RESTRICTEDWORLD TRADE
ORGANIZATIONWT/REG135/M/1
20 June 2003
(03-3320)
Committee on Regional Trade Agreements
Thirty-Fourth Session
EXAMINATION OF THE FREE TRADE AGREEMENT
BETWEEN TURKEY AND SLOVENIA
Note on the Meeting of 3 April 2003
Chairman:  Mr. S. Dalela (India)
1. The meeting was convened in document WTO/AIR/2056/Rev.1
2. Under Agenda Item C.XVIII of its Thirty-Fourth Session, the Committee on Regional Trade
Agreements (hereinafter CRTA or the Committee) t ook up the first round of examination of the Free
Trade Agreement (FTA) between Turkey and Slovenia.  The following topics were discussed:
A. General Remarks
B. Section I – Background Information on the Agreement
C. Section II – Trade ProvisionsD. Section III – General Provisions of the Agreement
3. The Chairman noted that it was the first round  of examination of the Free Trade Agreement
between Turkey and Slovenia. The Agreement had been signed on 5 May 1998 and had entered into
force on 1 June 2001.  The Agreement had been notified to the WTO on 6 March 2002 as document
WT/REG135/N/1, with the text of the Agreement appearing in document WT/REG135/1 and the
Standard Format in WT/REG135/3.  He proposed to  organize the examination by first asking the
Parties and other Members for general comments and then turn to the specifics of the Agreement,
using the Standard Format to guide the debate.  He recalled the terms of reference for the
examination, adopted on 22 March 2002 by the Council for Trade in Goods, as contained in document
WT/REG135/2.
A. GENERAL REMARKS4. The representative of Turkey, speaking also on behalf of the representative of Slovenia,
informed the Committee that the Free Trade Agreement had been signed in Ankara on 5 May 1998.
The Agreement had been applied provisionally fr om 1 June 2000 onwards, following the completion
of the internal ratification procedure by Turkey.  It had entered into force on 1 June 2001, after the
completion of the internal ratification procedure in Slovenia.  The Agreement had been done inconformity with the definition set out in Article XXIV:8(b) of GATT 1994.  As to the scope of the
Agreement, she indicated that it covered all trade in industrial products (HS Chapters 25-97) and a
number of agricultural, processed agricultural and fishery products.  She added that through an
evolutionary clause, the Parties had agreed to further develop the relations already established by the
Agreement by extending them to fields that were not originally covered.  With the application of theAgreement, customs duties and other restrictive regulations of commerce on industrial and certain
agricultural products had been either abolished or reduced.  Therefore, the Parties believed that the
Agreement met the requirement of Article XXIV concerning the principle of covering "substantiallyWT/REG135/M/1
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all the trade".  In order to ensure the proper functioning of the free-trade area, the Agreement
contained provisions on public aid, state monopolies, competition, public procurement and protection
of intellectual, industrial and commercial property rights as well.  As regards trade data, she indicated
that import and export figures on the trade between Turkey and Slovenia had been prepared for the
period 1997-2002.  That information had been classified according to different duty levels (MFN,less-than-MFN and zero), both for agricultural and industrial products, as well as by stating their
shares in total values.  Actual trade figures were also given by HS Chapters for the same period.  She
drew the attention on Turkey's proposal at the last meeting of the Negotiating Group on Rules,
towards the adoption of an improved standard format, emphasizing that information on trends and the
most recent intra-and extra-trade data of the Parties by major product groups and main partners had
been prepared, for the first time, in the context of  that examination. She was of the view that the
information provided in the non-paper would help  Members to monitor the impact of the FTA.
5. Another representative of  Turkey took the floor to brief the Committee on the data circulated
in the non-paper.  He indicated that in the tables, trade figures of the last three years had been used.
