RESTRICTEDWORLD TRADE
ORGANIZATIONWT/REG67/M/1
WT/REG68/M/1WT/REG70/M/1
23 July 1999
(99-3104)
Committee on Regional Trade Agreements
Twenty-Third Session
EXAMINATION OF FREE TRADE AGREEMENTS BETWEEN
TURKEY AND THE CZECH REPUBLIC;  TURKEY AND THE SLOVAK REPUBLIC;
AND TURKEY AND ESTONIA
Note on the Meeting of 1 July 1999
Chairman :  Ambassador Krirk-Krai Jirapaet  (Thailand)
1. This meeting was convened  in document WTO/AIR/1118.
2. Under Agenda Items C.VI-VIII, the Comm ittee on Regional Trade Agreements took up the
examinations of the Free Trade Agreements (FTAs) between Turkey and the Czech Republic; Turkey
and the Slovak Republic; and Turkey and Estonia.  The following topics were discussed:
A. General RemarksB. Section I - Background Information on the Agreement
- I.3 - Scope of Agreement
- I.4 - Trade data
C. Section II - Trade Provisions
- II.1 - Import restrictions
- II.3 - Rules of Origin
- II.5 - Safeguards
- II.7- Subsidies and State-Aid
- II.8 - Sector-Specific Provisions- II.9 - Other
D. Section III - General Provisions of the Agreement
- III.4 - Relation with other trade Agreements
3. Noting that the meeting was the first round of examination of the three Agreements, the
Chairman proposed that the Committee examine them as a group, though separately from Turkey's
four Agreements considered under Agenda item s C.II-V.  The proposed format would have no
influence on the examinations per se as each Agreement would be judged on its own merits and would
have its own report and conclusion.  He asked delegations to indicate whether their questions relatedto a specific Agreement or to a grouping of Agreements.WT/REG67/M/1
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A. General Remarks
4. The Chairman stated that the Turkey-Czech Republic Free Trade Agreement was signed on
3 October 1997 and entered into force on 1 September 1998.  The Turkey-Slovak Republic Free Trade
Agreement was signed on 20 October 1997 and entered into force on 1 September 1998.  The Turkey-
Estonia Free Trade Agreement was signed on 3 June 1997 and entered into force on 1 July 1998.
These agreements were notified to the WTO on 12 January, 1999;  the notifications of the three
Agreements could be found in documents WT/R EG67/N/1, WT/R EG68/N/1, and WT/REG70/N/1,
respectively with the text of the Agreements appearing as documents WT/REG67/1, WT/REG68/1
and WT/REG70/1, respectively.  He intended to or ganize the day's meeting in the following manner:
first, there would be an opportunity for general comments by the Parties and then from the Members
of the Committee; second, the meeting would turn to the specifics of the Agreements and, in so doing,
the Committee would have information in the Standard Formats WT/REG67/2, WT/REG68/2, and
WT/REG70/2, respectively, to guide the debate.  He  noted that the representative of Turkey would be
answering questions for Estonia, as Estonia was not yet a  WTO Member.
5. The Chairman recalled the terms of reference for the examinations contained in
WT/REG67/3, WT/REG68/3, a nd WT/REG70/3, respectively.  "To examine, in light of the relevant
provisions of the GATT 1994, the Free Trade Agreement between Turkey and the Czech Republic,
(Turkey and the Slovak Republic, and Turkey and Estonia) and to submit a report to the Council for
Trade in Goods."  The terms of reference were to  be applied in conjunction with the following
Understanding:  "It is understood that the statement read out by the Chairman of the Council for Trade
in Goods under item 7 of the Agenda of its meeting on 20 February 1995, as contained in document
WT/REG3/1, applies mutatis mutandis to this working party.  It is also understood that, during the
examination, due account will be taken of the intrinsic differences between customs unions and
free-trade areas."
