WT/DS583/12  
 
28 April 2022  
(22-3358) Page: 1/147 
  Original: English  
 
TURKEY – CERTAIN MEASURES CONCERNING THE PRODUCTION,  
IMPORTATION AND MARKETING OF PHARMACEUTICAL PRODUCTS  
NOTIFICATION OF AN APPEAL BY TURKEY UNDER ARTICLE 25 OF THE UNDERSTANDING ON 
RULES AND PROCEDURES GOVERNING THE SETTLEMENT OF DISPUTES (DSU),  
UNDER PARAGRAPH 5 OF THE AGREED PROCEDURES FOR ARBITRATION  
UNDER ARTICLE 25 OF THE DSU (ARBITRATION AGREEMENT),  
AND UNDER RULE 20 OF THE WORKING PROCEDURES FOR APPELLATE REVIEW  
The following communication, dated 25 April 2022, from the delegati on of Turkey, is being circulated 
to Members.  
 
_______________  
 
 
Notification of an Appeal by Turkey under Article 25 of th e Understanding on Rules and Procedures 
Governing the Settlement of Disputes ( "DSU"), under paragraph 5 of the Agreed Procedures for 
Arbitration under Article 25 of the DSU ( "Arbitration Agreement "),1 and under Rule 20 of the 
Working Procedures for Appell ate Review2 
 
________________  
 
 
Pursuant to paragraph 5 of the  Arbitration Agreement, Turkey hereby notifies the Dispute Settlement 
Body of its decision to initiate an arbitration under Article 25 of the DSU to decide an appeal with 
regard to certain issues of law and legal interpretation covered in the Panel Report i n the dispute 
Turkey – Certain Measures concerning the Production, Importation and Marketing of Pharmaceutical 
Products . 
Pursuant to paragraph 5 of the  Arbitration Agreement and Rule 20 of the Working Procedures for 
Appellate Review, Turkey simultaneously files this Notice of Appeal and its Appellant Submission 
with the European Union and the third parties in the panel proceedings and with the WTO Secretariat. 
The Notice of Appeal includes the final report of the Panel in the working languages of the WTO.  
For the reasons further elaborated in its Appellant Submission to the Arbitrators, Turkey appeals and 
requests the Arbitrators to reverse the findings, conclusions and recommendations of the Panel, with 
respect to the following errors of law and legal inter pretation contained in the Panel Report:3  
1. The Panel erred in the interpretation and application of Article III:8(a) of the GATT 1994 
when finding that the localisation measure does not involve a "purchase" within the meaning 
of Article III:8(a), is th us not covered by the government procurement derogation and is 
therefore subject to the national treatment obligation in Article III:4 of the GATT 1994 and 
Article 2.1 of the TRIMs Agreement.4 In particular, the Panel erred in interpreting 
Article  III:8(a ) as requiring that the purchase of products procured for governmental 
 
1 WT/DS583/10.  
2 Rule 20 of the Working Procedures for Appellate Review  applies pursuant to paragraph 11 of the 
Arbitration Agreement . 
3 Pursuant to Rule 20(2)(d)(iii) of the Working Procedures for Appellate Review , which apply mutatis 
mutandis  pursuant to paragraph 11 of the Arbitration Agreement , this Notice of Appeal inclu des an indicative 
list of the paragraphs of the Panel Report containing the alleged errors, without prejudice to the ability of 
Turkey to refer to other paragraphs of the Panel Report in the context of the arbitration proceedings.  
4 Panel Report, paras. 7.104, 7.107 and 8.1(b)(ii).  WT/DS583/12  
 
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  purposes must be made by a governmental agency5 and in interpreting the term 
"purchased" as requiring the transfer of ownership from the seller to the entity purchasing 
the product con cerned.6 Because of these interpretive errors, the Panel erred in its 
application of Article III:8(a) of the GATT 1994. First, the Panel erred in finding that Article 
III:8(a) does not apply because there is no purchase of medicines included in Annex 4/A by 
the Turkish Social Security Institution ("SSI"). Second, the Panel also erred in finding that 
there is no purchase by the SSI because the SSI does not acquire the ownership of 
medicines included in Annex 4/A. Furthermore, even if the Panel 's interpretat ion of the term 
"products purchased" was found to be correct ( quod non ), the Panel erred in concluding 
that the SSI does not acquire the ownership of medicines included in Annex 4/A.7 The Panel 
also failed to consider that, alternatively, retail pharmacie s that purchase medicines that 
are dispensed to patients covered by the public healthcare system act on behalf of the SSI 
and to that extent act as "governmental agencies", within the meaning of Article III:8(a).8 
In light of the foregoing, Turkey request s the Arbitrators to reverse the relevant Panel 's 
findings in paragraphs 7.61 -7.107 and 8.1(b)(ii) of the Panel Report, including the Panel 's 
conclusion that the localisation measure is not covered by the government procurement 
derogation in Article III:8( a) of the GATT 1994 and is therefore subject to the national 
treatment obligation in Article III:4 of the GATT 1994 and Article 2.1 of the TRIMs 
Agreement.  
 
Turkey requests that consequently the Arbitrators find the Panel 's conclusion that the 
localisatio n requirement is inconsistent with the national treatment obligation in Article III:4 
of the GATT 1994 to be moot and of no legal effect.9 If not, Turkey requests the Arbitrators 
to complete the analysis under Article III:8(a) of the GATT 1994 and find th at the 
localisation measure falls within the scope of the government procurement derogation 
provided by that provision. In that case, Turkey further requests the Arbitrators to reverse 
the Panel 's findings that the localisation measure is inconsistent with  Article III:4 of the 
GATT 1994 in paragraphs 7.121 -7.127 and 8.1(b)(iii) of the Panel Report.  
 
2. The Panel erred in the interpretation and application of Article XX(b) of the GATT 1994 when 
finding that the localisation measure is not "designed to" prote ct human, animal, or plant 
life or health.10 The Panel erred in defining the legal standard applicable for determining the 
design of the measure by requiring that a measure must address a health risk that has "a 
substantial degree of probability" of mater ialising for the measure to be "designed to" 
protect human, animal, or plant life or health".11 The Panel also erred by confusing the 
"design" and "necessity" steps of the legal test under subparagraph (b), and by relying on 
the legal tests under subparag raphs (a) and (j) of Article XX of the GATT 1994 and 
Article  XIV(a) of the GATS, as interpreted by previous panels.12 The Panel also erred in 
applying Article XX(b) of the GATT 1994 by concluding that the evidence submitted by 
Turkey does not indicate tha t the localisation measure is "designed to" protect human life 
or health.13 In addition, the Panel failed to make an objective assessment of the matter 
before it pursuant to Article 11 of the DSU when addressing Turkey 's claim that the 
localisation measure is justified under Article XX(b) of the GATT 1994. The Panel wilfully 
disregarded part of the evidence and failed to make a holistic assessment of the evidence 
presented by Turkey.14 These errors were material and affected the Panel 's finding that the 
localisation measure is not "designed to" protect human life or health and th erefore not 
justified under Article XX(b) of the GATT 1994. Thus, Turkey requests the Arbitrators to 
reverse the Panel 's findings in paragraphs 7.157 -7.214, 7.219 and 8.1(b)(iv) of the Panel 
Report and requests the Arbitrators to complete the legal analysi s and to find that the 
localisation measure is justified under Article XX(b) of the GATT 1994.  
 
 
5 Panel Report, para. 7.65.  
6 Panel Report, paras. 7.74 and 7.81.  
7 Panel Report, paras. 7.85 -7.88 and 7.90.  
8 Panel Report, paras. 7.98 and 7.103.  
9 Panel Report, paras. 7.121 -7.127 and 8.1(b)(iii).  
10 Panel Report, par as. 7.211, 7.219 and 8.1(b)(iv).  
11 Panel Report, para. 7.171.  
12 Panel Report, paras. 7.167 -7.170.  
13 See, for example, Panel Report, paras. 7.173, 7.180, 7.199, 7.207, 7.210.  
14 See, for example, Panel Report, paras. 7.186 -7.200 and 7.210.  WT/DS583/12  
 
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  3. The Panel erred in the interpretation and application of Article XX(d) of the GATT 1994 when 
finding that the localisation measure is not taken to secure compliance with laws requiring 
Turkey to ensure accessible, effective and financially sustainable healthcare.15 By 
considering that its analysis of Turkey 's defence under Article XX(b) of the GATT 1994 
applies mutatis mutandis  to the analysis of Tu rkey's defence under Article XX(d), the Panel 
applied the wrong legal standard and erroneously rejected Turkey 's defence under Article 
XX(d) of the GATT 1994. Thus, Turkey requests the Arbitrators to reverse the Panel 's 
findings under Article XX(d) of the GATT 1994 set out in paragraphs 7.217 -7.219 and 
8.1(b)(iv) of the Panel Report. If the Arbitrators reverse the Panel 's findings under Article 
XX(d) of the GATT 1994, Turkey requests the Arbitrators to complete the analysis and find 
that the localisation me asure is justified under that provision.  
 
Pursuant to Rule 23(2)(c) of the Working Procedures for Appellate Review, the service address, 
telephone and facsimile numbers of Turkey are:  
Permanent Mission of Turkey to the WTO  
Route de Pré -Bois 20, CP: 1837  
1215 Geneva 15  
Tel: + 41 -22-791-70-10  
Fax: + 41 -22-791-70-20 
 
 
_______________  
 
 
15 Panel Repor t, para. 7.218.  WT/DS583/12  
 
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TURKEY – CERTAIN MEASURES CONCERNING THE PRODUCTION, 
IMPORTATION AND MARKETING OF PHARMACEUTICAL PRODUCTS  
REPORT  OF THE PANEL  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 WT/DS583/12  
 
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  TABLE OF CONTENTS  
 
1   INTRODUCTION  ................................ ................................ ................................ ....... 19 
1.1   Complaint by the European Union  ................................ ................................ ................  19 
1.2   Panel establishment and composition  ................................ ................................ ...........  19 
1.3   Panel proceedings  ................................ ................................ ................................ ...... 19 
1.3.1    General  ................................ ................................ ................................ .................  19 
1.3.2    Preliminary ruling under Article 6.2 of the DSU  ................................ ...........................  20 
1.4   Impact of the COVID -19 pandemic on the proceedings  ................................ ...................  20 
1.5   Translation issues  ................................ ................................ ................................ ...... 22 
2   FACTUAL ASPECTS ................................ ................................ ................................ .... 22 
2.1   Factual background ................................ ................................ ................................ .... 22 
2.1.1   Turkey's Universal Health Insurance Scheme and relevant governmental entities  ...........  22 
2.1.2    Placing of pharmaceutical products o n the Turkish market  ................................ ...........  23 
2.1.3    Reimbursement of pharmaceutical products  ................................ ...............................  24 
2.1.3.1    The Annex 4/A list  ................................ ................................ ...............................  24 
2.1.3.2    Reimbursement of pharmaceutical products that are active on the Annex 4/A list  ........  26 
2.2   The measures at issue  ................................ ................................ ...............................  28 
2.2.1    The localisation requirement  ................................ ................................ ....................  29 
2.2.1.1    Overview  ................................ ................................ ................................ ............  29 
2.2.1.2    Phases of implementation of the localisation requirement ................................ ..........  30 
2.2.1.3    Localisation proce ss ................................ ................................ .............................  31 
2.2.2    The import ban on localised products  ................................ ................................ ........  32 
2.2.3    The prioritization measure  ................................ ................................ .......................  33 
3   PARTIES' REQUESTS FOR FINDINGS AND RECOMMENDATIONS  ...............................  33 
4   ARGUMENTS OF THE PARTIES  ................................ ................................ ..................  36 
5   ARGUMENTS OF THE THIRD PARTIES  ................................ ................................ ....... 36 
6   INTERIM REVIEW  ................................ ................................ ................................ ..... 36 
6.1   Introduction  ................................ ................................ ................................ ..............  36 
6.2   General issue  ................................ ................................ ................................ ............  36 
6.3   Descriptive part of the Report  ................................ ................................ .....................  37 
6.3.1    Translation issues  ................................ ................................ ................................ ... 37 
6.3.2    Factual aspects  ................................ ................................ ................................ ....... 38 
6.3.2.1    Turkey's Universal Health Insurance Scheme and relevant governmental entities  .........  38 
6.3.2.2    Reimbursement of pharmaceutical products  ................................ ............................  38 
6.3.3    The measures at issue  ................................ ................................ .............................  44 
6.3.3.1    The localisation requirement  ................................ ................................ ..................  44 
6.3.3.2    The prioritization measure ................................ ................................ .....................  45 
6.3.4    Parties' requests for findings and recommendations  ................................ ....................  45 
6.4   The existence and precise content of the localisation requirement as a "single and cohesive 
measure"  ................................ ................................ ................................ .........................  46 WT/DS583/12  
 
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  6.5   Article III:8(a) of the GATT 1994  ................................ ................................ .................  46 
6.6   Article III:4 of the GATT 1994  ................................ ................................ .....................  54 
6.7   Turkey's alternative defence under Artic le XX(d) of the GATT 1994  ................................ .. 55 
6.8   Article 3.1(b) of the SCM Agreement  ................................ ................................ ............  55 
6.9   Article X:1 of the GATT 1994  ................................ ................................ ......................  56 
6.10   Article XI:1 of the GATT 1994  ................................ ................................ ....................  56 
6.11   The prioritization measure  ................................ ................................ ........................  56 
7   FINDINGS  ................................ ................................ ................................ ................  57 
7.1   The existence and precise content of the localisation requirement as a "single and cohesive 
measure"  ................................ ................................ ................................ .........................  57 
7.1.1    Introduction  ................................ ................................ ................................ ...........  57 
7.1.2    Relevant provisions  ................................ ................................ ................................ . 58 
7.1.3    Main arguments of the parties  ................................ ................................ ..................  60 
7.1.4    Assessment by the Panel  ................................ ................................ .........................  61 
7.1.5    Conclusion  ................................ ................................ ................................ .............  67 
7.2   Article III:8(a) of the GATT 1994  ................................ ................................ .................  67 
7.2.1    Introduction  ................................ ................................ ................................ ...........  67 
7.2.2    Relevant provisions  ................................ ................................ ................................ . 68 
7.2.3    Main arguments of the parties  ................................ ................................ ..................  69 
7.2.3.1    Introduction  ................................ ................................ ................................ ........  69 
7.2.3.2    "laws, regulations or requirements governing … procurement"  ................................ ... 70 
7.2.3.3    "by governmental agencies of products purchased"  ................................ ..................  72 
7.2.3.4    "for governmental purposes"  ................................ ................................ .................  74 
7.2.3.5    "not with a view t o the commercial resale"  ................................ ..............................  75 
7.2.4    Assessment by the Panel  ................................ ................................ .........................  77 
7.2.4.1    Introduction  ................................ ................................ ................................ ........  77 
7.2.4. 2   Interpretation of the term "products purchased" in Article III:8(a)  .............................  79 
7.2.4.3    Whether the SSI purchases pharmaceutical pro ducts from retail pharmacies  ...............  84 
7.2.4.4    Pharmacies' purchases of pharmaceuticals from wholesalers  ................................ ..... 86 
7.2.4.5    Remaining elements under Article III:8(a)  ................................ ..............................  89 
7.2.5    Conclusion  ................................ ................................ ................................ .............  90 
7.3   Article III:4 of the GATT 1994  ................................ ................................ .....................  90 
7.3.1    Introduction  ................................ ................................ ................................ ...........  90 
7.3.2    Relevant provisions  ................................ ................................ ................................ . 90 
7.3.3    Main arguments of the parties  ................................ ................................ ..................  91 
7.3.4    Assessment by the Panel  ................................ ................................ .........................  92 
7.3.5    Conclusion  ................................ ................................ ................................ .............  94 
7.4   Article XX of the GATT 1994  ................................ ................................ ........................  94 
7.4.1    Introduction  ................................ ................................ ................................ ...........  94 
7.4.2    Article XX(b)  ................................ ................................ ................................ ..........  95 
7.4.2.1    Relevant provisions  ................................ ................................ ..............................  95 WT/DS583/12  
 
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  7.4.2.2    Main arguments of the parties  ................................ ................................ ...............  97 
7.4.2.2.1    The risk of a shortage of safe, effective and affordable medicines in Turkey  ..............  97 
7.4.2.2.2    The localisation requirement's objective  ................................ ...............................  98 
7.4.2.2.3    Contribution to the declared objective  ................................ ................................ .. 99 
7.4.2.2.4    Trade -restrictiveness  ................................ ................................ .......................  100 
7.4.2.2.5    Less trade -restrictive alternative measures  ................................ ........................  101 
7.4.2.2.6    Chapeau of Article X X ................................ ................................ ......................  102 
7.4.2.3    Assessment by the Panel  ................................ ................................ ....................  103 
7.4.2.3.1    Introduction  ................................ ................................ ................................ ... 103 
7.4.2.3.2    Whether the localisation requirement is a measure taken to protect human life or 
health  ................................ ................................ ................................ ............................  105 
7.4.2.3.3    Remaining elemen ts under Article XX(b)  ................................ ............................  118 
7.4.3    Turkey's alternative defence under Article XX(d) of the GATT 1994  .............................  119 
7.4.4    Conclusion  ................................ ................................ ................................ ...........  120 
7.5   Additional claims relating to the localisation requirement and the "import ban on localised 
products"  ................................ ................................ ................................ .......................  120 
7.5.1    Introduction  ................................ ................................ ................................ .........  120 
7.5.2    Article 3.1(b) o f the SCM Agreement  ................................ ................................ ....... 121 
7.5.3    Article 2.1 of the TRIMs Agreement  ................................ ................................ .........  122 
7.5.4    Article X:1 of the GATT 1994  ................................ ................................ ..................  125 
7.5.5    Article XI:1 of the GATT 1994  ................................ ................................ .................  128 
7.6   The prioritization measure  ................................ ................................ ........................  132 
7.6.1    Introduction  ................................ ................................ ................................ .........  132 
7.6.2    Relevant provisions  ................................ ................................ ...............................  132 
7.6.3    Main arguments of the parties  ................................ ................................ ................  134 
7.6.3.1    Introduction  ................................ ................................ ................................ ...... 134 
7.6.3.2    Whether the prioritization measure is challenged "as such" or as "ongoing 
conduct"/practice  ................................ ................................ ................................ ............  134 
7.6.3.3    "law, regulation or requirement"  ................................ ................................ ..........  136 
7.6.3.4    "less favourable treatment"  ................................ ................................ .................  137 
7.6.4    Assessment by the Panel  ................................ ................................ .......................  138 
7.6.4.1    Introduction  ................................ ................................ ................................ ...... 138 
7.6.4.2    The existence of the measure  ................................ ................................ ..............  138 
7.6.4.3    Article III:4 of the GATT 1994  ................................ ................................ .............  144 
7.6.5    Conclusion  ................................ ................................ ................................ ...........  146 
8   CONCLUSIONS AND RECOMMENDATION  ................................ ................................ .146  
 
 WT/DS583/12  
 
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  LIST OF ANNEXES  
ANNEX A 
WORKING PROCEDURES AND PRELIMINARY RULING  
Contents  Page  
Annex  A-1 Working Procedures of the Panel, as amended  4 
Annex A -2 Additional Working Procedures concerning Protection of Business 
Confidential Information  11 
Annex A -3 Preliminary Ruling of the Panel, dated 10 July 2020  14 
ANNEX B  
COMMUNICATIONS REGARDING THE IMPACT OF THE COVID -19 PANDEMIC ON THE PROCEEDINGS  
Contents  Page  
Annex B -1 Panel 's communication to the parties regarding the postponement of 
the first substantive meeting and proposed modifications to the Working 
Procedures and timetable, dated 12 August 2020  26 
Annex B -2 Panel 's communication transmitting the revised Working Procedures 
and timetable, dated 25 August 2020  28 
Annex B -3 Panel 's communication to the parties regarding the possibility of holding 
the first substantive meeting in virtual format, dated 3 February 2021  30 
Annex B -4 Panel 's communication to the parties regarding its decision to conduct 
the first substantive meeting in virtual format, dated 17 February 2021  31 
Annex B -5 Panel 's communication to the parties transmitting proposed revisions to  
the Working Procedures and Timetable, and a draft Protocol for 
logistical aspects of the virtual hearing, dated 25 February 2021  32 
Annex B -6 Panel 's communication to the parties transmitting revised Working 
Procedures and Timetable, and Protocol for log istical aspects of the 
virtual hearing, dated 5  March 2021  34 
Annex B -7 Panel 's communication to the parties establishing the remaining steps 
in the Timetable, dated 3 May 2021  36 
ANNEX C  
ARGUMENTS OF THE PARTIES  
Contents  Page  
Annex  C-1 Integrated executive summary of the arguments of the European Union  39 
Annex  C-2 Integrated executive summary of the arguments of Turkey  54 
ANNEX D  
ARGUMENTS OF THE THIRD PARTIES  
Contents  Page  
Annex  D-1 Integrated executive summary of the arguments of Canada  73 
Annex  D-2 Integrated executive summary of the arguments of Japan  77 
Annex  D-3 Integrated executive summary of the arguments of Switzerland  80 
Annex D -4 Integrated executive summary of the arguments of Ukraine  84 
Annex D -5 Integrated executive summary of the arguments of the United States  87 
 
 WT/DS583/12  
 
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  CASES CITED IN THIS REPORT  
Short title  Full case title and citation  
Argentina – 
Financial Services  Appellate Body Report, Argentina – Measures Relating to Trade in Goods 
and Services , WT/DS453/AB/R  and Add.1,  adopted 9 May 2016, DSR 
2016:II, p. 431  
Argentin a – Import 
Measures  Appellate Body Reports, Argentina – Measures Affecting the Importation of 
Goods , WT/DS438/AB/R  / WT/DS444/AB/R  / WT/DS445/AB/R , adopted 26 
January 2015, DSR 2015:II, p. 579  
Argentina – Textiles 
and Apparel  Appellate Body Report, Argentina – Measures Affecting Imports of 
Footwear, Textiles, Apparel and Other Items , WT/DS56/AB/R  and Corr.1, 
adopted 22 April 1998, DSR 1998:III, p. 1003  
Brazil – Retreaded 
Tyres  Appellate Body Report, Brazil – Measures Affecting Imports of Retreaded 
Tyres , WT/DS332/AB/R , adopted 17 December 2007, DSR 2007:IV, p. 
1527 
Brazil – Retreaded 
Tyres  Panel Report, Brazil – Measures Affecting Imports of Retreaded Tyres , 
WT/DS332/R , adopted 17 December 2007, as modified by Appellate Body 
Report WT/DS332/AB/R, DSR 2007:V, p. 1649  
Canada – Aircraft  Panel Report, Canada – Measures Affecting the Export of Civilian Aircraft , 
WT/DS70/R , adopted 20 August 1999, upheld by Appellate Body Report 
WT/DS70/AB/R, DSR 1999:IV, p. 1443  
Canada – 
Renewable Energy / 
Canada – Feed-in 
Tariff Program  Appellate Body Reports, Canada – Certain Measures Affecting the 
Renewable Energy Generation Sector / Canada – Measures Relating to the 
Feed-in Tariff Program , WT/DS412/AB/R  / WT/DS426/AB/R , adopted 24 
May 2013, DSR 2013:I, p. 7  
Canada – 
Renewable Energy / 
Canada – Feed-in 
Tariff Program  Panel Reports, Canada – Certain Measures Affecting the Renewable 
Energy Generation Sector / Canada – Measures Relating to the Feed -in 
Tariff Program , WT/DS412/R  and Add.1 / WT/DS426/R  and Add.1, 
adopted 24 May 2013, as modified by Appellate Body Reports 
WT/DS412/AB/R / WT/DS426/AB/R, DSR 2013:I, p. 237  
Canada – Wheat 
Exports and Grain 
Imports  Panel Report, Canada – Measures Relating to Exports of Wheat and 
Treatment of Imported Grain , WT/DS276/R , adopted 27 September 2004, 
upheld by Appellate Body Report WT/DS276/AB/R, DSR 2004:VI, p. 2817  
China – Auto Parts  Appellate Body Reports, China – Measures Affecting Imports of Automobile 
Parts, WT/DS339/AB/R  / WT/DS340/AB/R  / WT/DS342/AB/R , adopted 12 
January 2009, DSR 2009:I, p. 3  
China – Auto Parts  Panel Reports, China – Measures Affecting Imports of Automobile Parts , 
WT/DS339/R , Add.1 and Add.2 / WT/DS340/R , Add.1 and Add.2 / 
WT/DS342/R , Add.1 and Add.2, adopted 12 January 2009, upheld 
(WT/DS339/R) and as modified (WT/DS340/R / WT/DS342/R) by 
Appellate Body Reports WT/DS339/AB/R / WT/DS340/AB/R / 
WT/DS342/AB/R, DSR 2009:I, p. 119  
China – Publications 
and Audiovisual 
Products  Appellate Body Report, China – Measures Affecting Trading Rights and 
Distribution Services for Certain Publications and Audiovisual 
Entertainment Products , WT/DS363/AB/R , adopted 19 January 2010, DSR 
2010:I, p. 3  
China – Publications 
and Audiovisual 
Products  Panel Report, China – Measures Affecting Trading Rights and Distribut ion 
Services for Certain Publications and Audiovisual Entertainment Products , 
WT/DS363/R  and Corr.1, adopted 19 January 2010, as modified by 
Appellate Body Report WT/DS363/AB/R, DSR 2010:II, p. 261  
China – Rare Earths  Panel Reports, China – Measures Related to the Exportation of Rare 
Earths, Tungsten, and Molybdenum , WT/DS431/R  and Add.1 / 
WT/DS432/R  and Add.1 / WT/DS433/R  and Add.1, adopted 29 August 
2014, upheld by Appellate Body Reports WT/DS431/AB/R / 
WT/DS432/AB/R / WT/DS433/AB/R, DSR 2014:IV, p. 1127  WT/DS583/12  
 
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  Short title  Full case title and citation  
China – Raw 
Materials  Panel Repo rts, China – Measures Related to the Exportation of Various 
Raw Materials , WT/DS394/R , Add.1 and Corr.1 / WT/DS395/R , Add.1 and 
Corr.1 / WT/DS398/R , Add.1 and Corr.1, adopted 22 February 2012, as 
modified by Appellate Body Re ports WT/DS394/AB/R / WT/DS395/AB/R / 
WT/DS398/AB/R, DSR 2012:VII, p. 3501  
Colombia – Ports of 
Entry  Panel Report, Colombia – Indicative Prices and Restrictions on Ports of 
Entry , WT/DS366/R  and Corr.1, adopted 20 May 2009, DSR 2009:VI, p. 
2535 
Colombia – Textiles  Appellate Body Report, Colombia – Measures Relating to the Importation 
of Textiles, Apparel and Footwear , WT/DS461/AB/R  and Add.1, adopted 
22 June 2016, DSR 2016:III, p. 1131  
Colombia – Textiles  Panel Report, Colombia – Measures Relating to the Importation of 
Textiles, Apparel and Footwear , WT/DS461/R  and Add.1, adopted 22 June 
2016, as modified by Appellate Body Rep ort WT/DS461/AB/R, DSR 
2016:III, p. 1227  
Dominican Republic 
– Import and Sale 
of Cigarettes  Panel Report, Dominican Republic – Measures Affecting the Importation 
and Internal Sale of Cigarettes , WT/DS302/R , adopted 19 May 2005, as 
modified by Appellate Body Report WT/DS302 /AB/R, DSR 2005:XV, p. 
7425 
EC – Asbestos  Appellate Body Report, European Communities – Measures Affecting 
Asbestos and Asbestos -Containing Products , WT/DS135/AB/R , adopted 5 
April 2001, DSR 2001:VII, p. 3243  
EC – Asbestos  Panel Report, European Communities – Measures Affecting Asbestos and 
Asbestos -Containing Products , WT/DS135/R  and Add.1, adopted 5 April 
2001, as modified by Appellate Body Report  WT/DS135/AB/R, DSR 
2001:VIII, p. 3305  
EC – Bananas III  Appellate Body Report, European Communities – Regime for the 
Importation, Sale and Distribution of Bananas , WT/DS27/AB/R , adopted 
25 September 1997, DSR 1997:II, p. 591  
EC – Bananas III  Panel Reports, European Communities – Regime for the Importation, Sale 
and Distribution of Bananas , WT/DS27/R/ECU  (Ecuador)  / 
WT/DS27/R/GTM , WT/DS27/R/HND  (Guatemala and Honduras)  / 
WT/DS27/R/MEX  (Mexico)  / WT/D S27/R/USA  (US), adopted 25  September 
1997, as modified by Appellate Body Report WT/DS27/AB/R, DSR 1997:II, 
p. 695 to DSR 1997:III, p.  1085 
EC – Poultry  Appellate Body Report, European Communities – Measures Affecting the 
Importation of Certain Poultry Pro ducts , WT/DS69/AB/R , adopted 23 July 
1998, DSR 1998:V, p. 2031  
EC – Seal Products  Appellate Body Reports, European Communities – Measures Prohibiting 
the Importation and Marketing of Seal Products , WT/DS400/AB/R  / 
WT/DS401/AB/R , adopted 18 June 2014, DSR 2014:I, p. 7  
EC – Seal Products  Panel Reports, European Communities – Measures Prohibit ing the 
Importation and Marketing of Seal Products , WT/DS400/R  and Add.1 / 
WT/DS401/R  and Add.1, adopted 18 June 2014, as modified by Appellate 
Body R eports WT/DS400/AB/R / WT/DS401/AB/R, DSR 2014:II, p. 365  
EC – Tariff 
Preferences  Panel Report, European Communities – Conditions for the Granting of 
Tariff Preferences to Developing Countries , WT/DS246/R , adopted 20 April 
2004, as modified by Appellate Body Report WT/DS2 46/AB/R, DSR 
2004:III, p. 1009  
EC and certain 
member States – 
Large Civil Aircraft  Appellate Body Report, European Communities and Certain Member States 
– Measures Affecting Trade in Large Civil Aircraft , WT/DS316/AB/R , 
adopted 1 June 2011, DSR 2011:I, p. 7  
EU – Biodiesel 
(Argen tina) Appellate Body Report, European Union – Anti-Dumping Measures on 
Biodiesel from Argentina , WT/DS473/AB/R  and Add.1, adopted 26 October 
2016, DSR 2016:VI, p. 2871  WT/DS583/12  
 
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  Short title  Full case title and citation  
EU – Energy 
Package  Panel Report, European Union and its member States – Certain Measures 
Relating to the Energy Sector , WT/DS476/R  and Add.1, circulated to WTO 
Members 10 August 2018 [appeal/adoption pending]  
Guatemala – 
Cement I  Appellate Body Report, Guatemala – Anti-Dumping Investigation 
Regarding Portland Cement from Mexico , WT/DS60/AB/R , adopted 25 
November 1998, DSR 1998:IX, p. 3767  
India – Solar Cells  Panel Report, India – Certain Measures Relating to Solar Cells and Solar 
Modules , WT/DS456/R  and Add.1, adopted 14 October 2016, as modified 
by Appellate Body Report WT/DS456/AB/R, DSR 2016:IV, p. 1941  
Indonesia – Autos  Panel Report, Indonesia – Certain Measures Affecting the Automobile 
Industry , WT/DS54/R , WT/DS55/R , WT/DS59/R , WT/DS64/R , Corr.1 and 
Corr.2, adopted 23 July 1998, and Corr.3 and Corr.4, DSR 1998:VI, p. 
2201 
Indonesia – Chicken  Panel Report, Indonesia – Measures Concerning the Importation of 
Chicken Meat and Chicken Products , WT/DS484/R  and Add.1, adopted 22 
November 2017, DSR 2017:VIII, p. 3769  
Indonesia – Chicken 
(Article 21.5 – 
Brazil)  Panel Report, Indonesia – Measures Concerning the Importation of 
Chicken Meat and Chicken Products  – Recourse to Ar ticle 21.5 of the DSU 
by Brazil,  WT/DS484/RW  and Add.1, circulated to WTO Members 10 
November 2020 [adoption/ appeal pending]  
Indonesia – Import 
Licensing Regimes  Panel Report, Indonesia – Importation of Horticultural Products, Animals 
and Animal Products , WT/DS477/R , WT/DS478/R , Add.1 and Corr.1, 
adopted 22 November 2017, as modified by Appellate Body Report 
WT/DS477/AB/R, WT/DS478/AB/R, DSR 2017:VII, p. 3131  
Japan – Alcoholic 
Beverages II  Appellate Body Report, Japan – Taxes on Alcoholic Beverages , 
WT/DS8/AB/R , WT/DS10/AB/R , WT/DS11/AB/R , adopted 1 November 
1996, DSR 1996:I, p. 97  
Korea – Various 
Measures on Beef  Appellate Body Report, Korea – Measures Affecting Imports of Fresh, 
Chilled and Frozen Beef , WT/DS161/AB/R , WT/DS169/AB/R , adopted 10 
January 2001, DSR 2001:I, p. 5  
Mexico – Taxes on 
Soft Drinks  Appellate Body Report, Mexico – Tax Measures on Soft Drinks and Other 
Beverages , WT/DS308/AB/R , adopted 24 March 2006,  DSR 2006:I, p. 3  
Peru – Agricultural 
Products  Panel Report, Peru – Additional Duty on Imports of Certain Agricultural 
Products , WT/DS457/R  and Add.1, adopted 31 July 2015, as modified by 
Appellate Body Rep ort WT/DS457/AB/R, DSR 2015:VII, p. 3567  
Russia – Railway 
Equipment  Appellate Body Report, Russia – Measures Affecting the Importation of 
Railway Equipment and Parts Thereof , WT/DS499/AB/R  and Add.1, 
adopted 5 March 2020  
Russia – Traffic in 
Transit  Panel Report, Russia – Measures Concerning Traffic in Transit , 
WT/DS512/R  and Add.1, adopted 26 April 2019  
Thailand – 
Cigarettes 
(Philippines)  Appellate Body Report, Thailand – Customs and Fiscal Measures on 
Cigarettes from the Philippines , WT/DS371/AB/R , adopted 15 July 2011 , 
DSR 2011:IV, p. 2203  
Turkey – Rice Panel Report, Turkey – Measures Affecting the Importation of Rice , 
WT/DS334/R , adopted 22 October 2007, DSR 2007:VI, p. 2151  
US – Anti-Dumping 
Methodologies 
(China)  Appellate Body Report, United States – Certain Methodologies and Their 
Application to Anti -Dumping Proceedings Involving China , 
WT/DS471/AB/R  and Add.1, adopted 22 May 2017, DSR 2017:III, p. 1423  
US – Carbon Steel  Appellate Body Report, United States – Countervailing Duties on Certain 
Corrosion -Resistant Carbon Steel Flat Products from Germany , 
WT/DS213/AB/R  and Corr.1, adopted 19 December 2002, DSR 2002:IX, 
p. 3779  WT/DS583/12  
 
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  Short title  Full case title and citation  
US – COOL  Appellate Body Reports, United States – Certain Country of Origin 
Labelling (COOL) Requirements , WT/DS384/AB/R  / WT/DS386/AB/R , 
adopt ed 23 July 2012, DSR 2012:V, p. 2449  
US – COOL  Panel Reports, United States – Certain Country of Origin Labelling (COOL) 
Requirements , WT/DS384/R  / WT/DS386/R , adopted 23 July 2012, as 
modified by Appellate Body Reports WT/DS384/AB/R / WT/DS386/AB/R, 
DSR 2012:VI, p. 2745  
US – Corrosio n-
Resistant Steel 
Sunset Review  Appellate Body Report, United States – Sunset Review of Anti -Dumping 
Duties on Corrosion -Resistant Carbon Steel Flat Products from Japan , 
WT/DS244/AB/R , adopted 9 January 2004, DSR 2004:I, p. 3  
US – Export 
Restraints  Panel Report, United States – Measures Treating Exports Restraints as 
Subsidies , WT/DS194/R  and Corr.2 , adopted 23 August 2001, DSR 
2001:XI, p. 5767  
US – FSC Appellate Body Report, United States – Tax Treatment for "Foreign Sales 
Corporations ", WT/DS108/AB/R , adopted 20 March 2000, DSR 2000:III, 
p. 1619  
US – FSC (Article 
21.5 – EC) Appellate Body Report, United States – Tax Treatment for "Foreign Sales 
Corporations " – Recourse to Article 21.5 of the DSU by the European 
Communities , WT/D S108/AB/RW , adopted 29 January 2002, DSR 2002:I, 
p. 55 
US – Gambling  Appellate Body Report, United States – Measures Affecting the Cross -
Border Supply of Gambling and Betting Services , WT/DS285/AB/R , 
adopted 20 April 2005, DSR 2005:XII, p. 5663 (and Corr.1, DSR 
2006:XII, p. 5475)  
US – Gasoline  Appellate Body Report, United S tates – Standards for Reformulated and 
Conventional Gasoline , WT/DS2/AB/R , adopted 20 May 1996, DSR 1996:I, 
p. 3 
US – Lead and 
Bismuth II  Appellate Body Report, United States – Imposition of Countervailing 
Duties on Certain Hot -Rolled Lead and Bismuth Carbon Steel Products 
Originating in the United Kingdom , WT/DS138/AB/R , adopted 7 June 
2000, DSR 2000:V, p. 2595  
US – Renewable 
Energy Panel Report, United States – Certain Measures Relating to the Renewable 
Energy Sector , WT/DS510/R  and Add.1, circulated to WTO Members 27 
June 2019 [appeal/adoption pending]  
US – Shrimp  Appellate Body Report, United States – Import Prohibition of Certain 
Shrimp and Shrimp Products , WT/DS58/AB/R , adopted 6 November 1998, 
DSR 1998:VII, p. 2755  
US – Shrimp 
(Ecuador)  Panel Report, United States – Anti-Dumping Measure on Shrimp from 
Ecuador , WT/DS335/R , adopted on 20 Febru ary 2007, DSR 2007:II, p. 
425 
US – 
Supercalendered 
Paper  Appellate Body Report, United States – Countervailing Measures on 
Supercalendered Paper from Canada , WT/DS505/AB/R  and Add.1, 
adopted 5 March 2020  
US – Tariff 
Measures (China ) Panel Report, United States – Tariff Measures on Certain Goods from 
China , WT/DS543/R  and Add.1, circulated to WTO Members 15 September 
2020 [appeal/adoption pending]  
US – Tuna II 
(Mexico) (Article 
21.5 – Mexico)  Appellate Body Report, United States – Measures Concerning the 
Importation, Marketing and Sale of Tuna and Tuna Pro ducts – Recourse to 
Article 21.5 of the DSU by Mexico , WT/DS381/AB/RW  and Add.1, adopted 
3 December 2015, DSR 2015:X, p. 5133  
US – Underwear  Appellate Body Report, United States – Restrictions on Imports of Cotton 
and Man -made Fibre Underwear , WT/DS24/AB/R , adopted 25 February 
1997, DSR 1997:I, p. 11  WT/DS583/12  
 
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  Short title  Full case title and citation  
US – Wheat Gluten  Appellate Body Report, United States – Definitive Safeguard Measures on 
Imports of Wheat Gluten from the European Communities , 
WT/DS166/AB/R , adopted 19 January 2001, DSR 2001:II, p. 717  
US – Zeroing (EC)  Appellate Body Report, United States – Laws, Regulations and 
Methodology for Calculating Dumping Margins ( "Zeroing "), 
WT/DS294/AB/R , adopted 9 May 2006, and Corr.1, DSR 2006:II, p. 417  WT/DS583/12  
 
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  EXHIB ITS CITED IN THIS REPORT  
Exhibit  Description/Title  
EU-1, TUR-2 Social Insurance and Universal Health Insurance Law No.5510 (31 May 
2006), Official Gazette No. 26200 of 16 June 2006 ( "Social Insurance 
and UHI Law ") 
EU-2 Social Security Institution, "Universal Heath Insurance " 
EU-3 M. Tatar, "Short PPRI Pharma Profile, Turkey 2017 ", WHO 
Collaborating Centre for Pharmaceutical Pricing and Reimbursement 
Policy ( "Short PPRI Pharma Profile Turkey ") 
EU-4, TUR-3 Social Security Institution Law No 5502 (16 May 2006), Official Gazette 
No. 26173 of 20 May 2006 ( "Social Security Institution Law ") 
EU-5 G. Oner and M. Kecik, "Turkish Medicines and Medical Devices Agency ", 
presentation at 2014 WHO Technical Briefing Seminar  
EU-8, TUR-11 Social Security Institution Regulation on Medicine Reimbursement, 
Official Gazette No. 29620 of 10 February 2016 ( "Drug Reimbursement 
Regulation ") 
EU-11, EU -95, EU -102, 
TUR-10, TUR -10a Excerpts from the Health Implementation Notification/Comm uniqué 
(SUT - Sağlık Uygulama Tebliği), 11 February 2019 ( "HIC/SUT ") 
EU-12  Republic of Turkey, Ministry of Development, Tenth Development Plan 
2014-2018 (2014), approved by Decision No. 1041 of the Grand 
National Assembly of Turkey of 2 July 2013 ( "Tenth  Development Plan 
2014-2018") 
EU-14, TUR-37  Ministry of Health and Ministry of Development, Structural 
Transformation Program for Healthcare Industries Action Plan, 
November 2014 ( "Structural Transformation Program for Healthcare 
Industries Action Plan ") 
EU-15  Republic of Turkey, Office of the Prime Minister, 2016 Action Plan of 
the 64th Government (Implementation and Reforms), 10 December 
2015 ( "2016 Action Plan of the 64th Government ") 
EU-16  65th Government Programme, 24 May 2016 ( "65th Government 
Programme ") 
EU-19 A. Yücel, "Foreign investments will be [like] medicine! ", Dünya, 30 July 
2019 
EU-21 Social Security Institution, Rejoinder in court proceedings raised by the 
Association of Research -Based Pharmaceutical Companies (AIFD) 
before the Turkish State Council, Case 2017/1308, 21 September 2017 
("SSI Rejoinder ") 
EU-23 TMMDA, "Pharmaceutical Localisation Project Work Conducted by the 
Ministry of Health ", presentation of December 2017  
EU-28 EU Commissioner for Trade, Lette r to the Turkish Minister of Economy, 
5 April 2017  
EU-29 Turkish Minister of Economy, Letter to the EU Commissioner for Trade, 
19 June 2017  
EU-30 Social Security Institution, Defense in court proceedings raised by the 
Association of Research -Based Pharma ceutical Companies (AIFD) 
before the Turkish State Council, Case 2017/1308, 29 June 2017 ( "SSI 
Defense ") 
EU-34 H. Gursoz, President of the TMMDA, "Pharmaceutical Localisation 
Project: Transition from Importation to Manufacturing ", presentation 
of 6 March 2017  
EU-35 HSPC Decision regarding the Localization Process, October 2016 
("HSPC Decision ") 
EU-38, TUR-12 Social Security Institution Regulation on Alternative Reimbursement 
for Universal Health Insurance, published in the Offi cial Gazette 29620 
on 10 February 2016 ( "Alternative Reimbursement Regulation ") WT/DS583/12  
 
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  Exhibit  Description/Title  
EU-40 H. Eroğlu, Vice President of the TMMDA, "Local Production ", 
presentation at the Symposium on Rational Approach to Current Issues 
concerning Medicines, Ankara, 7 -9 Octobe r 2016  
EU-45, TUR-60 Roadmap for the process of localization, setting forth of the principles 
for the negotiation, 14 March 2016 ( "Localisation roadmap ") 
EU-46 SSI and TMMDA, Communication, "Local production " 
EU-51 Excerpts from Annex 4/A to the HIC/SUT, December 2018  
EU-52, TUR-20 Protocol on the procurement of medicines from pharmacies which are 
members of the Turkish Pharmacists ' Association (TEB) by persons 
covered by the Social Security Institution ( "TPA Protocol ") 
EU-53 Regulation on the p rocedures and principles governing checking of 
invoices of healthcare providers and reimbursement of their fees, 
Official Gazette No. 30001 of 8 March 2017  
EU-62, TUR-58 Social Security Institution, Public Announcement on the Localisation 
Process, 19 Janu ary 2018  
EU-84 Republic of Turkey Ministry of development, Eleventh Development 
Plan (2019 -2023), Transformation in healthcare industries, Specialised 
Committee Report of July 2018 ( "Ministry of development, Eleventh 
Development Plan 2019 -2023") 
EU-87, TUR-35 Ministry of Health, Strategic Plan of TMMDA for 2019 -2023, 31 
December 2018  
EU-88 Government of Turkey, 11th Development Plan for the period 2019 -
2023 ( "Government of Turkey, Eleventh Development Plan 2019 -
2023") 
EU-89 Regulation on the Ma rketing Authorization of Medicinal Products for 
Human Use, Official Gazette No. 25705 of 19 January 2005 ( "Marketing 
Authorization Regulation ") 
EU-91, TUR-33 Ministry of Trade, Implementing Regulation on Import Control of 
certain products inspected by the Ministry of Health, Official Gazette 
No. 30991 of 27 December 2019 ( "Implementing Regulation on Import 
Control ") 
EU-92 TMMDA, Announcement on import applications for medical products, 
31 December 2019  
EU-93 Regulation regarding the Varia tions on Medicinal Products for Human 
Use with Marketing Authorization or Pending Registration, Official 
Gazette No. 25823 of 23 May 2005  
EU-95, EU -11, EU -102, 
TUR-10, TUR -10a Implementing Regulation for Healthcare ( "HIC/SUT ") 
EU-96 Annex 4/C to the HIC/ SUT 
EU-97 TMMDA, Guideline for Working Principles and Procedures of Human 
Medicinal Products Priority Assessment Commission ( "Prioritization 
Guideline ") 
EU-99, TUR-36 Ministry of Health, TMMDA, Administrative Activity Report 2016, 
February 2017 ( "2016 TMMDA Activity Report ") 
EU-100 R. Yeter, "Watch out with the localization trap ", Yeni Şafak, 24 
February 2018  
EU-102, EU -11, EU -95, 
TUR-10, TUR -10a Excerpts from the Health Implementation Notification/Communiqué 
(SUT - Sağlık Uygulama Tebliği), 5 Ma y 2020 ( "HIC/SUT ") 
EU-109, TUR-7 Social Security Institution, Activity Report 2018  
("SSI Activity Report 2018 ") 
EU-111, TUR-78 TMMDA Administrative Operation Report 2019  
EU-117 IQVIA, Report on the Turkish healthcare market, September 2020  WT/DS583/12  
 
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  Exhibit  Description/Title  
EU-118 Comparison between applications for priority granted for imported and 
domestic products  
TUR-17 Communiqué on the Pricing of Medicinal Products for Human Use, 
Official Gazette No. 30195 of 29 September 2017 ( "Pricing 
Communiqué ") 
TUR-18 Decree on Pricing of Human Medicinal Products No. 2017/9901, Official 
Gazette No. 29989 of 24 February 2017 ( "Pricing Decree ") 
TUR-19 Article 26, Regulation on the Marketing Authorization of Medicinal 
Products for Human Use, Official Gazette No. 25705 of 19 January  
2005, amended on 14 November 2013  
TUR-21 Annex 4/A of the HIC/SUT  
TUR-27 Law on Turkish Pharmacists Association No. 6643 (25 January 1956), 
Official Gazette No. 9223 of 2 February 1956  
TUR-30 "Commission aims to bring back medicine production to Europe ", 
Euractiv , 22 April 2020  
TUR-31 Rym Momtaz, "Macron urges massive increase in local production of 
medical equipment ", Politico , 31 March 2020  
TUR-34 Ministry of Health, Strategic Plan 2019 -2023 
TUR-38 Ministry of Health, Strategic Plan of TMMDA for 2018-2022 
TUR-43 Healthcare Industries Steering Committee, Minutes of the 56th 
meeting,13 December 2017  
TUR-45 Social Security Institution Decision No. 2015/3 of 1 April 2015 $  
TUR-57 Social Security Institution, Public Announcement on the Localisation 
Process, 25 April 2017  
TUR-64 Table, Reimbursement applications for inclusion in Annex 4/A of Drug 
Reimbursement Regulation  
TUR-72 UN Human Rights Council, Resolution A/HRC/RES/12/24, 12 October 
2009  
TUR-77 Ministry of Health, Strategic Plan of TMMDA for 2013 -2017, 12 
December 2013  
TUR-79 Ministry of Health, TMMDA Administrative Operation Report 2018, 
February 2019 ( "2018 TMMDA Activity Report ") 
TUR-80 TMMDA Administrative Operation Report 2017, February 2018 ( "2017 
TMMDA Activity Report ") 
TUR-95 Jakob Hanke Vela, "Germany wants to reshore pharma production 
from Asia ", Politico , 13 March 2020  
TUR-96 Jim Brunsden and Michael Peel, "Covid -19 exposes EU 's reliance on 
drug imports ", Financial Times , 20 April 2020  
TUR-97 European Commission, Healt h and Food Safety Directorate -General, 
Pharmaceutical Committee, Dependency of the EU pharmaceutical 
industry on active pharmaceutical ingredients and chemical raw 
materials imported from third countries , 12 March 2020  
TUR-98 H. Biskin, "Shortage of supply in medicine to cure breast cancer ", 
Duvar, 22 September 2017;  
"Local solution for imported medicine used in intestinal diseases ", 
Anadolu, 16 January 2017  
TUR-99 "Shortage of supply in this medicine ", Sağlık Aktüel, 23 August 2012  
TUR-100 "Citizens are victims, that drug is still not on the market ", Yeniakit, 29 
November 2018  
TUR-101 Antalya Provincial Health Directorate, Letter to the Ministry of Health 
regarding oxtyocine ampoule, 7 March 2016;  
Yaşam Hastanesi Life Hospital Antaliya, Lett er to the Pharmacies 
Branch of the Provincial Health Directorate, 26 February 2016;  
Private Vitale Gynecology and Obstetrics Hospital, Letter to the 
Provincial Health Directorate Pharmacies Branch, 25 February 2016;  WT/DS583/12  
 
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  Exhibit  Description/Title  
Medical Park Özel Antalya Hastane Komple ksi, Letter to the Provincial 
Health Directorate Pharmacies Branch, 24 February 2016;  
Private Akdeniz Şifa Hospital, Letter to the Provincial Health 
Directorate Pharmaceuticals and Pharmacies Branch, 22 February 
2016;  
Özel/Private Anadolu Hastanesi Antalya , Letter to the Provincial Health 
Directorate Pharmaceuticals and Pharmacies Branch, 1 March 2016  
TUR-102 Ministry of Family and Social Policies, Directorate General for Disabled 
and Elderly, Letter to the Ministry of Health, 25 March 2016  
TUR-106 Table, Applications for priority under the Prioritization Guideline  
TUR-112 Social Security Institution, Directorate General for Provision of 
Services Healthcare Software Department, "Medula Project " 
presentation 2019  
TUR-117 Documents relating to a purc hase by the SSI from a pharmacy of the 
pharmaceutical products dispensed to patients in December 2020  
TUR-130 "Pharmacy chambers blame medical firms for drug shortages ", Daily 
News (Istanbul, 23 January 2017); C. Caglayan and E. Erkoyun, 
"Pharmacy stocks run low as Turkey 's drug price policy hits supplies ", 
Reuters (Istanbul, 6 February 2019); M. Xuequan, "Spotlight: Turkey 
faces shortages of medicine due to currency fluctuations ", Xinhuanet 
(21 February 2019)  
TUR-131 "The rise in the exchange rate also hit the pharmaceutical industry: 
alleged supply problems in 'more than 500 medicines '", Medimagazin 
(10 October 2018)  
 
 
  WT/DS583/12  
 
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  ABBREVIATIONS USED IN THIS REPORT  
Abbreviation  Description  
ARC Alternative Reimbursement Commission  
BCI Business confidential information  
DCR Domestic content requirement  
DRC Drug Reimbursement Commission  
DSB Dispute Settlement Body  
DSU Understanding on Rules and Procedures Governing the Settlement of 
Disputes  
GATS  General Agreement on Trade in Services  
GATT 1994  General Agreement on Tariffs and Trade 1994  
GMP good manufacturing practices  
GPA Agreement on Government Procurement  
HISC Healthcare Industries Steering Committee  
HSPC  Healthcare Services Pricing Commission  
LAC Localisation Assessment Commission  
PPAs Power purchase agreements  
SCM Agreement  Agreement on Subsidies and Countervailing Measures  
SPDs Solar power developers  
SSI Social Security Institution  
TBT Agreement  Agreement on Technical Barriers to Trade  
TMMDA  Turkish Medicines and medical Devices Agency  
TPA Turkish Pharmacists ' Association  
TRIMs Agreement  Agreement on Trade Related Investment Measures  
TRIPS Agreement  Agreement on Trade -Related Aspects of Intellectual Property Rights  
TRRs Trade -related requirements  
UHIS Universal Health Insurance Scheme  
UNCTAD  United Nations Conference on Trade and Development  
UNIDO  United Nations Industrial Development Organization  
WHO World Health Organization  
WIPO  World Intellectual Property Organization  
WTO World Trade Organization  
 
 
  WT/DS583/12  
 
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1  INTRODUCTION  
1.1  Complaint by the European Union  
1.1.  On 2 April 2019, the European Union requested consultations with Turkey pursuant to 
Articles  1 and 4 of the Understanding on Rules and Procedures Governing the Se ttlement of Disputes 
(DSU) and Article XXII:1 of the General Agreement on Tariffs and Trade 1994 (GATT 1994), Article  8 
of the Agreement on Trade Related Investment Measures (TRIMs Agreement), Article 64 of the 
Agreement on Trade -Related Aspects of Intelle ctual Property Rights (TRIPS Agreement), and 
Article  4.1 of the Agreement on Subsidies and Countervailing Measures (SCM Agreement) with 
respect to the measures and claims set out below.1 
1.2.  Consultations were held on 9 and 10 May 2019.  
1.2  Panel establishment and composition  
1.3.  On 2 August 2019, the European Union requested the establishment of a panel pursuant to  
Articles  4 and 6 of the DSU, Article XXIII of GATT 1994, Article 8 of the TRIMs Agreement, and  
Article 4.4 of the SCM Agreement with stand ard terms of reference.2 At its meeting on 
30 September  2019, the Dispute Settlement Body (DSB) established a panel pursuant to the request 
of the European Union in document WT/DS583/3, in accordance with Article  6 of the DSU.3 
1.4.  The Panel 's terms of refer ence are the following:  
To examine, in the light of the relevant provisions of the covered agreements cited by 
the parties to the dispute, the matter referred to the DSB by the European Union in 
document WT/DS583/3 and to make such findings as will assist the DSB in making the 
recommendations or in giving the rulings provided for in those agreements.4 
1.5.  On 4 March 2020 , the European Union requested that the Director -General determine the 
composition of the panel, pursuant to Article 8.7 of the DSU . On 17 Mar ch 2020, the Director -General 
accordingly composed the Panel as follows5: 
Chairperson:  Mr Gudmundur HELGASON  
 
Members:   Ms Beverley PEREIRA  
   Ms Paulyne WAIRIMU  
 
1.6.  Brazil, Canada, China, India, Indonesia, Japan, the Russian Federation, Switzerland, Ukraine, 
and the United States notified their interest in participating in the Panel proceedings as third parties.  
1.3  Panel proceedings  
1.3.1   General  
1.7.  After consultation with the parties, the Panel adopted its initial Working Procedures and initial 
timetable on 15 April 2020. Both were modified in the course of the proceedings , as elaborated 
further below, for reasons related to the COVID -19 pandemic .6 
 
1 See Request for consultations by the European Union, WT/DS583/1, G/L/1305, G/TRIMS/D/44, 
IP/D/41 G/SCM/D126/1.  
2 Request for the establishment of a panel by the European Union, WT/DS583/3 (European Union 's 
panel request).  
3 See WT/DSB/M/4 34. 
4 WT/DS583/4.  
5 WT/DS583/4.  
6 See the Panel 's Working Procedures in Annex A -1 to this Report . On 15 April 2020 , after consultation 
with the parties,  the Panel also adopted Additional Working Procedures concerning Protection of Business 
Confidential Inf ormation  (BCI)  (see Annex A -2 to this Report ). Neither party submitted BCI to the Panel in 
these  proceedings.  WT/DS583/12  
 
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  1.8.  The European Union and Turkey submitted their first written submissions on 19 May 2020 and 
20 July 202 0, respectively, and their second written submissions on 30 October 2020 and 
29 January  2021, respectively. The Panel sent a first set of questions to the parties and third parties 
for written responses by 29 March 2021. The Panel held a substantive meetin g with the parties 
during the period 20 -23 April 2021. A session with the third parties took place on 21 April 2021. 
Following the meeting, the Panel sent a second set of questions to the parties for written responses 
by 28 May 2021 and the parties provide d comments on one another 's responses by 18 June 2021. 
On 29 June 2021, the Panel issued the descriptive part of its Report to the parties. The Panel issued 
its Interim Report to the parties on 30 September 2021 and its Final Report to the parties on 
11 November 2021.  
1.3.2   Preliminary ruling under Article 6.2 of the DSU  
1.9.  On 15 May 2020, Turkey requested a preliminary ruling by the Panel that the European Union 's 
panel request fails to identify the specific measures at issue and, with respect to certain claims, fa ils 
to provide a brief summary of the legal basis of the complaint sufficient to present the problem 
clearly.7 Turkey requested that the Panel issue the preliminary ruling before the date on which 
Turkey 's first written submission was due (22 June 2020).  
1.10.   On 25 May 2020, the Panel invited the European Union and the third parties to comment on 
Turkey 's preliminary r uling request. On the same date, the Panel informed the parties and third 
parties that it intended to issue its decision on the preliminary ruling request by 6 July 2020. The 
Panel then extended the deadline for the submission of Turkey 's first written sub mission, and of the 
third parties ' written submissions, until after the issuance of its preliminary ruling.  
1.11.    On 5 June 2020, the Panel received the European Union 's comments on Turkey 's request for 
a preliminary ruling. On 12 June 2020, the Panel received comments from Canada, Ukraine, and the 
United States. On 19 June 2020, the Panel received Turkey 's comments on the European Union 's 
comments. On 26 June 2020, the Panel received further comments from the European Union. On 
3 July 2020, the Panel informed t he parties that to fully consider the issues arising from Turkey 's 
preliminary ruling request, it would issue its preliminary ruling on 10 July 2020.  
1.12.   The Panel issued its preliminary ruling on 10 July 2020 and indicated that it would become an 
integral par t of the Panel 's Final Report, subject to any changes that may be necessary in the light 
of comments received from the parties at the interim review stage. The Panel 's preliminary ruling is 
included in Annex A -3. 
1.4  Impact of the COVID -19 pandemic on the proc eedings  
1.13.   For reasons relating to the COVID -19 pandemic, and as elaborated further below, the Panel 
modified its initial Working Procedures and timetable as follows: (i) when it became clear that it 
would be impossible to proceed with an in -person first subs tantive meeting with the parties in 
September 2020, and both parties expressed a preference for the Panel to postpone the meeting 
while avoiding undue delay in the proceedings, the Panel proposed that the parties file their first and 
second written submiss ions, and respond to a first set of written questions from the Panel, prior to 
the date of the postponed substantive meeting; (ii) when it subsequently became clear that it would 
still not be possible to hold an in -person meeting during the March/April 202 1 window that the Panel 
had envisaged, the Panel decided to hold the meeting in virtual format; and (iii) following further 
consultation with the parties at that meeting, the Panel decided that an additional substantive 
meeting with the parties was not war ranted in the circumstances of this dispute. The Panel 's 
decisions, which are interrelated, are reflected in a series of communications to the parties annexed 
to this Report (in Annex B) and summarized below.  
1.14.   At the time that it adopted the initial Working  Procedures for this dispute, the Panel indicated 
that, if any change to the proceedings were to become necessary because of the COVID -19 
pandemic, the Panel would amend the Working Procedures following consultation with the parties. 
In a 10  July 2020 comm unication to the parties, the Panel noted that the travel restrictions in place 
at that time would restrict travel to Geneva by some participants in the proceedings. The Panel 
stated that it would continue to monitor developments with respect to travel res trictions with a view 
 
7 Turkey 's request for a preliminary ruling, para. 2.  WT/DS583/12  
 
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  to consulting further with the parties on or confirming, by the middle of August, the timing of the 
first substantive meeting initially scheduled for 22 -24 September 2020. The Panel invited the parties 
to provide their views on how th e Panel should proceed if the current restrictions were to remain in 
place, and they did so on 17 July 2020.  
1.15.   In their comments, both parties proposed that if an in -person meeting was impossible in 
September, the first substantive meeting should be postpone d to a later date. At the same time, 
both parties agreed that the Panel should conduct the proceedings in a manner that avoided undue 
delay. The European Union proposed that the Panel should amend its Working Procedures to have 
just one substantive meeting  with the parties in person, and have the parties file their second written 
submissions (and possibly have an exchange of written questions and answers) prior to that meeting. 
The European Union suggested that the postponed first substantive meeting could be held on the 
dates when the second substantive meeting with the parties had initially been scheduled, 
i.e. 12-13 January 2021.  
1.16.   In a 12 August 2020 communication (Annex B -1), the Panel informed the parties that, based 
on the information available at that time, it would not be possible to hold an in -person first 
substantive meeting in September 2020, as initially scheduled. The Panel proposed to modify its 
Working Procedures to provide that the parties would file their second written submissions prior to 
the first substantive meeting, and to provide that the Panel may hold a second substantive meeting 
with the parties if so requested by either party. In their comments, neither party objected to the 
proposed procedure, but both requested a longer time period to prepare their second written 
submissions. Accordingly, in a communication to the parties and third parties on 25 August 2020 
(Annex B -2), the Panel adopted and transmitted to the parties and third parties revised Working 
Procedures and a new partial tim etable, setting out the dates for the parties ' second written 
submissions and a provisional window for the timing of the first substantive meeting (March/April 
2021). Pursuant to the revised partial timetable, the European Union submitted its second writte n 
submission on 30 October 2020. Turkey submitted its second written submission on 29 January 
2021.  
1.17.   In a 3 February 2021 communication (Annex B -3), the Panel informed the parties that, based 
on the information available at that time, it would not be possib le for the participants in the 
proceedings to plan to hold an in -person first substantive meeting within the March/April 2021 
provisional window for the timing of the rescheduled first substantive meeting. The Panel proposed 
holding a first substantive mee ting with the parties (including the third -party session) in virtual 
format. The European Union and Turkey provided their comments on the possibility of holding the 
first substantive meeting in virtual format on 8 February and 10 February 2021, respectivel y. In a 
17 February 2021 communication (Annex B -4), the Panel informed the parties that it had decided 
to proceed by holding a first substantive meeting with the parties in virtual format (including a third -
party session) during the week of 19 -23 April 202 1. In a 25 February 2021 communication to the 
parties (Annex B -5), the Panel set out its proposed approach for conducting the first substantive 
meeting, reflected in proposed revisions to the partial timetable, revisions to the Working 
Procedures, and a Pr otocol for logistical aspects of the virtual meeting. On 3 March 2021, the parties 
provided their comments on the Panel 's proposed approach as reflected in these proposed 
procedures and timetable. In a communication on 5 March 2021 (Annex B -6), the Panel t ransmitted 
to the parties the adopted revised partial timetable, revised Working Procedures and a Protocol for 
logistical aspects of the virtual meeting.  
1.18.   The Panel held a substantive meeting with the parties from 20 to 23 April 2021. At the 
substantive mee ting, the parties presented their views on the necessity of holding a second 
substantive meeting, on the timing of such a meeting, on the format of such a meeting (i.e. in -
person or virtual again), and on any alternatives to holding a second substantive me eting. Turkey 
argued that a second substantive meeting was the usual practice and necessary in this case. The 
European Union argued that a second substantive meeting was not required and was unnecessary 
in this case. In a 3 May 2021 communication to the pa rties, the Panel informed the parties that it 
considered that an additional substantive meeting was not warranted for the reasons set out in that 
communication (Annex B -7). Instead of holding an additional substantive meeting, the Panel invited 
the parties  to provide written comments on one another 's responses to the second set of questions 
from the Panel, sent to the parties following the first substantive meeting.  WT/DS583/12  
 
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  1.5  Translation issues  
1.19.   With its first written submission, the European Union provided, as exhibi ts, its English 
translations of various Turkish legal instruments and documents. In its first written submission, 
Turkey stated that "with regard to the content of a number of exhibits, the European Union has 
provided an erroneous or misleading translation  with a view to skew the Panel 's opinion. "8 Turkey 
referred, in particular, to Exhibits EU -1, EU -4, EU -8, EU -11, EU -38, EU -45, EU -51, EU -52, EU -62, 
EU-95 and EU -102.9 Turkey stated that, in its own submission, it "will identify the errors of 
translation provided by the European  Union and will re -submit new exhibits, as appropriate ".10 
Accordingly, Turkey submitted Exhibits TUR -2, TUR -3, TUR -10, TUR -10a, TUR -11, TUR -12, TUR-20, 
TUR-21, TUR -33, TUR -37, TUR -57, TUR -58 and TUR -60. 
1.20.   In its second written submission, the European Union stated that "[w]hile mistakes are always 
possible, nothing in the EU 's translations supports Turkey 's allegation that the EU was attempting to 
mislead the Panel. "11 The European Union responded to some of the translation issues raised by 
Turkey.12 The European Union also submitted that "Turkey agrees with the main factual elements of 
the Localisation Requirement and Turkey 's reimbursement system f or outpatient pharmaceuticals, 
as described by the EU. "13 In its second written submission, Turkey addressed some of the European 
Union 's responses and reiterated its position with respect to the translation of certain terms.14 
1.21.   Neither party directed any r equest to the Panel to take any decision on any of the disputed 
translation issues, and the Panel did not consider it necessary to take any further steps in relation 
to them. The Panel has taken note of the parties ' disagreement, and of the different trans lations 
provided by the parties. Where relevant, the Panel addresses the differences in translation with 
respect to certain exhibits when referring to these exhibits.15 
2  FACTUAL ASPECTS  
2.1.  This section provides an overview of the wider factual and regulatory context in which the 
measures at issue in this dispute operate, drawing upon common elements from the parties ' 
submissions. It then identifies the measures at issue, as set out in the European Union 's request for 
the establishment of a panel (Eu ropean Union 's panel request) and describes the factual aspects of 
each of these measures. A more detailed review of the facts, and the Panel 's findings on any disputed 
factual issues, will be set out as necessary in the Panel's  findings in section 7 of th is Report.  
2.1  Factual background  
2.1.1   Turkey 's Universal Health Insurance Scheme and relevant governmental entities  
2.2.  In 2006, Turkey introduced the Universal Health Insurance Scheme (UHIS)16, which covers 
approximately 99% of its population17 and provides "comprehe nsive, fair and equitable access to 
healthcare services "18, including access to pharmaceutical products, to virtually anyone residing in 
Turkey.19 The system is mainly financed by social security premiums based on employer and 
employee contributions. Any deficit is covered from public funds.20 
 
8 Turkey 's first written submission, para. 17.  
9 Turkey 's first written submission, fn 8 to para. 17.  
10 Turkey 's first written submission, para. 17.  
11 European Union 's second written submission, para. 15.  
12 European Union 's second written submission, paras. 16 -25.  
13 European Union 's second written submission, para. 33.  
14 Turkey 's second written submission, paras. 9 -15. 
15 See footnotes 26, 39, 41, 45, 51, 52, 56, 92, 637, 644, and paragraph 7.91. 
16 Social Insurance and Universal Health Insurance  Law, Law No. 5510 (31 May 2006), Official Gazette 
No. 26200 of 16 June 2006 (Social Insurance and UHI Law) (Exhibits EU -1, TUR -2).  
17 M. Tatar, "Short PPRI Pharma Profile, Turkey 2017", WHO Collaborating Centre for Pharmaceutical 
Pricing and Reimbursement  Policy (Short PPRI Pharma Profile Turkey) (Exhibit EU -3), p. 7. See also Social 
Security Institution Activity Report 2018  (SSI Activity Report 2018)  (Exhibit s EU-109, TUR-7), p. 1.  
18 Social Security Institution, "Universal Health Insurance " (Exhibit EU -2). 
19 Turkey 's first written submission, para. 28. 
20 Short PPRI Pharma Profile Turkey (Exhibit EU -3), p. 7.  WT/DS583/12  
 
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  2.3.  The Ministry of Health is the main regulatory body in respect of matters concerning the market 
authorisatio n, pricing, legal classification and inspection of pharmaceutical products.21 Within the 
Ministry of Health, the Turkish Medicines and Medical Devices Agency (TMMDA) is responsible for 
the registration, marketing approval and authorization, pricing, legal classification and inspection of 
all human medicinal products.22 
2.4.  The Social Security Institution (SSI), currently affiliated with the Ministry of Family, Labour and 
Social Services, is in charge of implementing social security policies.23 It is responsible , inter alia , 
for paying for all healthcare goods and services, including pharmaceuticals.24 It also leads several 
commissions, consisting of members from various governmental entities. These include, in 
particular, the Healthcare Services Pricing Commissi on (HSPC)25, which decides on the prices of 
healthcare services and determines the reimbursement amounts, and its sub -commissions: the Drug 
Reimbursement Commission (DRC)26 and the Alternative Reimbursement Commission (ARC).27 
2.1.2   Placing of pharmaceutical pro ducts on the Turkish market  
2.5.  To be placed on the Turkish market, a pharmaceutical product must obtain:  
a. a "good manufacturing practices " (GMP) certification28; 
b. a marketing authorization29; 
 
21 Short PPRI Pharma Profile Turkey (Exhibit EU -3), p. 13. See also Turkey 's first written submission, 
para. 39.  
22 G. Oner and M. Kecik, "Turkish Medicines and Medical Devices Agency ", presentation at 2014 WHO 
Technical Briefing Seminar (Exhibit EU -5); Turkey 's first written submission, para. 40.  
23 Law on Social Security Institu tion, Law No. 5502 (16 May 2006), Official Gazette No. 26173 of 20 May 
2006 (Social Security Institution Law) (Exhibits EU-4, TUR-3), Article 3.  
24 Turkey 's first written submission, para. 39; second written submission, para. 19.  
25 The European Union, in i ts first written submission, refers to this entity as the "Healthcare Services 
Pricing Commission ". Turkey, in its first written submission, refers interchangeably to the "Healthcare Services 
Pricing Commission " and "Healthcare Services Pricing Committee ". The Panel notes this difference and refers to 
this entity as the "Healthcare Services Pricing Commission " (HSPC) . 
26 The Drug Reimbursement Commission ( DRC) is mainly responsible for deciding which new 
pharmaceutical products are included in and excluded f rom the list of pharmaceuticals reimbursed by the SSI. 
(Social Security Institution Regulation on Medicine Reimbursement, Official Gazette No. 29620 of 10 February 
2016 (Drug Reimbursement Regulation) (Exhibits EU-8, TUR-11), Article 5(1)(a), (b) and (d) .) The Drug 
Reimbursement Regulation refers to this entity as the "Medicine Reimbursement Commission " (in the 
translation provided by Turkey, Exhibit TUR -11) or the "Drug Reimbursement Committee " (in the translation 
provided by the European Union, Exhibit EU -8). The European Union refers in its first written submission 
interchangeably to the "Drug Reimbursement Committee " and "Drug Reimbursement Commission ". Turkey 
uses in its first written submission the term "Drug Reimbursement Commission ". The Panel notes this 
difference in translation and refers to this entity as the "Drug Reimbursement Commission ".  
27 The Alternative Reimbursement Commission ( ARC) is in charge of drawing up and establishing 
alternative reimbursement models for pharmaceutical products reimbursed by the SSI based on their financial 
or medical benefits in areas of specific need. (Social Security Institution Regulation on Alternative 
Reimbursement for Universal Health Insurance, Official Gazette No. 29620 of 10 February 2016 (Alternative 
Reimbursement Regulation) (Exhibits EU-38, TUR-12), Article 6 .) Some legal instruments provided by the 
parties, as well as the European Union in its fi rst written submission, refer to the ARC as the "Alternative 
Reimbursement Committee ". The title page of Exhibit TUR -12 explains that the Alternative Reimbursement 
Committee and Alternative Reimbursement Commission are the same actor. The Panel refers to t his entity as 
the "Alternative Reimbursement Commission ".  
28 A good manufacturing practices ( GMP) certification is conducted by the T urkish Medicines and Medical 
Devices Agency (TMMDA)  on a facility -basis for domestically produced pharmaceutical products a nd on a 
product -basis for imported pharmaceutical products. It is a prerequisite for obtaining a marketing 
authorization. (Turkey 's first written submission, paras. 42 -43.) 
29 A marketing authorization is granted by the TMMDA if a product meets all quality standards, and 
efficacy and safety conditions. (Regulation on the Marketing Authorization of Medicinal Products for Human 
Use, Official Gazette No.25705 of 19 January 2005 (Marketing Authorization Regulation)  (Exhibit EU -89), 
Article 16).  WT/DS583/12  
 
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  c. a fixed price, proposed to the TMMDA30 by the holder of a marketing authorization and 
calculated according to specific rules31; and  
d. a sales permit.32 
2.6.  To import some pharmaceutical products into Turkey, the importer is required to also submit 
an inspection certificate (or "control certificate "33) when making a cus toms declaration at customs 
offices. Inspection certificates are delivered by the Ministry of Health upon application by the 
pharmaceutical companies importing the products and on the basis of the relevant marketing 
authorization.34 They certify the produc ts' "suitability for human health and safety "35 and are valid 
for twelve months.  
2.1.3   Reimbursement36 of pharmaceutical products  
2.1.3.1   The Annex 4/A list  
2.7.  Pharmaceutical products are distributed to outpatients37 by retail pharmacies, which are private 
entities. The am ounts charged by pharmacies for pharmaceutical products covered by the social 
security system are met from payments made by the SSI and out -of-pocket payments by 
outpatients. The SSI makes payments to pharmacies based on monthly invoices submitted by the 
pharmacies. Regarding inpatient treatment, inpatients receive medicines directly from the hospitals, 
through a process different from the system at issue in this dispute.38 
2.8.  To be reimbursable, a pharmaceutical product must be included in the list in An nex 4/A to the 
Health Implementation Communiqué (HIC/SUT).39 The SSI determines which pharmaceutical 
 
