WT/DS583/12/Add.1  
 
28 April 2022 
(22-3326) Page: 1/90 
 
  Original: English  
 
  
 
TURKEY – CERTAIN MEASURES CONCERNING THE PRODUCTION, 
IMPORTATION AND MARKETING OF PHARMACEUTICAL PRODUCTS  
REPORT OF THE PANEL  
Addendum  
This addendum  contains Annexes A to D to the Report of the Panel to be found in document  
WT/DS583/ 12. 
 
 
_______________  
 
 
 
 
 
 
 
 
 
 WT/DS583/12/Add.1  
 
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LIST OF ANNEXES  
ANNEX  A 
WORKING PROCEDURES AND PRELIMINARY RULING  
Contents  Page  
Annex  A-1 Working Procedures of the Panel, as revised on 5 March 2021  4 
Annex A -2 Additional Working Procedures Concerning Protection of BCI  11 
Annex A -3 Preliminary Ruling of the Panel, dated 10 July 2020  14 
ANNEX B  
COMMUNICATIONS REGARDING THE IMPACT OF THE COVID -19 PANDEMIC ON THE PROCEEDINGS  
Contents  Page  
Annex B -1 Panel's communication to the parties regarding the postponement of 
the first substantive meeting and proposed modifications to the Working 
Procedures and timetable, dated 12 August 2020  26 
Annex B -2 Panel's communication transmitting the revised Working Procedures 
and timetable, dated 25 August 2020  28 
Annex B -3 Panel's communication to the parties regarding the possibility of holding 
the first substantive meeting in virtual format, dated 3 February 2021  30 
Annex B -4 Panel's communication to the parties regarding its decision to conduct 
the first substantive meeting in virtual format, dated 17 February 2021  31 
Annex B -5 Panel' s communication to the parties transmitting proposed revisions to 
the Working Procedures and Timetable, and a draft Protocol for 
logistical aspects of the virtual hearing, dated 25 February 2021  32 
Annex B -6 Panel's communication to the parties transmitti ng revised Working 
Procedures and Timetable, and Protocol for logistical aspects of the 
virtual hearing, dated 5  March 2021  34 
Annex B -7 Panel's communication to the parties establishing the remaining steps 
in the Timetable, dated 3 May 2021  36 
ANNEX  C 
ARGUMENTS OF THE PARTIES  
Contents  Page  
Annex  C-1 Integrated executive summary of the arguments of the European Union  39 
Annex  C-2 Integrated executive summary of the arguments of Turkey  54 
ANNEX D  
ARGUMENTS OF THE THIRD PARTIES  
Contents  Page  
Annex  D-1 Integrated executive summary of the arguments of Canada  73 
Annex  D-2 Integrated executive summary of the arguments of Japan  77 
Annex  D-3 Integrated executive summary of the arguments of Switzerland  80 
Annex D -4 Integrated executive summary of the arguments of Ukraine  84 
Annex D -5 Integrated executive summary of the arguments of the United States  87 WT/DS583/ 12/Add.1  
 
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  ANNEX  A 
WORKING PROCEDURES AND PRELIMINARY RULING  
Contents  Page  
Annex  A-1 Working Procedures of the Panel, as revised on 5 March 2021  4 
Annex A -2 Additional Working Procedures Concerning Protection of BCI  11 
Annex A -3 Preliminary Ruling of the Panel, dated 10 July 2020  14 
 
 WT/DS583/ 12/Add.1  
 
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  ANNEX  A-1 
WORKING PROCEDURES OF THE PANEL  
As revised on 5 March 2021  
 
General  
 
1. (1) In this proceeding, the Panel shall follow the relevant provisions of the Understanding 
on Rules and Procedures Governing the Settlement of Disputes ("DSU"). In addition, the 
following Working Procedures apply.  
(2) The Panel reserves the right to modify t hese procedures as necessary, after consultation 
with the parties.  
Confidentiality  
2. (1) In accordance with the DSU, the deliberations of the Panel shall be confidential and the 
documents submitted to it shall be treated as confidential but shall be made available to the 
parties and the third parties1 to the dispute. Members shall treat as confidential information 
that is submitted to the Panel which the submitting Member has designated as confidential.  
(2) In accordance with the DSU, nothing in these Wo rking Procedures shall preclude a party 
or third party from disclosing statements of its own positions to the public.  
(3) If a party submits a confidential version of its written submissions to the Panel, it shall 
also, upon request of a Member, provide a  non-confidential summary of the information 
contained in its submissions that could be disclosed to the public. The Panel may, upon 
request, fix a time -limit within which the party should endeavour to provide such summary.  
(4) Upon request, the Panel may adopt appropriate additional procedures for the treatment 
and handling of confidential information after consultation with the parties.  
Submissions  
 
3. (1) Before the first substantive meeting of the Panel with the parties, each party shall 
submit a writt en submission in which it presents the facts of the case and its arguments, in 
accordance with the timetable adopted by the Panel.  
(2) Each party shall also submit to the Panel, before the first substantive meeting of the 
Panel, a written rebuttal, in acc ordance with the timetable adopted by the Panel.  
(3) Each third party that chooses to make a written submission before the first substantive 
meeting of the Panel with the parties shall do so in accordance with the timetable adopted by 
the Panel.  
(4) The Panel may invite the parties or third parties to make additional submissions during 
the proceeding, including with respect to requests for preliminary rulings in accordance with 
paragraph 4 below.  
 
Preliminary rulings  
4. (1) If Turkey considers that the Panel shoul d make a ruling before the issuance of the 
Report that certain measures or claims in the panel request or the complainant's first written 
 
1 To the extent provided for in Article 10.3 of the DSU.    WT/DS583/12/Add.1  
 
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  submission are not properly before the Panel, the following procedure applies. Exceptions to 
this procedure shall be g ranted upon a showing of good cause.  
a. Turkey shall submit any such request for a preliminary ruling at the earliest possible 
opportunity and in any event no later than in its first written submission to the Panel. The 
European Union shall submit its res ponse to the request before the first substantive 
meeting of the Panel, at a time to be determined by the Panel in light of the request.  
b. The Panel may issue a preliminary ruling on the issues raised in such a preliminary ruling 
request before, during or  after the first substantive meeting, or the Panel may defer a 
ruling on the issues raised by a preliminary ruling request until it issues its Report to the 
parties.  
c. If the Panel finds it appropriate to issue a preliminary ruling before the issuance of  its 
Report, the Panel may provide reasons for the ruling at the time that the ruling is made, 
or subsequently in its Report.  
d. Any request for such a preliminary ruling by Turkey before the first meeting, and any 
subsequent submissions of the parties in relation thereto before the first meeting, shall be 
served on all third parties. The Panel may provide all third parties with an opportunity to 
provide comments on any such request, either in their submissions as provided for in the 
timetable or separately . Any preliminary ruling issued by the Panel before the first 
substantive meeting on whether certain measures or claims are properly before the Panel 
shall be shared with all third parties.  
(2) This procedure is without prejudice to the parties' right to request other types of 
preliminary or procedural rulings during the proceeding, and to the procedures that the Panel 
may follow with respect to such requests.  
Evidence  
5. (1) Each party shall submit all evidence to the Panel no later than during the first 
substantive meeting, except evidence necessary for purposes of rebuttal, or evidence 
necessary for answers to questions or comments on answers provided by the other party. 
Additional exceptions may be granted upon a showing of good cause.  
(2) If any new e vidence has been admitted upon a showing of good cause, the Panel shall 
accord the other party an appropriate period of time to comment on the new evidence 
submitted.  
6. (1) If the original language of an exhibit or portion thereof is not a WTO working lan guage, 
the submitting party or third party shall simultaneously submit a translation of the exhibit or 
relevant portion into the WTO working language of the Panel. The Panel may grant reasonable 
extensions of time for the translation of exhibits upon a sho wing of good cause.  
(2) Any objection as to the accuracy of a translation should be raised promptly in writing, 
preferably no later than the next submission or meeting (whichever occurs earlier) following 
the submission which contains the translation in question. Any objection sh all be accompanied 
by an explanation of the grounds for the objection and an alternative translation.  
7. (1) To facilitate the maintenance of the record of the dispute and maximize the clarity of 
submissions, each party and third party shall sequentially number its exhibits throughout the course 
of the dispute, indicating the submitting Member and the number of each exhibit on its cover page. 
Exhibits submitted by the European Union should be numbered EU -1, EU -2, etc. Exhibits submitted 
by Turkey should be  numbered TUR -1, TUR -2, etc. If the last exhibit in connection with the first 
submission was numbered TUR -5, the first exhibit in connection with the next submission thus would 
be numbered TUR -6. If a party withdraws one or more exhibits, or submits one or  more exhibits 
intentionally blank, it should indicate "exhibit withdrawn"; or "exhibit intentionally left blank”, 
respectively.  
    WT/DS583/12/Add.1  
 
