RESTRICTEDWORLD TRADE
ORGANIZATIONWT/REG58/4
24 June 1999
(99-2589)
Committee on Regional Trade Agreements Original:  English
FREE TRADE AGREEMENT BETWEEN TURKEY AND HUNGARY
Questions and Replies
This document reproduces questions addressed to the Parties and the responses submitted.
The questions and replies set out below are organized in accordance with document WT/REG58/3.
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I. BACKGROUND INFORMATION ON THE AGREEMENT
4. Trade Data
The Parties to the Agreement have circulated  overall two-way trade data at the chapter
or section level for the last few years.  While this information is useful, unfortunately the
information does not respond to the request ma de by the Committee.  Committee members are
still unclear on the treatment of certain type s of products under the Agreement.  While the
Parties claim that all trade is covered by the Agreement, it appears that some products –
primarily agricultural – are not subject to tariff elimination and in fact may receive only tariff
preferences.  Committee members have requested, on several occasions, statistical informationthat would show the amount/type of trade s ubject to varying treatment under the Agreement.
Similar data has been provided by the partie s to other agreements.  We are not prepared to
complete the factual review of this Agreement – or any other agreements - until satisfactory
trade data has been provided.  We note that while the Parties to the Agreement may consider
the meaning of the term "substantially all trade" to be a topic for the discussion on systemicissues, the information we have requested has been provided by the parties in reviews of other
agreements.  Please provide the trade data that has been requested.
We welcome the trade statistics provided by the FTA parties in the standard format
report.  We would be grateful for clarification of what percentage of FTA trade between theparties (for each party):
For agricultural products- will have the duties/regulations eliminated?
- receives concessions (less than MFN but greater than zero duties and/or quotas) or is
excluded from FTA provisions?
For industrial products- will have the duties/regulations eliminated?WT/REG58/4
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- receives concessions (less than MFN but greater than zero duties and/or quotas) or is
excluded from FTA provisions?
See Annex.
II. TRADE PROVISIONS
5. Safeguards
Articles 15, 17, 18 and 20 (Structural Adju stment/Emergency Action/Re-export and
Serious Shortage/Safeguards Procedures):  Ca n the Parties explain whether there is any
difference in practice between the obligations under these Articles and the manner in which
they will operate and the obligations of the Parties under the WTO?  Can the Parties confirm
that measures applied under these Articles will  be applied in a non-discriminatory manner
without prejudice to the interests of non-parties to this FTA.
Parties are allowed to take appropriate measur es that are in full conformity with the
obligations stemming from the WTO rules where the measures are enforced on the rule of non-
discrimination between Parties and non parties.  Of all the safeguard measures set out in the
Agreement, only a structural adjustment measure under Article 15 of the Agreement, namely infantindustries, or certain sectors undergoing restructuring or facing serious difficulties, can justify a
margin of preference for Parties.  Even the possibility to use this type of measure under the
Agreement is limited in duration, ending 1 January 2001.
Article 15 (Structural Adjustment):  This Article makes provisions for exceptional
measures to be taken concerning infant industries, or sectors undergoing restructuring or facing
serious difficulties have any structural adjustme nt measures been taken, and if so, on what
products?  How is it decided that exceptional measures can be taken?
Article 17 (Emergency Action):  Have any safeguard measures under this Article been
taken?  If so, on what products and for what duration?
No structural adjustment measure or emergency action has been taken by the Parties within
the meaning of Article 15, 17, since the entry into force of the Agreement.
Article 25 (Balance-of-Payments – BOP – Measures):  Will BOP measures under this
Article be applied in a non-discriminatory manner and without prejudice to the interests ofnon-parties to this Agreement?
BOP measures will be applied in a non-discriminatory manner to the interests of non-parties
to this Agreement and in accordance with the conditions laid down in the WTO rules.
