RESTRICTEDWORLD TRADE
ORGANIZATIONWT/REG58/M/3
WT/REG59/M/3WT/REG60/M/3
WT/REG61/M/3
23 July 1999
(99-3096)
Committee on Regional Trade Agreements
Twenty-Third Session
EXAMINATION OF THE FREE TRADE AGREEMENTS BETWEEN
TURKEY AND HUNGARY;  TURKEY AND ROMANIA;
TURKEY AND ISRAEL;  AND TURKEY AND LITHUANIA
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.II-V, the Comm ittee on Regional Trade Agreements took up the
examinations of the Free Trade Agreements (FTAs) between Turkey and Hungary;  Turkey andRomania;  Turkey and Israel;  and Turkey and Li thuania.  The following topics were discussed:
A. General Remarks
B. Section I - Background Information on the Agreement
- I.4 - Trade data
C. Section II - Trade Provisions
- II.8 - Sector Specific provisions
3. The Chairman proposed that the Committee deal jointly with the four Agreements.  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 related to a specific Agreement or to a grouping of Agreements.
A. General Remarks
4. The Chairman noted  that the meeting was the third round of the examination of the four
Agreements.  He recalled that since the last Session, an additional set of written questions and replies
received by the Parties to each of these four Agreements had been distributed as documents
WT/REG58/4, WT/REG59/4, WT/REG60/4 and WT/REG61/4.  He  intended to give first, an
opportunity for general comments by the Parties and other Members; second, the meeting would thenturn to the specifics of the Agreements and, in so  doing, the Committee would have information in the
Standard Formats (WT/REG58/3, WT/REG59/3, WT/REG60/3 and WT/REG 61/3, respectively),
along with the additional statistics submitted by the Parties in documents WT/REG58/3/Add.1-2,
WT/REG59/3/Add.1-3, WT/REG 60/3/Add.1-2, and WT/REG61/3 /Add.1-2, to guide debate.WT/REG58/M/3, WT/REG59/M/3,
WT/REG60/M/3, WT/REG61/M/3
Page 2
5. The representative of  Turkey expressed his pleasure in continuing with the examination of
Turkey's FTAs with Hungary, Romania, Israel and Lithuania. Turkey had worked together with the
other Parties to produce answers to the written questions posed by Japan, Australia and the
United States, distributed in documents WT/REG/GEN/2 and WT/REG58/4, WT/REG59/4,WT/REG60/4 and WT/REG61/4.  A cl arification of the proportion of trade that was duty free, and of
the proportion which received preferential rates or MFN rates was provided in the statistical tables.
Indicating that he would respond briefly to some of the questions raised by Members in previous
rounds of examination, he stated that provisions of the Agreements on safeguards, anti-dumping
measures, emergency action on imports of particular  products, and re-export and serious shortage, did
not provide a margin of preference for the Parties as  opposed to non-Parties.  No structural adjustment
measure or  emergency action had been undertaken by  the Parties since the Agreements came into force.
In the case of balance- of-payment difficulties, the Agreements gave the Parties the right to adopt
restrictive measures in accordance with the cond itions laid down in the framework of  GATT 1994 and
Article VII of the Articles of Agreement of the IM F.  If a party found any evidence of anti-dumping in
its trade with other Parties, within the meaning of  Article VI of the GATT, it could take appropriate
measures.  Any state aid that dist orted or threatened to distort competition by favouring the production
of certain goods,  would be subject to rules, which would be adopted by the Joint Committee.  Until
those rules were adopted, relevant rules of GATT 1994 w ould be applied.  He stated that  his delegation
viewed the provisions on safeguards included in the Agreements as being in full conformity with WTO
provisions.  In regard to agriculture, he stated th at the Parties had granted each other preferential market
access for several agricultural and processed agricultural products under positive lists.  Furtheragricultural trade liberalisation fo rmed an important component of the Agreements, which Parties were
willing to foster  to the extent allowed by thei r agricultural policies; and to address this issue,
periodically in Joint Committee meetings.
B. Section I - Background Information on the Agreement
Section I.4 - Trade data
6. The representative of  the United States expressed appreciation for the information provided
by the Parties.  With regard to the import data provided by Turkey in WT/REG58/3/Add.2, he
expressed concern that the same information had not been provided by other Parties to the
Agreements.  Referring to the same document, he noted that the data  provided on percentage of total
imports reflected not only zero tariffs but also less-than-MFN preferential tariffs.  He asked whether itfollowed that items subject to less-than-MFN preferential tariffs would also be scheduled for
elimination. In response to the first query, the representative of Israel stated that the requested
information with regard to imports of Turkey into Israel would be provided soon.  The representative
of Hungary said that the requested statistical data could be found in the Annex to the Agreement.