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  (2) With each submission, oral statement, and response to questions, a party shall provide 
an updated list of exhibits (in Word or Excel format).  
(3) If a party submits a document that has already been submitted as an exhibit by the 
other party, it should explain why it is submitting that document again.  
(4) If a party includes a hyperlink to the content of a website in a sub mission and intends 
that the cited content form part of the official record, the cited content of the website shall be 
provided in the form of an exhibit along with the date that it was accessed.  
Editorial Guide  
8. In order to facilitate the work of the Pa nel, each party and third party is invited to make its 
submissions in accordance with the WTO Editorial Guide for Panel Submissions (electronic copy 
provided).  
Questions  
 
9. The Panel may pose questions to the parties and third parties at any time, includi ng as follows 
in connection with the first substantive meeting:  
a.  Before the meeting, the Panel shall send written questions for advance written 
responses from the parties. The Panel shall ensure that the parties are afforded sufficient time 
to prepare t heir written responses, and that the responses are received sufficiently in advance 
of the meeting, so as to ensure that each party is able to provide comments on the other's 
responses at the meeting.  
b. The Panel may also include questions for advance wri tten responses from the third 
parties.   
c. The Panel may put additional follow -up questions to the parties and third parties orally 
during the meeting, and in writing following the meeting, as provided for in paragraphs 15  and 
21 below.  
Substantive meeti ngs 
 
10. The Panel shall meet in closed session.  
11. The parties shall be present at the meetings only when the Panel invites them to appear before 
it.  
12. (1) Each party has the right to determine the composition of its own delegation when 
meeting with the Panel.  
(2) Each party shall have the responsibility for all members of its delegation and shall 
ensure that each member of its delegation acts in accordance with the DSU and these Working 
Procedures, particularly with regard to the confidentiality of the proceeding and the 
submissions of the parties and third parties.  
13. Each party shall provide to the Panel the list of members of its delegation on a dedicated form 
to be provided by the Secretariat no later than 5.00  p.m. (Geneva time) on 6 April 202 1.  
14. A request for interpretation by any party should be made to the Panel as early as possible, 
preferably at the organizational stage, to allow sufficient time to ensure availability of interpreters.  
15. The Panel shall hold at least one substantive meeting with the parties. Upon request by either 
party, the Panel may hold a second substantive meeting with the parties. The first and second 
substantive meetings of the Panel with the parties shall be conducted as follows:  
a. At the first sub stantive meeting the Panel shall invite the European Union to make an 
opening statement to present its case first. Subsequently, the Panel shall invite Turkey to WT/DS583/12/Add.1  
 
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  present its point of view. Before each party takes the floor, it shall provide the Panel and o ther 
participants at the meeting with a provisional written version of its statement. At the second 
substantive meeting Turkey shall be given the opportunity to present its opening statement 
first. The party that presented its opening statement first shall  present its closing statement 
first. 
b. Each party should avoid lengthy repetition of the arguments in its submissions. Each 
party is allocated 75 minutes for its opening statement  
c. After the conclusion of the opening statements and the third -party sess ion, the Panel 
shall give each party the opportunity to make comments on the other party's opening 
statement, to make comments on the other party's written responses to advance written 
questions2, or to ask the other party questions, through the Panel.  
d. The Panel may subsequently pose questions to the parties.  
e. The parties and the Panel shall transmit any questions they expect to pose orally by no 
later than 16 April 2021. If the parties' opening statements raise any additional issues that 
the Panel wishes to address through oral questions, the Panel will transmit those questions in 
writing sufficiently well in advance of the interactive/Q&A session with the parties.  
f. Either party may take the floor to make oral comments on the other party's oral 
responses to questions.  
g. Once the questioning has concluded, the Panel shall afford each party an opportunity to 
present a closing statement of up to 45 minutes, with the European Union presenting its 
statement first. Before each party takes the floor, it  shall provide the Panel and other 
participants at the meeting with a provisional written version of its closing statement.  
h. Following the meeting:  
i. Each party shall submit a final written version of its opening and closing statements 
no later than 5.0 0 p.m. (Geneva time) on 26 April 2021.  
ii. Each party shall send in writing, by 30 April 2021, any questions to the other party to 
which it wishes to receive a response in writing.  
iii. The Panel shall send in writing, by 30 April 2021, any questions to the parties to which 
it wishes to receive a response in writing.  
iv. Each party shall respond in writing to the questions from the Panel, and to any 
questions posed by the other party, by 28 May 2021.  
Third -party session  
 
17. Each third party may present its views orally during a session of the first substantive meeting 
with the parties set aside for that purpose.  
18. Each third party shall provide to the Panel the list of the members of its delegation on a 
dedicated form to be provided by the Secretariat  no later than 5:00 p.m. (Geneva time) on 6 April 
2021, and each third party shall also indicate, by no later than 6 April 2021, whether it intends to 
make an oral statement at the meeting.  
19. (1) Each third party has the right to determine the compositio n of its own delegation when 
meeting with the Panel.  
(2) Each third party shall have the responsibility for all members of its delegation and shall 
ensure that each member of its delegation acts in accordance with the DSU and these Working 
 
2 For greater clarity, each party shall be free to comment in its opening and/or closing statements on 
the other's responses to advance written questions.  WT/DS583/12/Add.1  
 
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  Procedures, par ticularly with regard to the confidentiality of the proceeding and the 
submissions of the parties and third parties.  
20. A request for interpretation by any third party should be made to the Panel as early as 
possible, preferably upon receiving the workin g procedures and timetable for the proceeding, to 
allow sufficient time to ensure availability of interpreters.  
21. The third -party session shall be conducted as follows:  
a. The parties and third parties may be present during the entirety of this session.  
b. The Panel shall first hear the statements of the third parties, who shall speak in 
alphabetical order. Each third party making a statement at the third -party session shal l 
provide the Panel and other participants with a provisional written version of its statement 
before it takes the floor.  
c. Each third party should limit the duration of its statement to 15 minutes and avoid 
repetition of the arguments already in its sub mission. If a third party considers that it 
requires more time for its statement, it should inform the Panel and the parties by no later 
than 14 April 2021, together with an estimate of the expected duration of its statement. 
The Panel will accord equal ti me to all third parties for their statements.  
d. After the third parties have made their statements, the parties shall be given the 
opportunity to pose questions to any third party, through the Panel, for clarification on 
any matter raised in that third pa rty's submission or oral statement.  
e. The Panel may subsequently pose questions to any third party.  
f. The parties and the Panel shall transmit any questions they expect to pose orally to the 
third parties by no later than 16 April 2021.  
g. Following th e third -party session:  
i. Each third party shall submit the final written version of its statement no later than 
5.00 p.m. (Geneva time) on 26 April 2021.  
ii. Each party may send in writing, by 30 April 2021, any questions to one or more third 
parties to which it wishes to receive a response in writing.  
iii. The Panel may send in writing, by 30 April 2021, any questions to one or more third 
parties to which it wishes to receive a response in writing.  
iv. Each third party choosing to do so shall respond i n writing to the questions from the 
Panel or a party by 28 May 2021.  
Descriptive part and executive summaries  
 
22. The description of the arguments of the parties and third parties in the descriptive part of the 
Panel report shall consist of executive summ aries provided by the parties and third parties, which 
shall be annexed as addenda to the report. These executive summaries shall not in any way serve 
as a substitute for the submissions of the parties and third parties in the Panel's examination of the 
case.  
23. Each party shall submit a single integrated executive summary of the facts and arguments as 
presented to the Panel in its written submissions and oral statement(s), in accordance with the 
timetable adopted by the Panel.   
24. The integrated executive summary shall not exceed 30 pages.  WT/DS583/12/Add.1  
 