30 Decree on Pric ing of Human Medicinal Products No. 2017/9901, Official Gazette No. 29989 of 
24 February 2017 (Pricing Decree) (Exhibit TUR 18), Article 4.  
31 Communiqué on the Pricing of Medicinal Products for Human Use, Official Gazette No. 30195 of 
29 September 2017 (Pr icing Communiqué) (Exhibit TUR -17) and Pricing Decree (Exhibit TUR -18).  
32 Sales permits are issued by the Ministry of Health on the basis of the marketing authorization and a 
price copy of the products, and after evaluation of the accuracy of the informat ion on the patient leaflet, 
package and label, as well as price adequacy. ( Article 26 , Regulation on the Marketing Authorization of 
Medicinal Products for Human Use, Official Gazette No.  25705 of 19 January 2005 , amended on 14 November 
2013 (Exhibit TUR -19).) 
33 Turkey 's first written submission, para. 586.  
34 Turkey 's responses to the second set of questions, para. 95. See also Turkey 's responses to the first 
set of questions, para. 106.  
35 Ministry of Trade, Implementing Regulation on Import Control of certa in products inspected by the 
Ministry of Health, Official Gazette No. 30991 of 27 December 2019 (Implementing Regulation on Import 
Control) (Exhibits EU -91, TUR-33), Article 4(1).  
36 The parties disagree on the use of the terms "reimbursement " and "reimbursement list ". The 
European Union uses these terms to describe the process through which the Turkish authorities (in particular 
the SSI) cover the costs for pharmaceutical products provided to patients. (See European Union 's first written 
submission,  Section 2.2.1 .) Turkey maintains that the term "reimbursement ", though occasionally used by 
Turkish authorities, does not accurately reflect the SSI 's practice concerning payment of medicines (Turkey 's 
second written submission, para. 12), and that Turkey 's healthcare system is implemented through "direct 
payments " by the SSI to hospitals and retail pharmacies. (Turkey 's first written submission, para. 65 .) Instead 
of "reimburse " and "reimbursement list ", Turkey uses the terms "pay for " and "list of medici nes to be paid for ". 
(Turkey 's first written submission, para. 66; second written submission, paras. 11 -13.) The European Union 
disagrees and presents arguments as to why the facts support its description of the system for outpatient 
pharmaceuticals in Tur key as one that involves "reimbursement " rather than "direct provision ". (European 
Union 's second written submission, paras. 42 -67.) The Panel takes note of the parties ' disagreement 
concerning  the terms "reimbursement ", "reimbursement list ", "pay for " or "list of medicines to be paid for ". To 
the extent that the Panel uses these terms in the descriptive part of the Report, such use does not prejudge 
any disputed issue about the proper characterization of the measure before the Panel.  
37 Turkey and the Europ ean Union both refer to consumers who obtain prescribed pharmaceutical 
products from retail pharmacies as "outpatients", as distingui shed from "inpatients " who receive 
pharmaceutical products in hospitals (Turkey 's first written submission, para. 64; European Union 's first written 
submission, para. 12). The Panel uses the term "outpatients " in the same way in this Report.   
38 Turkey 's first written submission , paras. 111 -114; European Union 's second written submission, 
para. 33.  
39 Social Security Institution Health Implementation Communiqué, Official Gazette No. 28597 of 
24 March 2013 (HIC/SUT) (Exhibits EU -11, EU -95, EU-102, TUR -10, TUR -10a). The Panel notes  the parties ' 
disagreement with respect to the translation of the title of this document. The European Union refers to this 
document in various ways (Implementing Regulation for Healthcare (IRH), Health Implementation Notification / WT/DS583/12  
 
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  products are included in the Annex 4/A list.  According to Turkey, close to 90% of the pharmaceutical 
products that are actively sold and prescribed in Turk ey are included in the Annex 4/A list.40 The 
Annex 4/A list is revised regularly to reflect the inclusion or exclusion of certain pharmaceutical 
products. Any updates to the list are then published on the SSI 's website and in the Official Gazette.  
2.9.  Products  in the Annex 4/A list are put in equivalent groups. Products containing the same active 
ingredient (substance) that can be used for the same indication are included in the same group of 
equivalent pharmaceuticals on the basis of price comparison between s imilar dosage forms.41 The 
rationale behind this grouping is related to the use of a reference pricing system (or "equivalent 
band practice "42), whereby a single reimbursement price is set for each equivalent group (the lowest 
price in the equivalent group  increased by 10%).43 
2.10.   To request the inclusion of products in the Annex 4/A list, pharmaceutical companies apply to 
the SSI following one of two pathways: the "regular reimbursement pathway " or the "alternative 
reimbursement pathway ".  
2.11.   Following the "regular reimbursement pathway ", pharmaceutical companies submit an 
application for inclusion in the Annex 4/A list. This application is reviewed by the Scientific and 
Academic Consultation Council (SACC)44, which issues an opinion that is then discussed by the 
Medical and Economic Evaluation Commission (MEEC).45 The DRC takes the final decision on the 
inclusion of a product in the Annex 4/A list.  
2.12.   Following the "alternative reimbursement pathway ", pharmaceutical companies submit an 
alternative reimbursement appli cation to the ARC (which, as noted above, is a sub -commission of 
the SSI). The ARC evaluates the application based on the literature and data provided and takes the 
final decision about the inclusion of the product in the Annex 4/A list. The "alternative r eimbursement 
pathway " concerns medicines otherwise unavailable on the Turkish market, i.e. "innovative and 
high-tech medicines customized for individual patients "46, and certain groups of medicines which are 
 
Communiqué, HIN or in T urkish, Sağlık Uygulama Tebliğ  (SUT). (See European Union 's first written 
submission, para. 26 .) Turkey disagrees with the use of the term "regulation " and maintains that the document 
is correctly translated as "Social Security Institution Health Implement ation Communiqué " (cover page of 
Exhibit TUR -10). The Panel refers to this document as HIC/SUT.  The Panel also notes that this document has 
been submitted by the EU in full (Exhibit EU -95) and as excerpts updated at different points in time (Exhibits 
EU-11 and EU -102). The Panel will cite this document as HIC/SUT (Exhibits EU -95, TUR -10) as they contain 
the full text of the document, unless otherwise specified.  
40 Turkey 's responses to the second set of questions, para. 4. 
41 HIC/SUT (Exhibits EU -95, TUR -10), Article 4.4.2(1). This provision continues with a reference to 
situations where the products are included in different groups. The Panel notes that the translations pr ovided 
by the parties differ on this point. According to the translation provided by the European Union (Exhibits EU -11 
and EU -95), "products containing an identical active substance that can be used for the same indication are put 
in the same group of equ ivalent medicines on the basis of a price comparison between similar dosage forms or 
on the basis of the same price comparison but in separate groups of equivalent medicines when being 
substituted in pharmacies " (emphasis added). According to the translati on provided by Turkey (Exhibit 
TUR-10), "products containing the same active ingredient that can be used for the same indication are included 
in the same equivalent groups on the basis of price comparison between similar dosage forms, or in separate 
equiva lent groups on the basis of the same price comparison but in terms of pharmacy substitution. " 
(emphasis added).  
42 Turkey 's first written submission, para. 86.  
43 See Turkey 's first written submission, para. 87; European Union 's first written submission, para.  19.  
44 The S cientific and Academic Consultation Council (SACC)  consists of academics and experts. It is in 
charge of evaluating the applications for inclusion of new pharmaceutical products on the Annex 4/A list 
(Article  3(m) of the Drug Reimbursement Regulation (Exhibits EU-8, TUR-11)). The SACC considers  "the status 
of the product, its therapeutic benefits and alternative therapeutic methods, as well as the 'gold standard ' in 
the treatment of the disease targeted by the p roduct, the potential patients, the cost/benefit analysis and the 
size of the product 's packaging ". (Turkey 's first written submission, para. 74 .) 
45 The M edical and Economic Evaluation Commission (M EEC) evaluates the literature and data presented 
with the application file. (Drug Reimbursement Regulation (Exhibits EU-8, TUR-11), Article 9(a) .) Turkey refers 
to this entity as the Medical and Economic Evaluation Commission. (Turkey 's first written submission, 
paras.  74-75.) The European Union refers to this en tity as the Medical and Economic Assessment Committee 
(MEAC). (European Union 's first written submission, para. 21 .) The Drug Reimbursement Regulation, in its 
translations provided by both parties, also uses the abbreviation "TEDK ". (Drug Reimbursement Reg ulation 
(Exhibits EU-8, TUR-11), Article 8 .) The Panel notes this difference in translation  and refers to the entity as the 
"Medical and Economic Evaluation Commission ". 
46 Turkey 's first written submission, para. 92.  WT/DS583/12  
 
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  not manufactured or not available in Turkey.47 It is an "exceptional mechanism "48 that allows the 
inclusion (through "alternative reimbursement models ") of pharmaceutical products in the 
Annex  4/A list on the basis of "their financial or medical benefits "49 in areas of specific need.  
2.13.   Regardless of whether the regular or alternative reimbursement pathway is used, once 
approved, the pharmaceutical products are included in the same Annex 4/A lis t.50 Once included in 
the Annex 4/A list, products may subsequently  be "passivized " (their status in the list changes from 
"active " to "passive ")51, or excluded from the list.52 Products are no longer reimbursed if they are 
excluded or "passivized ".53 In other words, to be reimbursed, products must be both included and 
listed as "active " in the Annex 4/A list.54 
2.1.3.2   Reimbursement of pharmaceutical products that are active on the Annex 4/A list  
2.14.   Pharmaceutical products are prescribed to patients by medical doctors and then provided to 
outpatients by retail pharmacies. All retail  pharmacies are members of the Turkish Pharmacists ' 
Association (TPA).55 According to a Protocol concluded between the SSI and the TPA56, individual 
 
47 Turkey 's first written submission, para. 93.  
48 Turkey 's first written submission, para. 96.  
49 Alternative Reimbursement Regulation (Exhibits EU -18, TUR-12), Article 1.  
50 European Union 's first written submission, para. 24.  
51 "Passivization " occurs when: (i) a pharmaceutical c ompany does not submit its distribution certificate 
within five months after the product 's inclusion in the Annex 4/A list (Drug Reimbursement Regulation (Exhibits 
EU-8, TUR-11), Article 12(5)(b)); (ii) the product has not been sold on the Turkish market f or a year ( ibid. 
Article 12(5)(ç)); (iii) the price of the product is removed from or indicated as "0" in the list published by the 
Ministry of Health ( ibid. Article 12(5)(d)); and (iv) according to Turkey, the market share of the product falls 
below 1% (T urkey 's first written submission, para. 80, referring to  Article 12(5) ). The parties also appear to 
agree that pharmaceutical products may be passivized as a result of the localisation requirement. (Turkey 's 
first written submission, para. 82; European Uni on's second written submission, para. 33 .) Passivized products 
may be "re-activated " upon request of the pharmaceutical company if the conditions for passivization are no 
longer valid. (Turkey 's first written submission, para. 81 ; responses to the second set of questions, para. 10 ; 
and European Union 's first written submission, para. 34 .) The Panel notes that while Turkey uses the term 
"passivize ", the European Union indicates that the term "de-activate " better conveys the meaning of the 
Turkish wor d in this context but notes that "there does not seem to be a substantive disagreement here. " 
(European Union 's second written submission, para. 24 .) The Panel uses the terms "passivize " and 
"passivization ". 
52 Exclusion occurs when: (i) a pharmaceutical co mpany does not submit its distribution certificate 
within 10 months (Drug Reimbursement Regulation (Exhibits EU-8, TUR-11), Article 12(5)(b)); (ii) there has 
not been a request for re -activation of a passivized product for 10 months (ibid. Article 12(5)(ç) ); or (iii) the 
price of the product has been removed from or indicated as "0" in the list published by the Ministry of Health 
(ibid. Article 12(5)(d)). Excluded products may be "re-included " in the Annex 4/A list only after a period of six 
months followin g the date of their exclusion and are subject to a new application for inclusion in the Annex 4/A 
list. (Turkey 's first written submission, para. 81; responses to the second set of questions, para. 11 ; and 
European Union 's first written submission, para. 3 4.) The Panel notes that the European Union uses the term 
"excluded " interchangeably with the terms "delisted " and "removed ". The Drug Reimbursement Regulation 
uses the term "remove " (in the translation provided by Turkey, Exhibit TUR -11) or "delist " (in the translation 
provided by the European Union, Exhibit EU -8). The Panel uses the terms "exclude " and "exclusion ". 
53 While both "passivized " products and "excluded " products are no longer reimbursed, the "re-
activation " of a product that has been pass ivized appears to be a less cumbersome process than its "re-
inclusion " on the list after it has been excluded. If a passivized or an excluded product is prescribed, a 
pharmacist may dispense another pharmaceutically equivalent product which is included and  active on the 
Annex  4/A list. (Protocol on the Provision of Medicines to the Persons Covered by the Social Security Institution 
by the Pharmacies which are Members of the Turkish Pharmacists ' Association  (TPA Protocol)  (Exhibit TUR -20), 
para. 3.2.12 .) "Passivized " and "excluded " products may still be prescribed by doctors and dispensed by 
pharmacies, without being reimbursed (Turkey 's responses to the first set of questions, para. 4).  
54 See Turkey 's responses to the second set of questions, para. 40.  
55 Law on Turkish Pharmacists Association  No. 6643 (25 January 1956), Official Gazette No. 9223 of 2 
February 1956 (Exhibit TUR -27), Article 1.  The TPA is a public institution under Turkish law, established "to 
meet the common needs of pharmacists, to facilita te their professional activities and to ensure the 
development of pharmacy in accordance with general interests" (ibid, Article 1). Its Central Committee has the 
tasks, inter alia , to "take measures to facilitate the procedures related to professional acti vities between 
private and public institutions and organizations and members " and to "make agreements with all public and 
private institutions and organizations that will purchase health services from pharmacies " (ibid., Article 39(g) 
and Article 39(j)).  
56 TPA Protocol (Exhibit TUR -20); Protocol on the procurement of medicines from pharmacies which are 
members of the Turkish Pharmacists ' Association (TEB) by persons covered by the Social Security Institution  
(TPA Protocol) (Exhibit EU -52). The parties disagree on the translation of the title of this document. The WT/DS583/12  
 
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  retail pharmacies sign (and annually renew) standard contracts with the SSI.57 On the basis of these 
contra cts, pharmacies periodically send to the SSI invoices for all pharmaceutical products included 
in the Annex 4/A list that they have provided to outpatients during the relevant period.58 The SSI 
reviews these invoices59, and reimburses the "reimbursement pr ice" as described below . 
2.15.   The reimbursement price of medicines60 is lower than their retail price.61 Pharmaceutical 
products included in the Annex 4/A list are assigned a "public price " which results from the 
application of "public discounts " at each stage of the supply chain. If the product does not have an 
equivalent group in the Annex 4/A list, the SSI pays 100% of its public price. If a product has an 
equivalent group, the SSI pays a reimbursement price determined according to the "internal 
reference pricing mechanism ".62 A single reimbursement price is set for each equivalent group.63 It 
is calculated on the basis of the price of the product having the cheapest unit price in the group (and 
at least a 1% market share), increased by 10%.  
2.16.   If the public price of a pharmaceutical product is greater than the maximum reimbursement 
price set by the SSI for the relevant equivalent group, outpatients must pay the difference , unless 
they decide to opt for an equivalent product the public price of which is not greater than the 
maximum reimbursement price set by the SSI for the relevant equivalent group .64 In addition, 
outpatients generally also pay two types of fees collected by pharmacies65: (i) a fee calculated as a 
 
European Union refers to it as "Protocol on the procurement of medicines from pharmacies which are members 
of the Turkish Pharmacists ' Association ( TEB) by persons covered by the Social Security Institution ". (Exhibit 
EU-52, as referenced in European Union 's first written submission, para. 17 and fns 10, 13, 34, and 35 .) 
Turkey considers that the accurate translation of the title should be "Protocol o n the Provision of Medicines to 
the Persons Covered by the Social Security Institution by the Pharmacies which are Members of the Turkish 
Pharmacists ' Association ". (Exhibit TUR -20, as referenced in Turkey 's first written submission, paras. 65 and 
107, and fns 54 and 85 .) The Panel notes the parties ' disagreement on this point and refers forthwith to this 
document as "TPA Protocol " (Exhibits EU -52, TUR -20).  
57 The legal basis for the TPA Protocol and the individual contracts between the pharmacies and the S SI 
is Article 73 of the Social Insurance and UHI Law (Exhibits EU -1, TUR -2). Of the 26,600 retail pharmacies in 
Turkey, 25,300 are under contract with the SSI. (Turkey 's first written submission, para. 109 .) The remaining 
1,300 retail pharmacies that have not signed contracts with the SSI, as well as pharmacies whose contract 
with the SSI ha ve not been renewed, can still dispense medicines included in the Annex 4/A list but cannot 
invoice these medicines to the SSI. (Turkey 's responses to the second set of questions, paras. 14 and 19 .) 
Those pharmacies may be (and, according to the European Union, typically are) bound by contracts with 
private insurers, and their sales of medicines included in the Annex 4/A list are covered by reimbursement by 
private insure rs. (European Union 's comments on responses to the second set of questions, para. 11 .)  
58 TPA Protocol (Exhibits EU-52, TUR-20), paras. 4.1 -4.3. See also Turkey 's first written submission, 
para. 108 ; European Union 's second written submission, para. 33.  
59 The SSI usually reviews invoices and their accompanying documents using a sampling method 
(Regulation on the procedures and principles governing checking of invoices of healthcare providers and 
reimbursement of their fees, Official Gazette No. 30001 of 8 March 2017 (Exhibit EU -53), Article 6 ). According 
to Turkey, the SSI can refuse to make a payment when the medicines were approved in the Medula system on 
the basis of incorrect information and dispensed to patients in breach of the specific medical rules that exist for 
those medicines  (Turkey's opening statement , para. 32).  
60 While the European Union occasionally refers to the term "reimbursement price " (European Union 's 
first written submission, para. 25), it appears to use interchangeably the terms "reimbursement level ", 
"reference price " or "reference price for reimbursement ". (European Union 's first written submission, paras. 19 
and 27 .) Turkey uses the term "referen ce price " to reflect the price a product is given (in Euro (EUR)) in the 
reference countries. (Turkey 's first written submission, para. 53. ) The Panel uses the term "reimbursement 
price" to refer to the price paid by the SSI to a retail pharmacy for the ph armaceutical product provided to an 
outpatient. To the extent that the Panel uses the term "reimbursement price ", such use does not prejudge any 
disputed issue between the parties.  The reimbursement price is determined and paid in Turkish lira. (European 
Union's responses to the second set of questions, para. 35 .) 
61 A "retail price " is the price for pharmaceutical products that are not included in Annex 4/A list, and for 
products sold by pharmacies to patients without a prescription or with a prescription p rovided by a medical 
doctor "non contracted " with the SSI. (Turkey 's first written submission, para. 59 .) 
62 Turkey 's first written submission, para. 86.  
63 See HIC/SUT ( Exhibits EU -95, TUR -10), Article 4.4.2.  
64 European Union 's first written submission, para. 19; Turkey 's first written submission, para. 87.  
65 Social Insurance and UHI Law (Exhibits EU -1, TUR -2), Article 68; HIC/SUT (Exhibits EUR -95, TUR -
10), Article 1.8.2. The European Union uses the term "co-payments " to refer to these fees ( European Union 's 
first written submission, para. 15). Turkey takes issue with the use of this term. (Turkey 's first written 
submission, fn 90).  To the extent that there appears to be no factual disagreement between the parties with 
respect to the existence  and operation of these fees (Turkey 's first written submission, para. 110; European 
Union 's second written submission, para. 33) , the Panel will use the terms "contribution fee " and "prescription 
fee" (collectively "fees"). WT/DS583/12  
 
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  percentage of the price after public discount of the pharmaceutical product (contribution fee), being 
10% for persons who receive income or a pension from the SSI, and also for their dependants, or 
20% for all others66; and (ii) a fee of 3 Turkish lira for up to three boxes/items in the presc ription 
and 1 Turkish lira for each additional box/item (prescription fee).67 
2.17.   Retail pharmacies and the SSI use an electronic information system (the Medula system) 
which "enables the registration, tracking and invoicing of medicines that are obtained from 
pharmacies through a single application".68 Turkey explains that "[ a]ll transactions between the SSI 
and the healthcare service providers, including the purchase of pharmaceutical products, are carried 
out through the Medula system."69 
2.2  The me asures at issue  
2.18.   According to the European Union, the measures at issue in these proceedings are:  
a. a "localisation requirement " whereby "Turkey requires foreign producers to commit to 
localise in Turkey their production of certain pharmaceutical products "70, and "[i]f such 
commitments are not given, are not accepted by Turkish authorities, or are not fulfilled, 
the pharmaceutical products concerned are excluded from the scheme for the 
reimbursement of the pharmaceutical products sold by pharmacies to patients  operated 
by Turkey 's social security system (the 'reimbursement scheme ')" 71; 
b. an "import ban on localised products " which the European Union describes as follows: 
"[w]here the production of a pharmaceutical product has been localised in Turkey in 
accordance with the localisation requirement, applied in conjunction with the Turkish rules 
for approving the importation and marketing of pharmaceutical products, the importation 
of that pharmaceutical product is no longer permitted "72; and  
c. a "prioritizat ion measure " whereby "even in certain cases where imported products are 
not excluded from the reimbursement scheme by virtue of the localisation requirement, 
Turkey gives priority to the review of applications for inclusion of domestic pharmaceutical 
produ cts in the list of products covered by the reimbursement scheme, as well as with 
respect to any pricing and licensing policies and processes, over the review of the 
applications of like imported products. "73 
2.19.   According to the European Union, these measures at issue are "put in place and evidenced 
by, and are implemented and administered through " 28 different legal instruments or other types of 
documents, "considered alone and in any combination ".74 
 
66 HIC/SUT (Exhibits EU-95, TUR-10), Article 1.8.2(1).  A contribution fee refers to the amount to be 
paid by the universal health insurance holder or the dependents in order to benefit from healthcare services  
(ibid, Article 1.8.1).  Outpatients do not pay contribution fees for certain ph armaceutical products included in 
the List of Drugs Exempt from Patient Contribution Fee (Annex 4/D) ( ibid. Article 1.8.2(3)). Turkey explains 
that these include products "necessary for the treatment of critical diseases such as cancer or long -standing 
chronic diseases " and products that are "  used in the treatment of inpatients in both public and private 
hospitals " (Turkey 's first written submission, fn 90 ). According to Turkey, in 2019, 34.7% of the total SSI’s 
expenditure for medicines was exempt from the payment of the contribution fee  (Turkey's first written 
submission, fn 90 ).   
67 HIC/SUT (Exhibits EU -95, TUR -10), Article 1.8.2(2).  
68 Social Security Institution, Directorate General for Provision of Services Healthcare Software 
Department, "Medula Project " presentation , 2019 (Exhibit TUR -112), p. 17.  
69 Turkey 's second written submission, para. 52.  
70 European Union 's panel request, p. 5 . 
71 European Union 's panel request, p. 5. Turkey refers to the localisation requirement as the 
"localisation measure ", because "Turkey understands that the measure that is challenged by the European 
Union is not only the 'requirement ' allegedly imposed by Turkey on foreign producers to localise their 
production of certain pharmaceutical products in Turkey, but also the consequences following from the 
commitment or lack of commitment of localisation. In light thereof, Turkey will refer to this measure as the  
'localisation measure ' rather than as the 'localisation requirement '." (Turkey 's first written submission, 
para. 117.)  
72 European Union 's panel request, p. 6.  
73 European Union 's panel request, p. 6.  
74 European Union 's panel request, p. 1.  WT/DS583/12  
 
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  2.2.1   The localisation requirement  
2.2.1.1   Overview  
2.20.   The localisation requi rement relates to Turkey 's policy objective of achieving the gradual 
transition from imports to domestic manufacturing of pharmaceuticals.75 To achieve this policy 
objective, Turkey requires foreign producers to commit to localise in Turkey their productio n of 
certain pharmaceutical products.76 If a foreign producer does not make a commitment for a 
pharmaceutical product subject to localisation, if the Turkish authorities reject the commitment, or 
if the commitment made is not fulfilled, the pharmaceutical product concerned is no longer 
reimbursed by the SSI.  
2.21.   The main authorities within or affiliated with the Ministry of Health and the Ministry of Family, 
Labour and Social Services in charge of implementing the localisation requirement are77: the SSI, 
its co mmissions78 and sub -commissions79; the TMMDA80; the Healthcare Industries Steering 
Committee (HISC)81, and the Localisation Assessment Commission (LAC).82 
2.22.   The parties disagree on whether the European Union has established the existence and precise 
content of the "localisation requirement " as a "single and cohesive measure ". The Panel addresses 
this issue in its findings in section  7 of this Report.  
 
75 The objective is to meet 60% (by value) of domestic pharmaceutical demand through domestic 
production. (Republic of Turkey, Ministry of Development, Tenth Development Plan 2014 -2018 (2014), 
approved by Decision No. 1041 of the Grand National Assembly of Turkey  of 2 July 2013 (Tenth Development 
Plan 2014 -2018) (Exhibit EU -12), point 1.16.) This 60% figure relates to the share of locally produced 
medicines in terms of sales value of the total domestic demand for medicines. (Turkey 's responses to the 
second set of  questions, para. 72.)  
76 Turkey explains that this does not mean that the entire production process needs to take place in 
Turkey, but rather that "the bulk production, i.e. the establishment of a finished pharmaceutical form 
(granular, tablet, solution) f rom raw materials (active substances) and excipients (inactive substances), takes 
place in Turkey. " (Turkey 's first written submission, para. 137 .) 
77 The European Union also refers to the Commission on the Transition from Import to Manufactured 
Products (E uropean Union 's first written submission, para. 69) and the Localisation Executive Board (European 
Union 's first written submission, para. 75). Turkey  however  asserts that neither of these bodies is operational. 
(Turkey 's first written submission, paras. 1 43 and 147 .) 
78 The SSI 's HSPC sets out detailed steps and rules for the implementation of the localisation 
requirement. In particular, in October 2016, the HSPC adopted a Decision regarding the Localisation Process, 
which sets out the process and criteria for implementing the localisation requirement. (HSPC, Decision 
regarding the Localisation Process , October 2016 (HSPC Decision) (Exhibit EU -35.) Both the DRC and the ARC 
are sub -commissions of the HSPC.  
79 The SSI and its sub -commissions update the status o f pharmaceutical products included in the 
Annex  4/A list and notify pharmaceutical companies about changes in the status of their products. The ARC 
plays an important role, in particular with respect to approving the passiv ization, re -activation and exclus ion of 
pharmaceutical products from the Annex 4/A list. Turkey explains that the ARC has the authority to set the 
status of pharmaceutical products for which no localisation commitment has been offered or for which the 
localisation commitments have not bee n accepted to "passive ". (Turkey 's first written submission, para. 146 .) 
According to t he European Union it is not clear on which legal basis the ARC assumes this role. (European 
Union 's first written submission, para. 33 .) Turkey refers to S ocial Security  Institution  Decision No.2015/3 of 
1 April 2015  (Exhibit TUR -45), transferring some of the powers of the HSPC to the ARC. (Turkey 's first written 
submission, para. 146 .)  
80 The TMMDA (i) determines which pharmaceutical products will be subject to localisat ion in each 
phase; (ii) examines the pharmaceutical companies ' commitments and variation applications; and (iii) 
communicates the decisions regarding proposed commitments.  
81 The H ealthcare Industries Steering Committee (HISC)  discusses the overall implemen tation of the 
localisation requirement, assigns relevant tasks to the specific authorities. (Turkey 's first written submission, 
para. 144 .) The HISC also "had an important role in designing the several phases of localisation. " (European 
Union 's first written submission, para. 68 .)  
82 The L ocalisation Assessment Commission (L AC) is a working group under the TMMDA created by the 
HISC, which reviews requests for exemption (i.e. offers to localise alternative pharmaceutical product s) and for 
additional time . Based on this assessment , the LAC  decides which products should be passivized by the SSI 
and which products should be re -assessed. (Turkey 's first written submission, para. 145, (referring to 
Healthcare Industries Steering Commi ttee, Minutes of the 56th meeting ,13 December 2017  (Exhibit TUR -43))).  WT/DS583/12  
 
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  2.2.1.2   Phases of  implementation of the localisation requirement  
2.23.   The localisation requirement by design has five phases, which progressively target different 
products depending on their market share and the existence of equivalent products in the domestic 
market.83 The pha ses are divided as follows:  
• Phase 1 covers pharmaceutical  products for which the overall market share of domestic 
production in the equivalent group is above 50% and there are three or more different 
local companies producing locally three or more generic pharmaceutical products. 
In January 2018, the SSI announced that a list of 45 pharmaceutical products included in 
the scope of Phase 1 would no longer be reimbursed as of 8  February 2018.84 
• Phase 2 covers pharmaceutical products for which the overall marke t share of domestic 
production in the equivalent group is between 10% and 50% and there are two or more 
different local companies producing locally two or more generic pharmaceutical products. 
In January 2017, the TMMDA held meetings with pharmaceutical co mpanies producing 
Phase 2 products and later assessed the proposed commitments. The authorities 
subsequently announced that certain products would no longer be reimbursed as a result 
of the implementation of Phase  2.85 
• Phase 3 covers pharmaceutical  products for which the overall market share of domestic 
production in the equivalent group is below 10% and there is one local company producing 
locally one generic pharmaceutical product.  
• Phase 4 covers pharmaceutical  products for which there is no domest ic production in the 
equivalent group.  
• Phase 5 covers pharmaceutical  products with no equivalent groups.  
2.24.   The implementation of the localisation requirement is a dynamic process86: some phases are 
operational in parallel87, and the Turkish authorities regul arly check to see if there are new products, 
or products that have to be moved from one phase to another.88 As indicated above, the authorities 
have already identified products that, in the absence of localisation commitments being made by the 
producers an d accepted by the authorities, will no longer be reimbursed by the SSI as a result of 
the implementation of Phases 1 and 2.89 Meetings have been organized with pharmaceutical 
companies producing medicines that fall within the scope of the remaining phases inviting them to 
 
83 See H . Gursoz, President of the TMMDA, "Pharmaceutical Localisation Project: Transition from 
Importation to Manufacturing ", presentation of 6 March 2017 (Exhibit EU -34), slide 3 ; TMMDA, "Pharmaceutical 
Localisation Project Work Conducted by the Ministry of Health ", presentation of December 2017 (Exhibit 
EU-23), slide 9.  
84 Social Security Institution , Public Announcement on the Localisation Process , 19 January 2018 
(Exhibits EU -62, TUR-58). See also European Union's first written submission, para. 125; Turkey's first written 
submission, para. 157.  
85 TMMDA, "Pharmaceutical Localisation Project Work Conducted by the Ministry of Health ", presentation 
of December 2017 (Exhibit EU -23), slid e 10. 
86 Turkey 's first written submission, para. 140; European Union 's first written submission, para. 82.  
87 European Union 's first written submission, para. 95.  
88 Turkey explains that products are shifted from one phase to another because of changes in their 
market situations. (Turkey 's second written submission, para. 17 .) Turkey gives the example of a 
pharmaceutical product initially covered by Phase 3, which cou ld become subject to Phase 2 if its market share 
exceeds 10%. ( Ibid. para. 17 .)  
89 The parties appear to agree that the implementation of Phases 1 and 2 has already resulted in the 
identification of products that will no longer be reimbursed by the SSI. Tu rkey asserts that "[o]nly Phase 1 and 
Phase 2 have been implemented so far. " (Turkey 's first written submission, para. 140 .) The European Union 
submits that "so far, products have been deactivated within the framework of the first and second phase. " 
(Europ ean Union 's first written submission, para. 99 .) See also Republic of Turkey, Ministry of Development, 
Eleventh Development Plan (2019 -2023) Transformation in Healthcare Industries, Specialised Committee 
Report of July 2018  (Ministry of development, Eleven th Development Plan 2019 -2023) (Exhibit EU -84), section 
2.3.5: "[t]he first and second phases of this project, which is of key importance for the sector, have been 
successfully completed and are continually being updated. Work on the third phase is also un der way. 
Preparatory work on the fourth and fifth phases has started. "  WT/DS583/12  
 
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  present their views and to offer preliminary commitments, but as of the time of the Panel 's 
establishment all products currently in the scope of Phases 3, 4 and 5 remain reimbursable.90 
2.2.1.3   Localisation process  
2.25.   The localisation process starts with the identification of the relevant products by the Turkish 
authorities (in particular, the TMMDA).91 The pharmaceutical companies producing these products 
are informed, through periodically published announcements or an individual communication, that 
their products are to be included in the scope of the localisation requirement, and are invited to a 
meeting at the Ministry of Health.92 The pharmaceutical companies then enter into discussions with 
the competent authorities with a view to preparing a "transition plan "93 and submitting commitments 
to produce locally.94 The time schedule for implementing any commitments typically must not 
surpass 18 months.95 Pharmaceutical companies may also submit various requests to the TMMDA, 
including requests for additional time or for the localisation of an alternative product.96 
2.26.   Any commitments made by pharmaceutical companies that have been accepted are followed 
up through regular progress reports presented by the pharmaceutical companies to the TMMDA. If a 
company does not submit a localisation commitment, the relevant products are no longer reimbursed  
 
90 Turkey 's first written submission, paras. 161 -162; European Union 's first written submission, 
para. 132. Preliminary commitments have been submitted for some Phase 3 products, result ing in the 
amendment of the scope of Phase 2 to also cover Phase 3 products for which preliminary commitments were 
submitted. (Turkey 's first written submission, para. 160 .) The European Union asserts that the Turkish 
authorities have taken steps to implem ent Phases 3 and  4. (European Union 's first written submission, 
para. 132.) Turkey disagrees and asserts that "[n]o further steps have been taken to implement either Phase 3 
or Phase 4 " (Turkey 's first written submission, para. 162) and that Turkey "may de cide not to proceed with 
[their] implementation. " (Turkey 's comments on responses to the second set of questions, para. 2 .) The Panel 
notes the parties ' disagreement on this point. The Panel also notes the European Union 's argument that 
"[t]here is no doub t that phrases 3 -5 exist, because they are part of and are provided for by the Localisation 
Requirement, even if they have not been applied yet. " (European Union 's responses to the second set of 
questions, para. 5 .)  
91 All products that hold a valid market ing authorization and sales permit in Turkey and that are 
included in the Annex 4/A list are initially considered within the scope of the localisation  requirement . (Turkey 's 
first written submission, para. 138; European Union 's second written submission, para. 33 , and comments on 
responses to the second set of questions, para. 3 .)  
92 Turkey uses the terms "meeting " and "consultation meeting " (Turkey 's first written submission, 
paras.  148-149), while the European Union observes that the parties may disagree on whether the Turkish 
term "görüşme " should be translated as "meeting ", "discussion " or "negotiation ". (European Union 's second 
written submission, para. 25 .) The European Union notes, however, that it is unclear to what extent this is 
releva nt. (European Union 's second written submission, para. 25 .)  
93 European Union 's first written submission, para. 77  (referring to H . Eroğlu , Vice President of the 
TMMDA, "Local Production ", presentation at the Symposium on Rational Approach to Current Issue s concerning 
Medicines, Ankara , 7-9 October 2016 (Exhibit EU -40)).  
94 As Turkey explains, such commitments "in essence, amount to a declaration whether or not a 
pharmaceutical company will relocate within a specified period of time the production of the re levant 
pharmaceutical products to Turkey. " (Turkey 's first written submission, para. 149 .)  
95 European Union 's first written submission, paras. 105 and 114. See Roadmap for the process of 
localisation, setting forth of the principles for the negotiation, 1 4 March 2016 ( Localisation r oadmap) (Exhibits 
EU-45, TUR-60).  
96 Turkey 's first written submission, para. 151; European Union 's second written submission, para. 33.  WT/DS583/12  
 
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  by the SSI.97 This is also the case if a company submits a localis ation commitment, but this 
commitment is considered not to be "appropriate"98, or if a company does not fulfil its  commitment.  
2.2.2   The import ban on localised products  
2.27.   When a pharmaceutical company commits to localise the production of a product and this 
commi tment is accepted, the company has to submit, within a year, a variation application. This is 
a request to modify the marketing authorization for the relevant product  from "import " to "local".99 
2.28.   Pursuant to Article 20(2) of the Marketing Authorization Regu lation:  
A second local or import marketing authorization shall not be granted for any product 
with the same formulation and pharmaceutical form, already authorized by the Ministry, 
to the same real person or legal entity, even if the product has a differen t commercial 
name.100 
2.29.   The alleged "import ban on localised products ", as described by the European Union, arises 
from the combined operation of the localisation requirement and the Turkish rules for approving the 
importation and marketing of pharmaceutical products, and in particular Article 20(2) of the 
Marketing Authorization Regulation (Single Authorization rule).101 The parties hold diverging 
positions on the nature, scope, and significance of the restrictions arising from the Single 
Author ization rule. They also disagree on whether the localisation requirement and Single 
Authorization rule operate together as part of a "single measure " that exists distinct from its 
components. The Panel will address these issues, insofar as necessary, in it s findings in section 7 of 
this Report.  
 
97 The parties disagree as to whether the products are "passivized " or "excluded " from the Annex 4/A 
list. The European Union asserts that "the pharmaceutical products concerned are excluded  from the scheme 
for the reimbursement of the pharmaceutical product s sold by pharmacies to patients operated by Turkey 's 
social security system. " (European Union 's first written submission, para. 6 (emphasis added); see also 
European Union 's first written submission para. 141 ; comments on responses to the second set of qu estions, 
paras. 8 and 9 .) Turkey asserts that "imported pharmaceutical products may be 'passivized ' if they do not 
comply with the localisation measure " (Turkey 's first written submission, para. 82 (emphasis added)), that 
such products are never "excluded " from the Annex 4/A list, and that they may be re -activated "at any time 
should the pharmaceutical company decide to localise their production ". (Turkey 's comments on responses to 
the second set of questions, para. 4 .) Turkey also asserts that, unlike in a ll other circumstances in which 
products are "passivized ", pharmaceutical products which are passivized as a result of the localisation measure 
are not excluded from the Annex 4/A list after 10 months, but instead retain a "passivized " status. (Turkey 's 
first written submission, para. 82; responses to the second set of questions, para. 12 ; and comments on 
responses to the second set of questions, para. 5 .) The European Union considers that Turkey points to no 
evidence to substantiate this distinction. ( European Union 's second written submission, para.  69.) Finally, 
Turkey asserts that, before being passivized, these products remain "active " (and, therefore, reimbursable) for 
a period of one year, thereby providing the pharmaceutical company with an opportuni ty for "reconsidering its 
position ". (Turkey 's first written submission, para. 152; responses to the second set of questions, para. 7; and 
European Union 's second written submission, para. 33 .) The European Union notes that in this case, the 
products would eventually be localised or passivized. (European Union 's comments on responses to the second 
set of questions, para. 7 .)  
98 In this case, the SSI and TMMDA jointly notify the company that the relevant products "shall be 
excluded from the reimbursement list one year after the decision for exclusion from the reimbursement list is 
taken. " (SSI and TMMDA, Communication, "Local Production " (Exhibit EU -46); HSPC Decision (Exhibit EU -35), 
para. 4.) Turkey argues that in this situation, the products are passivized and not "removed " from the list 
(Turkey 's first written submission, para. 153), whereas the European Union asserts that the refusal of 
commitments "leads to an exclusion from reimbursement. " (European Union 's first written submission, 
para. 141.)  
99 Turkey 's first written submission, para. 150; European Union 's second written submission, para. 33. 
This is mandated by the Regulation regarding the Variations on Medicinal Products for Human Use wi th 
Marketing Authorisation or Pending Registration, Official Gazette No. 25823 of 23 May 2005 (Exhibit EU -93). 
The TMMDA delivers, or rejects the delivery of, market ing authorizations for both imported and locally 
produced pharmaceutical products.  
100 Marke ting Authorization Regulation (Exhibit EU -89), Article 20(2).  
101 European Union 's panel request, p. 6.  WT/DS583/12  
 
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  2.2.3   The prioritization measure  
2.30.   The TMMDA 's Guideline for Working Principles and Procedures of Human Medicinal Products 
Priority Assessment Commission (Prioritization Guideline)102 provides for the possibility to request  
priority assessment, in particular, of applications for GMP certification and marketing authorization, 
and of certain requirements relating to pharmaceutical products in specific cases. The Prioritization 
Guideline sets out the criteria that determine wheth er a particular product is eligible for priority 
assessment, as well as the procedure that must be followed to obtain priority assessment and 
treatment. The Prioritization Guideline also establishes a Prioritization Commission which is in charge 
of examini ng applications.103 
2.31.   "Prioritization " can be requested  for ten categories of applications, including applications 
relating to transferring the production of imported medicines to Turkey104, applications for locally 
manufactured products for exportation purpos es105, and applications relating to products that have 
strategic importance in terms of the country 's policies.106 
2.32.   In addition, the Drug Reimbursement Regulation provides for the possibility of according 
priority to the applications for inclusion in the Anne x 4/A list of some pharmaceutical products.107 
2.33.   The parties disagree on whether the "prioritization measure ", as characterized in the European 
Union 's panel request and subsequent submissions, is challenged "as such ", or concerns ongoing 
conduct. The Panel will address that issue, insofar as necessary, in its findings in section 7 of this 
Report.  
3  PARTIES ' REQUESTS FOR FINDINGS AND RECOMMENDATIONS  
3.1.  The E uropean Union identifies three measures at issue in this dispute, which it refers to as "the 
localisation requirement ", "the import ban on localised products ", and "the prioritization measure ". 
The European Union makes multiple claims in respect of these three measures, and Turkey presents 
multiple grounds on which it requests that the Panel reject all of these claims. Certain of the claims 
and defences are made in the alternative. To facilitate an understanding of the specific legal claims 
and defen ces and how they relate to one another, this section presents a breakdown of the claims 
and defences on a measure -by-measure basis, drawing on the European Union 's panel request and 
the parties ' submissions.  
3.2.  Regarding the localisation requirement, the Euro pean Union 's panel request and submissions 
set out the following claims:  
a. the localisation requirement is inconsistent with Article III:4 of the GATT 1994, because, 
by excluding  from the reimbursement scheme  imported pharmaceutical products for which 
localisation commitments have not been given, have not been accepted or have not been 
fulfilled Turkey accords to imported pharmaceutical products treatment less favourable 
than that accorded to like products of national origin covered by that scheme;  
b. the locali sation requirement is inconsistent with Article 2.1 of the TRIMs Agreement, 
because the localisation requirement is an investment measure related to trade in goods 
that is inconsistent with Article III:4 of the GATT 1994;  
c. in the alternative to the claims u nder Article III:4 of the GATT 1994 and Article 2.1 of the 
TRIMs Agreement108, the localisation requirement is inconsistent with Article 3.1(b) of the 
 
102 TMMDA, Guideline for Working Principles and Procedures of Human Medicinal Products Priority 
Assessment Commission (Prioritization Guideline) (Exhibit EU -97). 
103 The Prioritization Commission may put some products on its agenda without application if deemed 
necessary (Prioritization Guideline (Exhibit EU -97), Article 8(1)).  
104 Prioritization Guideline (Exhibit EU -97), Article 2(ç).  
105 Prioritization Guideli ne (Exhibit EU -97), Article 2(d).  
106 Prioritization Guideline (Exhibit EU -97), Article 2(h).  
107 Drug Reimbursement Regulation (Exhibits TUR -11, EU -8), Articles 5(1)(g) and 5(1)(ğ).  
108 The European Union states that it "submits this claim in the alternative to its claim against the 
Localisation Requirement under Article III:4 of the GATT set forth in section 2.3. In other words, the European 
Union requests the Panel to rule on this claim only in the event that the Panel were to conclude that the WT/DS583/12  
 
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  SCM Agreement, because the reimbursement scheme operated by the Turkish social 
security system involves th e granting of a subsidy within the meaning of Article 1.1 of the 
SCM Agreement, and the localisation requirement makes the granting of that subsidy 
contingent upon the use of domestic over imported goods; and  
d. the localisation requirement is inconsistent wi th Article X:1 of the GATT 1994, because 
Turkey failed to publish certain elements, terms and conditions of general application of 
the localisation requirement promptly in such a manner as to enable governments and 
traders to become acquainted with them.  
3.3.  In its submissions, Turkey requests that the Panel reject all the European Union 's claims 
regarding the localisation requirement on the grounds that:  
a. while the European Union characterizes the localisation requirement as a "single and 
cohesive measure ", it fails to precisely identify the legal instruments forming part of or 
giving effect to the measure, and a fortiori  provide evidence of how these components 
operate together as part of a single measure, and thereby fails  to demonstrate the 
existence and prec ise content of the localisation requirement as a "single and cohesive 
measure "; 
b. there is no inconsistency with Article III:4 of the GATT 1994 or Article 2.1 of the TRIMs 
Agreement as:  
i. the procurement of pharmaceutical products included in the Annex 4/A lis t by the SSI 
constitutes government procurement within the meaning of Article III:8(a) of the GATT 
1994 and thus the localisation requirement falls outside the scope of the national 
treatment obligation under Article III:4 of the GATT 1994 and Article 2.1 of the TRIMs 
Agreement;  
ii. the localisation requirement is justified under Article XX(b) of the GATT 1994 because 
it is necessary to ensure uninterrupted access to safe, effective and affordable 
medicines in Turkey;  
iii. in the alternative109, the localisation requ irement is justified under Article XX(d) of the 
GATT 1994 because it is necessary to secure compliance with laws requiring Turkey to 
ensure accessible, effective and financially sustainable healthcare;  
c. there is no inconsistency with Article 3.1(b) of the S CM Agreement because:  
i. there is no subsidy within the meaning of the SCM Agreement since there is no financial 
contribution in the form of direct transfer of funds and no benefit is conferred. More 
specifically, any direct benefit to outpatients conferred b y Turkey 's reimbursement 
scheme falls outside the scope of Article 1.1 of the SCM Agreement, and the European 
Union has not established that any indirect benefit is conferred upon producers of the 
pharmaceutical products listed in Annex 4/A; and  
ii. any allege d subsidy is not contingent upon the use of domestic over imported products 
within the meaning of Article 3.1(b) of the SCM Agreement; and  
d. the claim under Article X:1 of the GATT 1994 should be dismissed because:  
i. the European Union has changed the scope of  its claim in a way that raises serious 
due process concerns and/or falls outside the Panel 's terms of reference; and  
ii. the European Union has failed to demonstrate that the relevant measure(s), whether 
understood as a single cohesive measure, individual ins truments/documents, or 
 
Localisation Requirement is not in breach of Article III:4 of the GATT 1994, or that such breach is justified 
under any other provision of the GATT 1994. " (European Union 's first written submission, para. 382 .) 
109 Turkey 's first written submission, para. 504.  WT/DS583/12  
 
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  certain terms and conditions, fall within the scope of the obligation in Article X:1, 
and/or were not published promptly and adequately.  
3.4.  Concerning the "import ban on localised products " which , according to the European Union , 
arises from the localisation requirement "applied in conjunction with " the Turkish rules for approving 
the importation and marketing of pharmaceutical products, and in particular the Single Authorization 
rule, the European  Union requests that the Panel find that this measure is inconsistent with 
Article  XI:1 of the GATT 1994.  
3.5.  Turkey requests that the Panel reject the European Union 's claim under Article XI:1 of the GATT 
1994, on the grounds that:  
a. while the European Union ch aracterizes the "import ban measure " as a "single measure ", 
it fails to show how the different components operate together as part of a "single 
measure " distinct from its components, and thereby fails to establish the existence and 
precise content of the import ban measure as a "single measure "; 
b. the measure causing the alleged restriction, i.e. the Single Authorization rule, does not fall 
within the scope  of Article XI:1 and is an internal measure within the meaning of Article 
III:4 of the GATT 1994, and even if Article XI:1 applies there is no "ban" or "prohibition " 
on the importation of localised products. This is because, inter alia , the very same produ ct, 
in a different form or different dosage, can receive a marketing authorization with a 
production site abroad . Turkey draws two conclusions from the fact that there is no "ban" 
on pharmaceutical products: (i) the measure which is characterized by the Eu ropean Union 
as an "import ban " does not exist; and (ii) there is no violation of Article XI:1 of the GATT 
1994 insofar as it applies to the measure at issue110; 
c. the import ban is justified under Article XX(d) of the GATT 1994 because it is necessary to 
secure compliance with the localisation requirement.  
3.6.  As to the prioritization measure, the European Union requests that the Panel find that this 
measure is inconsistent with Turkey 's obligations under Article III:4 of the GATT 1994, because 
Turkey accords pri ority to the review of applications for inclusion in the reimbursement scheme, as 
well as with respect to any pricing and licensing policies and processes, to pharmaceutical products 
of national origin.  
3.7.  In its submissions, Turkey requests that the Panel re ject the European Union 's claim under 
Article III:4 of the GATT 1994 regarding the prioritization measure, on the grounds that:  
a. the European Union characterizes the measure as an overarching measure whereby 
Turkey "gives priority " to domestic pharmaceutica l products, but fails to demonstrate the 
existence of ongoing conduct consisting in Turkish authorities granting priority to 
domestically produced pharmaceutical products, and thereby fails to demonstrate the 
existence of the challenged measure;  
b. the Europe an Union has failed to demonstrate that the prioritization measure, understood 
as an overarching measure, is a law, regulation or requirement within the scope of 
Article  III:4 of the GATT 1994, or that the prioritization measure accords "treatment less 
favourable " to imported products, given the discretion of the authorities when assessing 
priority applications . 
3.8.  The European Union requests, pursuant to Article 19.1 of the DSU, that the Panel recommend 
that Turkey bring its measures into conformity with its WTO obligations.  
3.9.  Turkey requests that the Panel reject all of the European Union 's claims and confirm that 
Turkey 's measures are not inconsistent with its WTO obligations under the covered agreements.  
 
110 Turkey 's first written submission, paras. 587 -593, and 617 . WT/DS583/12  
 
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  4  ARGUMENTS OF THE PARTIES  
4.1.  The arguments of the parties a re reflected in their executive summaries, provided to the Panel 
in accordance with paragraph 23 of the Working Procedures adopted by the Panel (see Annexes C -1 
and C -2). 
5  ARGUMENTS OF THE THIRD PARTIES  
5.1.  The arguments of Canada, Japan, Switzerland, Ukraine, and the United States are reflected in 
their executive summaries, provided in accordance with paragraph 26 of the Working Procedures 
adopted by the Panel (see Annexes D -1, D-2, D-3, D-4 and D -5). Brazil, China, India, Indonesia, 
and the Russian Federation did not submit written or oral arguments to the Panel.  
6  INTERIM REVIEW  
6.1  Introduction  
6.1.  On 30 September 2021, the Panel issued its Interim Report to the parties. On 14 October 2021, 
the European Union and Turkey each submitted written requests for the Panel to  review precise  
aspects of the Interim Report.  On 28 October 2021, the European Union and Turkey submitted 
comments on each other's requests for review. Neither party requested an interim review meeting.  
6.2.  In accordance with Article 15.3 of the DSU, this section of the Report sets out the Panel's 
response to the parties' requests made at the interim review stage. The Panel generally addresses 
the parties' requests individually and in sequence according to th e paragraphs to which such requests 
pertain. The Panel addresses related requests together  to avoid repetition. To provide context, the 
Panel structures its discussion using the subheadings of the Report where the relevant paragraphs 
are found.  
6.3.  In additio n to the requests for substantive modifications discussed below, various corrections 
or improvements of a typographical or minor editorial nature were made to the Report, including 
but not limited to those suggested by the parties.  
6.4.  The numbering of some of the paragraphs and footnotes in the Final Report has changed from 
the numbering in the Interim Report . Except where otherwise indicated, references to footnote 
numbering in the discussion below correspond to the numbering in the Fi nal Report . 
6.2  General issue  
6.5.  As a general issue, Turkey states that it regrets that despite its earlier comments on the draft 
descriptive part of the Report111, the Panel decided to use the incorrect and misleading terminology 
suggested by the European Union a nd throughout the Report used terms such as "reimbursement" 
(to describe the Turkish system of the provision of medicines included in Annex 4/A) and 
"consumers" (to describe patients). Turkey states that it does not agree with the use of these terms 
and re quests the Panel to accurately reflect that in the Final Report. Turkey also requests the Panel 
to provide an explanation as to why it decided to use the terminology suggested by the European 
Union given that this terminology has been consistently conteste d by Turkey throughout the 
proceedings.  
6.6.  The European Union does not comment.  
6.7.  The Panel first notes that, contrary to what is suggested by Turkey's request, the Panel has 
not used the terminology suggested by the European Union throughout the Report : the Pa nel has 
sought to use neutral formulations.112 The Panel further notes that, contrary to what is implied by 
 
111 Turkey 's comments on the draft descriptive part of the Panel Report, para. 28.  
112 For example, instead of referring to the Annex 4/A list as the "reimbursement list " or the "list of 
medicines to be paid for ", the Panel simply refers to it as the Annex 4/A list. In various other instances, the 
Panel uses the terms "reimburses " and "pays for " interchangeably, depending on the context. While the Panel 
in several instances refers to Turkey 's "pharmace utical reimbursement system ", such terminology is mostly 
used as a generic shorthand expression. The Panel 's analysis under Article III:8(a) of the GATT 1994 is 
generally cast in Turkey 's own terminology, including the entirety of the Panel 's assessment of  Turkey 's WT/DS583/12  
 
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  Turkey's request, the Panel acknowledges and has already fully reflected, in the Report, that Turkey 
does not agree with the European Union's use of terms such as "reimbursement" and "consumer".113 
Finally, and again contrary to what might be suggested by Turkey's request , the Panel has already 
provided thorough explanations of its approach to disputed terminology.114 For these reasons, the 
Panel rejects  the premise underlying Turkey's request that the Panel provide an explanation "as to 
why it decided to use the terminology suggested by the European Union given that this terminology 
has been consistently contested by Turkey throughout the proceedings ". 
6.3  Descriptive  part of the Report  
6.3.1   Translation  issues  
6.8.  Turkey observes that paragraph 1.20 describes its position regarding the translation of 
certain terms included in Tu rkish legal instruments and documents. Turkey requests two changes. 
First, Turkey notes that the final two sentences suggest that whereas Turkey addressed "some" of 
the European Union's comments, it acquiesced to the European Union's broader statement that  
Turkey agreed with the European Union's factual description of the "Localisation Requirement and 
Turkey's reimbursement system for outpatient pharmaceuticals". Turkey considers that this 
characterization i s misleading as it does not reflect Turkey's detai led response to the European 
Union's factual description at paragraphs 16 -33 of Turkey's second written submission. Second, 
Turkey notes that despite  its request for modification in the context of its comments on the draft 
descriptive part of the Report115, the Panel did not amend that paragraph as suggested by Turkey. 
Turkey reiterates its request to add additional explanation at the end of that paragraph in order to 
better reflect Turkey's arguments.116  
6.9.  The European Union disagrees with Turkey's request t o have the Panel reflect that its second 
written submission "corrected the errors made by the European Union…" as it would create the 
impression of a finding, by the Panel, that the European  Union made errors. The remaining 
 
argument that the SSI "purchases " pharmaceutical products by paying for them. Furthermore, contrary to 
Turkey 's statement that the Panel decided to use the incorrect and misleading terminology suggested by the 
European Union and throughout the re port used the term "consumers " to describe patients, the Panel has 
consistently used the neutral expression "final consumers (i.e. outpatients) ". 
113 The Panel did so first in the descriptive part of the Report (see footnotes 36 and 56), and then again 
in the context of its findings (see in particular paragraph 7.91). The Panel observes  that the present discussion 
now serves as an addition al reflection that Turkey does not agree with the European Union 's use of terms such 
as "reimbursement " and "consumer ". 
114 The Panel made clear in the descriptive part that the terminology used in certai n instances would not 
prejudge any disputed issue about the proper characterization of the measure before the Panel (footnote  36). 
The Panel has also made clear in t he relevant section of its findings that its conclusions and reasoning are not 
based on semantic considerations (see paragraph 7.91). More specifically, the Panel rec alled the parties ' 
disagreement over the correct translation of certain terms used in Turkish instruments and documents, and 
their wider disagreements over terminology, and clarified that its conclusion and reasoning are not based on 
such semantic consider ations and are instead grounded in an objective legal standard arising from its 
understanding of the term "product purchased " in the context of Article III:8(a) of the GATT 1994.  
115 Turkey 's comments on the draft descriptive part of the Panel Report, para. 5.  
116 In particular, Turkey requests the Panel to amend paragraph 1.20 as follows:  
1.20. In its second written submission, the European Union stated that "[w]hil e mistakes are 
always possible, nothing in the EU 's translations supports Turkey 's allegation that the EU was 
attempting to mislead the Panel. " The European Union responded to some of the translation 
issues raised by Turkey. The European Union also submitt ed that "Turkey agrees with the main 
factual elements of the Localisation Requirement and Turkey 's reimbursement system for 
outpatient pharmaceuticals, as described by the EU. " In its second written submission, Turkey 
addressed some of  the European Union 's responses , corrected the errors made by the 
European Union with respect to the factual elements  and reiterated its position with 
respect to the translation of certain terms. In particular, Turkey explained that the SSI 
does not "reimburse " an already paid  amount, but directly pays the prices of the 
dispensed medicines to retail pharmacies instead of the patients. Furthermore, Turkey 
explained that the word "temin " in the context of the Protocol concluded between the 
SSI and the Turkish Pharmacists ' Associa tion corresponds to "the provision " of 
medicines by retail pharmacies to patients, rather than "the procurement " of 
medicines by patients.  WT/DS583/12  
 
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  suggestions by Turkey seem unnec essary, and even if considered, should state, for example, "Turkey 
argued", instead of "explained", which similarly creates the impression of a Panel finding.  
6.10.   The Panel observes that section 1.5 of the Report, which is entitled "Translation issues" and 
consists of three paragraphs, is meant to serve the limited purpose of recording the fact that disputed 
issues of translation arose in the course of the proceedings. Paragraph 1.20 does not aim to 
comprehensively set out the parties' positions on those issues. Bearing in mind the context and 
limited purpose of paragraph 1.20, the Panel does not consider the changes requested by Turkey to 
be necessary and appropriate. First, the Panel does not consider that the current text, read in its 
context, implies that Turkey acquiesced to the European Union's broa der statement that Turkey 
agreed with the entirety of European Union's factual description of the "Localisation Requirement 
and Turkey's reimbursement system for outpatient pharmaceuticals". Nor does the Panel consider it 
appropriate to add two additional sentences setting out in further detail Turkey's arguments on the 
correct translation of particular terms. Among other things, Turkey's arguments on both of these 
points (the term "reimbursement" and the title of the Protocol) are reflected elsewhere in bo th the 
descriptive part of the Report and in the Panel's findings.  
6.3.2   Factual  aspects  
6.3.2.1   Turkey's  Universal Health Insurance Scheme and relevant governmental entities   
6.11.   Turkey notes that the second sentence of paragraph 2.4 paraphrases Turkey's description 
of the SSI's responsibilities, providing that "[i]t is responsible for paying for all healthcare goods and 
services, including pharmaceuticals". However, the part of paragraph 39 of Turkey's first written 
submission, which the Panel has paraphrased, lists an additional responsibility of the SSI, namely, 
that "[i]t is also the SSI who oversees the distribution of pharmaceutical products to patients". 
Turkey notes that this description was included in the draft descriptive par t shared by the Panel with 
the parties but was deleted from the Interim Report. Turkey considers that the current wording does 
not reflect its description of the responsibilities of the SSI and requests that the second sentence of 
paragraph 2.4 be modified to reflect the additional responsibility.117  
6.12.   The European Union disagrees with Turkey's suggestion to the extent that it substitutes 
Turkey's own views of the SSI's  role for Panel findings. The European Union would not object if the 
Panel expanded on its findings on the role of the SSI but disagrees that the SSI "oversees the 
distribution of pharmaceutical products to patients". According to the European Union, s uch a finding 
is not borne out by the record.  
6.13.   The Panel recalls that, in its comments on the draft descriptive part of the Report, the 
European Union requested that the Panel amend the second sentence, as initially drafted, to include 
the qualification that th e SSI "…  oversees the distribution of pharmaceutical products to patients in 
certain cases ." Anticipating a lack of agreement between the parties on how to formulate the SSI's 
"oversight" responsibility, the Panel elected to delete this reference in paragr aph 1.20 because it 
was not necessary to the focus of this paragraph. However, in the light of Turkey's request to 
reintroduce a reference  to this responsibility , while taking into account the European Union's 
subsequent objection , the Panel has revised paragraph 2.4 to neutrally state that "[i]t is responsible , 
inter alia,  for paying for all healthcare goods and services, including pharmaceuticals".  
6.3.2.2   Reimbursement  of pharmaceutical products  
6.14.   Turkey observes that paragraph 2.7 sets out t he process by which pharmaceutical products 
included in the Annex 4/A list are provided to patients and describes the role of retail pharmacies in 
that process. Turkey notes that the Panel did not amend that paragraph as requested by Turkey in 
the context of its comments on the draft descriptive part of the Report.118 Turkey reiterates its 
request to redraft this paragraph in order to accurately explain the system of dispensing 
pharmaceutical products to patients in Turkey. In particular, Turkey notes that t he first sentence 
provides, at the end, that retail pharmacies "are private entities", but this statement ignores the 
"public role " of retail pharmacies as "primary healthcare service providers " under Turkish law. Turkey 
 
117 In particular, Turkey requests the following revision: "It is responsible for paying for all healthcare 
goods and services, including pharmaceuticals , and overseeing the distribution of pharmaceutical 
products to patients ". 
118 Turkey 's comments on the draft descriptive part of the Panel Report, para. 10.  WT/DS583/12  
 
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  states that this "public role " of the retail pharmacies has been described in detail in 
paragraphs  104-107 of Turkey's first written submission and paragraphs 27, 30, 48 -49 and 82 -85 
of Turkey's second written submission. In addition, Turkey considers that the juxtaposition offered 
in the s econd sentence of paragraph 2.7 between the "main" amounts charged by pharmacies met 
by the SSI and out -of-pocket payments understates the share of the amounts covered by the SSI. 
Turkey proposes the addition of several additional sentences and revisions t o paragraph 2.7 to reflect 
these points.119 
6.15.   The European Union disagrees with Turkey's suggestion to the extent that it substitutes 
Turkey's own views of the SSI's role for Panel findings. The European Union considers that the 
proposed additions are either unnecessary (for example, the discussion of the rules in place pre -
2003) or factually incorrect and not borne out by the record (for example, the references to the 
"public" nature of retail pharmacies, their "acting on behalf" of the SSI, or Turkey's understatement 
of patients' out -of-pocket payments, which typically range up to 20%).  
6.16.   The Panel has addressed  Turkey's multi -faceted request and proposed textual changes to 
paragraph 2.7 as follows : 
a. The Panel sees no reason to revise paragraph 2.7 with Turkey's proposed text regarding 
the healthcare system as it existed prior to 2003, in part because this is already fully 
reflected at paragraph 7.78 of the Panel Report . 
b. The Panel also s ees no reason to revise paragraph 2.7 with Turkey's proposed additional 
description of pharmacies as "primary healthcare providers under Turkish law". The 
factual cha racterization of pharmacies as "private entities"  relates to the fact that 
pharmacies in Turkey  are privately owned, as opposed to being publicly owned, entities. 
The Panel observes that at paragraph 104 of Turkey's first written submission, Turkey 
itself refers to pharmacies as "private entities". While it is not contested that pharmacies 
are referred to as "primary healthcare providers under Turkish law", this does not 
negate  the fact that pharmacies are privately owned  entities .  
c. The Panel has also made some additional changes to paragraph 2.14, discussed further 
below,  to accommodate the aspect of Turkey's requests pertaining to the role of the 
TPA. 
d. The Panel has revised the second sentence to refer to "[t]he amounts charged by 
pharmacies for pharmaceutical products covered by the social security system ". 
e. With respect to the remaining part of Turkey's request related to this sentence, the 
Panel observe s that the use of the word "mainly" is not intended to reflect a 
juxtaposition between the "main" amounts charged by pharmacies met by the SSI and 
out-of-pocket payments, but rather to refer to the two main sources that cover the 
 
119 Turkey therefore requests the Panel to modify paragraph 2.7 as follows (with citations to Turkey 's 
second written submission, para. 65):  
2.7. Prior to the introduction of the Transformation in Health Program (THP) launched 
in 2003, pharmaceutical products were distributed by SSK, the predecessor of the SSI, 
which obtained physical control over the medicines, stored them in its own pharmacies 
and distributed directly to out -patients. As this system proved to be ineff ective in 
reaching the entire population, Turkey implemented a different model for dispensing 
medicines to out -patients though retail pharmacies. Following that change, 
pPharmaceutical products are distributed to outpatients by retail pharmacies. Although retail 
pharmacies , which  are private entities , they are considered primary healthcare providers 
under Turkish law and have a legal duty to assist in the supply of pharmaceutical 
products. The Turkish Pharmacists ' Association, which is mandated to represent retail 
pharmacies, is a public institution under Turkish law and may act on behalf of retail 
pharmacies in its relationship with other public institutions, such as the SSI.  Almost 
the entire  The amount s charged by pharmacies for pharmaceutical products , covered by the 
social security system,  is are met mainly  from payments made by the SSI and, while the 
remaining share is met by  out-of-pocket payments by outpatients. The SSI makes payments 
to pharmacies based on monthly invoices submitted by the pharmacies. Regarding inpatient 
treatment, inpatients receive medicines directly from the hospitals, through a process different 
from the system at issue in this dispute.  WT/DS583/12  
 
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  amounts charged by pharmac ies. However, to address Turkey's concern with the 
formulation of the second sentence, the Panel has deleted the word  "mainly" .  
6.17.   Turkey observes that paragraph 2.8 describes which pharmaceutical products used by 
Turkish patients are included in the Annex 4/A list and indicates in its first sentence that "[n]ot all 
pharmaceutical products distributed to outpatients are reimbursed by the SSI". In a footnote to the 
third sentence of paragraph 2.8, the Panel indicates that "[a]ccording to Turkey, close to 90% of 
the medicines that are actively sold and prescribed in Turkey are included  in the Annex 4/A list." 
Turkey considers that the wording of the body text, i.e., "[n]ot all", does not adequately reflect the 
uncontested figure provided by Turkey, which indicates that nearly all products distributed to 
outpatients are paid for by the S SI. Turkey therefore requests modifying the first sentence of 
paragraph 2.8 as follows: " Not all  Close to 90% of pharmaceutical products distributed to 
outpatients by pharmacies are reimbursed by the SSI."  
6.18.   The European Union disagrees with Turkey's suggestion to the extent that it substitutes 
Turkey's own factual assertions for Panel findings.  
6.19.   The Panel has adjusted paragraph 2.8 to place more emphasis on the fact that approximately 
90% of the pharmaceutical products that are actively sold and prescribed in Turkey are included in 
the Annex 4/A list.  
6.20.   Turkey observes t hat paragraph 2.13 explains the process of "passivizing" products included 
in the Annex 4/A list. Turkey notes that footnotes 51, 52 and 53 to that paragraph explain the 
difference between excluded and passivized products, and the process of reactivation or re -inclusion. 
Because this distinction is important to Turkey's position on the trade -restrictiveness of the 
localisation measure, Turkey asks the Panel to move the explanation included in those footnotes to 
the body text.120 Turkey refers in that regard to its comments on the draft descriptive part of the 
Report.121    
6.21.   The European Union does not object but would request that the remaining text currently in 
footnotes 5 2-54 be preserved.  
6.22.   The Panel declines Turkey's request. The Panel understands that Turkey's request only 
concerns the place where the factual information regarding the passivization and the exclusion of 
pharmaceutical products is provided (i.e. in the main body of the text rather than in footnotes 51, 
52 and 53). The Panel notes that paragraph 2.13 is included in section 2.1.3.1 of the Report, titled 
"The Annex 4/A list". Previous paragraphs in this section explain that the SSI pays to pharmacies 
the price of certain pharmaceutical products (paragraph 2.7); clarify that to be reimbursable, 
pharmaceutical products must be included in the Annex 4/A list (paragraphs 2.8 -2.9); and outline 
the pathways through which products are included in this l ist (paragraphs 2.10 -2.12). Therefore, 
section 2.1.3.1 of the Report provides a description of the conditions under which a pharmaceutical 
product would be reimbursed by the SSI. This description follows chronologically the process that 
leads to a product being reimbursed by the SSI, i.e. its in clusion in the Annex 4/A list and its status 
in the list as "active". It is within this framework that paragraph 2.13 refers to the possibilities that 
a product be "p assivized" or "excluded", which both result in the product not being reimbursed. In 
this context, the difference between excluded and passivized products with respect to the 
possibilities of re -activation or re -inclusion is of a secondary nature. While the  Panel understands 
 
120 In particular, Turkey requests that the text be m odified as follows:  
2.13. Regardless of whether the regular or alternative reimbursement pathway is used, once 
approved, the pharmaceutical products are included in the same Annex 4/A list. Once included in 
the Annex 4/A list, products may subsequently be "passivized " (their status in the list changes 
from "active " to "passive "), or excluded from the list. Products may still be prescribed by 
doctors and dispensed by the pharmacies, but  are no longer reimbursed if they are 
excluded or "passivized ". In other words, to be reimbursed, products must be both included and 
listed as "active " in the Annex 4/A list. Pharmaceutical products that have been 
"passivized " may be re -activated upon request of the pharmaceutical company if the 
conditions for setting the produ ct's status to "passive " are no longer valid. 
Pharmaceutical products that have been "excluded " from the Annex 4/A list may be 
re-included after a period of 6 months following the date of their exclusion and are 
subject to a new application for inclusion in the Annex 4/A list.  
121 Turkey 's comments on the draft descriptive part of the Panel Report, pa ra. 11.  WT/DS583/12  
 
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  Turkey's comment that this distinction is important to Turkey's position on the trade -restrictiveness 
of the localisation measure, the Panel considers that the distinction is sufficiently clearly outlined in 
footnotes 51, 52 and 53 (as evidenced by Turkey's request to merely move these descriptions to 
the main body of the text without modifying the information provided). The Panel also notes that 
the fact that "passivized" and "excluded" products may sti ll be prescribed by doctors and dispensed 
by pharmacies, without being reimbursed, is already reflected in the last sentence of footnote 53. 
6.23.   Turkey observes that paragraph 2.14 explains how pharmaceutical products are provided 
to patients and the role of the retail pharmacies and the SSI in that process. Turkey notes that the 
Panel did not make all the changes suggested to that paragraph by Turkey in its comments on the 
draft descriptive part of the Report.122 Turkey reiterates its request to further redraft this paragraph 
in order to provide a more accurate description of the process of providing medicines to patients. In 
particular, Turkey states, the pay ment for medicines invoiced to the SSI is not optional (and refers 
to Turkey's opening statement, paragraph 32). Turkey states that while the SSI checks the invoices 
it receives from the retail pharmacies, mostly based on sampling, it can only refuse to ma ke the 
payment in exceptional circumstances when the medicines were approved in the Medula system on 
the basis of incorrect information and dispensed to patients in breach of the specific medical rules 
that exist for those medicines. Turkey suggests adding  that explanation to footnote 59. Turkey  also 
suggests the following change to the last sentence of that paragraph: "The SSI reviews these 
invoices, and pays  reimbur ses the 'reimbursement price ' based on the public price of the 
relevant medicines.  (i.e. the balance of the amount remaining after the out -of-pocket 
payments by the patients). " 
6.24.   The European Union disagrees with Turkey's suggestion because it substitutes Tu rkey's own 
views of the SSI's role for Panel findings, and because it is not borne out by the record.  
6.25.   The Panel has addressed Turkey's multi -faceted request and proposed textual changes to 
paragraph 2.14 as follows : 
a. With respect to Turkey's request to add certain explanations to footnote 59, the Panel 
recalls that, to accommodate certain of Turkey's requests presented in its comments on 
the draft descriptive part of the Report, the Panel added footnote 59 which explains that 
the SSI usually reviews invoices and their accompanying documents using a sampling 
method and refers to Article 6 of the Regulation on the procedures and principles 
governing checking of invoices of healthcare providers and reimburs ement of their fees 
(Exhibit EU -53). The Panel considered this addition, including the specific reference to 
the relevant legal instrument, to accurately reflect a broader description which Turkey 
suggested without providing any reference to the evidence o n record.123 In its 
comments on the Interim Report, Turkey reiterates its request for the addition of a 
similarly broad explanation that "the payment for medicines invoiced to the SSI is not 
optional" and refers to its opening statement without providing fu rther support for its 
statement based on the evidence on record.124 The Panel observes that this is an issue 
of some contention between the parties. The parties appear to agree that, in some 
circumstances, the SSI can refuse to make a payment for a product even when the 
provision of the medicine to the patient was approved in the Medula system.125 They 
disagree, however, as to the relevance, frequency or significance of this possibility – 
while Turkey states that the SSI can only refuse to make a payment "in exceptional 
circumstances"126, the European Union highlights the "significant risk" that receiving 
"approval" in Medula system at the time of the transaction does not necessarily mean 
that the product will be reimbursed by the SSI. 127 For these reasons, to accommodate 
Turkey's request, the Panel has made an addition  to footnote 59 to reflect that, 
accord ing to Turkey, the SSI can refuse to make a payment when the medi cines were 
 
122 Turkey 's comments on the draft descriptive part of the Panel Report, para. 13.  
123 Turkey's comments on the draft descriptive part of the Panel Report, para. 1 3, referring to Turkey's 
opening statement, para. 32.  
124 Turkey's comments on the Interim Report, para. 11. Turkey refers to para. 32 of its opening 
statement which does not include any reference to the evidence on record.   
125 Turkey's comments on the I nterim Report, para. 11 and European Union's responses to the first set 
of questions, para. 1 1.  
126 Turkey's comments on the I nterim Report, para. 11.  
127 European Union's responses to the first set of questions, para. 11.  WT/DS583/12  
 
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  approved in the Medula system on the basis of incorrect information and dispensed to 
patients in breach of the specific medical rules that exist for those medicines .  
b. With respect to Turkey's suggested change in the last sentence of the paragrap h, the 
Panel notes that paragraph 2.16 includes a detailed description of the "reimbursement 
price" covered by the SSI. To avoid confusion and to partially accommoda te Turkey's 
request, the Panel has made a revision to the last sentence of paragraph 2.14. 
c. Finally, to reflect Turkey's explanation of the status of the TPA in the context of its 
comments on paragraph 2.7, the Panel has added additional text  to footnote 55 
(footnote 55 in the Interim Report).  
6.26.   Paragraph 2.15: Turkey observes that this paragraph talks about the Medula system. Turkey 
suggests moving this paragraph to the end of section 2.1 (i.e., after paragraph 2.17) to improve the 
flow of the explanation relating to the price of the pharmaceutical products in Turkey, including the 
price paid by the SSI.  
6.27.   The European Union does not comment.  
6.28.   The Panel has made the change suggested by Turkey.  
6.29.   Turkey notes that paragraph 2.16 (paragraph 2.17 in the Interim Report)  illustrates  what 
happens if the application of the reference pricing system results in a reimbursable amount which is 
lower than the public price of a pharmaceutical product included in the Annex 4/A list. It provides 
that "[i]f the public price of a pharmaceutical p roduct is greater than the maximum reimbursement 
price set by the SSI for the relevant equivalent group, outpatients must pay the difference". Turkey 
states that it has explained at paragraph 1 of its responses to the Panel's first set of questions that 
this depiction is incomplete because a patient may opt for an equivalent medicine that is less costly 
than that which was prescribed by the medical doctor and is therefore not required to pay the 
difference. In addition, Turkey reiterates its previous commen ts on the draft descriptive part of the 
Report128 given that the Panel did not make all the requested changes. In particular, Turkey 
considers that it is important to clarify that the fees paid by patients constitute contributions to the 
social security sys tem and that in many instances patients do not pay any contribution fee. 
Accordingly, Turkey invites the Panel to add additional text to paragraph 2.16 to reflect the se 
points.129  
6.30.   The European Union responds that the first proposed addition is illogical, as the sentence only 
speaks of a scenario in which the public price is greater than the maximum reimbursement price. 
The second should be rejected because it substitut es Turkey's own views of the SSI's role for Panel 
findings, and because it is not borne out by the record. As for the third, the European Union does 
not object to a reference to some, or certain, instances where patients are exempt from a 
contribution fee,  but it should not be qualified by the adjective "many" (which would require a factual 
 
128 Turkey 's comments on the draft descriptive part of the Panel Report, para. 16.  
129 In particular, Turkey requests that paragrap h 2.17 be amended as follows:  
2.17. If the public price of a pharmaceutical product is greater than the maximum 
reimbursement price set by the SSI for the relevant equivalent group, outpatients must pay the 
difference or are provided another equivalent product with a lower public price . In 
addition, outpatients generally also pay two types of fees collected by pharmacies, as 
contribution to the social security system : (i) a fee calculated as a percentage of the price 
after public discount of the pharmaceutical product (contribution fee) , being 10% for persons 
who receive income or a pension from the SSI, and also for their dependants, or 20% for all 
others; and (ii) a fee of 3 Turkish lira for up to three boxes/items in the prescription and 1 
Turkish lira for each additional box/item (pr escription fee). In many instances, patients do 
not pay any contribution fee.[FN]  
 
[FN] Turkey 's first written submission, para. 110. Among others, the contribution fee is 
waived for pharmaceutical products necessary for the treatment of critical diseases 
such as cancer or long -standing chronic diseases. In 2019, 34.7% of the total SSI 's 
expenditure for medicines was exempt from the payment of the contribution fee.  WT/DS583/12  
 
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  assessment never undertaken by the Panel). The last sentence of the proposed footnote should also 
be rejected, as it would constitute a new factual finding.  
6.31.   The Panel ha s addressed  Turkey's multi -faceted request and proposed textual changes to 
paragraph 2.16 as follows : 
a. With respect to Turkey's request to modify the first sentence of  the paragraph, the Panel 
understands Turkey's explanation to mean that an outpatient may decide to opt either 
for the pharmaceutical product indicated on a prescription (and pay the difference 
between the public price of this product and the maximum reimb ursement price set by 
the SSI for the relevant equivalent group), or for a cheaper equivalent product (thus 
paying a smaller difference between the public price of the selected product and the 
maximum reimbursement price set by the SSI for the relevant equ ivalent group, or 
paying no such difference if the public price of the product is not greater than the 
maximum reimbursement price set by the SSI for the relevant equivalent group). 
However, the Panel is of the view that the revision, as suggested by Turke y, and in 
particular the use of the conjunction "or", might lead to an erroneous conclusion that if 
an outpatient opts for a cheaper equivalent product with a lower price, this necessarily 
means that the outpatient will not pay the potential difference bet ween the public price 
of this equivalent product and the maximum reimbursement price set by the SSI for the 
relevant equivalent group. This statement would only be correct if such difference does 
not exist, i.e. if the public price of the equivalent produc t is not greater than the 
maximum reimbursement price set by the SSI for the relevant equivalent group. For 
that reason, the Panel has revised the first sentence of the paragraph to include a 
clarification that  outpatients must pay the difference, unless t hey decide to opt for an 
equivalent product the public price of which is not greater than  the maximum 
reimbursement price set by the SSI for the relevant equivalent group.  
b. With respect to Turkey's request to clarify that the fees paid by patients constitute 
"contributions to the social security system", the Panel observes that the European 
Union does not disagree with this clarification but considers it "irrelevant because it 
concerns, at best, the ultimate use to which the money is put".130 The Pan el notes, 
however, that the legal instrument to which Turkey refers in its first written submission 
in support of the argument that the contribution fee forms part of patients' contribution 
to the social security system explains, more narrowly, that the co ntribution fee "refers 
to the amount to be paid by the universal health insurance holder or the dependents in 
order to benefit from healthcare services".131 To accommodate Turkey's request and 
precisely reflect the text of the relevant legal instrument, the  Panel has added a 
sentence in  footnote 66 (footnote 68 in the Interim Report)  stating  that a contribution 
fee refers to the amount to be paid by the universal healt h insurance holder or the 
dependents in order to benefit from healthcare services, along with a reference  to the 
relevant legal instrument.   
c. With respect to Turkey's request to clarify that in many instances patients do not pay 
any contribution fee, the P anel observes that, following Turkey's request in its 
comments on the draft descriptive part of the Report, the Panel revised footnote 66 to 
include this factual in formation. To further accommodate Turkey's request, the Panel 
has added a sentence at the end of footnote 66 reflecting  that, according to Turkey, in  
2019, 34.7% of the total SSI’s expenditure for medicines was exempt from the payment 
of the contribution fee . The Panel has added a reference  to footnote 90 of Turkey's first 
written submission, where this information was initially provided.  
 
