RESTRICTEDWORLD TRADE
ORGANIZATIONWT/REG115/M/1
18 December 2001
(01-6375)
Committee on Regional Trade Agreements
Thirtieth Session
EXAMINATION OF THE FREE TRADE AGREEMENT
BETWEEN TURKEY AND THE FORMER YUGOSLAV REPUBLIC OF MACEDONIA
Note on the Meeting of 26 September 2001
Chairman:   Mr. A.J. Dumont (Argentina)
1. The meeting was convened in document WTO/AIR/1618.
2. Under Agenda Item B.IV of its Thirtieth Session, the Committee on Regional Trade
Agreements (CRTA) took up the examination of the Free Trade Agreement (FTA) between Turkey
and the Former Yugoslav Republic of Macedonia (FYROM).  The following topics were discussed:
A. General Remarks
B. Section I – Background Information on the Agreement
C. Section II – Trade Provisions
3. The Chairman noted that this was the first round of examination of the Free Trade Agreement
between Turkey and FYROM.  The notification of the Agreement had been distributed in document
WT/REG115/N/1, and the text of the Agreemen t in document WT/REG115/1.  He proposed to
organize the examination by first asking the Pa rties and other Members for general comments and
then turn to the specifics of the Agreement, usin g the Standard Format (WT/REG115/3) to guide the
debate.  He recalled the terms of reference for the examination, adopted on 14 March 2001 by theCouncil for Trade in Goods as contained in document WT/REG115/2 and its Corrigendum:  "to
examine, in light of the relevant provisions of the GATT 1994, the Free Trade Agreement between
Turkey and the Former Yugoslav Republic of Macedonia and to submit a report to the Council for
Trade in Goods." These terms of reference applied in conjunction with the following Understanding:
"It is understood that the Understanding read out by the Chairman of the Council for Trade in Goods
under item 7 of the Agenda of the meeting of the Council for Trade in Goods on 20 February 1995, as
contained in document WT/REG3/1, will apply mutatis mutandis to the examination of the
agreements.  It was also understood that, during the examination, due account would be taken of the
intrinsic differences between customs unions and free-trade areas."
A. G
ENERAL REMARKS
4. The representative of Turkey said that Turk ey was committed to an open and liberal trading
system and had concluded FTAs with 13 countries (EFTA, Central and Eastern European countries,
Baltic countries and Israel).  In addition, negotiations with some Mediterranean countries, South
Africa, and the Faroe Islands were ongoing.  Some of the FTAs had already been examined by the
CRTA.  The FTAs already concluded had proven to stimulate trade between the Parties.  TheAgreement between Turkey and Macedonia had been signed on 9 September 1999 and entered into
force on 1 September 2000.  It was notified to the WTO on 22 January 2001 and the text of the
Agreement had been circulated as document WT/REG115/1.  The Standard Format had beenWT/REG115/M/1
Page 2
published as WT/REG115/3.  The Turkish delegation was of the view that the Turkey-Macedonia
FTA was in compliance with the requirements of GATT 1994, in particular with Article XXIV.  More
specifically, the provisions of Article XXIV:5(b) had been respected since "… the duties and other
regulations of commerce applicable at the formation of the free-trade area… to the trade of Parties not
included in such area were not higher or more restrictive than corresponding duties and otherregulations of commerce prior to the formation of the FTA…".  The Agreement did not introduce any
barriers for third countries.  The Agreement provided  for the elimination of duties and other restrictive
regulations of commerce covering all industrial prod ucts (HS Chapters 25-97), with the exception of a
few sensitive items for which a transitional period was set forth, as well as a number of agricultural,
processed agricultural and fishery products.  To this end, the provisions of the Agreement were in line
with Article XXIV:8(b), which stipulated the elimination of duties and other restrictive regulations of
commerce on "substantially all the trade,".  He stressed that the share of industrial products importedby Turkey from Macedonia in the years 1998 and 1999, before the Agreement entered into force, was
95 per cent of all imports, which represented quite a high degree of "substantiality".  In the first
implementation year – 2000/2001 - industrial products  constituted almost 100 per cent of all imports
from Macedonia.  As with other FTAs examined in the Committee, the Agreement included
transitional periods for certain groups of products.  Customs duties on a substantial part of industrialproducts were eliminated on entry into force of the Agreement, although for some products
