RESTRICTED  WORLD TRADE  
ORGANIZATION  WT/REG156/M/1 
19 November 2004 
 
 (04-5040) 
Committee on Regional Trade Agreements 
Thirty-Seventh Session  
 
 
 
FREE TRADE AGREEMENT BETWEEN TURKEY AND CROATIA 
 
Note on the Meeting of 7 October 2004  
 
Chairman: Mr. R. Saborío Soto (Costa Rica) 
 
 
1. The meeting was convened in document WTO/AIR/2393. 
2. Under Agenda Item B.VII of its Thirty-Sev enth Session, the Committee on Regional Trade 
Agreements (hereinafter CRTA or the Committee) took up the first round of examination of the Free 
Trade Agreement (FTA) between Turkey and Croatia.    
3. The following topics were discussed: 
 A. General Provisions of the Agreement 
 B. Trade Provisions  
4. The Chairman
 said that the Agreement had entered into force on 1 July 2003 and had been 
notified to the WTO on 8 September 2003 as doc ument WT/REG156/N/1 and Corrigendum 1, with 
the text of the Agreement appearing in documen t WT/REG156/1.  The terms of reference for the 
examination had been adopted on 26 November 2003 by the Council for Trade in Goods and were 
contained in document WT/REG156/2.  He pro posed to use the Standard Format, document 
WT/REG156/3,  to guide the debate.   
A. G ENERAL PROVISIONS OF THE AGREEMENT  
5. The representative of Turkey  said that the Agreement had been signed on 13 March 2002 and 
had entered into force on 1 July 2003, following co mpletion of internal and diplomatic procedures by 
the Parties.  The Agreement, which aimed at the gradual establishment of a free-trade area between 
the Republic of Turkey and Croatia by 2007, had been  done in conformity with the definition set out 
in Article XXIV:8(b) of GATT 1994.  The Agreement provided for free access for all industrial, and a 
limited number of agricultural, and processed agricultu ral, products.  It was the Parties' intention to 
extend the coverage of agricultural and processe d agricultural products later through bilateral 
negotiations within the Joint Committee set up by the Agreement.  In orde r to ensure the proper 
functioning of the free-trade area, the Agreement c ontained provisions, inter alia, on rules of origin, 
cooperation in customs administration, public aid, state monopolies, internal taxation, competition, 
public procurement, and protection of intellectual, industrial and commercial property rights.  Among 
the regulatory provisions of the Agreement, sta ndards, safeguards, anti-dumping and countervailing 
measures, and subsidies and state aid had been laid  down in a manner fully in conformity with the 
relevant WTO Agreements.  Turning to the details  of concessions for industrial goods, she said that 
Turkey had lifted all customs duties and charges ha ving equivalent affect, as well as quantitative 
restrictions, on imports and exports upon entry into force of the Agreement.  Croatia would abolish 
custom duties and equivalent charges in accordan ce with a timetable based on three lists which WT/REG156/M/1 
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 reflected the sensitivity of Croatian industry;  for all industrial products not co ntained in those lists, 
duties had been removed on the entry into force of the Agreement.  Duties on the products listed in 
Protocol A had been removed on 1 January 2004.  Hence, as of that day, two lists were in effect:  for 
products under List B duties, which we re currently set at pref erential rates of 35 pe r cent of MFN duties, 
would be abolished by 1 January 2006;  for products under List C duties, which were currently set at 
preferential rates of 40 per cent of MFN,  would be abolished by 1 January 2007.  
6. Turning to the general provisions of the Agre ement, the representative of Turkey said that 
Article 32 of the Agreement established a Joint Co mmittee responsible for the administration of the 
Agreement, which would meet once a year to this end.  The Joint Committee was also commissioned  as the competent authority by Article 22, which se t out the procedure for application of safeguard 
measures.  The Parties had agreed to further develop the relations established by this Agreement, by 
extending them to areas not covered initially.  Ther e was no provision in the Agreement allowing third 
countries to accede to the free trad e area.  It had been concluded for an  indefinite period and either Party 
might denounce it through written notific ation.  She indicated that the Parties had circulated bilateral 
statistics showing the coverage rates for the seco nd half of 2003 and that additional information 
regarding the first seven months of 2004 had been ci rculated in the meeting ro om.  This was important 
because, as of 1 January 2004, a greater number of  products originating in Turkey enjoyed zero or 
