RESTRICTEDWORLD TRADE
ORGANIZATIONWT/REG115/4
13 March 2002
(02-1280)
Committee on Regional Trade Agreements Original:  English
FREE TRADE AGREEMENT BETWEEN TURKEY AND
THE FORMER YUGOSLAV REPUBLIC OF MACEDONIA
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/REG115/3/Rev.1.
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I. BACKGROUND INFORMATION ON THE AGREEMENT
3. Scope
What percentage of trade (at the eight-digi t level) is covered for both Turkey and
FYROM, respectively? Please provide this information both in terms of overall trade volumeand percentage of tariff lines.
The information demanded has already been provided in the annexes of standard format of
the FTA between Turkey and Macedonia (WT/REG115/3) and also in the annexes of the revision
document WT/REG115/3/Rev.1 dated 18 January 2002 in th e form of percentage of trade.  According
to the table in these Annexes, in the year 2000, rate of duty-free imports to Turkey is 96 per cent and
the rest that was subjected to MFN rate is 4 per cent.  The rate of duty-free imports to Macedonia is
5 per cent, less-than-MFN rates is 82.7 per cent and MFN rates is 12.3 per cent.  However imports
under less-than-MFN rates are going to be graduall y converted to the duty free imports until 2008 at
the latest.  With a significant reduction instalment each year till 2003, the majority of industrial goodswill benefit from duty-free treatment by this date.  Our general perception is that “substantially all
trade” principle does not necessarily relate to percentage of tariff lines, rather it relates to actual trade
flow.
Please provide additional information on the products for which duties are being
eliminated and on the products on which duties and other restrictive regulations of commerce
remain. What products are excluded altogether from coverage?
Harmonized System (HS) Codes and Description of the products for which total elimination
of the duties at once and transitional period will apply can be found in the annexes of the Agreement,as well as the agricultural products subjected to duty free treatment or reduced rate of duty under tariff
quota or unlimited quantities.  The Annexes have been provided to the Secretariat.  No restrictive
regulation of commerce has been maintained. And finally, none of the products are excluded from the
scope of the Agreement.WT/REG115/4
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It is not clear that this Agreement meets th e “substantially all trade” threshold.  What
share of tariff lines are subject to duty free t reatment by HS Chapter?  What is the average
duty on HS Chapters 1-97?
Turkey is confident that any agreement providing duty free access for over 85 per cent
percent of the actual trade flow, having no prejudi ce for the lower limit, is in conformity with the
“substantially all trade” principle.  To the best of  our knowledge, there has been no consensus in this
platform or in any of the others under the WTO about the “substantially all trade threshold” or what
percentage of trade corresponds the term “substantially all trade”.  Average duty rate on HS Chapter
1-97 was shown in the 1998 Trade Policy Review Mechanism report of Turkey (document
WT/TPR/S/44).  In this document, average tariff structure according to the ISIC classification of
Turkey in 1998 in comparison with the year 1993 can be found.  The more up to date information canbe provided on a later date.
In the “Exports of Turkey to Macedonia” Table (WT/REG115/3/Rev.1), the Parties have
indicated that in 2000, 98 per cent of Turkish expo rts in industrial products to Macedonia were
at a non-zero preferential rate.  This does not seem to meet the requirements of ArticleXXIV:8(b).  Could the Parties pl ease explain and provide statistics from 1997 through 2001
similar to those provided in “Imports  of Turkey from Macedonia” Table?
Since the Agreement entered into force on 1 September 2000, the figures relating to the year
2000 reflect only the last four months of the year in question as the implementation period of theAgreement.  Therefore, more accurate evaluation can be made starting from the year 2001. The
figures relating the year 2001 are going to be provided as soon as they are complete. However, we
think that Article XXIV of GATT 1994 should be interpreted in its complete sense.  Article XXIV,
paragraph 5 (c) lays out provisions for inclusion of  plan or schedule for Customs Union or Free Trade
Areas to be established in a “reasonable period of time”.  Therefore, if the liberalization processscheduled within a transitional period in the Annex II of the Agreement is carefully reviewed, a better
and more complete evaluation on compliance of the Agreement to Articles XXIV:8(b) of GATT 1994
would be made. Since Macedonia is not a Member to WTO, in the statistical tables of
WT/REG115/3/Rev.1, only the export figures of Tu rkey were given.  However we asked for the
statistics from our Macedonian counterparts and will provide them to the Committee as soon as they
are available.
What changes, if any, were made in Turkey’s  and Macedonia’s applied rates at the time
the Agreement was under negotiation, and subsequently when it was implemented by both
Parties? Have any applied duties increased as a result of this agreement?
Turkey makes [and made] arrangements, where necessary, every year in its import regime in
accordance with its commitments  under WTO Agreements and Custom Union.  On the other hand,
Article 4 (1) of the Agreement states that “No new customs duties or charges having equivalent effect
shall be introduced in trade between the Parties from  the date of entry into force of this Agreement.”