130 European Union's second written submission,  para. 107. 
131 HIC/SUT (Exhibits EU -95, TUR -10), Article 1.8. 1. In the translation provided by the E uropean Union 
of this document, Article 1.8.1 reads as follows: "Contribution means the amount payable by persons covered 
by universal health insurance and their dependents to be entitled to healthcare."  WT/DS583/12  
 
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  6.3.3   The measures  at issue  
6.3.3.1   The localisation requirement   
6.32.   Turkey strongly disagrees with the description, in paragraph 2.20, of the localisation 
requirement as having the "policy obj ective of achieving the gradual transition from imports to 
domestic manufacturing of pharmaceuticals". While Turkey does not deny the target of meeting 60% 
of domestic pharmaceutical demand through domestic production, mentioned in footnote 75, it 
reiterates  that the policy objective  behind that target relates to social security and public health. 
Turkey therefore suggests amending the first sentence of this paragrap h.132  
6.33.   The European Union rejects Turkey's attempt to completely re -qualify its measure, in a way 
that goes far beyond the scope of interim review. On the other hand, the European Union notes that 
the Panel extensively discusses Turkey's alleged policy obje ctives in the section dealing with 
Article  XX of the GATT 1994 and would not object to a cross -reference to that discussion in this 
paragraph.  
6.34.   The Panel declines to make Turkey's proposed changes to paragraph 2.20, for the same 
reasons that the Panel declined to revise paragraph 2.20 in the light of Turkey's comments on the 
draft descriptive part of the Report. In the first sentence of paragraph 2.20, the Panel is simply 
indicating that it is not disputed that the challenged measure (i.e. the localisation requirement) is 
related to Turkey's wider objective of achieving the gradual transition from imports to domestic 
manufacturing of pharmaceuticals. The Panel refers to that objective as "Turkey's policy objective" 
in the context of paragraph 2.20 simply to distingu ish it from the challenged measure (i.e. the 
localisation requirement). In referring to "Turkey's policy objective" in the first and second sentences 
of paragraph 2.20, the Panel is clearly not prejudging the heavily contested  issue of whether and if 
so how that objective is related to Turkey's social security and public health objectives of securing 
uninterrupted access to medicines for all patients in  Turkey and guaranteeing the financial 
sustainability of the social security system. The parties' respective positions and arguments on that 
issue are set out in detail in the section of the Report addressing the general exceptions under 
Article  XX (see e. g. paragraph 7.165) and do not need to be reiterated in the context of 
paragraph  2.20.  
6.35.   In addition, Turkey, recalling its comments on the draft descriptive part of the Report133, 
states that the reference to "foreign producer(s)" in paragraph 2.20 is incorrect, given that the 
European Union's challenge of the measure is not directed at the nationality of producers but rather 
the origin of the products themselves. Turkey therefore respec tfully suggests amending paragraph 
2.20 so as to replace the words " foreign producers " with " producers of pharmaceutical products ".  
6.36.   The European Unio n does not comment.  
6.37.   The Panel understands  that the European Union's challenge of the localisation requirement is 
not directed at the nationality of producers but rather at the origin of the products themselves. 
However, when the Panel refers to a "foreign  producer" (or conversely, "local producer"), the Panel 
is referring to the location of production, and not to the nationality of the producer. By way of 
illustration, an EU -owned enterprise producing pharmaceutical products in Turkey would be referred 
to as a "local producer", and a Turkish -owned enterprise producing pharmaceutical products in the 
European Union, and importing those products into Turkey, would be referred to as a "foreign 
producer". Accordingly, the Panel declines to make the revision sugg ested by Turkey for the same 
reason that the Panel declined to change references to "foreign" and "local" producers after receiving 
Turkey's comments on the draft descriptive part of the Report.134 
 
132 In particular, Turkey requests that the first sentence be amended as follows:  
2.20. The localisation requirement seeks to  relates to Turkey 's policy objective of  
achiev eing the gradual transition from imports to domestic manufacturing of pharmaceuticals 
which, according to Turkey, relates to social security and public health objectives of 
ensuring uninterrupted access to medicines for all patients in Turkey and guaranteeing 
financial sustainability of the social security system . 
133 Turkey 's comments on the draft descriptive part of the Panel Report, para. 18.  
134 Turkey 's comments on the draft descriptive part of the Panel Report, paras. 18 and 21.  WT/DS583/12  
 
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  6.3.3.2   The prioritization  measure  
6.38.   Turkey reiterates the request m ade in its comments on the descriptive part of the Report135 
to complete paragraph 2.31 with additional examples in order to more accurately explain the 
circumstances when application may receive priority.136 
6.39.   The European Union does not comment.  
6.40.   The Panel notes that the Prioritization Guideline provides for the possibility to request priority  
assessment of ten different types of applications.137 To avoid including a list of all the circumstances 
when applicatio ns may receive priority, and noting that the European Union took issue with only 
some of these circumstances138, the Panel opted for describing only those circumstances that 
pertained to the European Union's challenge  and that were relevant for the potentia l distinction 
between domestically produced pharmaceutical products and pharmaceutical products produced 
abroad. The Panel flagged the existence of other circumstances by use of the words " inter alia" . In 
the Panel's view, the addition suggested by Turkey of only one additional example ("applications 
relating to biosimilar and innovative products") would only partially serve the purpose of "more 
accurately explain[ing] the circumstances when application may receive priority". For that reason, 
to accommodate  Turkey's request to the extent possible, the Panel has revised the paragraph to 
reflect that prioritization can be requested  for ten categories of applications, including those  
specifically mentioned in paragraph 2.31. 
6.3.4   Parties' requests for findings and recommendations  
6.41.   Turkey reiterates the request made in its comments on the draft descriptive part of the 
Report139 to modify paragraph 3.5 (a) in order to accurately r eflect Turkey's arguments.140 In a 
related request on paragraph 7.261  (paragraph 7.259  in the Interim Report) , Turkey reiterates 
that its claim that the European Union has failed to establish the existence and precise content of 
the "import ban measure" is based, in the first place, on the argument that the European Union 
failed to demonstrate the existence of a "ban". Turkey notes that reference is made to that point in 
the accompanying footnote but considers that it should be part of point (i) of paragraph 7.261  to 
more precisely and accurately reflect the structure of its arguments as included, inter alia , in 
paragraphs 590 -593 of Turkey's first written submission.141 
 
135 Turkey 's comments on the dra ft descriptive part of the Panel Report, para. 25.  
136 In particular, Turkey suggests the following change (with a reference to the Prioritization Guideline 
(Exhibit EU -97), Article 2(b) and (c)):  
2.31. "Prioritization " can be requested, inter alia, for appl ications relating to biosimilar and 
innovative products, applications relating to  transferring the production of imported 
medicines to Turkey, applications for locally manufactured products for exportation purpose, and 
applications relating to products tha t have strategic importance in terms of the country 's policies.  
137 Prioritization Guideline (Exhibit EU -97), Article 2.  
138 European Union's first written submission , paras. 339 -341.  
139 Turkey 's comments on the draft descriptive part of the Panel Report, para. 27.  
140 In particular, Turkey invites the Panel to make the following changes:  
a. the European Union has failed to establish the existence and precise content of 
the "import ban measure ". In particular, the European Union has failed to demonstr ate 
the existence of a "ban". while t The European Union also characterizes the "import ban 
measure " as a "single measure ", it failsed to show how the different components operate 
together as part of a "single measure " distinct from its components , and thereby fails to 
establish the existence and precise content of the import ban measure as a "single 
measure "; 
141 In particular, Turkey requests the following modification:  
 
7.259. Turkey requests that the Panel reject the European Union 's claim under Article XI:1 of the 
GATT 1994 on multiple separate grounds. The grounds invoked by Turkey are that: (i) the 
European Union fails to establish the existence and precise content of that measure, 
first because it failed to demonst rate the existence of a "ban", i.e. a formal prohibition 
on the importation of localised pharmaceutical products and second, because while the 
European Union characterizes the "import ban measure " as a "single measure ", it fails to show 
how the different c omponents operate together as part of a "single measure " distinct from its WT/DS583/12  
 
- 46 - 
 
  6.42.   The European Union does not comment.  
6.43.   The Panel considers that these paragraphs and their a ccompanying footnotes clearly and 
accurately reflect the structure of Turkey's layered arguments, and it was for that reason  that the 
Panel did not modify the wording of these paragraphs following Turkey's comments on the draft 
descriptive part. It now app ears from Turkey's comments on the Interim Report that Turkey's 
concern arises from the fact that reference is made to the argument in question using a footnote, 
rather than being reflected in main body text. The Panel notes that it presented the structure  of 
Turkey's arguments through a combination of main body text and footnotes to reflect that there are 
several layers to Turkey's arguments, and not in any way to imply that both of the arguments 
referenced in the footnote are secondary. Insofar as that is  Turkey's concern, the Panel has sought 
to accommodate it by reflecting all of Turkey's arguments in the  main body text of these paragraphs.   
6.4  The existence and precise content of the localisation requirement as a "single and 
cohesive measure"  
6.44.   Turkey obser ves that paragraph 7.11 summarizes Turkey's arguments developed in its first 
written submission regarding the European Union's identification of the content and exist ence of the 
localisation measure. Turkey requests that the following sentence in that paragraph be modified in 
order to reflect the due process dimension of its arguments, with reference in that regard to 
paragraph 39 of its second written submission and p aragraph 15 of its responses to the first set of 
questions: "According to Turkey, such identification and explanation are essential to establish the 
'precise content' of the measure and have important consequences for its ability to develop its 
defence aga inst some of the claims."  
6.45.   The European Union does not object to a more extensive description of Turkey's arguments, 
but would ask the Panel to limit this to direct citations of Turkey's submissions, and not to add any 
new language or modify the existing language summarising or qualifying those submissions.  
6.46.   The Panel declines to modify paragraph 7.11 to reflect these subsequent submissions: a s 
Turkey itself recognizes, paragraph 7.11 has the purpose of summarizing Turkey's arguments 
developed in its first written submission. Furthermore, the above -quoted sentence in paragraph 7.11 
as currently drafted corresponds to the cited sentence from Turkey's first written submission, which 
does not include the words "its ability to develop its defence against". However, with a view to 
accommodating Turkey's desire to have the due process dimension of its arguments reflected more 
explicitly in the  main body text of the Report, the Panel has revise d the first sentence of paragraph 
7.30 to read " [f]inally, the Panel observes that Turkey's argument regarding the European Union's 
alleged failure to precisely iden tify the components of the localisation requirement and resulting 
impact on Turkey's ability to develop its defence , while presented as a general argument 
relevant to all of the European Union's claims, seems to be primarily, if not exclusively, relevant t o 
the European Union's claim under Article X:1 of the GATT 1994." The Panel notes that the existing 
footnote to this sentence already refers to paragraph 39 of Turkey's second written submission and 
paragraph 15 of its responses to the first set of questio ns. 
6.5  Article III:8(a) of the GATT 1994  
6.47.   Turkey observes that paragraph 7.44 describes the European Union's arguments concerning 
the burden of proof under Article III:8(a) of the GATT 1994. Although the Panel did not make any 
findings on that issue, for the sake of com pleteness, Turkey suggests that the Panel also refer to 
Turkey's arguments on that point as reflected in paragraphs 31 -37 of its responses to the second 
set of questions.  
6.48.   The European Union does not object to a more extensive description of Turkey's argum ents, 
but would ask the Panel to limit this to direct citations of Turkey's submissions, and not to add any 
new language or modify the existing language summarising or qualifying those submissions.  
 
components , and thereby fails to establish the existence and precise content of the 
import ban measure as a "single measure "; (ii) …  WT/DS583/12  
 
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  6.49.   The Panel has added the reference as requested by Turkey i n footnote 257 (footnote 217 in 
the Interim Report).   
6.50.   Turkey observes that paragraph 7.46 summarizes Turkey's argument in its first written 
submission on the first element of the legal test under Article III:8(a) of the GATT 1994, namely, 
that the localisation requirement is a "law, regulation or requirement governing procuremen t". 
Turkey requests that the Panel reflect Turkey's references to the Protocol between the TPA and the 
SSI and the contracts between individual pharmacies and the SSI. In a related request, Turkey also 
suggests modifying the third sentence of paragraph 7.60 to add a reference to the Protocol 
between the TPA and the SSI and the contracts between individual pharmacies and the SSI.142 
6.51.   The European Union does not object to a more extensive description of Turkey's arguments, 
but would ask the Panel to limit this to direct citations of Turkey's submissions, and not to add any 
new language or modify the existing language summarising or qualifying those submissions . 
6.52.   The Panel has made the additions requested by Turkey to paragraphs 7.46 and 7.60. 
6.53.   Turkey requests that the sentence in paragraph 7.60 starting with "Turkey also points to 
several facts that, in its opinion, indicate that there is no commercia l transaction between the 
patients and retail pharmacies" be corrected to indicate that these points were made to rebut the 
European Union's arguments.143  
6.54.   The European Union does not object to a more extensive description of Turkey's arguments, 
but would ask the Panel to limit this to direct citations of Turkey's submissions, and not to add any 
new language or modify the existing language summarising or qualifying those submissions  
 
142 In particular, Turkey requests the following c hanges:  
7.46. Turkey submits that the localisation measure is a "law, regulation, or requirement 
governing procurement ". According to Turkey, the SSI "acquires " the medicines that are 
prescribed to patients in Turkey "since it pays for their costs ". Turkey  explains that the 
pharmaceutical products included in the Annex 4/A list "are acquired by the SSI through retail 
pharmacies which are members of the TPA ", and the "procurement process is governed by the 
Protocol concluded between the SSI and the TPA as we ll as contracts concluded between 
the SSI and individual retail pharmacies ". Turkey submits that, contrary to what the 
European Union argues, the very title of that document , i.e. Protocol on the Provision of 
Medicines to the Persons Covered by the Social Security Institution by the Pharmacies 
which are Members of the Turkish Pharmacists ' Association,  makes it clear that it 
regulates the "provision " of pharmaceutical products by retail pharmacies, on behalf of the SSI, 
to patients.  
 
7.60. […] First, pharmacies do not resell the pharmaceutical products because they rather 
dispense them to outpatients on behalf of the SSI , on the basis of the Protocol signed 
between the TPA and the SSI and the contracts signed between individual pharmacies 
and the SSI . 
143 In particular, Turkey suggests the following changes:  
7.60. […] Turkey also points out that contrary to what the European Union argues  to 
several facts that, in its opinion, indicate that there is no commercial transaction 
between the patients and retail  pharmacies, namely (i) the fact that patients may replace 
the brand product from the prescription with an equivalent generic product (or vice versa ); (ii) 
the fact that patients may decide "whether, when or where " to use their prescription; or (iii) the 
fact a patient may chose the pharmacy or even decide not to take his/her prescribed medicine , 
do not indicate that there are any commercial transactions between the patients and 
retail pharmacies as far as the pharmaceutical products included in Annex 4/A a re 
concerned . Turkey further maintains that the prescription fee and the contribution fee paid by 
patients are not part of the price of the pharmaceutical products but rather "form part of the 
patients ' contribution to the social security system and aim at  preventing abuses of the 
healthcare system, including overconsumption of medicines, as well as ensuring its financial 
sustainability ". Turkey also observes that in many instances, patients are exempted from the 
payment of the contribution fee.  WT/DS583/12  
 
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  6.55.   The Panel has reformulated the wording of paragraph 7.60 in the manner requested by 
Turkey, to reflect that the argument being summarized is in the nature of a rebuttal argument.  
6.56.   Turkey notes that the statement in paragraph  7.62 that the panel in India – Solar Cells  did 
not make any findings on the remaining elements of Article III:8(a) of the GATT 1994, other than 
the issue of the nature of "products purchased", is incorrect. Turkey notes that the Panel appears to 
recognize this elsewhere in the Interim Report (and refers to paragraph  7.105). Turkey notes that 
the panel in that case considered it "useful to proceed with a limited analysis and review" (at 
paragraph 7.137) of the remaining elements of Article III:8(a) and examined (i) whether the 
measures at issue were  "laws, regulations, or requirements governing procurement", (ii) whether 
the procurement was made "by governmental agencies", (iii) whether the procurement was of 
products purchased "for governmental purposes", and (iv) whether the procurement and purchas e 
of products was "not with a view to commercial resale" (at paragraphs  7.139 -7.186).  Turkey 
therefore suggests adding a sentence to paragraph 7.62 to reflect this.144 
6.57.   The European Union does not comment.  
6.58.   The Panel has revised the wording of the third sent ence of paragraph 7.62, and elaborated 
the text of its accompanying footnote, to express more clearly that while the panel in India – Solar 
Cells observed that it wa s unnecessary to make findings on the remaining elements of Article III:8(a) 
given that "the threshold legal element" under this provision was not satisfied, it nonetheless 
considered it useful to proceed with a limited analysis and review of certain issue s relating to the 
remaining elements of Article III:8(a).  
6.59.   In a related request,  Turkey further requests the Panel to follow the same approach as did 
the panel in India – Solar Cells  and thus to include in its final report limited analysis and review of 
the other elements of Article III:8(a) of the GATT 1994 as well as its factual findings related to those 
elements. Turkey notes that this would require redrafting section 7.2.4.5 in the Interim Report. In 
that regard, Turkey disagrees with the Panel's stateme nt, in paragraph 7.106 , that in the 
circumstances of this dispute there are "no compelling reasons to make additional findings or 
observations beyond those necessary to resolve the claims and defences at issue". Leaving aside 
the fact that the Panel did not further explain its decision not to address the remaining issues under 
Article III:8(a), Turkey submits that, as in India – Solar Cells  (referring to paragraph 7.137 of the 
panel report in that dispute), the additional factual findings of the Panel are necessary in order to 
allow a review of the Panel's findings and the completion of the legal analysis under Article III:8(a) 
in case of appeal.    
6.60.   The European Union does not comment.  
6.61.   The Panel declines Turkey's request that the Panel redraft section 7.2.4.5 of the Report to 
include further analysis and review of the other elements of Article III:8(a) of the GATT 1994 as well 
as its factual findings related to those elements. The Panel is not persuaded by Turkey's argument 
that additional factual findings of the Panel are necess ary in order to allow a review of the Panel's 
findings and the completion of the legal analysis under Article III:8(a) in case of appeal. The Panel 
notes that the work of the Appellate Body has been suspended for nearly two years and that 
Members remain un able to reach consensus on any selection process to fill the vacancies that are 
required for the Appellate Body to function. Moreover, the Panel's approach here is in line with the 
economical approach taken by the Panel elsewhere in the Report, including t he scope of the Panel's 
findings on Turkey's defences under Article XX(b) and (d), and the European Union's claims under 
Article 3.1(b) of the SCM Agreement, Article 2.1 of the TRIMs Agreement, Article X:1 of the GATT 
1994, and Article XI:1 of the GATT 199 4.  
6.62.   The Panel recalls that, as reflected in paragraph 7.64 and the subsections that follow, Turkey 
advances three lines of argument in support of its contention that  the localisation requirement 
 
144 In partic ular, Turkey suggests the following change:  
7.62. […] That panel ultimately found it unnecessary to make findings on the remaining elements 
of Article III:8(a) given that "the threshold legal element " under this provision was not satisfied. 
That panel neve rtheless decided to proceed with a limited analysis and review of the 
remaining elements of Article III:8(a) in order to provide sufficient factual findings 
that could be required in case of an appeal.  WT/DS583/12  
 
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  involves the "purchase" of pharmaceutical products included in the Annex 4/A list by governmental 
agencies. As reflected in paragraph 7.64, the Panel's view is that these arguments are properly 
characterized as alternative arguments. In the light of the foregoing, the Panel considers it 
appropriate to address the following comments together:  
a. The European Union suggests that the Panel rem ove the word "alternative" from the 
first sentence of paragraph 7.64. It is not the European Union's understanding that 
Turkey necessarily frames all of the three lines of argument as alternative, i.e. mutually 
exclusive. For the same reasons, the European Union requests that the words "made in 
the alternative" be removed from paragraph 7.82. By contrast, the European Union 
states that the argument assessed in section 7.2.4.4 ("Pharmacies' purchases of 
pharmaceuticals from wholesalers" ) can more clearly be described as alternative in 
nature. In its comments on the European Union's request, Turkey asks the Panel to 
revise paragraph 7.64 to present the first two lines of argument as a single argument.145 
Turkey also requests that the Panel  delete the words "second line of argument, made 
in the alternative" from paragraph 7.82. 
b. Turkey proposes to also refer to paragraphs 71 -73 of its se cond written submission in 
footnote 375 (footnote 335 in the Interim Report) to paragraph  7.64, because those 
paragraphs also contain elements of Turkey's position relating to the SSI gaining an 
entitlement over pharmaceutical products dis pensed on its behalf by retail pharmacies. 
The European Union does not object to a more extensive description of Turkey's 
arguments, but would ask the Panel to limit this to direct citations of Turkey's 
submissions, and not to add any new language or modif y the existing language 
summarising or qualifying those submissions  
c. Turkey comments on paragraph 7.75, which refers to Turkey's position on the 
interpretation of the terms "products purchased" as being that "the SSI must be deemed 
to 'purchase ' pharmaceutical products because it pays for their cost, even if it does not 
acquire ownership of those products". Turkey is of the view that the Panel's summary 
oversimplifies T urkey's position and therefore asks the Panel to modify the first sentence 
 
145 In particular, in the context of its comments on the European Union 's request that the Panel 
remove the word "alternative " from the first sentence of paragraph  7.64, Turkey requests the Panel to 
modify paragraph 7.64 as follows (with reference to Turkey 's response to Panel question No. 33(b), 
para. 44; Turkey 's first written submission, para. 206; Turkey 's first written submission, para. 207; 
Turkey 's first written submission, para. 209; Turkey 's second written submission, paras. 71 -76; 
Turkey 's responses to Panel questions No. 5(a), paras. 25 -26 an d No. 6(c), para. 34; Turkey 's response 
to Panel question No. 33(b), para. 44):  
7.64. Turkey 's advances three alternative lines of  argument in support of its contention that 
the localisation requirement involves the "purchase " of pharmaceutical products included in the 
Annex 4/A list by governmental agencies is two -fold. First, Turkey argues that the SSI 
purchases those medicines fro m the retail pharmacies which are charged with 
dispensing those medicines to patients . In that regard Turkey argues that  the concept of 
a "purchase " under Article III:8(a) should not be interpreted narrowly as requiring the 
acquisition of property rights. Relying on the ordinary meaning of the verb "to 
purchase " which means "the action or an act of obtaining something in exchange for 
payment in money or an equivalent ", Turkey argues that the notion of a "purchase " 
involves some kind of payment (usually mone tary) in exchange for a good.  , and that 
the SSI "purchases " pharmaceutical products by paying for them, even if it does not 
acquire an entitlement to (or property rights over) the products.  Turkey argues that the 
SSI's reimbursement of the cost of outpati ents' pharmaceuticals involves a "purchase " because it 
is "the SSI that pays for the pharmaceutical products and thus is the ultimate buyer (or the 
purchaser) ".335 Turkey explains that the SSI obtains the pharmaceutical products with 
the involvement of ret ail pharmacies.  Second,  Turkey further  argues that, even under an 
"extremely narrow "336 definition of what constitutes a "purchase " requiring the transfer of legal 
title over a product, which is an interpretation that Turkey disagrees with337, there is sti ll a 
"purchase " by the SSI. This is because, as a matter of fact, the SSI does acquire title to the 
pharmaceutical products at the moment a retail pharmacy scans a prescription 's QR code and the 
Medula system approves the provision of that pharmaceutical product to the patient. Second  
Third , Turkey argues that, even if that is incorrect, Article III:8(a) still applies because the 
purchase of pharmaceutical products included in th e Annex 4/A list by the retail pharmacies from 
the wholesalers is made on behalf of the SSI and this means that the retail pharmacies are 
themselves "governmental agencies " that "purchase " pharmaceuticals for purpose of Article 
III:8(a). The European Union  disputes all of Turkey 's arguments.  WT/DS583/12  
 
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  of this paragraph. Indeed, Turkey argues, the fact that the SSI pays for the cost of 
pharmaceutical products included in Annex 4/A and dispensed by retail pharmacies to 
patients is only one of the elements invoked by Turkey. Turkey suggests that paragraph 
7.75 begin with two new sentences to capture Turkey's position more fully.146 The 
European Union considers that Turkey's proposed addition does not fit with the specific 
issue discus sed by the Panel in that paragraph. It appears that Turkey is attempting to 
artificially create a contradiction between the current text and the text Turkey would 
wish to add, such that it could invoke that contradiction in a possible appeal. This should 
be rejected.  
6.63.   As set forth in paragraph 7.64, the Panel understands the first two of these three lines of 
argument, which are the subject of the European Union's reque st on paragraph 7.64 (and Turkey's 
related comment on paragraph 7.64), to be that (i) the SSI "purchases" pharmaceutical products by 
paying for them, even if it does not acquire an entitlement to (or property rights over) the products; 
(ii) even under that narr ow definition of what constitutes a "purchase" , with which  Turkey disagrees , 
there is still a "purchase" by the SSI because t he SSI does acquire title to the pharmaceutical 
products. These arguments rest on mutually exclusive interpretations of the term "p urchase" in 
Article III:8(a). As reflected in paragraph 7.64, the Panel's view is that these arguments are properly 
characterized as alternative arguments, and the P anel remains of the view that characterizing them 
as such contributes to analytical clarity in the subsections that follow. Accordingly, the Panel does 
not make any change  to the current wording of paragraph 7.64. However, t he Panel has reformulated 
paragraph 7.82 to clarify that Turkey's second line of argument rests on an alternative interpretation 
of the term "products purchased" in Article III:8(a), rather than indicating  that it was "made in the 
alternative". The Panel recognizes that the formulation "made in the alternative" would be misleading 
insofar as it was taken to mean that Turkey itself characterized its argument in this way. The Panel 
considers the reformulation of this element of paragraph 7.82 to more clearly convey that the Panel 
is referring to the logical relatio nship between the premises underlying Turkey's arguments, and not 
to Turkey's own framing of its position and arguments.  
6.64.   The Panel has sought to accommodate Turkey's request to add a citation to paragraphs 71 -73 
of its second written submission, but it ap pears that Turkey's request relates to the wrong footnote. 
Footnote 375 is a footnote accompanying the text referencing the first of the two lines o f argument 
referred to in paragraph 7.64. However, Turkey's description of the content of the paragraphs 71 -
73 of its second written submission confirms that it rela tes the second line of argument referred to 
in paragraph 7.64 (i.e. relating to the SSI gaining an "entitlement" over pharmaceutical products 
dispensed on its behalf by retail pharmacies). The Panel has added a reference to Turkey's second 
written submission, paragraphs 71 -73, to the pertinent sentence of paragraph 7.64.  
6.65.   The Panel declines Turkey's request to revise the opening sentence of paragraph 7.75. For 
the sake of analytical clarity, the Panel has addressed the three alternative lines of argument 
presented by Turkey separately and sequentially, in three different subsections. This paragraph is 
found in the subsection of the Panel's reasoning that a ddresses the first line of argument advanced 
by Turkey, which, as summarized in paragraph 7.64, is that the SSI "purchases" pharmaceutical 
products by paying for the m, even if it does not acquire an entitlement to (or property rights over) 
the products. It is in this context that the Panel refers to Turkey's position as being that " the SSI 
must be deemed to 'purchase ' pharmaceutical products because it pays for their cost". For the 
purposes of recalling the essence of Turkey's first line of argument, this is not an oversimplification. 
It is in the next subsection of the Panel's reasoning that the Panel addresses Turkey's second line of 
argument, i.e. that even under th e narrow definition of what constitutes a "purchase", with which 
 
146 In particular, Turkey requests the Panel to modify paragraph 7.75 as follows (with a reference to 
Turkey 's response to Panel q uestion No. 33(a), para. 43):  
According to Turkey, the concept of "purchase " is not limited to situations where a 
governmental agency obtains legal title or entitlement to a product, meaning property 
rights, but covers situations where the governmental age ncy obtains the right to 
dispose of a product according to its own choices. This does not necessarily imply the 
existence of a standard sales transaction between a seller and a public purchaser.  The 
Panel considers that Turkey 's interpretation of the term "products purchased ", i.e. the SSI must 
be deemed to "purchase " pharmaceutical products because it pays for their cost, even if it does 
not acquire ownership of those products, is also inconsistent with the two prior disputes in which 
Article III:8(a) was interpreted and applied. More specifically, […]  WT/DS583/12  
 
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  Turkey disagrees , there is still a "purchase" by the SSI because t he SSI does acquire title to the 
pharmaceutical products.   
6.66.   Turkey observes that paragraph 7.73 contains the Panel's analysis of the terms "products 
purchased" in light of the object and purpose of the GATT 1994. Turkey notes that the last sentence 
of this paragraph provides that "Turkey has not specified on what other basis, if not the acquisition 
of ownership, the concept of a 'purchase' by a government could be distinguished from mere 
financing of private purchases in circumstances where the relevant products are provided to, an d 
consumed by, non -governmental recipients." First, Turkey notes that this comment appears to relate 
to an issue that has never been raised by the Panel. Indeed, the Panel never inquired as to what 
could distinguish the concept of a "purchase" by a governm ent from a mere financing. Second, 
Turkey notes that it has extensively explained why the transactions between the SSI and the retail 
pharmacies cannot be considered as "mere financing". In particular, Turkey refers the Panel to 
paragraphs 23 and 51 -53 of its second written submission as well as to its response to Panel 
Questions Nos. 4 and 6 and paragraph  55 of its response to Panel Question No. 35. Turkey therefore 
requests the Panel to modify paragraph  7.73 to reflect Turkey's arguments on this point.147 
6.67.   While the European Union does not object to more extensive citations of Turkey's submissions 
(as long as they do not go beyond the content of the cit ed parts of Turkey's submissions), the 
European Union disagrees with Turkey's specific suggestion because it substitutes Turkey's own 
views of the SSI's role for Panel findings.  
6.68.   The Panel wishes to clarify that when it states in paragraph  7.73 that Turkey "has not 
specified on what other basis, if not the acquisition of ownership, the concept of a 'purchase' by a 
government could be distinguished from  mere financing of private purchases in circumstances where 
the relevant products are provided to, and consumed by, non -governmental recipients", the Panel 
does not mean to suggest that Turkey's submissions reflect a deficit of argumentation about why, 
in Turkey's view, the Turkish system and others that are similar to it fall within the scope of Article 
III:8(a). The Panel understands that Turkey has identified a series of elements (reflected in its 
proposed text to add to paragraph  7.73) that, in Turkey's view, support that conclusion. The point 
being made by the Panel in this paragraph is that although Turkey has identified a series of factual 
eleme nts that in its view support the conclusion that the Turkish system falls within the scope of 
Article III:8(a), these elements do not specify an objective legal standard for distinguishing the 
concept of a "purchase" by a government from mere financing of private purchases in circumstances 
where the relevant products are provided to, and consumed by, non -governmental recipients. The 
Panel has revised the text of paragraph  7.73 to make this clearer and has included a new 
accompanying footnote reflecting the summary of Turkey's arguments that Turkey asks the Panel 
to reflect in paragraph  7.73.  
 
147 In particular, Turkey suggests the following changes (with reference to Turkey 's second written 
submission, para. 52, and Turkey 's response to Panel question No. 4(a), para. 18):  
7.73.  […] The Panel understands that Turkey 's position is that the SSI does more than merely 
engage in "financing ", and that Turkey takes issue with the European Union 's attempt to "reduce 
the role of the SSI to the mere financing of the purchases of pharmaceutical products b y 
outpatients ". However, even assuming that Turkey is correct in asserting that the SSI 
does more than merely engage in financing, Turkey has not specified on what other 
basis, if not the acquisition of ownership, the concept of a "purchase " by a governmen t 
could be distinguished from mere financing of private purchases in circumstances 
where the relevant products are provided to, and consumed by, non -governmental 
recipients.  Turkey explained that the SSI ensures the provision of medicines to 
outpatients an d makes all the necessary arrangements for this purpose: it decides 
which medicines are listed in Annex 4/A; it sets public prices of those medicines; it 
signs contracts with pharmacies for ensuring the availability and distribution of those 
medicines thro ughout the country; it approves the provision of the medicines to be 
dispensed to outpatients through the Medula system and pays the invoice it receives 
for those medicines from the pharmacies. It is the combination of all the above 
elements that makes the  Turkish system fall within the scope of Article III:8(a). 
Turkey further explained that a universal healthcare system in which public authorities 
control all aspects of the purchase and provision of prescribed medicines to 
outpatients would generally fall  within the scope of Article III:8(a), while this would 
not be the case for a system which is voluntary, does not have universal coverage and 
is financed through the contributions of the participants.  WT/DS583/12  
 
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  6.69.   Turkey observes that paragraph  7.80 describes arguments made by India before the panel 
in India – Solar Cells , which the Panel describes as analogous to the arguments presented by Turkey. 
Turkey strongly disagrees with that comp arison and refers the Panel to paragraphs 52 -53 of its 
response to Panel Question No. 35, where it addressed India's arguments and distinguished the facts 
in India – Solar Cells  from the facts in this case. Turkey therefore requests the Panel to reconsider  
the content of this paragraph and at the very least to reflect Turkey's arguments differentiating the 
present case from India – Solar Cells .  
6.70.   The European Union does not comment.  
6.71.   The Panel declines Turkey's request. The Panel's findings under Article III: 8(a) recall at the 
outset that this provision was interpreted and applied in Canada – Renewable Energy / Canada – 
Feed-in Tariff Program  and India – Solar Cells . At the very beginning of its reasoning, the Panel 
notes in paragraph 7.63 that this dispute is distinguishable from Canada – Renewable Energy / 
Canada – Feed-in Tariff Program  and India – Solar Cells to the extent that, unlike the two prior 
disputes, the products that are allegedly "purchased" for purposes of Article III:8(a) and the 
products that are allegedly being discriminated against for purposes of Article III:4 are the same, 
i.e. pharmaceutical products included in the Annex 4/A list. In connection with this point, the  Panel 
includes a citation to Turkey's responses to the first set of questions, paragraph 29, and also to 
Turkey's responses to the second set of questions, paragraphs 51 -53. The Pa nel sees no reason to 
repeat this in the context of paragraph 7.80. Moreover, the Panel  fails to see the relevance of this 
point to the analogy being drawn by the Pa nel in paragraph 7.80 between Turkey's argument and 
an argument raised by the responding party in India – Solar Cells .  
6.72.   Turkey observes that the last sentence of paragraph 7.84 provides that "it is undisputed 
between the parties that pharmacies acquire ownership of medicines when obtaining them from 
wholesalers, and that the fina l consumers (i.e. outpatients) subsequently acquire ownership of 
pharmaceutical products when obtaining them from retail pharmacies". Turkey submits that to the 
extent that the Panel equates the notion of ownership with the concept of a "purchase", this se ntence 
needs to be modified. Indeed, throughout the Panel proceedings Turkey repeatedly explained that 
there is no purchase of medicines included in Annex 4/A by patients. Turkey refers in that regard in 
particular to paragraphs  202, 210, 236 of its first written submission and paragraphs  77-79 of its 
second written submission.  
6.73.   The European Union does not comment.  
6.74.   The Panel understands that Turkey has been consistent in arguing that there is no "purchase" 
by patients of pharmaceutical products included in the Annex 4/A list. The Panel does not consider 
that paragraph  7.84, as currently drafted, implies that Turkey agrees there is a "purchase" by 
patients of pharmaceutical products included in the Annex 4/A list. Turkey's concern appears to be 
that, insofar as the Panel  equates the notion of ownership with the concept of a "purchase", it follows 
that when the Panel states that it is undisputed by Turkey that the final consumers (i.e. outpatients) 
acquire ownership of pharmaceutical products when obtaining them from retail pharmacies, this i s 
tantamount to saying that it is undisputed by Turkey  that the final consumers (i.e. outpatients) 
"purchase" pharmaceutical products when obtaining them from retail pharmacies. In the Panel's 
view, that is a simple non sequitur . Accordingly, the Panel see s no reason to modify paragraph  7.84. 
6.75.   Turkey observes that in paragraph  7.86 the Panel states that the absence of a right to take 
physical possession of the goods is a strong indicator that the entity paying for these goods has not 
acquired any right of ownership over them. The Panel adds that "[t]his is especially so when the 
goods in question are in the nature of goods that can freely be transported and stored, such as 
pharmaceutical products". Turkey requests the Panel to add a footnote, at the end of that sentence, 
explaining Turkey's arguments with respect to the nature of the goods. Turkey refers in that regard 
to paragraph 208 of its first written submission and paragraphs 5 and 63 -64 of its second written 
submission.  
6.76.   While the European Union does not object to mo re extensive citations of Turkey's submissions 
(as long as they do not go beyond the content of the cited parts of Turkey's submissions), the 
European Union disagrees with Turkey's specific suggestion because it substitutes Turkey's own 
views of the SSI's role for Panel findings.  WT/DS583/12  
 
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  6.77.   The Panel understands Turkey's concern with paragraph 7.86 to be the statement that 
pharmaceutical products "can freely be transported and st ored". However, t he point of this sentence 
is that pharmaceutical goods are in the nature of goods that can freely be transported and stored in 
the sense that there are no physical, logistical or practical limitations on their transportation and 
storage of  the type that may be encountered in the case of certain other types of goods – for 
instance, electricity. The Panel does not mean to suggest that pharmaceutical products are 
unregulated products that can be freely bought and sold by anyone, and/or that th ere are no legal 
and regulatory limitations on how they are transported and stored. To avoid any misunderstanding  
as to the Panel's intended meaning on this point , the Panel has added a footnote for clarifying the 
point being made and quoting from paragrap h 5 of Turkey's second written submission.   
6.78.   The European Union proposes to add the word "government" before the word "ownership" in 
the last sentence of paragraph 7.96. 
6.79.   Turkey does not object to that change.  
6.80.   The Panel has made the revision requested by the European Union.  
6.81.   Turkey observes that paragraph  7.99 addresses the relevance of the degree of control which 
the SSI exercises over retail pharmacies in the dispensing of pharmaceutical products included in 
the Annex 4/A list. Turkey considers th at the second sentence of this paragraph, which characteri zes 
Turkey's argument on this issue, unduly restricts the scope of its argument because Turkey has not 
only argued that the SSI "instructs" and "directs" what pharmacies must do. Turkey has also poi nted 
out, in paragraphs 104 -107 of its first written submission and paragraphs 27, 30, 48 -49 and 82 -85 
of its second written submission, that retail pharmacies are primary healthcare service providers 
under Turkish law and have duties relating to the provi sion of pharmaceutical products. Turkey 
therefore requests the Panel to reflect this by adding an additional sentence at the end of paragraph 
7.99 indicating that Turkey has stressed that retail pharmacies are primary healthcare service 
providers under Turkish law and have duties relating to the provision of pharmaceutical products.148 
6.82.   The European Union does not object to more extensive citations of Tu rkey's submissions (as 
long as they do not go beyond the content of the cited parts of Turkey's submissions). Any addition 
should, however, be made to the first part of the paragraph, addressing Turkey's arguments, and 
include a reference to the correspond ing arguments of the European Union.  
6.83.   The Panel considers that paragraphs 7.92-7.103  of its Report comprehensively address 
Turkey's argument that even if the SSI does not itself "purchase" pharmaceutical products included 
in the Annex 4/A list, there is still a "purchase" covered by Article III:8(a) because private retail 
pharmacie s "act on behalf" of the SSI, and are, to that extent, themselves "governmental agencies" 
for purposes of Article III:8(a). In the Panel's view, Turkey has not adequately explained what 
purpose is served by adding the sentence in question to paragraph 7.99. As the Panel understands 
it, Turkey's concern with paragraph 7.99, as reflected in its comment, is that paragraph 7.99 
erroneously reduces the argument that private re tail pharmacies "act on behalf" of the SSI with the 
proposition that the SSI "instructs" and "directs" what pharmacies must do. In the Panel's view, this 
 
148 In particular, Turkey requests that paragraph 7.99 be amended as follows (with references to Turkey 's 
first written submission, paras. 104 -107; Turkey 's second written submission, paras. 27, 30, 48 -49 an d 82-85): 
7.99. The parties have engaged in extensive arguments about the extent to which the SSI 
controls the actions of the retail pharmacies. Turkey essentially argues that the SSI controls all 
the elements concerning the acquisition and distribution of pharmaceutical products included in 
the Annex 4/A list, starting with deciding which pharmaceutical products are listed in the Annex 
4/A list, the price of those products at each stage of the supply chain, including the "public price " 
charged to the SSI, and how they are  dispensed to patients. The European Union disagrees, 
arguing that retail pharmacies freely order and purchase their pharmaceutical products from 
wholesalers (also private entities) through a private sales contract, hold and manage their 
inventory on their  own (including holding property rights over it), and bear the risks associated 
with their stock, with no SSI involvement. The parties engage in these arguments in relation to 
the question whether it is correct to say that the pharmacies "act on behalf " of the SSI. Turkey 
also stressed that retail pharmacies are primary healthcare service providers under 
Turkish law and have duties relating to the provision of pharmaceutical products.  WT/DS583/12  
 
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  involves a misreading of paragraphs 7.99 and 7.100 , taken in the context of the reasoning developed 
in this section. Accordingly, the Panel declines to make the requested revisi on.  
6.6  Article III:4 of the GATT 1994  
6.84.   Turkey requests that, in order to accurately reflect Turkey's position with respect to the 
European Union's claim that the localisation measure is inconsistent with Article III:4 of the GATT 
1994, the Panel add additiona l text at the end of paragraph  7.120  elaborating on Turkey's 
position.149 
6.85.   The European Union does not object to more extensive citations of Turkey's submissions (as 
long as they do not go beyond the content of the cited parts of Turkey's submissions). However, the 
proposed addition is essentially already covered by paragraph 7.119 , and, i f needed , it should rather 
be that paragraph, or  footnote 467 (footnote 422 in the Interim Report), that should  be amended.  
6.86.   The Panel has added Turkey's proposed text to the end of paragraph 7.110 , in the context of 
providing a g lobal overview of the parties' respective positions. In the Panel's view, this elaboration 
of Turkey's position is more appropriately presented there, given that paragraph 7.120  (and the 
paragraphs immediately preceding it) are limited to summarizing the parties' arguments as set forth 
in their written submissions (with additional arguments or elaborations from the parties' oral 
statements and responses to questions re flected elsewhere).  
6.87.   Turkey requests the Panel to make the following change in paragraph  7.124 : "The Panel 
notes that Turkey agrees that the localisation requirement  is a 'requirement ' for purposes of Article 
III:4 and III:8(a)." Turkey observes that in paragraph 187 of its first written submission, mentioned 
in the footnote to that sentence, Turkey only stated that the localisation measure constitutes a 
requirement for the purpose of Article III:8(a).  
6.88.   The European Unio n does not comment.  
6.89.   The Panel has qualified the fourth sentence of paragraph 7.124  to state that Turkey " seems 
to agree " that the localisation requirement is a "requ irement" for purposes of both Article III:4 and 
III:8(a) and expanded on the accompanying footnote to elaborate on the Panel's basis for that 
assessment. The Panel notes that the accompanying footnote refers to paragraph 187 and 
accompanying footnote 199 o f Turkey's first written submission. Turkey rightly notes that paragraph 
187 states only that the localisation measure constitutes a requirement for the purpose of 
Article  III:8(a), and the Panel agrees with Turkey that such a statement, taken alone, would  not 
support the conclusion that Turkey agrees that the localisation requirement is a "requirement" for 
purposes of both Article III:4 and Article III:8(a). However, footnote 199 state s that "[t]he European 
Union appears to agree that the localisation meas ure constitutes a 'requirement '. See European 
Union's first written submission, paragraph 160." The Panel notes that paragraph 160 of the 
European Union's first written submission is directed at the term "requirement" in the context of 
Article III:4. Thus,  Turkey's reliance on paragraph 160 of the European Union's submission (arguing 
that the localisation requirement is a "requirement" for the purpose of Article III:4) to establish that 
the European Union agrees with Turkey that the localisation requirement  is likewise a "requirement" 
for purposes of Article  III:8(a) necessarily implies that Turkey accepts that, if the localisation 
requirement is a "requirement" for purposes of either of those provisions, it follows that it is also a 
 
149 In particular, Turkey requests that the Panel amend paragrap h 7.120. as follows (with a reference to 
paragraph 46 of Turkey 's response to Panel Question No. 9):  
7.120. In its second written submission, the European Union observes that apart from Turkey 's 
arguments on Article  III:8(a) of the GATT 1994, Turkey "does not dispute that the Localisation 
Requirement is inconsistent with Article III:4 of the GATT 1994 " and "[t]hus, there is no 
disagreement on the main elements of that provision: the domestic and imported products at 
issue are like, the Localisation Requirem ent is a law, regulation or requirement affecting the 
internal sale, offering for sale, purchase, transportation, distribution, or use of products, and it 
accords less favourable treatment to imported like products. " Turkey explains that given that 
the obl igation set out in Article III:4 does not apply to that measure, there is no need 
to examine the different elements of Article III:4, including whether the measure 
constitutes 'laws, regulations and requirements affecting internal sale, offering for 
sale, purchase, transportation, distribution or use ' or whether that measure accords 
'less favourable treatment ' to imported like products .  WT/DS583/12  
 
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  "requirement" for purpos es of the other. It is for this reason that the Panel understood Turkey to 
agree  that the localisation requirement is a "requirement" for purposes of both Article III:4 and 
III:8(a). In the light of Turkey's comment at the interim review stage, the Panel h as adjusted the 
wording of paragraph 7.124  to be more qualified in this respect.  
6.7  Turkey's alternative defence under Article XX(d) of the GATT 1994  
6.90.   Section 7.4.3 : Turkey observes that this section, which addresses Turkey's alternative 
defence under Article XX(d) of the GATT 1994, is limited to three paragraphs in which the Panel 
states, without any underlying analysis, that the arguments presented by Turkey overlap wi th those 
presented under Article XX(b) and thus that the Panel's assessment "under Article XX(b) extends 
mutatis mutandis  to the analysis of the defence under Article XX(d)". While Turkey disagrees with 
the Panel's conclusion, Turkey understands that the i nterim review stage does not serve the purpose 
of rearguing the case. Turkey considers, however, that it would be appropriate for the Panel to at 
least summarize the arguments presented by the parties with respect to Article XX(d) as it did for 
the claim u nder Article XX(b) (paragraphs 7.139 -7.156 in the Interim Report).  
6.91.   The European Union does not comment.  
6.92.   The Panel rejects Turkey's assertion that section 7.4.3 merely states, without any underlying 
analysis, that the arguments presented by Turkey overlap  with those presented under Article XX(b) 
and thus that the Panel's assessment "under Article XX(b) extends mutatis mutandis  to the analysis 
of the defence under Article XX(d)". As elaborated in greater detail in paragraphs 7.216 -7.218  
(paragraphs 7.215 -7.217 in the Interim Report) , the Panel explains that Turkey's argument under 
Article XX(d) "is substantially the same" as its argument under Article XX(b), in particular wit h 
respect to what the measure is "designed to" do; and further that, in  responding to this argument, 
the European Union "reiterates the same arguments" that it makes in the context of the " designed 
to" step  in Article  XX(b) (paragraph  7.217 ). The brevity of the Panel's analysis in paragraphs 7.216 -
7.218  does not reflect a refusal to engage with Turkey's arguments under Article XX(d). Rather, it 
reflects the Panel's assessment that the overlap, as explained  in paragraphs 7.216 -7.218 , makes it 
self-evident that the Panel's assessment under Article XX(b) logically extends mutatis mutandis  to 
Turkey's defence under Article XX(d). In these circumstances, the Panel sees no rea son to 
summarize the arguments presented by the parties with respect to Article XX(d) in the same manner 
as it did for the claim under Article XX(b).  
6.8  Article 3.1(b) of the SCM Agreement  
6.93.   Turkey states that it does not see the relevance of the reference  in footnote  692 (footnote 
647 in the Interim Report) to paragraph 7.226  to Turkey's responses to the first set of questions, 
paragraph  79, and therefore asks the Panel to delete that reference.  
6.94.   The European Union does not comment.  
6.95.   The Panel notes that the footnote in question states, in relevant part, that "Turkey does not 
dispute that the SSI 'entrusts' or 'directs' pharmacies to perform the function of 'providing good s', 
i.e. pharmaceutical products, to outpatients on the terms and conditions set by the SSI" and provides 
a reference to Turkey's first written submission, para. 370 and to Turkey's responses to the first set 
of questions, para. 79. The Panel recalls that the cited paragraph of Turkey's first written submission 
stated, in relevant part, that "it can be considered that pharmacies have been 'entrusted' or 'directed' 
by the SSI to dispense pharmaceutical products to out -patients". The Panel recalls that the fi rst set 
of questions included a question, directed to Turkey, setting out the Panel's understanding that 
"Turkey does not appear to disagree with the European Union's argument that the SSI 'entrusts' or 
'directs' pharmacies within the meaning of Article 1. 1(a)(1)(iv), to perform the function of 'providing 
goods' (i.e. medicines), to out -patients on the terms and conditions set by the SSI." Paragraph 79 
of Turkey's responses to the first set of questions sets out Turkey's response to that question. While 
Turkey's response does not directly address that aspect of the question, the Panel considered it 
sufficiently relevant to include as a citation. The Panel is not persuaded that the footnote  should be 
deleted.  WT/DS583/12  
 
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  6.9  Article X:1 of the GATT 1994  
6.96.   Turkey observes that paragraph 7.250  (paragraph 7.249  in the Interim Report) summarizes 
the parties' positions regarding the question whether it would be appropriate  for the Panel to make 
additional findings under Article X:1 of the GATT 1994 if the Article III:4 claim were  to be rejected. 
In the final sentence of this paragraph, the Panel characterizes Turkey's position relating to the 
European Union's claim that the  present case differs from preceding cases in which panels exercised 
judicial economy over an Article X:1 claim in similar circumstances. Turkey suggests that it would 
be more accurate to include the name of the case which the European Union sought to dist inguish 
in the body text.  
6.97.   The European Union does not comment.  
6.98.   The Panel agrees that the readability of paragraph  7.250  would be improved by the inclusion 
of the na mes of the relevant disputes in its main body text and has revised this paragraph 
accordingly.  
6.10  Article XI:1 of the GATT 1994  
6.99.   Turkey observes that paragraph 7.260  (paragraph 7.258  in the Interim Report)  introduces 
the parties' positions regarding the alleged import ban challenged by the European Union. Turkey 
notes that, given that the existence of that measure is disputed by Turkey, th e Panel uses the phrase 
"alleged  import ban" in paragraph  7.266  (paragraph  7.264 in the Interim Report ). Turkey asks the 
Panel to consistently use the phrase "alleged import ban" when referring to the measure challenged 
by the European Union under Article XI:1 of the GATT 1994 throughout the Report.  
6.100.   The European Union does not comment.  
6.101.   The Panel does not consider it necessary or appropriate to insert the word "alleged" before 
every ref erence to the "import ban" measure in the Report to signify that the existence of that 
measure is disputed by Turkey. Apart from the fact that this would entail adding the word "alleged" 
up to 50 times in relation to the "import ban", it would necessitate adding the word "alleged" several 
hundred times for every reference to the "localisation requirement" and "prioritization measure" – 
given that the existence and precise content of these measures are also disputed by Turkey.  
6.11  The prioritization measure  
6.102.   Turkey observes that footnote 766 (footnote 722 in the Interim Report) to  the last sentence 
of paragraph 7.285  (paragraph 7.283 in the Interim Report) includes a comment suggesting that 
Turkey accepts certain elements of the European Union's position without disputing, as a threshold 
issue, whether the European Unio n has identified the existence and precise content of the measure 
it seeks to challenge. In order to accurately reflect Turkey's position, Turkey asks the Panel to add 
certain qualifying language to the first sentence of footnote 766.150 
6.103.   The European Union does not comment.  
6.104.   The Panel understands the qualification requested by Turkey to already be implicit in the 
text as currently drafted. However, to avoid any possible misunderstanding of Turkey's position, the 
Panel has revised the text in the manner requested by Turkey.  
 
150 In particular, Turkey requests the Panel amend the footnote to read as follows:  
Insofar as the European Union has demon strated the existence and precise content of 
the measure, Turkey does not dispute the European Union 's arguments that there can or will be 
domestic and imported products that are "like products " affected by the origin -based distinction 
in the prioritizatio n measure ( European Union 's first written submission, paras. 366 -369), and 
that the measure is one "affecting the internal sale, offering for sale, purchase, transportation, 
distribution, or use of products " (European Union 's first written submission, paras. 372-375).  WT/DS583/12  
 
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  7  FINDINGS  
7.1  The existence and precise content of the localisation requirement as a "single and 
cohesive measure " 
7.1.1   Introduction  
7.1.  The Panel will begin by assessing whether the European Union has established the existence 
and precise content of the localisation requirement, based on the European Union 's description and 
characterization of it as a "single and cohesive meas ure". 
7.2.  The European Union challenges a measure it refers to as the "localisation requirement ", 
whereby Turkey requires foreign producers to commit to localise in Turkey their production of certain 
pharmaceutical products151, which are otherwise "excluded " from Turkey 's reimbursement scheme 
if commitments are not given, accepted or fulfilled.152 The European Union argues that the 
localisation requirement is a "single and cohesive measure ", "[d]espite the diversity of instruments 
used" in its implementation, bec ause the individual steps pertaining to the localisation requirement 
are taken within the framework of a "single " measure.153 The European Union submits that the 
"existence and precise content " of the localisation requirement are "undisputed "; the Turkish 
authorities themselves refer to these individual steps as part of a single localisation requirement, 
and Turkey agrees with the "main factual elements " of the localisation requirement as described by 
the European Union.154 Moreover, the European Union consid ers that it has "explained [the 
localisation requirement] in great detail, based on extensive evidence ".155 
7.3.  Turkey submits that the Panel should reject all of the European Union 's claims concerning the 
"localisation measure "156 because the European Union has failed to establish the "precise content " 
and/or "existence " of this measure.157 Turkey argues that the European Union, having characterized 
the measure as a "single and cohesive measure ", "based on… 'plans '… and on 'various instruments 
and tools '" implementing a localisation policy in the pharmaceutical sector, challenges a "single 
measure which is composed of several different instruments ". For that reason, Turkey asserts that 
the European Union was required to ident ify and explain which instruments and tools are components 
of the localisation measure and how they operate together. Having failed to do so, Turkey considers 
that the European Union consequently failed to establish the "existence " and "precise content " of 
the localisation measure.158 Turkey also submits that it remains "unclear " from the European Union 's 
 
151 The parties' submissions refer variously to "pharmaceutical products", "pharmaceuticals", 
"medicines", and " drugs ". So do the relevant Turkish documents and instruments cited throughout this Report. 
While the scope of the "pharmaceutical products " at issue in this dispute is not strictly limited to medicines and 
drugs, the Panel sees no issue with respect to the varying terminology and, like the parties, uses these terms 
interchangeably. Likewise, the Panel see s no issue with respect to the varying terminology used by the parties 
when referring to pharmaceutical products being "locally manufactured ", "locally produced ", "domestically 
manufactured ", or "domestically produced ". 
152 European Union 's first written sub mission, paras. 6 -7; European Union's panel request, p. 5.  
153 European Union 's first written submission, para. 60.  
154 European Union 's first written submission, paras. 60 -66; second written submission, paras. 31 -34; 
and opening statement, paras. 6 and 8.  
155 European Union 's second written submission, paras. 27 -30 (referring to Appellate Body Reports, 
Argentina – Import Measures , para. 5.108); opening statement, paras. 6 and 8.  
156 As noted above in the descriptive part of the Report, Turkey refers to the localisation requirement as 
the "localisation measure " (see fn 71). The Panel shares Turkey 's understanding that "the measure th at is 
challenged by the European Union is not only the 'requirement ' allegedly imposed by Turkey on foreign 
producers to localise their production of certain pharmaceutical products in Turkey, but also the consequences 
following from the commitment or lack  of commitment of localisation. " (Turkey 's first written submission, 
para. 117). There is no issue between the parties in this regard. The Panel also agrees with Turkey that the 
measure challenged by the European Union could equally have been referred to a s the "localisation measure ". 
However, the Panel does not consider that referring to the challenged measure as the "localisation 
requirement " implies a more restrictive understanding of what the challenged measure is or entails, and 
therefore sees no reaso n to deviate from the terminology used by the European Union.   
157 Turkey 's first written submission, paras. 116 -121.  
158 Turkey 's first written submission, paras. 119 -121; second written submission, paras. 38 -39; 
response s to the first set of questions, para s. 11 and 14; and response s to the second set of questions, paras. 
26 and 29.  WT/DS583/12  
 
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  description of the localisation measure "what the components which 'form part of ' the localisation 
measure are ".159 
7.1.2   Relevant provisions  
7.4.  While the DSU does n ot define the concept of a "measure "160, it is well established that in 
principle, any act or omission attributable to a WTO Member can be a "measure " for the purposes 
of dispute settlement proceedings.161 Therefore, a broad range of measures can be challeng ed in 
WTO dispute settlement.162 
7.5.  In every WTO dispute, complainants are required to prove the existence of the measures at 
issue. How a measure is described, characterized, and challenged by a complainant will inform the 
kind of evidence a complainant is re quired to submit and the elements that it must prove in order 
to establish the existence of the measure challenged.163 For every measure, a complainant must 
establish that the measure is attributable to the respondent, as well as the precise content of the 
challenged measure, to the extent that such content is the object of the claims raised.164 A 
complainant may be required to demonstrate other elements, depending on the particular 
characteristics or nature of the measure being challenged.165 
7.6.  In numerous disp utes, complainants have challenged "single " measures comprised of multiple 
components, elements, or instruments.166 In some of those disputes, panels and the Appellate Body 
had to consider whether the challenged measure constituted a "single " measure distinct from its 
constituent parts. Aside from being relevant to the question of whether the complainant has 
established the existence of the challenged measure, a proper characterization of the measure(s) at 
issue (as "single " or distinct measur es, or otherwise) enables panels to make findings that assist the 
DSB in making "sufficiently precise recommendations and rulings " to ensure the effective resolution 
of WTO disputes.167 
 
159 Turkey 's response s to the second set of questions, para. 27.  
160 Article 3.3 of the DSU refers to the impairment of benefits by "measures " taken by another Member. 
Article 6.2 of the DSU requires that a panel request identify the "specific measures at issue ". Such 
identification is one of two components of the "matter referred to the DSB ", which in turn forms the basis for a 
panel 's terms of reference under Article 7.1 of the DSU. (Appellate Body Report, US – Carbon Steel , para. 125 
(referring to Appellate Body Report, Guatemala – Cement I , paras. 69 -76).) 
161 Appellate B ody Reports, US – Anti-Dumping Methodologies (China) , para. 5.122 (referring to 
Appellate  Body Report, US — Corrosion -Resistant Steel Sunset Review , para. 81); Argentina – Import 
Measures , para. 5.100.  
162 Appellate Body Reports, US – Anti-Dumping Methodolo gies (China) , para. 5.122; Guatemala – 
Cement I , fn 47 to para. 69; EC and certain member States – Large Civil Aircraft , para. 794; and Argentina – 
Import Measures , paras. 5.108 and 5.110. In this vein, the Appellate Body has referred to the "comprehensive  
nature of the right of Members " in Article 3.2 of the DSU, to resort to dispute settlement to preserve their 
rights and obligations. (Appellate Body Report, EU – Biodiesel (Argentina) , para. 6.228 (referring to Appellate 
Body Report, US – Corrosion -Resist ant Steel Sunset Review , para. 89) .) 
163 Appellate Body Reports, US – Anti-Dumping Methodologies (China) , para. 5.123; Argentina – Import 
Measures , paras. 5.108 -5.110.  
164 Appellate Body Reports, Argentina – Import Measures , para. 5.104. As to the requirement  to 
establish the precise content of the challenged measure, a panel 's examination is informed by the 
complainant 's description of the alleged measure, including its "constituent elements " and "defining 
characteristics ", substantiated through arguments and evidence. (Appellate Body Reports, Argentina – Import 
Measures , paras.  5.117 -5.118, and 5.124; Russia – Railway Equipment , paras. 5.234 and 5.236. ) 
165 Appellate Body Reports, Argentina – Import Measures , paras. 5.104 an d 5.108; US – 
Supercalendered Paper , para. 5.17.  
166 See e.g. Panel Reports, US – Export Restraints , paras. 8.82-8.87 and 8.130 -8.131 ; Turkey – Rice, 
paras. 7.273 and 7.280 -7.281 ; US – COOL , paras. 7.35 and 7.44 -7.61; EC – Seal Products , paras. 7.25 -7.27; 
Argentina – Import Measures , paras. 6.221 -6.231; Indonesia – Chicken , paras. 7.618 -7.619, 7.624, and 
7.664 -7.688 ; Colombia – Textiles , paras. 7.270 -7.274 and 7.343 -7.344 ; Russia – Railway Equipment , paras. 
5.229, 5.243, and 5.249 ; and India – Solar Cells , paras. 7.24 -7.28. See also Appellate Body Reports, EC – Seal 
Products , para. 1.3; US – Tuna II (Mexico) (Article 21.5 – Mexico) , paras. 7.1 and 7.13 -7.21; and Argentina – 
Import Measures , paras. 5.124 and 5.130 -5.131 . 
167 Panel Report, US – COOL , paras. 7.47 -7.48. See also Panel Reports, China – Raw Materials , 
paras.  7.59-7.63 and 7.68; China – Rare Earths , paras. 7.41, 7.235, 8.1.a, 8.6.a, and 8.11.a for instances 
where panels have considered challenged measures as "single measures " despite that  term not being used, in 
order to make such findings.  WT/DS583/12  
 
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  7.7.  In cases involving challenges to a "single " measure comprised of multip le components168, 
panels and the Appellate Body have generally considered three main factors169: (i) the complainant 's 
presentation of its claim(s) in respect of the constituent components170; (ii) the respondent 's 
position171; and (iii) the operation of and r elationship between the components to determine whether 
they are "autonomous or independent ", or more "interdependent " and integrated.172 
7.8.  In examining the relationship between the various components of a "single " measure, panels 
and the Appellate Body have also considered the legal status of these components, the impact their 
relationship has on their functioning, any substantive legal links (e.g. implementing legislation, 
interpretive guidance or certain practices), and any relationship with or contribution  to an 
overarching policy or framework where such policy is alleged.173 Indeed, when referring to the three 
main factors above, the Appellate Body indicated that "a complainant challenging a single measure 
composed of several different instruments will norm ally need to provide evidence of how the different 
components operate together as part of a single measure and how a single measure exists as distinct 
from its components ".174 
7.9.  When analysing "single " measures, some panels have considered whether certain instruments 
are separate measures, or merely evidence of measures and their components. For example, in 
India – Solar Cells , the panel addressed certain domestic content requirement (DCR) measures 
requiring solar power developers to purchase or use solar cells or modules of domestic (Indian) 
origin in order to enter into and maintain certain power purchase agreements. These DCR measures 
were set forth, reproduced or otherwise reflected in a series of do cuments. The panel therefore had 
to decide whether the documents reflecting the DCR measures were themselves distinct 
measures.175 In its analysis, the panel referred to the wording of the United States ' panel request, 
the parties ' submissions throughout the proceedings and the interconnectedness of the documents 
underlying each DCR measure. These factors all favoured treating the DCR measure for each of three 
"batches " as a measure, reflected or incorporated in the various documents. The underlying 
document s and instruments were not treated as distinct measures.176 
 
168 The Panel uses the term "components " to refer to the constituent elements of a "single " measure, 
that make up the content of that measure. Some previous panels have used the terms "instruments ", 
"requirements " or "measures " when referring to the constituent elements of a single measure.  
169 See Panel Reports, US – COOL , para. 7.50; Argentina – Import Measures , para. 6.222; Appellate 
Body Report, Argentina – Import Measures , fn 541 to para. 5.108.  
170 A complainant 's characteri zation of the challenged measure as a "single measure " is usually but not 
necessarily the starting point for a panel 's analysis. See Panel Reports, China – Rare Earths , paras. 7.41, 
7.235, 8.1.a, 8.6.a, and 8.11.a; China – Raw Materials , paras. 7.59 -7.63 and 7.68 . 
171 In some cases, it is undisputed between the parties that multiple components may be analysed as a 
"single " measure. For example, in EC – Seal Products , both  parties agreed that the "EU Seal Regime " at issue 
should be treated as a single measure. (Panel Reports, EC – Seal Products , para. 7.26.)  
172 Past panels and the Appellate Body have examined whether components operate in their "own right ", 
have their own "functional life ", do something "independently " to "independently give rise to a WTO violation " 
or have "autonomous status ". In Indonesia – Chicken, that panel considered that "co-existence in the same 
legal instrument " or a "connection between different legal instruments " is not enough to assume that 
components operate as a single measure, "particularly " where they "operate in their own right ". Rather, a 
panel must look at whether components are "inter-dependent in respect of the overall impact assessed ". (Panel 
Report, Indonesia – Chicken , paras. 7.664 -7.688.)  
173 For example, in EC – Seal Products , the panel and Appellate Body treated the EU Sea l Regime (a 
Basic Regulation and an Implementing Regulation implementing the Basic Regulation) as a single measure. The 
regulations operated "in conjunction with each other in governing the importation and the placing of seal 
products on the EU market ". Further, the Implementing Regulation did not "operate on its own ", having been 
adopted to implement the Basic Regulation. (Panel Reports, EC – Seal Products , para. 7.26.) In Indonesia – 
Chicken , the lack of structural interdependence between the componen t measures, which could each be 
terminated without affecting other component measures, was fatal to there being a "single " measure. (Panel 
Report, Indonesia – Chicken , paras. 7.664 -7.688.) On the relationship between components and policies, see 
e.g. Appel late Body Reports, Argentina – Import Measures , paras. 5.126, and 5.129 -5.132; US – Tuna II 
(Mexico) (Article 21.5 – Mexico) , para. 7.16; and Panel Report, Indonesia – Chicken , paras. 7.664 -7.688.  
174 Appellate Body Reports, Argentina – Import Measures , para . 5.108 and fn 451 to para. 5.108 
(referring to Panel Reports, Argentina – Import Measures , para. 6.144; US – COOL , para. 7.50).  
175 Panel Report, India – Solar Cells , paras. 7.24 -7.28. 
176 Panel Report, India – Solar Cells , para. 7.28.  WT/DS583/12  
 