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  25. The Panel may request the parties and third parties to provide executive summaries of facts 
and arguments presented in any other submissions to the Panel for which a deadline may not be 
specified in the timetable.  
26. Each third party that submitted arguments (either in writing or at the third -party session) 
shall submit an integrated executive summary of its arguments as presented in its written 
submission and statement in accordance with the  timetable adopted by the Panel. This integrated 
executive summary may also include a summary of responses to questions, if relevant. The 
executive summary to be provided by each third party shall not exceed six  pages. If a third party’s 
submission and sta tement do not exceed six pages in total, they shall serve as the executive 
summary of that third party's arguments. If the third party’s submission and statement exceed six 
pages in total, the third party shall indicate if its submission or its statement s hould serve as its 
executive summary. If the third -party indicates that it does not wish for the submission or statement 
or both to serve as its executive summary, it shall submit a separate integrated executive summary.  
Interim review  
 
27. Following issua nce of the interim report, each party may submit a written request to review 
precise aspects of the interim report and request a further meeting with the Panel, in accordance 
with the timetable adopted by the Panel. The right to request such a meeting shal l be exercised no 
later than at the time the written request for review is submitted.  
28. If no further meeting with the Panel is requested, each party may submit written comments 
on the other party's written request for review. Such written comments shal l be limited to the other 
party’s written request for review and shall be submitted in accordance with the timetable adopted 
by the Panel.  
Interim and Final Report  
29. The interim report, as well as the final report before its official circulation, shall be kept strictly 
confidential and shall not be disclosed.  
Service of documents  
 
 30. The following procedures regarding service of documents apply to all documents submitted by 
parties and third parties during the proceeding:  
a. Each par ty and third party shall send an email to the DS Registry attaching an electronic 
copy of all documents that it submits to the Panel, preferably in both Microsoft Word and 
PDF format. All such emails to the Panel shall be addressed to DSRegistry@wto.org  and 
copied to other WTO Secretariat staff whose email addresses have been provided to the 
parties during the proceeding. If it is not possible to attach all the exhibits to one email, 
the submitting party or third pa rty may send separate emails. If the number of emails 
necessary to transmit the exhibits would exceed 5 or any one exhibit is too large to be 
transmitted via email, the party shall upload the relevant exhibits to the Disputes On -line 
Registry Application ( DORA). The email version sent to the DS Registry shall constitute 
the official version for the purposes of submission deadlines and the record of the dispute.  
b. In addition, each party is invited to submit all documents through DORA within 24 hours 
following the deadline for the submission of the paper versions. If the parties have any 
questions or technical difficulties relating to the WTO e -filing system, they are invited to 
contact the DS Registry at DSRegistry @wto.org . 
c. If the parties or third parties have any questions or technical difficulties relating to DORA, 
they are invited to consult the User Guide available in the “Help” section of DORA and if 
necessary contact the DS Registry ( DSRegistry@wto.org ). 
d. Following email submission, each party and third party shall submit one courtesy paper 
copy of all documents it submits to the Panel, including the exhibits, with the DS  Registry WT/DS583/12/Add.1  
 
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  (office No. 2047) by 5:00 p.m. (Ge neva time) the next business day.3  If the Member does 
not have a mission or representative in Geneva the submissions may be sent by post or 
courier and must have a postmark or proof that they were sent the next business day 
after the submission was due. The DS  Registrar shall stamp the documents with the date 
and time of receipt. If an exhibit is in a format that is impractical to submit as a paper 
copy, then the party may submit such exhibit in electronic format (email or on a CD -ROM, 
DVD or USB key). In  this case, the cover page of the exhibit should indicate that the 
exhibit is only available in electronic format.  
e. The receipt of the email by the DS Registry shall constitute service on the Panel. Each 
party shall serve any document submitted to the P anel directly on the other party. A party 
shall submit its documents to another party by email. Each party shall confirm, in writing, 
that it has served on the other party, as appropriate, at the same time it provides each 
document to the Panel, a copy of such documents. Each party shall, in addition, serve any 
document submitted in advance of the first substantive meeting with the Panel directly on 
the third parties. For greater clarity, this includes, in accordance with paragraph 3(b) of 
these Working Pro cedures, the parties' rebuttal submissions. This also includes the parties' 
written responses to questions sent in advance of the first substantive meeting. The receipt 
of the email by the other party and the third parties (where relevant) shall constitute  
service.4 
f. As a general rule, all communications from the Panel to the parties and third parties will 
be via email. The Panel shall provide the parties with a paper copy of the Interim Report 
and the Final Report upon request.  
Correction of clerical er rors in submissions  
31. The Panel may grant leave to a party or third party to correct clerical errors in any of its 
submissions (including paragraph numbering and typographical mistakes). Any such request should 
identify the nature of the errors to be co rrected and should be made promptly following the filing of 
the submission in question.  
 
 
 
 
 
 
 
 
 
3 If, for any reason, the WTO building is ext raordinarily closed, the “next business day” will mean the 
day that the Panel determines for such filings once normal operations have resumed.  
4 In light of the requirement that receipt of the email constitutes service, parties and third parties may 
wish t o include a “read receipt” when sending emails to the DS Registry, the other party, or the third parties.  WT/DS583/ 12/Add.1  
 
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  ANNEX A -2 
ADDITIONAL WORKING PROCEDURES CONCERNING PROTECTION OF  
BUSINESS CONFIDENTIAL INFORMATION  
(BCI PROCEDURES)  
Adopted on 15 April 202 0 
 
The following procedures apply to business confidential information (BCI) submitted during the panel 
proceedings.  
1. For the  purposes of these proceedings, BCI means information:  
a. that is designated as such by the party submitting it;  
b. that is not otherwise available in the public domain; and  
c. that is commercially sensitive or, in the case of government, confidential i nformation, 
the release of which could reasonably be considered to cause or threaten to cause harm 
to the public interest, including by impairing the ability of the government to conduct 
its work.  
2. Each party and third party shall act in good faith and exercise restraint in designating 
information as BCI. The Panel shall have the right to intervene in any manner that it deems 
appropriate, if it is of the view that restraint in the designation of BCI is not being exercised.  
3. If a party, a third party, or the Panel, objects to the designation of information as BCI, the 
party designating the information shall provide reasons for the designation within seven (7) working 
days of the objection. After giving the other party an opportunity to comment on the ju stification 
provided within seven (7) working days, the Panel shall decide on the designation of the information. 
If the Panel disagrees with the designation of information as BCI, the submitting Party may either 
designate it as non -BCI or withdraw the inf ormation.  
4. If a party or a third party considers that information submitted by the other party or a third 
party should have been designated as BCI and objects to its submission without designation, it shall 
provide reasons for its objection to the Panel , the other party, and where relevant the third parties 
within seven (7) working days of the submission of the information. After giving the submitting party 
or third party an opportunity to comment on whether the information should be designated as BCI 
within seven (7) working days, the Panel shall decide on the designation of the information. If the 
Panel agrees that the information should be designated as BCI, the submitting party will be asked 
to withdraw the earlier version and submit a new version pro perly labelled as BCI as set forth in 
these procedures.  
5. As required by paragraph 2(1) of the Working Procedures of the Panel1, the deliberations of 
the Panel and the documents submitted to it shall be kept confidential.  Further, pursuant to Article 
18.2 of the DSU a party or third party having access to information designated as BCI submitted in 
these Panel proceedings shall treat it as confidential and shall not disclose that information other 
than to those persons authorized to receive it pursuant to these BCI Procedures. Each party, third 
party, and outside adviser having access to the BCI shall only use it for the purposes of this dispute. 
Each party and third party is responsible for ensuring that its employees, outside advisers, and 
experts comply with these BCI Procedures.  
6. Panel Members and employees of the WTO Secretariat assigned to the dispute DS583, 
including translators and interpreters, shall have access to BCI submitted in these proceedings. 
Employees of the Governments of the European U nion and Turkey, as well as of the third parties, 
shall have access to BCI submitted in these Panel proceedings to the extent necessary for their 
involvement in their official capacity in these proceedings. Outside advisers may be permitted access 
 
