresaw liberalization of "substantially all
the trade", it was his view that the same objective had been achieved in this particular Agreement,
through, for example, the coverage of industrial products and the short timescale foreseen for
liberalization.
B. SECTION I - B ACKGROUND INFORMATION ON THE AGREEMENT
7. The representative of the United States asked whether the Parties could confirm that no
particular sector had been excluded from the Agreement.  She added that she would provide particular
requests for additional trade data in writing.  The representative of Turkey replied that no sectors had
been excluded from the scope of the Agreement.  All industrial products had been granted
preferences, with some exclusions, for which a transition period had been set forth.  Some agricultural
products were subject to preferences between the Parties, while for the rest, there was an evolutionary
clause which provided the Parties with a platform upon which they could exchange further
concessions.
8. The representative of Australia expressed doubts that the "substantially all the trade"
requirement had been met by the Agreement.  According to the data he had, the percentage by value
of Poland’s agricultural exports to Turkey, entering at MFN rates, appeared almost unchanged, at
approximately 74 per cent, upon entry into force of the Agreement.  In the case of Turkey’s
agricultural exports to Poland, almost half still faced MFN tariff rates.  Agriculture represented more
than 5 per cent of Poland’s exports to Turkey and nearly 17 per cent of Turkey’s exports to Poland.He acknowledged the existence of an evolutionary clause, but there did not appear to be a timetable
attached to it.  He asked how the Parties established which agricultural products were to be included
in the agreement; if they could give details of the specific agricultural product lines which faced zero
duties, less than MFN rates, or MFN rates; whether consideration had been given to inclusion of
further agricultural products within the FTA; and if so, if there was a timetable for advancing these
discussions.
9. The representative of Turkey said that the Standard Format included trade figures for 1997,
1998 and 1999, but that the Agreement had entered into force in May 2000, so the data annexed gave
a picture of past performance before the Agreement had entered into force.  He suggested that the
Parties should submit a corrigendum to the Secretariat that zero duty and less-than-MFN duties should
not appear in these tables.  They had been included merely to show past performance.  The new
figures for 2000 showed that agricultural products subject to zero duties accounted for US$884,000,less-than-MFN trade was US$2,532,000, and trade at MFN rates was US$456,000, giving a total of
US$3,873,000.  Thus, agricultural imports from Poland subject to zero duty rates were 23 per cent,
those imports subject to less-than-MFN rates were 65 per cent, while imports subject to MFN rates
were 12 per cent.  Comparing the data from 2000 to the data from 1999, the total amount of
agricultural imports subject to MFN rates declined from 74 per cent to 12 per cent, which showed apositive effect attributable to the FTA, which had entered into force in 2000.  In response to the
second question of the Australian representative as to how the Parties decided which products would
be covered, he replied that all agricultural products which countries have an interest were subject to
preferences under the Agreement.  He could not offer a timetable for the total liberalization ofWT/REG107/M/1
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agricultural products, but restated that the evolu tionary clause stipulated that the Joint Committee
could meet whenever necessary, but at least once a year.  The representative of Australia asked the
representative of Turkey to submit his last responses in writing.
C. SECTION II - T RADE PROVISIONS
10. The representative of the United States said it was her understanding that all quantitative
restrictions and measures on industrial goods had been eliminated, but with respect to agricultural
goods, she wondered which products were subject to  tariff quotas, what amounts were provided for
and whether the amounts increased each year.  In addition, if there were tariffs quotas, she wondered
if they were in addition to the amount provided for in the Uruguay Round, for Turkey.  The
representative of Turkey replied that tariff quota information could be found in the Annex to the
Agreement, which had already been submitted to the Secretariat, but he was willing to provide this
information in writing.
11. Bearing in mind that the Parties were using the pan-European System of Cumulation of
Origin, the representative of the United States inquired whether other countries or third parties
benefited from treatment under this RTA.  She also requested a list of the countries with whichTurkey and Poland, respectively, had concluded RTAs or customs unions as she wanted to determine
whether it was the same list, or slightly different, to fully assess exactly how the rules of origin systemaffected third parties to this particular free trade agreement.  Given the complexity of the question, she
volunteered to put it in writing.