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  7.1.3   Main arguments of the parties  
7.10.   In its first written submission, the European Union explains the localisation requirement by 
reference to: (i) its general features and objectives; (ii) why it constitutes a "single and cohesive 
measure"; (iii) the institutional set -up; (iv) the process and "phases" of localisation ; (v) its 
implementation in general; (v i) its implementation through various "phases"; and (vii) its application 
to individual companies and their products.177 According to the European Union, the localisation 
requirement is "a single and cohesive measure" because "[d] espite the diversity of ins truments used, 
and despite the fact that much of the detailed implementation of the Localisation Requirement takes 
place in bilateral communications between Turkish auth orities and individual pharmaceutical 
companies, there is no doubt that all of these st eps are taken within the framework of a single 
Localisation Requirement, in order to achieve the objectives described above. "178 The European 
Union adds that "many of the relevant legal instruments and documents expressly refer, for example, 
to the Tenth De velopment Plan 2014 -2018 or to the Action Plan of the 64th Government ", and states 
that Turkish authorities "have repeatedly emphasized that the Localisation Requirement is a single, 
cohesive measure, and that individual steps such as the announcements on the removal of certain 
products from the Reimbursement List are taken within the framework of that measure ".179 
7.11.   Turkey responds that the European Union has failed "to precisely identify the components of 
the measure and a fortiori  to provide evidence of how  those components operate together as part 
of a single measure ".180 According to Turkey, the European Union claims that the localisation policy 
is "based on… 'various instruments and tools '" and therefore challenges a single measure "composed 
of several different instruments, including plans and other instruments "181, without, however, 
identifying those instruments and tools precisely or explaining which "instruments and tools " 
properly consti tute the components of the localisation requirement and how those components 
operate together.182 According to Turkey, such identification and explanation are essential to 
establish the "precise content " of the measure and have important consequences for so me of the 
claims.183 Turkey submits that it is not for Turkey, as the responding party, to second -guess which 
of the elements referred to by the European Union in its first written submission, constitute the 
"legal instruments that form part of, or give eff ect to " the localisation measure and, thereby, 
constitute components of the measure; rather, it is for the complainant to establish the existence 
and precise content of the measure it challenges and therefore for that party to precisely identify 
the legal instruments forming part or giving effect to the measure.184 Turkey submits that "by failing 
to do so the European Union has failed to demonstrate the existence and precise content of the 
measure ".185 
7.12.   In its second written submission, the European Union stat es that it "has explained in great 
detail, based on extensive evidence, what the components of the measure are and how they 
interrelate ", and that it "is unclear from Turkey 's submission what sort of explanation Turkey would 
like, or what it considers to b e lacking ".186 As to the applicable legal standard, the European Union 
submits that there "is no requirement for a complainant to separately list or qualify each of the 
'components ' of a measure, or explain how each of them relates to all of the others ", and that Turkey 
errs insofar as it reads the Appellate Body report in Argentina – Import Measures  as supporting such 
a requirement.187 According to the European Union, the issue in that case was whether or not several 
"components " are sufficiently related, or  operate together, such that they can be described as a 
single measure as opposed to several different  measures. By contrast, "the issue of explaining how 
different components of a measure operate together does not present itself in this case, because … 
it is undisputed that the Localisation Requirement exists as a measure in its own right, and that the 
 
177 European Union 's first written submission, section 2.2.2.  
178 European Union 's first written submission, para. 60.  
179 European Union 's first written submission, para. 60. See also European Union 's first written 
submission, para. 62.  
180 Turkey 's first written submission, para. 120. See also Turkey 's first written submission, para. 119 
(citing Appellate Body Reports, Argentina – Import Measures , para. 5.108).  
181 Turkey 's first written submission, para. 119 (referring to Appellate Body Reports, Argentina – Import 
Measures , para. 5.108).  
182 Turkey 's first written submission, para. 120.  
183 Turkey 's first written submission, para. 120.  
184 Turkey 's first written submission, para. 121.  
185 Turkey 's first written submission, para. 121.  
186 European Union 's second written subm ission, para. 27.  
187 European Union 's second written submission, para. 28.  WT/DS583/12  
 
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  various elements cited by the EU form part of it or of its implementation. "188 According to the 
European Union, while the parties disagree on a number of fac tual aspects as well as on the legal 
characterization of the measure, "the existence and precise content of the Localisation Requirement 
are in fact undisputed ".189 
7.13.   In its second written submission, Turkey reiterates that it "takes issue with the fact that the 
European Union referred to the localisation measure as a single and cohesive measure which is 
based on a number of plans, instruments or tools but that the Euro pean Union failed to identify those 
instruments and tools precisely ".190 Turkey states that it is not for it to guess "which instruments 
constitute the components of the measure that the European Union challenges ", and that by failing 
to identify them preci sely, "the challenged measure becomes a moving target. "191 According to 
Turkey, "this is particularly relevant in the context of the European Union 's claim under Article X:1 
of the GATT 1994 where the European Union has submitted that not all legal instrume nts that form 
part, or give effect to the localisation requirement have been published promptly ".192 Turkey states 
that the European Union "should have identified the specific instruments and tools which, according 
to the European Union, form part or give e ffect to the localisation measure ", and that, by failing to 
do so, "the European Union failed to identify the precise content and scope of the measure it 
challenges. "193 
7.1.4   Assessment by the Panel  
7.14.   The Panel recalls that how the localisation requirement is desc ribed, characterized and 
challenged by the European Union informs the kind of evidence the European Union is required to 
submit and the elements that it must prove to establish the existence of the localisation 
requirement.194 In assessing whether the local isation requirement is a "single " measure, the Panel 
will refer to the European Union 's presentation of its claims (including what the content of the 
measure is), Turkey 's position on the issue, and the operation of and relationship between the 
various com ponents, including, where relevant, their relationship with an overarching policy or 
framework.195 The Panel adopts a holistic approach in analysing these elements, and in addressing 
whether the European Union has established the existence and/or precise co ntent of the localisation 
requirement as a "single measure ".196 
7.15.   Beginning with how the European Union has characterized and described the content of the 
measure that it is challenging, the Panel recalls that the European Union 's panel request identifies 
the three measures at issue in this dispute as (i) the localisation requirement; (ii) the import ban on 
localised products; and (iii) the prioritization measure. The panel request then lists 28 different legal 
instruments or other types of documents, with the  preface that the three measures "are put in place 
and evidenced by, and are implemented and administered through, inter alia , the following legal and 
other instruments, considered alone and in any combination ".197 The panel request is then divided 
into three sections, each devoted to one of the measures. These sections in turn contain a sub -
section headed "identification of the specific measure at issue " containing a narrative description of 
the relevant challenged  measure.198 
 
188 European Union 's second written submission, para. 29.  
189 European Union 's second written submission, para. 31. The European Union lists examples of how it 
considers that Turkey e xplains that the localisation requirement is based on Turkish law, and the main factual 
elements of the localisation requirement with which it considers Turkey agrees. (European Union 's second 
written submission, paras. 32 -33.)  
190 Turkey 's second written s ubmission, para. 38.  
191 Turkey 's second written submission, para. 39.  
192 Turkey 's second written submission, para. 39.  
193 Turkey 's second written submission, para. 39.  
194 Appellate Body Reports, US – Anti-Dumping Methodologies (China) , para. 5.123; Argentina – Import 
Measures , paras. 5.108 -5.110.  
195 See Panel Reports, US – COOL , para. 7.50; Argentina – Import Measures , para. 6.222.  
196 See also the holistic approach taken by the panel and upheld by the Appellate Body concerning the 
precise content of the TRRs measure and its operation as a single measure in Argentina – Import Measures.  
(Appellate Body Reports, Argentina – Import Measure s, paras. 5.133, 5.164 (quoting Panel Reports, Argentina 
– Import Measures , para. 6.119 .) 
197 European Union 's panel request, p. 1.  
198 See also preliminary ruling by the Panel, para. 3.8.  WT/DS583/12  
 
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  7.16.   The narrative description of the localisation requirement in the panel request refers to the 
measure in the singular, and describes the challenged measure as follows:  
Turkey requires foreign producers to commit to localise in Turkey their produ ction of 
certain pharmaceutical products. If such commitments are not given, are not accepted 
by Turkish authorities, or are not fulfilled, the pharmaceutical products concerned are 
excluded from the scheme for the reimbursement of the pharmaceutical produ cts sold 
by pharmacies to patients operated by Turkey 's social security system (the 
"reimbursement scheme ").199 
7.17.   Based on the foregoing , the Panel understands the European Union to define the localisation 
requirement as a composite measure, comprising two elements, whereby (i) Turkey requires foreign 
producers to commit to localise in Turkey their production of certain pharmaceutical products, and 
(ii) where commitments are not given, not accepted or not fulfilled relevant products are no lon ger 
reimbursed by the SSI.200 This, in the Panel's view, serves as the description and characterization 
of the measure, which identifies the precise content of the measure that must be sufficiently 
established through evidence.  The European Union's statemen t that this measure is "put in place 
and evidenced by, and [is] implemented and administered through" a variety of legal instruments 
and documents confirms that the legal instruments and documents are being referred to for the 
purpose of evidencing the exi stence of the measure (as described above) and explaining the means 
through which it is put in place. In the Panel's  view, this statement, and others like it, do not have 
the effect of equating the listed instruments and documents with the content of the m easure itself. 
Rather, they serve an evidentiary and explanatory purpose. Thus, the description of the content of 
the localisation requirement is entirely independent from the instruments through which that 
measure is evidenced and implemented.  
7.18.   This conclu sion is buttressed by the fact that the European Union does not actually refer to 
any legal instruments or documents in the narrative description of the localisation requirement in its 
panel request. It is further reinforced by how the European Union refer s to the measure, and related 
instruments, in its submissions. The European Union, in its first written submission, describes the 
localisation requirement in the same or similar terms as in its panel request.201 While the European 
Union makes several refere nces to "instruments ", none of these references blur the distinction 
between what the measure at issue is, on the one hand, and how that measure is evidenced, 
implemented and/or administered (i.e. through various instruments), on the other hand. To the 
contrary, such references reinforce that distinction. For example, the European Union refers to 
instruments "implementing " a "localisation policy "202, "outlining " processes and phases of the 
localisation requirement203, "governing " the reimbursement system204, "imposing " the localisation 
requirement205, and "giving effect to "206 the localisation requirement. Such statements serve to 
distinguish what the measure is, on the one hand, and the legal instruments and documents through 
which that measure is evidenced and implemented, on the other hand.  
7.19.   The Panel now turns more specifically to the question of how the European Union has 
presented its arguments on whether the localisation requirement (as described above) can be 
examined as a "single measure " for purposes of t he Panel 's findings. The Panel recalls that in its first 
written submission, the European Union refers to the localisation requirement as a "single and 
cohesive measure " which is implemented "through various instruments and tools ".207 The European 
Union repeats its description of the localisation requirement in the same or similar terms as in its 
panel request208 before describing in greater detail the localisation requirement 's general features 
and objectives, institutional set -up, and  the process and phases of its implementation in practice.209 
The European Union also explains why, "[d]espite the diversity of instruments used … there is no 
 
199 European Union 's panel request, p. 5.  
200 European Union 's panel reques t, p. 5.  
201 European Union 's first written submission, paras. 1 and 6 -7. 
202 European Union 's first written submission, paras. 39, 58, 60, and 256.  
203 European Union 's first written submission, para. 76.  
204 European Union 's first written submission, para. 192. 
205 European Union 's first written submission, para. 231.  
206 European Union 's first written submission, para. 249.  
207 European Union 's first written submission, section 2.2.2.2 , and in particular para. 58.  
208 European Union 's first written submission, para s. 1, and 6 -7. 
209 European Union 's first written submission, section 2.2.2.2.  WT/DS583/12  
 
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  doubt that all of these steps are taken within the framework of a single Localisation Requirement ".210 
The Panel notes that the European Union also presents the localisation requirement as a "single " 
measure in its second written submission and opening statement at the substantive meeting.211 
7.20.   The European Union submits that the localisation requirement a nd its individual "steps ", such 
as the passivization of certain pharmaceutical products in the Annex 4/A list, pursue a localisation 
policy, which itself is anchored in broader policies such as the Tenth Development Plan 2014 -2018 
or the Action Plan of the  64th Government.212 The European Union further argues that various 
evidence, including statements by Turkish ministers and institutions like the SSI, situates local 
production, commitments from pharmaceutical companies and treatment of products in the 
Annex 4/A list within the framework of the "localisation requirement ". According to the 
European  Union, such evidence includes213: 
a. public and private communications, issued jointly or separately by the TMMDA and the SSI 
to pharmaceutical companies importing pha rmaceutical products to Turkey, to commit to 
localise production of certain products and, failing that, announcing "the removal of certain 
products from the Reimbursement List "214; 
b. documentation indicating that where the relevant pharmaceutical company does  not 
submit a commitment, or where a commitment is refused or not fulfilled on time, the 
relevant products are "deactivated, and later potentially delisted " from the Annex 4/A 
list215; 
c. express references in many relevant legal instruments and documents to the Tenth 
Development Plan 2014 -2018 or the Action Plan of the 64th Government216; 
d. statements by Turkish authorities concerning a "localisation policy " carried out as part of 
the Tenth Development Plan 2014 -2018 and 64th Government Action Plan, including by 
the Turkish Minister of Economy and the SSI217; and  
e. reference to a "process of localisation of imported drugs " as "[o]ne of the most important 
steps o f indigenization in healthcare " in a policy document titled "Structural 
Transformation Program in Healthcare Industries ".218 
7.21.   The Panel considers that the European Union 's description of these elements and the evidence 
it relies on, would prima facie  support  the conclusion that there exists a localisation policy, enacted 
 
210 European Union 's first written submission, paras. 60 and 62.  
211 Similarly, in its second written submission, the European Union responds to Turkey 's arguments as to 
why the European Union has failed to establish the existence and precise content of the localisation 
requirement as a single and cohesive measure. (European Union 's second written submission, section 2.2.3 .) 
The European Union 's opening statement argues along simi lar lines, also treating the localisation requirement 
as a single and cohesive measure. (European Union 's opening statement, paras. 5 -9.)  
212 European Union 's first written submission, para. 60.  
213 See for example European Union 's first written submission, p aras. 59 -66 (referring to Social Security 
Institution, Rejoinder in court proceedings raised by the Association of Research -Based Pharmaceutical 
Companies (AIFD) before the Turkish State Council, Case 2017/1308, 21 September 2017  (SSI Rejoinder) 
(Exhibit E U-21); EU Commissioner for Trade , Letter  to the Turkish Minister of Economy, 5 April 2017  (Exhibit 
EU-28); Turkish Minister of Economy , Letter to the EU Commissioner for Trade, 19 June 2017  (Exhibit EU -29); 
Social Security Institution, Defense in court pro ceedings raised by the Association of Research -Based 
Pharmaceutical Companies (AIFD) before the Turkish State Council, Case 2017/1308, 29 June 2017  (SSI 
Defense) (Exhibit EU -30); and H. Eroğlu , Vice President of the TMMDA, "Local Production ", presentation at the 
Symposium on Rational Approach to Current Issues concerning Medicines, Ankara , 7-9 October 2016 (Exhibit  
EU-40)). 
214 European Union 's first written submission, paras. 59 -60. 
215 European Union 's first written submission, para. 59 (referring to H . Eroğlu, Vice President of the 
TMMDA, "Local Production ", presentation at the Symposium on Rational Approach to Current Issues concerning 
Medicines, Ankara , 7-9 October 2016 (Exhibit EU -40)). 
216 European Union 's first written submission, paras. 60 and 66 (referr ing to  SSI Rejoinder (Exhibit EU -
21); EU Commissioner for Trade , Letter  to the Turkish Minister of Economy, 5 April 2017  (Exhibit EU -28); 
Turkish Minister of Economy , Letter to the EU Commissioner for Trade, 19 June 2017  (Exhibit EU -29); and SSI 
Defense (Exhibit EU -30)). 
217 Ibid.  
218 European Union 's first written submission, paras. 64 -66. WT/DS583/12  
 
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  as part of a broader governmental programme, with its own policy documentation such as the 
Structural Transformation Program in Healthcare Industries. The Panel also considers that, in 
practi ce, much of this measure is evidenc ed by and implemented through individual bilateral 
communications between Turkish authorities (especially the TMMDA and SSI) and foreign 
pharmaceutical companies announcing whether certain products fall within the scope o f the 
localisation requirement , the treatment of relevant commitments and any "passivization" or removal 
from the reimbursement scheme through the Annex 4/A list. The Panel considers that, in the absence 
of any rebuttal arguments from Turkey, the nature of  the explanation provided by the European 
Union in its first written submission would suffice to establish, prima facie , that the localisation 
requirement may be examined as a single  measure for the purposes of this dispute.  
7.22.   While Turkey presents its argum ents in terms of the European Union 's failure to establish the 
"existen ce" and "precise content" of the localisation requirement219, the Panel understands that 
Turkey does not deny that there is, in fact, one or more measures in place through which foreign 
producers of pharmaceutical products are required to submit to Turkish authorities commitments to 
localise  in Turkey their production of certain products as a condition for those products to remain 
included and active in the Annex 4/A list.220 In this conne ction, the Panel notes that the European 
Union lists221 the following points of  agreement between the parties:  
• products may be de -activated or "passivized ", including as "a result of the localisation 
measure "; 
• pharmacies invoice the SSI for the price of the medicines they supplied to patients as well 
as other fees;  
• on top of the reimbursed price, patients must pay a "contribution fee " and a "prescription 
fee" to pharmacies in order to receive the medicines;  
• medicines are provided to inpatients directly, t hrough a system that differs from the one at 
issue in this dispute;  
• the localisation requirement "derives from " several high -level instruments adopted by the 
Turkish government, corresponding to those cited by the European Union;  
• the localisation requireme nt "entails production activities in Turkey";  
• the TMMDA selects which imported products will be subject to localisation;  
• the measure is implemented in five phases without a set timeline, two of which have already 
been implemented, as described by the Europ ean Union;  
• various Turkish authorities including the TMMDA, the HISC, the LAC and the SSI are 
"involved in the implementation of the localisation measure";  
• all reimbursable medicines (i.e. all pharmaceutical products with a valid marketing 
authorization an d sales permit included in the Annex 4/A list) are "subject to localisation";  
• the TMMDA identifies the companies whose products are subject to localisation, informs 
them of possible de -activation, invites them to submit commitments (i.e. "a declaration 
whether or not a pharmaceutical company will relocate within a specified period of time the 
production of the relevant pharmaceutical products to Turkey";)  
• if those commitments are accepted, variation applications must be submitted;  
• companies must submit prog ress reports, and may request additional time, or the 
localisation  of an alternative product;  
• if there is no l ocalisation  commitment, a period of one year is accorded to the company to 
"reconsider its position"; if it does not, or if its commitment has not  been accepted or fulfilled, 
the products will be "p assivized " or de-activated;  
• the status of a product as activated or de -activated may be updated;  
 
219 Turkey 's first written submission, section VI.A; second written submission, section III.A.  
220 See European Union 's second written submi ssion, paras. 32 -34 (referring to Turkey 's first written 
submission, paras. 6, 79, 82, 108, 111 -114, 128 -142, and 148 -163).  
221 European Union 's second written submission, para. 33.  WT/DS583/12  
 
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  • the different phases have been implemented according to a timeline, which by and large 
corresponds to the evidence set out by the European Union. Turkey disagrees that all phases 
should be considered as ongoing, pointing out that Phases 3 and 4 have so far not been 
implemented, however, it does accept that there is no set timeline, that prod ucts have been 
shifted from Phases 3, 4 or 5 to Phases 1 or 2, and presumably also that Phases 3 and 
onwards have not been cancelled, such that they continue to exist as parts of the measure.  
 
7.23.   Accordingly, the Panel understands Turkey 's position to be that  there is in fact a localisation 
requirement, i.e. one or more measures  in place through which foreign producers of pharmaceutical 
goods are required to submit to Turkish authorities commitments to localise production if those 
products are to be included i n the Annex 4 /A list .222 The Panel understands Turkey 's argument 
regarding the European Union 's failure to establish the "existence " and "precise content " of the 
measure to be limited to its contention that the European Union was required to specifically an d 
exhaustively identify the "various instruments and tools " implementing the localisation requirement 
and how they interrelate, because they are component parts of the "single " challenged measure.223 
The Panel therefore understands Turkey 's argument to be limited to the question of whether a 
precise identification of all of the instruments that in Turkey 's view are "components " of the 
localisation requirement is a prerequisite for making findings on t he European Union 's claims against 
the localisation requirement as a "single and cohesive measure ". This appears to be Turkey 's position 
throughout its written submissions, responses to Panel questions and statements at the substantive 
meeting.224 
7.24.   For the r easons given above, the Panel does not agree with the premise of Turkey 's argument, 
namely, that the European Union has characterized and described the content of the measure at 
issue by reference to legal instruments and documents. In the Panel 's view, Tu rkey's argument 
conflates the content of the localisation requirement with the instruments through which that 
measure is evidenced and implemented. In some cases, a complaining party may describe and define 
the content of the challenged measure by referenc e to certain legal instruments and documents, 
and in such a way as to equate the content of the measure to one or more legal instruments or 
documents, and make them constitutive components of the measure itself. In such cases, it may 
well follow that a com plaining party is required to specifically and exhaustively identify all such legal 
instruments and documents to properly identify the content of the challenged measure. In this case, 
however, the European Union has not defined the content of the measure b y reference to, or in 
terms of, legal instruments or documents. As already explained above, the precise content of the 
localisation requirement, as described and characterized by the European Union in its panel request, 
is that Turkey requires foreign prod ucers to commit to localise in Turkey their production of certain 
pharmaceutical products, and where commitments are not given, not accepted or not fulfilled 
relevant products are no longer reimbursed by the SSI.  
7.25.   Consequently, the Panel disagrees with Turk ey's argument that the European Union fails "to 
precisely identify the components of the measure and a fortiori  to provide evidence of how those 
components operate together as part of a single measure ".225 The Panel also rejects Turkey 's 
argument that the  European Union was required "to precisely identify the legal instruments forming 
part or giving effect to the measure "226, and that "by failing to do so the European Union has failed 
to demonstrate the existence and precise content of the measure. "227 
7.26.   The Pan el is also compelled to note that Turkey 's argument is, to some extent, a reformulation 
of the same argument that the Panel has already considered in the context of assessing whether the 
European Union 's panel request complies with the requirement, in Arti cle 6.2 of the DSU, to identify 
the "specific measures at issue ". The Panel recalls that in a request for a preliminary ruling, Turkey 
 
222 In this vein, the European Union points to examples whereby Turkey seeming ly acknowledges the 
localisation requirement. See European Union 's second written submission, paras. 32 -34 (referring to Turkey 's 
first written submission, paras. 6, 79, 82, 108, 111 -114, 128 -142, and 148 -163).  
223 See Turkey 's response s to the first set of questions, paras. 13 -14; response s to the second set of 
questions, paras. 23 -24, 26 and 29.  
224 See Turkey 's first written submission, paras. 119 -121; second written submission, paras. 38 -39; 
responses to the first set of questions, paras. 11, 14; and respo nses to the second set of questions, paras. 23, 
24, 26, and 29.  
225 Turkey 's first written submission, para. 120.  
226 Turkey 's first written submission, para. 121. See also Turkey 's second written submission, 
paras.  38-39. 
227 Turkey 's first written submission, para. 121. See also Turkey 's second written submission, para. 39.  WT/DS583/12  
 
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  argued that the European Union failed to identify "the specific measures at issue " pursuant to 
Article  6.2 of the DSU. Tu rkey argued that for each of the three measures, the European Union was 
required to specify individually and cumulatively (i) the nature of the measures at issue as written 
or unwritten; (ii) the content of the measures, including the products that are the  subject of the 
measures and the requirement(s) concerned; and (iii) the legal instruments underpinning each of 
the measures at issue in its panel request.228 
7.27.   In its preliminary ruling of 10 July 2020, the Panel found that the panel request satisfies the 
requirement, in Article 6.2 of the DSU, to identify the "specific measures at issue ".229 The Panel 
found that the European Union adequately identified the "content " of the measures "in terms of the 
requirements it was challenging in the narrative descriptions of the measures in the panel 
request ".230 The Panel did not agree with Turkey 's view that the European Union was required to 
specify the legal instruments underpinning each of the measures at issue in its panel request. The 
Panel instead conclu ded that "the narrative descriptions of the measures in the European Union 's 
panel request are sufficient for purposes of compliance with Article 6.2 of the DSU, particularly in 
light of the fact that the European Union provided an illustrative list of rel evant legal instruments 
that it contends put in place, evidence, implement, and administer the challenged measures ".231 
Similarly, the Panel now concludes that the evidence and arguments before it are sufficient to 
establish the precise content of the local isation requirement as outlined in the narrative of the 
European Union 's panel request.  
7.28.   Moreover, the Panel does not consider that Turkey 's argument finds support in the Appellate 
Body's statement, in Argentina – Import Measures , that when dealing with a "single measure 
composed of several different instruments ", a complainant will normally need to provide evidence 
of "how the different components operate together as part of a single measure and how a single 
measure exists as distinct from its components ".232 In that case, the complainants established that 
Argentina required importers and other economic operators to undertake one or more of five trade -
related requirements (TRRs), as a condition to import goods or to obtain certain benefits, and that 
Argentina  had imposed one or more of the five TRRs in different combinations.233 The panel agreed 
with the complainants that the five TRRs together constituted a "single " measure,  and that a 
separate conclusion on each TRR would "go against the nature of the measure " and not reflect the 
measure 's operation in practice or capture some of its main features.234 The Appellate Body upheld 
the panel 's findings about the operation of the TRRs measure, and that the "components " of the 
measure (referenced by the Appellate Body in the above -cited statement) were the five TRRs that, 
according to the complainants ' own characterization, constituted the conte nt of the measure at issue.  
7.29.   In this case, Turkey 's reliance on the Appellate Body 's statement in Argentina – Import 
Measures , concerning the need for a complaining party to provide evidence of how the different 
"components " of a single measure operate toge ther, seems to treat the legal and other instruments, 
referenced by the European Union as evidence of the existence of the localisation requirement, as 
"components " of that measure.235 However, a s elaborated further above, the Panel does not consider 
that t he European Union has characterized the localisation requirement by reference to any legal 
instruments or documents in a way that would make such instruments and documents "components " 
of the challenged measure in the same way that the five TRRs were "comp onents " or "the constitutive 
elements "236 of the single TRRs measure in Argentina – Import Measures . 
7.30.   Finally, the Panel observes that Turkey 's argument regarding the European Union 's alleged 
failure to precisely identify the components of the localisation r equirement  and resulting impact on 
 
228 Preliminary ruling by the Panel, paras. 1.3 and 3.10.  
229 See Annex A -3. 
230 Preliminary ruling by the Panel, para. 3.13.  
231 Preliminary ruling by the Panel, para. 3.1 4. 
232 Appellate Body Reports, Argentina – Import Measures , paras. 5.108 and 5.124.  
233 Panel Reports, Argentina – Import Measures , para. 6.221.  
234 Panel Reports, Argentina – Import Measures , para. 6.228.  
235 For exampl e, Turkey argues that "European Union did not precisely identify the components of the 
measure and failed to explain how they interrelate. In particular, taking into account that the European Union 
described the 'localisation measure ' as being implemented through 'various legal instruments and tools ' and 
'embodied through […] specific laws and decrees ' and that it relied on those instruments to develop its claims, 
the European Union should have precisely identified those legal and other instruments. " (Turke y's responses to 
the second set of questions, para.  26.) 
236 Appellate Body Reports, Argentina – Import Measures , para. 5.108.  WT/DS583/12  
 
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  Turkey's ability to develop its defence, while presented as a general argument relevant to all of the 
European Union 's claims, seems to be primarily, if not exclusively, relevant to the European Union 's 
claim under Articl e X:1 of the GATT 1994.237 However, for reasons given later in this Report, the 
Panel exercises judicial economy over the European Union 's claim under Article X:1.238 Insofar as 
Turkey 's argument is related to the European Union 's claim under Article X:1 of the GATT 1994, it 
has been rendered moot.  
7.1.5   Conclusion  
7.31.   The Panel finds that the European Union has established the existence of the localisation 
requirement as a single measure, whereby (i) Turkey requires foreign producers to commit to locali se 
in Turkey  their production of certain pharmaceutical products; and (ii) where commitments are not 
given, not accepted or not fulfilled, affected products are no longer reimbursed by the SSI.  
7.2  Article III:8(a) of the GATT 1994  
7.2.1   Introduction  
7.32.   The Panel has found that t he European Union has established the existence and precise 
content of the localisation requirement as a "single measure ". The Panel now addresses Turkey 's 
assertion that the localisation requirement falls within the scope of the government procurement 
derogation in Article III:8(a) of the GATT 1994 and is, for that reason, not subject to the national 
treatment obligation of Article III:4 of the GATT 1994.239 
7.33.   Turkey submits that the localisation requirement falls within the scope of Article III:8(a), 
arguing  that it is a "law, regulation or requirement governing procurement " of pharmaceutical 
products, that the procurement of pharmaceutical products is done by a "governmental agency " and 
entails the "purchase " of those products "for governmental purposes ", and is not done "with a view 
to commercial resale ".240 
7.34.   The European Union argues that the localisation requirement is not protected by 
Article  III:8(a), because it is not a "law, regulation or requirement governing procurement ", does 
not involve the "purchase " of products by "governmental agencies ", does not involve any 
 
237 According to Turkey, the European Union 's failure to precisely identify the components of the 
localisation requirement as a "single and cohesive measure " is "particularly relevant " in the context of the 
European Union 's claim under Article X:1 of the GATT 1994 , where the European Union has submitted that not 
all legal instruments that form part of, or give effect to the localisa tion requirement have been published 
promptly. (Turkey 's second written submission, para. 39.) In its first set of questions to the parties, the Panel 
asked Turkey whether the alleged failure to precisely identify the components of the localisation require ment is 
exclusively relevant to the claim under Article X:1 and , if not, to please elaborate on how this alleged failure 
has affected Turkey 's ability to develop its arguments under Articles III:8(a), XX(b) and/or XX(d) of the GATT 
1994, and/or under Artic le 3.1(b) of the SCM Agreement. In its response, Turkey reiterated that "such failure 
has important consequences, for instance with regard to the European Union 's claim under Article X:1 of the 
GATT 1994 ", and reiterated that "the lack of appropriate ident ification of the precise content of the measure 
affected Turkey 's ability to develop its arguments under the Article X:1 GATT claim ." Turkey offered no 
indication how  this alleged failure has affected Turkey 's ability to develop its arguments under the oth er 
referenced provisions. (Turkey 's responses to the first set of questions, para. 15.)  
238 See section 7.5.4.  
239 The Panel addresses the government procurement derogation in Article III:8(a) before making any 
findings under Article III:4 of the GATT 1994 or Article 2.1 of the TRIMS Agreement, bearing in mind that 
measures satisfying the requirements of Article III:8(a) are not subject to the national treatment obligations 
set out in other paragraphs of Article III. The Panel does not consider that the nature of Article III:8(a) as a 
derogation from the obligations in Article III necessarily mandates this order of analysis in all cases, and notes 
that the panel in India – Solar Cells  addressed the claims under Article III:4 and Article 2.1 before addressing 
the applicability of the Article III:8(a). (Panel Report, India – Solar Cells , para. 7.42 .) 
240 Turkey 's first written submission, paras. 175 -241; second written submission, paras. 40 -95; 
responses to the first set of questions, paras. 16 -43; opening statement,  paras. 10 -70; closing statement, 
paras. 9 -23; responses to the second set of questions, paras. 31 -55; and comments on responses to the 
second set of questions, paras. 6 -16. WT/DS583/12  
 
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  procurement or purchase "for governmental purposes ", and any such procurement and purchase 
would be "with a view to commercial resale ".241 
7.2.2   Relevant provisions  
7.35.   Article III:8(a) of the GATT 1994 p rovides:  
The provisions of this Article shall not apply to laws, regulations or requirements 
governing the procurement by governmental agencies of products purchased for 
governmental purposes and not with a view to commercial resale or with a view to use 
in the production of goods for commercial sale.  
7.36.   By its terms, Article III :8(a) is a "derogation limiting the scope of the national treatment 
obligation " in Article III of the GATT 1994.242 This means that measures satisfying the requirements 
of Article III:8(a) are not subject to the national treatment obligation set out in Article III:4.  
7.37.   It is clear from the text of Article III:8(a) that a series of elements must be satisfied for a 
measure to fall within the scope of the government procurement derogatio n: 
a. the challenged measure must fall within the scope of "laws, regulations, or requirements 
governing … procurement "; 
b. it must involve a "purchase " of products by a "governmental agency "; 
c. the products must be purchased "for governmental purposes "; and  
d. the p roducts must not be purchased "with a view to commercial resale or with a view to 
use in the production of goods for commercial sale ". 
7.38.   Article III:8(a) has been interpreted and applied in two prior sets of WTO dispute settlement 
proceedings, Canada – Renew able Energy / Canada – Feed-in Tariff Program  and India – Solar Cells , 
and the panel considers that the Appellate Body and panel reports (as modified on appeal) in those 
disputes provide useful guidance on each of these elements.  
7.39.   With respect to the first  element above, the Appellate Body clarified that "the word 
'procurement ' [in Article III:8(a)] refers to the process pursuant to which a government acquires 
products. "243 The Appellate Body observed that the ordinary meaning of the word "governing " is 
"constitut[ing] a law or rule for "244, and considered that Article  III:8(a) thus requires an "articulated 
connection " between "the laws, regulations, or requirements " and the "procurement ", in the sense 
that the act of "procurement " is undertaken "within a b inding structure of laws, regulations, or 
requirements ".245 
7.40.   With respect to the second element, the Appellate Body distinguished the concepts of 
"procurement " and "purchase ". It clarified that they should not be equated as "[n]ot every 
procurement needs to be effectuated by way of a purchase, and not every purchase is part of a 
process of government procurement. "246 According to the Appellate Body, "procurement " is the 
operati ve word in Article  III:8(a) "describing the process and conduct of the governmental agency ", 
 
241 European Union 's first written submission, paras. 177 -227; second written submis sion, paras. 83 -
116; responses to the first set of questions, paras. 5 -33; opening statement, paras. 13 -32; closing statement, 
paras. 5 -14; responses to the second set of questions, paras. 8 -17; comments on responses to the second set 
of questions, paras. 28-45. 
242 Appellate Body Report, Canada – Renewable Energy / Canada – Feed-in Tariff Program , para. 5.56.  
243 Appellate Body Report, Canada – Renewable Energy / Canada – Feed-in Tariff Program , para. 5.59.  
244 Appellate Body Report, Canada – Renewable Energy / Canada – Feed-in Tariff Program , para. 5.58 
(referring to Oxford English Dictionary online, < http://www.oed.com/view/Entry/80304 >). 
245 Appellate Body Report, Canada – Renewable Energy / Canada – Feed-in Tariff Program , para. 5.58. 
The panel in India – Solar Cells  considered that the domestic content requirement at issue "govern[ed] the 
procurement " of electricity, because it "operate[d] to impose compulsory conditions for bidding eligibility and 
participation under each of the relevant Batches of the National Solar Mission, and further mandate the use of 
domestically manufactured solar cells and modules through enforceable contractual obligations of [solar power 
developers] ". (Panel Report, India – Solar Cells , para. 7.145 .) 
246 Appellate Body Report, Canada – Renewable Energy / Canada – Feed-in Tariff Program , para. 5.59.  WT/DS583/12  
 
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  and the word "purchased " is used "to describe the type of transaction used to put into effect that 
procurement ".247 In Canada – Renewable Energy / Canada – Feed-in Tariff Program , the Appellate 
Body stated that "[t]he precise range of contractual arrangements that are encompassed by the 
concept of "purchase " is not a matter we need to decide in this case ".248 Regarding the entity making 
the purchase, the Appellate Body clarified that the t erm "governmental agencies " in Article III:8(a) 
"refers to those entities acting for or on behalf of government in the public realm within the 
competences that have been conf erred on them to discharge governmental functions ".249 According 
to the Appellate Body, whether an entity is a "governmental agency " within the meaning of Article 
III:8(a) is "determined by the competences conferred on the entity concerned and by whether th at 
entity acts for or on behalf of government ".250 
7.41.   With respect to the third element, the Appellate Body stated that the term "governmental 
purposes " in Article III:8(a) refers to "purchases of products directed at the government or 
purchased for the needs of the government in the discharge of its functions ".251 The Appellate Body 
further clarified that the phrase "products purchased for governmental purposes " in Article III:8(a) 
"refers to what is consumed by the government or what is provided by government to recipients in 
the discharge of its public functions ", with the scope of such functions determined on a case by case 
basis.252 
7.42.   With respect to the fourth element, the Appellate Body explained that the  word "commercial 
resale " refers to "a resale of a prod uct at arm 's length between a willing seller and a willing buyer ".253 
Whether a transaction constitutes a "commercial resale " must be assessed having regard to the 
entire transaction and looking at the transaction from the perspective of both the seller and the 
buyer. In terms of the seller 's perspective, the Appellate Body noted that a profit -orientation is 
generally an indicat ion that a resale is made at arm 's length.254 The last clause "not … with a view 
to use in the production of goods for commercial sale " signifies that Article III:8(a) does not cover 
purchases made by governmental agencies with a view to using the product p urchased in the 
production of other goods for sale at arm 's length.255 
7.2.3   Main arguments of the parties  
7.2.3.1   Introduction  
7.43.   Both parties present their arguments by parsing the text of Article III:8(a) into a series of 
elements, and then presenting their arguments und er headings in relation to those elements. The 
parties parse the elements of Article III:8(a) in a similar (if not always identical) manner: (i) as the 
first element, whether the localisation requirement falls within the scope of "laws, regulations or 
requirements governing … procurement "; (ii) as the second element, whether the localisation 
requirement involves a "purchase " by "governmental agencies "256; (iii) as the third element, whether 
the procurement/purchase is "for governmental purposes "; and (iv) as  the fourth element whether 
the procurement/purchase is done "with a view to commercial resale ". As elaborated below, there 
are one or more points of contention between the parties in relation to each of these elements.  
 
247 Appellate Body Report, Canada – Renewable Energy / Canada – Feed-in Tariff Program , para. 5.59.  
248 Appellate Body Report, Canada – Renewable Energy / Canada – Feed-in Tariff Program , para. 5.59. 
The panel in India – Solar Cells  recalled the Appellate Body 's findings above and stated that "this conceptual 
distinction " between the concepts of procurement and purchase "informs the cumul ative and separate 
elements of Article III:8(a). " (Panel Report, India – Solar Cells , para. 7.133 .) 
249 Appellate Body Report, Canada – Renewable Energy / Canada – Feed-in Tariff Program , para. 5.61.  
250 Appellate Body Report, Canada – Renewable Energy / Canad a – Feed-in Tariff Program , para. 5.60.  
251 Appellate Body Reports, Canada – Renewable Energy / Feed -In Tariff Program , para. 5.67. 
252 Appellate Body Reports, Canada – Renewable Energy / Feed -In Tariff Program , para. 5.68. 
253 Appellate Body Report, Canada – Renewable Energy / Canada – Feed-in Tariff Program , para. 5.70.  
254 Appellate Body Report, Canada – Renewable Energy / Canada – Feed-in Tariff Program , para. 5.71.  
255 Appellate Body Report, Canada – Renewable Energy / Canada – Feed-in Tariff Program , paras. 5.72 -
5.74. 
256 In its first written submission, Turkey addresses the "purchase " element in the context of presenting 
its arguments on the first element, which it formulates in terms of whether the localisation measure is a "law, 
regulation or requirement governing … procurement ". However, in its second written submission Turkey 
addre sses, as a second element, whether the alleged procurement of pharmaceutical products is "done by a 
governmental agency and entails the purchase of those products ".  WT/DS583/12  
 
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  7.44.   While the European Union maintains t hat Turkey has the burden of establishing that the 
challenged measure is covered by the government procurement derogation in Article III:8(a)257, the 
European Union addressed the applicability of Article III:8(a) to the localisation requirement in its 
first written submission. In that submission, the European Union, noting Turkey 's earlier assertion 
that the localisation requirement falls within the scope of Article III:8(a)258, engaged in this 
discussion "in an attempt to be helpful to the Panel and address all possibly relevant legal issues as 
early as possible ".259 
7.2.3.2   "laws, regulations or requirements governing … procurement " 
7.45.   The European Union submits that the localisation requirement is not a "law, regulation or 
requirement governing procurement ".260 According to the European Union, that is "for the simple 
reason that no procurement is involved "261 and i t is impossible for a measure to "govern " 
procurement if no "procurement " is involved.262 The European Union submits that, according to the 
ordinary mean ing of the term "procurement " and the prior panel and Appellate Body reports under 
Article III:8(a), the derogation only applies where the government, and not another actor or set of 
actors, "acquires " or "obtains " products.263 Furthermore, this acquisition must be done on the basis 
of a particular legal process, specifically designed for that purpose and binding on governmental 
authorities.264 In this case, in the outpatient sector265, pharmaceutical products are never acquired 
or obtained, and thus never "procured ", by any governmental agencies in Turkey, whether through 
the requisite type of legal process or otherwise; instead, they are acquired or obtained by consumers 
from pharmacies, and the Turkish government reimburses the pharmacies for (in most instances) a 
part of the cost.266 The European Union further argues that this is clear from the legal instruments 
governing the reimbursement system, including the very title of the "Protocol on the procurement 
of medicines from phar macies which are members of the Turkish Pharmacists ' Association (TEB) by 
persons covered by the Social Security Institution ".267 
7.46.   Turkey submits that the localisation measure is a "law, regulation, or requirement governing 
procurement ".268 According to Turkey, the SSI "acquires " the medicines that are prescribed to 
patients in Turkey "since it pays for their costs ".269 Turkey explains that the pharmaceutical products 
included in the Annex 4/A list "are acquired by the SSI through retail phar macies which are members 
of the TPA ", and the "procurement process is governed by the Protocol concluded between the SSI 
and the TPA  as well as contracts concluded between the SSI and individual retail pharmacies, which 
 
257 European Union 's response s to the second set of questions, paras. 8 -12; European Union 's 
comments on responses to the second set of questions, paras. 28 -31. For Turkey's arguments on this point, 
see Turkey's responses to the first set of questions, paras. 31 -37. 
258 European Union 's first written submission, para. 177 (referring to minutes of t he meetings of the 
Committee on Trade -Related Investment Measures held on 6 November 2017, 1 June 2018, and 17 October 
2018 (respectively G/TRIMS/M/43, G/TRIMS/M/44, and G/TRIMS/M/45)).  
259 European Union 's comments on responses to the second set of question s, para. 31.  
260 European Union 's first written submission, paras. 181-195. 
261 European Union 's first written submission, para. 184. 
262 European Union 's first written submission, para. 185. 
263 European Union 's first written submission, paras. 185 -187. The European Union adds that this 
interpretation is supported by the use of the terms "acquisition " and "adquisición " in place of "procurement " in 
the French and Spanish versions of the GATT 1994, and notes that these terms are different, and narrower, 
than the terms used in the French and Spanish titles of the Agreement on Government Procurement ( Accord 
sur les Marchés Publics, Acuerdo sobre Contratación Pública ). (European Union 's first written submission, 
para. 188.)  
264 European Union 's first written sub mission, para. 189. 
265 According to the European Union, "it is useful to compare the reimbursement system which applies 
to out -patient pharmaceuticals with Turkey 's treatment of in -patient pharmaceuticals. For in -patients, public 
entities – hospitals – procure medicines by acquiring or obtaining them. Furthermore, those entities provide 
those pharmaceutical products to patients directly. Moreover, when doing so, public hospitals acquire or obtain 
pharmaceuticals on the basis of a tendering process that appli es to Turkish government entities more 
generally. Thus, the necessary elements of "procurement " seem to be present: the government (including 
public hospitals) acquires or obtains products, pursuant to a particular process designed for that purpose. By 
contrast, in the out -patient sector, no public entity or governmental agency ever acquires or obtains 
pharmaceutical products. " (European Union 's first written submission, paras. 193 -194.)  
266 European Union 's first written submission, paras. 190 -191. 
267 Europea n Union 's first written submission, para. 192. 
268 Turkey 's first written submission, paras. 186 -204. 
269 Turkey 's first written submission, para. 189.   WT/DS583/12  
 
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  essentially reproduce the text of th e Protocol ".270 Turkey submits that, contrary to what the European 
Union argues, the very title of that document , i.e. Protocol on the Provision of Medicines to the 
Persons Covered by the Social Security Institution by the Pharmacies which are Members of th e 
Turkish Pharmacists' Association,  makes it clear that it regulates the "provision " of pharmaceutical 
products by retail pharmacies, on behalf of the SSI, to patients.271 Turkey explains that the text of 
that Protocol shows that pharmaceutical products "are procured, that is acquired, by the SSI " and 
distributed to patients through retail pharmacies under contract with the SSI.272 According to Turkey, 
the fact that the provision of pharmaceutical products is organized differently in the outpatient and 
inpati ent sectors does not mean, contrary to what the European Union argues, that in the outpatient 
sector "no public entity or governmental agency ever acquires or obtains pharmaceutical 
products ".273 Furthermore, the localisation measure is a "law, regulation o r requirement governing " 
procurement, as it constitutes a "requirement "274 and "the entire process pursuant to which the SSI 
acquires those pharmaceutical products ", including the decision about which products are included 
in Annex 4/A, their prices and the modalities of their purchase, "is regulated and controlled by the 
relevant Turkish authorities ".275 
7.47.   The European Union responds by recalling the Appellate Body 's statement that the term 
"procurement " refers to "the process pursuant to which a government acquires products " and argues 
that, instead of loosening the test, as Turkey suggests, "the requirement of a 'process ' pursuant to 
which products are acquired (meani ng that the simple act or practice of acquiring a product is not 
enough) makes the legal test stricter ".276 The European Union rejects Turkey 's argument that the 
SSI acquires the medicines because it pays for their cost, and is therefore the "ultimate buyer " of 
those products, the pharmacies being just an "agent for the SSI " and the "distribution network of 
the SSI ". The European Union asserts that, under Turkey 's reading, whenever a government finances 
or pays for something, even partly, this would constitu te public procurement and would therefore 
fall outside the scope of Article III of the GATT 1994 and that this is plainly wrong.277 Furthermore, 
none of the provisions of Turkish law or the Protocol between pharmacists and the SSI that Turkey 
cites in any w ay suggest that the SSI "acquires " any medicines.278 Finally, the European Union 
argues that the localisation requirement itself is not a law, regulation or requirement that governs 
procurement  because through it, Turkey "actively seeks to obtain localisation commitments from 
foreign producers, rather than to simply apply an 'origin rule ' for the 'procured products '".279 
According to the European Union, "the Localisation Requirement is not a necessary and usual 
component of a  procurement system, but rather an industrial policy and economic development 
measure that seeks, inter alia, to attract investments in Turkey ".280 
7.48.   In its second written submission, Turkey maintains that the localisation requirement is a "law, 
regulation or  requirement governing procurement " within the meaning of Article III:8(a) because it 
"governs the process through which the Turkish Government acquires pharmaceutical products 
included in Annex 4/A ".281 According to Turkey, the SSI 's role "goes far beyond the mere financing 
of the pharmaceutical products included in Annex 4/A to outpatients. "282 Rather, the SSI purchases 
the pharmaceutical products included in Annex 4/A283, ensures the provision of these products to 
outpatients, and makes all the necessary ar rangements for this purpose.284 To dispense these 
 
270 Turkey 's first written submission, para. 190. (fns omitted)  
271 Turkey 's first written submission, para. 191. 
272 Turkey 's first written submission, paras. 191-201. 
273 Turkey 's first written submission, para. 203. In its second written submission, Turkey explains that 
"in both outpatient and inpatient sectors, the medicines are acquired by public entities " and that "the 
differences between the provision of pharmaceutical products to inpatients and to outpatients have to do with 
the practical aspects of dispensing pharmaceutical products in the most effective way ." (Turkey 's secon d 
written submission, para. 33).  
274 According to Turkey, it is a "requirement " in the sense that compliance with the localisation 
requirement determines whether a pharmaceutical product will be covered by the reimbursement scheme. 
(Turkey 's first written s ubmission, paras. 187, 204.)  
275 Turkey 's first written submission, para. 189.  
276 European Union 's second written submission, para. 86. (emphasis original)  
277 European Union 's second written submission, para. 88.  
278 European Union 's second written submission, p aras. 89 -94. 
279 European Union 's second written submission, para. 96.  
280 European Union 's second written submission, para. 97.  
281 Turkey 's second written submission, para. 46.  
282 Turkey 's second written submission, para. 51. See also ibid. para. 23.  
283 Turkey 's second written submission, para. 18.  
284 Turkey 's second written submission, para. 52.  WT/DS583/12  
 
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  products to outpatients, it acts through retail pharmacies.285 According to Turkey , retail pharmacies 
dispense pharmaceutical products to patients on behalf of the SSI286, acting "as service providers 
for the SSI."287 Turkey submits that this conclusion is supported by the following: (i) the Protocol 
and the individual contracts concluded between the SSI and retail pharmacies "establish that the 
latter act as a service provider of the SSI by dispensing pharmaceu tical products included in Annex 
4/A to outpatients "288; (ii) retail pharmacies receive a service fee from the SSI for the service they 
provide, "namely the provision of pharmaceutical products to the outpatients "289; (iii) retail 
pharmacies collect contribution fees from the outpatients on behalf of the SSI290; and (iv) retail 
pharmacies have the status of primary healthcare service providers which "also collect contribution 
fees on behalf of the SSI and provide other public health services ".291 Finall y, Turkey also rejects 
the European Union 's argument that the localisation requirement does not "govern procurement " 
because it goes beyond a simple preference for domestic products.292 Turkey argues that the 
localisation requirement "governs the procuremen t" of pharmaceutical products by the SSI because 
compliance with this requirement is "a necessary prerequisite for the continued inclusion of a 
pharmaceutical product subject to localisation in Annex 4/A and thus for the procurement of that 
product by the SSI to take place ".293 
7.2.3.3   "by governmental agencies of products purchased " 
7.49.   The European Union submits that, even if the Panel finds that the measure at issue is 
somehow connected to "procurement ", Article III:8(a) would still not apply because the relevant 
products are not being "purchased " by "governmental agencies ".294 Recalling the prior panel and 
Appellate Body reports examining Article III:8(a), the European Union submits that it is clear that 
the concept of "purchase " covers only a sub -set of the various t ypes of transactions that can be used 
to put into effect a procurement295, that the requirement that there must be a "purchase " is distinct 
and additional to the requirement that there must be a "procurement ", and that to be covered by 
Article III:8(a), gov ernment procurement can only be effectuated by means of a purchase, and not 
by means of any other contractual arrangement.296 The European Union notes that the ordinary 
meaning of the term "purchase " is "[t]he acquisition of property (esp. land) by any legal means 
other than inheritance "297 and observes that this is how the term "purchase " is used in the 
Agreement on Government Procurement (GPA) as well.298 In the outpatient sector no Turkish 
"governmental agency " acquires the relevant pharmaceutical produ cts, at any point, whether 
through purchase or otherwise; in this connection, the European Union submits that pharmacies, 
like individual consumers, are "private entities, not acting for or on behalf of the government ".299 
 
285 Turkey 's second written submission, para. 48.  
286 Turkey 's second written submission, paras. 23, 29 and 49.  
287 Turkey 's second written submission, para. 18. In that sense, Turkey states that "there is a split 
between the government -purchaser (the SSI) and the private party provider (the retail pharmacies) ", whereby 
the SSI is the purchaser of pharmaceutical products provi ded to outpatients such as to ensure their universal 
access, while retail pharmacies take on the role of service provider by dispensing those pharmaceutical 
products in a more efficient and timely manner . (Turkey 's second written submission, para. 23 .) 
288 Turkey 's second written submission, paras. 27 and 48 -49. Turkey also explains that the TPA Protocol 
deals with the "provision " or "supply " of pharmaceutical products to patients by the retail pharmacies on behalf 
of the SSI, and does not relate to the procu rement of pharmaceutical products by patients, because "patients 
do not procure pharmaceutical products included in Annex 4/A but are provided with those products ." (Ibid. 
para. 15 .)  
289 Turkey 's second written submission, para. 27 . 
290 Turkey 's second writte n submission, para. 27 . 
291 Turkey 's second written submission, para. 30.  
292 European Union 's second written submission, para. 96.  
293 Turkey 's second written submission, para. 56.  
294 European Union 's first written submission, paras. 196-206. 
295 The European Uni on refers to the definition of "procurement " in the Agreement on Government 
Procurement ( GPA) to explain that a "purchase " is merely one of a number of contractual arrangements 
typically used in procurement ( "lease, rental or hire purchase, with or without an option to buy "), and that 
these other arrangements do not involve the acquisition of property rights over products. ( European Union 's 
first written submission, para. 202.)  
296 European Union 's first written submission, paras. 198 -200. 
297 European U nion's first written submission, para. 201 (referring to Oxford  English Dictionary online , 
<https://www.oed.com/view/Entry/154831?rskey=07nKL5&result=1&isAdvanced=false#eid> ). 
298 European Union 's first written submission, para. 202. 
299 European Union 's first  written submission, paras. 204 -205. WT/DS583/12  
 
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  7.50.   Turkey argues that the localisatio n requirement involves the "purchase " of products "by 
governmental agencies ".300 Turkey submits that even under a narrow interpretation of the term 
"purchase "301, in the present case the procurement of pharmaceutical products is effectuated by 
means of a "purchase ". In Turkey 's view, the fact that this purchase is effectuated with the 
involvement of retail pharmacies acting on behalf of the SSI, and that the pharmaceutical products 
are not physically with the SSI, does not change the fact that it is the SSI t hat pays for the 
pharmaceutical products and thus is the ultimate buyer (or the purchaser).302 Nothing  in the text of 
Article III:8(a) suggests that the purchase must be necessarily made directly by the governmental 
agency itself (in contrast to the "procur ement by  a governmental agency "), rather than by other 
entities acting as an intermediary.303 Furthermore, patients themselves do not "purchase " 
pharmaceutical products included in the Annex 4/A list, as they "do not pay for those medicines 
which are provided to them free of charge, the costs being paid by the SSI ".304 With regard to the 
second prong of this element of Article III:8(a), Turkey expl ains that it is t he SSI, the governing 
authority of the Turkish social security system affiliated to the Ministry of Family, Labor and Social 
Services, that constitutes the relevant "governmental agency " within the meaning of 
Article  III:8(a).305 
7.51.   In its sec ond written submission, the European Union confirms that it does not dispute that 
the SSI is a "governmental agency ", but that, in the context of the reimbursement system and the 
localisation requirement, neither the SSI nor any other governmental agency e ngages in the 
"procurement ", let alone "purchase ", of any products.306 The European Union reiterates that the 
term "purchase " should be interpreted to mean "acquiring property over " products.307 However, it 
argues that even under Turkey 's broader reading of the term as covering "obtaining something in 
exchange of payment ", the SSI does not "obtain " any products for the reasons already explained at 
length in its first written submission.308 The SSI "merely provides financing through reimbursement ", 
and "[p]roviding financing is different from obtaining, acquiring or purchasing products ".309 Finally, 
as for Turkey 's alternative argument that the SSI could be said to engage in purchasing because 
retail pharmacies, allegedly acting "on behalf of " the SSI, pur chase medicines from wholesalers, the 
European Union argues that there is no support whatsoever for these assertions: retail pharmacies 
are private entities, they freely order and purchase their medicines from wholesalers through a 
private sales contract, hold and manage their inventory on their own (including holding property 
rights over it), and bear the risks associated with their stock, with no SSI involvement. Thus, 
according to the European Union, Turkey 's attempt to portray the retail pharmacies ' purchase of 
medicines from wholesalers as a "purchase " by the SSI fails.310 Finally, the European Union 
comments that it has already addressed Turkey 's assertion that patients do not purchase 
 
300 Turkey 's first written submission, paras. 20 5-217. As noted earlier, the parties do not parse the 
terms of Article III:8(a) in the same way, with each addressing the "purchase " element under a different 
element. In it s first written submission, the European Union addresses the issue of "purchase " as part of the 
second element, i.e. "purchased by governmental entities "; in contrast, Turkey addresses the "purchase " 
element in tandem with the first element, i.e. whether the localisation measure is a "law, regulation or 
requirement governing … procurement ". 
301 Turkey refers to the dictionary definition of "the action or an act of obtaining something in exchange 
for pay ment in money or an equivalent ", which in its view "suggests that the notion of a 'purchase ' involves 
some kind of payment (usually monetary) in exchange for a good ." (Turkey 's first written submission, 
para. 207.) Turkey also doubts the validity and proba tive value of the European Union 's reliance on the GPA to 
interpret Article III:8(a) of the GATT 1994. (Turkey 's first written submission, fn 219.)  
302 Turkey 's first written submission, paras. 206 -208. Turkey refers to the statement by the panel in 
Canada – Renewable Energy / Canada – Feed-in Tariff Program  that a "purchase " does not require obtaining 
physical possession over the goods that are purchased. (Turkey 's first written submission, para. 208, referring 
to Panel Report, Canada – Renewable Energy / Ca nada – Feed-in Tariff Program , para. 7.228.)  
303 Turkey 's first written submission, para. 209.  
304 Turkey 's first written submission, para. 210. According to Turkey, "the contribution fee paid by 
patients forms part of the patients ' contribution to the social security system in general and aims at preventing 
abuse of that system. The European Union therefore errs when it argues that part of the price of 
pharmaceutical products is borne by patients. " (Ibid.  para. 210 ) 
305 Turkey 's first written submission, paras. 212-217. 
306 European Union 's second written submission, paras. 98 -99. 
307 European Union 's second written submission, para. 100.  
308 European Union 's second written submission, para. 101.  
309 European Union 's second written submission, para. 101.  
310 European Union 's second written submission, paras. 105 -106. WT/DS583/12  
 
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  pharmaceutical products but even if it was shown that patients, for whatever reason, do not 
"purchase " pharmaceutical products, it would still not follow that the SSI does.311 
7.52.   In its second written submission, Turkey disagrees with the European Union 's argument that 
the concept of "purchase " pertains to transactions that involve "physical possession and property " 
over a product.312 In this case, Turkey argues that because of the nature of the products at issue, 
and the specific features of the Turkish healthcare system, "it would make no econo mic or practical 
sense for the SSI to take physical possession of medicines that are ultimately provided to Turkish 
patients ".313 Turkey submits that the SSI does not merely finance pharmaceutical products, but 
purchases them "at the time they are dispensed  to the patients "314, because it acquires the title to 
them and instructs the retail pharmacies to dispense them immediately to the patients. 315 According 
to Turkey, the "purchase " by the SSI "occurs when a patient presents a prescription for a medicine 
included in Annex 4/A in a retail pharmacy and the provision of that medicine to the patient is 
approved through the Medula system ".316 The SSI then delegates to retail pharmacies the dispensing 
of the purchased products to outpatients.317 According  to Turkey, since it is the SSI that purchases 
the pharmaceutical products included in the Annex 4/A list, the SSI does not "reimburse " patients, 
nor retail pharmacies318, because neither of them "purchases " these products. Retail pharmacies 
obtain the prod ucts from wholesalers and keep them at their premises until they are dispensed to 
patients upon the presentation of a medical prescription.319 The SSI purchases from and makes 
direct payments for those medicines to the retail pharmacies320, which "receive a service fee in 
return for the service they perform on behalf of the SSI, namely, dispensing pharmaceutical products 
to patients ".321 Patients receive the products but do not purchase them.322 They merely pay "a 
relatively small contribution fee which is, how ever, not part of the price of the pharmaceutical 
products but forms part of the patients ' contribution to the social security system in general and 
aims at preventing abuse of that system. "323 
7.2.3.4   "for governmental purposes " 
7.53.   The European Union argues that the localisation requirement does not involve procurement 
of products purchased "for governmental purposes ".324 The European Union accepts that "providing 
universal healthcare, ensuring access to medicines and protecting human health are legitimate 
governmental objectives. "325 However, t he European Union notes that it is obvious that the Turkish 
government neither uses nor consumes the relevant pharmaceutical products.326 While the prior 
panel and Appellate Body reports confirm that "products purchased  for governmental purposes " in 
Article III:8(a) may cover not only "what is consumed by the government " but also "what is provided 
by government to recipients in the discharge of its public functions ", there is no such "provision " in 
 
311 European Union 's second written submission, paras. 107 -108. 
312 Turkey 's second written submission, para s. 62-63. Turkey refers to the example given by the panel 
in Canada – Renewable Energy / Ca nada – Feed-in Tariff Program  of a book that is bought on the internet by 
an entity that directs the seller to deliver it to somebody else as a gift . (Ibid. para. 63  (referring to Panel 
Reports, Canada – Renewable Energy / Canada – Feed-in Tariff Program , para. 7.228).  
313 Turkey 's second written submission, para. 64. Turkey relates that prior to the 2003 reform of its 
healthcare system, the SSI did obtain physical control over the medicines it provided to patients and this 
system proved to be ineffective (Ib id. para. 65).  
314 Turkey 's second written submission, para. 76.  
315 Turkey 's second written submission, paras. 73 and 76. Turkey provides a series of documents 
attesting the details of this process in Exhibit TUR -117 (Documents relating to a purchase by the SSI from a 
pharmacy of the pharmaceutical products dispensed to patients in December 2020  (Exhibit TUR -117)).  
316 Turkey 's second written submission, para. 71. See also Turkey 's second written submission, para. 72  
317 Turkey 's second written submission, para. 66. The payment for the pharmaceutical products 
purchased by the SSI and dispensed by retail pharmacies to patients is made by the SSI on the basis of 
consolidated invoices sent by the retail pharmacies to the SSI at the end of each month ( Ibid. para. 74). This 
invoice covers the public price of the medicines dispensed to patients and a service fee that the pharmacies 
receive "in return for the service they perform on behalf of the SSI, namely, dispensing pharmaceutical 
products to patients ". (Ibid. para. 69).  
318 Turkey 's second written submission, para. 18.  
319 Turkey 's second written submission, para. 69.  
320 Turkey 's second written submission, para. 13.  
321 Turkey 's second written submission, para. 69.  
322 Turkey 's second writt en submission, paras. 13, 18, 70 and 72.  
323 Turkey 's second written submission, para. 77.  
324 European Union 's first written submission, paras. 207-216. 
325 European Union 's first written submission, para. 211.  
326 European Union 's first written submission, par a. 213. WT/DS583/12  
 
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  this case.327 According  to the European Union, "it is clear that the Turkish government does not 
provide  the relevant pharmaceutical products to recipients. It merely reimburses a part of the cost 
of those pharmaceuticals, which are provided to patients (as "recipients ", in this  context) by 
pharmacies. "328 This should be contrasted with the scenario in which "a public hospital purchases 
pharmaceuticals and provides them to patients. "329 
7.54.   Turkey asserts that the localisation measure involves procurement of products purchased for 
"governmental purposes ".330 Specifically, the pharmaceutical products are procured to provide 
healthcare services to the Turkish population.331 The fact that the provision of healthcare, including 
provision of pharmaceutical products, falls within the scope of a  government 's public functions is 
confirmed both by international instruments and Turkish legislation.332 In response to the European 
Union 's argument that there is no "direct provision " of pharmaceuticals by the government to 
outpatients, Turkey reiterates that the provision of pharmaceutical products in case of outpatient 
treatment is, for practical reasons, organized through retail pharmacies (which have the status of 
healthcare provid ers in the Turkish healthcare system and act on behalf of the SSI); and in that 
sense, as in the case of inpatient treatment, pharmaceutical products are "provided " by the 
government, i.e. the SSI, through retail pharmacies, to patients.333 
7.55.   In its second wr itten submission, the European Union comments that Turkey is "preaching to 
the choir " when it explains, at length, the reasons why healthcare is an important governmental 
objective, and recalls that this is not in dispute.334 The European Union reiterates t hat being linked 
to a government objective is not enough, as the Appellate Body stated that it must be shown that 
products are "purchased for the use of government, consumed by government, or provided by 
government to recipients in the discharge of its pub lic functions ".335 Turkey does not claim that the 
products are "purchased for the use of government " or "consumed by government ", and i t "is clear 
that no Turkish governmental agency provides  the pharmaceutical products to anyone – pharmacies 
do".336 
7.56.   In its second written submission, Turkey maintains that pharmaceutical products included in 
the Annex 4/A list are provided by the SSI to recipients (i.e. outpatients) "in the discharge of its 
public function, namely the provision of healthcare services ".337 In this process, Turkey explains, the 
SSI uses retail pharmacies as a distribution network to dispense the products to patients on its 
behalf.338 Thus, according to Turkey, retail pharmacies provide (dispense) the pharmaceutical 
products included in the Annex 4/A list to outpatients "on behalf of the SSI ".339 For this service, 
Turkey submits, the pharmacies receive a service fee from the SSI.340 
7.2.3.5   "not with a view to the commercial resale " 
7.57.   The European Union contends that if the government "procures " and "purchases " 
pharmaceutical products when it reimburses a part of their cost to the pharmacies which ultimately 
sell them to consumers , it follows that the government purchases pharmaceutical products "with a 
view to the commercial resale " of pharmaceutical products by pharmacies to consumers.341 The 
 
327 European Union 's first written submission, paras. 208, 212.  
328 European Union 's first written submission, para. 214.  (emphasis original)  
329 European Union 's first written submission, para. 215 (referring to Appellate Body Report, Canada – 
Renewable Energy/Feed -in Tariff Program , fn 514.)  
330 Turkey 's first written submission, paras. 218-231. 
331 Turkey 's first written submission, para. 219.  
332 Turkey 's first written submission, paras. 220 -229. 
333 Turkey 's first written submission, para. 231.  
334 European Union 's second written submission, para. 110.  
335 European Union 's second written submission, para. 112 (quoting Panel Report, India – Solar Cells , 
para. 7.156, summarizing the findings of the Appellate Body in Canada – Renewable Energy / Feed -In Tari ff 
Program , paras. 5.66 –5.68 and 5.74).  
336 European Union 's second written submission, paras. 112 -113. (emphasis original)  
337 Turkey 's second written submission, para. 81.  
338 Turkey 's second written submission, para. 83.  Turkey submits that "the European Union appears to 
agree that pharmacies act on behalf of the SSI when they dispense pharmaceutical products to patients in the 
context of its claim under Article 3.1(b) of the SCM Agreement ." (Turkey 's second written submission, para. 
86.) 
339 Turkey 's second written submission, para. 82 . (emphasis original)  
340 Turkey 's second written submission, paras. 85 and 13.  
341 European Union 's first written submission, paras. 217-227. WT/DS583/12  
 
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  European Union refers to the fact that pharmacies provide the product, in exchange for payment 
that is part ly borne by the consumer, and asserts that this provision is made within the framework 
of a straightforward arms -length sales transaction: pharmacies are profit -seeking, and end -users 
are interest -maximizing.342 The European Union submits that Article III:8 (a) captures not only direct 
resale by the very agency purchasing the products, but also commercial resale343 through another 
actor, such as, in this case, a pharmacy.344 
7.58.   Turkey responds that the pharmaceutical products are not "resold " on the "commercial " 
market but are dispensed by retail pharmacies – on behalf of the SSI – to patients.345 According to 
Turkey, the patients – which it says are "curiously referred to " by the European Union as "consumers " 
or "end-users "346 – are not "buying " pharmaceutical products of their choice, as they cannot choose 
the products or their quantities or discuss their price, and they receive the specific medicine that 
was prescribed to them in a specific dose by a medical doctor based on those patients ' specific health 
needs.347 There is thus no "commercial transaction " between the patient and the medical doctor or 
the pharmacy.348 All elements of the "exchange " between the patient and the retail pharmacy are 
decided by the Turkish government which determines w hich pharmaceutical products are paid for 
by the SSI, what their price is and how they will be dispensed to patients.349 Turkey also reiterates 
that the contribution fee and the prescription fee paid by patients in retail pharmacies are not the 
"resale pric e" of the pharmaceutical product, as the European Union seems to suggest, but form 
part of the patients ' contribution to the social security system and aim at preventing abuse.350 
Furthermore, contrary to what the European Union suggests, the retail pharmac y is also not acting 
as a regular, profit -seeking "willing seller ": the price of a pharmaceutical product provided to patients 
and paid by the SSI, as well as the mark -up made by a retail pharmacy, are all set by law.351 Finally, 
the SSI does not procure th e pharmaceutical products with a view to using those products in the 
production of other goods for commercial sale.352 
7.59.   In its second written submission, the European Union responds that Turkey, in claiming that 
the European Union misrepresents its reimburse ment system as a set of purely commercial 
transactions, fails to engage with the European Union 's actual argument. The European Union 
reiterates that its argument is that if the Panel were to find that the government purchases 
pharmaceutical products when reimbursing  their cost to the pharmacies, then it would logically follow 
that the government is purchasing those products with a view to their commercial resale  by 
pharmacies.353 The European Union submits that Turkey provides no direct response to this 
argument.354 Furthermore, according to the European Union, Turkey makes a number of "startling 
remarks " that "must be corrected ", including that patients cannot choose the products (even though 
Turkey itself describes a scenario in which they can choose betwee n different products in equivalent 
groups); that all elements of the exchange are decided by the government (even though patients 
may decide, among other things, which product to purchase); and that pharmacies are not profit -
seeking (even though they are p rivate entities with a commercial interest and receive a mark -up as 
well as a service fee).355 
7.60.   In its second written submission, Turkey argues that the relationship between the retail 
pharmacies and patients does not fit the definition of "commercial resale " within the meaning of 
Article III:8(a) as "a resale of a product at arm 's length between a willing seller and a willing 
 
342 European Union 's first written submission, paras. 224-225. 
343 The European Union notes that it is aware that this reading would mean that pharmacies are both 
selling  the products to the government and reselling  the same products to consumers. It argues that "this 
oddity …  is caused by accepting the argument that, when it engages in reimbursement, the Turkish 
government is procuring and purchasing products for governmental purposes ." (European Union 's first written 
submission, para. 227.)  
344 European Union 's first written su bmission, para. 226.  
345 Turkey 's first written submission, paras. 232 -240. 
346 Turkey's first written submission, para. 236.  
347 Turkey 's first written submission, para. 236. 
348 Turkey 's first written submission, para. 236. 
349 Turkey 's first written submission, para. 236. 
350 Turkey 's first written submission, para. 236. 
351 Turkey 's first written submission, para. 237. 
352 Turkey 's first written submission, para. 239.  
353 European Union 's second written submission, paras. 114 -115. 
354 European Union 's second written submission, para. 116.  
355 European Union 's second written submission, para. 116.  WT/DS583/12  
 
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  buyer ".356 According to Turkey, this relationship is not in the nature of a "transaction " because 
pharmacies do not "resell " medicines and outpatients do not "buy" them. 357 First, pharmacies do 
not resell the pharmaceutical products because they rather dispense them to outpatients on behalf 
of the SSI , on the basis of the TPA Protocol and the contracts signed between individual pharmacies 
and the SSI .358 The elements of any "transaction " between retail pharmacies and patients are either 
set by the SSI or the medical doctor prescribing the pharmaceutical products, and thus "do not have 
a commercial character ".359 Second, Turkey disagrees with the European Union 's position that 
patients "purchase " pharmaceutical products which would then be reimbursed by the SSI. Turkey 
submits that patients "go to retail pharmacies with their prescription and get the prescribed 
medicines from the pharmacies, the medicines being paid for by the SS I."360 According to Turkey, 
"patients receive the medicines indicated on their prescription and the cost of those medicines is 
covered by the SSI who purchases them from the pharmacies ".361 Patients "cannot choose the 
pharmaceutical products but obtain the s pecific medicine prescribed to them in a specific form and 
dosage by a medical doctor. "362 If a patient prefers a more expensive product from the same 
equivalent group, he or she must pay the difference between the price of that product and the price 
paid b y the SSI – but according to Turkey this does not mean that patients pay the retail price of 
those pharmaceutical products.363 Turkey also points out that, contrary to what the European Union 
argues,  (i) the fact that patients may replace the brand product from the prescription with an 
equivalent generic product (or vice versa )364; (ii) the fact that patients may decide "whether, when 
or where " to use their prescription365; and (iii) the fact a patient may cho ose the pharmacy or even 
decide not to take his/her prescribed medicine , do not indicate that there are any commercial 
transactions between the patients and retail pharmacies as far as the pharmaceutical products 
included in the Annex 4/A list are concerned .366 Turkey further maintains that the presc ription fee 
and the contribution fee paid by patients are not part of the price of the pharmaceutical products 
but rather "form part of the patients ' contribution to the social security system and aim at preventing 
abuses of the healthcare system, includin g overconsumption of medicines, as well as ensuring its 
financial sustainability ".367 Turkey also observes that in many instances, patients are exempted from 
the payment of the contribution fee.368 
7.2.4   Assessment by the Panel  
7.2.4.1   Introduction  
7.61.   The government procurem ent derogation in Article III:8(a) concerns "the procurement by 
governmental agencies of products purchased for governmental purposes ". This provision was 
interpreted and applied in Canada – Renewable Energy / Canada – Feed-in Tariff Program  and India 
– Solar Cells . In both disputes, the measures at issue required entities seeking to sell electricity to 
the government at preferential rates to satisfy certain domestic content requirements with respect 
to the equipment used to generate that electricity (e.g. solar cells). The conclusion ultimately 
 