6. The representative of Turkey expressed his pl easure in presenting Turkey's FTAs with the
Czech Republic, the Slovak Republic, and Estonia.  He stated that the regional preferential
arrangements of Turkey should be evaluated in the context of its active policies promoting regional
co-operation schemes in adjacent regions.  Considering the Agreements as complementary to the
multilateral trading system, Turkey was committed to the creation of an open and liberal trading
system.  Turkey's policy was to use increased trade to promote greater investment, production and
employment, thus facilitating the economic development of all countries and, particularly, that of thecountries of the region.  Already, the preferential regimes had significantly stimulated trade within the
region.  Recalling the Turkey-European Communities (EC) Customs Union Decision, he indicated
that Turkey had  envisaged to undertake the preferential arrangements of the EC and had prioritised
the conclusion of agreements with the Central & Eastern European and Baltic countries;  the three
Agreements under examination were concluded in that context.  The FTAs between Turkey and theCzech and Slovak Republics had  entered into force on 1 September 1998, while the agreement with
Estonia had come into effect on 1 July 1998.  All Agreements had been duly notified to the WTO
after the completion of the internal approval procedures of the Parties.  He stated that the Agreements
fulfilled the requirements of GATT 1994 and Article XXIV.  First, the Agreements complied with
Article XXIV:5 as, "... the duties and other regulations of commerce applicable at the formation" ofthe free-trade areas were not higher or more restrictive vis-à-vis third countries than the corresponding
duties and other regulations of commerce prior to the formation of the free-trade area.  The
Agreements did not introduce any barriers against third countries.  In addition, the provisions of the
Agreements were in compliance with Article XXIV:8(b), since the Parties had eliminated duties and
other restrictive regulations of commerce on "substantially all the trade" between them.  Each of theAgreements covered all trade in industrial products and a number of agricultural and processedWT/REG67/M/1
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agricultural products.  He stressed that since industrial products were completely covered by each
Agreement and comprised an important share of total trade between the Parties, trade between
constituent territories had been greatly facilitated.  Unsurprisingly, two of the Agreements (those withthe Czech and Slovak Republics) included transition periods for sensitive products, with all tariffs on
such products being eliminated by the year 2001.  Immediate liberalisation had been attained with the
entry into force of the Agreement with Estonia.  He noted that the Agreements provided possibilities
for preferential market access with respect to a number of agricultural and processed agricultural
products, as detailed under positive lists.  An open-ended liberalisation of trade in agricultural
products was an important component of each Agreement since the Parties were committed to grant
further concessions on these products.
7. The representative of Turkey said that negotiat ions to complete FTAs between Turkey and the
Czech and Slovak Republics had been initiated in July 1996 and the Agreements were signed on
3 October 1997 and 20 October 1997 respectively, both being notified to the WTO on
12 January 1999 (WT/REG67/N/1 and WT/REG68/N/ 1, respectively).  Turkish figures on imports
from the Czech and Slovak Republics for 1997 indicated that the Agreement covered almost all thetrade between the Parties.  Turkey had abolished duties on the majority of its total imports
immediately after the Agreement came into force.  Sensitive industrial products had been subjected to
two different timetables for the elimination of customs duties, the first of which ended on
1 January 1999, and the second ending on 1 January 2001.  Turkey had already made a 50 per cent
reduction in customs duties applying to the second group, comprising most sensitive products.Customs duties on those products would be subjected to another reduction of 20 per cent on
1 January 2000 and would be completely eliminated by 1 January 2001.  The first round of
negotiations between Turkey and Estonia took place in April 1997 and the Parties concluded the
Agreement on 3 June 1997.  The Turkey-Estonia FTA was notified to the WTO on 12 January 1999
(WT/REG70/N/1).  Turkey had abolished all customs duties and charges having equivalent effect onimports of industrial products from Estonia with the entry of force of the Agreement and had initially
granted Estonia preferential market access for a number of agricultural products under quotas.  Import
figures for the previous three years indicated that the trade in industrial goods that was completely
covered in the Agreement constituted 100 per cent of the total.  The figures for the previous three
years indicated that there had not been any importati on of agricultural products from Estonia that was
subject to Turkey's concession.  The arrangements on rules of origin detailed in the Agreements
completed with the Czech and Slovak Republics and Estonia were similar, since all the countries wereparties to the Pan-European Cumulation System, a system based on the principle of diagonal
cumulation of origin between member countries.  The principles of the system had been notified to the
WTO Members on 20 August 1998 and have been discussed in the Committee.
8. The representative of Turkey also noted that each of the Agreements was accompanied by
Turkey's implementation of the far-reaching Uruguay Round market access commitments to reduce
the original preferential margins, thereby increasing trade opportunities for third parties.  He reiterated
that the Agreements fully complied with the principl es of the multilateral trading system since each of
them facilitated trade between the Parties and did not raise barriers to trade with other WTO
Members.
9. The representative of the European Comm unities welcomed the Agreements and the
opportunity to consider them in the CRTA.  He supported the statement made by the representative
from Turkey with regard to the EC's close relations  with each of the Parties to the Agreements and
recalled the EC's own agreements with them.  He said that the EC supported the initiative to develop
closer economic ties between the Parties to the three Agreements and saw these as being largely
complementary to the strategy which European countries were pursuing in terms of developingeconomic and political ties.  He said that given the information provided, his delegation shared theWT/REG67/M/1
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view of the Turkish delegation and other Parties to the Agreements that the test of Article XXIV had
been met with respect to those Agreements.