Since the Agreement fully entered into force on 1 January 2001, the Parties considered that the period
from 2000 to 2002 was the most appropriate term for the assessment of the Agreement's effects on
intra-and extra-trade figures of the countries.  Among the circulated items, mainly three sets of datahad been processed.  These were: Annex I - Imports and exports of the first ten products between the
Parties (12 digit description);  Annex II - Sectoral  breakdown of trade between the Parties;  Annex III
- Shares of the Parties in each other's imports and exports (in comparison with major trading partners
and RTA countries).  He said that, since during the previous meetings of the CRTA, Members had
repeatedly asked for more detailed trade data, the Parties felt that it was necessary to provide theCommittee with a list of the first ten products traded between the two countries on a 12-digit
description.  That data amounted to approximately ha lf of the trade between the Parties as indicated in
Annex I.  He added, however, that for a more m eaningful assessment, Annex I and II ought to be
examined together.  He indicated that by doing so, Industrial Machinery and Textiles and Clothing
could be seen as representing the major sectors in the Parties' commercial relations, amounting to one-third of the total value of their trade in 2002 ($122 m.).  Annex III, he added, was particularly
important since it contained a table that summarizes many interesting indicators on a single page.
Firstly, on the top left hand side, it indicated the total number of countries with which Turkey had
trade relations.  Secondly, it provided a breakdown of Turkey's exports and imports with its first ten
major trading partners, its FTA partners, and the EU.  The table also indicated the ranking and the
share of each country or country group in relation to total values.  That information, he said, clearly
made it possible to monitor any trade creating or diverting effects of an FTA.  He noted that in case ofthe Agreement being examined, in 2001 Slovenia ranked 65
th in Turkey's exports and 63rd in Turkey's
imports, with shares of 0.20 per cent and 0.12 per cent, respectively.  Slovenia's ranking and shares
before and after the entry into force of the Agreement had remained almost unchanged.  To a great
extent, the same was true for Turkey's first ten trading partners and for FTA partners.  He added that it
was interesting to note that with the exception of Israel's place in relation to Turkey's exports, none ofthe other FTA partners were among Turkey's first ten trading partners.  In light of those figures, he
was confident that the FTA with Slovenia, as well as  any other RTA that Turkey was involved in, had
not created trade diversion to date.  He informed Members that the non-paper contained very similar
data for Slovenia as well, and concluded by drawing Members' attention to the fact that the CRTA's
most important mission should be to determine a nd assess RTAs' implications on global trade flows.
6. Taking back the floor, the representative of  Turkey informed Members that all customs duties
and charges having equivalent effect, as well as quantitative restrictions, on imports and exports of
industrial products had been abolished with a few exceptions on the day of entry into force of the
Agreement.  On 1 January 2001, the remaining duties and restrictions for sensitive products had also
been eliminated.  Furthermore, Turkey and Slovenia had granted each other preferential market accesson a number of agricultural, processed agricultural and certain fishery products, as specified in
Protocol 2 to the Agreement.  Some of those products were, however, subject to tariff quotas.WT/REG135/M/1
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Regarding the rules of origin that were set out in Protocol 3 to the Agreement, she stated that they
were based on the sufficient working and processing criteria.  Protocol 3 on rules of origin also
enabled extended cumulation of products among the countries pertaining to the Pan-European
Cumulation System.  Accordingly, a framework had been established with Protocol 3 for cooperation
in customs administration on the definition of the concept of "originating products" and methods ofadministrative cooperation between the Parties.  Sh e added that among the "Regulatory Provisions" of
the Agreement, "Standards", "Safeguards", "A nti-Dumping and Countervailing Measures" and
"Subsidies and State Aid" issues had been laid down in a manner fully in conformity with the relevant
WTO Agreements.
B. S
ECTION I - B ACKGROUND INFORMATION ON THE AGREEMENT
7. The representative of the United States, having noted the late notification of the Agreement,
referred to the provisional application of the Agreement upon completion of the ratification procedure
by Turkey and wondered whether the Agreement had been applied only in one of the Parties or
whether the government of Slovenia had authority to implement tariff preferences provisionally
before the completion of its ratification procedure.  The representative of  Turkey, while taking note
of the comment, remarked that the question of late notification was a procedural issue. With respect tothe second comment of the representative of the United States, she indicated that upon completion ofthe internal ratification procedure by Turkey, the Agreement had been applied provisionally in both
Turkey and Slovenia.