356 Turkey 's second written submission, para. 89 (referring to Appellate Body Reports, Canada – 
Renewable Energy / Canada – Feed-in Tariff Program , para. 5 .70).  
357 Turkey 's second written submission, para. 88.  
358 Turkey explains that retail pharmacies are "considered as primary healthcare service providers and 
act on behalf of the SSI to carry out its function to provide pharmaceutical products to outpatient s in Turkey ". 
(Turkey 's second written submission, para. 92 .)  
359 Turkey 's second written submission, para. 32. According to Turkey, the fact that retail pharmacies 
receive a mark -up, does not change this conclusion, because "the pharmacy mark -up forms part  of the retail 
price of a pharmaceutical product and is set by law ." (Ibid. para. 32 .) See also Turkey 's second written 
submission, para. 94.  
360 Turkey 's second written submission, para. 13.  
361 Turkey 's second written submission, para. 88.  
362 Turkey 's second written submission, para. 90.  
363 Turkey 's second written submission, para. 26.  
364 Turkey 's second written submission, para. 90.  
365 Turkey 's second written submission, para. 91.  
366 Turkey 's second written submission, para. 91. Turkey also submits tha t "the fact that the price of 
pharmaceutical products includes a pharmacy mark -up does not show that pharmacies are regular 'profit -
seeking ' sellers ." (Turkey 's second written submission, para. 94). Turkey explains that the mark -up is paid by 
the SSI when it purchases medicines included in Annex 4/A from the pharmacies and "covers, among others, 
the prefinancing of the medicines provided by the pharmacies during the period between the moment they pay 
the wholesalers and the moment they receive payment from the SSI ." (Ibid. para. 94).  
367 Turkey 's second written submission, paras. 24 and 77.  
368 Turkey 's second written submission, paras. 24 and 78.  WT/DS583/12  
 
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  reached was that, for purposes of Article III:8(a), the "product purchased " by the governmental 
agencies through the relevant measures was electricity, and not also the electricity generation 
equipment subject to the  challenged domestic content requirement. On that basis, Article III:8(a) 
was found to be inapplicable to the domestic content requirements at issue, because the electricity 
generation equipment subject to those requirements was not a "product purchased " within the 
meaning of Article III:8(a).  
7.62.   In both disputes, the examination of the applicability of Article  III:8(a) to the measure at 
issue started, and ultimately ended, with an assessment of the nature of the "products purchased " 
within the meaning of Arti cle III:8(a), without any adopted findings as to whether the measure 
qualified as a "law, regulation or requirement governing … procurement ".369 The panel in India – 
Solar Cells  explained that the assessment of the nature of the "products purchased " was the  
"dispositive factor " of the Appellate Body 's analysis in Canada – Renewable Energy / Feed -In Tariff 
Program370 and characterized this question in terms of a "threshold matter of the applicability of 
Article  III:8(a) in respect of the 'products purchased '".371 That panel observed that  it was therefore 
unnecessary to make findings on the remaining elements of Article III:8(a) given that "the threshold 
legal elemen t" under this provision was not satisfied.372 The Appellate Body upheld the panel 's 
interpretation and application of the term "products purchased " in Article III:8(a), and made no 
findings on what it termed "the remaining elements " of Article III:8(a) (inc luding whether the 
challenged measure was a "law, regulation or requirement governing … procurement ").373 
7.63.   This dispute is distinguishable from Canada – Renewable Energy / Canada – Feed-in Tariff 
Program  and India – Solar Cells to the extent that, unlike the  two prior disputes, the products that 
are allegedly "purchased " for purposes of Article III:8(a) and the products that are allegedly being 
discriminated against for purposes of Article III:4 are the same, i.e. pharmaceutical products 
included in the Annex  4/A list.374 However, there are certain parallels between the arguments made 
in these disputes, and, like the panels in those two cases, t he Panel will start its assessment by 
focusing on the "products purchased" (if any) through the challenged measure, an d more specifically 
with the question whether the localisation requirement involves the " purchase " of pharmaceutical 
products included in the Annex 4/A list by governmental agencies.  
7.64.   Turkey advances three alternative lines of argument in support of its con tention that the 
localisation requirement involves the "purchase " of pharmaceutical products included in the Annex 
4/A list by governmental agencies. First, Turkey argues that the concept of a "purchase " under 
Article III:8(a) should not be interpreted narrowly, and that the SSI "purchases " pharmaceutical 
products by paying for them, even if it does not acquire an entitlement to (or property rights over) 
the products. Turkey argues that the SSI 's reimburs ement of the cost of outpatients ' 
pharmaceuticals involves a "purchase " because it is "the SSI that pays for the pharmaceutical 
products and thus is the ultimate buyer (or the purchaser) ".375 Second, Turkey argues that, even 
under an "extremely narrow "376 definition of what constitutes a "purchase " requiring the transfer of 
legal title over a product, which is an interpretation that Turkey disagrees with377, there is still a 
 
369 The panel in Canada – Renewable Energy / Feed -In Tariff Program  interpreted the terms 
"procurement " and "purcha se" to mean the same thing, and addressed them together in the context of finding 
that the challenged measure qualified as a "law, regulation, or requirement governing the procurement by 
governmental agencies of electricity ". The panel found that the procu rement and purchase of electricity was 
undertaken "with a view to commercial resale " and found Article III:8(a) inapplicable on that basis. On appeal, 
the Appellate Body stated that the terms "procurement " and "purchase " should not be given the same 
meaning, and clarified that the relevant question was whether electricity generation equipment (as distinct 
from electricity) was a product being "procured " or "purchased ". After finding that it was not, the Appellate 
Body end ed its analysis at that point.  
370 Panel Report, India – Solar Cells , para. 7.106.  
371 Panel Report, India – Solar Cells , para. 7.106.  
372 Panel Report, India – Solar Cells , para. 7.136.  In India – Solar Cells , the panel nonetheless 
considered it useful to proceed with a limited analysis and review of certain issues relating to the remaining 
elements of Article III:8(a), so that the Appellate Body could have the benefit of its factual findings related to 
these issues in case the Appellate Body were to modify  or reverse the Panel 's interpretation and application of 
the nature of the "products purchased ". (Panel Report, India – Solar Cells , paras. 7.136 -7.138. ) 
373 Appellate Body Report, India – Solar Cells , paras. 5.42 -5.44. 
374 Turkey 's response s to the first set of questions, para. 29; response s to the second set of questions, 
paras. 51 -53.  
375 Turkey 's first written submission, paras. 206 -208.  
376 Turkey 's first written submission, para. 205.  
377 Turkey 's first written submission, para. 206.  WT/DS583/12  
 
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  "purchase " by the SSI. This is because, as a matter of fact, t he SSI does acquire titl e to the 
pharmaceutical products at the moment a retail pharmacy scans a prescription 's QR code and the 
Medula system approves the provision of that pharmaceutical product  to the patient.378 Third, Turkey 
argues that, even if that is incorrect , Article III:8(a) still applies because the purchase of 
pharmaceutical products included in the Annex 4/A list by the retail pharmacies from the wholesalers 
is made on behalf of the SSI and this means t hat the retail pharmacies are themselves 
"governmental agencies " that "purchase " pharmaceuticals for purpose of Article III:8(a). The 
European Union disputes all of Turkey 's arguments.  
7.65.   In the light of the parties ' arguments, the Panel will first set forth its interpretation of the 
term "purchased " in the context of the phrase "products purchased by governmental agencies ". The 
Panel will then apply that legal standard to assess whether the localisation requirement involves a 
"purchase " by the SSI. The Panel will then assess Turkey 's argument that, even if the SSI itself does 
not "purchase " pharmaceutical products included in the Annex 4/A list, there is still a "purchase " 
covered by Article III:8(a) because pharmacies act on behalf of t he SSI, and to that extent, are 
themselves "governmental agencies " for purposes of Article III:8(a).  
7.2.4.2   Interpretation of the term "products purchased " in Article III:8(a)  
7.66.   The Panel observes that most cases of governmental procurement involve situations in wh ich 
a government obtains products for its own use or consumption, and do not give rise to any 
conceptual issues in terms of Article III:8(a). In the classical situation where a government obtains 
products for its own use or consumption, it will typically d o so pursuant to tendering procedures 
prescribed by domestic laws and regulations governing procurement; the government 's action of 
using or consuming the products itself will reflect rights of ownership of the product associated with 
a product "purchased " in the narrowest sense of the term; the purchase of a product by a 
government for its own use and consumption will fall within the narrowest concept of a product 
purchased "for a governmental purpose "; and when the government uses or consumes the product 
itself, it will by definition not be "with a view to commercial resale ". 
7.67.   However, the scope of the government procurement derogation in Article III:8(a) is not 
limited to the classical situation in which a government acquires products for its own use or 
consumption. The Appellate Body interpreted the term "governmental purposes " in Article III:8(a) 
as referring more generally to products "purchased for the needs of the government in the discharge 
of its functions "379, and clarified that the phrase "products purchased for governmental purposes " in 
Article III:8(a) covers not only what is consumed by the government itself, but also "what is provided 
by government to  recipients  in the discharge of its public functions ".380 In the present case, neither 
of the part ies, nor any of the third parties, has disagreed with this understanding of what may 
constitute a "governmental purpose ". 
7.68.   In those situations where a government pays for products that are ultimately used and 
consumed by non -governmental third parties, rath er than by the government itself, the applicability 
of Article III:8(a) may become less straightforward. Among other things, it may become more 
difficult in such situations to differentiate a payment constituting a "purchase " of products, which in 
principl e falls within the scope of the derogation in Article III:8(a), from other forms of payments 
which might be labelled as financing, reimbursement or funding, which in principle are not covered 
by Article III:8(a). The difficulty of conceptualizing what is m eant by a "product purchased ", and 
how to differentiate a purchase from other types of transactions, may be compounded where the 
end result of different types of arrangements is identical – i.e. the government pays for products 
that are ultimately used or consumed by third parties. In such situations, it becomes necessary to 
ensure that the application of Article III:8(a) is grounded in an objective legal standard and sound 
interpretation of the definition of the term "product purchased ". 
7.69.   The Panel has been  presented with opposing interpretations of the term "products purchased " 
in Article III:8(a). The European Union argues that the term "purchased " should be interpreted 
relatively narrowly, to mean a transaction which results in a government "acquiring property over "381 
products.  Turkey does not agree with the European Union that government procurement effectuated 
 
378 Turke y's second written submission, paras. 71 -73.  
379 Appellate Body Reports, Canada – Renewable Energy / Feed -In Tariff Program , para. 5.67. 
380 Appellate Body Reports, Canada – Renewable Energy / Feed -In Tariff Program , para. 5.68.  
381 European Union 's second wri tten submission, para. 100.  WT/DS583/12  
 
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  through means of a purchase under Ar ticle III:8(a) necessarily requires acquiring an "entitlement " 
to or "obtaining property rights over " the products.382 The Panel considers that, in accordance with 
Article 31(1) of the Vienna Convention on the Law of Treaties, it must resolve the meaning of  the 
term "product purchased " in accordance with "the ordinary meaning to be given to the terms of the 
treaty in their context and in the light of its object and purpose ". 
7.70.   Beginning with the ordinary meaning of the term "product purchased ", the Panel consi ders 
that in everyday usage a person or entity is said to purchase a product at the moment that the 
person or entity acquires ownership of a product through some kind of payment. Indeed, it is the 
acquisition of ownership over a product that constitutes th e defining characteristic of what it means 
to purchase a product, and it is what distinguishes purchasing a product from renting/leasing that 
product. If the word "purchase " is defined in more general and abstract terms as "the action or an 
act of obtainin g something in exchange for payment in money or an equivalent "383, then when what 
is being purchased is a product, the "something " that is obtained for purposes of that general and 
abstract definition is the ownership of (i.e. property rights over) the prod uct. 
7.71.   Turning to the immediate context of the term "purchase " in Article III:8(a), the Panel recalls 
that the Appellate Body clarified that the word "procurement " refers to "the process pursuant to 
which a government acquires  products "384, and that the word "purchased " in Article III:8(a) refers 
to "the type of transaction used to put into effect " that acquisition.385 Thus, the concept of "purchase " 
covers only a subset of the various types of transactions that can be used to put into effec t a 
"procurement ".386 Article I:2 of the GPA supports the Appellate Body 's understanding, as it refers to 
"procurement by any contractual means, including through such methods as purchase or as lease, 
rental or hire purchase, with or without an option to bu y". The Panel considers that interpreting the 
term "purchased " in accordance with its ordinary meaning, i.e. as covering only the type of 
transaction through which the government acquires ownership of the products, gives the term 
"purchase " a meaning that is distinct from the broader concept of "procurement " which may involve 
other types of transactions by which products might be procured (e.g. leasing) . As the European 
Union observes, the common element of these other contractual arrangements is that, "while they 
may lead to the acquisition of products (for example, in the case of rental, the acquirer takes 
possession and has the right to use the product for a certain period of time), they do not lead to the 
acquisition of property  over products. "387 
7.72.   The Panel considers that the term  "products purchased " must also be interpreted taking into 
account, as part of the immediate context, the additional requirement that, in order to fall within 
the scope of Article III:8(a), the products purchased must be "for a governmental purpose ". The 
Appellate Body clarified that the phrase "products purchased for governmental purposes " in Article 
III:8(a) "refers to what is consumed by the government or what is provided by government to 
recipients in the discharge of its pu blic functions ".388 The Panel considers that both of those actions 
– i.e. a government consuming a product that it has acquired, or providing a product that it has 
 
382 Turkey 's response s to the first set of questions, para. 31.  
383 Oxford  English Dictionary online, 
<https://www.oed.com/view/Entry/154831?rskey=07nKL5&result=1&isAdvanced=false#eid> . The Panel notes 
that the parties have presented it with alternative dictionary definitions of the word "purchase " to support their 
opposing interpretations. Consistent with its view that the acquisition of property over products is a defining 
characteris tic of a "purchase ", the European Union considers that the relevant dictionary definition is "[t]he 
acquisition of property (esp. land) by any legal means other than inheritance " (European Union's first written 
submission, para. 201) . In contrast, Turkey r efers to a dictionary definition of the term "purchase " that does 
not make reference to property, and defines the term more broadly as "the action or an act of obtaining 
something in exchange for payment in money or an equivalent ." (Turkey's first written submission, para. 207) . 
Both parties draw their definitions from the same source, i.e. the Oxford English Dictionary Online.  
384 Appellate Body Report, Canada – Renewable Energy / Canada – Feed-in Tariff Program , para. 5.59. 
(emphasis added)  
385 Appellate Bod y Report, Canada – Renewable Energy / Canada – Feed-in Tariff Program , para. 5.59.  
386 See para. 7.40 and fn 369 above.  
387 European Union 's first written submission, para. 202.  (emphasis original).  The Panel notes that the 
GATT panel in US – Sonar Mapping  stated, in the context of a similar provision in a predecessor version of the 
GPA in force at the time, that "[w]hereas ownership is not a necessary element of government procurement , 
as is clear from the various methods  of procurement mentioned in Articl e I:1(a), transfer of title to the 
Government is a strong indication that government procurement is involved ." (GATT Panel Report, US – Sonar 
Mapping , para. 4.10.) (emphasis added)  
388 Appellate Body Reports, Canada – Renewable Energy / Feed -In Tariff Progra m, para. 5.68. WT/DS583/12  
 
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  acquired to other recipients to be consumed by them – presuppose that the government acquires  
ownership of the product being consumed.  
7.73.   Turning to the Panel 's consideration of the object and purpose of the GATT 1994, the Panel 
notes that if situations in which a government pays for products used by non -governmental 
consumers are treated as "purchas es" by the government even though the government never 
acquires ownership over those products, simply on the basis that it is the government that "pays for 
the pharmaceutical products and thus is the ultimate buyer (or the purchaser) "389, then this would 
result in Article III:8(a) covering an open -ended range of protectionist measures. As the European 
Union observes, the range of governmental financing measures that might be covered under Article 
III:8(a) as "purchases " by a government agency  could , on the b asis of Turkey's interpretation of the 
term,  include coupons for food, subsidies for renovating real estate, and tax credits for 
environmentally friendly purchases.390 Recalling that Article III:8(a) is a limited derogation from the 
national treatment oblig ation in Article III, the Panel considers that such a result would undermine 
the object and purpose of the GATT 1994. The Panel understands that Turkey 's position is that the 
SSI does more than merely engage in "financing ", and that Turkey takes issue with  the European 
Union 's attempt to "reduce the role of the SSI to the mere financing of the purchases of 
pharmaceutical products by outpatients ".391 However, even assuming that Turkey is correct in 
asserting that the SSI does more than merely engage in financ ing, Turkey has not specified on what 
other basis, if not the acquisition of ownership, the concept of a "purchase " by a government could 
be distinguished from mere financing of private purchases in circumstances where the relevant 
products are provided to , and consumed by, non -governmental recipients.  In other words, while 
Turkey has identified a series of factual elements that, in its view, support the conclusion that the 
Turkish system falls within the scope of Article III:8(a)392, these elements do not specify an objective 
legal standard  for distinguishing the concept of a "purchase " by a government from mere financing 
of private purchases in circumstances where the relevant products are provided to, and consumed 
by, non -governmen tal recipients . 
7.74.    The foregoing analysis leads the Panel to conclude that, in the context of the phrase 
"procurement by governmental agencies of products purchased for governmental purposes " in 
Article III:8(a), a product is "purchased " by a government only  if the government acquires ownership 
of that product  through some kind of payment. The fact that SSI pays for the products is not 
sufficient: for a purchase to occur by the SSI, it would have to be established that the SSI acquires 
ownership of the produc ts. As elaborated in the next subsection, the Panel agrees with Turkey that 
the range of transactions through which a government may acquire ownership of products may vary, 
and the specific features of what constitutes ownership may vary depending on facto rs such as the 
nature of the good. However, the Panel considers that in all cases, if there is no acquisition of 
ownership of products by the government, then there is no "purchase " of products by the 
government and the measure at issue will not fall withi n the scope of the government procurement 
derogation in Article III:8(a). Thus, the Panel does not agree with Turkey 's argument that the SSI 
"pays for the pharmaceutical products and thus is the ultimate buyer (or the purchaser) ".393 
7.75.   The Panel considers tha t Turkey 's interpretation of the term "products purchased ", i.e. the 
SSI must be deemed to "purchase " pharmaceutical products because it pays for their cost, even if 
it does not acquire ownership of those products, is also inconsistent with the two prior d isputes in 
which Article III:8(a) was interpreted and applied. More specifically, in Canada – Renewable Energy 
/ Canada – Feed-in Tariff Program , the panel interpreted government "purchases " of goods "to mean 
 
389 Turkey 's first written submission, paras. 206 -208.  
390 European Union 's response s to the first set of questions, para. 8.  
391 Turkey 's second written submission, para. 23.  
392 In the context of its comments on the Interim Report, Turkey reitera ted that " the SSI ensures the 
provision of medicines to outpatients and makes all the necessary arrangements for this purpose: it decides 
which medicines are listed in Annex 4/A; it sets public prices of those medicines; it signs contracts with 
pharmacies for ensuring the availability and distribution of those medicines throughout the country; it approves 
the provision of the medicines to be dispensed to outpatients through the Medula system and pays the invoice 
it receives for those medicines from the phar macies. It is the combination of all the above elements that makes 
the Turkish system fall within the scope of Article III:8(a). Turkey further explained that a universal healthcare 
system in which public authorities control all aspects of the purchase and  provision of prescribed medicines to 
outpatients would generally fall within the scope of Article III:8(a), while this would not be the case for a 
system which is voluntary, does not have universal coverage and is financed through the contributions of the  
participants. " (Turkey's comments on the Interim Report, para. 28.)  
393 Turkey 's first written submission, paras. 206 -208.  WT/DS583/12  
 
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  the action by which a government obtains posses sion (including via obtaining an entitlement) over 
goods through some kind of payment (monetary or otherwise) ".394 Although the panel referred to 
the concept of possession, which might be understood to mean physical possession395, it made clear 
that it did not use the term in this sense, reasoning that "nothing in the ordinary meanings we have 
reviewed suggests that a 'purchase ' must involve obtaining physical  possession over something ".396 
Instead, the panel used the expression "possession over goods " to refer to the rights acquired by 
the government in respect of electricity sold by the generators, namely the right to receive, distribute 
and charge for electricity passing through the transmission system. These appear to be rights of 
ownership associated with electricity, a product that cannot be stored and that is generated and 
consumed almost instantaneously. Indeed, t he panel concluded that "given the specific 
characteristics of electricity, it is perhaps best to conceive of a purchase of electricity as involving 
the transfer of an entitlement  to electricity, rather than the taking of physical possession over 
electrici ty".397 
7.76.   In India – Solar Cells , the governmental agencies in question purchased electricity from 
generators, and India accepted that those agencies did not "purchase " or "directly acquire " the solar 
cells and modules used to generate the electricity, which were the subject of the domestic content 
requirements at issue. India accepted that this was so because the agencies did not "take title or 
custody " of the electricity generation equipment.398 India nonetheless sought to argue that it was 
"effectively procu ring" solar cells and modules for purposes of Article III:8(a), because the electricity 
generation equipment constituted "integral inputs for the generation system "399 and thus "cannot 
be treated as distinct from solar power "400, and because "the tariff for the power purchased under 
the [power purchase agreements] incorporated within it the cost for the solar cells and modules ".401 
However, the panel and the Appellate Body in that dispute were not persuaded by those arguments 
and concluded that the only produc t being "purchased " was electricity.  
7.77.   Thus, in both of these disputes, the conclusion reached was that, for purposes of Article 
III:8(a), the "product purchased " by the governmental agencies through the relevant measures was 
only electricity, and not also the electricity generation equipment subject to the challenged domestic 
content requirement. This conclusion was reached even though, in  both cases, the relevant  
governmental agencies paid the electricity generators a price that covered the cost of the equipment 
used in generating the electricity that the governments purchased.  However, the governmental 
agencies involved in purchasing electricity acquired ownershi p of electricity, but did not acquire 
ownership of the electricity generation equipment (e.g. solar cells) that was the subject of the 
domestic content requirement at issue.  
7.78.   In this dispute, Turkey explains that in the past, the SSI itself obtained the pha rmaceutical 
products from the wholesalers and dispensed them to patients through pharmacies run by the SSI.402 
Turkey explains that because that system was not very efficient, it was changed, with the 
 
394 Panel Report, Canada – Renewable Energy / Canada – Feed-in Tariff Program , para. 7.136.  
395 The Panel notes that the term "possession " is susceptible to several different meanings and 
depending on the context may be used interchangeably with "ownership ". For example, the Oxford English 
Dictionary Online defines "possess " as "[t]o own, to have or gain ownership of; to have (wealth or mate rial 
objects) as one 's own; to hold as property. " In the US – Sonar Mapping case, the panel appeared to use the 
terms "possession " and "ownership " interchangeably. Specifically, the panel stated that while not intending to 
offer a definition of government procurement within the meaning of Article I:1(a), it enumerated several 
factors that should be considered on the facts of any case, including what it termed "government possession " 
(GATT Panel Report, US – Sonar Mapping , para . 4.7). In the context of elabo rating on the facts of the case, the 
panel stated, apparently in relation to that enumerated factor, that the relevant governmental agency would 
"take title to the sonar mapping system as of the time of its delivery " and made the observation that 
"[w]herea s ownership is not a necessary element of government procurement, as is clear from the various 
methods of procurement mentioned in Article I:1(a), transfer of title to the Government is a strong indication 
that government procurement is involved " (para. 4. 10). In summing up its assessment of the factors it had 
considered, the panel again referred to the government 's "ownership " of the sonar mapping system . (Ibid. 
para. 4.13).  
396 Panel Report, Canada – Renewable Energy / Canada – Feed-in Tariff Program , para . 7.228. 
(emphasis original)  
397 Panel Report s, Canada – Renewable Energy / Canada – Feed-in Tariff Program , para. 7.229. 
(emphasis original)  
398 Panel Report, India – Solar Cells , para. 7.114.  
399 Panel Report, India – Solar Cells , paras. 7.109 and 7.114.  
400 Panel Report, India – Solar Cells , para. 7.128.  
401 Panel Report, India – Solar Cells , para. 7.129.  
402 Turkey 's second written submission, paras. 65 -68. WT/DS583/12  
 
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  introduction of the Transformation in Health Program in 2003, to a system whereby pharmaceutical 
products are dispensed through retail pharmacies. Turkey understands that the European Union 
would consider the practice before this reform as amounting to government procurement and in that 
sense would agree that t he practice falls under Article III:8(a) just because the pharmaceutical 
products were dispensed by the state -owned pharmacies directly to patients. However, according to 
Turkey, "the essence of the system after the reform remains unchanged, the only diffe rence being 
that part of the tasks previously carried out by the SSI has now been delegated to the retail 
pharmacies ", and therefore Turkey submits that the European Union 's interpretation of 
Article  III:8(a) is "overly formalistic and puts form before sub stance ".403 
7.79.   The Panel is not persuaded by Turkey's argument. First, the Panel notes that Turkey's 
argument is formulated in terms that imply that the European Union is arguing that Article III:8(a) 
only applies where a government acquires "physical possessi on" of the products purchased.404 
However, the Panel does not understand the European Union's interpretation of Article III:8(a) to 
be that "physical possession" of goods is a constitutive element of a "purchase". Rather, the Panel 
understands the European Union's interpretation of Article III:8(a) to be essentially the same 
interpretation as the one elaborated by the Panel in its reasoning above, namely, that a product is 
"purchased" by a government only if the government acquires ownership of the product t hrough 
some kind of payment. Thus, Turkey's argument appears to conflate the notion of acquisition of 
ownership over a good and the notion of having physical possession of that good. Second, insofar 
as Turkey's argument is that treating the acquisition of ownership over a good as a constitutive 
element of the concept of a "purchase" of that good is overly formalistic, then the Panel disagrees.  
The Panel does not consider it formalistic to interpret Article III:8(a) as being, in principle, applicable 
to situ ations in which a governmental agency (e.g. state -owned pharmacy and/or hospital) 
purchases pharmaceutical products and then provides them directly to patients, and as being, in 
principle, not applicable to other situations where the government pays for th e cost of the 
pharmaceutical products consumed by patients without ever acquiring ownership over these 
products.405 
7.80.   The Panel observes that an analogous argument was made by the responding party in 
India - Solar Cells , and that it did not persuade the panel  or the Appellate Body. In that case, India 
argued that under the relatively narrow interpretation of Article III:8(a) advocated by the 
complaining party, and ultimately adopted by the panel and the Appellate Body, there would be an 
arbitrary result. Speci fically, the result would be that Article III:8(a) would in principle apply only if 
the government itself purchased solar cells and then provided them to private solar power developers 
(SPDs) (or the government itself generated the electricity from them wi thout involving SPDs), but 
that Article  III:8(a) would in principle not apply if the government paid for their cost (i.e. the tariff 
for the power purchased from SPDs incorporated within it the cost for the solar cells and modules 
they were required to use ) without acquiring ownership. In India 's view, both situations involved the 
relevant governmental agency "effectively procuring " solar cells and modules for purposes of 
Article  III:8(a). India considered that it could not have been the intent of the drafters of 
Article  III:8(a) to treat these situations differently. However, neither  the panel nor the Appellate 
Body was persuaded by India 's argument, and evidently did not consider the distinction drawn to be 
formalistic.406 
7.81.   Based on th e foregoing, the Panel concludes that, in the context of the phrase "procurement 
by governmental agencies of products purchased for governmental purposes " in Article III:8(a), a 
product is "purchased " by a government if the government acquires ownership of  that product 
through some kind of payment. The Panel considers that the broader interpretation of the term 
"products purchased " advanced by Turkey, i.e. that the SSI "pays for the pharmaceutical products 
and thus is the ultimate buyer (or the purchaser) "407 regardless of whether the SSI ever acquires 
ownership over those products, is difficult to reconcile with the ordinary meaning of the term 
"purchased ", the immediate context afforded by the other cumulative elements of Article III:8(a), 
 
403 Turkey 's opening statement, para. 69.  
404 See Turkey 's second written submission, paras. 63 -64. 
405 See Tu rkey's second written submission, para. 42.  
406 See Panel Report, India – Solar Cells , paras. 7.130 -7.133; Appellate Body Report, India – Solar Cells , 
paras. 5.33 -5.34. 
407 Turkey 's first written submission, paras. 206 -208.  WT/DS583/12  
 
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  the object and pu rpose of the GATT 1994, and the Appellate Body 's findings in Canada – Renewable 
Energy / Canada – Feed-in Tariff Program  and India – Solar Cells . 
7.2.4.3   Whether the SSI purchases pharmaceutical products from retail pharmacies  
7.82.   Having concluded that a product is a "product purchased " by a government only if the 
government acquires ownership of that product, the Panel will now apply this legal standard to 
assess whether Turkey 's pharmaceutical reimbursement system involves a "purchase " by the SSI. 
The Panel recalls t hat Turkey 's second argument  which rests on an alternative interpretation of the 
term "products purchased" in Article III:8(a), is that even under the "extremely narrow "408 definition 
of what constitutes a "purchase " that it disagrees with409, i.e. a transaction requiring the transfer of 
legal title over a product, there is still a "purchase " by the SSI because, as a matter of fact, t he SSI 
does acquire title to pharmaceutical products at the moment a retail pharmacy s cans a prescription 's 
QR code and the Medula system approves the provision of that pharmaceutical product to the 
patient.  Thus, the Panel must assess whether the SSI acquires ownership of pharmaceutical products 
included in the Annex 4/A list, whether at t he moment of approval in the Medula system or otherwise.  
7.83.   The Panel accepts that the range of transactions through which a government may acquire 
ownership of products may vary, and that the specific features of what constitutes ownership may 
vary depending  on factors such as the nature of the good. As elaborated above in the context of 
interpreting the term "purchase ", the Panel does not consider physical possession of goods to be a 
constitutive element of a purchase. In this connection, the Panel agrees wi th both parties that the 
Canada – Renewable Energy / Canada – Feed-in Tariff Program  panel 's approach to the example of 
electricity – a product that generally cannot be stored in large quantities, and which in the context 
of delivery by public utilities th rough the electricity grid is generated and consumed almost 
instantaneously – is instructive. That panel stated that "given the specific characteristics of 
electricity, it is perhaps best to conceive of a purchase of electricity as involving the transfer o f an 
entitlement  to electricity, rather than the taking of physical possession over electricity "410 and found 
that there was such a transfer of an "entitlement " to electricity on the basis that the governmental 
agencies in question acquired certain legal ri ghts in respect of the products, including the right to 
receive, distribute and charge for (i.e. resell) electricity passing through the transmission system.  
7.84.   Thus, in assessing whether the SSI acquires ownership of pharmaceutical products included 
in the A nnex 4/A list, the Panel has sought to determine whether the SSI acquires any legal rights 
over the products of the type typically associated with ownership of goods. The Panel has also taken 
into account the kinds of legal rights over pharmaceutical produ cts that are acquired by other entities 
that undisputedly acquire ownership over those products in the context of the Turkish system. These 
other entities include private pharmacies that acquire ownership of pharmaceutical products  when 
they purchase them from wholesalers, and the final consumers (i.e. outpatients) that acquire 
ownership of pharmaceutical products  when they obtain them from pharmacies. The Panel observes 
that it is undisputed between the parties that pharmacies acquire ownership of medicine s when 
obtaining them from wholesalers, and that the final consumers (i.e. outpatients) subsequently 
acquire ownership of pharmaceutical products  when obtaining them from retail pharmacies.411 
7.85.   The Panel is unable to discern any basis upon which it could conclude that the SSI acquires 
any legal rights over the pharmaceutical products  it pays for, let alone that it acquires the types of 
legal rights that are typically associated with ownership of goods. Generally, there is nothing in the 
parties ' description of Turkey 's pharmaceutical reimbursement system to suggest that the SSI 
 
408 Turkey 's first written submission , para. 205.  
409 Turkey 's first written submission, para. 206.  
410 Panel Report s, Canada – Renewable Energy / Canada – Feed-in Tariff Program , para. 7.229. 
(emphasis original)  
411 The point of disagreement between the parties is whether the SSI acquires intervening ownership of 
the product. The European Union argues that the pharmacy retains ownership and control of their stock, once 
purchased from wholesalers, until they are sold to patients, and that when sold to patients, there is "no doubt 
that patients obtain those products (including property over them) ". (European Union 's second written 
submission, paras. 106 -107.) Turkey argues that the pharmacy retains ownership and control  of their stock, 
once purchased from wholesalers, and that the SSI acquires the title to medicines listed in Annex 4/A and 
prescribed to patients at the moment the provision of such medicines is registered and approved in the Medula 
system and that, at tha t moment, the SSI acquires the right to dispose of those medicines by dispensing them, 
through the retail pharmacies, to patients, and "the title to those medicines is then immediately transferred to 
patients because the patients have the legal right to th ose medicines ." (Turkey 's closing statement, para. 23 .) WT/DS583/12  
 
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  acquires any right of possession, any right of control, any right of exclusion, any right to derive 
income, or any right to freely dispose of the pharmaceutical products that it acquires.  
7.86.   As an example of the kinds of legal rights typically associated with ownership of goods that 
the SSI does not acquire, the Panel notes that it is undisputed that SSI does not ever acquire t he 
right to take physical possession of the pharmaceutical products that it pays for. For reasons already 
given, the Panel does not consider taking physical possession of goods to be a constitutive element 
of a "purchase". However, while a purchaser need n ot necessarily exercise the right to take physical 
possession of the purchased goods for the transaction to be considered a purchase, the absence of 
any such right to take physical possession of the goods is a strong indicator that the entity paying 
for th ese goods has not acquired any right of ownership over them . This is especially so when the 
goods in question are in the nature of goods that can freely be transported and stored, such as 
pharmaceutical products.412 The absence of any right for the SSI to t ake physical possession of the 
products it pays for stands in marked contrast to the rights  of ownership acquired by retail 
pharmacies when purchasing pharmaceutical products from warehouses, and the rights  of ownership 
acquired by outpatients when receiving those products from the retail pharmacies. In both cases, 
these purchasing entities acqu ire, and exercise, the r ight to take physical possession of the products 
in question.  
7.87.   In addition, the Panel finds no basis to support Turkey 's assertion that the SSI obtains the 
right to dispose of the pharmaceutical products that it pays for according to  its own choices. Based 
on the parties ' description of the process, it seems undisputed that, following approval in the Medula 
system, the pharmaceutical product in question must be provided to the individual consumer (i.e. 
outpatient) named in the prescri ption. According to the parties ' description of the process, all 
relevant decisions and choices associated with the disposition of pharmaceutical products are made 
by the prescribing doctor, the pharmacy, and the ultimate consumer (i.e. the outpatient). Th e Panel 
is unable to discern any SSI involvement in choosing who receives and consumes any of the 
pharmaceutical products that the SSI pays for. Put differently, all of the pharmaceutical products 
paid for by the SSI would be disposed of in exactly the sam e manner in a counterfactual scenario in 
which the SSI did not pay for all or part of the cost of those products. Neither the SSI nor any other 
governmental agency plays any role in directing, or redirecting, pharmaceutical products to 
recipients of their choosing.  
7.88.   The Panel is not persuaded by Turkey 's argument, in this connection, that the SSI can be 
deemed to acquire title to pharmaceutical products included in the Annex 4/A list and prescribed to 
patients at the moment the provision of such pharmaceutic al products is registered and approved in 
the Medula system. Approval through the Medula system is essentially a confirmation that the patient 
is within SSI coverage and that the prescribed pharmaceutical products are on the Annex 4/A list. 
That approval c onfirms, among other things, that the pharmaceutical product  may be invoiced by 
the pharmacy to the SSI at the previously set price.413 In the Panel 's view, it would require an 
artificial and strained construction of the facts to characterize this confirmat ion as a transaction 
through which "the SSI acquires the right to dispose of those medicines by dispensing them, through 
the retail pharmacies, to patients ", and "the title to those medicines is then immediately transferred 
to patients because the patients  have the legal right to those medicines. "414 If that characterization 
of the facts in this case were accepted, then almost any measure through which the government 
(provisionally) approves the payment of the cost of a product could also be so characterized . In 
addition, the Panel observes that Turkey has not directed the Panel to any reference to the SSI 
 
412 The Panel considers that p harmaceutical products  are in the nature of goods that can freely be 
transported and stored in the sense that there are no physical, logistical or practical limitations on their 
transportation and storage of the type that may be encountered in the case of certain other types of goods – 
for instance, electricity. Of course, pharmaceutical products cannot be freely transported and stored in the 
sense of being unregulated produ cts that can be freely bought and sold by anyone , and there are a range of 
legal and regulatory limitations on how they are transported and stored. As Turkey observes "[t]heir 
production and placing on the market are strictly regulated and their consumptio n is subject to the prescription 
by medical doctors. Their provision requires specific conditions and must be carried out by trained 
professionals, i.e. pharmacists. Medicines cannot be freely bought by consumers and cannot be treated as 
such." (Turkey's s econd written submission, para. 5.)  
413 See Turkey 's response s to the first set of questions, para. 26; European Union 's response s to the 
first set of questions, paras. 10 -22, opening statement para. 24.  
414 Turkey 's second written submission, para. 73; response s to the first set of questions, paras. 32 -34; 
closing statement, para. 23; and response s to the second set of questions, para. 43.  WT/DS583/12  
 
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  acquiring "title" to pharmaceutical products in the Protocol signed between the SSI and the Turkish 
Pharmacists Association  or to any other evidence on rec ord.415 
7.89.   The Panel notes that none of the third parties that took a position on the applicability of 
Article  III:8(a) to the localisation requirement consider that the SSI acquires ownership of 
pharmaceutical products. Canada notes that in the case of a phar maceutical reimbursement system 
like the one in Turkey, the "governmental agency " does not "purchase " the pharmaceutical products 
because it does not "obtain any form of 'property rights ' over the pharmaceutical products ".416 Japan , 
likewise , notes that the  SSI "cannot be the purchaser for purposes of Article III:8(a) because it 
never gains an entitlement to the products ", in contrast to the pharmacies that acquire an 
"entitlement to the products, including the authority to store, ship, or sell the product ".417 
Switzerland observes that it would be difficult to consider that there is "procurement by 
governmental agencies " or "purchase of products " within the meaning of Article III:8(a) "where 
private entities have ownership of the products " and "control their disposition " (and, Switzerland 
continues, where they have the right to cancel contracts with wholesalers, bear the risks of unsold 
inventories and other commercial risks, do not go through tendering processes to acquire the 
products, or are not perce ived to be government agencies by wholesalers).418 
7.90.   Based on the foregoing, the Panel concludes that the SSI does not acquire ownership of 
pharmaceutical products included in the Annex 4/A list and therefore the SSI 's reimbursement of 
part or all of the cost  of those products does not qualify as a "purchase " by the SSI in the context 
of the phrase "procurement by governmental agencies of products purchased for governmental 
purposes " in Article III:8(a).  
7.91.   As indicat ed in the descriptive part of the Report419, the parties use different terminology, at 
times supported by alternative translations of relevant Turkish instruments and documents, to 
characterize what happens  in transactions between retail pharmacies, outpatients, and the SSI. For 
the European Union, the  SSI "reimburses" retail pharmacies for medicines "sold to" "consumers", 
pursuant to the Protocol that, under its translation, refers to pharmaceutical products  being 
"procured by" those consumers.  For Turkey, the pharmaceutical products are "paid for " (not 
"reimbursed ") by the SSI, the retail pharmacies "dispense " or "provide " (and do not "sell") those 
medicines to "outpatients " (not "consumers "), and the correct translation of the Protocol refers to 
medicines being "provided to ", as opposed to being "procured by ", outpatients. In the light of the 
parties ' disagreement over the correct translation of certain terms used in Turkish instruments and 
documents, and their wider disagreements over terminology, the Panel wishes to clarify that its 
conclusion and re asoning above are not based on semantic considerations. The Panel 's conclusion 
and reasoning are instead grounded in an objective legal standard.  
7.2.4.4   Pharmacies ' purchases of pharmaceuticals from wholesalers  
7.92.   The Panel has concluded that the SSI 's payment of part or all of the cost of pharmaceutical 
products does not qualify as a "purchase " by the SSI. The Panel will now assess Turkey 's alternative 
argument that, even if the SSI does not itself "purchase " pharmaceutical products included in the 
Annex 4/A list, there is still a "purchase " covered by Article III:8(a) because private retail pharmacies 
act on behalf of the SSI, and are, to that extent, themselves "governmental agencies " for purposes 
of Article III:8(a).  
7.93.   The Panel notes at the outset th at this alternative argument, i.e. that Article III:8(a) applies 
to the localisation requirement because private retail pharmacies are themselves "governmental 
agencies ", has been unfolded in the course of the proceedings in a manner that is less than clea r 
and remains somewhat ambiguous. First, Turkey argues that "the procurement is done by a 
governmental agency, namely the SSI "420, and Turkey "confirms that the relevant governmental 
 
415 The Panel considers the lack of such a characterization to be a relevant supplementary consideration, 
bearing in m ind that the label or characterization given to a transaction under domestic law cannot be 
dispositive of the proper characterization under Article III:8(a). (See Appellate Body Report s, Canada – 
Renewable Energy / Canada – Feed-in Tariff Program , para. 5. 127.) 
416 Canada 's responses to the Panel 's questions to third parties, para. 4.  
417 Japan 's responses to the Panel 's questions to third parties, para. 6.  
418 Switzerland 's response s to the Panel 's questions to third parties, para. 7.  
419 See section 1.5 and foot notes 36 and 56. 
420 Turkey 's opening statement, para. 28.  WT/DS583/12  
 
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  agency is the SSI ".421 In its written submissions, Turkey argued that the r etail pharmacies "act on 
behalf " of the SSI in dispensing the pharmaceutical products approved and paid for by the SSI to 
outpatients.  The Panel understood from Turkey 's written submissions that Turkey was arguing that 
the SSI purchases pharmaceutical prod ucts from pharmacies, and that the pharmacies "act on 
behalf " of the SSI insofar as they perform the service of dispensing pharmaceutical products  included 
in the Annex 4/A list to outpatients. The Panel has addressed this argument in the previous sub -
section. 
7.94.   However, in its responses to the first set of questions from the Panel, Turkey stated, in a 
footnote, that "[i]n any event, even if the transaction between the SSI and the retail pharmacies 
would not be qualified as a 'purchase ' (quod non ), it is clea r that the retail pharmacies purchase 
medicines included in Annex 4/A from the wholesalers acting on behalf of the SSI. "422 In response 
to the Panel 's second set of questions, Turkey clarified that its alternative argument in this 
connection is that private  retail pharmacies are themselves "governmental agencies " for the 
purposes of Article III:8(a), because they act on behalf of the SSI when purchasing medicines from 
wholesalers.423 Turkey explained that its "argument relating to the purchase of medicines included 
in Annex 4/A and dispensed to patients by the SSI is two -fold. In the first place, Turkey argues that 
the SSI purchases those pharmaceutical products from the retail pharmacies which are charged with 
dispensing those medicines to patient s. Should the Panel find that the SSI does not purchase 
medicines from the retail pharmacies, Turkey submits that Article III:8(a) applies in the present 
case also because the purchase of medicines included in Annex 4/A by the retail pharmacies from 
the wh olesalers is made on behalf of the SSI. "424 
7.95.   In its comments on Turkey 's response, the European Union states that Turkey "seems to 
propose a novel theory of why Article III:8(a) should apply ", and observes that "[u]nder that theory, 
it would be wholesale pur chases of pharmaceutical products, and not their government -financed 
supply to out -patients, that would constitute 'government procurement ' protected by 
Article  III:8(a). "425 
7.96.   The Panel agrees with Turkey that the terms of Article III:8(a) do not necessarily  preclude a 
governmental agency from purchasing products through an "intermediary ".426 However, the Panel 
considers that, to fall within the scope of Article III:8(a), a governmental purchase effected through 
an intermediary, and/or through the combined act ions of several entities427, must be conducted in 
a way that leads to the government acquiring ownership of the product purchased. In a situation in 
which a purchasing entity is an organ of the State (whether legislative, executive, or judicial), its 
acquisition of ownership over pr oducts entails that the government has acquired ownership over 
those products. Likewise, in the case of purchases made by a publicly owned and controlled entity , 
 
421 Turkey 's response s to the second set of questions, para. 46.  
422 Turkey 's response s to the first set of questions, f n 36. 
423 Turkey 's response s to the second set of questions, paras. 47 -49. 
424 Turkey 's response s to the second set of questions, para. 44.  
425 European Unio n's comments on response s to the second set of questions, para. 39.  
426 Turkey 's first written submission, para. 209.  
427 The Panel considers that where a government acts through several entities that  are each/all 
"governmental agencies ", then responsibilities  may be allocated in a manner that necessitates an assessment 
of whether their "combined actions " establish the requisite elements of a governmental purchase.  In Canada – 
Renewable Energy / Canada – Feed-in Tariff Program , one government entity (the OPA) m ade the payments 
for electricity, while a different government entity (Hydro One) received and transmitted electricity delivered 
by suppliers. This led Japan to argue that the OPA served as a mere financing entity, not a purchasing entity, 
because the OPA itself never took possession of electricity. However, neither the panel nor the Appellate Body 
considered that the allocation of responsibilities between different governmental  entities undermined the 
conclusion that the Government of Ontario "purchased " electricity, because all of the entities involved were 
governmental  entities. More specifically, the Appellate Body reasoned that "[s]ince in the present case all the 
entities involved are public bodies and thus their activities are attributable to the gove rnment, it is not relevant 
whether the Government of Ontario acts through one or several of these entities ." Consequently, the Appellate 
Body considered that the fact that "the OPA itself does not take possession over electricity does not undermine 
the Pan el's finding that the Government of Ontario purchases electricity through the FIT Programme and 
Contracts … because Hydro One, which is the entity transmitting electricity, was also found to be a public body, 
and the Panel found that the "combined actions " of the OPA, Hydro One, and the IESO demonstrate that the 
Government of Ontario purchases electricity ." (Appellate Body Report s, Canada – Renewable Energy / Canada 
– Feed-in Tariff Program , para. 5.124 .) The panel and the Appellate Body 's analysis of that issue was made in 
the context of interpreting and applying Article 1.1(a)(1)(iii) of the SCM Agreement, but the panel considered 
that its findings under Article 1.1(a)(1)(iii) applied equally to Article III:8(a ). (See Panel  Report s, Canada – 
Renewa ble Energy / Canada – Feed-in Tariff Program , para. 7.136). ) WT/DS583/12  
 
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  the government 's ownership of the purchasing entity may entail the government also acquiring 
ownership over any products purchased by that publicly owned and controlled entity. A government 
may also enter into transactions through a private, arms -length third party entity that involve 
purchasing products and, insofar as the relevant transactions ar e structured and organized in a 
manner that results in the government acquiring ownership, that entity may well qualify as a 
"governmental agency " for purposes of Article III:8(a). What is relevant in each of these cases is 
that the entity 's purchases enta il, or result in, government ownership over the products in question.  
7.97.   To find otherwise would lead to the conclusion that Article III:8(a) would apply to purchases 
made by non -governmental, private entities despite the government never acquiring ownership over 
the products. This would entirely negate the limitation in Article III:8(a) that a product is "purchased " 
by a government if the government acquires ownership of it. For the reasons already given, this 
limitation is grounded in the provision 's ordinar y meaning and context, and in the object and purpose 
of the GATT 1994. The concept of a "governmental agency " cannot be interpreted in a manner that 
is divorced from the fact that Article III:8(a) is limited to the acquisition of products, through 
procurem ent and "purchase " by the government.  
7.98.   It is not necessary for the Panel to elaborate further in the abstract on the types of entities 
that may constitute "governmental agencies " in the context of Article III:8(a), because in the 
circumstances of this case,  it is clear that the pharmacies ' purchases of pharmaceutical products 
from wholesalers do not entail, or result in, the acquisition of ownership over those products by the 
SSI. In this case, the Panel has concluded that the SSI does not acquire ownership of pharmaceutical 
products included in the Annex 4/A list and therefore, the SSI 's reimbursements of part or all of the 
cost of those products do not qualify as a "purchase " by the SSI. Rather, the private pharmacies 
acquire ownership of pharmaceutical pro ducts from wholesalers and retain ownership until it is 
transferred to the final consumers (i.e. outpatients). Accordingly, this suffices to establish that 
private pharmacies do not qualify as "governmental agencies " under Article III:8(a).  
7.99.   The parties hav e engaged in extensive arguments about the extent to which the SSI controls 
the actions of the retail pharmacies. Turkey essentially argues that the SSI controls all the elements 
concerning the acquisition and distribution of pharmaceutical products includ ed in the Annex 4/A 
list, starting with deciding which pharmaceutical products are listed in the Annex 4/A list, the price 
of those products at each stage of the supply chain, including the "public price " charged to the SSI, 
and how they are dispensed to p atients. The European Union disagrees, arguing that retail 
pharmacies freely order and purchase their pharmaceutical products from wholesalers (also private 
entities) through a private sales contract, hold and manage their inventory on their own (including  
holding property rights over it), and bear the risks associated with their stock, with no SSI 
involvement. The parties engage in these arguments in relation to the question whether it is correct 
to say that the pharmacies "act on behalf " of the SSI.   
7.100.   In the Panel 's view, these disputed issues do not relate to the question whether the 
pharmacies ' purchases from wholesalers entail or result in the SSI acquiring ownership over those 
products, and therefore are not directly relevant. Even if the Panel were to  accept Turkey's assertion  
that the SSI controls all the elements concerning the acquisition of pharmaceutical products included 
in the Annex 4/A list, to such an extent that it could be said that the SSI instructs and directs 
pharmacies what to do, this w ould not make pharmacies "governmental agencies " for the purposes 
of Article III:8(a), or transform their purchases into purchases by the government, so long as the 
pharmacies acquire ownership over pharmaceutical products independently of the government.  
7.101.   To find otherwise would imply that if private parties are instructed or directed by a 
government to purchase certain products, the act of instruction or direction would make those 
private parties "governmental agencies " with the result that their purchases  would then be covered 
by Article III:8(a). If that were correct, then it would follow that all domestic content requirements 
imposed by governments on private entities would fall within the scope of Article III:8(a) because 
the measure imposing the requir ement – be it a general law, regulation or requirement, or an 
individual contractual arrangement – would have the effect of turning those entities into 
"governmental agencies " for purposes of Article III:8(a).  
7.102.   Indeed, if it were correct to reason that a pr ivate entity should be deemed to be a 
"governmental agency " whenever it is instructed or directed by the government to purchase certain 
products, then it would follow, by way of illustrative example, that private electricity generators 
subjected to certain  domestic content requirements on generation equipment were themselves WT/DS583/12  
 
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  "governmental agencies " acting on behalf of the government. This would, of course, stand in direct 
contradiction to what the panels and Appellate Body found in previous cases under Arti cle III:8(a). 
In India – Solar Cells , the measures expressly stipulated the origin of the goods that were to be 
used by SPDs wishing to bid to sell electricity to the government428; the measures were then 
implemented by means of power purchase agreements (P PAs) and the "specific plan " that SPDs had 
to submit within 180 days after entering into the PPA, specifying how they would meet the domestic 
content requirements429; SPDs entering into a PPA thus became legally bound, by contract, to fulfil 
the obligation of using certain solar cells and modules manufactured in India430; and the tariff for 
the power purchased under the PPAs incorporated within it the cost for the solar cells and modules.431 
This did not make SPDs governmental agencies.  
7.103.   Based on the foregoing, and recalling the Panel 's conclusion that the SSI never acquires 
ownership over the pharmaceutical products that it pays for, the Panel concludes that the private 
retail pharmacies that do acquire and retain ownership over those pharmaceutical p roducts until 
they are dispensed  to the final consumer (i.e. outpatients) , do not qualify as "governmental 
agencies " in the context of the phrase "procurement by governmental agencies of products 
purchased for governmental purposes " in Article III:8(a).  
7.2.4.5   Remaining elements under Article III:8(a)  
7.104.   The Panel has found that the localisation requirement does not involve the "purchase " of 
pharmaceutical products included in the Annex 4/A list by governmental agencies. Accordingly, the 
localisation requirement is n ot covered by the government procurement derogation of 
Article  III:8(a). This is a threshold legal element that must be satisfied for a measure to be covered 
by the derogation in Article III:8(a), and the localisation requirement fails to meet this thresho ld. 
Accordingly, it is not necessary for the Panel to conduct any further assessment of the remaining 
legal elements of Article III:8(a) to determine the applicability of this derogation.  
7.105.   In India – Solar Cells , the panel considered it useful to proceed wi th a limited analysis and 
review of certain issues relating to the remaining elements of Article III:8(a), including the 
requirements that: (i) the measures in question are "laws, regulations or requirements governing … 
procurement "; (ii) the procurement i s "by governmental agencies "; (iii) the procurement is of 
products purchased "for governmental purposes "; and (iv) the products purchased are not procured 
"with a view to commercial resale or with a view to use in the production of goods for commercial 
sale".432 That panel's reason for doing so was to ensure that the Appellate Body could have the 
benefit of its factual findings related to these issues in case the Appellate Body were to modify or 
reverse the Panel 's interpretation and application of the natur e of the "products purchased ".433 The 
panel followed a similar approach in respect of certain other issues in that dispute, and made certain 
additional findings beyond those strictly necessary to resolve the claims under Article 2.1 of the 
TRIMs Agreement a nd Article III:4 of the GATT 1994434, and to resolve the defences under 
Articles  XX(j) and (d) of the GATT 1994.435  
7.106.   In the circumstances of this dispute436, the Panel sees no compelling reason to make 
additional findings or observations beyond those necessar y to resolve the claims and defences at 
issue. Accordingly, the Panel makes no  findings on the disputed issues that arise in respect of the 
remaining elements under Article III:8(a).  
 
428 Panel Report, India – Solar Cells , para. 7.63. 
429 Panel Report, India – Solar Cells , para. 7.27. 
430 Panel Report, India – Solar Cells , paras  7.85 and 7.88.  
431 Panel Report, India – Solar Cells , para. 7.129.  
432 Panel Report, India – Solar Cells , paras. 7.136 -7.186.  
433 Panel Report, India – Solar Cells , paras. 7.136 -7.138.  
434 Panel Report, India – Solar Cells , paras. 7.74 -7.98. 
435 Panel Report, India – Solar Cells , paras. 7.334 -7.382.  
436 The Panel notes that the work of the Appellate Body has been suspended for nearly two years and 
that Members remain unable to reach consensus on any selection process to fill the vacancies that are required 
for the Appellate Body to function.  WT/DS583/12  
 
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  7.2.5   Conclusion  
7.107.   The Panel concludes that the localisation requirement is not c overed by the government 
procurement derogation in Article III:8(a) of the GATT 1994, and is therefore subject to the national 
treatment obligation in Article III:4 of the GATT 1994 and Article 2.1 of the TRIMs Agreement.  
7.3  Article III:4 of the GATT 1994  
7.3.1   Introduction  
7.108.   The Panel, having rejected Turkey 's assertion that the localisation requirement is covered 
by the government procurement derogation in Article III:8(a) of the GATT 1994, now proceeds to 
address the European Union 's claim that the localisation req uirement is inconsistent with the national 
treatment obligation in Article III:4 of the GATT 1994.  
7.109.   The European Union claims that the localisation requirement is inconsistent with Article III:4 
because, by excluding imported pharmaceutical products from the reimbursement scheme, Turkey 
accords imported pharmaceutical products treatment less favourable than that accorded to like 
products of national origin that are covered by the reimbursement scheme.437 
7.110.   Turkey limits its response to the European Union 's claim under Article III:4 to arguing that 
this provision is inapplicable to the localisation requirement by virtue of the government procurement 
derogation in Article III:8(a) of the GATT 1994, and that any inconsistency with Article  III:4 would 
be just ified by Article XX(b) or XX(d) of the GATT 1994.438 Turkey explains that, given that the 
obligation set out in Article III:4 does not apply to that measure, by virtue of Article III:8(a), there 
is no need to examine the different elements of Article III:4, including whether the measure 
constitutes 'laws, r egulations and requirements affecting internal sale, offering for sale, purchase, 
transportation, distribution or use' or whether that measure accords 'less favourable treatment' to 
imported like products.439 
7.3.2   Relevant provisions  
7.111.   Article III:4 of the GATT 19 94 provides:  
The products of the territory of any Member  imported into the territory of any other 
Member  shall be accorded treatment no less favourable than that accorded to like 
products of national origin in respect of all laws, regulations and requireme nts affecting 
their internal sale, offering for sale, purchase, transportation, distribution or use.  
7.112.   Thus, the complaining party has the burden of establishing the following three elements440: 
(i) the imported and domestic products at issue are "like produc ts"; (ii) the measure at issue is a 
"law, regulation, or requirement a ffecting their internal sale, offering for sale, purchase, 
transportation, distribution, or use"; and  (iii) the imported products are accorded "less favourable " 
treatment than that accor ded to like domestic products.  
7.113.   With respect to the first element, the Appellate Body clarified that a determination of 
"likeness " is "fundamentally, a determination about the nature and extent of a competitive 
relationship between and among products ".441 Likeness must be considered from both a qualitative 
and quantitative aspect and necessitates a case -by-case analysis considering the evidence as a 
 
437 European Union 's first written submission, paras. 149 -176; second written submission, paras. 81 -82; 
and opening statement, paras. 10 -12. 
438 Turkey 's first written submission, paras. 6, 123, 174, 242, 243 -244, and 414; second written 
submission, paras. 95 and 158; and response s to the first set of questions, paras. 44 -46.  
439 Turkey's responses to the first set of questions, para. 46.  
440 Appellate Body Report, Korea – Various Measures on Beef , para. 133.  
441 Appellate Body Report, EC – Asbestos , para. 9 9. WT/DS583/12  
 
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  whole.442 When origin is the sole criterion for a regulatory distinction between products, the likeness 
of the p roducts that are distinguished in this way can be presumed.443 
7.114.   With respect to the second element, a broad range of governmental actions is covered by 
"laws, regulations, or requirements " affecting the internal sale, offering for sale, purchase, 
transportat ion, distribution, or use of like products. Panels have found that where measures are 
"embodied, wholly or at least partly, in formal legal instruments such as codes, rules, acts and 
statutes ", they may qualify as laws or regulations under Article III:4.444 Likewise, where a measure 
contains a "statutory " and "regulatory " element, it may be qualified as a law or regulation by virtue 
of its "legal form ". A "requirement " within the meaning of Article III:4 is not limited to requirements 
reflected in "laws" or "regulations ", and may encompass both obligations that an enterprise is legally 
obliged to carry out, as well as voluntary action in order to obtain an advantage from a 
government.445 To fall within the scope of Article III:4, a measure need only "affect ", as opposed to 
directly govern (or be primarily aimed at regulating), the conditions of sale, purchase, 
transportation, distribution, or use of products.446 
7.115.   Lastly, a complaining party  must establish that imported products are treated less favourably 
than like domestic products. Treatment no less favourable means "according conditions of 
competition " no less favourable to the imported product than the like domestic product.447 Notably, 
examination of less favourable treatment need not be based on the actual effects of the measure in 
the market place; the "potential effects " of the measure may suffice.448 In assessing the effects of 
a measure, the Appellate Body indicated that panels should  carefully scrutinize the measure, 
including its design, structure and expected operation. This could, but need not, involve assessing 
the measure in light of evidence regarding its actual effects.449 A measure may accord imported 
products "less favourable treatment " in various ways, including through the imposition of additional 
processes and costs450, presentation of imported products to final consumers in a less appealing 
manner451, or additional administrative burdens for imported products.452 Even where a measure 
may not legally require certain treatment of imported products, it may be found to accord less 
favourable treatment insofar as it creates incentives for market participants to behave in certain 
ways, with the "practical effect " of treating imported  products less favourably.453 
7.3.3   Main arguments of the parties  
7.116.   Regarding the first element under Article III:4, the European Union submits that the 
domestic and imported products at issue are like.454 The European Union recalls that it is well 
established in prior panel and Appellate Body reports that measures distinguishing between goods 
solely on the basis of national origin satisfy the "like product " requirement.455 In this case, the only 
 
442 Appellate Body Report, EC – Asbestos , paras. 101 and 103. Relevant factors can include: the 
properties, nature and quality of the products, end uses of the products, consumers ' tastes and habits, and 
tariff classification. (Appellate Body Report, EC – Asbestos , para. 101 .) 
443 See A ppellate Body Report, Argentina – Financial Services , para. 6.38; and Panel Reports,  
Argentina – Import Measures , para. 6.274; China – Publications and Audiovisual Products , para. 7.1447; and  
Canada – Wheat Exports and Grain Imports , para. 6.164.  
444 Panel  Report, US – Renewable Energy , para. 7.152.  
445 Panel Reports, China – Auto Parts , para. 7.240; China – Publications and Audiovisual Products , para. 
7.1448.  
446 Appellate Body Reports, EC – Bananas III , para. 220  (referring to Panel Report, Italy – Agricultural 
Machinery , para. 12); US – FSC (Article 21.5 – EC), para. 210; China – Auto Parts , para. 194.  
447 Appellate Body Report, Korea – Various Measures on Beef , para. 135.  
448 Appellate Body Reports, US – FSC (Article  21.5 – EC), para. 215; Thailand – Cigarettes (Philippines) , 
para. 135.  
449 Panel Report, Dominican Republic – Import and Sale of Cigarettes , para. 7.196; Appellate Body 
Report, Thailand – Cigarettes (Philippines) , para. 134.  
450 Panel Report, Dominican Repu blic – Import and Sale of Cigarettes , para. 7.196.  
451 Panel Report, Dominican Republic – Import and Sale of Cigarettes , para. 7.196.  
452 Appellate Body Report, Thailand – Cigarettes (Philippines) , para. 130.  
453 See Appellate Body Reports, Korea – Various Me asures on Beef , paras. 144 -145; China – Auto Parts, 
paras. 195 -196; and US – COOL , para. 288.  
454 European Union 's first written submission, paras. 151 -154. 
455 European Union 's first written submission, paras. 151 -153. Thus, where a Member draws an origin -
based distinction, a comparison of specific products is not required and it is not necessary to examine the 
traditional likeness criteria – such as, their physical properties, end -uses and consumers ' tastes and habits. It 
is sufficient for the purpo se of satisfying the "like product " test for a complaining party to demonstrate that 
there can or will be domestic and imported products that are "like". (Ibid.) WT/DS583/12  
 
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  "factor of distinction " on which the localisation requirement is premised is the country of 
production.456 The reimbursement of the products to which the localisation requirement applies is 
explicitly conditioned on their production in Turkey, and not on any other cha racteristics of the 
products.457 
7.117.    Regarding the second element under Article III:4, the European Union submits that the 
localisation requirement is a "law, regulation, or requirement affecting the internal sale, offering for 
sale, purchase, transportation, distribution, or use of products ".458 In the European Union 's view, as 
the localisation requirement is to a significant extent "embodied " through various "specific laws or 
decrees " or "formal legal instruments ", it should, as a whole, be described as a "law or regulation ".459 
Alternatively, the European Union submits that it should be characterized as a "requirement "460 
because "it is clear that the measure imposes a requirement (localisation) as a condition for o btaining 
an advantage (reimbursement). "461 Furthermore, the European Union submits that "when the 
purpose of complying with certain requirements is to obtain an advantage, or when they create an 
incentive to buy certain products over others, it is clear tha t those requirements affect the sale, 
offering for sale or purchase of products ".462 According to the European Union, the localisation 
requirement is "designed to confer an advantage on locally produced pharmaceutical products by 
encouraging their sale, pur chase and use, to the detriment of like imported products ", and it "is 
clearly capable of influencing the choice between like imported and domestic products ".463 
7.118.   Regarding the third element under Article III:4, the European Union submits that the 
localisati on requirement accords "less favourable treatment " to imported products.464 According to 
the European Union, this is so because it "expressly reserves a major advantage – reimbursement, 
which covers approximately 90% of the entire Turkish pharmaceuticals ma rket – to domestic like 
products to the exclusion of imported like products ".465 The European Union argues that while 
imported products caught by the localisation requirement can still be imported and sold, "their 
exclusion from reimbursement creates a clea r disincentive on their sales in Turkey " and 
"[c]onsumers are unlikely to choose a non -reimbursed product over a like reimbursed product. "466 
7.119.   In its first written submission, Turkey does not present arguments on any of the above 
elements of Article III:4 of  the GATT 1994. Rather, Turkey limits its response to the European Union 's 
claim to arguing that Article III:4 is not applicable to the localisation requirement by virtue of the 
government procurement derogation in Article III:8(a) of the GATT 1994, and th at any inconsistency 
with Article III:4 would be justified by Article XX(b) or Article XX(d) of the GATT 1994.467 
7.120.   In its second written submission, the European Union observes that apart from Turkey 's 
arguments on Article  III:8(a) of the GATT 1994, Turkey "does not dispute that the Localisation 
Requirement is inconsistent with Article III:4 of the GATT 1994 " and "[t]hus, there is no 
disagreement on the main elements of that provision: the domestic and imported products at issue 
are like, the Localisation Req uirement is a law, regulation or requirement affecting the internal sale, 
offering for sale, purchase, transportation, distribution, or use of products, and it accords less 
favourable treatment to imported like products. "468 
7.3.4   Assessment by the Panel  
7.121.   The Panel considers that the fact that Turkey does not present any arguments on the 
elements of the claims under Article III:4 of the GATT 1994 is not in and of itself a sufficient basis 
for the Panel to summarily conclude that the European Union 's claims are well founded. In line with 
the approach taken by other panels in similar circumstances, the Panel will consider whether the 
 
456 European Union 's first written submission, para. 154.  
457 European Union 's first written submi ssion, para. 154.  
458 European Union 's first written submission, paras. 155 -168. 
459 European Union 's first written submission, paras. 156 -159. 
460 European Union 's first written submission, paras. 160 -163. 
461 European Union 's first written submission, para. 163.  
462 European Union 's first written submission, para. 166.  
463 European Union 's first written submission, para. 168.  
464 European Union 's first written submission, paras. 169 -176. 
465 European Union 's first written submission, para. 173.  
466 European Union 's first w ritten submission, para. 173.  
467 Turkey 's first written submission, paras. 6, 123, 174, 242, 243 -244, and 414.  
468 European Union 's second written submission, para. 81.  WT/DS583/12  
 
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  complainant has presented evidence and argument "sufficient to identify the challenged measure 
and its basic import, identify the re levant WTO provision and obligation contained therein, and 
explain the basis for the claimed inconsistency of the measure with that provision ".469 
7.122.   In section 7.1 of this Report, the Panel concluded that the European Union has established 
the existence of th e localisation requirement as a single measure, whereby (i) Turkey requires 
foreign producers to commit to localise in Turkey their production of certain pharmaceutical 
products; and (ii) where commitments are not given, not accepted, or not fulfilled, aff ected products 
are no longer reimbursed by the SSI. Thus, the Panel has found that the European Union has 
identified the challenged measure with sufficient clarity and precision for purposes of enabling the 
Panel to make an assessment of whether the elemen ts of Article III:4 of the GATT 1994 are satisfied.  
7.123.   As regards the first element under Article III:4, the Panel considers that the European Union 
has made a prima facie  case that domestic pharmaceutical products and imported pharmaceutical 
products affecte d by the localisation requirement are "like products ".470 The Panel recalls that 
through the localisation requirement: (i) Turkey requires foreign producers to commit to localise in 
Turkey their production of certain pharmaceutical products; and (ii) where commitments are not 
given, not accepted, or not fulfilled, affected products are no longer reimbursed by the SSI. Thus, 
the only "factor of distinction " on which the localisation requirement is premised is the country of 
production for the pharmaceutical p roducts affected by the measure. As has been indicated above, 
when the country of origin is the sole criterion for a regulatory distinction between products, the 
likeness of the products that are distinguished in this way can be presumed.471 
7.124.   As for the seco nd element under Article III:4, the Panel considers that the localisation 
requirement constitutes a "requirement " affecting the internal sale, offering for sale, purchase, 
transportation, distribution, or use of pharmaceutical products. The Panel recalls t hat a 
"requirement " within the meaning of Article III:4 is not limited to requirements reflected in "laws" 
or "regulations ", and may encompass both obligations that an enterprise is legally obliged to carry 
out, as well as voluntary action in order to obta in an advantage from government.472 Given the 
content of the localisation requirement, referred to above, it follows that the measure imposes a 
requirement (localisation) as a condition for obtaining an advantage (reimbursement/payment). The 
Panel notes that Turkey seems to agree that the l ocalisation requirement is a "requirement " for 
purposes of Article III:4 and III:8(a).473 Recalling that a measure need only "affect " the conditions 
of sale, purchase, transportation, distribution, or use of products to fall within the scope of Article 
III:4474, the Panel considers that this aspect of the second element under Article III:4 is also 
satisfied. As the European Union observes, "when the purpose of complying with certain 
requirements is to obtain an advantage, or when they create an incentive to b uy certain products 
over others, it is clear that those requirements affect the sale, offering for sale or purchase of 
products. "475 
7.125.   Regarding the third element under Article III:4, the Panel recalls that treatment no less 
favourable means "according condit ions of competition " to the imported product that are no less 
favourable than those accorded to the like domestic product.476 The Panel considers it to be axiomatic 
 
469 Panel Report, US – Shrimp (Ecuador) , para. 7.11.  
470 European Union 's first written submission, paras. 151 -154. 
471 See Appellate Body Report, Argentina – Financial Services , para. 6.38; and Panel Reports,  
Argentina – Import Measures , para. 6.274; China – Publications and Audiovisual Products , para. 7.1447; and  
Canada – Wheat Exports and Grain Imports , para. 6.164.  
472 Panel Reports, China – Auto Parts , para. 7.240; China – Publications and Audiovisual Products , para. 
7.1448.  
473 Turkey 's first written submission, para. 187 and f n 199 (cross -referencing paragraph 160 of the 
Europea n Union's first written submission in a manner that implies that Turkey considers the term 
"requirement" to have the same meaning in the context of Article III:4 and III:8(a) of the GATT 1994) . The 
Panel notes that in the context of responding to the Europ ean Union 's claim under Article X:1 of the GATT 1994 
pertaining to the non -publication of certain terms and conditions of the measure, Turkey argues that the 
European Union has failed to demonstrate that the localisation requirement as a single measure con stitutes a 
"law" or "regulation ". (Turkey 's first written submission, paras. 272 -279.) The Panel considers it unnecessary 
to make a finding on whether the localisation requirement additional ly constitutes a "law" or "regulation " within 
the meaning of Artic le III:4, given that it clearly constitutes a "requirement ". 
474 Appellate Body Reports, EC – Bananas III , para. 220 ; US – FSC (Article 21.5 – EC), para. 210 
(referring to Panel Report, Italy – Agricultural Machinery , para. 12); China – Auto Parts , para. 194 . 
475 European Union 's first written submission, para. 166.  
476 Appellate Body Report, Korea – Various Measures on Beef , para. 135.  WT/DS583/12  
 
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  that, if a measure is designed to create a financial incentive for consumers (i.e. outpatients in this 
case) to select domestically produced pharmaceutical products over imported pharmaceutical 
products, it accords "less favourable treatment " to those imported pharmaceutical products. While 
Turkey has stressed that  outpatients cannot change the active substance, dosage or the duration of 
their treatment, it does not dispute that outpatients are free to select among equivalent medicines 
based on price.477 Accordin gly, the Panel is of the view that the localisation requirement is "designed 
to confer an advantage on locally produced pharmaceutical products by encouraging their sale, 
purchase and use, to the detriment of like imported products ", and it "is clearly cap able of influencing 
the choice between like imported and domestic products ".478 
7.126.   For the foregoing reasons , the Panel finds that domestic pharmaceutical products and 
imported pharmaceutical products affected by the localisation requirement are "like products "; the 
localisation requirement constitutes a "requirement " affecting the internal sale, offering for sale, 
purchase, transportation, distribution, or use of those pharmaceutical products; and by creating a 
price incentive for consumers (i.e. outpatients) to select domestically produced pharmaceutical 
products over imported pharmaceutical products, the localisation requirement  accords "less 
favourable treatment " to those imported pharmaceutical products.  
7.3.5   Conclusion  
7.127.   The Panel concludes that the localisation  requirement is inconsistent with the national 
treatment obligation in Article III:4 of the GATT 1994.  
7.4  Article XX of the GATT 1994  
7.4.1   Introduction  
7.128.   The Panel has found that the localisation requirement is not covered by the government 
procurement derogation in  Article III:8(a) of the GATT 1994, and that it is inconsistent with the 
national treatment obligation in Article III:4 of the GATT 1994. Accordingly, the Panel now proceeds 
to address Turkey 's invocation of the general exceptions in Articles XX(b) and (d)  of the GATT 1994.  
7.129.   Turkey submits that the localisation measure is covered by the general exception in 
Article  XX(b) because it is designed to ensure an uninterrupted access to safe, effective and 
affordable medicines for all patients in Turkey, is "necess ary" to achieve that objective, and satisfies 
the requirements of the chapeau of Article XX.479 Turkey submits that if the Panel finds that the 
localisation requirement is not justified under Article XX(b), then, in the alternative, it is justified 
under Ar ticle XX(d) of the GATT 1994 as a measure necessary to secure compliance with laws and 
regulations requiring Turkey to ensure "accessible, effective and financially sustainable 
healthcare ".480 
7.130.   The European Union agrees that the declared objective of ensurin g adequate access to 
medicines falls within the scope of Article XX(b) and is extremely vital and important, but submits 
that the localisation requirement is not designed to achieve the public health objective alleged by 
Turkey, and is not "necessary " to achieve that objective.481 The European Union presents similar 
arguments under Article XX(d).  
 