1 Adopted on 15 April 2020.  WT/DS583/12/Add.1  
 
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  to BCI. However, an outside adviser is not permitted access to BCI if that adviser is an officer or 
employee of an enterprise engaged in the production, marketing, export, or import of the products 
that are subject of this dispute or an officer or employee of an a ssociation of such enterprises.  
7. Representatives of, and outside advisers to, each of the parties and representatives of, and 
outside advisers to, the third parties shall be notified to the Panel, other party, and third parties in 
a list containing the names, titles, and employers of persons legitimately requiring access to BCI. 
The list for each party is to be first submitted at the latest by one (1) week before the due date of 
the first written submission of the complainant. The list of each party or t hird party shall be 
subsequently amended and re -submitted if the names, titles, or employers are changed. Parties and 
third parties may give access to BCI only to outside advisers (including their clerical staff) providing 
assistance to the parties in thes e proceedings.  
8. On the request of either party, the Panel will review whether specific confidential information 
it has submitted is so sensitive that it should not be provided to the third parties. In its review the 
Panel will take into consideration the need for the third party to have access to the particular 
information. If the Panel finds such information to be particularly sensitive, it will direct the party 
submitting the information to provide a non -confidential summary of the cont ents of the redacted 
information that will be made available to the third parties.  
9. A party or third party submitting or referring to BCI in any written submission (including in 
any exhibits) shall mark the cover and the first page of the document contai ning any such 
information with the words "Contains Business Confidential Information" and listing the pages on 
which BCI appears. Any BCI that is submitted in binary -encoded form shall be clearly marked with 
the statement "Business Confidential Information " on a label on the storage medium, and clearly 
marked with the statement "Business Confidential Information" in the binary -encoded files. The 
specific information in question shall be enclosed in double brackets, as follows: [[***]], and the 
notation "Con tains Business Confidential Information" shall be marked at the top of each page 
containing the BCI. In the case of a statement containing BCI, the party or third party making such 
a statement shall inform the Panel before making it that the statement will  contain BCI, and the 
Panel will ensure that only persons authorized to have access to BCI pursuant to these BCI 
Procedures are in the room to hear that statement. If a party submits a document containing BCI to 
the Panel, the other party or any third part y referring to that BCI in its documents, including written 
submissions, written versions of oral statements and documents submitted in binary -encoded form, 
shall mark the document and any storage medium accordingly, and use double brackets, as set forth 
in these procedures.  
10. The parties, third parties, the Panel, the WTO Secretariat, and any others permitted to have 
access to documents containing BCI under the terms of these BCI Procedures shall store all 
documents containing BCI in a manner so as to pr event unauthorized access to such information. 
Parties are invited to upload BCI into DORA rather than sending via email as the application is 
encrypted and has appropriate access controls. If a particular document is so sensitive that the party 
or third p arty does not wish to send it via email or upload it into DORA it should inform the Panel in 
advance of the submission so that arrangements can be made for off -line filing. Any party filing a 
document off -line must file a redacted version of the document w ith a non -confidential summary of 
the redacted information.  
11. The Panel may include in its confidential Interim Report any information designated as BCI 
under these BCI Procedures. However, the Panel will not disclose in its Final Report any information 
designated as BCI under these BCI Procedures. The Panel may, however, make statements of 
conclusion based on such information. Before the Panel circulates the Final Report to Members, the 
Panel shall give each party or third party an opportunity to ensure that any information it has 
designated as BCI is not contained in the report.  
12. At the conclusion of the dispute2, and within a period to be fixed by the Panel, each party and 
third party shall either return all documents (including electronic material) containing BCI, submitted 
during the Panel proceedings, to the party that submitted such documents or certify in wr iting to 
 
2 Where this is defined as when (a) the Panel or Appellate Body report is adopted by the DSB, or the 
DSB decides by consen sus not to adopt the Panel or the Appellate Body report; (b) the authority for the 
establishment of the Panel lapses under Article 12.12 of the DSU; or (c) a mutually satisfactory solution is 
notified to the DSB under Article 3.6 of the DSU.  WT/DS583/12/Add.1  
 
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  the Panel and the other parties that all such documents have been destroyed, or otherwise protect 
the BCI against public disclosure, consistent with the party's obligations under its domestic laws. 
The WTO Secretariat shall have the right to retai n the documents containing BCI for the archives of 
the WTO.  
13. If a party formally notifies the DSB of its decision to appeal pursuant to Article 16.4 of the 
DSU, the Secretariat will take appropriate steps with respect to the preservation and transmissio n 
of the record in relation to the appeal.  Following the completion or withdrawal of an appeal, the 
parties and third parties shall promptly return all such documents or certify to the parties that all 
such documents have been destroyed, taking account of any applicable procedures adopted during 
the appeal.  
 
 
 WT/DS583/ 12/Add.1  
 
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  ANNEX A -3 
PRELIMINARY RULING OF THE PANEL  
10 July 2020  
 
1  INTRODUCTION  
1.1.  Pursuant to the European  Union's request for establishment of a panel (panel request)1, the 
Dispute Settlement Body (DSB) established the Panel on 30  September  2019.2 The Panel was 
composed on 17  March  2020.3 The Panel held a written exchan ge with the parties on organizational 
matters between 7  April 2020 and 9  April 2020. The Panel adopted its Working Procedures on 
15 April 2020. On 15  May 2020, three days before the deadline for the European  Union's first written 
submission, Turkey request ed a preliminary ruling arguing that the European  Union's panel request 
fails to identify the specific measures at issue and, with respect to certain claims, fails to provide a 
brief summary of the legal basis of the complaint sufficient to present the pro blem clearly.  
1.2.  After receiving comments from the parties4 and third parties5, the Panel provides its preliminary 
ruling on Turkey's request below. This Ruling will become an integral part of the Panel's Final Report, 
subject to any changes that may be ne cessary in light of comments received from the parties at the 
interim review stage.  
1.3.  Turkey requests that the Panel issue a preliminary ruling, concluding that the measures and 
claims identified in its request for a preliminary ruling are not within the Pa nel's terms of reference. 
Turkey claims that the European  Union has failed to comply with Article  6.2 of the Understanding on 
Rules and Procedures Governing the Settlement of Disputes (DSU) because its panel request did not 
identify the specific measures a t issue.6 In particular, Turkey argues that the panel request does not 
identify with sufficient precision: (i) the nature of the measures at issue as written or unwritten 
measures7; (ii) the content of the measures, including the products that are the su bject of the 
measures and the requirement(s) concerned8; (iii) the legal instruments underpinning each of the 
measures at issue9; and (iv) the "as such" or "as applied" character of the prioritization measure.10  
1.4.  Turkey submits that, even if the Panel were to conclude that the European  Union did identify 
the specific measures at issue, it should, nevertheless, conclude that any claims that the 
European  Union makes with respect to "other instruments through which Turkey implements and 
administers t he measures at issue" fall outside the Panel's terms of reference. This is because that 
reference is vague and does not allow the identification of the specific instruments or documents 
that the reference aims to cover.11  
1.5.  Lastly, Turkey submits that the E uropean  Union's panel request has failed to provide the legal 
basis of the complaint sufficient to present the problem clearly in connection with its claims under 
Article  X:1 of the General Agreement on Tariffs and Trade 1994 (GATT  1994) and Article  3.1(b)  of 
the Agreement on Subsidies and Countervailing Measures (SCM  Agreement) with respect to the 
localisation requirement measure.12 
 
1 WT/DS583/3.  
2 WT/DSB/M/434 . 
3 WT/DS583/4.  
4 The European  Union  responded to Turkey 's request on 5 June 2020 . On 19 June 2020 , Turkey  
commented on the European  Union 's comments. The European  Union  provided its comments on Turkey’s  
comments on 26 June 2020.  
5 Canada, Ukraine, and the United  States provided comments on 12 June 2020.  
6 Turkey's request for a preliminary ruling, paras.  16-48. 
7 Turkey's request for a preliminary ruling, paras.  22-25. 
8 Turkey's request for a preliminary ruling, paras.  26-33. 
9 Turkey's request for a preliminary ruling, paras.  34-44. 
10 Turkey's request for a preliminary ruling, paras.  45-46. 
11 Turkey's request for a preliminary ruling, paras.  49-50. 
12 Turkey 's request for a preliminary ruling, para.  68.  WT/DS583/12/Add.1  
 