Macedonia would gradually eliminate the duties over a transitional period scheduled to end by 2003
and 2008 at the latest.  With the exception of a few industrial products subject to duty elimination
within tariff quotas, for the remaining industrial  products Turkey would grant duty free access.  An
Evolutionary Clause (Article 33) provided Parties with the legal basis to expand the product coverageof the Agreement and to exchange further concessions within the Joint Committee that would meet
whenever necessary, but at least once every year (Article 29).  The import figures of the year 2000,
indicated that the Agreement covered almost 100 per cent of the trade between Parties.  Turkey's
import from Macedonia increased to US$10.4 million in 2000 from US$7.8 million in 1999.  Almost
all of these imports benefitted from duty free treatment.  The Protocol relating to rules of originannexed to the Agreement was similar to those included in other FTAs signed by Turkey with
countries part of the pan-European Cumulation System.  The System, based on the principle of
diagonal cumulation of origin between its member countries, had been notified to WTO Members.
He stressed that the FTA between Turkey and Macedonia was in full compliance with the principles
of the WTO, as it provided greater trade possibilities between the Parties and did not raise any barriers
to trade from third countries.
5. The representative of Hungary stressed the importance of the Agreement for the stability of
the region.  He also considered it to be in line with the provisions of GATT Article XXIV.
B. SECTION I - B ACKGROUND INFORMATION ON THE AGREEMENT
6. The representative of the United States noted with some surprise, following the difficulties
encountered with other FTA with FYROM, that th e Annexes to the Standard Format did include
import statistics from Macedonia.  He also noted that Turkey had provided a useful table relating tothe different duty levels on imports from FYROM, but he did not find a corresponding table for
FYROM's imports from Turkey.  The representative of Turkey explained that they used their own
export figures to Macedonia as Macedonian imports from Turkey, although he acknowledged that that
might not be entirely accurate.  He intended therefore to invite Macedonia to supply their own import
figures for the purposes of the table in the Annex.  The representative of Hungary reminded theCommittee that no obligation could be put on a party which was not member of the WTO.
7. In light of the remarks made by the Turkish delegate, the representative of Canada asked for
clarification on whether the trade data on page nine of the Standard Format was not in fact Turkey's
exports to FYROM rather than imports from Turkey into FYROM as indicated in the table.  If thatWT/REG115/M/1
Page 3
was the case, she suggested that the table be re-designated.  The representative of Turkey
acknowledged the mistake in the title of the table and said that it would be amended.
C. SECTION II - T RADE PROVISIONS
8. The representative of Canada asked the representative of Turkey if he could elaborate on the
last sentence in the first paragraph of Section II.1 of the Standard Format that dealt with annual
ceilings fixed for imports into Turkey of several industrial products originating in FYROM, and more
precisely whether these were actually tariff rate quotas.  She also remarked, with respect to the last
paragraph in Section II.1, that the number of agricultural products granted preferential market access
might be overstated as the trade statistics provided for imports of Turkey from FYROM indicated that
99 per cent of agricultural trade in the case of 1998 and 96 per cent in the case of 1999 was subject to
MFN duty.  In her opinion, this raised doubts as to whether the Agreement met the criterion of
"substantially all the trade" when in effect a whole sector had been excluded.
9. The representative of the United States shared similar concerns as those expressed by the
Canadian delegate and wondered whether the repr esentative of Turkey could provide them with an
idea of what products/sectors were involved with respect to those annual ceilings.  He added that from
the wording it appeared that those ceilings were quantitative restrictions and would therefore
appreciate confirmation of that.  He also noted that there was no mention in the Agreement to the
transition period for the elimination of those quantitative restrictions.  He also asked whether those
quantitative restrictions were being eliminated and, if so, according to what time-frame.