477 More specifically, Turkey confirms that if a prescribed product is not on the Annex 4/A list (i.e. for 
which the patient will have to pay ), the pharmacist will typically inform the outpatient that there is an 
equivalent product that is on the list (i.e. f or which the patient will not have to pay), and that the outpatient 
may decide to opt for the equivalent medicine , the cost of which will be paid by the SSI. (Turkey 's response s to 
the first set of questions, paras. 1 -4.) 
478 European Union 's first written s ubmission, para. 168.  
479 Turkey 's first written submission, paras. 414 -503; second written submission, paras. 158 -224; 
responses to the first set of questions, paras. 47 -68; opening statement, paras. 72 -86; closing statement, 
paras. 36 -47; responses to the second set of questions, paras. 56 -72; and comments on responses to the 
second set of questions, paras. 20 -32. 
480 Turkey 's first written submission, para. 504.  
481 European Union 's second written submission, paras. 140 -199; responses to the first set of quest ions, 
paras. 34 -63; opening statement, paras. 33 -73; closing statement, paras. 16 -21; responses to the second set 
of questions, paras. 24 -61; and comments on responses to the second set of questions, paras. 46 -66. WT/DS583/12  
 
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  7.4.2   Article XX(b)  
7.4.2.1   Relevant provisions  
7.131.   Article XX(b) of the GATT 1994 provides:  
Subject to the requirement that such measures are not applied in a manner which would 
constitute a means of arbitrary or unjustifiable discrimination between countries where 
the same conditions prevail, or a disguised restriction on international trade, nothing in 
this Agreement shall be construed to prevent the adoption or enfo rcement by any 
Member  of measures:  
… 
(b) necessary to protect human, animal or plant life or health;  
7.132.   Article XX of the GATT 1994 allows Members to justify measures that would otherwise be 
inconsistent  with the GATT 1994. Article XX sets out a "two-tier test ": (i) the measure must fall 
under one of the listed exceptions in Article XX such as Article XX(b) (it is then "provisionally 
justified "); and (ii) the measure must be applied in a manner that satisf ies the requirements of the 
chapeau of Article XX.482 
7.133.   Measures may be provisionally justified under Article XX(b) if they (i) are taken to (i.e. are 
designed to) protect human, animal or plant life or health; and (ii) are "necessary " to protect human, 
anima l or plant life or health.483 
7.134.   When assessing whether a measure is taken to protect human, animal or plant life or health, 
prior panels have often commenced their analysis by determining the existence of the risk to human, 
animal or plant life or health (hea lth risk) that the challenged measure aims to reduce.484 Where 
there is no sufficient evidence as to the existence of a health risk, a challenged measure is not 
necessary to protect  human, animal or plant life or health.485 
7.135.   Next, if the alleged health risk e xists, panels will examine whether the measure at issue was 
taken for the purpose of protecting human, animal or plant life or health by reducing that risk486, or 
was instead taken for other reasons. To determine whether a challenged measure is "designed to " 
protect human, animal or plant life or health, a panel must examine all the evidence before it, 
including the text of the relevant legal instruments, the legislative history, and other evidence 
regarding the design, structure and expected operation of th e challenged measure.487 Such an 
 
482 Appellate Body Reports, US – Gasoline , p. 22; Brazil – Retreaded Tyres , para. 139.  
483 See Panel Reports, Indonesia – Chicken , para. 7.208; Brazil – Taxation , para. 7.858 . 
484 Panel Reports, EC – Asbestos , para. 8.170;  Brazil – Retreaded Tyres , para. 7.42; China – Rare 
Earths , para. 7.156; Brazil – Taxation , para. 7.859;  and Indonesia – Chicken , para. 7.209.  For instance, in EC 
– Asbestos , the panel determined, as the first step in its analysis, whether chrysotile -asbestos posed a risk to 
human life or health. (Panel Report, EC – Asbestos , paras. 8.170, 8.182, and 8.185 -8.194.) In Brazil – 
Retreaded Tyres , the panel assessed whether the accumulation of waste tyres posed risks to human, animal or 
plant life or health. (Panel Report, Brazil – Retreaded Tyres , paras. 7.42, and 7.53-7.93.) In China – Rare 
Earths , the panel found that the mining and production of rare earths, tungsten, and molybdenum have caused 
grave harm to the environment and to the life and health of humans, animals, and plants in China. (Panel 
Reports, China – Rare Earths , paras. 7.149 -7.156 .) In some other cases, including those where there was no 
dispute as to the existence of the risks that the measure allegedly aimed to address, prior panels have 
addressed this step of the analysis succinctly. (See Panel Repo rts, US – Gasoline , para. 6.21; EC – Tariff 
Preferences , paras. 7.180 and 7.200 .) 
485 As the panel in EC – Asbestos observed, "inasmuch as they include the notion of 'protection ', the 
words 'policies designed to protect human life or health ' imply the existence of a health risk. " (Panel Report, EC 
– Asbestos , para. 8.170 .) See also Appellate Body Reports, EC – Seal Products , para. 5.197.  
486 See Panel Reports, Indonesia – Chicken , para. 7.216; Brazil – Taxation , para. 7.859.  
487 See e.g., Panel  Reports, Indonesia – Import Licensing Regimes , para. 7.620; Brazil – Taxation , para. 
7.884; China – Raw Materials , para. 7.479; China – Rare Earths , para. 7.145; and EC – Tariff Preferences , 
para. 7.200 (referring to Appellate Body Reports, Japan – Alcoho lic Beverages II , p. 29; Argentina – Textiles 
and Apparel , para. 55; and US – Shrimp , para. 137). See also Appellate Body Reports, Colombia – Textiles , 
para. 5.69 (referring to Appellate Body Reports, US – Shrimp , paras. 135 -142; EC – Seal Products , para. 
5.144) and EC – Seal Products , para. 5.144 (referring to Appellate Body Reports, US – Tuna II (Mexico) , para. 
314 and US – Gambling , para. 304).  WT/DS583/12  
 
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  enquiry has led some panels to conclude that the challenged measures were not designed to protect 
human, animal or plant life or health, and instead pursued other objectives.488 If this threshold 
enquiry reveals that the chal lenged measure is incapable of meeting the stated objective, the 
analysis need not go further to determine whether this measure is necessary to protect this 
objective.  
7.136.   If a measure is "designed to " protect human, animal or plant life or health, panels must then 
examine whether that measure is "necessary " to protect human, animal or plant life or health. In 
doing so, panels will weigh and balance several factors, including the importance of the objec tive, 
the contribution of the measure to the achievement of that objective, and the trade -restrictiveness 
of the measure. Panels may then compare the challenged measure with possible alternative 
measures.489 In assessing the first of these factors, panels a nd the Appellate Body have focused on 
the relative importance of the interests or values furthered by the challenged measure.490 As to the 
second factor, a measure contributes to the objective when there is a "genuine relationship of ends 
and means between the objective pursued and the measure at issue ".491 In assessing the 
contribution  of the measure to the achievement of the objective , panels may have regard to 
quantitative and qualitative evidence. Whether a contribution is established ultimately depends o n 
the nature of the risk, the objective pursued, and the level of protection sought, as well as the 
nature, quantity and quality of evidence at the time such assessment is made.492 The third factor 
relates to the trade -restrictiveness of the challenged meas ure, which can be assessed in a qualitative 
or quantitative manner.493 Finally, alternative measures must be more than "merely theoretical in 
nature "494, and should allow the responding Member to achieve the same level of protection while 
being less trade -restrictive.495 The burden lies on complaining Members to identify possible 
alternative measures.496 
7.137.   The process of weighing and balancing these factors is "a holistic operation that involves 
putting all the variables of the equation together and evaluating th em in relation to each other after 
having examined them individually, in order to reach an overall judgement ".497 The more vital or 
important the societal value pursued by a challenged measure498, the greater the contribution of this 
measure to the objective pursued499, and the less restrictive its effects500, the more readily the 
measure may be considered to be "necessary ". 
7.138.   If a measure is provisionally justified under Article XX(b), it must also satisfy the 
requirements of the chapeau in Article XX. The chapeau requires that a provisionally justified 
measure be applied in a manner that does not constitute "arbitrary or unjustifiable discrimination 
between countries where the same conditions prevail " or a "disguised restriction on international 
trade ". 
 
488 See e.g., Panel Report, EC – Tariff Preferences , paras. 7.207 and 210; China – Rare Earths , paras. 
7.169 - 7.171. 
489 Appellate Body Reports, Colombia – Textiles , para. 5.70; India – Solar Cells , para. 5.59; and EC – 
Seal Products , para. 5.214 (referring to Appellate Body Reports, US – Gambling , para. 307 and Korea – 
Various Measures on Beef , para. 166).  
490 Appellate Body Report, US – Gambling , para. 306 (citing Appellate Body Report, Korea – Various 
Measures on Beef , para. 162) and Panel Reports, Indonesia – Chicken , para. 7.138; Brazil – Taxation , para. 
7.525.  
491 Appellate Body Report, Brazil – Retreaded Ty res, para. 145.  
492 Appellate Body Report, Brazil – Retreaded Tyres , paras. 145 -146. 
493 Appellate Body Report, Korea – Various Measures on Beef , para. 163. See also Panel Reports, 
Indonesia – Chicken , para. 7.143 . 
494 The responding Member must be capable of t aking the alternative measure, and it should not impose 
an undue burden on the responding Member.  (Appellate Body Report, Brazil – Retreaded Tyres , paras. 156, 
and 172-175.)  
495 Appellate Body Reports, US – Gambling , paras. 307 -308; Brazil – Retreaded Tyres , para. 156. See 
also Panel Report, EU – Energy Package , para. 7.1209.  
496 Appellate Body Report, Brazil – Retreaded Tyres, para. 156.  
497 Appellate Body Report, Brazil – Retreaded Tyres , para. 182.  
498 Appellate Body Reports, EC – Asbestos , para. 172 and Korea  – Various Measures on Beef , para. 162; 
Panel Reports, Brazil – Taxation , para. 7.525.  
499 Appellate Body Report, Korea – Various Measures on Beef , para. 162; Panel Reports, Brazil – 
Taxation , para. 7.528.  
500 Appellate Body Report, China – Publications and Audiovisual Products , para. 310 (referring to 
Appellate Body Reports, Korea – Various Measures on Beef , para. 163 ; Brazil – Retreaded Tyres , para. 150).  WT/DS583/12  
 
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  7.4.2.2   Main arguments of the parties  
7.4.2.2.1   The risk of a shortage of safe, effective and affordable medicines in Turkey  
7.139.   Turkey submits that the need for local production of pharmaceutical products has become 
evident in the context of the COVID -19 pandemic, and in that context the need for local production 
of pharmaceutical products has been officially endorsed by several co untries, including some of the 
EU member States.501 Turkey submits that even without a pandemic, there are situations when over -
reliance on imported products can lead to dangerous shortage of supply, and provides examples 
from the Turkish context.502 
7.140.   The Eur opean Union argues that Turkey has not met its burden of proving that there is a 
risk of shortage of supply of the pharmaceutical products within the scope of the localisation 
requirement.503 In line with the guidance provided by the Appellate Body in the c ontext of 
Article  XX(j), the general exception governing products in "short supply ", the European Union 
submits that Turkey has the burden of demonstrating, for each category of "equivalent products ", 
that there is a risk that "the quantity of available su pply from both domestic and international 
sources in the relevant geographical market may be insufficient to meet demand ", having regard to 
all relevant factors affecting supply and demand.504 According to the European Union, Turkey has 
provided no relevant  evidence of the existence of a risk of shortage of supply; to the contrary, it 
stresses that there is no risk of shortage of supply as regards the products covered by Phase 1 and 
Phase 2.505 The European Union submits that in practice, disruptions of suppl y of pharmaceutical 
products appear to be occasional and of short duration, and notes that Turkey has identified just 
five instances of alleged disruption of supply since 2012. The European Union comments that 
Turkey 's allegations are based on anecdotal ev idence in the form of press articles of limited probative 
value and official correspondence between Turkish authorities that provides scant information on 
the causes and extent of the disruption.506 
7.141.   In its second written submission, Turkey responds that it is undisputed that "the lack of 
access to medicines poses a very serious threat to human life or health ".507 Turkey clarifies that it 
is not arguing that the pharmaceutical products covered by the localisation measure are "in short 
supply ".508 Rather, Turkey has explained that the objective of the localisation measure is to ensure, 
in the long term, that all patients in Turkey have uninterrupted access to safe, effective and 
affordable medicines.509 Turkey maintains that WTO Members "are allowed  to take preventive 
measures before any actual shortage of supply arises ".510 Based on these considerations, Turkey 
submits that it is not required to demonstrate the existence of a risk of shortage of supply and even 
less so the existence of such a risk se parately for each category of pharmaceutical products subject 
to the localisation requirement.511 Turkey submits that, contrary to the arguments of the European 
Union, the press articles provided by Turkey provide ample evidence of disruptions in the supply  of 
pharmaceutical products linked to the over -reliance on imports.512 Turkey adds that the risk of 
shortage of supply due to unilateral decisions of pharmaceutical companies can be also illustrated 
by recent decisions of Pfizer and AstraZeneca to cut the s upply of the COVID -19 vaccines to certain 
EU member States.513 In any event, Turkey reiterates that the localisation requirement "is not meant 
to remedy an ad hoc  short-term shortage of supply but aims to ensure that in the long -term, all 
patients in Turkey  are guaranteed stable access to safe, effective and affordable medicines ".514 
 
501 Turkey 's first written submission, paras. 486 -487. 
502 Turkey 's first written submissi on, para. 488.  
503 European Union 's second written submission, paras. 159 -173. The European Union observes that 
"the notion of 'protection ' in Article XX(b) of the GATT 1994 implies the existence of a health risk " (European 
Union 's second written submission,  para. 159  (citing Panel Report, EC – Asbestos , para. 8.170 ). See also 
Appellate Body Reports, EC – Seal Products , para. 5.197.)  
504 European Union 's second written submission, paras. 162 -165. 
505 European Union 's second written submission, para. 166.  
506 Europe an Union 's second written submission, paras. 167 -173. 
507 Turkey 's second written submission, para. 179.  
508 Turkey 's second written submission, para. 181.  
509 Turkey 's second written submission, para. 181.  
510 Turkey 's second written submission, para. 181.  
511 Turkey 's second written submission, paras. 177 -182. 
512 Turkey 's second written submission, paras. 183 -188. 
513 Turkey 's second written submission, fn 236.  
514 Turkey 's second written submission, para. 189.  WT/DS583/12  
 
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  7.4.2.2.2   The localisation requirement 's objective  
7.142.   Turkey submits that the localisation measure is designed to ensure "an uninterrupted access 
to safe, effective and affordable medicines f or all patients in Turkey " which falls within the range of 
policies to protect human life and health covered by Article XX(b).515 Turkey explains that by 
requiring that certain pharmaceutical products be produced domestically to be included in the Annex 
4/A list, the localisation requirement seeks to ensure that those products are available to patients 
in Turkey.516 Turkey submits that it is now widely agreed that the proximity of manufacturing to the 
point of use is of major relevance for ensuring an uninter rupted access to safe and effective 
medicines, for several reasons.517 According to Turkey, the fact that the localisation requirement is 
concerned with ensuring adequate access to medicines and thus pursues an objective of protecting 
human life and health,  is confirmed by the design and structure of that measure, by the authorities 
responsible for its implementation, and by several official documents.518 
7.143.   The European Union  does not dispute that the alleged objective to ensure adequate access 
to medicines fal ls within the scope of Article XX(b)519, but submits that the localisation requirement 
is not designed to achieve the public health objective alleged by Turkey.520 Rather, the localisation 
requirement has been designed to promote the economic development and  industrial policy 
objectives pursued by Turkey in the pharmaceutical sector.521 Such objectives are confirmed by 
several official documents that evidence a preoccupation with the large size of Turkey 's trade deficit 
in the pharmaceutical sector, together w ith a desire to promote the domestic production of higher 
value -added pharmaceutical products with a view to becoming competitive in global markets, 
thereby contributing to the development of Turkey 's economy.522 In the European 's Union 's view, 
these stated objectives are fully consistent with the "structure and design " of the localisation 
requirement, which cannot be reconciled with the stated public policy alleged by Turkey in this 
dispute. Specifically, and reiterating essentially the same arguments it presents on the "contribution " 
step in the "necessity " analysis, the European Union submits that "the Localisation Requirement 
does not, and indeed cannot, contribute to the alleged objective of ensuring access to medicines 
with regard to  any pharmaceutical product within the scope of the Localisation Requirement ".523 
According to the European Union, Turkey cannot explain away the manifest inconsistencies between 
its alleged public health objective and the structure and design of the measur e "simply by citing 
vague and rhetorical political statements included in documents of the Turkish government where 
an unsubstantiated link is asserted between access to medicines and the Localisation 
Requirement ".524 
7.144.   In its second written submission, Turke y responds by pointing out that WTO dispute 
settlement practice recognizes that a measure may pursue multiple objectives, and such multiple 
objectives will often be intertwined and may be advanced in a mutually supportive manner.525 In the 
present case, the  public health objective and the alleged industrial policy objective of the localisation 
requirement are both legitimate policy objectives, and they are interrelated, because a strong 
domestic pharmaceutical sector contributes to ensuring uninterrupted acc ess to medicines.526 Turkey 
submits that numerous documents issued by the Turkish health authorities, referred to in its first 
written submission, demonstrate that the localisation requirement clearly pursues a public health 
objective. Turkey moreover consi ders that even the documents referred to by the European Union 
confirm that the localisation requirement has a public health objective.527 In response to the 
 
515 Turkey 's first written submission, paras. 441 -463. 
516 Turkey 's first written submission, para. 443.  
517 Turkey 's first written submission, para. 445. According to Turkey, this is so for three reasons. L ocal 
production of medicines:  (i) shortens the supply chain thereby reducing the lead time and minimizing the  risk 
of shortages; (ii) enables closer regulatory oversight by national regulatory authorities, as excessive reliance 
on imports from distant geographies can have a negative impact on the quality assurance of pharmaceutical 
products; and (iii) provides op portunities to ensure that pharmaceutical products meet local needs and are fit 
for local purposes. (Ibid.)  
518 Turkey 's first written submission, paras. 451 -463. 
519 European Union 's second written submission, para. 142.  
520 European Union 's second written subm ission, paras. 144 -157. 
521 European Union 's second written submission, para. 144.  
522 European Union 's second written submission, paras. 145 -148. 
523 European Union 's second written submission, para. 156.  
524 European Union 's second written submission, para. 157 . 
525 Turkey 's second written submission, para. 164.  
526 Turkey 's second written submission, paras. 166 -169.  
527 Turkey 's second written submission, para. 170.  WT/DS583/12  
 
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  European Union 's arguments regarding the structure and design of the localisation requirement, 
Turkey clarifies that this measure serves the "long-term objective " of guaranteeing more stable 
access to safe, effective and affordable medicines in Turkey and is "not a tool to remedy any potential 
short-term shortage of supply ".528 
7.4.2.2.3   Contribution to the declar ed objective  
7.145.   Turkey submits that the importance of local production for ensuring access to medicines and 
improving health security in developing countries has been widely recognized and endorsed by the 
World Health Organization (WHO) and other internationa l organizations such as United Nations 
Conference on Trade and Development (UNCTAD), United Nations Industrial Development 
Organization (UNIDO), and the Office of the United Nations High Commissioner for Human Rights.529 
Furthermore, while it is not necessa ry under Article XX(b) to demonstrate that the localisation 
requirement has already yielded concrete results, and given that only two of the five phases of the 
localisation requirement have been implemented such that any conclusion as to the effectiveness of 
that measure would appear premature, the localisation requirement so far has already helped to 
resolve problems concerning the availability of certain pharmaceutical products on the Turkish 
market.530 
7.146.   The European Union responds that Turkey 's selective ( often out -of-context) quotations from 
documents of various international organizations, that suggest that a policy of local production of 
pharmaceutical products contributes to improving access to medicines, do not meet Turkey 's burden 
of proving that the localisation requirement contributes to the alleged public health objective.531 The 
European Union accepts that in "specific contexts, and subject to certain conditions, local production 
may be a useful tool, alongside other policy tools, for improving acce ss to medicines "532, but that 
Turkey must demonstrate "how, in the specific context of the Turkish market for each of the 
categories of 'equivalent products ' covered by the Localisation Requirement, local production would 
contribute to improve access to those products by the Turkish citizens, as compared to the situation 
preceding the introduction of that measure ".533 According to the European Union, Turkey tel lingly 
provides no evidence for its assertion that "the implementation of the localisation measure so far 
has helped to resolve problems related to the availability of certain pharmaceutical products on the 
Turkish market. "534 The European Union argues that  there should be quantifiable effects of the 
localisation requirement by now, given that the implementation of Phases 1 and 2 started in 2016 
and 2017, respectively.535 
7.147.   In its second written submission, Turkey submits that the European Union fails to 
substa ntiate its allegation that Turkey 's quotations from the cited documents are "selective " and 
"taken out of context ", and that the European Union conveniently ignores the statements made by 
its own authorities and member States endorsing the need for local p roduction of medicines.536 
Turkey argues that although local production of medicines may have different effects in different 
countries, it is recognized by the WHO and other international organisations as an effective tool for 
improving access to medicines.537 Turkey submits that the European Union does not explain why 
local production should not be successful in the context of Turkey, and points out that: (i) other 
developing countries including Bangladesh, Ethiopia, and Nigeria, have realized the value of l ocal 
production of medicines for improving access to health and have pursued or are currently pursuing 
similar policies538; (ii) the factors that may jeopardize the successful implementation of a localisation 
policy are not present in Turkey (prices of medi cines are closely regulated by the relevant authorities, 
who ensure the enforcement of high -quality standards, and Turkey does not lack affordable, 
 
528 Turkey 's second written submission, paras. 171 -174. 
529 Turkey 's first written submission, paras. 471 -485. 
530 Turkey 's first written submission, paras. 489 -491. 
531 European Union 's second written submission, paras. 174 -180.  
532 European Union 's second written submission, para. 176.  
533 European Union 's second written submission, para. 178.  
534 European Union 's second written submission, para. 180.  
535 European Union 's second written submission, para. 180.  
536 Turkey 's second written submission, para. 191 (referring to Turkey 's first written submission, paras. 
484-487). 
537 Turkey 's second written sub mission, para. 193.  
538 Turkey 's second written submission, para. 193.  WT/DS583/12  
 
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  quality -assured materials or a skilled workforce)539; and (iii) several empirical case studies, by 
UNCTAD and  others, found that locally produced medicines improved access to medicines for poor 
rural populations, and Turkey has a large rural population.540 Turkey further argues that several EU 
documents recognise the fact that local production is an effective tool  for ensuring uninterrupted 
access to medicines and avoiding shortages.541 In response to the European Union 's argument that 
there should be quantifiable effects by now, Turkey submits that since the implementation of the 
measure is still ongoing, it is too  early to accurately evaluate the effects of the measure.542 The fact 
that an adequate assessment of the effectiveness of local production can only be made after a certain 
period of time is also confirmed by the WHO and other relevant organizations.543 
7.4.2.2.4   Trade -restrictiveness  
7.148.   As regards trade -restrictiveness, Turkey argues that the localisation requirement "is not 
trade -restrictive since it does not relate to the conditions under which pharmaceutical products may 
be imported and placed on the Turkish market ".544 Turkey adds that "the market data show that 
pharmaceutical products which did not comply with the localisation measure continue to be sold on 
the Turkish market. The data confirms that in 2018 -2019, 139 imported medicines from 39 different 
pharm aceutical companies were placed on the Turkish market. "545 
7.149.   The European Union responds that the localisation requirement is "extremely trade -
restrictive because, in practice, it has the effect of excluding imports from a very large part of the 
Turkish market ".546 The European Union explains that while imported products caught by the 
localisation requirement can still be legally imported and sold, imported products excluded from 
reimbursement are unable to compete with the reimbursable like domest ic products (i.e. because 
consumers are "most unlikely to choose a non -reimbursed product over a like reimbursed 
product ").547 The European Union states that the reimbursement scheme covers approximately 90% 
of all sales of pharmaceutical products in Turkey , hence imported products excluded from 
reimbursement are in practice effectively excluded from a very large part of the market.548 
7.150.   In its second written submission, Turkey reiterates that the localisation requirement does 
not affect the access of pharmaceu tical products to the Turkish market because products that do not 
comply with the localisation requirement may continue to be imported and placed on the Turkish 
market without any restrictions.549 According to Turkey, the European Union 's argument that the 
localisation requirement is trade -restrictive because "consumers  are […] most unlikely to choose [a] 
non-reimbursed product over a like reimbursed product " once again "ignores the fact that patients  
do not freely choose the pharmaceutical products which ar e prescribed to them by medical doctors 
on the basis of their specific health needs ".550 Furthermore, any trade -restrictiveness entailed by the 
localisation requirement, "even though unintended ", is outweighed by a material contribution which 
that measure m akes to the achievement of the invoked public health objective, as explained 
above.551 Turkey recalls that a measure that makes a material contribution to a public health 
 
539 Turkey explains that it has a well -established regulatory framework for producing pharmaceutical 
products that is generally in line with E uropean Union legislation. Turkey also has a hi ghly qualified workforce 
and production facilities that meet all quality standards so as to ensure that no substandard or falsified medical 
product is placed on the market. As a result, Turkey has so far not experienced any of the negative effects that 
the European Union alludes to. The cost of medicines has not increased, nor has the quality of medicines 
decreased. (Turkey 's second written submission, paras. 194 -195.)  
540 Turkey 's second written submission, paras. 196 -199. 
541 Turkey 's second written submissio n, para. 200. Specifically, Turkey refers to the recent 
Pharmaceutical Strategy for Europe, which refers to "fostering production and investment in Europe " among 
the actions that will be taken by the European Union.  
542 Turkey 's second written submission, pa ra. 201.  
543 Turkey 's second written submission, para. 202.  
544 Turkey 's first written submission, para. 493.  
545 Turkey 's first written submission, para. 494.  
546 European Union 's second written submission, para . 181.  
547 European Union 's second written submission, paras. 182 -183. 
548 European Union 's second written submission, para . 184.  
549 Turkey 's second written submission, para. 203.  
550 Turkey 's second written submission, para. 205.  
551 Turkey 's second written submission, para. 206.  WT/DS583/12  
 
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  objective may be justified under Article XX(b), even when that measure is considered "trade -
restrictive to the highest degree ".552 
7.4.2.2.5   Less trade -restrictive alternative measures  
7.151.   Turkey notes that it is for the European Union to identify "reasonably available alternative 
measures " to the localisation requirement, which are less trade restrictive  but equally effective in 
achieving uninterrupted access to safe, effective and affordable medicines for all patients in 
Turkey.553 
7.152.   The European Union submits that given their multifaceted causes, there is no single response 
to medicine shortages. While rec ognizing that in "specific contexts, and subject to certain conditions, 
local production may be a useful tool for improving access to medicines ", the European Union 
identifies several alternative measures for ensuring access to medicines that do not involv e local 
production: (i) the creation of contingency reserves of medicines at risk of shortage, and in particular 
of those previously identified as essential; (ii) the diversification of sources of supply; (iii)  the 
simplification of supply chains; (iv) the  facilitation of imports; (v) the improvement of pricing 
mechanisms and procurement procedures; (vi) the harmonization and simplification of regulatory 
requirements; and (vii) increased international cooperation.554 The European Union lists several 
strategi es recommended by the WHO for forecasting, averting or reducing shortages of medicines 
and vaccines, and stresses in particular that "the importance of monitoring medicine supply, 
demand, and availability and of alerting responsible departments to possible  shortages cannot be 
overemphasised ".555 Alternatively, "in those cases where local production can be an effective tool ", 
there are less trade -restrictive alternative measures which the WHO has identified including (i) direct 
support to reduce the cost of manufacture (i.e. subsidies); and (ii) a wide range of other strategies 
to indirectly support local production.556 The European Union notes that the strategies listed by the 
WHO do "not include any measure resembling Turkey 's Localisation Requirement "557, and considers 
the recommendation on developing appropriate investment policies and joint ventures to be of 
particular relevance.558 
7.153.   In its second written submission, Turkey responds with three arguments. It asserts first, 
that the European Union enumerates ce rtain "general categories of measures " that it suggests may 
be "useful for improving access to medicines " but fails to explain how any of these "extremely vague " 
measures would contribute to its long -term objective559, achieve the same level of protection, or be 
less trade restrictive.560 Second, the European Union 's proposed system of monitoring and import 
 
552 Turkey 's second writte n submission, para. 207.  
553 Turkey 's first written submission, para. 496.  
554 European Union 's second written submission, para. 186.  
555 European Union 's second written submission, paras. 187 -188. The strategies listed are: (i) the 
implementation of effective n otification systems to identify potential shortages; (ii) ensuring best practices for 
procurement, distribution and contract management processes to mitigate the risk of shortages; (iii) 
developing/strengthening systems capable of monitoring supply, demand , and availability, alerting 
procurement departments to possible shortages; (iv) ensuring sound financial management of procurement 
systems, to prevent funding shortfalls for medicines; (v) prioritizing, in the case of shortages, the health needs 
of the mo st affected groups; and (vi) advancing regional and international cooperation in support of national 
notification systems.  
556 European Union 's second written submission, para. 190. The strategies listed are: (i) investment in 
strengthening regulation; (ii)  developing national priority lists; (iii) improving the financing of health services 
for expanding the domestic market; (iv) facilitating access to foreign markets; (v) developing regional pooled 
procurement mechanisms; (vi) regulatory harmonization; (vii ) appropriate pricing policies; (viii) relevant 
technology transfer; (ix) incremental innovation and production; (x) appropriate IP regimes; (xi) appropriate 
investment policies and joint ventures; and (x ii) international cooperation.  
557 European Union 's second written submission, para. 191.  
558 European Union 's second written submission, para. 19 2. 
559 Turkey reiterates here that the localisation requirement "serves the long -term objective of ensuring 
uninterrupted access to safe, effective and affordable medicines and thus any measures that may remedy an 
ad hoc  short-term shortage of supply are not alternatives to the localisation measure ". (Turkey 's second 
written submission, para. 212.)  
560 Turkey 's second written submission, paras. 210 -212. According to Turkey, this stands in stark 
contrast to the level of detail and explanation provided by complainants identifying alternative measures in 
other WTO cases. Turkey indicates that this argument is directed at the following general categories of 
alternative measures: contingency reserves of medicines at risk of shortage, diversifying sources of supply, 
simplifying supply chains, facilitating imports, improving pricing mechanisms and procurement procedures, 
harmonizing and simplifying regulatory re quirements, and increasing international cooperation. (Ibid.)  WT/DS583/12  
 
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  licensing is already in place, and is thus "complementary " and not an alternative measure to the 
localisation requirement561; additionally, a monitoring an d licensing system does not address the 
localisation requirement 's safety and affordability objectives, and would not address scenarios in 
which imports are simply shut off or become excessively expensive.562 Third, in relation to the 
several recommendation s included in the WHO report cited by the European Union, Turkey submits 
that (i) it is unclear whether all of these general recommendations are put forward by the European 
Union as alternative measures563; (ii) the suggestion that Turkey provide grants and  subsidies is 
difficult to reconcile with the European Union 's claim under Article 3.1(b) of the SCM Agreement564; 
and (iii) relying on possible "joint-ventures " with "efficiency -seeking foreign investors " is not a viable 
strategy for ensuring reliable acce ss to medicines.565 Turkey also notes "the growing consensus that 
the COVID -19 pandemic has revealed a need to revise the measures that were , until recently , 
considered sufficient to guarantee access to medicines and medical products ", and refers to a recent 
European Parliament report in support.566 
7.4.2.2.6   Chapeau of Article XX  
7.154.   Turkey argues that the localisation requirement is applied in accordance with the 
requireme nts of the chapeau as it is not applied in a manner that would constitute "arbitrary or 
unjustifiable discrimination between countries where the same conditions prevail " or in a manner 
that constitutes "a concealed or unannounced restriction or discrimination in international trade ".567 
It applies "indistinctly to pharmaceutical products falling within the scope of localisation irrespective 
of the country of origin of the products "; the pharmaceutical products subject to localisation are 
selected on the basis of objective criteria which aim to avoid any shortage of supply and , ultimately , 
lead to better access to medicines in Turkey; and while based on objective criteria, it provides 
necessary flexibility for taking into account the circumstances o f specific pharmaceutical 
companies.568 
7.155.   The European Union submits that the localisation requirement is applied in a manner that 
cannot be rationally reconciled with the public health objective alleged by Turkey and, as a result, 
leads to "arbitrary or unju stifiable discrimination " between domestic and imported products. The 
localisation requirement is not calibrated to reflect the difference in health risks that may arise in 
relation to different pharmaceutical products, and in principle "applies to all pha rmaceutical products 
covered by the Reimbursement Scheme, regardless of how essential they are, and regardless of the 
degree of risk of shortage of supply of each group of equivalent products ".569 To the extent that 
Turkey modulates the application of the l ocalisation requirement, by dividing its implementation into 
five phases, "such modulation is at odds with the public health objective allegedly pursued by 
Turkey " because Phase 1 and Phase 2, the only ones implemented so far by Turkey, "cover 
pharmaceutic al products where, by Turkey 's own admission, there is no risk of shortage of supply 
and, hence, no health risk ".570 In the absence of that risk, the European Union submits , it becomes 
clear, that the public health objective invoked by Turkey is an excuse f or promoting the economic 
development and industrial policy objectives pursued by Turkey in the pharmaceutical sector.571 
7.156.   In its second written submission, Turkey responds that the manner in which the localisation 
requirement is implemented has "a clear rat ional connection to its aim "572 and therefore does not 
lead to arbitrary or unjustifiable discrimination under the chapeau of Article XX. First, the 
implementation of the localisation requirement through five phases follows a discernible logic: 
Turkey sough t to minimize the risk of a short -term shortage of supply due to the implementation of 
the measure by including in the first and second phases only medicines that are already available in 
Turkey. This approach "balances long -term supply security with avoid ing short -term shortages and 
 
561 Turkey 's second written submission, para. 214.  
562 Turkey 's second written submission, para. 215.  
563 Turkey 's second written submission, para. 216.  
564 Turkey 's second written submission, para. 216.  
565 Turkey 's second written submission, para. 217.  
566 Turkey 's second written submission, para. 218.  
567 Turkey 's first written submission, paras. 497 -503. 
568 Turkey 's first written submission, para. 501.  
569 European Union 's second written submission, para. 197.  
570 European Union 's second written submission, para. 198.  
571 European Union 's second written submission, para. 198.  
572 Turkey 's second written submission, para. 224.  WT/DS583/12  
 
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  does not give rise to a contradiction "573, contrary to the European Union 's suggestion. Second, in 
order to balance the localisation requirement 's goals of ensuring long -term access to medicines with 
guaranteeing the sustainabil ity of the Turkish healthcare system, "the scope of the measure cannot 
be limited to only medicines which are currently at a risk of shortage of supply. "574 Access and 
sustainability must be ensured with regard to all pharmaceutical products included in the  Annex 4/A 
list, "because inadequate access to those products would present a health risk for the patients and 
the availability of those medicines entails costs that are expected to rise ".575 
7.4.2.3   Assessment by the Panel  
7.4.2.3.1   Introduction  
7.157.   The general exceptions in the GATT 1994 and certain other covered agreements provide that 
Members may take any measures necessary, inter alia , "to protect human life or health ".576 
Article  8.1 of the TRIPS Agreement recognizes that "Members may … adopt meas ures necessary to 
protect public health and nutrition… ", and the preamble to the TBT Agreement affirms that "no 
country should be prevented from taking measures necessary … for the protection of human … life 
or health ". Panels and the Appellate Body have r epeatedly emphasized that the preservation of 
human life and health, which extends to measures protecting people against life -threatening 
diseases , is "both vital and important in the highest degree ".577 
7.158.   The more specific objective of ensuring access to pha rmaceutical products is also recognized 
in the WTO covered agreements. Notably, the 1994 Agreement on Trade in Pharmaceutical Products, 
negotiated in the context of the Uruguay Round, committed the signatories to eliminating all tariffs 
and other duties an d charges on most pharmaceutical products and the substances used to produce 
them, permanently binding them at duty -free levels in their Schedules.578 The 2001 Declaration on 
the TRIPS Agreement and Public Health reflects WTO Members ' shared understanding t hat the TRIPS 
Agreement can and should be interpreted and implemented in a manner supportive of the right of 
WTO Members to protect public health "and, in particular, to promote access to medicines for all ".579 
Article 31 bis of the TRIPS Agreement and paragraph 1(b) of the Annex thereto , which entered into 
force in 2017, provide that the obligations of an exporting Member under Article  31(f) of the TRIPS 
Agreement shall not apply with respect to the grant by it of a compulsor y licence "to the extent 
necessary for the purposes of production of a pharmaceutical product (s) and its export to an eligible 
importing Member (s)" in circumstances including times of "national emergency " or "extreme 
urgency ".580 
7.159.   The more specific objective  of ensuring access to pharmaceutical products is also recognized 
by various international authorities and through various instruments. For example, a 2009 
Resolution of the UN Human Rights Council on "Access to medicine in the context of the right of 
everyone to the enjoyment of the highest attainable standard of physical and mental health " 
underscores that improving access to medicine could save millions of lives every year. It recognizes 
that access to medicine is one of the fundamental elements in achie ving progressively the full 
realization of the right of everyone to the enjoyment of the highest attainable standard of physical 
and mental health. It also stresses the responsibility of States to ensure access to all, without 
discrimination, of medicines,  in particular essential medicines, that are affordable, safe, effective 
and of good quality.581 
 
573 Turkey 's second written submission, para. 222.  
574 Turkey 's second wr itten submission, para. 223.  
575 Turkey 's second written submission, para. 223.  
576 See also Article XIV(b) of the GATS and Article II:2(b) of the Agreement on Government 
Procurement.  
577 See e.g. Appellate Body Report s, EC – Asbestos , para. 172; Brazil – Retre aded Tyres , para. 179 ; and 
Panel Report s, Brazil – Retreaded Tyres , para. 7.210; Indonesia – Chicken , para. 7.225.  
578 See "Trade in Pharmaceutical Products ", GATT Doc. L/7430, 25 March 1994.  
579 Ministerial Conference, Declaration on the TRIPS Agreement and P ublic Health, WT/MIN(01)/DEC/2, 
para. 4.  
580 See protocol amending the TRIPS Agreement, a dopted by the General Council, WT/L/641, 
6 December 2005 ; Article 31 bis of the TRIPS Agreement; and paragraph 1(b) of the Annex to the TRIPS 
Agreement. The amendment entered into force on 23 January 2017.  
581 UN Human Rights Council, Resolution A/HRC/RES/12/24, 12 October 2009  (Exhibit TUR -72), p. 2, 
paras. 1 and 2.  WT/DS583/12  
 
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  7.160.   The importance of ensuring access to affordable medicines is also recognized through 
multiple initiatives and publications by various international organization s. For example, the WTO, 
the World Intellectual Property Organization (WIPO) and the World Health Organization (WHO) have 
cooperated as part of increasing international efforts to support innovation in health technologies 
and to ensure the availability of affordable, new and more effective medicines for patients in all 
countries. A recent joint publication,  Promoting Access to Medical Technologies and Innovation, 2nd 
edition: Intersections between public health, intellectual property and trade , confirms that access to 
medicines and health services is an element of the fulfilment of the right of everyone to the 
enjoyment of the highest attainable standard of health; th at furthering access to medicines is also 
part of the United Nations Sustainable Development Goals; and that affordable prices are a critical 
determinant of access to medicines.582 
7.161.   While it may go without saying that providing universal healthcare, ensuring access to 
pharmaceutical products and protecting human health are legitimate governmental objectives583, 
the Panel considers it useful to stress that this dispute does not involve any challenge to Turkey 's 
declared objective of preventi ng a risk of long -term shortage of supply of safe, effective and 
affordable pharmaceutical products . The Panel understands there to be no disagreement between 
the disputing parties that the lack of access to pharmaceutical products poses a risk to human li fe 
and health584; that the objective of ensuring adequate access to pharmaceutical products is thus one 
that relates to the protection of "human life or health " under Article  XX(b) of the GATT 1994, and is 
vital and important585; that WTO Members are free to  decide how to organize their social security 
and healthcare systems586; and that governmental policies of covering all or part of the cost of 
pharmaceutical products are linked to the objective of providing universal healthcare, ensuring 
access to pharmace utical products and protecting human health.587 
7.162.   Furthermore, the parties agree that Members may, in the context of Article XX(b), take 
measures to address the risk of future shortages of supplies before such shortages actually arise.588 
All third parties tha t expressed a view on this issue agree as well.589 The Panel understands that 
while two prior panels ruled that the "short supply " exception in Article XX(j) of the GATT 1994590 
does not cover measures taken to prevent a potential future shortage, both of th ose rulings were 
based on the particular wording of the "short supply " exception in Article XX(j).591 Indeed, both 
panels accepted that measures taken to address the risk of future shortages could in principle fall 
within the scope of other sub -paragraphs of Article XX of the GATT 1994 or Article XIV of the GATS.592 
 
582 WTO, WIPO , and WHO,  Promoting Access to Medical Technologies and Innovation, 2nd edition: 
Intersections between public health, intellectual property and trade  (2020), p. 17.  (available at 
https://www.wto.org/english/res_e/publications_e/who -wipo-wto_2020_e.htm ) 
583 European Union 's first written submission, para. 211.  
584 Turkey 's second written submission, para. 179; European Union 's response s to the first set of 
questions, para. 45. As Turkey explains, "[m]edicines shortages pose risks for patient health due to 
undertreatment, medication errors, and adverse reactions from attempts to substitute unavailable medicines. " 
(Turkey 's first written submission, para. 488 .) 
585 Turkey 's first written submission, para. 470; European Union 's second written submission, para. 142.   
586 Turkey 's first written submission, para. 26; European Union 's second written submission, para. 39.  
587 European Union 's first written submission, para. 211.  
588 Turkey 's second written submission, para. 181; European Union 's responses to the first set of 
questions, para. 43.  
589 Canada 's responses to the Panel 's questions to third parties, paras. 10 -14; Japan 's responses to the 
Panel 's questions to third parties, paras. 9 -13; Switzerland 's responses to the Panel 's questions t o third 
parties, paras. 8 -11; United States ' responses to the Panel 's questions to third parties, paras. 10 -15. 
590 Article XX(j) provides that that Members may take, under certain conditions, measures "essential to 
the acquisition or distribution of product s in general or local short supply ". 
591 See Panel Report, India – Solar Cells , para. 7.250. The panel in EU – Energy Package  agreed that 
"the plain reading of the terms 'products in … short supply ' indicates that the products referred to in 
Article  XX(j) of the GATT 1994 are those products that are presently in short supply ". (Panel Report, EU – 
Energy Package , para. 7.1348 .) 
592 The panel in India – Solar Cells  found that Article XX(j) only applies t o products presently in short 
supply, not products at risk of becoming in short supply, but reasoned that insofar as that was incorrect, it 
could only apply to products in respect of which there was an "imminent risk ". However, it stated that it saw 
"no ba sis for applying the same standard of imminent risk, and therefore [did] not apply this same standard, in 
the context of assessing whether the DCR measures are designed to secure compliance with laws or 
regulations within the meaning of Article XX(d) of th e GATT 1994, or are 'essential ' or 'necessary ' within the 
meaning of Articles XX(j) and XX(d) ". (Panel Report, India – Solar Cells , footnote 618 .) The panel in EU – 
Energy Package  agreed that Article XX(j) only applies to products presently in short supply  but did not read 
this limitation into Article XIV(a) of the GATS, which provides a general exception for measures "necessary to WT/DS583/12  
 
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  Other panels have adopted a similar appr oach in the context of other sub -paragraphs of Article  XX.593 
Thus, the Panel agrees with Turkey that, in the context of Article XX(b), WTO Members "are allowed 
to take preventive measures before any actual shortage of supply arises ".594 
7.163.   Based on the foregoi ng, the Panel emphasizes that what is in dispute in this case is not the 
legitimacy of Turkey 's declared objective of preventing a risk of long -term shortage of supply of 
safe, effective and affordable medicines , or whether a measure taken to fulfil  that o bjective would 
in principle qualify as a measure "to protect human life or health " within the meaning of Article 
XX(b). The question is whether Turkey has discharged its burden of demonstrating that the 
localisation requirement is a measure that was taken to prevent a risk of long -term shortage of 
supply of safe, effective and affordable medicines , and, if so, whether Turkey has discharged its 
burden of demonstrating that the localisation requirement is necessary to fulfil that objective. When 
Article XX(b)  is invoked, the responding party carries the burden of proof in respect of the elements 
of that affirmative defence.595 
7.164.   Following the traditional analytical approach to the interpretation of A rticle XX(b)596, the 
Panel will first assess whether the localisa tion requirement is provisionally justified under Article 
XX(b). In this context, the Panel will address the threshold issue of whether  the localisation 
requirement is a measure  taken to protect human life or health . If the Panel finds that this is the 
case, it will then proceed to examine the remaining elements of the test under Article XX(b), namely 
whether the localisation requirement is necessary to protect human life or health, and thus 
provisionally justified under Article XX(b), and whether it has be en applied consistently with the 
requirements of the chapeau of Article XX.  
7.4.2.3.2   Whether the localisation requirement is a measure taken to protect human life 
or health  
7.165.   Turkey asserts that its over -reliance on imported pharmaceutical products creates a risk of 
long-term597 shortage of supply of safe, effective and affordable medicines, and argues that the 
localisation requirement, by localising the production of pharmaceutical products, is a measure 
designed to address this risk and thus to ensure an uninterrupte d access to safe, effective and 
affordable pharmaceutical products for all patients in Turkey. The European Union argues that there 
is no relevant evidence of the existence of a risk of shortage of supply  of safe, effective and 
affordable medicines  in Turk ey arising from an over -reliance on imported pharmaceutical products, 
and that the localisation requirement is designed only to promote Turkey 's economic development 
and industrial policy objectives in the pharmaceutical sector.  
7.166.   This is not the first case in which a responding party has argued that a challenged measure 
was taken to prevent a risk of supply -side disruptions that could arise from its alleged over -reliance 
on imports of essential goods and/or services, to ensure a continuous and affordabl e supply of those 
goods or services. In prior cases, panels and the Appellate Body have consistently required the 
responding party to demonstrate, at a minimum, that the asserted risk arising from over -reliance 
on imports was more than a merely hypothetica l possibility.  
7.167.   In India – Solar Cells , India argued that the challenged measures, which conditioned 
government purchases of electricity from SPDs on those SPDs sourcing certain types of equipment 
(e.g. solar cells) domestically, were justified under Articl es XX(j) and (d) of the GATT 1994 because 
 
protect public morals or to maintain public order ". The footnote to Article XIV(a) of the GATS expressly 
indicates that it appl ies to situations involving a "genuine and sufficiently serious threat " to fundamental 
societal interests, and the panel found that "evidence of a threat already having materialized is not a 
prerequisite for demonstrating that this threat is genuine, i.e. has the character of a threat and is real and 
true." (Panel Report, EU – Energy Package , para. 7.1190 .)  
593 See e.g. Panel Report, Brazil – Taxation , fn 1001, noting that Brazil 's argument regarding the risk of 
a shortage of digital TV equipment was based on an invocation of Article XX(a), and not Article XX(j), of the 
GATT 1994.  
594 Turkey 's second written submission, para. 181.  
595 See e.g. Appellate Body Report, US – Gasoline , p. 22; Panel Report, EC – Asbestos , paras. 8.177 -
8.178.  
596 See paras.  7.132  - 7.138  above.  
597 In its submissions, Turkey emphasizes that the localisation requirement is "not a tool to remedy any 
potential short -term shortages of supply, but aims to ensure a guaranteed stable and long -term access to 
medicines ". (Turkey 's opening statement, para. 73 .) WT/DS583/12  
 
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  "dependence on imports of foreign solar cells and modules creates a risk of disruption in continuous 
and affordable supply of solar cells and modules [and] it is therefore necessary to ensure that there 
is an adequ ate reserve of domestic manufacturing capacity for solar cells and modules in case there 
is a disruption in supply of foreign solar cells and modules. "598 The panel in that case examined the 
individual pieces of evidence provided by India to substantiate it s concerns about the risk of 
shortage. The panel noted that "there is always some risk of a future shortage of any product. "599 
However, the panel ultimately found that India had failed to provide sufficient evidence of any 
imminent risk of a disruption in supply of foreign solar cells and modules to India SPDs.600 
7.168.   In Brazil – Taxation , Brazil argued that certain challenged tax exemptions and reductions on 
digital TV equipment produced domestically were justified under Article XX(a) of the GATT 1994 
because t o bridge the digital divide, it needed to ensure the supply of digital TV transmitting 
equipment and the capacity to develop and manufacture this equipment in Brazil, since there was 
no guarantee that there would be a sufficient quantity of imported produc ts to adequately supply 
the market with transmitting equipment compliant with Brazil 's standards.601 The panel in that case 
examined whether Brazil had presented sufficient evidence in support of its assertions that domestic 
producers required protection and that it had taken into account the capacity of foreign producers 
to supply the Brazilian market i n order to secure access to digital television equipment, and 
concluded that this was not the case.602 The panel found that Brazil had provided no evidence to 
substantiate its assertion that there was a risk that it could not obtain all of the necessary 
transmitting equipment from foreign sources, stating that "Brazil has not provided any evidence to 
indicate that transmitting equipment would not be made available in the Brazilian market in the 
necessary scale "603 and that "Brazil has not undertaken any analy sis, nor presented any evidence 
(quantitative or qualitative), in support of its contention that imported products could not supply the 
market. "604 
7.169.   In EU – Energy Package , the European Union defended two of the challenged measures on 
the grounds that they w ere related to securing an uninterrupted and affordable supply of energy 
within the European Union. More specifically, the European Union argued that the third -country 
certification measure was justified under Article XIV(a) of the GATS because it was nece ssary to 
ensure the European Union 's security of energy supply and hence to maintain public order605; and 
that the TEN -E measure was justified under Article XX(j) of the GATT because natural gas was a 
product "in general or local short supply " because of th e existence of "genuine and serious risks of 
disruption of supply of gas. "606 The panel in that case engaged in a review of the evidence and 
arguments and found that there was a sufficient factual basis to conclude that certain risks of natural 
gas disrupti ons were not merely hypothetical.607 The panel stated that the European Union made a 
"prima facie case that there is a real and true possibility, rather than a merely hypothetical one, of 
foreign governments requiring or inducing foreign controlled [transpo rt service operators] to 
undermine the European Union 's security of energy supply ".608 
7.170.   Thus, in those cases, panels and the Appellate Body required the responding party to 
demonstrate, at a minimum, that the asserted risk arising from alleged over -reliance on imports 
was more than a merely hypothetical possibility. The Panel considers that i n the context of 
Article  XX(b), as in the context of the other sub -paragraphs of Article XX, a party invoking a general 
exception must identify some degree of probability that the alleged risk exists.609 In this case, Turkey 
 
598 Panel Report, India – Solar Cells , para. 7.189. See also ibid. para. 7.237. India provided evidence on 
what the possible supply -side disruptions for solar cells and modules are, and why they could be reasonably 
expected. Such evidence included a World Bank study, certain market forecasts, and two press reports. (Ibid. 
paras. 7.251 -7.254 .) 
599 Panel Report, India – Solar Cells , para. 7.245.  
600 Panel Report, India – Solar Cells , paras. 7.261 -7.264.  
601 Panel Reports, Brazil – Taxation , para. 7.572.  
602 Panel Reports, Brazil – Taxation , para. 7.582.  
603 Panel Reports, Brazil – Taxation , para. 7.573.  
604 Panel Reports, Brazil – Taxation , para. 7.600.  
605 Panel Report, EU – Energy Package , para. 7.1135.  
606 Panel R eport, EU – Energy Package , para. 7.1326.  
607 Panel Report, EU – Energy Package , paras. 7.1194 and 7.1346.  
608 Panel Report, EU – Energy Package , paras. 7.1194 and 7.1346.  
609 The Panel sees nothing in the text of Article XX(b) that would establish a materially different 
evidentiary standard, in this respect, than has been applied in previous cases in the context of Article XX(j) of 
the GATT 1994, Article XX(a) of the GATT 1994, and Article XIV(a) of the GATS. In the context of assessing 
whether a ban on certain products containing asbestos was taken to protect human life or health, the panel in WT/DS583/12  
 
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  asserts that its over -reliance o n imported pharmaceutical products creates a risk of long -term 
shortage of supply of safe, effective and affordable pharmaceutical products, and argues that the 
localisation requirement, by localising the production of pharmaceutical products, is a measure  
designed to address this risk. Contrary to what some  of Turkey 's arguments suggest610, it therefore 
falls on Turkey to demonstrate the existence of a risk of shortage of supply arising from its over -
reliance on imported pharmaceutical products.  
7.171.   The Panel d oes not consider that there is any rigid or pre -determined threshold or evidentiary 
standard that should be applied in this respect. Insofar as a responding party presents evidence and 
arguments demonstrating that there is a substantial degree of probabili ty of a specified risk to human 
life or health materializing, it will be easier for the responding party to discharge its burden of proving 
that the challenged measure was taken to protect against that risk, thus qualifying as a measure 
taken to protect hu man life or health under Article XX(b). Conversely, insofar as a responding party 
asserts the existence of a risk without establishing any substantial degree of probability, such that 
the risk appears to be theoretical, abstract or otherwise hypothetical, it will be more difficult for the 
responding party to discharge its burden of proving that the challenged measure was taken to protect 
against that risk.  
7.172.   According to Turkey, its over -reliance on imported pharmaceutical products creates a risk of 
long-term shortage of supply of safe, effective and affordable pharmaceutical products  risk because 
of several prevailing economic circumstances relating to the cost of imported pharmaceutical 
products in Turkey, including most notably that: (i) the low prices of p harmaceutical products on 
the Turkish market create the risk that foreign pharmaceutical producers might decide to supply 
other countries where they can receive a higher price for their products, instead of Turkey611; and 
(ii) imported pharmaceutical produc ts may become unaffordable to the SSI if a foreign currency 
gains in value or the Turkish lira depreciates.612 
7.173.   In the Panel 's view, the nature of the risk identified by Turkey in this dispute involves the 
kind of hypothetical possibility that previous panel s and the Appellate Body have regarded as 
insufficient to discharge a responding party 's burden under Article XX. Significantly, Turkey has not 
identified any instance of shortage of supply of a specific product caused by foreign producers 
deciding to stop  supplying medicines to Turkey to instead sell in other countries where they can 
receive a higher price for their products; or caused by a medicine becoming unaffordable to the SSI 
because of a foreign currency gaining in value or the Turkish lira deprecia ting.  
7.174.   The Panel has carefully reviewed the examples of shortages of certain pharmaceutical 
products offered by Turkey in support of its contention that this is "not merely a hypothetical 
situation ".613 The evidence provided by Turkey, which consists of pre ss articles over the period 2017 -
2019 (and one from 2012), shows that shortages of pharmaceutical products have arisen on more 
than one occasion. While the evidence suggests that all such shortages were temporary in nature, 
it also shows that a range of di fferent pharmaceutical products were affected. Thus, the Panel agrees 
with Turkey that the press articles submitted "provide ample evidence of disruptions in the supply 
 
EC – Asbestos  first assessed whether the product at issue (i.e. chrysotile -asbestos in that case) posed a risk to, 
in that case, human life or health. ( Panel Report, EC – Asbestos , para. 8.170 .) Likewise, in the context of 
assessing whether the ban on imported retreaded tyres was taken to protect human life or health, the panel in 
Brazil – Retreaded Tyres  first assessed whether Brazil had demonstrated that risks posed by mo squito -borne 
diseases (such as dengue, yellow fever and malaria) to human health and life exist in Brazil in relation to the 
accumulation as well as transportation of waste tyres. (Panel Report, Brazil – Retreaded Tyres , para. 7.43 .) 
610 Turkey 's second writ ten submission, paras. 177 -182. 
611 Turkey 's first written submission, paras. 127, 488, and 547; response s to the first set of questions, 
para. 58.  
612 Turkey 's second written submission, para. 244.  Turkey explains that, at a certain point, "the costs of 
imported medicines become so expensive that a decision must be made to either stop covering the costs of 
certain medicines, thereby risking limiting access, or continue paying for those medicines even  if this is not 
supported by revenue, thereby risking the financial stability of the healthcare system. " (Ibid. para. 245 .) 
613 Turkey 's second written submission, para. 245 (referring to "Pharmacy chambers blame medical 
firms for drug shortages ", Daily News  (Istanbul, 23 January 2017); C . Caglayan and E . Erkoyun, "Pharmacy 
stocks run low as Turkey 's drug price policy hits supplies ", Reuters (Istanbul, 6 February 2019); M . Xuequan, 
"Spotlight: Turkey faces shortages of medicine due to currency fluctuations ", Xinhuanet (21 February 2019)  
(together Exhibit TUR -130); "The rise in the exchange rate also hit the pharmaceutical industry: alleged supply 
problems in 'more than 500 medicines '", Medimagazin (10 October 2018) (Exhibit TUR -131)).  WT/DS583/12  
 
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  of pharmaceutical products " in Turkey, and furthermore, that insofar as the products in  question 
were imported, such shortages were "linked to " imports.614 
7.175.   The Panel in no way questions the gravity of these situations or the legitimate concerns that 
they raise. However,  the Panel 's review of the articles does not reveal any instance of shorta ge of 
supply of a specific product caused by foreign producers deciding to stop supplying pharmaceutical 
products to Turkey to sell instead in other countries where they can receive a higher price for their 
products; or shortage of supply caused by a pharm aceutical product becoming unaffordable to the 
SSI because of a foreign currency gaining in value or the Turkish lira depreciating:  
a. Three press articles submitted by Turkey615 refer to situations where pharmaceutical 
producers, warehouses and/or pharmacies temporarily "hoarded " pharmaceutical products 
pending, and to take advantage of, a previously announced increase of the exchange rate 
for imported medicines or hikes in prices. The Panel understands that these shortages 
arose from the Turkish government 's announcement of price increases  (operated through 
the adjustment of the fixed exchange rate for pharmaceutical products), and that the 
products concerned were made available on the market shortly after the prices 
increased616, or following an authorizatio n by the Ministry of Health for certain 
pharmaceutical products to be sold at prices higher than those set by the fixed exchange 
rate.617 
b. Another press article submitted by Turkey618 refers to supply problems concerning 521 
pharmaceutical products, including  some imported products (e.g. eye drops), but gives 
mostly examples of shortages of pharmaceutical products produced in Turkey  using 
imported raw materials.  
c. Three other press articles provided by Turkey relate to temporary shortages of Tamoxifen 
(a breast cancer medicine)619, Purinethol (a medicine used to treat leukaemia)620, and 
Salofalk (a medicine used to treat ulcerative colitis).621 However, none indicates whether 
the supply disruptions are the result of reliance on imports, as opposed to other factors:  
i. One of the articles on Tamoxifen quotes an official as saying that this pharmaceutical 
product is also produced locally. This raises  the question of how the temporary 
shortage arose from an over -reliance on imports in the manner argued by Turkey.622 
 
614 Turkey 's second written  submission, paras. 183 -188. 
615 "Pharmacy chambers blame medical firms for drug shortages ", Daily News (Istanbul, 23 January 
2017); C . Caglayan and E . Erkoyun, "Pharmacy stocks run low as Turkey 's drug price policy hits supplies ", 
Reuters (Istanbul, 6 February 2019); M . Xuequan, "Spotlight: Turkey faces shortages of medicine due to 
currency fluctuations ", Xinhuanet (21 February 2019)  (Exhibit TUR -130).  
616 "Pharmacy chambers blame medical firms for drug shortages ", Daily News (Istanbul, 23 Ja nuary 
2017); C . Caglayan and E . Erkoyun, "Pharmacy stocks run low as Turkey 's drug price policy hits supplies ", 
Reuters (Istanbul, 6 February 2019); M . Xuequan, "Spotlight: Turkey faces shortages of medicine due to 
currency fluctuations ", Xinhuanet (21 February 2019)  (Exhibit TUR -130).  
617 C. Caglayan and E . Erkoyun, "Pharmacy stocks run low as Turkey 's drug price policy hits supplies ", 
Reuters  (Istanbul, 6 February 2019) (Exhibit TUR -130).  
618 "The rise in the exchange rate also hit the pharm aceutical industry: alleged supply problems in 'more 
than 500 medicines '", Medimagazin  (10 October 2018) (Exhibit TUR -131).  
619 H. Biskin, "Shortage of supply in medicine to cure breast cancer ", Duvar , 22 September 2017; "Local 
solution for imported medicine  used in intestinal diseases ", Anadolu , 16 January 2017 (Exhibit TUR -98).  
620 "Shortage of supply in this medicine ", Sağlık Aktüel , 23 August 2012 (Exhibit TUR -99).  
621 "Citizens are victims, that drug is still not on the market ", Yeniakit , 29 November 2018 (Exhibit TUR -
100).  
622 "Local solution for imported medicine used in intestinal diseases ", Anadolu , 16 January 2017 (Exhibit 
TUR-98). The other press article regarding Tamoxifen notes the following explanation provided by H . Gürsöz, 
President of the TMMDA: "There is no supply problem for cancer medicines that we have identified at the 
moment. Last year, the short -term problem experienced in breast cancer patients ' medications was caused by 
the firm, which has the highest mark et share of the drug, [which] wants to close the production line abroad. 
We also produced this product locally. There is no procurement problem that reaches us about other cancer 
medicines. After this problem has been solved, the normal supply flow has con tinued. " (H. Biskin, "Shortage of 
supply in medicine to cure breast cancer ", Duvar , 22 September 2017 (Exhibit TUR -98).)  WT/DS583/12  
 
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  ii. The article on Purinethol relates a statement by the SSI that appears to indicate that 
price was not an issue, in that "there is no demand from the importer company, 
especially for a price increase ".623 
iii. The article on Salofalk contains statements suggesting that the shortage of supply may 
have been related to a decision by pharmaceutical companies to stop the sale of the 
product in Turkey "by claiming that the SSI did not offer desired prices for their 
products " but also states that "despite the fact that the Ministry of Health said that the 
price was eventually agreed with the pharmaceutical company and that the distribution 
would be made, it was noticed that the sale still is not made. "624 It also contains 
statements relating the shortages to an unspecified "long" and "official procedure ", 
and quotes an official 's statement that "pharmaceutical companies have caused 
problems in access by turnin g the recent exchange rate fluctuations into an 
opportunity ". However, it also quotes the official as referring to "alternative 
procurement ways, including quick licensing and mandatory license liberalization 
method, are put into use, and drugs are procure d at an affordable price to our 
country ". 
iv. In sum, none of these press articles provided by Turkey mentions a situation where 
the companies producing Tamoxifen, Purinethol, Salofalk, or any other pharmaceutical 
product decided to stop supplying pharmaceutic al products to Turkey to sell instead in 
other countries where they could receive a higher price for their products; or where 
the pharmaceutical product became unaffordable to the SSI because of a foreign 
currency gaining in value or the Turkish lira depre ciating.  
7.176.   Turkey also provides as evidence correspondence between Turkish authorities relaying 
shortages of medicines containing the active substance Oxytocin (used to treat antenatal contraction 
insufficiencies and postnatal atony)625 and medicines containi ng L-carnitine (used for carnitine 
insufficiencies).626 The Panel notes that this correspondence does not specify whether the 
pharmaceutical products containing these substances are produced in Turkey or imported. The 
correspondence also contains no indicat ion whether or how the supply disruptions are related to 
reduced imports.  
7.177.   The Panel recalls that it is for Turkey, as the party invoking the general exception in 
Article  XX(b), to substantiate its assertion that its alleged over -reliance on imported pharma ceutical 
products creates a risk of long -term shortage of supply of safe, effective and affordable medicines. 
As indicated above, t he Panel agrees with Turkey that the press articles submitted "provide ample 
evidence of disruptions in the supply of pharmac eutical products " in Turkey and further that, insofar 
as the products in question were imported, such shortages were "linked to " imports. However,  the 
Panel 's review of these press articles does not reveal any instance of shortage of supply of a specific 
product caused by foreign producers deciding to stop supplying medicines to Turkey to  sell instead 
in other countries where they can receive a higher price fo r their products; or caused by a medicine 
becoming unaffordable to the SSI because of a foreign currency gaining in value or the Turkish lira 
depreciating. Thus, the absence of evidence linking these past instances of shortages to Turkey 's 
over-reliance on  imports further confirms that the risk identified by Turkey – and more specifically, 
that the factors that give rise to a risk of future shortages in respect of any and all pharmaceutical 
products  can only be characterized as hypothetical . 
 