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  1.6.  The European  Union asserts that Turkey's request is untimely and therefore inadmissible, and 
in any event, that its panel req uest fulfils all the requirements of Article  6.2 of the DSU.13 The 
European  Union asks the Panel to reject Turkey's request for a preliminary ruling.14 
1.7.  The Panel sets forth its decision below. A copy of this communication will be transmitted to the 
third p arties for information.  
2  THE LEGAL STANDARD UNDER ARTICLE  6.2 OF THE DSU  
2.1.  Article  6.2 of the DSU sets forth the requirements that a complaining party must fulfil when 
requesting the establishment of a panel. They are:  
The request for the establishment of a panel shall be made in writing. It shall indicate 
whether consultations were held, identify the specific measures at issue and provide a 
brief summary of the legal basis of the complaint sufficient to present the problem 
clearly. In case the applicant requ ests the establishment of a panel with other than 
standard terms of reference, the written request shall include the proposed text of 
special terms of reference.  
2.2.  Article  7.1 of the DSU, explains that a panel's terms of reference are set by the provisions c ited 
by the parties, most especially the "matter" referred to it in the request for establishment of a panel. 
Prior panels and the Appellate  Body have clarified that the "matter" referred to in Article  7.1 is the 
measures and claims identified in the panel  request.15 Therefore, if a measure or claim is absent 
from the panel request or not clearly specified therein, it would be outside the panel's terms of 
reference.  
2.3.  The requirements for a panel request are also important for protecting the respondent's due 
process rights. Due process is "an essential feature of the WTO dispute settlement system" that 
helps ensure "the rights of parties to be afforded an adequate opportunity to pursue their claims and 
make out their defences".16 The requirements in Article  6.2 are used to ensure that the respondent 
knows what case it has to answer and to protect its due process rights by enabling it to properly 
prepare a defence.17 
2.4.  When panels are called upon to examine a panel request for compliance with Article  6.2, they 
must carefully consider the panel request "to ensure compliance with both the letter and spirit of 
Article 6.2".18 Although such compliance must be demonstrated on the face of the panel request19, 
panels are to examine the request as a whole and in light of t he attendant circumstances.20 Panels 
may have reference to the parties' written submissions to clarify or confirm the meaning of the 
phrases in the panel request, but the written submissions cannot be used to "cure" a deficiency in a 
panel request.21  
2.5.  The Panel recalls that Article  3.10 of the DSU requires both complaining and responding 
Members to comply with the requirements of the DSU in good faith. Thus, complaining Members 
must accord to responding Members the full measure of protection and opportunity to defend, 
contemplated by t he letter and spirit of the procedural rules.22 Likewise, responding Members must 
 
13 European  Union ’s response to Turkey 's request for a preliminary ruling, para.  2. 
14 European  Union ’s response to Turkey 's request for a preliminary ruling, para.  108. 
15 Appellate  Body Report, US – Carbon Steel , para.  125.  
16 Panel  Report , India – Agricultural Products , para.  7.82. 
17 Appellate  Body Reports, US – Carbon Steel , para.  126; Brazil – Desiccated Coconut , para.  186, 
EC – Bananas III , para.  142; US – Continued Zeroing , para.  161. 
18 Appellate  Body Report, US – Carbon Steel, paras.  126 and 127  (citing Appellate  Body Report EC – 
Bananas III , para.  142). 
19 The Appellate  Body has cautioned that a need to scrutinize a panel request on its face should not limit 
the examination of that request to the words appearing in the document as this would be "too formalistic an 
approach". See Appellate  Body Report, Argentina – Import Measures, paras.  5.51-5.52. 
20 Panel  Report , US – FSC (Article  21.5 – EC II) , para.  7.74. See also Appellate  Body Reports, Canada – 
Wheat Exports and Grain Imports , para.  206 and EC and certain member States – Large Civil Aircraft , 
para. 787; Panel  Report , China – Publications and Audiovisual Products , para.  7.104.  
21 Appellate  Body Report, Argentina – Import Measures , para.  5.42 (citing Appellate  Body Report, US – 
Countervailing and Anti-Dumping Measures (China) , para.  4.9). 
22 Appellate Body Report, US – FSC, para. 166.  WT/DS583/12/Add.1  
 
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  seasonably and promptly bring claimed procedural deficiencies to the attention of the complaining 
Member, and to the DSB or the panel, so that corrections, if needed, can be made, so that differences 
or misunderstandings can be resolved. 23 As the Appellate  Body has clarified, "the procedural rules 
of WTO dispute settlement are designed to promote, not the development of litigation techniques, 
but simply the fair, prompt and e ffective resolution of trade disputes."24 
2.6.  In light of the above, and after careful review of the parties' arguments and the third parties' 
comments, the Panel has reached the conclusions set forth below.  
3  CONCLUSIONS ON TURKEY'S REQUESTS  
3.1  Timeliness of Turkey's request for a preliminary ruling  
3.1.  The European  Union addressed a letter to the Panel on 26  May 2020 raising many of the 
arguments on the timeliness of Turkey's request for a preliminary ruling that it makes in its formal 
comments on t he request. The Panel answered many of these issues in its letter to the parties of 
29 May 2020 and sees no need to return to or repeat its reasoning here.  
3.2.  In its comments, the European  Union expands on its arguments concerning the proper 
interpretation of  paragraph 4(1)(a) of the Panel's Working Procedures. In particular, the 
European  Union argues that paragraph 4(1)(a) of the Working Procedures sets two cumulative time 
limits: (i) a dynamic, yet objective, time limit to request a preliminary ruling "as so on as it is 
objectively possible for Turkey to do so"25, which is subject to review by the Panel26; and (ii) a fixed 
time limit linked to the filing of Turkey's first written submission, which addresses primarily situations 
where the request for a prelimin ary ruling relates to the lack of consistency between the panel 
request and the complainant's first written submission.27 The European  Union maintains that Turkey 
fails on the first requirement because Turkey could have filed its request immediately upon t he 
composition of the Panel, or at the latest upon the adoption of the Working Procedures and 
Timetable.28 The European  Union considers that Turkey failed to explain how certain circumstances, 
including the COVID -19 pandemic, prevented it from filing its r equest at an earlier date.29 
3.3.  Turkey responds that its request for a preliminary ruling was filed "at the earliest possible 
opportunity" and well before the deadline of Turkey's first written submission30 and thus complies 
with the Working Procedures. Turke y explains that it could not have filed its request before the date 
on which the Panel sent the parties the Working Procedures (i.e. 15  April 2020), because the 
procedure for filing such a request was outlined in the Working Procedures31, and that during t he 
period 15  April 2020-15 May 2020 various factors, including the extraordinary situation created by 
the COVID -19 pandemic, influenced what may have been "the earliest possible opportunity".32  
3.4.  Although the Working Procedures are adopted pursuant to the P anel's authority under the DSU, 
they are not treaty text and do not need to be scrutinized according to customary rules of 
interpretation of public international law as codified in the Vienna  Convention on the Law of Treaties. 
At the same time, the Panel f inds nothing objectionable in applying its Working Procedures in good 
faith, relying on the ordinary meaning of the terms used in their context, bearing in mind their object 
 
23 Appellate Body Report, US – FSC, para. 166.  
24 Appellate  Body Report, US – FSC, para.  160. 
25 European  Union's response to Turkey's request for  a preliminary ruling, para.  9. 
26 European  Union 's comments on Turkey's comments on the European  Union 's response to Turkey's 
request for a preliminary ruling, para. 8.  
27 European Union's comments on Turkey 's comments on the European  Union 's response to Turkey's 
request for a preliminary ruling, para.  5. 
28 The European  Union  also notes that there was no need for Turkey to wait for the Panel to adopt its 
Working Procedures – see European  Union 's comments on T urkey's comments on the European  Union 's 
response to Turkey's request for a preliminary ruling, para.  10.  
29 European  Union 's comments on Turkey's comments on the European  Union 's response to Turkey's 
request for a preliminary ruling, para.  12. 
30 Turkey's comments on the European  Union 's response to Turkey's request for a preliminary ruling, 
para. 15. 
31 Turkey's comments on the European  Union 's response to Turkey's request for a preliminary ruling, 
para. 13. 
32 Turkey's comments on the European  Union 's respo nse to Turkey's request for a preliminary ruling, 
para. 14. WT/DS583/12/Add.1  
 