7. The representative of Australia thanked th e delegation of Turkey for the information
provided, noting that the delegation of Israel would be providing similar data soon.  He stated that the
information provided satisfied some of his delegation's concerns regarding the applicability of
safeguards and other measures. He added that in the case of the Turkey-Hungary FTA, the coverage
of zero or less-than-MFN duties fell from 85 per cent of trade in 1995 to 69 per cent in 1996, before
recovering to 94 per cent, he wanted to know how that trend could meet the requirements ofArticle XXIV:8 of the GATT 1994, which stipulated the elimination of duties and other restrictive
regulations of commerce.
8. Understanding that statistical data were important for examining whether agreements
conformed with the conditions of Article XXIV, the representative of Turkey stated that all relevantWT/REG58/M/3, WT/REG59/M/3,
WT/REG60/M/3, WT/REG61/M/3
Page 3
data were provided in the tables distributed to the Members; he intended, however, to answer
Australia's query.  The review of imports by Turkey from Romania by different duty levels for the
period 1995-1997 indicated that, in 1995, 47 per cent of agricultural imports benefited from a zero
rate of duty, while 11 per cent received better than the MFN rates; and 100 per cent of industrialimports received zero duty treatment. In 1996, 25 per cent of agricultural imports were subject to a
zero duty rate treatment and 2 per cent received better rates than MFN rates; 99.8 per cent of total
Turkish industrial imports from Romania were subject to zero duty rate, while 0.2 per cent of such
imports received less than MFN rates. In 1997, 45 per cent of agricultural imports and 99.8 per cent of
industrial imports received zero duty rates. In the case of Turkey's imports from Israel, agricultural
imports in 1994, 1995, and 1996 accounted for 5.3 per cent, 7 per cent and 6.7 per cent of total
imports, respectively. Total agricultural imports from Israel therefore, fluctuated between 5 and 7  percent.  In 1994, 94.5 per cent of total Turkish imports from Israel received zero customs duty treatment
and 2 per cent received better than MFN rates. In 1995, 92.8 per cent of total imports from Israel
benefited from a zero duty rate and 3.7 per cent of total imports received better rates than MFN.  In
1996, 93 per cent of  total Turkish imports received zero duty rates and 3.6 per cent received better
than MFN rates.  As regards, Turkey's imports  from Hungary in 1995, 79 per cent of total imports
were subject to a zero duty rate and 6 per cent received better than MFN rates.  In 1996, 65 per cent of
total imports benefited from a zero duty rate a nd 4 per cent received better than MFN rates. He
recalled that as had been explained at the meeting of the CRTA on 11 February 1999, the fall in trade
coverage in 1996, had been due to an extremely poor harvest in that year, which resulted in large
imports of wheat, a product not been covered by the Agreement. In 1997, 92 per cent of total Turkishimports from Hungary benefited from a zero duty rate treatment, and 2 per cent of imports received
better than MFN rates.  Finally, as for the trade coverage of Turkey's imports from Lithuania, 99 per
cent, 97.2 per cent and 98.4 per cent of  total imports benefited from a zero rate of duty in 1995, 1996
and 1997, respectively. He concluded that his delegation viewed the conditions of Article XXIV as
being met.
9. The representative of Hungary stated that a FTA could not create trade opportunities
backwards. He said that the statistics cited by the de legate of Australia clearly referred to the situation
in 1995, 1996 and 1997, while the Agreement between Turkey and Hungary was signed on
8 January 1997 and entered into force only on 1 April 1998.
10. The representative of the United States stated that the surge in MFN imports occurred in 1996
as a result of the Agreements between Turkey with Romania and Hungary not providing for duty
elimination on wheat.  Pointing out that the Agreements were negotiated after the 1996 data becameavailable, he asked why the Agreement had not taken wheat into consideration given its importance
with respect to the volumes of trade that were taking place between Turkey and its two partners.  He
also repeated his question on the schedule for elimination for less-than-MFN duties.