Therefore, inherently none of the applied duties have been increased as a result of this Agreement.
Though the Agreement came into force on  1 September 2000, had any of the Parties
applied preferential rates to imports originat ing in the other Party prior to that date?
None of the Parties applied any preferential rates to imports originating in the other Party.WT/REG115/4
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4. Trade Data
Can the Parties confirm that all tariffs and non-tariff barriers scheduled for elimination
were fully eliminated as of 1 September 2000 or is there a phase-in period (apart from the stated
phase-in for sensitive products by 2008)?
The Agreement stipulates that all tariffs in industrial products originating in Turkey have been
eliminated except some sensitive products for which a transitional period have been set up until 2008
at the latest, whereas remarkable elimination of duties is to be achieved by 2003.  In some of the
agricultural products, duty free access have been granted within or without quotas.  The elimination of
all non-tariff barriers was laid down by the Agreement though they did not exist in Turkey even prior
to the signing of the Agreement.  Turkey eliminat ed all duties for the industrial goods originating in
Macedonia.  The annual ceilings set up for a number of industrial goods originating in Macedonia will
be reconsidered, with a view to eliminating, in the first coming Joint Committee of the Agreement.
II. TRADE PROVISIONS
1. Import Restrictions
The Parties state that no new customs duties on imports or charges having equivalent
effect may be introduced between the Parties and that customs duties on imports and any
charges having equivalent effect shall be ab olished (WT/REG115/3/Rev.1). Could the Parties
comment on any non-tariff import measures (charges and quantitative restrictions, QRs) that
are applied to third countries and not intra-FTA trade?  We would appreciate a list of such
measures.
Turkey does not apply any non-tariff import measures (charges and QRs) that are applied to
third countries and not intra-FTA trade.
2. Export Restrictions
The Parties state that “prohibition of new customs dut[ies] or charges having equivalent
effect on exports between the Parties is envisaged ” (emphasis added).  This language appears
weaker than the Parties commitment that they “ will not introduce  new quantitative restrictions
and measures having equivalent effect on imports and measures having equivalent effect...”
(WT/REG115/3/Rev.1). Could the Parties explain the disparity?
It is our understanding that there is no such disparity and the language of the Agreement
prevails.  In the Agreement itself, the wording of Article 6 explicitly states no new customs duties orcharges having equivalent effect on exports shall be introduced”.
Which products are subject to tariff-rates quotas (TRQs)?  What are the within-quota
and out-of-quota rates?  Do TRQ amounts increase from year to year?  Is this tonnage in
addition to the amounts agreed in the Uruguay Round?
Annex A and B to Protocol 1 include the lists of tariff quotas opened for agricultural products
in favor of each parties and TQ rates. Annual increases for the quantities of quota were not articulated
in the Agreement. However, the evolutionary clause under article 33 provides mandate to Parties to
review the existing regime of preferences including increasing the quotas. Turkey has no commitmentfor Minimum or Current Market Access quotas, which were agreed in the Uruguay Round.WT/REG115/4
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3. Rules of Origin
Which other countries benefit from the system?
The European Union, Bulgaria, the Czech Republic, Hungary, Iceland, Liechtenstein,
Norway, Poland, Romania, the Slovak Republic, Slovenia and Switzerland are parties to this origin
network. As of 1 January 1999, Turkey became a Party to the Pan-European System of Cumulation of
Origin.
With which other countries do Turkey and Macedonia, respectively, have free-trade
arrangements or customs unions?
Turkey has Customs Union only with the EU and FTA Agreements with EFTA States,
Poland, Hungary, Romania, Bulgaria, Czech Republi c, Slovak Republic, Slovenia, Lithuania, Latvia,
Estonia, Macedonia and Israel. An FTA has already been initialed with Croatia.
Can the Parties please describe whether these preferential rules of origin are used under
their respective agreements with the European  Community on the recognition of conformity
assessment procedures, and how the use of such ru les will affect each of the Parties' treatment
of conformity assessment procedures with res pect to goods and materials produced in each
other's territories?
Turkey’s alignment process of technical regulation with the Community is still continuing.
So far no agreement on the conformity assessment procedures has been accorded either with the
Community or Macedonia.
4. Standards
With respect to standards, the Parties stat e that they “may conclude” an agreement on
mutual recognition in conformity assessment in the future.  Do the Part ies currently participate
in any arrangements on the recognition of co nformity assessment procedures, any mutual
recognition arrangement with third countries?
No further progress has been taken in this respect.
5. Safeguards
Does the agreement provide for the exclusion of other Parties from safeguard measures?
No.
Does the Agreement require and/or allow preferential treatment to the other party in
the application of a global safeguard measure?  If so, please describe how the preferential
treatment operates.
No.