reduced tariff rates.  According to the figures, 87 per cent of Turkish industrial exports now enjoyed 
zero duty rates; other Turkish exports  to Croatia were subject to taxati on, albeit at reduced rates.  As 
regards agricultural products, 28 per cent of Turk ish exports enjoyed duty-free market access while 10 
per cent were subject to reduced ta riffs;  62 per cent still faced MFN ra tes.  On the whole, 80 per cent of 
Turkey's total exports entered the Croatian market duty -free.  On the other side of the coin, 99.9 per cent 
of products originating in Croatia enjoyed duty-free a ccess to the Turkish market.  Only 4 per cent of 
Croatia's agricultural exports to Tu rkey were subject to MFN duties,  while industrial goods had full 
duty-free access.  In light of these statistics, she e xpressed the view of the Parties that the Agreement 
met the requirement of GATT Article XXIV in respect to covering "substantially all trade". 
B. T
RADE PROVISIONS  
7. The representative of Japan  said that based on the Annex of statistics attached to the Standard 
Format, he had noted the current percentage of products subject to zero duties for agricultural and 
industrial goods.  He wondered if the Parties had any target for further liberalization by the end of the 
transition period, on 1 January 2007, or whethe r it was up to the Joint Committee to discuss these 
issues.   In response, the representative of Turkey  said that the lists were operational as they were and 
it was the Parties' intention to extend coverage if they jointly agreed.   
8. The representative of the United States  said that his delegation had no oral questions as it was 
still reviewing documentation, but he w ould submit his questions in writing. 
9. The representative of Australia  said that paragraph 3, Scope, of the Standard Format, 
indicated that all industrial and certain agricultu ral and fishery products listed in Tables A and B of 
Protocol II of the Agreement were subject to c oncessions in intra-trade.  She wondered what the 
Parties meant by "concessions":  did this mean that  they granted non-zero preferential tariff rates and 
could they provide details of such concessions?  She asked the Parties to provide details of the 
products contained in Tables A, B, and C, the current duties on these products, and when existing 
duties would be eliminated.  The representative of Turkey  agreed to provide details of the contents of 
Tables A, B, and C in writing.  As regards the concessions on agricultural and fishery products, she 
said that bilateral concessions existed, as we ll as less-than-MFN duties for specific quotas.   
10. The representative of Japan  asked whether the Agreement ha d any provision for tariff quotas.  
He also enquired about the relationship between th e invocation of global safeguard measures and its 
relationship to the intra-trade safeguard provisions  of the Agreement.  The representative of Turkey   WT/REG156/M/1 
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 replied that the only tariff quotas existing in the Ag reement applied to agricultural products.  In 
relation to the question on global safeguards, she said that the Agreement was fully in conformity with 
the WTO Agreement on Safeguards. 
11. By way of example, the representative of United States  asked if a zero duty applied on a 
particular product under the Agreement and one of the Parties applied a global safeguard, would it be 
in violation of its commitment under the Ag reement?  The representative of Turkey  replied that there 
were no preferential aspects of the Agreement in this regard.  The representative of United States  
responded by saying that if, for example, Turkey were to apply a global safeguard on a product for 
which it offered a zero-tariff commitment to Croa tia under the Agreement would such a safeguard 
action violate the bilateral Agreement?  The representative of Turkey  reiterated that the Agreement 
was fully in conformity with the relevant WTO Agreement on Safeguards and if the Parties invoked a 
global safeguard measure, such a measure w ould apply to the FTA partner also.     
12. The Chairman  said that the first round of examination of the Free Trade Agreement between 
Turkey and Croatia had enabled the Committee to clarify a number of aspects but a few questions 
remained outstanding.  He asked delegations wish ing to submit further questions to do so by 29 
October and for Parties to provide written replies by  3 December.  The examination of this Agreement 
would continue at a future Session of the CRTA.  In  closing, he expressed his best wishes to Turkey 
in light of its negotiations with the European Union. 
13.  The Committee took note  of the comments made. 
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