12. While not wishing to anticipate the responses of the representatives of Turkey or Poland to
the question posed by the representative of the United States, the representative of the
European Communities reacted to the suggestion made by the representative of United States that
there were "third party beneficiaries" to the provisions on rules of origin.  He reminded the Committee
of the numerous discussions which had been held on the pan European System of Cumulation of
Origin.  The system worked, through the existence of identical rules of origin provisions in the
different Agreements that linked the countries that pa rticipated in the system.  So, the trade that took
place between country A and B or between countr y B and C, if they were all members of the
pan-European System, was determined by the agreement that linked those countries rather than by
agreements to which they were not themselves party.  He cautioned against the use of the term "third
party beneficiary" as it was neither appropriate nor accurate in explaining how the system operated.
In response to the request by the representative of the United States that the Parties submit a list of all
the FTAs and customs unions in which they participated, he reminded the Committee that its purpose
was to examine the Agreement between Turkey and Poland, not to conduct a trade policy review
either of Turkey or of Poland or of any other Party with which they might have free-trade areas orcustoms unions.   The representative of Turkey said that given that the representative of the EC had
answered the US representative's question, he had no further response to make.
13. The representative of the United States said that, in her view, the representative of the
European Communities had indeed anticipated the response of representative of Turkey.  She repeated
that the questions she was asking did not relate to the system as a whole, but to how the systemoperated for this Agreement.  Given the fact that the system had been justified on the basis of easing
trade between countries which each had agreements with each other, she wanted to know how much
trade diversion there had been as a result of this Ag reement, for countries that were not party to either
the Agreement between Turkey and Poland or parties to any bilateral agreement with those countries.
If the answer was that there were none, she wanted to  know this;  she was not interested in the general
trade policy of these countries.  She wanted to know how rules of origin worked in this particular
case, with respect to discriminating against exports from the United States.  She requested that the
representative of Turkey,  in conformity with Article XXIV:7, consider her remarks and provide this
information.WT/REG107/M/1
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14. The representative of Turkey restated his position that when the response of another
representative was the same as his, he felt entitled to say so.  His intention was not to avoid answering
the questions posed by the representative of United States and he confirmed that he would answer
them in written form.
15. The representative of the United States requested more information from the Parties on the
nature of the agreement with respect to mutual r ecognition in the field of conformity assessments.
The representative of Turkey said he would provide a written response.
16. In noting that the Agreement provided for the application of safeguards under Articles 20, 21,
24, 26, and 28, the representative of Australia asked if any safeguard measures had yet been taken and
if so, on what products, and by whom.  The representative of Turkey replied that no safeguard
measures or any other trade related defense measures had yet been taken.
17. Citing Article 21.1 of the Agreement, the representative of Australia noted that the
Joint Committee was responsible for developing  rules on the granting of state aid.  He asked whether
the Parties were able to report on any progress made on developing these rules and whether they could
provide details, if any rules had been developed.
18. The representative of the United States asked for more information on the operation of the
subsidies and state aid provisions, as well as which public monopolies were subject to the provisions
of the Agreement.  The representative of Turkey said he would answer these questions in written
form, but said that state aid provisions operated  in conformity with the procedures laid down by
GATT 1994 and the Agreement establishing the WTO.
19. The representative of Australia asked which products were currently subject to state
monopolies.  The representative of Turkey responded that the products were alcoholic beverages,
tobacco and tobacco products, but a new law had abolished these state monopolies from the market
the previous month.  He would provide more details in written form.
20. The Chairman said that the first round of ex amination of the FTA between Turkey and Poland
had allowed the Committee to clarify a number of questions, although others were pending.  He
invited those representatives wishing to ask addition al questions to forward them to the Secretariat by
10 July, at the latest, and that the Parties submit their replies by 4 September, to allow the Secretariat
to produce a new document in time for the September meeting.
21. The Committee took note of the comments made.
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