RESTRICTEDWORLD TRADE
ORGANIZATIONWT/REG61/3
5 January 1999
(99-0005)
Committee on Regional Trade Agreements Original:  English
FREE TRADE AGREEMENT BETWEEN THE REPUBLIC OF TURKEY
AND THE REPUBLIC OF LITHUANIA
Communication from the Parties
The following communication has been received from the Permanent Mission of the Republic
of Turkey with the request that it be distributed to the WTO Members.
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I. BACKGROUND INFORMATION ON THE AGREEMENT
1. Membership and Dates of Signatures, Ratification and Entry into Force
The Parties to the Agreement are the Government of the Republic of Turkey and the
Government of the Republic of Lithuania.  The Agreement applies in respect of the territory to which
the customs laws of Turkey and Lithuania are applicable respectively.
The Free-Trade Area Agreement between Turkey and Lithuania was signed on 2 June 1997 in
Vilnius and entered into force on 1 March 1998 after the completion of the legal internal ratification
procedures of the two Parties.
2. Type of Agreement
The Agreement establishes a free-trade area in conformity with the definition set out in
Article XXIV:8(b) of GATT 1994.
3. Scope
The free-trade area established by this Agreement, provides the framework for future trade
relations between Turkey and Lithuania.
The free-trade area Agreement covers all trade in industrial products (HS Chapter 25-97) and
a number of agricultural, processed agricultural and fishery products.  For further developing the
relations established by this Agreement by extending them to fields not covered thereby and in
accordance with the evolutionary clause contained in the Agreement, Parties will examine ways to
ensure the liberalization of the provision concerning the right of establishment and supply of services.
With the entry into force of the Agreement, customs duties and other restrictive regulations of
commerce on industrial and certain agricultural products were abolished thus meeting the requirement
of Article XXIV in respect of the principle of "covering substantially all trade".WT/REG61/3
Page 2
In order to ensure the proper functioning of the free-trade area the Agreement, contains
provisions, inter alia , on state aide, state monopolies, competition, government procurement and
intellectual property rights.
4. Trade Data
The trade coverage of the Agreement in tota l trade between the Parties is as follows:
Exports of Turkey to Lithuania
(1,000 US$)
Year Total Trade Trade Covered % of Trade Covered
1995 28,120 27,079 96
1996 15,088 12,378 82
1997 55,585 48,681 88
Imports of Turkey from Lithuania
(1,000 US$)
Year Total Trade Trade Covered % of Trade Covered
1995 30,726 30,575 99
1996 30,787 29,935 98
1997 39,143 38,561 98
Volume of Trade between Turkey and Lithuania
(1,000 US$)
Year Total Trade Trade Covered % of Trade Covered
1995 58,846 57,654 98
1996 45,875 42,313 92
1997 94,728 87,422 92
II. TRADE PROVISIONS
1. Import Restrictions
All customs duties and charges having equivalent effect on imports of industrial products
except for those classified as sensitive were abolished on 1 March 1998.  As for the sensitive
products, customs duties and charges having equivalent effect will be gradually eliminated by theyear 2001.
The Parties will not introduce new quantitative restrictions and measures having equivalent
effect on imports.
Turkey and Lithuania initially granted each other preferential market access for a number of
agricultural, processed agricultural and certain fishery products under tariff quotas.WT/REG61/3
Page 3
2. Export Restrictions
Under Article 6(1), prohibition of new customs duty or charges having equivalent effect on
exports between the Parties is envisaged.  Moreover all existing duties and charges having equivalent
effect on exports applied to industrial products are abolished with the entry into force of theAgreement with the exception of those listed in Annex IV, which shall be abolished by Lithuania at
the latest 1 January 2001.
The Parties will not introduce new quantitative restrictions and measures having equivalent
effect on exports.
3. Rules of Origin
The rules of origin on trade between Turkey and Lithuania, defined in Protocol 3 of the
Agreement, are based on the sufficient working or processing criteria.  In general, origin is conferred
when:
- the good is wholly obtained or produced in the territory of a Party;
- each of the non-originating materials used in the production of the good undergoes an
applicable change in tariff classification set out in the specific rule for that good, and
the good satisfies any other applicable requirement set out in that rule, as a result ofproduction occurring entirely in the territory of one or both of the Parties;
- the good is produced entirely in the territory of one or both of the Parties exclusively
from originating materials; or
- other particular circumstances as set out in Protocol 3.
As stated in the Joint Declaration on Protocol 3, the rules or origin enables extended
cumulation of products between Turkey, Lithuania, EU countries, EFTA countries and Central and
Eastern European Countries when the necessary procedures have been completed.
5. Safeguards
The Agreement permits the application of safeguard measures in the case of dumping
(Article 17), emergency action on imports of particular products (Article 18), measures relating
re-export and serious shortage (Article 19), provisions concerning rules of competition and public aid
(Article 25) between the Parties.
In the case of balance-of-payments difficulties, Article 26 of the Agreement gives to the
Parties the right of adopting restrictive measures in accordance with the conditions laid down within
the framework of GATT 1994 and with Article VIII of the Articles of Agreement of the
International Monetary Fund.
Article 12 of the Agreement prohibits the Parties from applying their regulations in sanitary
and phytosanitary matters as an arbitrary or unjustifiable discrimination between the Parties or a
disguised restriction in the trade between them.