10. Pointing out that his delegation was still examining the Agreements, the representative of
Japan said that he would only be able to give preliminary comments at the day's meeting.  His
delegation intended to submit comments in writing after a thorough examination of the Agreements.
11. The representative of Hungary welcomed the notification and examination of the three
Agreements.  He expressed appreciation for the professional and detailed introduction to the
Agreements provided during the meeting.  He stated that his delegation had studied the Agreements
and had concluded that they were in conformity with the provisions of Article XXIV.
12. The representative of Djibouti commended the Parties to the Agreements under examination
on excellent work. He remarked that Members needed  to take into account in their examination, the
developing-country status of Turkey.
13. The representative of Switzerland shared the appreciation expressed for the excellent
presentation made by the delegation of Turkey and joined the EC in the view that the three
Agreements  under examination met the criteria under Article XXIV.
B. Section I - Background Information on the Agreement
Section I.3 -  Scope of the Agreement
14. Recalling that some other agreements with Central European countries had allowed for
provisional application of preferential treatment, the representative of the United States asked if any
of the Parties to the Agreements under examination had implemented preferential treatment beforeentry into force. If so, he asked for dates of such provisional application. Pointing out that the
Agreements with the Czech and Slovak Republics were identical while the one with Estonia was very
similar, the representative of Turkey responded by affirming that no preferential rates had been
applied before the Agreements came into effect.
Section I.4 - Trade data
15. The representative of Australia observed that the tables provided indicated the percentage of
trade covered under the Agreements. He requested the Parties for further statistics and in particular,
for the number of tariff lines for which duties had been eliminated, besides providing an account of
the status of other restrictive regulations of commerce. The representative of the United States alsorequested the Parties for more detailed trade data. He said that the trade data provided by Turkey in
the context of another examination had been usef ul and suggested that Turkey follow a similar
approach in providing information for the three Agreements under consideration. Referring to the
tariff-line information requested by Australia, he specified his delegation's interest in receiving data
on the percentage of total tariff lines for which there were zero duties. The representative of Japanjoined the delegations of Australia and the United States in their request for tariff-line information.
16. The representative of the United States asked the Parties for a confirmation that all items in
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17. In response to the questions on provision of information on tariff lines, the representative of
Turkey stated the view of his delegation that they had provided information on the scope of bilateral
trade between the Parties, which they considered he lpful in determining whether or not the provisions
of Article XXIV were met.  He stated that, although it was extremely difficult in the given
circumstances to provide information regarding tariff lines, his delegation had taken note of the
question and would consider it at a later time.  He affirmed that in the agreements between Turkey
and the Czech and Slovak Republics, the Parties had eliminated all customs duties and charges on
industrial products upon the entry into force of the Agreement, with the exception of a limited number
of sensitive products.  The duties on some of these had already been abolished on 1 January 1999.
Duties and other charges for the rest of the industrial products would be abolished by 1 January 2001,at the latest.  Preferential treatment had also been extended to a number of agricultural and processed
agricultural products falling within HS Chapters 1-24.  The trade coverage of the Agreements
corresponded to 79 per cent, 85 per cent and 100 per cent of Turkey's imports from Czech Republic
and 94 per cent, 73 per cent and 97 per cent of Turkey's imports from Slovakia for the years 1995,
1996 and 1997, respectively.  The relatively low coverage rates in 1996 were due to a temporaryincrease in wheat imports not covered by the Agreements, due to a poor harvest in Turkey.  In regard
to the Agreement with Estonia, all customs duties and charges having equivalent effect applicable to
trade in industrial products between the Parties had been abolished with the entry into force of the
Agreement.  Industrial products constituted 100 per cent of Turkey's imports from Estonia in 1995,
1996 and 1997; consequently all trade was covered by the Agreement.  He expressed his delegation'sview that, given these proportions, the Agreements satisfied the requirements of paragraph 8(b) of
Article XXIV of GATT 1994.
18. The representative of Slovak Republic supported the views of the representative of Turkey.
He stated that his delegation had provided all relevant information and drew attention to additional
information provided in documents WT/ REG67/ 1, WT/REG68/1, and WT/REG70/1.  In response to
the question raised by the representative of the United States, he confirmed that the implementation
date for all items would not be extended beyond the year 2001.