11. The representative of Australia sought clarification on the nature and the time-frame of
agricultural liberalisation referred to in Article 11 of the Turkey-Lithuania FTA.  He also indicated
that his delegation would submit further questions in writing,
12. In response to the question put forth by the United States, the representative of Turkey
explained that wheat was not covered in the Agreements because traditionally Turkey had been a
wheat exporting country.  Due to the poor harvest in 1995 and 1996, Turkey had to import wheat
under extraordinary circumstances.  He added that each Agreement had its own dynamics but as ageneral rule, with the exception of the Turkey-Estonia FTA,  industrial goods had timetables, some of
which expired by 1 January 2000 and others in 2001 or 2002 at the latest.  The scope of agricultural
trade liberalisation was not as wide as that of industrial liberalisation but the Parties had the best
intention to further liberalise trade in agriculture.  Although each Agreement had its own provision to
expand trade in agricultural products, no timetable existed for such expansion.WT/REG58/M/3, WT/REG59/M/3,
WT/REG60/M/3, WT/REG61/M/3
Page 4
13. The representative of Hungary stated his delegation's view that the Agreements had satisfied
the criteria under Article XXIV:8(b).  The exclusion of one item or one product did not imply that the
criterion of "substantially all the trade" had not been met.  The fact that there had been some
exceptional years was just additional information which, did not influence the fact that the relevantAgreements fulfilled the basic criteria.
14. The representative of Turkey stated that during the first meeting, they had discussed each
issue topic by topic and all the questions raised in that meeting had been answered by the Parties.  The
reason he had provided trade figures in the current meeting was in response to questions raised by
delegates.
C. Section II - Trade Provisions
Section II.8 - Sector Specific provisions
15. Referring to paragraph 1 in Article 20 of the Turkey-Israel Agreement, which addressed the
right of establishment and liberalisation of the provision of services to consumers in the other Party,
the representative of Canada asked if this provision was broad enough to ensure that Mode 2,
consumption of services abroad, and Mode 4, presence of natural persons, were in fact  excluded from
the ambit of the Agreement.  She sought clarification as to whether service suppliers from the territory
of one Party would be entitled to providing their serv ices to a consumer in  the other Party.  Quoting
from paragraph 1 of Article 20, which referred to " the liberalisation of the provisions of services by
one Party's firms to consumers of services in the other Party", she asked whether this provision was
broad enough to cover individual professionals. Referring to paragraph 3 in that same Article, sherequested more information as to the specific timetable applicable to the widening of the scope of
each Agreement.  Finally, she asked whether or not the Parties envisaged including all service sectors
when they widened the scope of each Agreement.
16. The representative of the United States wondered if the representative of Canada's questions
were outside the scope of that particular examination, considering that the terms of reference for the
examination were limited to GATT 1994.  He was interested nevertheless in looking at written
responses to the question and was confident that the GATS Article V context to the ongoing
examination would be taken up at another opportunity.
17. The representative of Turkey viewed the information provided by the Parties as being
sufficient and proposed to conclude the factual part of the examination.  He welcomed any
outstanding questions, which his delegation would try to respond to at that meeting itself.  He
indicated however, that in the event that they were unable to provide sufficient information, theywould do so in writing.  The Chairman asked the Members if their questions had been addressed so
that they could proceed to concluding the factual part of the examination of the four Agreements.
18. The representative of Australia expressed appreciation for and satisfaction with the answers
that the Parties had provided to his delegation's questions.  He stated however, that his delegation did
have additional questions arising from the responses that the Parties had provided, which he wouldsubmit in writing.
19. The representative of Hungary shared the view of the delegate of Turkey that they had
completed the factual part of the examination of the Agreements under review and requested that the
Chairman declare an end to the factual part of the examination.  He stated that all information had
been provided, except that related to tariff lines, which his delegation was not in a position to provide.WT/REG58/M/3, WT/REG59/M/3,
WT/REG60/M/3, WT/REG61/M/3
Page 5
20. The representative of the United States stated that his delegation wanted the factual
examination of the Agreements under review to be concluded; however, since Australia had some
legitimate follow-on questions that they would pose in writing, he suggested that the factual
examination be closed but Australia be given until the end of July to submit those questions, so thatTurkey could respond by early September.  The representative of Turkey shared the view of the
representative of the United States and expressed willingness to provide answers by the agreed date.He proposed  that the factual part of the examination be concluded.  The representative of Hungary
said that he considered a month too long to answ er follow-on questions.  He suggested that if the
delegation from Australia already had the questions, they could submit them in a few days so that
responses could be provided at the earliest and the  Secretariat could begin preparing the draft report.
He proposed that the Secretariat begin preparing the draft report after the meeting.  The representativeof Australia clarified that his delegation did not intend to hold up the process at the fact-finding stage.
He expressed his delegation's willingness to provide the questions within few days.
21. The Chairman concluded the third round of the examination of the FTAs between Turkey and
Hungary, Romania, Israel and Lithuania.  He requested that further questions be forwarded to the
Secretariat in written form by the end of the week and that Parties provide responses to the Secretariatwithin ten days.  Based on those answers the Committee would determine whether another round of
examination was required.  If not, the factual examination would be considered complete and the
Secretariat would begin preparing the draft report.
22. The Committee took note of the comments made.
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