The procedure for the application of these measures is laid down in Article 21 of the
Agreement.WT/REG61/3
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6. Anti-Dumping and Countervailing Measures
Article 17 of the Agreement states that if a Party finds that dumping is taking place in trade
with the other Party within the meaning of Article VI of the GATT, it may take appropriate measures
against this practice in accordance with the Agreement on Implementation of Article VI of theGATT 1994 and with its relevant internal legislation, under the conditions and in accordance with the
procedures laid down in Article 21.  Through this Article the conformity with GATT 1994 rules has
been provided
7. Subsidies and State Aid
The Agreement evaluates "state aid" issue in the context of distortion of competition.According to Article 25:1 of the Agreement, any state aid which distorts or threatens to distort
competition by favouring certain undertakings or the production of certain goods will be subject to
rules which are going to be adopted by the Joint Committee.  Until these rules are adopted relevant
rules of GATT 1994 shall be applied.
The Agreement also sets up appropriate means to ensure transparency in the area of state aid.Against the improper practices of a Party, Article 25:3 of the Agreement establishes the right
of the other Party to take appropriate measures.
8. Sector-Specific Provisions
8.1 Agriculture
Under the Agreement the Parties have declared their readiness to foster, insofar as their
agricultural policies allow, the harmonious development of trade in agricultural products and to
discuss this issue periodically in the Joint Committee.  In addition, the Parties accepted to further
liberalization of their trade in agricultural products.  This issue will be assessed within the
Joint Committee
Besides, Parties agreed on not applying their regulations in sanitary and phytosanitary matters
as an arbitrary or unjustifiable discrimination or a disguised restriction on trade between them.
8.2 ServicesTurkey and Lithuania agreed to seek widening the scope of the Agreement to cover the right
of establishment of firms and the liberalization of services after the entry into force of the Agreement.
9. Other
9.1 Cooperation in Customs AdministrationA framework was established for cooperation in customs administration with Article 22 and
Protocol 3 on the definition of the concept of "originating products" and methods of administrative
cooperation between the Parties.WT/REG61/3
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9.2 State Monopolies
Under Article 20 of the Agreement, the Parties agreed to adjust all state monopolies in a
manner of no discrimination regarding the conditions under which goods are procured and marketed
between the nationals of the Parties.
9.3 Internal TaxationAny measures or practice of an internal fiscal nature establishing discrimination between the
products originating in Turkey and Lithuania has been prohibited with Article 14.  This Article also
prohibits repayment of indirect internal taxation in excess of the amount of indirect of direct taxes on
exports.
9.4 Intellectual, Industrial and Commercial PropertyThe protection of intellectual, industrial and commercial property is addressed in Article 27
and Annex VI of the Agreement.  The Parties accepted to accede certain multilateral conventions onintellectual and industrial property rights which listed in Annex VI of the Agreement.
9.5 PaymentsIn Article 24 of the Agreement, Parties undertake  to authorize, in freely convertible currency,
any payments on the current account of balance-of-payments to the extent that the transactions
underlying the payments concern movements of goods
9.6 Public Procurement
The Parties recognize the effective liberalization of their respective public procurement
markets as an integral objective of free-trade area Agreement.  The progress in this field will be
reviewed in the Joint Committee annually.
III. GENERAL PROVISIONS OF THE AGREEMENT
1. Exceptions and Reservations
All customs duties and charges having equivalent effect on imports applied to industrial
products except for those classified as sensitive are abolished with the entry into force of the
Agreement.  As for the sensitive products, customs duties and charges having equivalent effect will be
gradually eliminated by the year 2001.  This, however, will not preclude prohibitions or restrictionson imports, exports or goods in transit justified on grounds of public morality, public order or public
security; the protection of health and life of humans, animals or plants and of the environment; the
protection of national treasures possessing artistic, hi storic or archaeological value; or the protection
of intellectual, industrial and commercial property, or the rules relating to gold or silver.
The Agreement allows the Parties to take measures, with concerns of security, in the cases
specified in Article 31.
2. Accession
There is no provision in the Agreement allowing other countries to accede to the
free-trade area.WT/REG61/3
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3. Institutional Framework
The Agreement establishes a Joint Committee which is responsible for administration of the
Agreement and shall meet once a year to monitor the implementation of it.
4. Dispute Settlement Procedures
The Joint Committee which is responsible for the administration of the Agreement and its
proper implementation has the authority to take decisions on issues mentioned in various Articles of
the Agreement.  In the procedure for application of safeguard measures relating to "Dumping",
"Emergency Action on Imports of Particular Products" and "Re-export and Serious Shortage" the
Joint Committee has also commissioned actively as a competent authority in Article 21 of theAgreement.
5. Relation with Other Trade Agreements
Regarding "basic duties" defined in Article 2, the Agreement envisages that any tariff
reduction resulting from the tariff agreement concluded as a result of the GATT Uruguay Round and
Turkey-EC Customs Union replaces the former basic duty.
The Agreement stipulates that rights and ob ligations relating to certain matters namely
anti-dumping measures, balance of payment, competition related measures shall be governed by therelevant WTO Agreements.
The Agreement states that measures concerning current payments connected with the
movement of goods shall be in conformity with the Article VIII of the Status of the International
Monetary Fund and GATT 1994 provisions.
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