19. The representative of Hungary stated that his delegation did not consider tariff-line
information necessary for judging whether an Agreement was compliant with Article XXIV.  Trade
creation and trade distortion could be measured by trade data and not by tariff-line information.
B. Section II - Trade Provisions
Section II.1 - Import restrictions
20. Noting that all duties and charges having equivalent effect had been abolished on imports of
industrial products except those classified as sensitive, the representative of  the United States asked
which products were considered sensitive for those purposes.  He specified that that his questionapplied only to the Agreements between Turkey and the Czech and Slovak Republics.  He also wishedto know what type of measures other than duties and charges, if any, applied to these products.
Finally, he asked if the Parties maintained any quantitative restrictions between each other and, if so,
requested that they be identified.  The representative of Australia joined the representative of
United States in his query regarding import restrictions.
21. In response, the representative of Turkey stated that since the Agreements entered into force,
no quantitative restrictions had been introduced between the Parties.  He recalled having covered the
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groups; restrictions for the first group had a phase-out period that terminated on 1 January 1999, while
duties and charges for the rest of the sensitive products would be abolished by 1 January 2001.
22. In response to the representative of the United States' reiterated interest in knowing which
product items fell within each of these two groups, the representative of Turkey referred to Protocol 1
of the Agreements.  The first group, Annexes A and C of the Agreements included sensitive products
for which customs duties were abolished on 1 January 1999.  The second group, Annexes B and D of
the Agreements included the most sensitive products for which the customs duties would be abolished
by 1 January 2001 at the latest.  Within that framework,  Turkey had already made a 50 per cent
reduction in its customs duties for the second group of products.  In citing some of the listed products
within the second category, he included trunks, suitcases, briefcases, boxes, sacks and bags for cementand fertilisers, certain textile and clothing products, certain footwear and parts of footwear, tableware,
kitchenware, other household articles, toilet articles, porcelain and china, sewing machines, tractors,
minibuses, motorcars, motorcycles, bicycles and seats.  Customs duties on those products would be
subject to another reduction of 20 per cent on 1 January 2000 and would be completely eliminated by
1 January 2001.
23. In response to a request of clarification by the representative of Australia on the cited
Protocols, the representative of Turkey suggested that the document be obtained from the Secretariat
and indicated that his delegation would be willing to provide it if that were not possible.  The
appropriate reference was Annex D to Protocol 1 of the Agreements between Turkey and the
Czech and Slovak Republics.  The representative of the Slovak Republic added that the Annexes and
Protocols had been submitted to the Secretariat for consultation by interested Members.
Section II.3 - Rules of Origin
24. Referring to WT/REG67/2, the representative of  the United States quoted the last paragraph
of the "Rules of Origin" section, stating that "the rules of origin enable extended cumulation of
products between Turkey, the Czech Republic, EU countries, EFTA countries and Central and EasternEuropean countries when the necessary procedures have been completed.  Until that time, diagonal
cumulation will be implemented in relation with the Czech Republic."  He asked if the
Czech Republic had begun implementation of the System for the Agreement under review.
Furthermore, he asked the Parties why they were applying cumulative rules of origin to countries that
were not Parties to that particular Agreement.  The representative of Turkey stated that his delegation
would provide an answer in writing.  The representative of the Slovak Republic and of the
Czech Republic, stated that their delegations woul d also provide written answers to the questions
posed.
Section II.5 - Safeguards
25. The representative of the United States asked for a confirmation that the Parties did not
provide any margin of preference with respect to global safeguard action.  He asked if the Parties to
the Agreements excluded each other from safeguard actions as well.
26. The representative of Japan sought to clar ify whether the safeguard measures would be
enforced without any discrimination. Finally, he asked what the relationship was between the
safeguard measures in the Agreement and the related provisions of the WTO Agreement.
27. The representative of Turkey responded that the provisions of the Agreements on safeguards,
(namely, anti-dumping measures, emergency action, and import of particular products and re-export
and serious shortage) did not provide for any preference to the Parties.  He specified that only in theWT/REG67/M/1
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case of structural adjustment did the Parties retain a marginal preference, which would cease to apply
at the end of the transition period stated in the Agreement.  No structural adjustment measure or
emergency action had been undertaken by the Parties since entry into force of the Agreements.  Nodiscrimination existed against third Parties and the provisions of safeguards included in the FTAs
fully complied with the WTO Agreement.