8. The representative of the United States welcomed the data circulated by the Parties in the non-
paper.  She acknowledged that trade diversion was a systemic issue of concern to the Committee;
however, she recalled that the provisions of GATT Article XXIV were very specific in theirrequirements of the test on coverage of substantially all trade.  She noted that the information
provided by the Parties did not appear to contain data on the percentage of tariff lines covered.  She
indicated that although her delegation had never considered that information to be dispositive on
GATT Article XXIV requirements, it did believe that it gave an indication of the extent of coverage.
In that respect she recalled that the submission of NAFTA had included information on the percentageof tariff lines.  The representative of Turkey said that her delegation's view on that issue was well
known to the Committee as well as to the Negotiating Group on Rules.  She remarked that, asindicated in the Standard Format, the Agreement covered all industrial products and a number of
agricultural products.  It was the view of her delegation that what mattered was trade coverage, which
in the case of the Agreement was 99.9 per cent of Turkish imports from Slovenia and 93.3 per cent of
Slovenian imports from Turkey.
C. S
ECTION II - T RADE PROVISIONS
9. The representative of Japan said that his delegation was interested in learning more on the
specific items that fell under the tariff quotas mentioned in Section II:1 of the Standard Format
dealing with import restrictions.  He also asked whether that information was readily available on one
of the Parties' governmental web sites.  The repres entative of Turkey indicated that Protocol 2 to the
Agreement laid down the specific items subject to tariff quotas.  She added that should there be a need
for additional information she would be pleased to provide that in writing.
10. The representative of the United States, following up the point made by the representative of
Japan, said that her delegation would welcome any documentation related to the Agreement, such as
Annexes and Protocols, that was available in electronic format.  The representative of Turkey said that
her delegation would provide the relevant data in electronic format.
11. The representative of Chile sought clarification on the tables in the Annex to the Standard
Format and, in particular, on the logic of differen tiating duty rates between zero, less-than-MFN andWT/REG135/M/1
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MFN.  The representative of Turkey said that that was the traditional way of presenting data in the
Standard Format.  She added that it was evident from the tables that trade shares for MFN and less-
than-MFN rates were practically zero.
12. On the point raised by the representative of Chile, the representative of the United States
further remarked that while the less-than-MFN rate on the agricultural imports of Turkey from
Slovenia was zero, that was not the case for agricultural imports of Slovenia from Turkey where in
2002 the less-than-MFN rate applied to approximately half of total agricultural imports.  She
expressed her delegation's concern about the existence of preferential tariffs, especially should that
situation remain a permanent feature of the Agreement.  The representative of Turkey asked that the
question be submitted in writing.
13. Under Section II:8 of the Standard Format, the representative of the United States referred to
the table in the Annex to the Standard Format concerning imports of Slovenia from Turkey and noted
that almost 95 per cent of agricultural trade was not slated for zero duties.  Referring to a comment by
the representative of Australia in the course of another examination, she questioned whether an RTA
that almost excluded an entire sector could be said to be covering substantially all the trade. She also
reiterated her delegation's concern about the use by numerous RTAs of preferential rules of origin
regimes based on cumulation of origin.  In the case of the Agreement, the use of such systemapparently benefited not only the goods of Turkey and Slovenia, but also those of several third
countries not party to the Agreement.  She noted her delegation's contentment to see new RTAs not
applying cumulation of origin.
14. Finally, to a question by the representative of the United States on whether any agreement for
mutual recognition in the field of conformity assessment had been reached, since such aim wasmentioned in the Standard Format, the representative of  Turkey indicated that at the time there was
no such agreement.  She also referred to the existence of an evolutionary clause provision through
which the Agreement could be improved over time.
D. SECTION III – G ENERAL PROVISIONS OF THE AGREEMENT
15. With respect to Section III:4 of the Standard Format, the representative of the United States
wondered whether the tariff reductions referred to  under that paragraph where only limited to those
reductions resulting from the GATT Uruguay Round.  The representative of Turkey said that the
paragraph could be read as any tariff reduction decided within the WTO.
16. The Chairman said that the first round of examination of the Free Trade Agreement between
Turkey and Slovenia had allowed the Committee to clarify a number of issues, but some remained
pending.  He asked delegations to submit questions to the Secretariat by the end of July 2003 and for
the Parties to submit replies no later than the end of October 2003.
17. The Committee took note of the comments made.
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