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  and purpose. In that vein, the Panel recalls that the Working Procedures are adopt ed to set forth 
procedures for orderly panel proceedings while at the same time preserving the parties' due process 
rights, in the context of a dispute settlement mechanism where a panel's jurisdiction is limited 
pursuant to Article  7.1 of the DSU. As the Appellate  Body has explained, because a panel's terms of 
reference define the scope of the dispute and serve to establish and delimit a panel's jurisdiction, 
"panels cannot simply ignore issues which go to the root of their jurisdiction – that is, to their  
authority to deal with and dispose of matters. Rather, panels must deal with such issues – if 
necessary, on their own motion – in order to satisfy themselves that they have authority to 
proceed."33 The Panel, therefore, cannot adopt an overly legalistic r eading of the Working Procedures 
that could lead to the Panel potentially exceeding its mandate.34 The determination of what point in 
time constitutes a party's "earliest possible opportunity" to file a request for a preliminary ruling 
must take into accou nt the specific circumstances of the case and the party concerned, as well as 
an understanding that parties must be given adequate time to prepare their submissions.  
3.5.  It is true that Turkey could have brought its request for a preliminary ruling at any tim e after 
the Panel was established or composed. However, Turkey could not have been bound to comply with 
paragraph 4(1)(a) of the Working Procedures until they were adopted, on 15  April 2020. Turkey filed 
its request for a preliminary ruling one month later . The Panel has already noted in its letter of 
29 May 2020 that Turkey is a developing country and entitled to flexibility on the length of time 
necessary to prepare its submissions under the DSU. Coupled with the extraordinary situation 
created by the COV ID-19 pandemic, one month to prepare a detailed legal submission is not 
unreasonable and is not inconsistent with making the request at the earliest possible opportunity. 
Moreover, the Panel recalls its finding in its letter of 29  May 2020 that in any even t, the fact that 
Turkey's request for a preliminary ruling was filed before its first written submission meant that the 
request was made within the time allowed in paragraph 4(1)(a).   
3.6.  In light of the above, the Panel finds that Turkey's request for a prel iminary ruling is not 
untimely.  
3.2  Whether the European  Union's panel request identified the specific measures at issue  
3.7.  The Panel recalls that it should determine whether a specific measure at issue has been 
sufficiently identified in a panel request based not only on the text of a request, but also upon a 
respondent's ability to defend itself given the description of a measure in a panel request.35 Measures 
can be identified either  by reference to a specific legislative instrument or by their substanc e.36 The 
identification of the specific measures at issue is different from a demonstration of the existence of 
such measures and the applicable provisions of the covered agreements.37 An examination of a panel 
request's specificity does not entail substan tive consideration of the existence and precise content 
of a measure or whether that measure is susceptible to challenge in WTO dispute settlement. Such 
consideration may need to be explored by a panel and the parties during the panel proceedings but 
is not a prerequisite for setting the jurisdictional boundaries of a panel.38 
3.8.  The European  Union referred in the introductory paragraphs of its panel request to three 
different measures – a localisation requirement, an alleged import ban on localised products, and a 
prioritization measure. The European  Union also provided a list of 28 different legal instruments or 
other types of documents with the preface that the three measures "are put in place and evidenced 
by, and are implemented and administered through, inter alia , the following legal and other 
instruments, considered alone an d in any combination". The panel request is then divided into three 
sections, each one devoted to one of the measures. Each section has a subheading for "identification 
 
33 Appellate  Body Report , Mexico – Corn Syrup (Article  21.5 – US), para.  36. See also Ibid., para.  53; 
Appellate  Body Report, EC and certain member States – Large Civil Aircraft , para.  791; Panel  Report s, US – 
Clove Cigarettes , para.  7.134, EU – Energy Package , paras.  7.200, 7.215 and 7.221, and Morocco – Hot-Rolled 
Steel (Turkey) , paras.  7.54-7.57. 
34 In that regard, the Panel recalls that paragraph 4 of the Working Procedures provides that t he 
deadlines in paragraph 4 can be waived by the Panel for "good cause".   
35 Appellate  Body Report, EC – Computer Equipment , para. 45. See also Panel  Report, Canada – Wheat 
Exports and Grain Imports , para.  6.10, sub -paras.  17 and 20.  
36 Panel  Report, Argent ina – Footwear (EC) , para.  8.40. 
37 Appellate  Body Report, US – Continued Zeroing , para s. 168-169. 
38 Appellate  Body Report, US – Continued Zeroing, para. 169. WT/DS583/12/Add.1  
 
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  of the specific measure at issue", which is then accompanied by a narrative description  of the 
challenged measure.  
3.2.1   The nature, content, and legal instruments underpinning the measures at issue  
3.9.  As noted above, Turkey argues that the European  Union failed to identify all three of the 
measures at issue consistently with the obligation in Arti cle 6.2 of the DSU.  
3.10.   Turkey has relied on the findings of the panel in Russia – Traffic in Transit39 to support its 
position that the European  Union was required to specify individually and cumulatively (i) the nature 
of the measures at issue as written or unwritten40; (ii) the content of the measures, including the 
products that are the subject of the measures and the requirement(s) concerned41; and (iii) the legal 
instruments underpinning each of the measures at issue42 in its panel request to comply with the 
obligation in Article  6.2 to identify the specific measure at issue.43 The Panel notes that the panel in 
Russia – Traffic in Transit  was dealing with the specifics of that case in light of the measures at issue, 
the way that panel request was drafted, the attendant circumstances surrounding that dispute and 
the relationship between the two parties. This Panel is not of the view that the panel report in Russia 
– Traffic in Transit  established a new standard for compliance with Article  6.2 of the DSU. We agree 
with the panel in India – Export Related Measures , that a determination of whether a measure has 
been sufficiently identified may depend on "the particular context in which those measures exist and 
operate", and "involves, by necessity, a case -by-case analysis since it may require examining the 
extent to which those measures are capable of being precisely identified".44 The Panel, therefore, 
does not believe that it can simply adopt wholesale the same factors that the panel in Russia – 
Traffic in Tran sit adopted in its evaluation of the panel request in that case. The Panel will instead 
examine the European  Union's panel request as a whole and in light of the attendant circumstances45 
to determine whether it complies with both the letter and spirit of Article  6.2.46  
3.11.   The Panel has examined not only the listing of legal instruments and other documents in the 
introductory section of the panel request, but also the narrative descriptions of each measure in the 
relevant sections of the panel request. The Panel has also examined the attendant circumstances, 
which in its view include discussions in WTO bodies on the matter as well as bilateral discussions 
between the parties on the matter.47 These attendant circumstances cannot be discounted in 
reaching a conclusion on whether the language in the panel request adequately identified the 
challenged measures to Turkey  as opposed to a person with no prior understanding of the dispute.  
3.12.   First, the Panel recalls that a broad range of measures may be cha llenged under the WTO 
dispute settlement system and that they need not fit within neat categories to be susceptible to 
challenge. In principle, any act or omission attributable to a Member can be brought before the 
DSB.48 The Panel does not believe that a measure must fall discretely into the category of either 
 
39 Turkey's request for a preliminary ruling, paras.  13-14, and 44.  
40 Turkey's request for a preliminary ruling, para.  25. 
41 Turkey's request for a preliminary ruling, para.  26. 
42 Turkey's request for a preliminary ruling, para.  40. In its comments on the European  Union's 
comments on its request for a preliminary ruling, Turkey raises the issue that in its first written submission, 
the European  Union referred to new legal instruments and documents that were not identified in its panel 
request with respect to its claims under each of the challenged measures. See Turkey 's comm ents on 
European  Union' s response to Turkey 's request for a preliminary ruling, paras.  66–73. Turkey argues that this 
inclusion of new legal instruments supports its contention that the European  Union did not properly identify the 
measures in its panel req uest. 
43 Turkey's request for a preliminary ruling , para.  21. See also Turkey's request for a preliminary ruling, 
para. 14 (citing Panel  Report , Russia – Traffic in Transit , para.  7.301 ). 
44 Panel  Report, India – Export Related Measures , Annex D -2, para. 2.8. 
45 Panel  Report , US – FSC (Article  21.5 – EC II) , para.  7.74. See also Appellate Body Reports, Canada – 
Wheat Exports and Grain Imports , para. 206 and EC and certain member States – Large Civil Aircraft , para. 
787; Panel Report, China – Publicati ons and Audiovisual Products , para. 7.104.  
46 Appellate Body Report, US – Carbon Steel, paras.  126 and 127  (citing Appellate  Body Report EC – 
Bananas III , para.  142). 
47 The Panel notes in this regard that it is not referring to discussions that took place i n the context of 
consultations under Article  4 of the DSU as these are confidential, but rather other publicly available 
information that the European  Union referred to in its submissions.  
48 Appellate  Body Reports, US – Anti-Dumping Methodologies (China) , para. 5.122 (referring to 
Appellate  Body Report, US — Corrosion -Resistant Steel Sunset Review , para.  81); Argentina – Import 
Measures , para.  5.100; US – Supercalende red Paper , para.  5.17. WT/DS583/12/Add.1  
 