28. The representative of  Korea asked how the Parties could justify the different application of
safeguard measures vis-à-vis the Parties, noting that in some cases they applied safeguard measures
on a discriminatory basis and in others on an MFN basis.  He said that while he understood that
different views existed on whether Parties to a RTA should apply safeguard measures on an MFN
basis, he thought it best to stick to one interpretation.  The representative of Turkey responded that
only in the case of structural adjustment would Parties retain margins of preference, which would
cease to apply at the end of the transition period stated  in the Agreement.  He specified that this was
only a temporary measure and all other measures were in complete compliance with the WTO
provisions.
Section II.7- Subsidies and State-Aid
29. The representative of Canada quoted paragraph 2 of Article 21 under State-Aid, which read as
follows, "the provisions of paragraph 1 shall not apply to products covered by Chapter II".  She
requested the Parties to elaborate on why this provision was included in the Agreement and what
specific products it referred to.  The representative of Turkey requested that the question be submitted
in writing since his delegation intended to consider it carefully and provide an answer in writing.
Section II.8- Sector-Specific Provisions
30. Referring to concessions granted in trade on agricultural products, which were laid down in
Protocol 2 of Turkey's Agreement with the Czech and Slovak Republics, the representative of the
United States requested that the Parties provide some details on the agricultural products included in
the positive list. Additionally, he asked the Parties to elaborate on the kind of mechanisms being used
to provide those concessions.  The representative of Turkey stated that the agricultural concessions
that Turkey provided to the Czech and Slovak Republics in the context of tariff quotas were laid downin Annex B to Protocol 2 of the Agreement.  With regard to the Czech Republic, this included
290 lines (8-digit basis) comprising live and bovine animals, meat, yoghurt, extracts of herbs,
margarine, butter and fats, cheese, beans, seeds, sunflower oil, chewing gum, sugar confectionery,
chocolate products, jams, fruit juice, soups, waters, beer, wine, other  spirits, oil cake, dog or cat food.
Turkey's agricultural concessions to the Slovak Republic included 229 lines (8-digit basis) amongwhich, live bovine animals, butter and fats, cheese, be ans, seeds, sunflower oil, chewing gum, sugar
confectionery, chocolate products, jams, fruit juice, soups, waters, beer, wine, other spirits and oil
cake were covered.
31. The representative of the United States sought to confirm if the same level of tariff quotas
were being applied by the Czech and Slovak Republics on imports from Turkey.  Additionally, he
asked if the Agreement provided a scheduling for the enlargement of the quotas and the reduction of
the rates that were being applied both in quota and out of the quota for the products on the list.  The
representative of Turkey responded by saying that the subject of further liberalisation of agricultural
products and that of the review of  tariff quotas according to the provisions of the Agreement would
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Section II.9 - Other
32. Regarding State monopolies, the representative of Australia noted that under Article 18 of the
Agreements of Turkey with the Czech and Slovak Republics, the Parties had agreed to adjust
progressively any state monopoly of a commercial character so as to ensure that by 1 July 1999 no
discrimination regarding the conditions under which goods were procured and marketed existed
between the nationals of the Parties.  He asked whether that adjustment program to ensure the
elimination of discrimination had come into effect and, if so, what kind of monopolies had been
adjusted. In response, the representative of Turkey stated that Turkey had only one State monopoly,
without discriminatory policies against third Parties and did not favour any country irrespective ofwhether it was a Party or non-Party to the Agreem ent; there was no discrimination in the legislation.
The representative of the Slovak Republic confirmed that there were no State monopolies in the
Slovak Republic.
D. Section III - General Provisions of the Agreement
Section III.4 – Relation with other trade Agreements
33. The representative of the United States sought clarification for the first sentence regarding
basic duties, defined in paragraph 2 of Article 4 of the Agreements of Turkey with the Czech and
Slovak Republics, which envisaged that any tariff reduction applied on an erga omnes basis be
replaced by "the basic duties referred to in paragraph 1 as from that date when such reductions are
applied".  He also asked for confirmation that nothing in the Agreements would prevent or discourage
Parties to the Agreement from making multilateral concessions, including MFN tariff reductions.  Inresponse, the representative of Turkey explained that any trade concessions provided within the
framework of the WTO would replace the duties that were subject to the Agreements.  In the eventthat after entry into force of the Agreements, there were some multilateral negotiations which required
Parties to  reduce their basic duties, the duties in the Agreements would then be replaced by the
outcome of those international agreements.
34. The Chairman concluded the first round of examination of the FTAs between Turkey and the
Czech Republic, Slovak Republic and Estonia.  He su ggested that delegations be allowed one week to
submit questions in written form and the responses be provided to the Secretariat at the earliest, in
order to maintain momentum in the examination pr ocess.  He noted that the examination of these
Agreements could be revisited at a later stage.
35. The Committee took note of the comments made.
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