7. Subsidies and State-Aid
Article 24 (Competition Policy):  We acknowledge that competition policy is not covered
in explicitly by the WTO rules.  However, certain aspects of competition are captured by
various WTO rules we therefore would be grateful for comments on the following questions:
- What criteria are to be applied in asse ssing whether actions prevent, restrict or
distort competition, or whether actions by dominant undertakings constitute an
abuse of their position?WT/REG58/4
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- Are these considerations subject to specific legally based processes?
The criteria for evaluation whether actions prevent, distort or restrict competition are
explicitly stated in Article 24.  Moreover any issues on competition rules are consulted and measures
are taken within the Joint Committee and parallel to th e guidelines laid down in the Parties' respective
Agreements with the EU.
8. Sector-Specific Provisions
Agriculture
Article 11 (Agriculture):  Is consideration being given to establishing free trade in
agriculture, or to extending existing provisions on agriculture and fisheries to cover more
products or to liberalise further (e.g., eliminating duties/quotas on products currently only listed
for concessions or currently exempt)?
The Parties have granted each other preferential market access possibilities under the
Agreement for a number of agricultural and processed agricultural products under positive lists.  In
accordance with Article 11, further liberalization of trade in agricultural products is an important
component of the agreement.  This objective will  be taken up regularly within the Joint Committee
meetings.
9. Other
State Monopolies
Article 19 (State Monopolies):  Which products are currently subject to state
monopolies?  This Article suggests that state mo nopolies might currently discriminate in their
commercial decisions – Can the Parties confirm that such monopolies operate in a manner
consistent with GATT Article XVII in their purchases from and sales to third countries?
The importation of alcohol and alcoholic beverages excluding whisky and natural sparkling
wines are under the monopoly of the Turkish Government.  In accordance with GATT Article XVII,
the monopoly operates in a non-discriminatory ma nner concerning commercial decisions without
creating any advantage for Hungarian exporters against non-parties to the Agreement.WT/REG58/4
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ANNEX
Imports of Turkey from Hungary, 1995-1997,
by different duty levels according to the Agreement
1995
Agricultural products Industrial products Total imports Duty
rate 1,000 US$ % 1,000 US$ % 1,000 US$ %
0% 7,113 33 47,878 99.6 54,991 79
Less than MFN 4,137 19 175 0.4 4,312 6
MFN 10,602 48 0 0.0 10,602 15
1996
Agricultural products Industrial products Total imports Duty
rate 1,000 US$ % 1,000 US$ % 1,000 US$ %
0% 7,092 18 53,872 99 60,964 65
Less than MFN 3,577 9 361 1 3,938 4
MFN 29,517 73 0 0 29,517 31
1997
Agricultural products Industrial products* Total imports Duty
rate 1,000 US$ % 1,000 US$ % 1,000 US$ %
0% 5,174 44 92,988 98 98,162 92
Less than MFN 101 1 1,869 2 1,970 2
MFN 6,381 55 0 0 6,381 6
*  Duties on products subject to timetables will be abolished in 2001.
Imports of Hungary from Turkey, 1995-1997,
by different duty levels according to the Agreement
1995
Agricultural products Industrial products Total imports Duty
rate 1,000 US$ % 1,000 US$ % 1,000 US$ %
0% 177.2 2.1 37,504.9 100 37,682.1 81.1
Less than MFN 5,128.9 59.6 - 0 5,128.9 11.1
MFN 3,94.6 38.3 - 0 3,294.6 7.1
1996
Agricultural products Industrial products Total imports Duty
rate 1,000 US$ % 1,000 US$ % 1,000 US$ %
0% 399.1 2.7 41,871.7 100 42,270.8 74.3
Less than MFN 8,295.8 55.1 - 0 8,295.8 14.6
MFN 6,345.7 42.2 - 0 6,345.7 11.1
1997
Agricultural products Industrial products* Total imports Duty
rate 1,000 US$ % 1,000 US$ % 1,000 US$ %
0% 547.9 3.5 52,466.2 100 53,014.1 77.0
Less than MFN 6,535.7 39.8 - 0 6,535.7 9.5
MFN 9,303.8 56.7 - 0 9,303.8 13.5
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