Does the Agreement require that a margin of preference vis-à-vis third countries be
maintained when the safeguard provisions are invoked?  Will the Parties to the agreement
observe the provisions of GATT Article XIX in  the application of safeguard measures that
involve third country trade?WT/REG115/4
Page 5
The Agreement does not require that a margin of preference vis-à-vis third countries be
maintained when the safeguard provisions are invoked.  Turkey as a Member of WTO will naturally
observe the provision of GATT XIX in the application of safeguard measures whereas Macedonia’s
obligation is confined to the provisions of the Agreem ent that were indeed articulated in line with the
GATT principles.
Have safeguard measures been implemented during the life of the Agreement?  If so, by
whom, on which products, and under what circumstances?  To whom did the action apply?
Safeguard measures have not been implemented during the life of the Agreement.
If the Agreement has flexibility for either Party to impose safeguard measures, are there
any legal constraints on doing so and what happens if one Party wishes to reimpose the MFN
rate?
Either Party may impose safeguard measures, whenever they deem necessary, according to
the relevant provisions of the Agreement notably the Article 21.  Prior notification of the intention ofinvoking the safeguard  measures is foreseen in the Agreement. If the dispute can not be settled
through bilateral consultation Parties are free to proceed further with the procedure of safeguard
measure. In case of re imposing the MFN rates infringing the provision of same Article will apply.
7. Subsidies and State-aid
Have the subsidies and state-aid provisions in  the Agreement ever been used?  If so,
when?
The subsidies and State-aid provisions in the Agreements have not been used.
8. Sector Specific Provisions
8.1 Agriculture
Please provide more detailed information on the treatment (tariff and non-tariff) of
agricultural products.  In the “Imports of Turkey from Macedonia, 1996-2000" Table
(WT/REG115/3/Rev.1), HS Chapters 1, 2, 4, 6, 11, 13, 16-18, 24 are not listed.  Are those
HS Chapters excluded from the Agreement? What is the average tariff rate on HS Chapters
1-24?
These chapters do not appear on the list not because they are excluded but simply because no
trade flow on these products has been registered. Average tariff rate information is not available atpresent but may be provided at a later stage.
Do either of the Parties provide bilateral pr eferential treatment to agricultural products
under MFN TRQs?  Please specify by type of preference on a product-specific basis.
Turkey does not apply MFN TRQs.
Will duty elimination provided for in the Agreement be extended to other agricultural
products currently excluded?  If so, when?
Preferences either in form of duty-free treatment or duty reduction can always be extended to
other agricultural products which are not indeed excluded from the scope of Agreement upon theWT/REG115/4
Page 6
request of any Party and the negotiations to be held afterwards. No explicit time frame in the
Agreement is set up for this process.
The Parties state that “Memorandum of Understanding between the Government of
Macedonia and the Government of Turkey” pert ains to textile products. What is in this
agreement? Does it include textile quotas?
Turkey had the obligation, under the Customs Union established in 1995, of adopting EU’s
quota and surveillance measures applied on textile and clothing products originating in certain
countries including Macedonia. These arrangements are based on the agreements on trade in textile
products between the European Community and the related countries and contain parallel provisions
on rules of origin, classification of goods, import and export procedures, etc of textile and clothingproducts. On the other hand, by the year 2005, when trade in textiles and clothing products will be
subjected to the rules of the GATT 1994, surveillance and quota measures currently applied on these
products including that with Macedonia will be phased out. The mentioned MOU was adapted in line
with above described Agreement and subject to improv ement in parallel to those already done or to be
done in the Agreements between the EU and related Countries.
The Parties state that customs duties and charges on “sensitive products” will be
eliminated by 2008 (WT/REG115/3/Rev.1). Could the Parties list those products which are
included under “sensitive products” and provide more information on their treatment under
the Agreement?
The term “sensitive” has been utilized as a describing modifier of the goods for which a
transitional period  was established for duty elimination and these goods are listed in the tables of
Annex II. List A of Annex II cont ains the products on which duties was eliminated at once with the
entry into force. List B includes the products for which a gradual elimination of duties was scheduledto be completed by 2003 at the latest by 20 per cent reduction each year starting from the year of entry
into force of Agreement which is 2000.
8.2 Services
The Parties state that they have “agreed to c ooperate” on investment and services issues.
Are there plans for a more formalized comp anion free trade agreement on services?
No further progress in this area is foreseen in the short and medium run.
9. Other
Which public monopolies are subject to the provisions of the Agreement?  Are all state
monopolies notified as required by Article XV II of the GATT 1994?  If not, could the Parties
please list all such entities covered by this re levant article and explain why they are not covered
by Article XVII of GATT.
Turkey has updated its notification about State Trading pursuant to Article XVII:4(a) of the
GATT 1994. This notification was published as the document G/STR/N/5/TUR on 24 January 2000.
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