10. The representative of the European Communities stressed the complementarity of the
Agreement with those that other European countr ies had concluded with FYROM.  He added that,
flowing from the customs union agreement that applied between the EC and Turkey, there was anobligation for the two parties to apply a common customs regime in areas covered by the customs
union.  This strengthened even further the parallel ism that existed between the EC's agreements with
partners of Turkey and the agreements themselves.  Specifically on the question of import restrictions,
he noted as a positive element in the consideration of the Agreement the fact that most liberalization
was undertaken immediately in the industrial sector and that the transition period foresaw for sensitiveproducts was scheduled to end by 2008.  In relation to the remark made by the Canadian delegate in
respect of the table showing the imports of Turkey from FYROM according to different duty levels,
he pointed out that the column showing total imports for 1999 indicated a zero duty rate for
94 per cent of that particular set of trade.  That, he said, led them back to the debate the Committee
had in the past on the question of "substantially all the trade".  His position on the matter was that in a
situation where 94 per cent of trade was liberalise d and where no sector was entirely excluded, the
parties to an agreement ought to be considered in  conformity of their obligations under the test of
Article XXIV.
11. Responding to the questions posed by the Canadian delegate, the representative of Turkey
said that the last sentence in the first paragraph of Section II.1 of the Standard Format referred to
ceiling quantities, and not tariff quotas, set forth as part of the alignment process of the Turkish
customs regime with the preferential and autonomous re gime of the EU, in line with Article 16 of the
1995 Turkey-EC Customs Union Agreement.  This also explained the lack of a definite time-frame
for the elimination of the ceilings, as this had to parallel the process set in the EC's agreement with
Macedonia.  He also remarked that the Agreement provided for the total liberalization of trade in
industrial products subject to no time-frame and that the ceiling quantities applied only to a few
products.  The fact that imports from Macedonia of the products subjected to ceiling quantitiesremained well below the amount indicated in the li st showed that ceiling quantities by no means
limited so far duty-free import into Turkey.WT/REG115/M/1
Page 4
He added that the issue would be dealt with and reconsidered at the first meeting of the Joint
Committee.  Turning to the preferential arrangement on agriculture, he pointed out that the trade
figures provided were those of 1999;  since the Agreement had only entered into force in
September 1999, statistics could hardly reflect the effects of the preferential regime.  He also observed
that trade figures for 2000, which would be submitted to the Committee very soon, also indicated lowlevels of agricultural trade, probably because, though duty elimination was one of the pillars for
improving trade between the Parties, other variables affected trade, such as availability of export
products and weather conditions.
12. The representative of the United States reiterated his interest in knowing which product
sectors were subject to quantitative restrictions and asked again whether he could be provided with
that information.  He also expressed interest in k nowing whether or not the quantitative restrictions on
FYROM trade existed in Turkey prior to the coming into being of the Agreement.  The representative
of Turkey explained that the CN Codes and the description of the goods could be found in the Texts
and Annexes of the Agreement and that these had been submitted to the Secretariat, where they couldbe obtained.  Turning to the second question, he said that the ceilings had not existed before the entry
into force of the Agreement, but remarked that while previously those products were subject to MFN
treatment they now benefitted from duty free albeit under ceiling quantities.
13. The representative of the United States expressed curiosity as to why paragraph four of
Section II of the Standard Format was seemingly omitted and speculated on whether it meant that the
Agreement had no provisions relating to Standards.  The representative of Turkey acknowledged the
omission and said that he would look into the matter.
14. The Chairman noted that this first round of examination of the FTA between Turkey and
FYROM had allowed the Committee to clarify a number of questions, although others were still
pending.  He invited those delegations wishing to ask additional questions to forward them to the
Secretariat by 12 October, at the latest, and the Pa rties to submit their replies in writing as soon as
possible and no later than 30 November.
15. The Committee took note of the comments made.
__________