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  written or unwritten to be properly identified in a panel request. What matters is whether the 
responding Member can discern from the language which of its acts or omissions49 are being 
challenged. T he European  Union noted in its panel request that the identified measures were "put in 
place and evidenced by, and are implemented and administered through, inter alia , the following 
legal and other instruments, considered alone and in any combination." Th e European  Union, thus, 
indicated that there were written components of the challenged measures. The fact that the 
European  Union raised a claim under Article  X:1 of the GATT  1994 indicates that it believes that 
there are also unwritten or at least unpubli shed aspects of the localisation requirement.  
3.13.   Second, the Panel finds that the European  Union adequately identified the content of the 
measures in terms of the requirements it was challenging in the narrative descriptions of the 
measures in the panel requ est. Furthermore, nothing in Article  6.2 requires complainants to identify 
with specificity the products  covered by the challenged measures. As the Appellate  Body has noted 
such knowledge will usually flow from the identification of the measures.50 In this  case, the 
European  Union identified the challenged measures as relating to the production, importation, and 
approval of pharmaceutical products in particular as it relates to their inclusion in the Turkish scheme 
for reimbursing pharmacies for the purchas e of such products by Turkey's citizens. Moreover, 
nothing in the DSU  requires Members to restrict the scope of their disputes to limited or discrete 
sets of products.51  
3.14.   Finally, with respect to the legal instruments underpinning the measures, the Panel r ecognizes 
that the easiest way to identify a "specific measure at issue" would be by a reference to the name, 
number, date or place of promulgation of a particular law or regulation.52 A panel request that does 
not specify the relevant law, regulation, or other legal instrument to which a claim relates, however, 
is not necessarily inconsistent with Article  6.2 of the DSU so long as it contains "sufficient information 
that effectively identifies the precise measures at issue".53 As the Appellate  Body has exp lained, a 
complainant need only frame the measure "with sufficient particularity so as to indicate the nature 
of the measure and the gist of what is at issue".54 The Panel also recalls that there is no requirement 
that, in order to establish a panel's juri sdiction, a panel request must answer questions concerning 
the existence and content of the measures at issue and the consistency of such measures with the 
covered agreements. Rather, arguments and evidence on these questions will be developed 
progressivel y during the proceeding in the parties' written submissions and oral pleadings.55 A 
complainant need not, therefore, list all the evidence it will use to support its arguments about the 
existence of the measure and how it operates in its panel request. The  Panel, therefore, concludes 
that the narrative descriptions of the measures in the European  Union's panel request are  sufficient 
for purposes of compliance with Article  6.2 of the DSU, particularly in light of the fact that the 
European  Union provided an illustrative list of relevant legal instruments that it contends put in 
place, evidence, implement, and administer the challenged measures.  
3.2.2   The "as such" or "as applied" character of the prioritization measure  
3.15.   Turkey raises a separate issue with respect to the prioritization measure, arguing that the 
European  Union did not specify whether it was challenging the measure "as such" or "as applied". 
Turkey considers that it is unclear from the European  Union's narrative description of the 
prioritizati on measure, which refers to "certain cases where imported products are not excluded from 
the reimbursement scheme", whether the European  Union challenges that measure "as such" or "as 
applied in certain cases" (i.e. individual instances of application).56  
 
49 Appellate  Body Reports, US – Anti-Dumping Methodologies (China) , para.  5.122 (referring to 
Appellate  Body Report, US — Corrosion -Resistant Steel Sunset Review , para.  81); Argentina – Import 
Measures , para.  5.100; US – Supercalende red Paper , para. 5.17.  
50 Appellate Body Report, EC – Chicken Cuts, para. 165.  
51 For example, the dispute in US – FSC related to revenue foregone with respect to "foreign sales 
corporations" in the United  States. The measure at issue applied to any sales of any products by qualifying 
companies.  
52 Appellate  Body Report, US – Continued Zeroing , para.  168. 
53 Panel  Report , Canada – Wheat Exports and Grain Imports , para.  6.10. 
54 Appellate  Body Report,  US – Continued Zeroing , para. 169. 
55 Appellate  Body Report, US – Continued Zeroing, para. 169. 
56 Turkey's request for a preliminary ruling, paras.  45-46. WT/DS583/12/Add.1  
 
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  3.16.   The European  Union  argues that the wording "as such" need not be used, so long as it is clear 
that an "as such" challenge is intended.57 According to the European  Union, the wording in the panel 
request describing the prioritization measure as giving "pri ority to the review of applications … over 
the review of the applications of like imported products" "unambiguously" shows that the European 
Union is challenging a measure of "general and prospective application" (an "as such" challenge) not 
"specific inst ances" of application.58 The European  Union responds that Turkey's reading of the 
wording "certain cases" does not take account of the full wording of that sentence, which specifies 
that imported products that still benefit from the reimbursement scheme ar e discriminated against 
when compared with like domestic products. According to the European  Union, that wording 
describes a challenge that is broader than addressing specific instances of application.59  
3.17.   The Panel agrees with the Appellate  Body that the d istinction between measures challenged 
"as such" and "as applied" does not govern the definition of a measure for purposes of WTO dispute 
settlement, nor does it exhaustively define the types of measures susceptible to challenge. These 
categories serve as analytical tools to facilitate the understanding of challenged measures; the 
measures need not fit squarely within these categories in order to be susceptible to WTO dispute 
settlement.60 The Panel, therefore, is not of the view that there is an absolute r equirement that a 
challenge to a particular measure be specified either "as such" or "as applied" in a panel request to 
satisfy the obligation in Article  6.2 to identify the specific measure at issue. Rather, such 
identification can aid in understanding th e legal basis for the complaint and how the measure is 
alleged to be inconsistent with the relevant provisions of the covered agreements.  
3.18.   In the instant case, the Panel understands that the reference to "certain cases" in the panel 
request covers all inst ances where imported products are still eligible under the reimbursement 
scheme. This is confirmed by reading the panel request as a whole which includes the entire narrative 
on the prioritization measure as well as its relationship to the localisation req uirement measure and 
the narrative description of that measure. This understanding is confirmed by the European  Union's 
first written submission. The Panel, therefore, finds that Turkey has not established that the 
European  Union's panel request is inconsi stent with Article  6.2 on the basis that it did not specify 
the "as such" or "as applied" nature of its challenge to the prioritization measure.  
3.2.3   Other instruments through which Turkey implements and administers the measures 
at issue  
3.19.   Turkey argues that the terms "other instruments through which Turkey implements and 
administers the measures at issue", "implementing measures" and "other related measures" as used 
in the panel request are too vague and do not allow the specific instruments to be identified.61 Turkey 
considers that the European  Union should have identified any other sources or evidence of the 
measures "precisely".62  
3.20.   The European  Union  notes in its comments on Turkey's request for a preliminary ruling that 
the Panel can only decide on whether  claims are within its terms of reference once those claims have 
been made, such that Turkey's "jurisdictional objection" to any "hypothetical claims" the 
European  Union may or may not make should be rejected.63 The European  Union rejects the notion 
that c ertain terms may not be used in a panel request; rather, the terms of a panel request would 
need to be assessed reading the panel request as a whole in light of attendant circumstances.64  
3.21.   As noted above, the easiest way to identify a "specific measure at issue" would be a reference 
to the name, number, date or place of promulgation of a particular law or regulation.65 Such a level 
of specificity is not required and sometimes may not be possible. Parties often use language similar 
 