623 "Shortage of supply in this medicine ", Sağlık Aktüel , 23 August 2012 (Exhibit TUR -99), p. 1.  
624 "Citizens are victims, that drug is s till not on the market ", Yeniakit , 29 November 2018 (Exhibit TUR -
100), pp. 1 -2. 
625 Antalya Provincial Health Directorate, Letter to the Ministry of Health regarding oxtyocine ampoule, 7 
March 2016; Yaşam Hastanesi Life Hospital Antaliya, Letter to the Pharm acies Branch of the Provincial Health 
Directorate, 26 February 2016; Private Vitale Gynecology and Obstetrics Hospital, Letter to the Provincial 
Health Directorate Pharmacies Branch, 25 February 2016; Medical Park Özel Antalya Hastane Kompleksi, Letter 
to the Provincial Health Directorate Pharmacies Branch, 24 February 2016; Private Akdeniz Şifa Hospital, Letter 
to the Provincial Health Directorate Pharmaceuticals and Pharmacies Branch, 22 February 2016; Özel/Private 
Anadolu Hastanesi Antalya, Letter to the  Provincial Health Directorate Pharmaceuticals and Pharmacies Branch, 
1 March 2016 (Exhibit TUR -101).  
626 Ministry of Family and Social Policies, Directorate General for Disabled and Elderly, Letter to the 
Ministry of Health, 25 March 2016 (Exhibit TUR -102).  WT/DS583/12  
 
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  7.178.   In addition to being merely hypothetical, the situation described  by Turkey in this dispute is 
characterized by a level of temporal and sectoral generality that is at odds with the concept of risk 
under Article XX(b).  The generality of Turkey 's argument is in fact such t hat the risk identified by 
Turkey could be present in any sector and concern any market. Indeed, Turkey refers to general 
economic circumstances that are not specific to the pharmaceutical sector627, and not specific to 
Turkey (such as exchange rate fluctua tions).628 The generality of Turkey 's underlying argument 
would lead to the conclusion that there is a permanent risk of shortage of products concerning each 
and every sector of any WTO Member 's economy. Following the logic of Turkey 's argument, 
internation al trade liberalization in products and sectors that are necessary for the protection of 
human life or health creates a permanent risk to human life or health under Article XX(b).  
7.179.   The Panel is also not persuaded that the risk of a shortage of supply of pha rmaceuticals, as 
described by Turkey, has been proven in the context of the COVID -19 pandemic.629 The Panel 
understands Turkey to argue that the COVID -19 pandemic demonstrates that the risk of shortage 
of supply of safe, effective and affordable pharmaceuti cal products is not merely theoretical, because 
an acute emergency such as the pandemic can lead to such shortages.630 The Panel considers that 
what the COVID -19 pandemic demonstrates is simply that an acute emergency in any sector could 
potentially trigger  a risk of short -term shortage of any products. Any additional parallel between the 
COVID -19 pandemic and Turkey 's alleged risk would be precluded by the specific nature of the 
shortages related to the COVID -19 pandemic, which involved a novel virus, a glo bal pandemic, 
unprecedented global demand for newly developed vaccines, and insufficient worldwide production 
to meet that demand. In the Panel 's view, the COVID -19 pandemic is relevant for Turkey 's argument 
only to the extent that it provides a highly pub licized example of worldwide short -term shortages of 
products (such as vaccines and other pharmaceutical products).  The COVID -19 pandemic does not 
demonstrate, however, how over -reliance on imports of globally available pharmaceutical products 
can lead to long-term risks of shortage of these products, nor how occasional disruptions of supply 
of some  pharmaceutical products can be indicative of a potential risk of disruption of supply of all 
pharmaceutical products . 
7.180.   In sum, Turkey asserts the existence of a risk without establishing any substantial degree 
of probability, such that the risk appears to be theoretical, abstract and hypothetical. In the Panel 's 
view, the hypothetical and overly general nature of the alleged risk, as asserted by Tur key, casts 
serious doubt on Turkey 's assertion that the localisation requirement was taken to protect against a 
future shortage of supply of safe, effective and affordable pharmaceutical products in Turkey.  
7.181.   The Panel recalls that to determine whether a cha llenged measure was taken to protect 
human, animal or plant life or health, a panel must examine all the evidence before it, which may 
include the text of the relevant legal instruments, the legislative history, and other evidence 
regarding the design, str ucture and expected operation of the challenged measure.631 The Panel 
 
627 The Panel notes that, in India – Solar Cells , the responding party likewise referred to currency 
fluctuations and the depreciation of the Indian rupee in the context of asserting possible risks of supply -side 
disruptions and related risks of overrelianc e on imported solar cells and modules. (Panel Report, India – Solar 
Cells, paras. 7.251 -7.252 .) In that case, the panel found it "significant that India has not identified any actual 
disruptions in imports of solar cells and modules to date, whether stemmi ng from 'the unprecedented 
depreciation in [Indian rupee] in 2013 ' or otherwise ". (Ibid . para. 7.262 .) 
628 As the European Union observes, "[e]xchange rate fluctuations are a common re -adjustment 
mechanism in response s to trade and capital imbalances. They a ffect all currencies, and not only the Turkish 
lira." (European Union 's responses to the first set of questions, para. 56 .) 
629 Turkey 's first written submission, paras. 486 -487; second written submission, f n 236; responses to 
the first set of questions, par a. 57; and opening statement, para. 76.  According to Turkey, the COVID -19 
pandemic "confirmed that an acute emergency such as a virus outbreak can quickly lead to dangerous 
medicine shortage " and "shows the risks of overreliance on imported pharmaceutical products ". (Turkey 's first 
written submission, para. 486 .)  
630 The parties appear to agree that the localisation requirement is not similar to the measures imposed 
by a number of countries in the context of the COVID -19 pandemic . (See Europea n Union 's response s to the 
second set of questions, paras. 24 -33; Turkey 's comments on responses to the second set of questions, para. 
21.) 
631 See e.g., Panel Reports, Indonesia – Import Licensing Regimes , para. 7.620; Brazil – Taxation , para. 
7.884; China – Raw Materials , para. 7.479; China – Rare Earths , para. 7.145; and EC – Tariff Preferences , 
para. 7.200 (referring to Appellate Body Reports, Japan – Alcoholic Beverages II , p. 29; Argentina – Textiles 
and Apparel , para. 55; and US – Shrimp , para. 137). S ee also Appellate Body Reports, Colombia – Textiles , 
para. 5.69 (referring to Appellate Body Reports, US – Shrimp , paras. 135 -142; EC – Seal Products , para. 
5.144) and EC – Seal Products , para. 5.144 (referring to Appellate Body Reports, US – Tuna II (Mexi co), para. 
314 and US – Gambling , para. 304).  WT/DS583/12  
 
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  further recalls that such an enquiry has led some panels to conclude that the challenged measures 
were not designed to protect human, animal or plant life or health, and instead pursued o ther 
objectives.  
7.182.   For example, in EC – Tariff Preferences , the European Communities argued that certain tariff 
preferences given to 12 beneficiary countries were justified under Article XX(b) as measures 
necessary to protect human life or health, because th e tariff preferences supported measures taken 
in those countries against the illicit production and trafficking of narcotic drugs, thereby reducing 
the supply of those drugs into its territory and protecting the life and health of EC citizens. The panel 
found that the tariff preferences were not designed to protect the life and health of EC citizens, 
based on, among other things, the fact that there was no mention of the asserted objective 
(protecting the life and health of EC citizens) in the text of the r elevant instruments.632 
7.183.   In China – Rare Earths , China argued that its export duties on rare earths, tungsten, and 
molybdenum products were justified under Article XX(b), because they were "an integral part of a 
comprehensive policy that has the goal to redu ce pollution and protect the health of China 's 
population, its animals and plants ".633 The panel found that the export duties were not taken to 
protect human, animal or plant life or health, based on, among other things, the fact that the Chinese 
instrument s imposing the export duties made no link between the duties and any environmental or 
health objective.634 
7.184.   The Panel observes that most of the legal instruments putting into place the localisation 
requirement do not refer to a public health objective. To the extent that some of them do, such 
references are cast at a general level (as general policy objectives of th e entire Turkish healthcare 
system) and are not linked with the localisation requirement or the declared objective of preventing 
a shortage of supply of safe, effective and affordable medicines arising from an over -reliance on 
imports . 
7.185.   The main legal instr uments serving as a basis for the localisation requirement, as identified 
by the parties635, are the Tenth Development Plan 2014 -2018636, the Structural Transformation 
Program for Healthcare Industries Action Plan637, and the 2016 Action Plan of the 
64th Government.638 
7.186.   The Tenth Development Plan 2014 -2018 does not relate the localisation requirement (or the 
main assessments and objectives from which the localisation requirement derives) to a public health 
objective. The Panel also notes that in the section  describing "global trends and their impact on 
Turkey " in the Health and Social Security sector, the Tenth Development Plan 2014 -2018 does not 
mention the existence of any risk of shortage of supply of safe, effective and affordable 
pharmaceuticals  in Turk ey, but only refers to an expected increase in health expenditures in Turkey 
"in parallel with the projected global rise ".639 
7.187.   Among its objectives and policies, the Tenth Development Plan 2014 -2018 identifies certain 
general "objectives and targets " related  to the topic of "Health "640 (in Chapter 2.1, "Qualified People, 
Strong Society ") and relates them to a series of policies (such as the implementation of a referral 
 
632 Panel Report, EC – Tariff Preferences , para. 7.201.  
633 Panel Reports, China – Rare Earths , para. 7.157.  
634 Panel Reports, China – Rare Earths , paras. 7.169 -7.171.  
635 See Turkey 's first written submission, paras. 128 and 165; European Union 's first written submission, 
paras. 37 -42. 
636 Tenth Development Plan 2014 -2018 (Exhibit EU -12). 
637 Ministry of Health and Ministry of Development, Structural Transformation Program for Healthcare 
Industries Actio n Plan, November 2014 (Structural Transformation Program for Healthcare Industries Action 
Plan) (Exhibits EU -14, TUR -37). Turkey submitted this document as a separate exhibit, arguing that "the 
translation provided by the European Union was inadequate ". According to the exhibit provided by Turkey, the 
document is titled "Action Plan of Structural Transformation Program in Health Industry " (Exhibit TUR -37).  
638 Republic of Turkey, Office of the Prime Minister, 2016 Action Plan of the 64th Government 
(Implemen tation and Reforms), 10 December 2015 (2016 Action Plan of the 64th Government) (Exhibit EU -15). 
639 Tenth Development Plan 2014 -2018 (Exhibit EU -12), para. 52.  
640 Tenth Development Plan 2014 -2018 (Exhibit EU -12), para. 172. These general objectives and targe ts 
do not refer specifically to a public health objective beyond the general description: "[i]ncreasing the quality of 
life and life span of the citizens and ensuring their participation to the economic, social and cultural life in a 
conscious, active and healthy manner is the main objective. For this purpose, accessible, qualified, cost -
effective and sustainable health service delivery supported by data and evidence -based policies is essential. " WT/DS583/12  
 
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  system, increased awareness of health service providers and citizens, control of the quality  and use 
of pharmaceuticals, clear defining of educational and research activities, determination of standards 
in the area of complementary medicine etc.).641 The Panel finds it telling that none of these policies 
pertains to the localisation requirement. R ather, a reference to local production of pharmaceutical 
products appears in the description of policies related to the topic of "Transformation in the 
manufacturing industry " in a different Chapter of the Plan (Chapter 2.2, Innovative Production, High 
and Stable Growth).642 This suggests that the premise of the localisation requirement is seen as part 
of an industrial policy objective and not as pursuing a public health objective.  
7.188.   The Tenth Development Plan 2014 -2018 also contains a Healthcare Related Indus tries 
Structural Transformation Program (Section 1.16). In setting the "objective and scope of the 
program ", it clarifies that "[b]y this program, the aim is transforming into a production structure 
which is capable to produce high value -added products, of fer such products and services to global 
markets and meet a higher portion of domestic pharmaceutical and medical device demands. "643 
While the Plan thus relates the Healthcare Related Industries Structural Transformation Program to 
the objective of meeting  a higher portion of domestic pharmaceutical demand through domestic 
production, it does not appear to relate this objective to concerns pertaining to public health, such 
as improving the safety or affordability of available medicines, or addressing a risk  that domestic 
pharmaceutical demand may not be met by supply from the international market by imports. The 
Plan also identifies program targets, performance indicators and program components, none of 
which refer to an objective of ensuring access to safe,  effective and affordable pharmaceutical 
products.  
7.189.   The Structural Transformation Program for Healthcare Industries Action Plan further 
develops the elements set out in the Tenth Development Plan 2014 -2018. In particular, the program 
targets performance ind icators and program components. The Panel finds it again telling that neither 
of these elements, nor the description of the Program, refer to the objective of ensuring access to 
safe, effective and affordable pharmaceutical products. Rather, the Structural  Transformation 
Program for Healthcare Industries Action Plan  appears to reproduce and build upon the industrial 
policy objective described in the Tenth Development Plan : 
In the long haul, it is vital that Turkey becomes a global hub for R&D and production  in 
medicines and that it reaches a competitive position in medicines and medical devices 
sector. The aim of this program is to switch to a production structure that is able to 
produce high added -value products; to place products and services to the global  
markets; and is capable of meeting a larger portion of domestic need for medicines and 
medical devices.644 
7.190.   The Action Plan of the 64th Government sets out a series of "reforms to be implemented 
within 3 months ", including Action 46: "[t]o improve the reimbursement, pricing and licensing 
procedures for medical devices and strategic and domestic medicines " under the responsibility of 
the Ministry of Health.645 The description of Action 46 includes "speed[ing] up the evaluation process 
for including domest ically manufactured healthcare products on the reimbursement list ", the prompt 
licensing of "medicines for which an application has been lodged for production in Turkey ", and the 
 
641 Tenth Development Plan 2014 -2018 (Exhibit EU -12), paras. 17 3-182. 
642 Tenth Development Plan 2014 -2018 (Exhibit EU -12), para. 669: "[p]harmaceuticals industry will 
attain a more competitive state in which; exports are higher, its internationally competent technology is 
integrated with R&D, necessary measures are taken to develop new molecules in the long run, and higher 
value added drugs, biotechnology and bio -similar products being the priority, are produced. " See also  ibid. 
para. 675: "[d]omestic capability in manufacturing and exporting will be improved in the medical devices and 
supplies industry. " 
643 Tenth Development Plan 2014 -2018 (Exhibit EU -12), p. 180.  
644 Structural Transformation Program for Healthcare Industries Action Plan (Exhibits EU -14, TUR -37), 
p. 1. In the translation provided by Turkey, this paragr aph also does not make any reference to a public health 
objective: "[i]t is important for Turkey to be a global pharmaceutical R&D and production center in the field of 
pharmaceuticals and medical devices and to reach a competitive position in long term. W ith this program, it is 
aimed to introduce a production structure capable of producing high value -added products, providing products 
and services to global markets, and meeting a greater portion of the domestic pharmaceutical and medical 
device needs. " 
645 2016 Action Plan of the 64th Government (Exhibit EU -15), Action 46.  WT/DS583/12  
 
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  exclusion of imported pharmaceutical products from the Annex 4/A list which "will be defined, 
provided that necessary assurance is obtained for provision of the treatment ".646 
7.191.   Thus, the three main legal instruments serving as a basis for the localisation requirement 
strongly indicate that the localisation requirement was not conceiv ed to pursue a public health 
objective (in particular, that of ensuring uninterrupted access to safe, effective and affordable 
medicines for all patients in Turkey) but rather appears to pursue an industrial policy objective. The 
few contemporaneous refere nces to public health concerns that may be related to the objective of 
ensuring uninterrupted access to safe, effective and affordable medicines in Turkey, are made in the 
broader context of describing the general functions of Turkey 's healthcare sector. B y contrast, in 
those same documents, the premises and objectives of the localisation requirement appear in the 
context of industrial policy objectives.  
7.192.   Several Strategic Plans of the TMMDA were published at or around the time when the 
implementation of the  localisation requirement began. The parties refer, in particular, to the 
Strategic Plans of the TMMDA for 2013 -2017647, 2018 -2022648, and 2019 -2023.649 After a careful 
examination of each of these Strategic Plans of the TMMDA, the Panel notes that none of th ese 
provides any further indication that the localisation requirement pursues a public health objective 
by contemporaneously referring to the objective of ensuring uninterrupted access to safe, effective 
and affordable medicines for all patients in Turkey.  
7.193.   With respect to the Strategic Plan of the TMMDA for 20 13-2017, the Panel takes note of 
Turkey 's explanation that this plan links,  through a correlation matrix, the localisation objectives 
included in the Tenth Development Plan 2014 -2018 with the TMMDA 's strategic actions. However, 
the Panel notes that: (i) each of the objectives included in the Tenth Development Plan (2014 -2018) 
appearing in the excerpt provided by Turkey is generally related to one or more of three TMMDA 
objectives ( "to provide access to quality, effective and safe products ", "to take the necessary 
measures to minimize risks and raise awareness to ensure the correct use of products ", and "to 
provide corporate excellence "); and (ii) the policies pertaining to the localisation requirement ar e 
linked to all three TMMDA objectives. If the correlation matrix were indicative of the objective 
pursued by each measure, this would lead to the conclusion that any measure, whose 
implementation involves the TMMDA or the SSI, would necessarily be charact erized as a measure 
designed to protect human health within the meaning of Article XX(b) of the GATT 1994  merely 
because its implementation involves the TMMDA or the SSI.  
7.194.   The Strategic Plan of the TMMDA for 2018 -2022 refers to the objective of "protecting public 
health " which "is possible with the presence of a strong pharmaceutical industry ". This mention is 
followed by the statement that "[r]ather than making very important contributions in terms of 
economic development, the country should have a pharmace utical sector capable of producing to 
meet the medicine needs of the country against factors such as war, epidemic diseases and a 
possible embargo. "650 The Panel observes that this statement links the development of the domestic 
pharmaceutical industry to a voiding shortages, and is thus broadly consistent with Turkey 's assertion 
that the localisation requirement was adopted to ensure an uninterrupted access to safe, effective 
and affordable pharmaceutical products for all patients in Turkey. However, the factors referred to 
("war, epidemic diseases and a possible embargo ") do not align to the specific factors that Turkey 
refers to as the basis for the asserted risk of over -reliance on imports651, and are generic factors 
that could be invoked to support self -sufficiency arguments, and industrial policy measures, in 
virtually any sector of the economy. In addition, the Strategic Plan of the TMMDA for 2018 -2022 
 
646 2016 Action Plan of the 64th Government (Exhibit EU -15), Action 46.  
647 Ministry of Health, Strategic Plan of TMMDA for 2013 -2017, 12 December 2013 (Exhibit TUR -77). 
648 Ministry of Health, Strategic Plan of TMMDA for 2018 -2022, 11 October 2018 (Exhibit TUR -38).  
649 Ministry of Health, Strategic Plan of TMMDA for 2019 -2023, 31 D ecember 2018 (Exhibits EU -87, 
TUR-35). 
650 Ministry of Health, Strategic Plan of TMMDA for 2018 -2022, 11 October 2018 (Exhibit TUR -38), pp. 
74-76. 
651 The Panel recalls that, according to Turkey, its over -reliance on imported pharmaceutical products 
creates th at risk because of several prevailing economic circumstances relating to the cost of imported 
pharmaceutical products in Turkey, including most notably that: (i) the low prices of pharmaceutical products 
on the Turkish market create the risk that foreign p harmaceutical producers might decide to supply other 
countries where they can receive a higher price for their products, instead of Turkey; and (ii) imported 
pharmaceutical products may become unaffordable to the SSI if a foreign currency gains in value or  the 
Turkish lira depreciates.  WT/DS583/12  
 
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  refers to the concept of public health  in the context of describing a largely industrial policy objective: 
"[i]n long term, it is expected that Turkey will be a global pharmaceutical R&D and production center 
and reach a competitive position in the field of pharmaceuticals and medical devices. "652 
7.195.   The Strategic Plan of the TMMDA for 2019 -2023 lists three aims, each further elaborated 
upon with the addition of "goals " and "performance indicators ". The goals and performance indicators 
for "Aim 1: providing access to quality, effective, and safe pr oducts " do not contain any mention of 
the localisation requirement. In fact, localisation appears as a separate component of "Aim 3: priority 
evaluation of applications for the public health and country economy, support of R & D and domestic 
production in health ".653 The Panel considers that this further confirms that the localisation 
requirement does not pursue a public health objective but rather an industrial policy objective.  
7.196.   Turkey also refers to a Strategic Plan 2019 -2023 of the Ministry of Health.654 The sixth aim 
identified in this plan is "[t]o contribute to the socioeconomic development of our country and global 
health; developing national technology and increasing domestic production in healthcare 
industries ".655 The Panel disagrees with Turkey 's exp lanation that two out of the four main 
components of that aim "explicitly refer to the connection between 'ensuring the accessibility, safety 
and rational use of medicines, biological products and medical devices ' and the localisation 
measure ".656 Rather, t he Panel observes that the first of these components refers to a general 
objective of "ensuring the accessibility, safety and rational use of medicines, biological products and 
medical devices " without reference to localisation, and the second of these com ponents is 
"[p]romoting R&D and innovation in health, ensuring nationalization and localization, increasing 
exports ". Rather than a "connection ", as suggested by Turkey, the coexistence of these two 
components implies – at most – that both form part of the  overarching objective of contributing to 
the socioeconomic development of the country and global health. The Panel does not find that this 
conclusively shows that the localisation requirement has a "public health objective " as argued by 
Turkey.  
7.197.   In additio n to the Strategic Plans of the Ministry of Health and the TMMDA, Turkey refers to 
several TMMDA Administrative Operation and Activity Reports.  An analysis of these reports confirms 
the Panel 's initial assessment that the documents pertaining to the implementation of the localisation 
requirement do not contain any indication of a public health objective underpinning the localisation 
requirement. For instance, the 2016 TMMDA Activity Report  refers to the goal of "increasing domestic 
production in the field of pharmaceuticals and medical devices  with the sustainability of the quality 
we achieve in healthcare " and an engagement to "move to a production structure that can produce 
high value -added pr oducts in pharmaceuticals and medical devices, offer products and services to 
global markets, and meet a greater portion of the domestic pharmaceutical and medical device 
needs ", without any connection to the objective of protecting public health.657 The Pa nel disagrees 
with Turkey 's assessment that the 2018 TMMDA Activity Report658 and the 2019 TMMDA Activity 
Report659 "indicate that the objective of local production of pharmaceutical products lies in its 
 
652 Ministry of Health, Strategic Plan of TMMDA for 2018 -2022, 11 October 2018 (Exhibit TUR -38), pp. 
74-76. 
653 Ministry of Health, Strategic Plan of TMMDA for 2019 -2023, 31 December 2018 (Exhibits EU -87, 
TUR-35), Aim 3. (emphasi s added)  
654 Ministry of Health, Strategic Plan 2019 -2023 (Exhibit TUR -34). 
655 Ministry of Health, Strategic Plan 2019 -2023 (Exhibit TUR -34), p. 15.  
656 Turkey 's first written submission, para. 457.  
657 Ministry of Health, TMMDA, Administrative Activity Report 2 016, February 2017 (2016 TMMDA 
Activity Report) (Exhibits EU -99, TUR -36), pp. 1, 86 -87. The 2017 TMMDA Activity Report similarly describes 
the localisation requirement as follows: "In the Tenth Development Action Plan, it is envisaged to carry out 
actions that will encourage the pharmaceutical and medical device industry to domestic production. With these 
actions, domestic production will be encouraged in our country and the domestic producer will have a 
competitive structure. Thus, contribution will be mad e in the pharmaceutical and medical device sectors to 
bring the domestic production to a level that meets the country 's needs. With the Tenth Development Plan 
1.16 within the scope of the Structural Transformation Program in Health Industries, it is envisa ged to increase 
the efficiency of global value chains by increasing the domestic production capacity in the mid -term, developing 
the R&D and enterprise ecosystem, developing a new molecule in the long term, producing higher value added 
medicines and medica l devices. " (Ministry of Health, TMMDA Administrative Operation Report 2017 , February 
2018 (2017 TMMDA Activity Report) (Exhibit TUR -80), p. 95).  
658 Ministry of Health, TMMD Administrative Operation Report 2018 , February 2019  (2018 TMMDA 
Activity Report) ( Exhibit TUR -79). 
659 Ministry of Health, TMMDA Administrative Operation Report 2019 , February 2020  (2019 TMMDA 
Activity Report) (Exhibit TUR -78). WT/DS583/12  
 
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  contribution to public health and the country 's econom y".660 The Panel finds it hard to derive such a 
conclusion from the mere fact that, as described above, one of the aims pursued by the TMMDA is 
described as "priority evaluation of applications for the public health and country economy, support 
of R & D and  domestic production in health ". 
7.198.   Having analysed the evidence before it, the Panel concludes that the documents pertaining 
to the implementation of the localisation requirement do not contain any contemporaneous 
references to a public health objective that  could support the argument that the localisation 
requirement is a measure taken to protect human health or life. The Panel notes, in particular, that: 
(i) some of these documents do not mention a public health objective at all; (ii) some of the 
documents that mention a public health objective do not relate this objective to the localisation 
requirement, but rather describe the localisation requirement within the context of industrial policy 
objectives; (iii) some of the documents that mention a public heal th objective, do so in relation to 
broader policy considerations (i.e. pertaining to the general functions of Turkey 's healthcare system, 
or to health as an element of general societal values), and not in relation to the localisation 
requirement; and (iv) some of the documents that mention the potential effects of increased local 
production of pharmaceuticals on public health, appear to consider these effects not as an objective 
of the localisation requirement, but rather as a potential positive by -product,  as a result of the 
improved performance of Turkey 's domestic pharmaceutical industry.  
7.199.   In the Panel 's view, this demonstrates the Turkish government 's ongoing aim to improve the 
performance of Turkey 's domestic pharmaceutical industry, in particular with r espect to its meeting 
a higher share of domestic demand for pharmaceutical products. However, beyond the general 
assertion that such an improved performance of the domestic pharmaceutical industry could be 
beneficial for public health, the documents pertai ning to the implementation of the localisation 
requirement do not seem to relate this objective to specific public health concerns such as improving 
the safety or affordability of available pharmaceutical products, or addressing a risk that domestic 
pharma ceutical demand may not be met by supply from the international market.  
7.200.   In the Panel 's view, this casts further doubt on Turkey 's assertion that the localisation 
requirement was taken to protect against a future shortage of supply of safe, effective and af fordable 
pharmaceutical products in Turkey.  
7.201.   The Panel 's view is further reinforced by the fact that the objective of the localisation 
requirement, as it appears in several documents, has no rational relationship to the invoked objective 
of ensuring a conti nuous supply of safe, effective and affordable pharmaceutical products.  
7.202.   The Tenth Development Plan (2014 -2018) sets, as one of the two programme targets for 
the Healthcare Industries Structural Transformation Program (Section 1.16), the aim of "meeting 
60 percent (by value) of domestic pharmaceutical demand by domestic production ".661 The 
Structural Transformation Program for Healthcare Industries Action Plan662, as well as several other 
documents related to the implementation of the localisation requirement,  reiterate this objective.663 
The Panel considers it clear from these documents that the localisation requirement, as one of the 
measures put in place to implement the Tenth Development Plan (2014 -2018), also pursues the 
objective of meeting 60% of domestic pharmaceutical demand by do mestic production.664 
 
660 Turkey 's first written submission, para. 461.  
661 The other program target is "[m]eeting 20 percent of the domes tic medical devices and supplies 
demand by domestic production ". (Tenth Development Plan 2014 -2018) (Exhibit EU -12), p. 180 .) It appears 
that, as of 2018/2019, approximately 40% of domestic pharmaceutical demand was met by domestic 
production (see Ministry  of development, Eleventh Development Plan 2019 -2023 (Exhibit EU -84), Section 
2.3.5 ; A. Yücel, "Foreign investments will be [like] medicine! ", Dünya , 30 July 2019 (Exhibit EU -19), p. 4).  
662 Structural Transformation Program for Healthcare Industries Action  Plan (Exhibits EU -14, TUR -37), 
p. 1.  
663 See, for instance, Ministry of Health, Strategic Plan of TMMDA for 2013 -2017, 12 December 2013 
(Exhibit TUR -77), pp. 91 -93. For further reference, see also H . Gursoz, President of the TMMDA, 
"Pharmaceutical Localisation Project: Transition from Importation to Manufacturing ", presentation of 6 March 
2017 (Exhibit EU -34), slide 1; TMMDA, "Pharmaceutical Localisation Project Work Conducted by the Ministry of 
Health ", presentation of December 2017 (Exhibit EU -23), slide 1.  
664 Turkey argues that the 60% target mentioned in the Tenth Development Plan (2014 -2018) is "an 
overarching objective which does not exclusively relate to the localisation measure " (Turkey 's responses to the 
second set of question s, para. 72). However, the Panel recalls that Turkey identified the Tenth Development WT/DS583/12  
 
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  7.203.   The Panel agrees with Turkey that "each WTO Member has the right to set its own objectives 
for developing its pharmaceutical sector in order to ensure access to safe, effective and affordable 
medicines in line with the sustainable deve lopment goals "665, and understands that Turkey has set 
its own objective of meeting 60% of domestic pharmaceutical demand through domestic production. 
However, the Panel disagrees with Turkey to the extent that Turkey appears to suggest that any 
objective s et by a WTO Member for developing its pharmaceutical sector is automatically or 
necessarily set "in order to ensure access to safe, effective and affordable medicines in line with the 
sustainable development goals ". To the contrary, in the Panel 's view, a measure adopted in pursuit 
of developing a WTO Member 's pharmaceutical sector could only be seen as having a public health 
objective if there is a rational relationship between the objective set by that WTO Member for 
developing its pharmaceutical sector a nd the specific public health objective invoked.  
7.204.   The Panel does not see such a rational relationship between the localisation requirement 's 
stated objective of increasing domestic production from meeting 40% to covering 60% of domestic 
demand, and the decl ared objective of ensuring a continuous supply of safe, effective and affordable 
pharmaceutical products. This is because: (i) it remains unclear from Turkey 's arguments and the 
evidence before the Panel how the target of meeting 60% of domestic demand by domestic 
production relates to ensuring continuous supply of safe, effective and affordable pharmaceutical 
products; (ii) this target is set simply in terms of the total sales value of the total domestic demand 
for medicines; and (iii) the performance indi cators for this target do not appear to be related to the 
objective of ensuring a continuous supply of safe, effective and affordable pharmaceutical products.  
7.205.   Turkey has provided no explanation as to why and how the localisation requirement 's stated 
object ive of specifically meeting 60% of domestic demand through domestic production (rather than, 
for instance, maintaining the current figure of 40%, or setting a higher target of 100%) relates to 
ensuring a continuous supply of safe, effective and affordable pharmaceutical products.666 The 
various legal instruments related to the implementation of the localisation requirement do not 
provide further clarity. The Panel observes that the program targets for the Healthcare Industries 
Structural Transformation Progr am (Section 1.16) are set in terms of increasing the share of 
domestic production similar to those used for other programs that pursue an industrial policy 
objective667, whereas the program targets for other programmes are set in terms that have a much 
clearer relationship with the objective of improving public health.668 
 
Plan (2014 -2018) as one of the "high-level policy documents which paved the way for the localisation 
measure " and specified that the localisation requirement "encourages local production and implements the 
Tenth Development Plan " (Turkey 's first written submission, paras. 165 and 555). The Tenth Development Plan 
(2014 -2018) refers to the fact of meeting 60% of domestic pharmaceutical demand by domestic production as 
a "program target ". (Tenth Development Plan 2014 -2018 (Exhibit EU -12), p. 180 .) Since the localisation 
requirement implements the Tenth Development Plan (2014 -2018), the Panel finds it logical to conclude that 
the localisation requirement pursues the program tar gets set in the Tenth Development Plan (2014 -2018). 
Turkey also explains that it has considered it sufficient for domestic production to account for 60% of the 
domestic pharmaceutical market, making domestic production a "safety cushion " without eliminatin g imports of 
medicines (i.e. having 100% domestic production). (Turkey 's responses to the second set of questions, para. 
65.) The European Union disagrees that the 60% target is a "safety cushion " and argues that it is "rather an 
objective of Turkey 's indu strial and economic development policy ". (European Union 's comments on responses 
to the second set of questions, para. 61 .) Whether or not the 60% target is a "safety cushion ", it is clear from 
the evidence, and undisputed by Turkey, that the 60% target is  one of the program targets set by the Tenth 
Development Plan (2014 -2018) and pursued by the localisation requirement.  
665 Turkey 's responses to the second set of questions, para. 68.  
666 Turkey only explains that it has considered "that it is sufficient for the domestic production to 
account for 60% of the medicine market " and relates this choice to "a factual assessment of Turkey 's chosen 
level of protection and the expected operation of the measure at issue ". (Turkey 's responses to the first set of 
question s, para. 65 ; responses to the second set of questions, para. 69 .) 
667 For instance, the program targets for "Domestic resource based energy production program " (Section 
1.13), include "[i]ncreasing the share of domestic resources, including domestic and inte rnational oil and 
natural gas drillings, in primary energy production to 35 percent at the end of 2018 which was 28 percent at 
the end of 2011 " and "[i]ncreasing electricity generation from domestic coal sources to 60 billion kWh in 2018 
which was approximately 39 billion kWh in 2012 " (Tenth Development Plan 2014 -2018) (Exhibit EU -12), 
p. 174). The "Domestic resource based energy production program " clearly refers to industrial policy and 
economic development objectives such as "[t]o establish high and stable growth in Turkish economy, utilization 
of all possible domestic resources in energy production ". (Ibid. p. 174 .) 
668 For instance, the program targets for "Healthy life and mobility program " (Section 1.21) include 
"[r]educing the rate of deaths fr om non -communicable diseases " or "[r]educing the ratio of obese people 
among 19+ population to 24 percent. " (Tenth Development Plan 2014 -2018) (Exhibit EU -12), p. 190 .)  WT/DS583/12  
 
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  7.206.   The Panel also finds it telling that the 60% figure relates to the share of locally produced 
pharmaceutical products in terms of sales value of the total domestic demand for medicines.669 This 
reference to sales value rather than to other metrics, such as the range of medicines produced 
domestically, or the geographic or demographic coverage of demand in Turkey, suggests that the 
localisation requirement 's stated objective pert ains exclusively to industrial policy and cannot be 
related to the invoked objective of ensuring access to safe, effective and affordable pharmaceutical 
products.670 
7.207.   The Panel 's conclusion that the localisation requirement 's stated objective of meeting 60% 
of domestic demand through domestic production has no rational relationship to Turkey 's declared  
objective of ensuring access to safe, effective and affordable pharmaceutical products is further 
confirmed by the performance indicators set in the Tenth Deve lopment Plan (2014 -2018) and the 
Structural Transformation Program for Healthcare Industries Action Plan. These include, among 
other things, indicators such as "ratio of exports to imports ", "number of companies producing 
medical devices in Turkey ", "numbe r of employees in the pharmaceutical industry "671 or "capacity 
utilization rate "672, and do not include any indicators related to Turkey 's invoked objective of 
ensuring a continuous supply of safe, effective and affordable pharmaceutical products. The inclus ion 
of a performance indicator related to the "ratio of exports to imports " appears particularly at odds 
with the pursuit of an objective of ensuring a continuous supply of pharmaceutical products in 
Turkey .673 The Panel is not convinced by Turkey 's explanation that "in order to guarantee 
uninterrupted access to medicines in Turkey, it is important for the domestic pharmaceutical industry 
to be also capable to export medicines to other countries ".674 In the Panel 's view, there is an inherent 
contradiction between the declared objective of ensuring a continuous supply of safe, effective and 
affordable products in a particular market and encouraging domestic producers in that market to 
increase their export performa nce.675 
7.208.   For these reasons, the Panel is of the view that the stated objective of the localisation 
requirement, i.e. meeting 60% (by value) of domestic pharmaceutical demand by domestic 
production, has no rational relationship to the objective invoked by Tur key in this dispute, 
i.e. ensuring a continuous supply of safe, effective and affordable pharmaceutical products. This is 
a further indication that the localisation requirement is not a measure taken to protect human life 
or health.  
7.209.   The Panel is aware that  the COVID -19 pandemic has prompted many WTO Members to 
consider increasing their local production of certain pharmaceutical products to mitigate against risks 
of disruptions in global supply chains in respect of essential medicines (including the raw mate rials 
needed to produce them).676 The Panel is also cognizant of the growing consensus within the 
 
669 Turkey 's responses to the second set of questions, para. 72.  
670 The Panel notes  the European Union 's argument  that "the use of such metric is designed to promote 
the localization of relatively more expensive medicines, regardless of their therapeutic uses or availability " and 
that "[i]f the Localization Requirement was genuinely designed to secure access to medicines, its 'target ' would 
rather be defined in other metrics related to the range of medicines produced domestically, and their relative 
importance in light of that objective, having regard to relevant factors such as their therapeu tic uses, 
consumption needs, and their availability on the international markets. " (European Union 's comments on 
responses  to the second set of questions, paras. 65 -66.) 
671 Tenth Development Plan 2014 -2018 (Exhibit EU -12), p.  180. 
672 Structural Transformation Program for Healthcare Industries Action Plan (Exhibits EU -14, TUR -37), 
p. 2. 
673 The Panel appreciates Turkey 's explanation that "this performance indicator is not design ed to 
measure the effectiveness of the localization measure with respect to meeting its public health objective " 
(Turkey 's responses to first set of questions, para. 66), i.e. Turkey 's invoked objective  in this dispute. 
However, this performance indicator is clearly designed to measure the effectiveness of the localisation 
requirement with respect to the program target of meeting 60% of domestic pharmaceutical demand by 
domestic production, i.e. the localisation requirement 's stated objective . For that reason, the Panel finds the 
inclusion of this performance indicator indicative of the expected outcomes of the localisation requirement, and 
– indirectly – of the potential existence, or lack, of a rational relationship between the stated objective a nd the 
invoked objective.  
674 Turkey 's response s to the first set of questions, para. 67.  
675 According to the Structural Transformation Program for Healthcare Industries Action Plan, the ratio of 
exports to imports was expected to increase from 18.2% in 2013  to 29.3% in 2018. (Structural Transformation 
Program for Healthcare Industries Action Plan ) (Exhibits EU -14, TUR -37), p. 2 .)  
676 Turkey states that "the need for local production of pharmaceutical products has been officially 
endorsed by several countries,  including some of the European Union Members States. French President 
Emanuel Macron stated that '[t]his crisis teaches us that on some goods, materials, the strategic character WT/DS583/12  
 
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  international community that t he local production of medicines can provide for greater sustainability 
of supply chains, especially in public health emergencies . This growing consensus finds reflection in, 
among other things, the May 2021 resolution adopted by the Member States of the WHO on 
"Strengthening local production of medicines and other health technologies to improve access ".677 
The Panel, taking into acc ount the current context of the COVID -19 pandemic, does not question 
that various risks of disruptions in global pharmaceutical supply chains exist; that there is a range 
of measures that countries have been encouraged to take to mitigate such risks  and, m ore generally, 
to promote the sustainability of supply chains ; and that these may include measures to strengthen 
the local production of pharmaceuticals.  
7.210.   However, it does not logically follow from this that any measure taken by a WTO Member to 
increase its local production of pharmaceutical  product s must be deemed to have been taken for the 
purpose of protecting human life or health. In this case, the Panel 's analysis of the evidence before 
it relating to Turkey 's locali sation requirement, imple mented in 2016, leads it to conclude that Turkey 
has not discharged its burden of demonstrating that the localisation requirement is a measure taken 
to protect against a risk of long-term shortage of supply of safe, effective and affordable 
pharmaceutical products in Turkey . First, Turkey has not identified any instance of shortage of supply 
of a specific product caused by the factors that it asserts create the alleged risk, namely foreign 
producers deciding to stop supplying pharmaceutical products to Turk ey and to instead sell in other 
countries where they can receive a higher price for their products, or a pharmaceutical product 
becoming unaffordable to the SSI because of a foreign currency gaining in value or the Turkish lira 
depreciating. Second, the do cuments pertaining to the implementation of the localisation 
requirement do not contain any contemporaneous references to the specific risk and objective 
invoked by Turkey. Third, there is no rational relationship between the localisation requirement 's 
stated objective of meeting 60% (by value) of domestic pharmaceutical demand through domestic 
production and the objective of ensuring a continuous supply of safe, effective and affordable 
pharmaceutical products.  
7.211.   For these reasons, the Panel finds that Turke y has not demonstrated that the localisation 
requirement is a measure taken to protect  human, animal or plant life or health within the meaning 
of Article XX(b).  
7.4.2.3.3   Remaining elements under Article XX(b)  
7.212.   The Panel has found that the localisation requirement i s not a measure  taken to protect 
human, animal or plant life or health. This is a threshold legal element that must be satisfied for a 
measure to be covered by the exception of Article XX(b)678, because there can be no justification 
under Article XX(b) for a measure that is not "designed " to protect human, animal or plant life or 
 
imposes having a European sovereignty, produce more on the national territory  to reduce our dependence and 
equip us over the long run . […] Our priority today is to produce more in France and to produce more in 
Europe '. Similarly, the German Economy Minister Peter Altmaier called for an EU -wide initiative to reshore 
pharmaceutical p roduction. The same was recognised by the EU Health Commissioner Stella Kyriakides, 
according to whom, 'it has become abundantly clear that we need to work towards the need for increasing the 
production of medicines and innovation within the EU '. In a simi lar vein, the Pharmaceutical Committee of the 
European Commission 's Health and Food Safety Directorate -General stated that it was 'concerned that [the 
EU's] dependency on imports of APIs and chemical raw materials will put increasingly at risk the supply o f 
certain essential medicines and threaten the EU 's strategic autonomy. The recent outbreak of COVID -19 shows 
that a disruption of supply from India and China in the pharmaceutical value chain could present a major 
health security issue '". (Turkey 's first written submission, para. 487, referring to Rym Momtaz, "Macron urges 
massive increase in local production of medical equipment ", Politico , 31 March 2020  (Exhibit TUR -31); Jakob 
Hanke Vela, "Germany wants to reshore pharma production from Asia ", Politico , 13 March 2020 (Exhibit TUR -
95); "Commission aims to bring back medicine production to Europe ", Euractiv , 22 April 2020, (Exhibit TUR -
30); Jim Brunsden and Michael Peel, "Covid -19 exposes EU 's reliance on drug imports ", Financial Times , 20 
April 2 020 (Exhibit TUR -96); European Commission, Health and Food Safety Directorate -General, 
Pharmaceutical Committee, Dependency of the EU pharmaceutical industry on active pharmaceutical 
ingredients and chemical raw materials imported from third countries , 12 March 2020 ( Exhibit TUR -97). 
677 Seventy -Fourth World Health Assembly, 25 May 2021, A74/A/CONF./1 . This resolution was initially 
proposed by Ethiopia (on behalf of the African Group) and co -sponsored by the US, EU member States and 
many other developing and developed countries.  
678 See Appellate Body Report, Colombia – Textiles , para. 5.68.  WT/DS583/12  
 
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  health.679 The localisation requirement fails to meet this threshold. Accordingly, the Panel need not 
assess the remaining legal elements of Article  XX(b) to determine the applicabil ity of this exception.  
7.213.   Since the localisation requirement does not fall under Article XX(b) and is thus not 
provisionally justified under this subparagraph, it is also not necessary for the Panel to assess 
whether the localisation requirement has been appl ied consistently with the requirements of the 
chapeau of Article XX.680 
7.214.   In the circumstances of this dispute, the Panel also sees no compelling reason to make 
additional findings or observations beyond those necessary to resolve the claims and defences at 
issue. Accordingly, it is unnecessary to make findings on the disputed issues that arise in respect of 
the remaining elements under Article XX(b).  
7.4.3   Turkey 's alternative defence under Article XX(d) of the GATT 1994  
7.215.   Article XX( d) of the GATT 1994 provides:  
Subject to the requirement that such measures are not applied in a manner which would 
constitute a means of arbitrary or unjustifiable discrimination between countries where 
the same conditions prevail, or a disguised restriction on international trade, no thing in 
this Agreement shall be construed to prevent the adoption or enforcement by any 
Member  of measures:  
… 
(d) necessary to secure compliance with laws or regulations which are not inconsistent 
with the provisions of this Agreement, including those rel ating to customs enforcement, 
the enforcement of monopolies operated under paragraph 4 of Article II and Article 
XVII, the protection of patents, trade marks and copyrights, and the prevention of 
deceptive practices ; 
7.216.   Turkey submits that if the Panel finds that the localisation requirement is not justified under 
Article XX(b), then, in the alternative, it is justified under Article XX(d) of the GATT 1994 as a 
measure necessary to secure compliance with laws and regulations that are not inconsistent with 
the GATT 1994. According to Turkey, the localisation requirement is necessary to secure compliance 
with the laws and regulations requiring Turkey to ensure "accessible, effective and financially 
sustainable healthcare ".681 
7.217.   The Panel notes that Turkey 's argument under Article XX(d) is substantially the same as its 
argument under Article XX(b). More specifically, Turkey submits that the localisation measure is 
designed to secure compliance with the obligation to ensure accessible, effective, and financiall y 
sustainable healthcare.682 Turkey states that  to meet its obligation to provide adequate healthcare 
to its population, Turkey needs to ensure that its healthcare system is sustainable, and to maintain 
the broad coverage of that system, Turkey regulates th e prices of medicines available on the market. 
This, in turn, "leads to a risk of a shortage of supply when the prices are considered by the 
pharmaceutical companies as too low ".683 The localisation requirement "aims to address that risk by 
ensuring the con tinuous availability of the medicines without undermining the financial balance of 
 
679 See Appellate Body Reports, Colombia – Textiles , para. 5.68; Argentina – Financial Services , para. 
6.203, and Mexico – Taxes on Soft Drinks , para. 72.  
680 Prior WTO adjudicators have traditionally refrained from assessing for conformity with the chapeau of 
Article XX measures that they have found not to be provisionally justified. See e.g. Panel Reports, US – Tariff 
Measures (China) , para. 7.242; India – Solar Cells , paras. 7.389 -7.390; China – Publications and Audiovisual 
Products , para. 7.912; and Colombia – Ports of Entry , para. 7.620. See also Appellate Body Reports, India – 
Solar Cells , para. 5.155; and China – Publications and Audiovisual Products , fn 614. 
681 Turkey 's first written submission, para. 504.  
682 Turkey 's first written submission, paras. 540 -548. In its first written submission, Turkey addresses 
the "designed to " element of the test as an element of whether the measure is "necessary ", and not a s a 
threshold analytical issue.  
683 Turkey 's first written submission, para. 547.  WT/DS583/12  
 
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  the healthcare system ".684 In responding to this argument, the European Union reiterates the same 
arguments that it makes in the context of the "designed to " step in Article  XX(b).685 
7.218.   While Turkey presents two separate defences for the localisation requirement under 
Articles  XX(b) and (d) of the GATT 1994, the essence of Turkey 's arguments is that the measure is 
justified under Article XX(b) because it is necessary to ensure un interrupted access to safe, effective 
and affordable medicines in Turkey; and under Article XX(d) because it is necessary to secure 
compliance with laws requiring Turkey to ensure accessible, effective and financially sustainable 
healthcare. Given the over lap, the Panel considers that its assessment under Article XX(b) extends 
mutatis mutandis  to the analysis of the defence under Article XX(d). Thus, even assuming , for the 
sake of argument , that Article XX(d) could be interpreted as covering measures taken by a 
government to secure its own compliance with its laws or regulations, which is an interpretative 
issue the Panel considers unnecessary to resolve686, it follows from the Panel 's assessment of the 
evidence under Article XX(b) that Turkey has failed to demonstrate that the localisation requirement 
was taken to secure compliance with laws  requiring Turkey to ensure "accessible, effective and 
financially sustainable healthcare " for its population.  
7.4.4   Conclusion  
7.219.   The Panel concludes that Turkey has no t established that the localisation requirement is 
justified under Article XX(b) or Article XX(d) of the GATT 1994.  
7.5  Additional claims relating to the localisation requirement and the "import ban on 
localised products " 
7.5.1   Introduction  
7.220.   The Panel has found that (i) the localisation requirement is not covered by the government 
procurement derogation in Article III:8(a) of the GATT 1994, (ii) it is inconsistent with the national 
treatment obligation in Article III:4 of the GATT 1994, and (iii) Turkey has not establ ished that the 
measure is necessary for the protection of human life or health under Article  XX(b) of the GATT 1994 
or to secure compliance with laws and regulations under Article XX(d) of the GATT 1994. The Panel 
now turns to the European Union 's addition al claims relating to the localisation requirement and the 
"import ban on localised products ". While these claims raise distinct issues of fact and legal 
interpretation, each claim is the subject of a request, by at least one of the parties, that the Panel  
not rule on it for reasons related to considerations of judicial economy.  
7.221.   First, the European Union claims that the reimbursement scheme operated by the Turkish 
social security system involves the granting of a subsidy within the meaning of Article  1.1 of  the 
SCM Agreement, and that the localisation requirement makes the granting of that subsidy contingent 
upon the use of domestic over imported goods, thereby violating Article  3.1(b) of the 
SCM Agreement. The European Union presents this as an alternative and conditional claim, 
requesting the Panel to rule on this claim only if the Panel were to conclude that the localisation 
requirement is not in breach of Article III:4 of the GATT 1994, or that such breach is justified under 
any other provision of the GAT T 1994.687 Turkey does not comment on the alternative and conditional 
nature of the European Union 's claim under Article 3.1(b).  
7.222.   Second, the European Union claims that the localisation requirement, in addition to being 
inconsistent with Article III:4 of the  GATT 1994, is inconsistent with Article 2.1 of the TRIMs 
Agreement because it constitutes an "investment measure related to trade in goods " that is 
inconsistent with Article III:4 of GATT 1994. Turkey submits that if the Panel were to uphold the 
 
684 Turkey 's first written submission, para. 547.  
685 European Union 's second written submission, paras. 203 -206. 
686 The responding party in India – Solar Cells  adopted a similar i nterpretation of the exception in Article 
XX(d). The complaining party in that case argued that Article XX(d) does not apply to measures taken to 
secure a government 's own compliance with its laws and regulations, on the basis that the wording of Article 
XX(d), including the terms "secure compliance " and "enforce ", "strongly suggest that the actor doing the 
enforcing is distinct from the object(s) subject to enforcement ". The panel considered it unnecessary to resolve 
that issue. (Panel Report, India – Solar Cells , paras. 7.324 and 7.329 .) 
687 European Union 's first written submission, para. 279; second written submission, para. 232.  WT/DS583/12  
 
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  European Union 's claim under Article III:4 of the GATT 1994 , then it would not be necessary for the 
Panel to also rule on the claim under Article 2.1 of the TRIMs Agreement.688 
7.223.   Third, the European Union claims that Turkey has acted inconsistently with its obligation s 
under Article X:1 of GATT 1994 by failing to publish certain elements, terms and conditions of general 
application of the localisation requirement promptly, in such a manner as to enable governments 
and traders to become acquainted with them. Turkey argu es that if the Panel were to conclude that 
the localisation requirement is inconsistent with Article III:4 of the GATT 1994, it would not be 
necessary for the Panel to also rule on the European Union 's claim under Article X:1 of the 
GATT  1994.689 
7.224.   Fourth, th e European Union claims that the measure it refers to as "the import ban on 
localised products " is inconsistent with Turkey 's obligations under Article XI:1 of GATT 1994. Turkey 
argues that if the Panel were to conclude that the localisation requirement is  inconsistent with 
Article  III:4 of the GATT 1994, then one of the components of the "import ban " as defined by the 
European Union would disappear, such that it would be unnecessary that the Panel additionally rule 
on that alleged measure.690 
7.5.2   Article 3.1(b) of the SCM Agreement  
7.225.   Article 1 of the SCM Agreement, entitled "Definition of a Subsidy ", provides that a subsidy 
shall be deemed to exist if there is a financial contribution by a government or any public body within 
the territory of a Member (Artic le 1.1(a)(1)), and a "benefit " is thereby conferred (Article 1.1(b)). 
Article 1 sets forth an exhaustive list of what constitutes a "financial contribution ". This list provides 
that a financial contribution exists , inter alia,  where a government practice involves a "direct transfer 
of funds " (Article 1.1(a)(1)(i)), where a government "provides goods " (Article 1.1(a)(1)(iii)), and 
where a government "entrusts or directs a private body to carry out " those or other functions liste d 
in Articles  1.1(a)(1)(i), (ii), or (iii) (Article 1.1(a)(1)(iv)).  
7.226.   Article 3 of the SCM Agreement, entitled "Prohibited Subsidies ", establishes two categories 
of subsidies that Members are prohibited from granting or maintaining. The first category is sub sidies 
contingent on export performance (Article 3.1(a)), which is not at issue in this dispute. The second 
category is "subsidies contingent, whether solely or as one of several other conditions, upon the use 
of domestic over imported goods " (Article 3.1( b)). 
7.227.   The European Union claims that the reimbursement scheme operated by the Turkish social 
security system involves the granting of a subsidy within the meaning of Article  1.1 of the 
SCM Agreement, and that the localisation requirement makes the granting of that subsidy contingent 
upon the use of domestic over imported goods, thereby violating Article  3.1(b) of the SCM 
Agreement.691 Specifically, the European Union argues that: (i) there is a financial contribution in 
the form of a "direct transfer of funds ", from the SSI to the pharmacies, within the meaning of 
Article  1.1(a)(1)(i)692; (ii) this financial contribution confers a direct "benefit ", within the meaning of 
Article 1.1(b) of the SCM Agreement to the outpatients who receive the pharmaceutical produc ts 
covered by the reimbursement scheme and, as a result, also an indirect benefit to the Turkish 
 
688 Turkey 's comments on responses to the second set of questions, para. 17.  
689 Turkey 's response s to the second set of questions, para. 84.  
690 Turkey 's response s to the second set of questions, para. 86.  
691 European Union 's first written submission, paras. 278 -299; second written submission, paras. 231 -
269; responses to the first set of questions, paras . 64-71; responses to the second set of questions, paras. 62 -
82; comments on responses to the second set of questions, paras. 67 -79. 
692 The Panel notes that the European Union makes an additional and conditional argument, in the 
alternative, regarding the e xistence of a financial contribution in the form of "entrustment " or "direction " under 
Article 1.1(a)(1)(iv) of the SCM Agreement. Specifically, the European Union argues that if the Panel were to 
agree with Turkey that the SSI does "procure " and "purchase " pharmaceutical products "for governmental 
purposes " within the meaning of Article III:8(a) of the GATT 1994, then the European Union submits that the 
subsequent provision of those goods by the pharmacies to the outpatients would constitute, by itself, a 
financial contribution in the form of an "entrustment " or "direction " of the provision of goods within the scope 
of Article 1.1(a)(1)(iv) of the SCM Agreement. Turkey does not dispute that the SSI "entrusts " or "directs " 
pharmacies to perform the function of "providing goods ", i.e. pharmaceutical products, to outpatients on the 
terms and conditions set by the SSI . (Turkey 's first written submission, para. 370; Turkey 's response s to the 
first set of questions, para. 79 .) At this juncture of its analysis, however, the Panel has already found that the 
SSI does not "purchase " pharmaceutical products within the meaning of Article III:8(a) of the GATT 1994, 
which renders moot the European Union 's alternative and conditional arg ument under Article 1.1.(a)(1)(iv).  WT/DS583/12  
 
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  producers of those pharmaceutical products693; and (iii) this subsidy is effectively contingent upon 
the use by the outpatient of domestic pharmaceutical produc ts over like imported pharmaceutical 
products.  
7.228.   Turkey disputes each of these points694, arguing that (i) the payments made by the SSI to 
pharmacies are not a "direct transfer of funds " within the meaning of Article 1.1(a)(1)(i); (ii) any 
direct benefit to o utpatients conferred by Turkey 's reimbursement scheme falls outside the scope of 
Article 1.1 of the SCM Agreement, and the European Union has not established that any indirect 
benefit is conferred upon producers of the pharmaceutical products listed in Ann ex 4/A; and (iii) any 
alleged subsidy is not contingent upon the use of domestic over imported products within the 
meaning of Article 3.1(b) of the SCM Agreement.  
7.229.   The Panel notes that the European Union 's claim under Article 3.1(b) of the SCM Agreement 
is expressly conditioned on the Panel rejecting the European Union 's claim under Article III:4 of the 
GATT 1994. Specifically, the European Union states that it makes its claim under Article 3.1(b) of 
the SCM Agreement "in the alternative "695 to its claim conc erning the localisation requirement under 
Article III:4 of the GATT 1994, and "requests the Panel to rule on this claim only in the event that 
the Panel were to conclude that the Localisation Requirement is not in breach of Article III:4 of the 
GATT 1994, or that such breach is justified under any other provision of the GATT 1994 ".696 The 
Panel has concluded that the localisation requirement does not fall within the scope of the 
government procurement derogation in Article III:8(a) of the GATT 1994, that the  localisation 
requirement is inconsistent with Article III:4 of the GATT 1994, and that Turkey has not established 
that the localisation requirement is justified under either of the general exceptions in Article XX(b) 
or (d) of the GATT 1994. Thus, the con dition on which the European Union 's claim under 
Article  3.1(b) is predicated has not been fulfilled.  
7.230.   The Panel considers that the alternative and conditional nature of the European Union 's claim 
under Article 3.1(b) of the SCM Agreement constitutes a suff icient basis for the Panel to decline to 
rule on it, and that it is unnecessary to consider this claim further.  
7.5.3   Article 2.1 of the TRIMs Agreement  
7.231.   Article 1 of the TRIMs Agreement states that it applies to "investment measures related to 
trade in goods " (i.e. "TRIMs "). 
7.232.   Article 2 of the TRIMs Agreement provides:  
1.  Without prejudice to other rights and obligations under GATT 1994, no Member 
shall apply any TRIM that is inconsistent with the provisions of Article III or Article XI 
of GATT 1994.  
2.  An illustrative list of TRIMs that are inconsistent with the obligation of national 
treatment provided for in paragraph 4 of Article  III of GATT 1994 and the obligation of 
general elimination of quantitative restrictions provided for in paragraph 1 of Arti cle XI 
of GATT 1994 is contained in the Annex to this Agreement.  
7.233.   That Illustrative List provides in relevant part:  
 
693 In response to Turkey 's argument that the direct benefit to outpatients "falls outside the scope of the 
SCM Agreement ", the European Union clarifies that Turkey is responding to an argument that the European 
Union has  not made and that it does not argue that any direct benefit conferred to outpatients constitutes, in 
and of itself, a subsidy within the scope of the SCM Agreement; rather, the European Union argues that the 
financial contributions confer a direct benefit  to the outpatients as part of its demonstration that, as a result, 
the same financial contributions also confer an indirect benefit to the Turkish producers of pharmaceutical 
products. (European Union 's second written submission, para. 246; response s to the first set of questions, 
paras. 64 -65.) 
694 Turkey 's first written submission, paras. 330 -413; second written submission, paras. 118 -157; 
responses to the first set of questions, paras. 76 -97; opening statement, paras. 101 -115; closing statement, 
paras. 24 -35; responses to the second set of questions, paras. 73 -81; comments on responses to the second 
set of questions, paras. 33 -38. 
695 European Union 's first written submission, para. 279; second written submission, para. 232.  
696 European Union 's first written  submission, para. 279; second written submission, para. 232.  WT/DS583/12  
 
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  1.  TRIMs that are inconsistent with the obligation of national treatment provided for 
in paragraph  4 of Article  III of GATT 1994 include tho se which are mandatory or 
enforceable under domestic law or under administrative rulings, or compliance with 
which is necessary to obtain an advantage, and which require:  
(a) the purchase or use by an enterprise of products of domestic origin or from any 
domestic source, whether specified in terms of particular products, in terms of volume 
or value of products, or in terms of a proportion of volume or value of its local 
production;  or 
(b) that an enterprise 's purchases or use of imported products be limited  to an amount 
related to the volume or value of local products that it exports.  
7.234.   Thus, Article 2 prohibits the application of any TRIM that is inconsistent with Articles III or 
XI of the GATT 1994. If a TRIM is one of the two types of TRIMs covered by parag raph 1 of the 
Illustrative List annexed to the TRIMs Agreement, then the measure is deemed to be inconsistent 
with Article III:4 of the GATT 1994 (and, by extension, Article 2.1 of the TRIMs Agreement) which 
obviates the need for any further examination of  the elements of Article III:4.697 If the TRIM at issue 
is not one of the two types of TRIMs covered by paragraph 1 of the Illustrative list, then a claim 
under Article 2.1 of the TRIMs Agreement necessarily entails an examination of whether the elements 
of Article III:4 are satisfied.  
7.235.   The European Union claims that the localisation requirement, in addition to being 
inconsistent with Article III:4 of the GATT 1994, is inconsistent with Article 2.1 of the TRIMs 
Agreement because it constitutes an "investment measure related to trade in goods " that is 
inconsistent with Article III:4 of GATT 1994.698 
7.236.   Turkey does not present arguments on any of the elements of Article III:4 of the GATT 1994 
or Article 2.1 of the TRIMs Agreement, and limits its response to the Euro pean Union 's claims under 
these provisions to arguing that these provisions are inapplicable to the localisation requirement by 
virtue of the government procurement derogation in Article III:8(a) of the GATT 1994, and that any 
inconsistency with Article II I:4 and Article 2.1 would be justified by Article XX(b) or Article XX(d) of 
the GATT 1994.699 
7.237.   The parties have presented opposing views on whether the Panel should, if it finds that the 
localisation requirement is inconsistent with Article III:4 of the GATT 1994, make any additional 
finding under Article 2.1 of the TRIMs Agreement. In response to a  question from the Panel, the 
European Union argues that several previous panels in similar cases have made findings under both 
provisions700 and states that there is little to gain from exercising judicial economy over the claim 
under Article 2.1 because t he only remaining elements to consider (i.e. whether the localisation 
requirement is an "investment measure " "related to trade in goods ") are uncontested by Turkey.701 
Turkey submits that, contrary to what the European Union argues, if the Panel were to uph old the 
European Union 's claim under Article III:4 of the GATT 1994 then it would not be necessary for the 
Panel to also rule on the claim under Article 2.1 of the TRIMs Agreement.702 Turkey notes that in 
several past cases  panels have decided to exercise judicial economy on claims under the TRIMs 
Agreement after having found violations of Article III:4 of the GATT 1994.703 
7.238.   In approaching arguments  relating to judicial economy, the Pane l considers it useful to 
distinguish and consider two separate questions. The first is whether the Panel has the discretion to 
decline to rule on a given claim. This is a legal question, and it turns on whether such a ruling  would 
be superfluous from the p erspective of implementation. If the answer to the first question is yes, 
the second question is whether the Panel should exercise that discretion, given that a panel  is not 
 
697 Panel Report, India – Solar Cells , para. 7.54. 
698 European Union 's first written submission, paras. 262 -277; second written submission, paras. 227 -
230; opening statement, paras. 10 -12; response s to the second set of questions, paras. 18 -23.  
699 Turkey 's first written submission, paras. 6, 123, 174, 242, 243 -244, and 414.  
700 The European Union refers to Panel Reports, Indonesia – Autos , para. 15.1; Canada – Renewable 
Energy / Canada – Feed-in Tariff Program , paras. 8.2 and 8.6; and India – Solar Cells , para. 8.2. 
701 European Union 's response s to the second set of questions, paras. 18 -23. 
702 Turkey 's comments on responses to the second set of questions, para. 17.  
703 Turkey refers to Panel Reports, EC – Bananas III , para. 7.186; Turkey – Rice, para. 7.184; India – 
Autos , paras. 7.161, 7.324; China – Auto Parts , para. 7.368; US – Renewable Energy , paras. 7.348 -7.353.  WT/DS583/12  
 
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  required to exercise judicial economy  in circumstances where it is entitled to do so.704 That 
assessment is not as much a legal question  as it is a discretionary authority , the exercise of which 
is guided by the Panel 's judgement of the circumstances of the case.  
7.239.   It is clear from the terms of the TRIMs Agreement, and confirmed in past di spute settlement 
practice, that the relationship between Article 2.1 of the TRIMs Agreement and Article III:4 of the 
GATT 1994 is such that, in principle, compliance with a finding of inconsistency with Article III:4 
would bring about compliance with the p arallel obligation in Article 2.1 of the TRIMs Agreement.705 
Therefore, where a panel has already found a violation of Article III:4 of the GATT 1994, it is in 
principle not necessary to make additional findings on the consistency of the same measure(s) und er 
the parallel obligation in the TRIMs Agreement. The steps taken by the responding Member to bring 
the measures at issue into compliance with Article III:4 of the GATT 1994 will also, by definition, 
eliminate the alleged non -conformity of the same measur es with obligations under Article 2 of the 
TRIMs Agreement (which, as explained above, prohibits TRIMs inconsistent with Article III:4 of the 
GATT 1994).  
7.240.   The foregoing explains why there is a "relatively consistent practice "706 of past panels 
exercising jud icial economy over claims under the TRIMs Agreement when faced with claims under 
Article III:4 of the GATT 1994. As indicated by the panel in a recent case involving parallel claims 
under Article III:4 of the GATT 1994 and Article 2.1 of the TRIMs Agreemen t: 
Like the above panels, we do not find it necessary to address India 's claims under the 
TRIMs Agreement in order to provide a positive solution to this dispute. Bearing in mind 
that Article 2 of the TRIMs Agreement is only concerned with TRIMs that are i nconsistent 
with Article III (or Article XI) of the GATT 1994 and also in light of the relatively 
consistent practice of past panels when faced with claims under Article III:4 of the GATT 
1994 and Article 2 of the TRIMs Agreement, we consider that steps ta ken by the United 
States to bring the measures at issue into compliance with Article III:4 of the GATT 
1994 will also eliminate the alleged non -conformity of the same measures with 
obligations under the TRIMs Agreement.707 
7.241.   The Panel put a question to the Eu ropean Union asking whether, if the Panel were to uphold 
the European Union 's claim under Article III:4  of the GATT  1994,  it would  still be necessary  to rule on 
the claim  under  Article  2.1 of the TRIMS Agreement. In its response, the European Union appears to 
accept the premise that, if the claim under Article III:4 is upheld, the Panel would be legally entitled 
to exercise judicial economy over the claim under Article 2.1.708 The only reasons given by the 
European Union for a ruling on the claim unde r Article 2.1 are that some panels in previous cases 
have ruled on both provisions, and that doing so in this case would be uncomplicated. Even 
assuming , for the sake of argument , that these could be valid reasons for a panel to refrain from 
exercising jud icial economy709, the European Union 's response does not suggest that the Panel is 
legally precluded from exercising judicial economy over the claim under Article 2.1.  
7.242.   Based on the foregoing, the Panel considers that it is legally entitled to exercise judic ial 
economy over the claim under Article 2.1 of the TRIMs Agreement given that the Panel has already 
found that the localisation requirement is inconsistent with Article III:4 of the GATT 1994, and the 
Panel does not understand the European Union to argue otherwise. The disputed question is whether 
the Panel should exercise that authority in the circumstances of this case.  
7.243.   The Panel recalls that it has already followed an economical approach when assessing the 
central issues in this dispute. In addressing A rticle III:8(a) and Articles  XX(b) and (d), the Panel 
indicated that in the circumstances of this dispute, the Panel saw no compelling reason to make 
 
704 Appellate Body Report, US – Lead and Bismuth II , paras. 71 and 73.  
705 See e.g. Panel Report, US – Renewable Energy , para. 7.348.  
706 Panel Report, US – Renewable Energy , para. 7.353.   
707 Panel Report, US – Renewable Energy , para. 7.353.  
708 European Union 's responses to the second set of questions, paras. 18 -23. 
709 The Panel acknowledges that there is not a uniform practice, but notes that two of the three cases 
referred to by the European Union involved arguments relating to Article 2.2 and the Illustrative List of TRIMs, 
which necessarily entailed ruling in tan dem on the claims under the GATT 1994 and the TRIMs Agreement. 
(See e.g. Panel Reports, Canada – Renewable Energy / Canada – Feed-in Tariff Program , para. 7.167; Panel 
Report, India – Solar Cells , para. 7.73 .) In this case, the European Union has not presented any arguments 
under Article 2.2 and the Illustrative List of TRIMs.  WT/DS583/12  
 
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  additional findings or observations beyond those necessary to resolve the claims and defences before 
it. Thus, the Panel ended its assessment under Article III:8(a) after finding that the localisation 
requirement did not involve the "purchase " of pharmaceutical products included in the Annex 4/A 
list by governmental agencies. The Panel made no findings on the disputed issues under the three 
remaining elements of Article III:8(a), all of which are disputed.710 The Panel similarly ended its 
assess ment under Article XX(b) after finding that Turkey had not discharged its burden of 
demonstrating that the localisation requirement is a measure taken to prevent a long -term shortage 
of supply of safe, effective and affordable pharmaceutical products in Tu rkey. The Panel made no 
findings on the heavily contested issue of whether the localisation requirement was "necessary " to 
fulfill that objective.711 And having found that its assessment under Article XX(b) extended mutatis 
mutandis  to the analysis of the d efence under Article XX(d), the Panel disposed of Turkey 's Article 
XX(d) defence without making findings on the disputed issues specific to that provision and without 
making findings on whether the instruments referenced by Turkey constituted "laws or regu lations " 
within the meaning of Article XX(d) or the extent to which Article XX(d) covers measures taken by 
a government to secure its own compliance with its laws and regulations.712 
7.244.   The Panel considers that the economical approach it has taken to these iss ues comports with 
the economical approach that the European Union has itself advocated for resolving its claim under 
Article 3.1(b) of the SCM Agreement. Notably, as explained in the previous section, the European 
Union requested that the Panel rule on its  claim under Article 3.1(b) of the SCM Agreement only if 
the Panel were to conclude that the localisation requirement is not inconsistent with Article III:4 of 
the GATT 1994, or that such inconsistency was justified under any other provision of the GATT 
1994.713 In the light of its findings under the relevant provisions of the GATT 1994, the Panel has 
followed the economical approach requested by the European Union and accordingly declined to rule 
on the European Union 's conditional claim under Article 3.1(b ) of the SCM Agreement. As a result, 
the Panel has made no findings on the heavily contested issues that arise in the context of that 
claim.  
7.245.   In line with the approach taken by the Panel elsewhere in this Report, the Panel sees no 
compelling reason to make additional findings under Article 2.1 of the TRIMs Agreement. In the light  
of its findings under the relevant provisions of the GATT 1994 , the Panel exercises judicial economy 
over this claim.  
7.5.4   Article X:1 of the GATT 1994  
7.246.   Article X:1 of the GATT 1994 provi des in relevant part:  
Laws, regulations, judicial decisions and administrative rulings of general application, 
made effective by any Member , pertaining to the classification or the valuation of 
products for customs purposes, or to rates of duty, taxes or other charges, or to 
requirements, restrictions or prohibitions on imports or exports or on the transfer of 
payments therefore, or affecting their sale, distribution, transportation, insurance, 
warehousing inspection, exhibition, processing, mixing or othe r use, shall be published 
promptly in such a manner as to enable governments and traders to become acquainted 
with them.  
7.247.   Article X:1 applies where the instrument challenged (i) is a law, regulation, judicial decision 
or administrative ruling; (ii) of gener al application; (iii) made effective; and (iv) pertains to the 
range of listed matters affecting imports  or exports . If these conditions are satisfied, Article X:1 of 
the GATT requires Members to publish such instruments "promptly " (vis-à-vis the time at which the 
instruments were made effective) and in such a "manner as to enable governments and traders to 
become acquainted with them ". 
7.248.   The European Union claims that Turkey has acted inconsistently with its obligations under 
Article  X:1 of GATT 1994 by failing to publish certain elements, terms and conditions of general 
application of this measure promptly in such a manner as to enable governments and traders to 
 
710 See section 7.2.4.5 (Remaining elements under Article III:8(a)).  
711 See section 7.4. 2.3.3 (Remaining elements under Article XX(b)).  
712 See section 7.4. 3 (Turkey 's alternative defence under Article XX(d) of the GATT 1994).  
713 European Union 's first written submission, para. 279; second written submission, para. 232.  WT/DS583/12  
 
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  become acquainted with them.714 More specifically, the European Union arg ues that the terms and 
conditions that Turkey should have published in manner compliant with Article X:1 include the 
process and various steps that must be taken as part of localisation; the phases of localisation; the 
product categories to which those pha ses relate; various steps and deadlines for the submission of 
commitments, the information that should be included in the commitments or justifications on why 
commitments could not be made; the authorities ' criteria for accepting or refusing commitments; 
the criteria, phases and deadlines for delisting or deactivating their products (as the case may be); 
instructions on the various steps to be followed (including follow up, possible updates or alternative 
commitments, variation applications); and instructio ns for submitting progress reports.715 
7.249.   Turkey responds that the claim under Article X:1 of the GATT 1994 should be dismissed on 
multiple separate grounds.716 The grounds invoked by Turkey can be broadly categorized as follows: 
(i) the European Union has chan ged the scope of its claim in a way that raises serious due process 
concerns and/or falls outside the Panel 's terms of reference; and (ii) the European Union has failed 
to demonstrate that the relevant measure(s), whether understood as a single cohesive me asure, 
individual instruments/documents, or certain terms and conditions, fall within the scope of the 
obligation in Article X:1, and/or were not published promptly and adequately.  
7.250.   The parties have presented opposing views on whether the Panel should, if i t finds that the 
substantive content of the localisation requirement is inconsistent with Article III:4 of the GATT 1994 
(or Article 3.1(b) of the SCM Agreement), make any additional finding under Article X:1 of the GATT 
1994 relating to its publication. A ccording to the European Union, the Panel should make additional 
findings under Article X:1 relating to the publication of the localisation requirement for the same 
reason that the Panel should rule on its claim under Article XI:1 (discussed in the next su bsection), 
namely , that it is possible that the Appellate Body could reverse the Panel 's other findings regarding 
the WTO -inconsistency of the localisation requirement.717 Additionally, in responding to a question 
from the Panel asking the parties to commen t on two prior cases (Argentina – Import Measures  and 
Russia – Traffic in Transit ) in which panels refrained from ruling on claims under Article X:1, the 
European Union argues that one of those cases (Russia – Traffic in Transit ) is distinguishable.718 
Turkey considers that if the European Union 's first argument were to be followed this would mean 
that panels could hardly ever exercise judicial economy719, whereas several panels have done so in 
relation to claims under Article X:1.720 Furthermore, according to  Turkey, the European Union 's 
attempt to distinguish the present case from Russia – Traffic in Transit  is inapposite and should be 
rejected.721 
7.251.   Article X of the GATT 1994 is entitled "Publication and Administration of Trade Regulations ". 
The obligations in Article X govern the publication and administration of measures, rather than the 
substantive content of measures.722 Thus, where the substantive content of a measure is found to 
be inconsistent with one or more substantive obligations i n the GATT 1994, additional findings 
relating to the  publication and/or administration of that measure – a measure that will cease to exist 
(in its current form) insofar as the Member concerned withdraws or modifies it to comply with its 
substantive obliga tions – will in principle be superfluous. The reason is that a finding by a panel 
under Article X:1 of the GATT 1994 would not be directed towards any new measures taken by the 
 
714 European Union 's first written submission, paras. 228 -261; second written submission, paras. 117 -
139; responses to the first set of questions, paras. 72 -78; opening statement, paras. 99 -110; responses to the 
second set of questions, paras. 83 -95. 
715 European Union 's responses to the first set of questions, para. 78 (referring to European Union 's 
second written submission, paras. 130 -134).  
716 Turkey 's first written submission, paras. 245 -329; second written submission, paras. 96 -117; 
responses to the first set of questions, paras. 15; opening statement, paras. 96 -100; responses to t he second 
set of questions, paras. 82 -84; comments on responses to the second set of questions, paras. 39 -49. 
717 European Union 's responses to the second set of questions, paras. 83 -84. 
718 European Union 's responses to the second set of questions, paras. 85 -87. 
719 Turkey 's comments on responses to the second set of questions, para. 41. Turkey adds that, in any 
case, the Appellate Body has completed the legal analysis where the factual findings of the panel or undisputed 
facts on the panel record provided a suf ficient factual foundation for doing so. In light of the foregoing, only 
factual findings relating to the parties ' arguments with respect to Article X:1 of the GATT would be necessary. 
(Turkey 's comments on responses to the second set of questions, para. 4 2.) 
720 Turkey refers to Panel Report, Argentina – Import Measures , paras. 6.302 -6.305; Appellate Body 
Report, Argentina – Import Measures , paras. 5.185 -5.203; Panel Report, Peru – Agricultural Products , 
para. 7.501; Panel Report, Russia – Railway Equipment , para. 7.939.  
721 Turkey 's comments on responses to the second set of questions, paras. 39 -40. 
722 Appellate Body Report, EC – Poultry , para. 115.  WT/DS583/12  
 
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  responding Member; rather, a finding of inconsistency under Article X:1 would l ead only to proper 
publication of the existing  measure.723 
7.252.   The foregoing explains why several past panels have exercised judicial economy over claims 
under Article X:1 of the GATT 1994 after finding that the substantive content of the measure violated 
one o r more substantive obligations. In some cases, panels exercised judicial economy over claims 
under Article X:1 in such circumstances without further explanation.724 In other cases, panels and 
the Appellate Body have been more explicit in their reasoning. No tably, in Argentina – Import 
Measures  the Appellate Body upheld the panel 's exercise of judicial economy over a claim under 
Article X:1, noting that as Argentina would have to modify or withdraw the measure to comply with 
the recommendations under Articles  III:4 and XI:1 of the GATT 1994, that the existing measure 
would "cease to exist ".725 The Appellate Body failed to understand "how the publication of this WTO -
inconsistent measure would contribute to securing a positive solution to this dispute ".726 The 
subsequent panel in Russia – Traffic in Transit  likewise exercised judicial economy over the claim 
under Article X:1 and, referring to the Appellate Body 's reasoning, stated that "where a measure is 
found to be WTO -inconsistent, findings relating to the publi cation or administration of the same 
measure are unlikely to be necessary or useful in resolving the matter. "727 
7.253.   The Panel asked the parties if the Panel were to uphold the European Union 's claim under 
Article III:4  of the GATT  1994,  would  it still be necessary  to rule on the claim  under  Article X:1.  In its 
response, the European Union appears to accept the premise that, if the claim under Article III:4 is 
upheld, the Panel would be legally entitled to exercise judicial economy over the claim under Arti cle 
X:1 of the GATT 1994.728 The only reasons given by the European Union for a ruling on the claim 
under Article X:1 are, as already indicated above, that it is possible that the Appellate Body might 
reverse the Panel 's other findings regarding the localis ation requirement729 and that one of the cases 
mentioned above is in some respects distinguishable.730 Leaving aside the circumstance that the 
Appellate Body is not currently functioning731, and assuming that the reason given by the European 
Union for the Pan el to refrain from exercising judicial economy could in principle still be a valid one, 
the European Union 's response does not suggest that the Panel is legally precluded from exercising 
judicial economy over the claim under Article X:1.  To construe the Eu ropean Union 's argument 
otherwise would imply that panels are legally precluded from exercising judicial economy in respect 
of any claim rendered superfluous by its findings on one or more other claims, insofar as those other 
claims involve a question of law or legal interpretation that might be modified or reversed on appeal.  
7.254.   Based on the foregoing, the Panel considers that it is legally entitled to exercise judicial 
economy over the claim under Article X:1 given that the Panel has already fou nd that the localisation 
requirement is inconsistent with Article III:4 of the GATT 1994, and the Panel does not understand 
the European Union to argue otherwise. The disputed question is whether the Panel should exercise 
that authority in the circumstance s of this case.  
7.255.   The Panel understands that in some cases, findings on claims under Article X:1 were made 
in circumstances where it would have been possible to exercise judicial economy. Moreover, the 
Panel accepts that there may be a good reason to make fi ndings on issues relating to the publication 
and administration of a measure instead of exercising judicial economy . Notably, a panel may opt 
to make findings where there is a genuine possibility that the Member concerned could modify or 
reintroduce the ch allenged measure in such a way that the substantive content of the measure is 
brought into conformity with substantive WTO obligations, but without any adjustment to the same 
 
723 Appellate Body Report, Argentina – Import Measures , para. 5.198.  
724 See e.g. Panel Report, Indonesia – Autos , para. 14.152, where the panel merely stated that "[w]e 
have already found that the measures adopted pursuant to the National Car programme violate the provisions 
of Articles I and/or III of GATT. Therefore, we consider that it is not necessary to ex amine Japan 's claims under 
Article X of GATT. " 
725 Appellate Body Report, Argentina – Import Measures , para. 5.200.  
726 Appellate Body Report, Argentina – Import Measures , para. 5.200.  
727 Panel Report, Russia – Traffic in Transit , paras. 7.200 -7.201, citing Panel Reports, Peru – Agricultural 
Products, para. 7.501; and Russia – Railway Equipment, para. 7.939.  
728 European Union 's responses to the second set of questions, paras. 83 -87. 
729 European Union 's responses to the second set of  questions, paras. 83 -84. 
730 European Union 's responses to the second set of questions, paras. 85 -87. 
731 The Panel notes that the work of the Appellate Body has been suspended for nearly two years and 
that Members remain unable to reach consensus on any selection process to fill the vacancies that are required 
for the Appellate Body to function.  WT/DS583/12  
 
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  alleged shortcomings with respect to the publication and administration of the me asure such that 
they are repeated or otherwise carried over into the modified or reintroduced measure. For example, 
in China – Raw Materials , the panel recognized the scope for applying judicial economy over the 
claims under Article  X732, which included a claim under Article X:1, but considered that "in the event 
that China were in any instance to impose a quota that was justified pursuant to Article XX, it would 
be relevant for the parties to know whether the aspects of China 's system of  quota administration 
at issue in this dispute comply with the relevant provisions of GATT Article X. "733 
7.256.   In this case, the Panel has found the localisation requirement to be inconsistent as such with 
Article III:4 of the GATT 1994. This inconsistency with Article III:4 is inherent to the basic 
constitutive elements of the measure. The terms and conditions that the European Union alleges 
were not properly published relate to aspects of the measure that are inseparable from the aspects 
of the measure that giv e rise to the violation under Article III:4. It is not the Panel 's role to speculate 
on the ways in which Turkey might choose to implement the recommendations and rulings of the 
DSB.734 However, neither party has suggested that Turkey could modify the local isation requirement 
in such a way that the substantive content of the measure is brought into conformity with Turkey 's 
substantive WTO obligations, with the same alleged shortcomings with respect to the publication of 
the measure being repeated or otherwis e carried over into the modified measure.  
7.257.   The Panel recalls that it has already followed an economical approach in the context of 
assessing the central issues in this dispute. As elaborated above, in  the context of addressing 
Article  III:8(a) and Articles XX(b) and(d), the Panel indicated that in the circumstances of this 
dispute, the Panel sees no compelling reason to make additional findings or observations beyond 
those necessary to resolve the claims and defences at issue.  The Panel recalls that the econ omical 
approach it has taken with respect to these issues comports with the economical approach that the 
European Union has itself advocated for resolving its claim under Article 3.1(b) of the SCM 
Agreement. Recalling the approach taken by the Panel elsewh ere in this Report, the Panel has also 
exercised judicial economy over the claim under Article 2.1 of the TRIMs Agreement.  
7.258.   In line with the approach taken by the Panel elsewhere in this Report, the Panel sees no 
compelling reason to make additional finding s under Article X:1 of the GATT 1994. In the light  of its 
findings under the relevant provisions of the GATT 1994 , the Panel  exercises judicial economy over 
this claim.  
7.5.5   Article XI:1 of the GATT 1994  
7.259.   Article XI:1 of the GATT 1994 provides:  
No prohibitions or restrictions other than duties, taxes or other charges, whether made 
effective through quotas, import or export licences or other measures, shall be instituted 
or maintained by any Member  on the importation of any product of the territory of any 
other Member  or on the exportation or sale for export of any product destined for the 
territory of any other Member . 
7.260.   The European Union claims that the measure it refers to as "the import ban on localised 
products " is inconsistent with Turkey 's obligations under Article XI:1 of GATT 1994.735 According to 
the European Union, "[w]here the production of a pharmaceutical product has been localised in 
Turkey in accordance with the localisation requirement, applied in conjunction with the Turkish rules 
for approving the importation and marketing of pharmaceutical products, the importation of that 
pharmaceutical product is no longer permitted. "736 This "import ban ", as described by the European 
Union, arises from the combined operation of the localisation requirement and the Turkish rules for 
 
732 Panel Reports, China – Raw Materials , para. 7.635.  
733 Panel Reports, China – Raw Materials , para. 7.636.  
734 Appellate Body Reports, US – FSC, para. 175; and US – Wheat Gluten , para. 185.  
735 European Union 's first written submission, paras. 300 -321 and 351 -364; second written submission, 
paras. 270 -300; response s to the first set of questions, paras. 79 -97; opening statement, paras. 111 -134; 
closing statement, paras.  23-28; response s to the second set of questions, paras. 96 -111; and comments on 
response s to the second set of questions, paras. 80 -90. 
736 European Union 's panel request, p. 6.  WT/DS583/12  
 
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  approving the importation and marketing of pharmaceutical products, and in particular the Single 
Authorization rule.  
7.261.   Turkey requests that the Panel reject the European Union 's claim under Article XI:1 of the 
GATT 1994 on multiple separate grounds.737 First, Turkey argues that while the European Union 
characterizes the "import ban measure " as a "single measure ", it fails to show how the different 
components operate together as part of a "single measure " distinct from its components, and 
thereby fails to establish the existence and precise content of the import ban measure as a "single 
measure ". Second, Turkey argues that the measure causing the alleged restriction, i.e. the Single 
Authorization rule, does not fall within t he scope of Article XI:1 and is an internal measure within 
the meaning of Article III:4 . According to Turkey,  even if Article XI:1 applies there is no "ban" or 
"prohibition " on the importation of localised products because, inter alia , the very same produc t, in 
a different form or different dosage, can receive a marketing authorization with a production site 
abroad . From the fact that there is no "ban" on pharmaceutical products , Turkey draws two 
conclusions : (i) the measure which is characterized by the Eu ropean Union as an "import ban " does 
not exist; and (ii) there is no violation of Article XI:1 insofar as it applies to the measure at issue . 
Third, Turkey argues that the import ban is justified under Article XX(d) of the GATT 1994 because 
it is necessary  to secure compliance with the localisation requirement.  
7.262.   The parties have presented opposing views on whether the Panel should, if it finds that the 
localisation requirement is inconsistent with Article III:4 of the GATT 1994, make any additional 
finding on "the import ban on localised products " under Article XI :1 of the GATT 1994. In response 
to a question from the Panel, the European Union requests that the Panel rule on this measure and 
claim.738 The European Union argues that if the Appellate Body were to disagree with the Panel 's 
view that the localisation re quirement is WTO -inconsistent, then the "import ban " measure, as a 
different measure, could still be found to violate Article XI:1.739 Turkey submits that contrary to what 
the European Union argues, if the Panel were to uphold the European Union 's claim und er Article 
III:4 of the GATT 1994, it would not be necessary for the Panel to also rule on the claim under Article 
XI:1 of the GATT 1994. In that regard Turkey argues that if the Panel were to conclude that the 
localisation requirement is inconsistent with  Article III:4 of the GATT 1994, then one of the 
components of the "import ban " as defined by the European Union will disappear and it would be 
unnecessary that the Panel additionally rule on that alleged measure.740 
7.263.   The Panel observes that in cases where t he same measure is challenged under Article III:4 
and Article XI:1, the decision to exercise judicial economy over one or the other of those claims may 
be relatively straightforward. For example, in India – Autos , the Panel found the indigenization 
conditi on "in its entirety to be inconsistent with Article III:4 ", and stated that in these circumstances 
it did "not see any need to address in addition whether the same condition is also inconsistent with 
Article XI:1 " and therefore exercised judicial economy o ver that claim.741 In Indonesia – Chicken 
(Article 21.5 – Brazil)  the panel found a violation under Article III:4, and reasoned that even if Brazil 
had developed a  prima facie  case in respect of its claim under Article XI:1, it would have followed 
the original panel 's approach of applying judicial economy to the Article XI:1 claim after finding a 
violation under Article III:4. The panel recognized that the scope and content of the two provisions 
were different, but noted that Brazil was unable to point to any potential differences in 
implementation, such that Panel saw no reason not to exercise judicial economy.742 Having exercised 
such judicial economy, the panel indicated that it would leave open the "systemically important 
question " regarding the relat ionship between Article III:4 and Article XI:1.743 
7.264.   The Panel recalls that it has found the localisation requirement to be inconsistent as such 
with Article III:4 of the GATT 1994. This inconsistency with Article III:4 is inherent to the basic 
constitutive e lements of the measure. To that extent, it could be said that the localisation 
requirement has been found in its entirety to be inconsistent with Article III:4. Furthermore, in this 
 
737 Turkey 's first written submission, paras. 571 -646; second written submission,  paras. 257 -302; 
response s to the first set of questions, paras. 98 -107; opening statement, paras. 116 -118; responses to the 
second set of questions, paras. 85 -101; and comments on response s to the second set of questions, paras. 50 -
60. 
738 European Union 's responses to the second set of questions, paras. 96 -99. 
739 European Union 's responses to the second set of questions, paras. 96 -99. 
740 Turkey 's response s to the second set of questions, para. 86.  
741 Panel Report, India – Autos , para. 7.208.  
742 Panel Report, Indonesia – Chicken (Article 21.5 – Brazil) , para 7.192.  
743 Panel Report, Indonesia – Chicken (Article 21.5 – Brazil) , para 7.193.  WT/DS583/12  
 
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  case the arguments of the parties and third parties address the relationsh ip between Article III:4 
and Article XI:1. According to Turkey, the measure causing the alleged restriction, i.e. the Single 
Authorization rule, does not fall within the scope of Article XI:1 and is an internal measure within 
the meaning of Article III:4.  
7.265.   The Panel notes that in this case the possible exercise of judicial economy over the claim 
under Article XI:1 by virtue of the finding that the localisation requirement violates Article III:4 is 
not necessarily as straightforward as in some previous cases involving parallel claims under these 
provisions, because the European Union identifies the localisation requirement and the import ban 
on localised products as two separate measures.744 The European Union challenges the former under 
Article III:4 of the GA TT 1994 (and Article 3.1(b) of the SCM Agreement, Article 2.1 of the TRIMs 
Agreement, and Article X:1 of the GATT 1994) and the latter under Article XI:1 of the GATT 1994. 
Insofar as these measures were distinct from one another, then there would be little  scope for the 
Panel to consider exercising judicial economy in respect of the claims relating to one measure based 
on the rulings on claims relating to the other, distinct measure. That is because in general, if there 
are two distinct measures at issue, t hen a finding concerning one of them would not be expected to 
lead to the modification or withdrawal of the other. In those circumstances, there would be no basis 
to assume that a finding concerning a claim relating to only one of the measures would make f indings 
concerning the other measure superfluous from the perspective of implementation.  
7.266.   In this case, however, the measure that the European Union refers to as "the import ban on 
localised products " comprises two components, one of which is the localisati on requirement itself. 
As noted further above, this alleged "import ban ", as described by the European Union, arises from 
the combined operation of the localisation requirement and the Turkish rules for approving the 
importation and marketing of pharmaceut ical products, and in particular the Single Authorization 
rule. In response to a question from the Panel, the European Union confirmed that the measure it 
refers to as "the import ban on localised products " is the localisation requirement as "applied in 
conjunction " with the rules for approving the importation and marketing of pharmaceutical 
products.745 The European Union further clarified that it "did not challenge the rules for the 
importation and marketing of pharmaceutical products on their own ( per se ), in the absence of the 
Localisation Requirement ".746 
7.267.   Given that the measure that the European Union refers to as "the import ban on localised 
products " comprises two components, one of which is the localisation requirement itself (the other 
component being the Single Authorization rule), the Panel asked the parties  if a finding that the 
localisation requirement is WTO -inconsistent would render moot or superfluous any further finding 
on "the import ban on localised products ". While the parties presented opposing views on whether 
the Panel should make any further finding, both parties ' responses appear to confirm that if the 
Panel finds that the localisation requirement is inconsistent with Article  III:4 of the GATT 1994, then 
it could in principle refrain from making any additional finding on "the import ban on localised 
products " under  Article XI:1 of the GATT 1994.  
7.268.   The Panel notes that Turkey 's response to this question747 presents reasoning that essentially 
mirrors the reasoning adopted by the Panel above in the context of exercising judicial economy over 
the publication claim under Ar ticle X:1 of the GATT 1994. Turkey responded that in this case where 
the European Union has explained that the "import ban on localised products " is the localisation 
requirement "as applied in conjunction " with the rules for approving the importation and m arketing 
of pharmaceutical products, it follows that if the localisation requirement is found to be WTO -
inconsistent, then Turkey will "have to modify or withdraw that measure ". It follows from this, Turkey 
argues, that "the localisation measure – in its c urrent form and with its current content – will cease 
to exist, so that one of the components of the 'import ban ' in its current form and with its current 
content will disappear ". Therefore, Turkey concludes, addressing claims with regard to the "import 
ban" would not contribute to securing a positive solution to this dispute.  
 
744 The Panel recalls that, as set forth in the descriptive part of this Report, the European Union 
identifies th e three measures at issue in this dispute which it refers to as (i) the localisation requirement; (ii) 
the import ban on localised products; and (iii) the prioritization measure.  
745 European Union 's responses to the first set of questions, para. 79.  
746 Europ ean Union 's responses to the first set of questions, para. 81.  
747 Turkey 's responses to the second set of questions, para. 86; comments on responses to the second 
set of questions, para. 50.  WT/DS583/12  
 
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  7.269.   The Panel further notes that the European Union 's response to this question does not 
contradict Turkey 's reasoning. The only reason given by the European Union for a ruling on "the 
import ban on localised products " is that if the Appellate Body were to disagree with the Panel 's view 
that the localisation requirement is WTO -inconsistent, then the "import ban " measure, as a different 
measure, could still be found to violate Article XI:1.748 The European Union 's argument therefore 
implies that, in the absence of the possibility of the Appellate Body reversing the Panel 's findings on 
the localisation requirement, there would be no need to rule on its separate claim under Article XI:1 
relatin g to "the import ban on localised products ". Indeed, the European Union refrained from making 
any comment on Turkey 's argument that it would be unnecessary for the Panel to additionally rule 
on whether the import ban is consistent with Article XI:1 of the GATT 1994 if the Panel upholds the 
claims against the localisation requirement because pursuant to the European Union 's description of 
the measure at issue, such a measure is partly composed of the "localisation requirement ".749 
7.270.   Based on the foregoing, the Panel considers that it is legally entitled to exercise judicial 
economy over the claim under Article XI:1 given that the Panel has already found that the localisation 
requirement is inconsistent with Article III:4 of the GATT 1994, and the Panel does not understand 
the European Union to argue otherwise. As elaborated above, the Panel 's findings on the localisation 
requirement require Turkey to modify or withdraw that measure. It follows that not only the 
localisation requirement, but also th e "import ban on localised products ", will cease to exist in its 
current form. As already explained above, this is because the European Union has defined the 
"import ban on localised products " as the localisation requirement applied in conjunction with the  
Single Authorization rule. Thus, the only disputed question is whether the Panel should exercise 
judicial economy in the circumstances of this case.  
7.271.   The Panel is conscious of the possibility that Turkey could withdraw the localisation 
requirement, and to that extent the "import ban on localised products " as defined by the European 
Union would cease to exist, but that without any adjustment to the Single Authorization rule the 
problem could be repeated or otherwise carried over into the new legal framework governing the 
manufacture of pharmaceuticals in Turkey.  The Single Authorization rule exists independently of 
(and predates) the localisation requirement and the European Union argues that it prohibits the 
importation of all pharmaceutical products that ar e manufactured domestically, not only of the 
products that are localised pursuant to the localisation requirement.750 The Panel understands the 
European Union 's arguments concerning the Single Authorization rule to imply that, even without 
the localisation requirement, the Single Authorization rule would continue to have the kind of limiting 
effect on importation, for any pharmaceutical product that is manufactured domestically, that the 
European Union regards as a "prohibition " or "restriction " giving rise to a violation of Article XI:1.  
7.272.   However, the Panel can only recall that the European Union has clarified that it is not 
challenging the Single Authorization rule separately, on its own, or per se . In other words, the 
European Union has not challenged the Single Authorization rule "as such ", and the European Union 
has made clear that it is not challenging the Single Authorization as a measure distinct from the 
localisation requirement. Thus, insofar as the Single Authorization rule and its alleged limiting effect 
on importation would remain in place in the absence of the localisation requirement, that would not 
be a consequence that would be attributable to the Panel exercising judicial economy in respect of 
the "import ban on localised products " measure. It  would simply be a consequence of the manner 
in which the European Union has described and challenged the measures at issue in this dispute, 
and the resulting limitations on the Panel 's terms of reference.  
7.273.   Having made these observations, it bears repeating  that the European Union has not argued 
that the Panel should refrain from exercising judicial economy over the "import ban on localised 
products " on that basis. To the contrary, and as indicated above, the European Union 's argument 
on the issue of judicia l economy implies that, in the absence of the possibility of the Appellate Body 
reversing the Panel 's findings on the localisation requirement, there would be no need to rule on its 
separate claim under Article XI:1 relating to "the import ban on localised  products ". 
7.274.   The Panel recalls that it has already followed an economical approach in the context of 
assessing the central issues in this dispute. As elaborated above, in  the context of addressing 
 
748 European Union 's responses to the second set of questions, para s. 96-99. 
749 See Turkey 's responses to the second set of questions, para. 86; European Union 's comments on 
responses to the second set of questions, at Question 48.  
750 See e.g. European Union 's second written submission, para. 290.  WT/DS583/12  
 
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  Article  III:8(a) and Articles XX(b) and(d), the Panel indica ted that in the circumstances of this 
dispute, the Panel also sees no compelling reason to make additional findings or observations beyond 
those necessary to resolve the claims and defences at issue.  The Panel recalls that this economical 
approach it has t aken to these issues comports with the economical approach that the European 
Union has itself advocated for resolving its claim under Article 3.1(b) of the SCM Agreement. 
Recalling the approach taken by the Panel elsewhere in this Report, the Panel has als o exercised 
judicial economy over the claim under Article 2.1 of the TRIMs Agreement, and over the claim under 
Article X:1 of the GATT 1994.  
7.275.   In line with the approach taken by the Panel elsewhere in this Report, the Panel sees no 
compelling reason to make additional findings on "the import ban on localised products " under 
Article  XI:1 of the GATT 1994. In the light  of its findings under the relevant provisions of the GATT 
1994, the Panel exercises judicial economy over this claim.  
7.6  The prioritization measure  
7.6.1   Introduction  
7.276.   Having addressed the parties ' claims and defences relating to the localisation requirement 
and the so -called "import ban on localised products ", the Panel now addresses the third measure at 
issue in this dispute, which t he European Union refers to as the "prioritization measure ". 
7.277.   The European Union submits that in certain cases, where imported products are not excluded 
from the Annex 4/A list by virtue of the localisation requirement, Turkey gives priority to the review 
of applications for inclusion of domestic pharmaceutical products in the list of products covered by 
the reimbursement scheme, as well as with respect to any pricing and licensing policies and 
processes (in particular, GMP and marketing authorization applic ations), over the review of the 
applications of like imported products (the "prioritization measure ").751 The European Union claims 
that the prioritization measure is inconsistent "as such " with Article III:4 of GATT 1994. Specifically, 
the European Union c ontends that the prioritization measure is a law, regulation or requirement, 
which de jure gives priority to pharmaceutical products of national origin in the review of applications 
for inclusion in the Annex 4/A list and under other pricing and licensing policies  and processes. On 
that basis, the European Union considers that Turkey accords to imported pharmaceutical products 
treatment less favourable than that accorded to like products of national origin.752 
7.278.   Turkey responds that the European Union fails to establish the existence of the prioritization 
measure, because the European Union has not shown any ongoing conduct or practice by the Turkish 
authorities actually granting priority to domestically produced pharmaceutical products. Turkey 
further responds  that the European Union has not shown that the prioritization measure as an 
"overarching " measure is a "law, regulation or requirement " under Article III:4 of the GATT 1994. 
Moreover, Turkey argues that European Union has not demonstrated that the priorit ization measure 
accords less favourable treatment to imported products than to like domestic products given the 
discretion of the authorities when assessing priority applications, and presents figures showing no 
significant difference between the treatment  of domestically manufactured  and imported products.753 
7.6.2   Relevant provisions  
7.279.   Article III:4 of the GATT 1994 provides:  
The products of the territory of any Member  imported into the territory of any other 
Member  shall be accorded treatment no less favourable t han that accorded to like 
products of national origin in respect of all laws, regulations and requirements affecting 
their internal sale, offering for sale, purchase, transportation, distribution or use.  
 
751 European Union 's panel request, p. 6; first written submission, para. 322.  
752 European Union 's panel request, p. 6; first written submission, paras. 322 -350, and 365 -381; second 
written submission, paras. 301 -318; response s to the first set of questions, paras. 98 -105; and response s to 
the second set of questions, paras. 112 -123.  
753 Turkey 's first written submission, paras. 647 -697; second written submission, paras. 303 -320; 
opening statement, paras. 119 -125; and comments on response s to the second set of questions, paras. 61 -63. WT/DS583/12  
 
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  7.280.   The Panel has already elaborated on the applicable l egal standard under Article III:4 in 
addressing the localisation requirement.754 
7.281.   The Panel recalls that a complainant is required to prove the existence of the measure at 
issue, and that it is the complainant 's description and characterization of the measure that informs 
the kind of evidence it is required to submit and the elements that it must prove to establish the 
measure 's existence.755 For every measure, a complainant must show the measure is attributable to 
the respondent,  and establish the precise content of that measure, to the extent that such content 
is the object of the claims raised. A complainant may be required to demonstrate other elements, 
depending on the particular characteristics or nature of the measure being challenged.  
7.282.   Panels have frequently examined measures consisting not only of particular acts applied 
exclusively to a specific situation ( "as applied " claims), but also of acts setting forth rules or norms 
that are intended to have general and prospective a pplication ( "as such " claims); in other words, an 
instrument of a Member containing a rule or norm may constitute the challenged measure, without 
evidence of how it is applied in a particular instance or in practice.756 When a complaining party 
challenges rules or norms set forth in laws, regulations, or other instruments "as such ", it will 
typically be necessary to show that the terms of the relevant provision(s) mandate one or more acts 
or omissions inconsistent with W TO obligations.757 Thus, when a measure is challenged "as such ", 
the starting point for an analysis must be the measure on its face. If the meaning and content of 
the measure are clear on its face, then the WTO -consistency of the measure as such can be asse ssed 
on that basis alone.758 
7.283.   When challenging a rule or norm of general and prospective application (i.e. making an "as 
such" challenge), a complainant must show that the measure has both general and prospective 
application.759 Challenges to measures "as suc h" typically have as their object (written) legislation, 
which "prescribes " such norms or rules.760 A rule or norm has "general application " to the extent 
that it affects an unidentified number of economic operators.761 A rule or norm has "prospective 
applic ation" to the extent that it applies in the future. A complainant is not required to show with 
"certainty " that a given measure will apply in future situations.762 Rather, prospective application 
may be demonstrated through several factors, such as the exis tence of an underlying policy 
implemented by the measure; the measure 's design, architecture, and structure; the extent to which 
the measure provides administrative guidance for future conduct; and the expectations the measure 
creates among economic operat ors that it will be applied in the future.763 
7.284.   When challenging specific instances of application (i.e. making an "as applied " challenge), a 
complainant will need to provide evidence of those instances of application that it challenges. When 
challenging "ongoing conduct ", a complainant must establish that the conduct has been repeatedly 
applied, and that it is likely to continue to be applied in the future.764 
 
754 See section 7.3.2 of this Report.  
755 See paragraph 7.5 of this Report.  
756 Appellate Body Repor t, US – Corrosion -Resistant Steel Sunset Review , para. 82.  
757 The mere fact that the application of the rule could in some circumstances lead to WTO -inconsistency 
will typically not be sufficient to discharge the complaining party 's burden to make a prima f acie case that the 
rule is inconsistent "as such " with WTO obligations. (See e.g. Appellate Body Report, EU – Biodiesel 
(Argentina) , paras. 6.282; Panel Report, Canada – Aircraft , para. 9.124 .) 
758 Appellate Body Report, US – Corrosion -Resistant Steel Sunset  Review , para. 168.  
759 Appellate Body Reports, US – Anti-Dumping Methodologies (China) , para. 5.127; US – Zeroing (EC) , 
para. 198.  
760 Appellate Body Report, Argentina – Import Measures , para. 5.103.  
761 Appellate Body Report, US – Anti-Dumping Methodologies ( China) , paras. 5.130 (referring to 
Appellate Body Reports, US – Underwear ; EC – Poultry ), 5.152 , and 5.155 -5.156.  
762 Appellate Body Report, US – Anti-Dumping Methodologies (China) , para. 5.132.  
763 Appellate Body Report, US – Anti-Dumping Methodologies (China) , paras. 5.132 -5.133.  
764 Appellate Body Reports, Argentina – Import Measures , para. 5.108 ; US – Supercalendered Paper , 
para. 5.17.   WT/DS583/12  
 
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  7.6.3   Main arguments of the parties  
7.6.3.1   Introduction  
7.285.   The parties disagree on several issues, including: (i) the nature of the measure challenged 
by the European Union (an "as such " challenge or a challenge to "ongoing conduct/practice " of 
"general application "765); (ii) whether the prioritization measure, as characterized by the European 
Union, is a "law, regulation or requirement " under Article III:4 of the GATT 1994; and (iii) whether 
the prioritization measure gives rise to any "less favourable treatment " to imported pharmaceuticals 
under Article III:4 of t he GATT 1994.766 
7.6.3.2   Whether the prioritization measure is challenged "as such " or as "ongoing 
conduct "/practice  
7.286.   In its panel request, the European Union states that Turkey "gives priority to the review of 
applications for inclusion of domestic pharmaceutical p roducts in the list of products covered by the 
reimbursement scheme, as well as with respect to any pricing and licensing policies and processes, 
over the review of the applications of like imported products ", and refers to this as the "prioritization 
meas ure".767 The European Union also states that the three measures at issue in this dispute are 
"put in place and evidenced by, and are implemented and administered through, inter alia " a series 
of listed "legal and other instruments ", "considered alone and in  any combination ".768 
7.287.   In its first written submission, the European Union states that "[b]y this measure ", Turkey 
"gives priority to the review of applications for inclusion of domestic pharmaceutical products in the 
list of products covered by the reimburs ement system, as well as with respect to some licensing 
policies and processes, over the review of the applications of like imported products ".769 The 
European Union submits that several "action plans and programmes " "confirm the existence and 
content of an overarching Prioritization Measure with respect to locally manufactured pharmaceutical 
products ".770 The European Union then reviews in detail these action plans and programmes, as well 
as the provisions of a series of legal instruments and other documents.771 In the context of arguing 
that the measure is a "law" or "regulation " within the meaning of Arti cle III:4 of the GATT 1994, the 
European Union states that the prioritization measure is "imposed through a number of legal 
instruments, namely the SSI Regulation on Drug Reimbursement … and the Priority Assessment 
Guideline ".772 
7.288.   Turkey submits that the Eur opean Union does not demonstrate the existence of the 
prioritization measure as it was described by the European Union.773 Specifically, Turkey argues that 
the European Union describes the measure in its panel request and first written submission as an 
"overarching measure " whereby Turkey "gives priority " to domestic pharmaceutical products, but 
fails to demonstrate the existence of "ongoing conduct " consisting of Turkish authorities granting 
priority to domestically produced pharmaceutical products as a mea sure of general application.774 
In Turkey 's view, by describing the measure as an "overarching measure " whereby Turkey "gives 
priority " to domestic pharmaceutical products with regard to review of applications for inclusion in 
the Annex 4/A list and with re spect to some licensing policies and processes, the European Union 
must provide evidence "of that conduct/practice and prove its general character ".775 Accordingly, 
Turkey submits that the European Union "must show that Turkey effectively  gives priority to 
 
765 The Panel notes that following the preliminary ruling stage of this dispute, Turkey no longer asserts  
that the European Union makes an "as applied " claim with respect to the prioritization measure.  
766 Turkey does not dispute that, i nsofar as the European Union has demonstrated the existence and 
precise content of the measure,  there can or will be domestic  and imported products that are "like products " 
affected by the origin -based distinction in the prioritization measure ( European Union 's first written submission, 
paras. 366 -369), and the measure is one "affecting the internal sale, offering for sale, purc hase, 
transportation, distribution, or use of products " (European Union 's first written submission, paras. 372-375).  
767 European Union 's panel request, p. 6.  
768 European Union 's panel request, p. 1.  
769 European Union 's first written submission, para. 322.  
770 European Union 's first written submission, para. 323.  
771 European Union 's first written submission, paras. 324 -350. 
772 European Union 's first written submission, para. 371.  
773 Turkey 's first written submission, paras. 662 -677. 
774 Turkey 's first written submis sion, paras. 667 -668. 
775 Turkey 's first written submission, para. 669.  WT/DS583/12  
 
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  domestic pharmaceutical products over imported products ", and that "merely claiming that the 
possibility exists in certain legal instruments is not enough " to demonstrate that Turkey "gives 
priority to domestic pharmaceutical products ", in particular in light of the discretion granted to the 
relevant bodies involved.776 Turkey notes that figures show that there is no significant difference 
between the number of applications for priority and the number of grants of priority across 
domestically  manufactured and imported products.777 
7.289.   The European Union responds that the relevant instruments mandate giving priority to locally 
manufactured products.778 According to the European Union, Turkey 's action plans and programmes 
further confirm that domestic ally produced medicines are granted priority, and recent reports 
continue to refer to priority given to domestically manufactured products.779 With respect to Turkey 's 
submission that while the action plan sets out the "objective " to evaluate with priority reimbursement 
applications filed for domestically produced products it does not prejudge whether priority will be 
granted in each case, the European Union argues that Turkey actually concedes that, in certain 
cases, applications filed for domestically prod uced products will be granted priority.780 The European 
Union notes that even if applications for prioritization are not granted in every case, a measure need 
not give rise to less favourable treatment in every case, for there to be "less favourable treatme nt" 
under Article III:4 of the GATT 1994.781 In this vein, the European Union notes that Article III:4 
"does not require proof of actual effects " because it seeks to protect equality of opportunities. 
Moreover, the fact that, overall, the number of imported  and domestic products that were granted 
priority is similar does not inform how frequently domestic products get priority because they are 
manufactured domestically.782 In this connection, the European Union recalls that prior panel and 
Appellate Body repo rts examining Article III have rejected offsetting "less favourable treatment " of 
some imported products with more favourable treatment of other imported products.783 On that 
basis, the European Union submits that Turkey 's argument that the European Union m ust 
demonstrate that the authority "effectively gives priority " to domestic pharmaceutical products is 
unfounded.784 
7.290.   In its second written submission, Turkey notes that the European Union does not dispute 
Turkey 's description of the prioritization measure a s "an ongoing conduct or practice of general 
application ", but still fails to provide any evidence that Turkey "effectively gives priority " to domestic 
pharmaceutical products over imported products.785 In Turkey 's view, the fact that certain legal 
instrume nts or documents refer to the possibility for authorities to give priority does not establish 
that there is "conduct " or a "practice " of the Turkish authorities giving priority to domestic 
pharmaceutical products "and that such a practice is of general application ".786 Concerning the 
Annex  4/A list, Turkey emphasizes that the chair of the DRC has discretion to call an extraordinary 
meeti ng to examine applications of domestically manufactured products and that decisions at such 
meetings are taken at the DRC 's discretion.787 As to the Prioritization Guideline, Turkey emphasizes 
that scoring certain applications for priority review on the bas is of criteria including whether a 
medicine is locally produced does not imply that granting priority to those medicines is mandatory; 
although such scores "inform " the decision of the Priority Assessment Commission members, those 
 
776 Turkey 's first written submission, para. 672.  
777 Turkey 's first written submission, para. 675.  
778 European Union 's second written submission, paras. 302 -303. Concerning the Annex 4/A li st, the 
European Union states that Turkish legislation "mandates " listing pharmaceutical products manufactured in 
Turkey on the agenda of the MEEC and DRC as "prioritized topics for review " to be included in the Annex 4/A 
list, and that extraordinary meeti ngs are held for that purpose. With respect to GMP and marketing 
authorization applications, the European Union states that the Priority Assessment Guideline "enables giving 
priority… to applications regarding pharmaceutical products manufactured in Turkey ", including through a 
coefficient score of 0.15 for priority applications where local production is involved . (Ibid.)  
779 European Union 's second written submission, para. 304 (referring to Government of Turkey, 11th 
Development Plan for the period 2019 -2023 (Government of Turkey, Eleventh Development Plan 2019 -2023) 
(Exhibit EU -88); SSI Activity Report 2018  (Exhibit EU -109, TUR -7); and IQVIA, Report on the Turkish 
healthcare market, September 2020  (Exhibit EU -117)). 
780 European Union 's second written submission, para. 305.  
781 European Union 's second written submission, paras. 306 -307. 
782 European Union 's second written submission, para. 309 (referring to Table, Applications for priority 
under the Prioritization Guideline  (Exhibit TUR -106)). 
783 European Un ion's second written submission, para. 310.  
784 European Union 's second written submission, para. 308.  
785 Turkey 's second written submission, paras. 303 -304. 
786 Turkey 's second written submission, paras. 304.  
787 Turkey 's second written submission, para. 306 (re ferring to Exhibit TUR -11). WT/DS583/12  
 
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  members must still decide  by absolute majority. On that basis, Turkey argues that the Prioritization 
Guideline does not "mandate " or "require " the giving of priority to applications regarding medicines 
manufactured in Turkey.788 Turkey next reiterates that references to an objectiv e of prioritization 
"do[] not show that there is an ongoing practice or conduct of general application ", and thus those 
documents "do not show that Turkey effectively  gives priority to domestic pharmaceutical products 
over imported products ".789 In response  to the European Union 's argument that Article III:4 of the 
GATT 1994 does not require the complainant to show that like imported products are accorded less 
favourable treatment in every case, Turkey submits that the European Union confuses the issue of 
demonstrating the "existence and precise content " of the measure it challenges with the legal 
standard under Article III:4.790 
7.6.3.3   "law, regulation or requirement " 
7.291.   The European Union notes that "the terms 'all laws, regulations and requirements ' have been 
interpr eted as encompassing a broad  range of governmental actions ", and states that  the 
"Prioritization Measure could be considered as a 'law' or 'regulation '", because it is imposed through 
a number of legal instruments, namely the Drug Reimbursement Regulation (with respect to priority 
applications for reimbursement) and the Prioritization Guideline (with respect to priority applications 
for GMP and marketing authorization).791 
7.292.   Turkey responds that the European Union "fails to substantiat e how or why the prioritization 
measure as an overarching measure is a "law" or "regulation " by merely referring to two legal 
instruments that are components of, or elements through which the measure is implemented, but 
do not constitute the measure at iss ue".792 According to Turkey, the mere observation that "laws, 
regulations and requirements " covers a broad range of measures does not discharge a complainant 
from substantiating its claim that a given measure falls within the scope of the provision under which 
that measure is challenged.793 
7.293.   The European Union replies that "the Prioritization Meas ure is embodied, wholly or at least 
partly, as shown above and in the first written submission, in formal legal instruments such as laws 
and guidelines ", and these instruments "clearly qualify as 'laws' or 'regulations ' resulting from 
'governmental action '" and set out "rules with which compliance is necessary to obtain an advantage 
from a government ".794 The European Union submits that in any case, the legal instruments in this 
dispute qualify at least as "requirements " within the meaning of Article III:4 o f the GATT 1994, 
because they set out the "conditions and procedures that need to be followed to benefit from the 
priority for reimbursement, pricing policies and licensing procedures and they are issued by public 
authorities responsible for these matters ".795 The European Union further submits that the 
governmental action plans and programmes presenting the prioritization measure as a policy of the 
Turkish government also qualify as "requirements ".796 
7.294.   In its second written submission, Turkey responds that th e European Union does not show 
that the "prioritization measure " as a "single measure " constitutes a "law, regulation or 
requirement ".797 Turkey states that the European Union once again mixes the measure at issue with 
the legal instruments allegedly embodying the measure, when stating that because some of those 
instruments "clearly qualify as 'laws' or 'regulations '", it follows that the p rioritization measure is a 
law or regulation, or when stating that in any case those legal instruments qualify at least as 
"requirements ".798 In Turkey 's view, what the European Union needs to show is that "what it has 
described as the prioritization measur e, i.e. the fact that Turkey gives priority to domestic 
 
788 Turkey 's second written submission, paras. 307-309 (referring to  Prioritization Guideline  (Exhibit EU -
97)). 
789 Turkey 's second written submission, para. 311.  
790 Turkey 's second written submission, paras. 312 -314. 
791 European Union 's first written submission, paras. 370 -371. 
792 Turkey 's first written submission, para. 688.  
793 Turkey 's first written submission, para. 688.  
794 European Union 's second written submission, para. 312 (fn omitted).  
795 European Union 's second writt en submission, para. 313.  
796 European Union 's second written submission, para. 314 (referring to Panel Report s, Argentina – 
Import Measures ). 
797 Turkey 's second written submission, para. 316.  
798 Turkey 's second written submission, para. 316.  WT/DS583/12  
 
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  pharmaceutical products ", is a "law, regulation or requirement ".799 Finally, Turkey disagrees with 
the European Union 's argument that the prioritization measure constitutes a "requirement " because 
it lays down a "condition to obtain an advantage, i.e. priority ". According to Turkey, even if the 
product fulfils the condition (domestic production), it is not necessarily granted priority; therefore, 
"the discretion left to the authorities prevents from qua lifying the measure as a 'requirement '."800 
7.6.3.4   "less favourable treatment " 
7.295.   The European Union argues that the prioritization measure accords imported pharmaceutical 
products "less favourable treatment ".801 According to the European Union, the implications of th e 
prioritization measure for the equality of competitive conditions are discernible from its design, 
structure, and expected operation.802 As a de jure  discriminatory measure that by its nature accords 
less favourable treatment to imports, the European Unio n submits that there is no need to analyse 
the actual market impact or other consequences of the measure further.803 The European Union 
explains that the "priority review " granted by the Turkish authorities to products of domestic origin 
means that these products are likely to be placed on the market faster than imported products, 
thereby providing them with an advantage over the imported products, and thus takes away the 
ability of imported products to compete on the basis of an "effective equality of opportunities ".804 
The European Union notes that the fact that imported products are not entirely excluded from the 
marketplace is no defence; prior reports indicate that there  may be "less favourable treatment " even 
where the measure "will not give rise to less favourable treatment for like imported products in each 
and every case ", or "where the coverage of the measure is only partial ".805 
7.296.   Turkey responds that the European Unio n does not show that the prioritization measure 
accords "treatment less favourable " to imported products than to domestic like products, as  (i) the 
authorities have discretion when assessing priority applications; and (ii) figures show no significant 
difference between the treatment of domestically manufactured and imported products.806 Turkey 
points out that under the Drug Reimbursement Regulation and Prioritization Guideline, both 
domestically produced and imported pharmaceutical products may be "granted p riority with respect 
to the procedures covered under those instruments and subject to the criteria stipulated therein ".807 
Turkey reiterates that the figures demonstrate no significant difference between the number of 
priority applications and grants of pri ority across domestically manufactured and imported 
products.808 
7.297.   In response to Turkey 's assertion, the European Union argues that the legal instruments 
underpinning the prioritization measure do not confer unfettered discretion on the responsible 
bodies: t he Drug Reimbursement Regulation and Prioritization Guideline "actually mandate as a 
favourable criterion in assessing priority the local manufacture of pharmaceutical products ".809 The 
European Union further responds that the fact that imported products ma y be granted priority for 
other reasons is not sufficient to refute the existence of domestic manufacturing as a criterion for 
priority, and that without such a criterion, it is likely that fewer domestically manufactured products 
would get priority review  and in turn, would not be placed on the market as fast.810 Lastly, while 
Turkey provides a table showing the number of applications the DRC included in the Annex 4/A list 
with a breakdown between domestic and imported products, the European Union submits t hat the 
data actually shows that domestic products are included faster in the Annex 4/A list than imported 
products: 24% to 92% of domestic applications were already granted by the DRC within the first 
 
799 Turkey 's second  written submission, para. 316.  
800 Turkey 's second written submission, para. 317.  
801 European Union 's first written submission, paras. 376 -381. 
802 European Union 's first written submission, paras. 378.  
803 European Union 's first written submission, paras. 379.  
804 European Union 's first written submission, para. 378.  
805 European Union 's first written submission, para. 380 (referring to Appellate Body Report, US – FSC 
(Article 21.5) , para. 221; Panel Report, India – Solar Cells , para. 7.95). The European Union provides an 
example of partial coverage, noting that the prioritization measure does not cover imported pharmaceutical 
products listed on the "Foreign Price List of Medicinal Products " (ibid.).  
806 Turkey 's first written sub mission, paras. 690 -697. 
807 Turkey 's first written submission, paras. 694 -696. 
808 Turkey 's first written submission, para. 695.  
809 European Union 's second written submission, paras. 315 -316. 
810 European Union 's second written submission, para. 317.  WT/DS583/12  
 
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  year following application, while only 8% to 58% of im port applications were granted within the 
same period of time.811 
7.298.   In its second written submission, Turkey reiterates that the authorities have discretion to 
assess applications for prioritization, such that the status of a pharmaceutical product as a "dome stic 
product " does not guarantee that such product will be treated with priority.812 With respect to the 
European Union 's argument that the data submitted by Turkey regarding the relative rate of priority 
review accorded to imported and locally manufactured  medicines is not instructive because it does 
not show  how frequently domestic products are accorded priority because they are manufactured 
domestically, Turkey responds that t he data it submitted support the conclusion that the European 
Union fails to mak e a prima facie  case that imported medicines are treated less favourably than 
domestically manufactured medicines.813 
7.6.4   Assessment by the Panel  
7.6.4.1   Introduction  
7.299.   The Panel will first examine whether the European Union has established the existence of 
the prioritization measure and then address the substance of the European Union 's claim under 
Article III:4 of the GATT 1994, in particular , whether the prioritization measure is a "law, regulation, 
or requirement " that accords "less favourable treatment " to imported pharmaceutical products.  
7.6.4.2   The existence of the measure  
7.300.   The European Union is required to establish the existence of the prioritization measure. How 
the prioritization measure is described, characterized and challenged by the European Union informs 
the kind of evidence the European Union is required to submit and the elements that it must prove 
to establish the existence of the prioritization measure.814 Before assessing whether the European 
Union has established the existence of the prioritization mea sure, in light of the points of contention 
between the parties, the Panel will examine what it is the European Union contends the prioritization 
measure to be, and the nature of its challenge (being "as such ", or to "ongoing conduct " of "general 
applicatio n"). 
7.301.   The European Union 's panel request identifies the "prioritization measure ", inter alia , 
through a narrative description, which reads:  
Lastly, even in certain cases where imported products are not excluded from the 
reimbursement scheme by virtue of the  localisation requirement, Turkey gives priority 
to the review of applications for inclusion of domestic pharmaceutical products in the 
list of products covered by the reimbursement scheme, as well as with respect to any 
pricing and licensing policies and processes, over the review of the applications of like 
imported products (the "prioritization measure ").815 
7.302.   In its first written submission, the European Union repeats this formulation of the measure, 
before referring to several "action plans and programmes ", as well as the Drug Reimbursement 
Regulation and Prioritization Guideline as confirming the existence and content of an "overarching 
Prioritization Measure ".816 
7.303.   The Panel understands that the European Union 's reference to the "reimbursement scheme " 
conce rns inclusion in the Annex 4/A list pursuant to the Drug Reimbursement Regulation817, whereas 
 
811 European Union 's second written submission, para. 318.  
812 Turkey 's second written submission, para. 318.  
813 Turkey 's second written submission, para. 320.  
814 Appellate Body Reports, US – Anti-Dumping Methodologies (China) , para. 5.123; Argentina – Import 
Measures , paras. 5.108 -5.110.  
815 European Union 's panel request, p.6.  
816 European Union 's first written submission, para s. 322-350, and 371.  
817 The panel request defines "reimbursement scheme " in the narrative description of the localisation 
requirement as "the scheme for the reimbursement of the pharmaceutical products sold by pharmacies to 
patients operated by Turkey 's social security system ". Pharmaceutical products subject to the localisati on 
requirement are "excluded " from this scheme if their production is not localised in line with the localisation WT/DS583/12  
 
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  "pricing and licensing policies and processes " refers to GMP and marketing authorization applications 
under the Prioritization Guideline.818 The Panel understands that there is no disagreement between 
the parties that the relevant reimbursement scheme refers to the reimbursement scheme under the 
Annex 4/A list, and that "pricing and licensing policies and processes " refers to GMP and marketing  
authorization applications only. This is reflected by the fact the parties ' submissions almost 
exclusively concern provisions under the Drug Reimbursement Regulation and Prioritization 
Guideline.819 
7.304.   By "overarching ", the Panel understands the European Unio n to locate the prioritization 
measure (i.e. giving priority to applications for inclusion in the Annex 4/A list and for GMP and 
marketing authorization under the Prioritization Guideline) within the broader Turkish policy context 
contained and evidenced i n the cited action plans and programmes, as well as other reports from 
Turkish governmental authorities, namely:  
a. the Structural Transformation Program for Healthcare Industries Action Plan 2014 
(implementing the Healthcare Related Industries Structural Tra nsformation Program), 
which refers to an "objective of prioritizing medicines and medical devices produced in 
Turkey in reimbursement and pricing policies and licensing processes ", "accelerat[ing] the 
evaluation process " for the inclusion of domestically m anufactured products in the 
Annex  4/A list, and supporting research and development activities in Turkey through 
"pricing and reimbursement practices ", through the SSI, MOH and TMMDA820; 
b. the 2016 Action Plan of the 64th Government, which talks of improving "reimbursement, 
pricing and licensing processes for… domestic medicines ", whereby the SSI will "speed up 
the evaluation process for including domestically manufactured healthcare products " on 
the Annex 4/A list821; 
c. the 65th Government Program of 2016, which  states that "[w]hen it comes to 
reimbursement and pricing policies and licensing procedures, we will give priority to 
domestically produced medicines and medical devices "822; 
d. the Turkish healthcare market report from September 2020, which refers to MOH 
"initiatives to improve review times " and a "priority evaluation " "points -based " system 
whereby "products receive a priority review if they meet a number of conditions " including 
"[t]echnology transfer to Turkey "823; 
 
requirement. (European Union 's panel request, p.5 .) See also Panel Report, section 2.1.3.1. The Panel notes 
that the Annex 4/A list concerns r eimbursement by the regular reimbursement pathway (through the DRC) as 
distinct from reimbursement by the alternative reimbursement pathway (through the ARC); products under the 
latter path are "unavailable on the Turkish market " and therefore have no like  domestic counterparts. (Panel 
Report, paras. 2.10 -2.12.) This is in keeping with the European Union 's first written submission, which 
explicitly excludes reimbursement under the "Foreign Price List of Medicinal Products " (also known as the 
Annex 4/C list) , which concerns products not available in Turkey, from the scope of this measure, as there are 
no like domestic counterparts for these products. (European Union 's first written submission, paras. 335 and 
369.) Turkey also takes note of the European Union 's statement that products under the Annex 4/C list fall 
outside the scope of the prioritization measure (Turkey 's first written submission, fn 621 to para. 659).  
818 See e.g. European Union 's first written submission, paras. 371, 374, 378, and 381. Each of t hese 
paragraphs refers to the reimbursement scheme (being the Annex 4/A list), and review of GMP and marketing 
authorization applications. They no longer mention "pricing and licensing policies and processes ". 
819 See e.g. European Union 's first written subm ission, paras. 330 -349; second written submission, 
paras. 302 -303; Turkey 's first written submission, paras. 650 -661; second written submission, paras. 306 -308. 
820 European Union 's first written submission, paras. 324 -326 (referring to  Structural Transforma tion 
Program for Healthcare Industries Action Plan  (Exhibit EU -14)); TMMDA, Announcement on import applications 
for medical products , 31 December 2019  (Exhibit EU -92). See in particular Structural Transformation Program 
for Healthcare Industries Action Plan  (Exhibit EU -14), Component 1 Policy 5 Action 2, and Component 3 Policy 
1 Action 2.  
821 European Union 's first written submission , paras. 327 -328 (referring to  2016 Action Plan of the 64th 
Government  (Exhibit EU -15)). See in particular 2016 Actio n Plan of the 64th Government  (Exhibit EU -15), 
Action 46.  
822 European Union 's first written submission , para. 329 (referring to  65th Government Programme , 24 
May 2016 (65th Government Programme)  (Exhibit EU -16), p. 81.)  
823 European Union 's second written su bmission, para. 304 (referring to IQVIA, Report on the Turkish 
healthcare market, September 2020  (Exhibit EU -117), p. 76).  WT/DS583/12  
 
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  e.  the SSI 's 2018 Report, indicating that "[i]n reimbursement and pricing policies and in 
licensing procedures, the requisite arrangements and applications are to be put in place 
for priority assessment of medicines and medical devices produced in Turkey "824; and  
f. the TMMDA 's Administrative Operation Report 2019, which includes the objective to 
"prioritise assessment of applications " and to "support domestic [yerli, which can also 
mean local] production ".825 
7.305.   The Panel notes that Turkey does not dispute the objective of prioritization that is exemplified 
in these instruments, but instead limits its arguments to stating that evidence of an objective is not 
equal to evidence of actual conduct.826 
7.306.   Next, the Panel recalls that the parties have different understandings of wheth er Turkish 
authorities "give priority " in circumstances where those authorities have discretion, e.g. to call for 
an extraordinary meeting or take certain decisions. At this stage, the Panel limits its analysis to the 
significance of these arguments for es tablishing the existence of the prioritization measure, i.e. with 
respect to what the measure is and the nature of the European Union 's challenge (being "as such " 
or to "ongoing conduct/practice " of "general application "). 
7.307.   In this regard, the Panel observe s that "gives priority " is used in a sentence in the European 
Union 's panel request which reads: "Turkey gives priority to the review of applications  for inclusion 
of domestic pharmaceutical products in the [Annex 4/A list], as well as with respect to [GMP  and 
marketing authorization applications ]".827 
7.308.   In its first written submission, the European Union refers to action plans and programmes 
which talk of "prioritizing medicines ", "accelerat[ing] " and "speed[ing] up " the evaluation process 
for inclusion in th e Annex 4/A list, "facilitation " and "improve[ment] " of price and reimbursement 
practices, and states that it "will give priority " in reimbursement and pricing policies and licensing 
procedures.828 
7.309.   With respect to the Annex 4/A list, the European Union submits that domestically 
manufactured products are listed in the DRC and MEEC agendas as "prioritized topics for review ", 
whereby the relevant commissions  hold extraordinary meetings for that purpose.829 The European 
Union refers to several provisions of the Drug Reimbursement Regulation in support of its 
argument830: 
a. Article 5(1)(g), which states that the DRC 's duties include "[h]olding extraordinary 
sessions, when necessary, to assess applications for locally -manufactured medicinal 
products requesting to be listed, without waiting for conclusion of other applications made 
during the same period "; 
b. Article 6(1)(ç), which states that the DRC chair 's duties include "[r]eviewing assessments 
by [MEEC] related  to applications for locally -manufactured products, that a decision be 
 
824 European Union 's second written submission, para. 304 (referring to SSI Activity Report 2018  
(Exhibit s EU-109, TUR -7), p. 29).  
825 European Union 's second written submission, para. 304 (referring to TMMDA Administrative 
Operation Report 2019  (Exhibit EU -111), pp. 200 -201.) As reflected in Exhibit EU -111, the Turkish word  "yerli" 
can be translated as "domestic" or "local".  Excerpts fro m this instrument are also found in Exhibit TUR -78.  
826 See e.g. Turkey 's first written submission, para. 675; second written submission, para. 311. The 
Panel notes that in Turkey 's first written submission, it argues that Turkey did not retain its prioriti zation 
objectives, evidenced by the document, Government of Turkey, Eleventh Development Plan 2019 -2023 
(Exhibit EU -88) (Turkey 's first written submission, para. 676). In response to this the European Union referred 
to further documentation in its second w ritten submission which refers to Turkey 's prioritization objectives and 
post-dates Government of Turkey, Eleventh Development Plan 2019 -2023 ( Exhibit EU -88). With respect to 
these more "recent " documents, Turkey makes its argument that the fact they "refer to an objective of 
prioritization " does not show there is "ongoing practice or conduct of general application " (Turkey 's second 
written submission, paras. 310 -311).  
827 European Union 's panel request, p. 6 . (emphasis added)  
828 European Union 's first written submission, paras. 325 -329. 
829 European Union 's first written submission, para. 337.  
830 European Union 's first written submission, paras. 331, 332, and 336.  WT/DS583/12  
 
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  taken at an extraordinary meeting of the [DRC], and calling an extraordinary meeting of 
the [DRC] if necessary "; and  
c. Article 9(1)(c), which states that the MEEC 's duties include "[p]rio ritizing the review of 
applications involving locally manufactured medicinal products requesting listing for 
reimbursement… and referring them to the [DRC] Chair for publication, without waiting 
for conclusion of the other applications that were submitted during the same period, 
issuing an opinion that these should be given consideration during an extraordinary 
meeting of the DRC ". 
7.310.   Similarly, the European Union submits that, read as a whole, the Prioritization Guideline 
gives priority for review to applicat ions concerning all locally manufactured products, in the context 
of GMP and marketing authorization applications.831 The European Union refers to several provisions 
of the Prioritization Guideline in support of its arguments, including832: 
a. Articles 2(1)(ç) and (d), which indicate that the Prioritization Guideline covers the "analysis 
and finalization of the requests about prioritization " i.e. "[a]pplications relating to 
transferring the production of imported medicines to our country " and "[a]pplications for  
locally manufactured products for exportation purposes "; 
b. Article 4(1)(ç), which indicates that the assessment process of applications for GMP and 
marketing authorization span s from "pre-assessment " to "placing on the market " affected 
pharmaceutical produc ts; 
c. Article 4(1)(h), which defines "prioritization " as the "assessment of applications within the 
determined criteria " and putting them "forward " in the "assessment process " by giving 
them priority;  
d. Article 6(1), which indicates that the Priority Assessmen t Commission 's duties include 
"[a]ssessing and finalizing prioritization requests "833; 
e. Annex 3, which contains assessment criteria and a scoring chart, that attribute a coefficient 
of 0.15 to applications concerning "local production " (as well as  a coefficient of 0.15 to 
applications concerning a "local active substance " and a coefficient of 0.3 to applications 
involving "bioequivalence studies in Turkey "). 
7.311.   The European Union then refers to further evidence that local manufacture is among the 
criteria governing assessment of the prioritization process for pharmaceutical products, and that 
where a product has "no priority " its "licensing period " is 210 days, if it has "priority " its licensing 
period is 180 days, and if it has "high priority " its licensing period is 150 days.834 
7.312.   In its second written submission, the European Union reiterates that Turkish legislation 
"mandates " listing domestic pharmaceutical products on the MEEC and DRC agendas as "prioritized 
topics for review " and that extraordinary meetings are held for that purpose.835 With respect to the 
Prioritization Guideline, the European Union reiterates that it "enabl es" giving priority to applications 
for domestic pharmaceutical products and that no such possibility exists for like imported products, 
and that the assessment criteria for priority actually "mandate[] " giving priority to locally 
 
831 European Union 's first written submission, paras. 338 and 349.  
832 European Union 's first w ritten submission, paras. 338 -339, and 343 -349. 
833 The European Union also notes that the Priorit y Assessment Commission was established to 
implement Policy 5 Component 1 Action 2 of the 2014 Action Plan, which is described above. (European Union 's 
first wr itten submission, para. 345 (referring to 2016 TMMDA Activity Report (Exhibit EU -99)). 
834 European Union 's first written submission, para. 350 (referring to R. Yeter, "Watch out with the 
localization trap", Yeni Şafak , 24 February 2018  (Exhibit EU -100)). See also Turkey 's first written submission, 
para. 656 (referring to Prioritization Guideline ( Exhibit EU -97), Articles 11(2) and 11(3)). The Panel notes that 
Turkey refers to "the registration process " instead of a "licensing period ". The Panel understands t he parties to 
refer, by this terminology, to the time period it takes for the relevant application process to be completed 
(such that the product can be placed on the market).  
835 European Union 's second written submission, para. 302; response s to the secon d set of questions, 
paras. 119 -120.  WT/DS583/12  
 
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  manufactured products by virtue of the coefficient for "local production ".836 The European Union also 
points to the "priority matter of locally manufactured product applications relating to the transferring 
of production of imported medicines " in Article 10(2)(ğ) as evidence of loc al manufacture as a 
"mandatory criterion " in the priority assessment process.837 The European Union identifies 
documentation that refers to products receiving "priority review " under a "points -based system " if 
they meet conditions like "[t]echnology transfe r to Turkey ", "priority assessment of medicines and 
medical devices produced in Turkey " and "priorit[zing] assessment of applications  … and to support 
domestic [yerli, which can also mean local] production ".838 
7.313.   In the light of the European Union 's panel request and written submissions, the Panel 
understands the European Union to challenge a prioritization measure whereby:  
a. Turkish authorities "give priority " to applications for inclusion in the Annex 4/A list by 
placing those applications as a priori ty on the agenda for DRC and MEEC meetings 
including extraordinary meetings or in MEEC 's case, priority consideration at its own 
meetings and referral for consideration at a DRC extraordinary meeting. The Panel also 
notes the wording in Article 5(1)(g) of the Drug Reimbursement Regulation, referred to by 
both parties, which essentially gives the DRC the green light to consider applications for 
locally manufactured products "without waiting " for other applications made during the 
same period to be "concluded ". In other words, the Panel understands Article 5(1)(g) to 
provide both a forum and "queue -jumping " mechanism for applications for inclusion in the 
Annex 4/A list where the relevant products are locally produced. The Panel notes that this 
is significant, given that regular DRC meetings are held twice yearly and extraordinary 
meetings can be convened at any time.839 The Panel further notes that Article 9(1)(c) 
contains similar wording with respect to MEEC meetings.  
b. With respect to GMP and marketing authoriza tion applications, the Panel understands the 
European Union 's challenge to the prioritization measure to refer specifically to the scoring 
system used by the Priorit y Assessment Commission in determining whether an application 
should receive priority (and therefore a shorter licensing period before a product is able 
to be placed on the market), whereby points are attributed for local production.840 
7.314.   The Panel observes that the provisions of the Drug Reimbursement Regulation (as mentioned 
above) and Prioritiza tion Guideline are in keeping with the underlying action plans, programmes and 
other documentation, which both refer to prioritization as a desired outcome and a process of 
decision -making.  
7.315.   On that basis, the Panel does not understand the European Union to  be arguing that in each 
and every case domestic pharmaceutical goods are granted "priority " in the sense that applications 
concerning those products are always processed fastest, but rather that their assessment  within 
these approval processes for reimbur sement, GMP and marketing authorization is prioritized by 
virtue of criteria attaching to a product 's status as a locally manufactured pharmaceutical product. 
The Panel understands the European Union 's claim to be that it is the inclusion of assessment 
opportunities (e.g. being placed on the DRC or MEEC agenda, role of extraordinary meetings) and 
criteria (e.g. the "local production " coefficient) in these approval processes, rather than the outcome 
for applications per se , that gives rise to the inconsisten cy with Article III:4 of the GATT 1994, 
because they result in a higher chance of actual priority being granted, (i.e. faster inclusion in the 
Annex 4/A list or shorter processing times with respect to GMP and marketing authorization 
applications).841 
 
836 European Union 's second written submission, paras. 302 -303 (referring to Prioritization Guideline  
(Exhibit EU -97), Article 10(2)(d) ); response s to the second set of questions, paras. 119 , and 121 -122. 
837 European Union 's second written submission, para. 303 (referring to Exhibit EU -97). 
838 European Union 's second written submission, para. 304.  As reflected in Exhibit EU -111, the Turkish 
word " yerli" can be translated as "domestic" or "local". Excerpts from this instrument are also found in Exhibit 
TUR-78.  
839 Turkey 's first written submission, para 659 (referring to Exhibit TUR -11, Articles 5(1)(g) and (ğ)). 
The Panel notes that Exhibit TUR -11 is the Drug Reimbursement Regulation also found in Exhibit EU -8.  
840 See e.g. European Union 's first written submission, paras. 341 , and 347 -349; second written 
submission, para. 303.  
841 See European Union 's response s to the second set of questions, paras. 119 -123. WT/DS583/12  
 
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  7.316.   The P anel finds nothing in Turkey 's arguments or evidence that contradicts the existence of 
such a measure. Indeed, Turkey (i) does not dispute the objective of prioritization outlined by the 
European Union, with respect to both the Annex 4/A list and GMP and m arketing authorization; 
(ii) notes that both the Drug Reimbursement Regulation and Prioritization Guideline "create the 
possibility of granting priority " to locally manufactured products842; and (iii) provides the same 
evidence concerning the scoring of app lications under the Prioritization Guideline.843 
7.317.   The Panel notes that Turkey 's arguments about the non -existence of the prioritization 
measure instead focus on the fact that imported products may also receive priority assessment in 
certain instances, and th at the local manufacture criterion does not determine the outcome  of an 
application. For the reasons given above, the Panel does not agree with Turkey that these factors 
impact the existence of the prioritization measure as characterized by the European Un ion, which is 
concerned at a minimum with in -built opportunities for prioritization within the relevant application 
processes . The Panel also notes that, with respect to certain other  opportunities for "prioritization " 
of imported products referred to by T urkey, these opportunities only cover products for which there 
will be, by definition, no "like" domestic product.844 
7.318.   In the light of the Panel 's conclusion as to how the European Union has characterized and 
described the prioritization measure in its panel request and first written submission, in particular , 
what is meant by "giving priority " in the context of the decision -making processes concerning the 
Annex 4/A list and GMP and marketing authorization, the Panel also understands the European Union 
to be challenging the prioritization measure "as such ".  
7.319.   The Panel does not share Turkey 's understanding that the European Union is challenging 
what Turkey refers to as an "ongoing conduct/practice " of general application. Indeed, the Panel is 
compelled to recall that it already clarified its understanding of the panel request in the context of a 
preliminary ruling.845 The Panel ruled that this measure did not concern specific instances of 
application (which, the Panel observes, would necessarily form part of  the definition of an "ongoing 
conduct " measure).846 The Panel also found that the European Union did not need to explicitly 
identify its challenge to the prioritization measure as being "as such " or "as applied ", and that the 
reference to "certain cases " in the panel request covers "all instances where imported products are 
still eligible under the reimbursement scheme ", as distinct from specific instances of application.847 
Moreover, the European Union clarified in response to Turkey 's preliminary ruling re quest, which 
pre-dates Turkey 's first written submission, that it challenges this measure "as such ". Following such 
clarification by the European Union and the Panel 's own ruling, the Panel sees no basis to construe 
words such as "gives priority " to imply that the European Union is in fact challenging an "ongoing 
conduct " measure (and doing so without providing any evidence of the kind needed to substantiate 
that type of claim).  
7.320.   Having concluded that the European Union 's panel request, as clarified through its 
subsequent submissions, identifies an "as such " challenge to the prioritization measure as defined 
further above, the Panel now turns to consider whether the European Union has established the 
 
842 See e.g. Turkey 's first written submission, paras. 649 -651. 
843 Turkey 's first written submission, paras. 655 -656. 
844 See e.g. European Union 's first written submission, para. 369.  
845 In its request for a preliminary ruling, Turkey argued that it was unclear whether this measure was 
challenged as a "measure of general application " or "specific instances of application ", such that the European 
Union had failed to identify the specific measure at issue under Article 6.2 of the DSU. At that stage of 
proceedings, Turkey submitted that the reference to "certain cases " in the  narrative description of the measure 
indicated that the European Union was challenging specific instances of application (Turkey 's request for a 
preliminary ruling, paras. 39 and 46). In response, the European Union clarified that its panel request identi fies 
an "as such " challenge and that the full wording of the narrative description indicated that "certain cases " did 
not refer to instances of application, but the scope of the prioritization measure, being imported products that 
still have the benefit of  the reimbursement scheme (European Union 's response s to Turkey 's request for a 
preliminary ruling, paras. 68 -73).  
846 The Panel recalls that when establishing the existence of an ongoing conduct measure, a complainant 
is required to provide evidence of how that conduct has been repeatedly applied (i.e. several instances of 
application) and likelihood of its continued app lication (which may also be evidenced by instances of 
application). (Appellate Body Reports, Argentina – Import Measures , para. 5.108 ; US – Supercalendered Paper , 
para. 5.17).  
847 Preliminary ruling, paras. 3.17 -3.18. WT/DS583/12  
 
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  existence of an overarching, mandatory prioritization measu re as a rule or norm of general and 
prospective application.  
7.321.   The Panel finds that the European Union has established the existence of an "overarching " 
measure whereby Turkish authorities give priority to the review of applications for inclusion in the 
Annex 4/A list and to GMP and marketing authorization applications concerning domestic 
pharmaceutical products over like imported products. The Panel , moreover , notes its conclusion 
above, that the prioritization measure mandates  giving priority to the review of applications based 
on criteria attaching to local production and recalls that rules or norms that mandate certain action 
may be challenged "as such " in WTO dispute settlement.848 
7.322.   Given that the prioritization measure is a rule or norm which is expressly set out in writing 
in the provisions of the Drug Reimbursement Regulation and Prioritization Guideline, it is not clear 
that there is any need for the  Panel to further assess whether this measure exhibits general and 
prospective application, typically considered in the context of unwritten measures. Assuming , for the 
sake of argument , that such further consideration is necessary, the Panel considers tha t this measure 
has general application; it is not limited in application to specific economic operators but applies 
across the board to imported pharmaceutical products not yet subject to the localisation 
requirement. Moreover, the Panel considers that the  prioritization measure has prospective 
application, on the basis that it is reflected in legal instruments with continuing and prospective 
effect (i.e. the Drug Reimbursement Regulation and Prioritization Guideline) and implements an 
underlying current po licy of prioritization.  
7.323.   Having found that the European Union challenges the prioritization measure "as such ", the 
European Union is not required to prove any specific instances of application of this measure, that 
would otherwise have had relevance for evidencing repeated application and likelihood of continued 
application in establishing an "ongoing conduct " measure. The Panel therefore disagrees with 
Turkey 's argument that the European Union was required to show that Turkish authorities 
"effectively " give priority to applications concerning domestically manufactured pharmaceutical 
products by evidencing specifi c instances of application, for the purposes of establishing the 
existence of the prioritization measure.  
7.6.4.3   Article III:4 of the GATT 1994  
7.324.   The Panel now considers whether the prioritization measure is consistent with Article  III:4 
of the GATT 1994. In this s ection, the Panel considers the requisite elements in turn.  
7.325.   Concerning the first element under Article III:4, the Panel considers the European Union has 
made a prima facie  case that domestic  pharmaceutical products  and imported pharmaceutical 
products affe cted by the prioritization measure are "like products "849 and Turkey has not presented 
any counterarguments in relation to this element of Article III:4.  
7.326.   The European Union indicates in its first written submission that "domestic pharmaceutical 
products " refers to "all pharmaceutical products manufactured in Turkey ", and "imported products " 
refers to "all imported pharmaceutical products with the same characteristics ".850 The European 
Union further clarifies that the category of imported products excludes pharmaceutical products, 
such as those in the "Foreign Price List of Medicinal Products " (also known as the Annex 4/C List), 
which are not available on the Turkish market .851 The Panel notes that Turkey is aware that the 
European Union does not contend that such products are caught by the prioritization measure.852 
The Panel therefore understands the European Union to exclude – by definition – from the 
prioritization measure , imported products for which there are no domestic counterparts.  
7.327.   The Panel also recalls that the European Union had indicated in its response to Turkey 's 
request for a preliminary ruling, that "imported products " refers to those that "benefit from the 
reimbursement scheme (for example, because they fall outside of the localisation requirement or 
 
848 See paragraph 7.282.   
849 European Union 's first written submission, paras. 366 -369. 
850 European Union 's first written submission, para. 368.  
851 European Union 's first written submission, par a. 369.  
852 Turkey 's first written submission, fn 621 to para. 659.  WT/DS583/12  
 
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  localisation commitments were offered) ".853 This is in keeping with the Panel 's finding in its 
preliminary ruling, that "imported products " covers "all instances wh ere imported products are still 
eligible under the reimbursement scheme ", i.e. may be included in the Annex 4/A list for 
reimbursement.854 The Panel therefore considers that the scope of the prioritization measure affects 
domestically manufactured products that are reimbursable under Annex 4/A and their imported 
counterparts.  
7.328.   When origin is the sole criterion for a regulatory distinction between products, the likeness 
of the products that are distinguished in this way can be presumed.855 The Panel agrees with  the 
European Union that the country of production for the pharmaceutical products affected by this 
measure is the sole distinguishing criterion between relevant products falling within the scope of this 
measure.856 
7.329.   Regarding the second element under Article III:4, the Panel considers that the prioritization 
measure constitutes a "requirement " affecting the internal sale, offering for sale, purchase, 
transportation, distribution, or use of pharmaceutical products. The Panel recalls that a 
"requirement " within the meaning of Article III:4 is not limited to requirements reflected in "laws" 
or "regulations ", and may encompass both obligations that an enterprise is legally obliged to carry 
out, as well as voluntary action in order to obtain an advantage from gove rnment.857 As the European 
Union observes, the measure imposes "at least " a "requirement " (i.e. local production) as a condition 
for obtaining an advantage (i.e. priority review for inclusion in the Annex 4/A list, and in the context 
of GMP and marketing authorization applications).858 
7.330.   In the light of the Panel 's understanding of the prioritiza tion measure as challenged by the 
European Union, the Panel does not accept  Turkey 's argument that the "discretion " left to Turkish 
authorities prevents this measure from qualifying it as a "requirement ".859 As the Panel understands 
this measure, it is only  domestically manufactured pharmaceutical products that can benefit from 
priority assessment (e.g. listing and review by the DRC and/or MEEC for inclusion in the Annex 4/A 
list) and criteria (e.g. the "local production " coefficient) attaching to a product 's status as locally 
produced. Therefore, in the context of both the Annex 4/A list and GMP and marketing authorization 
procedures, the advantage attaches to a domestic production criterion.  
7.331.   Recalling that a measure need only "affect " the conditions of sale , purchase, transportation, 
distribution, or use of products860, the Panel considers that this aspect of the second element under 
Article III:4 is also satisfied. As the European Union observes, "this measure affects the internal sale 
or offering for sale b ecause it affects the conditions of competition of the imported products on the 
domestic market as it covers the priority of applications for inclusion in the [Annex 4/A list] and the 
review of GMP and marketing authorisation applications " (without which a  product cannot be placed 
on the Turkish market).861 
7.332.   Regarding the third element under Article III:4, the Panel recalls that treatment no less 
favourable means "according conditions of competition " no less favourable to the imported product 
than to the like  domestic product862. In the Panel 's view, as discussed in the context of the 
localisation requirement, access to reimbursement for the costs of a domestic product but not for 
the costs of an imported like product obviously grants a competitive advantage to  the domestic 
product.863 Similarly, having faster access to inclusion on the Annex 4/A list (i.e. "reimbursable " 
status) grants a competitive advantage to those products with faster access, namely domestic 
 
853 European Union 's response s to Turkey 's request for a preliminary ruling, para. 73.  
854 Preliminary ruling of the Panel, para. 3.18.  
855 See Appellate Body Report, Argentina – Financial Service s, para. 6.38; and e.g. Panel Reports,  
Argentina – Import Measures , para. 6.274; China – Publications and Audiovisual Products , para. 7.1447; and  
Canada – Wheat Exports and Grain Imports , para. 6.164.  
856 European Union 's first written submission, paras. 366 -369. 
857 Panel Reports, China – Auto Parts , para. 7.240; China – Publications and Audiovisual Products , 
para. 7.1448.  
858 European Union 's second written submission, para. 313.  
859 Turkey 's second written submission, para. 317.  
860 Appellate  Body Reports, EC – Bananas III , para. 220 ; US – FSC (Article 21.5 – EC), para. 210 
(referring to Panel Report, Italy – Agricultural Machinery , para. 12);  and China – Auto Parts , para. 194.  
861 European Union 's first written submission, paras. 373 -375. 
862 Appellate Body Report, Korea – Various Measures on Beef , para. 135.  
863 See paragraph 7.125  of this Report.  WT/DS583/12  
 
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  products within the scope of the prioritization me asure. With respect to GMP and marketing 
authorization applications, the Panel notes that increased likelihood of access to priority licensing 
process times by virtue of a local production criterion means that locally manufactured products are 
available on  the Turkish market faster.864 The Panel considers that such products benefiting from 
the prioritization mechanisms that attach to local production status therefore also have a competitive 
advantage over their like imported counterparts. The Panel agrees wi th the European Union that the 
prioritization measure affects the equality of competitive conditions between domestic and like 
imported products that fall within the scope of this measure, and that this is discernible from the 
design, structure and expecte d operation of this measure.865 
7.333.   The Panel rejects Turkey 's argument that elements of "discretion " within the relevant 
approval procedures precludes any "less favourable treatment " arising from the prioritization 
measure.866 In this regard, the Panel recalls its understanding of the prioritization measure, as 
defined by the European Union, as comprising the in -built "prioritization " opportunities (as distinct 
from automatic outcomes) for locally manufactured products vis -à-vis their like imported 
counterparts, with respect to the Annex 4/A list and GMP and marketing authorization applications. 
As the Panel has found above, like imported products cannot benefit from any equivalent 
opportunities. The Panel notes that this is suf ficient for a finding of inconsistency with Article III:4 
of the GATT 1994.867 
7.6.5   Conclusion  
7.334.   The Panel finds that the European Union has established the existence of an overarching 
measure whereby Turkish authorities give priority to the review of applications  for inclusion in the 
Annex 4/A list and to GMP and marketing authorization applications concerning domestic 
pharmaceutical products over like imported products. The Panel concludes that the prioritization 
measure is inconsistent with Article III:4 of the GATT 1994.  
8  CONCLUSIONS AND RECOMMENDATION  
8.1.  For the reasons set forth in this Report, the Panel concludes as follows:  
a. With respect to Turkey 's request for a preliminary ruling:  
i. Turkey 's request for a preliminary ruling was not untimely;  
ii. the localisation requ irement, the import ban on localised products, and the 
prioritization measure were identified with sufficient specificity to comply with 
Article  6.2 of the DSU when reading the panel request on its face, as a whole, and in 
light of the attendant circumstan ces; and  
iii. the European  Union provided a brief summary of the legal basis of the complaint 
sufficient to present the problem clearly with respect to its claims under Article  X:1 of 
the GATT  1994 and Article  3.1(b) of the SCM  Agreement. Both claims, therefore , are 
properly within the Panel 's terms of reference.  
b. With respect to the localisation requirement:  
i. the European Union has established the existence of the localisation requirement as a 
"single measure ", whereby (i) Turkey requires foreign producers to com mit to localise 
in Turkey their production of certain pharmaceutical products; and (ii) where 
 
864 Furthermore, the Panel notes that with respect to both the Annex 4/A list and GMP and marketing 
authorization applications, other regulatory benefits may flow from priority access to a market, such as market 
history data, that may be used when submitting application s to another market . 
865 European Union 's first written submission, paras. 378 -379; second written submission, paras. 316 -
317.  
866 Turkey 's first written submission, paras. 693 -697; second written submission, paras. 317 -319. 
867 Appellate Body Report , US – FSC (Article 21.5) , para. 221; and Panel Reports, India – Solar Cells , 
para. 7.95; Canada – Wheat Exports and Grain Imports , para. 6.202.  WT/DS583/12  
 
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  commitments are not given, not accepted or not fulfilled , affected products are no 
longer reimbursed by the SSI;  
ii. the localisation requirement is not covered by th e government procurement derogation 
in Article III:8(a) of the GATT 1994, and is therefore subject to the national treatment 
obligation in Article III:4 of the GATT 1994 and Article 2.1 of the TRIMs Agreement;  
iii. the localisation requirement is inconsistent w ith the national treatment obligation in 
Article III:4 of the GATT 1994;  
iv. Turkey has not established that the localisation requirement is justified under 
Article  XX(b) or Article XX(d) of the GATT 1994; and  
v. in the light of these findings, the Panel declines  to rule on the European Union 's 
alternative and conditional claim under Article 3.1(b) of the SCM Agreement and 
exercises judicial economy over the European Union 's additional claims under 
Article  2.1 of the TRIMs Agreement and Article X:1 of the GATT 199 4. 
c. In the light of these findings, the Panel exercises judicial economy over the European 
Union 's claim that the localisation requirement applied in conjunction with the Turkish 
rules for approving the importation and marketing of pharmaceutical products ( referred to 
by the European Union as the "import ban on localised products ") is inconsistent with 
Article XI:1 of the GATT 1994.  
d. With respect to the prioritization measure:  
i. the European Union has established the existence of an overarching measure whereby 
Turkish authorities give priority to the review of applications for inclusion in the 
Annex  4/A list and to GMP and marketing authorization applications concerning 
domestic pharmaceutical products over like imported products; and  
ii. the prioritization measure is inconsistent with Article III:4 of the GATT 1994.  
8.2.  Under Article 3.8 of the DSU, in cases where there is an infringement of the obligations 
assumed under a covered agreement, the action is considered prima facie  to constitute a case of 
nullification or i mpairment. The Panel concludes that, to the extent that the measures at issue are 
inconsistent with the GATT 1994, they have nullified or impaired benefits accruing to the European 
Union under that agreement.  
8.3.  Pursuant to Article 19.1 of the DSU, the Panel recommends that Turkey bring its measures into 
conformity with its obligations under the GATT 1994.  
 
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