57 European  Union 's response to Turkey's request for a preliminary ruling, para.  70 (referring to 
Panel  Report , EC — Selected Customs Matters , para.  7.62).  
58 European  Union 's response to Turkey's req uest for a preliminary ruling, para.  71. 
59 European  Union 's response to Turkey's request for a preliminary ruling, para.  73. 
60 Appellate  Body Reports, US – Anti-Dumping Methodologies (China) , paras.  5.124 -5.125; US – 
Continued Zeroing , para.  179; Argentina  – Import Measures , para.  5.102; US – Supercalendered Paper , fn 64 
to para.  5.17. 
61 Turkey's request for a preliminary ruling, paras.  50-53.   
62 Turkey's request for a preliminary ruling, para.  51. 
63 European  Union 's response to Turkey's request for a prel iminary ruling, para.  75. 
64 European  Union 's response to Turkey's request for a preliminary ruling, para.  76. 
65 Appellate  Body Report, US – Continued Zeroing , para.  168. WT/DS583/12/Add.1  
 
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  to that used by the Europe an Union in its panel request to include unnamed measures within a 
panel's terms of reference. Panels have cautioned that the "mere incantation" of such phrases will 
not permit Members "to bring in measures that were clearly not contemplated in the Panel 
request ".66 At the same time, the use of such terms in a panel request is not necessarily  so vague 
as to exclude  all other instruments from falling within the scope of a panel's mandate. In this respect, 
panels have examined measures not yet in force or con cluded on the date of the panel request, 
measures that the complainants were not yet aware of, such as government procedures not yet 
published that have the same essential effect as the measures that were specifically identified, and 
others.67  
3.22.   At this poi nt in time, the Panel finds Turkey's arguments to be premature. The Panel can only 
determine whether the language is sufficient if and when such measures are actually raised before 
the Panel. The Panel will, of course, make any such determination by readin g the panel request as 
a whole and in light of the attendant circumstances once such measures are actually raised before 
it. The Panel will not make a finding that the European  Union's panel request fails to identify the 
specific measures at issue simply b ecause of the use of this language.  
3.3  Whether the European  Union's panel request provided the legal basis of the complaint 
sufficient to present the problem clearly  
3.23.   In addition to requiring that the specific measures at issue be identified, Article  6.2 of the 
DSU obliges complaining Members to present a brief summary of the legal basis of the complaint 
sufficient to present the problem clearly. Members comply with this obligation by plainly connecting 
the challenged measures with the provisio ns of the covered agreements claimed to have been 
infringed. In this way the responding party is aware of the legal basis for the alleged nullification or 
impairment of the complaining party's benefits and thereby knows the case it has to answer and can 
begin to prepare its defence.68  
3.24.   The "legal basis" of the complaint is commonly understood to mean "the claims".69 A "claim" 
in the WTO context has been described as "a claim that the respondent party has violated, or nullified 
or impaired the benefits arisi ng from, an identified provision of a particular agreement".70 This 
requirement in Article  6.2 may not be satisfied by a "mere listing of the articles  of an agreement 
alleged to have been breached", especially if a particular article contains more than one  obligation.71 
At the same time, complying with the requirement to present the problem clearly does not require 
a complainant to set out its legal case in full in a panel request. Rather, "Article  6.2 demands only a 
summary – and it may be a brief one – of the legal basis of the complaint".72 Moreover, the 
Appellate  Body has repeatedly stated that "Article  6.2 of the DSU requires that the claims, but not 
the arguments, must all be specified sufficiently in the request for the establishment of a panel".73 
This distinction is important. Arguments are contained in the parties' written submissions and in 
their oral presentations during substantive meetings with a panel and, unlike the claims, need not 
be presented in a panel request.  
3.3.1   Article  X:1 of the GATT  1994  
3.25.   Turkey submits that the European  Union's reference to non -publication of "certain elements, 
terms and conditions of general application" in its panel request is too vague and does not explain 
how or why the localisation requirement (or parts of i t) is inconsistent with Article  X:1. Turkey argues 
that because the panel request fails to plainly connect the localisation requirement with Article  X:1,it 
is "impossible" for Turkey to know the case it has to answer and prepare its defence.74 
 
66 Panel  Report , EC – IT Products , para.  7.140.  
67 Panel  Report , EC – IT Products , para.  7.140.  See also Appellate  Body Reports, Chile – Price Band 
System , paras.  139 and 144 ; US – Zeroing (21.5 - Japan) , para.  116. 
68 Appellate  Body Report, US – Oil Country Tubular Goods Sunset Review s, para.  162. 
69 Appellate  Body Report, Guatemala – Cement I , para.  72. 
70 Appellate  Body Report, Korea – Dairy , para.  139. 
71 Appellate  Body Report, Korea – Dairy , para.  123. 
72 Appellate  Body Report, Korea – Dairy , para.  120. 
73 Appellate  Body Report, EC – Bananas III , para.  143. For recent iterations, see Communication from 
the Panel, India – Agricultural Products , para.  3.80; Appellate  Body Report, US – Countervailing Measures 
(China) , para.  4.8. 
74 Turkey's request for a preliminary ruling, para.  60. WT/DS583/12/Add.1  
 
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  3.26.    The Europea n Union recalls that the requirement to present the problem clearly does not 
require a complainant to provide arguments in support of its claims, which are to follow progressively 
in later submissions and panel meetings. It considers that to require a desc ription of the "precise 
and specific manner in which certain elements, terms and conditions of the localization requirement… 
are inconsistent with Article X:1" would amount to requiring arguments in a panel request.75 
3.27.   The Panel recalls that what is suffici ent to "plainly connect" the measure with the provision of 
the covered agreements claimed to have been infringed depends on the circumstances of each case, 
including such factors as the nature of the measure at issue, the manner in which it is described in  
the panel request, and the nature of the provision of the covered agreements alleged to have been 
breached.76  
3.28.   The Panel notes, in particular, the nature of Article  X:1 of the GATT  1994 which requires the 
publication of measures of general application so that traders can become familiar with their contents 
and that the European  Union's claim pertains to the non-publication of certain elements, terms and 
conditions of general application of the localisation requirement measure. Although, the reference 
to "certain elements, terms and conditions of general application" in the European  Union's panel 
request is general, the Panel is cognizant that in the context of a claim of non -publication it can be 
difficult for a complainant to cite a particular instrument o r parts thereof. The Panel recalls that the 
European  Union has described the localisation requirement measure in narrative form in its panel 
request and listed certain published instruments as well. The combination of these two elements in 
the request prov ides adequate notice to Turkey what elements, terms and conditions of general 
application could be covered by the European  Union's allegation that they were not published.  
Moreover, the Panel recalls that in providing the legal basis of the complaint, a pa nel request need 
not set out "arguments"77, i.e. statements made in order "to demonstrate that the responding party's 
measure does indeed infringe upon the identified treaty provision".78 
3.29.   In light of the above, the Panel considers that, although the refere nce to "certain elements, 
terms and conditions of general application" in the panel request is general, it provided adequate 
notice to Turkey regarding the legal basis of the European  Union's claim sufficient to present the 
problem clearly.   
3.3.2   Article  3.1(b ) of the SCM  Agreement  
3.30.   Turkey argues that merely referring to Articles 1.1 and 3.1(b) of the SCM  Agreement is not 
sufficient to present the problem clearly under Article  6.2, given the circumstances of this dispute 
and the nature of the provisions alleged to have been breached.79 In particular, Turkey asserts that 
the panel request does not explain how or why the reimbursement scheme under the "Turkish social 
security system" "involves" the granting of a subsidy, and that it fails to identify the beneficiar ies of 
the subsidy, or what constitutes the subsidy.80 Turkey argues that the panel request should have 
specified the type of financial contribution, from the list provided in Article  1.1, it is alleged to have 
offered. Turkey maintains that without this l evel of specificity it is "left in the dark" as to the measure 
it has to defend.81 
3.31.   The European  Union responds that its panel request refers to and describes the 
reimbursement scheme, localisation requirement and how they interact in sufficient detail. The 
European  Union considers that it is clear from the panel request and understood by  Turkey, that it 
 
75 European  Union 's response to Turkey's request for a preliminary ruling, paras.  87, and 90 -95. See 
also European  Union 's comments on Turkey's comments on European  Union 's response to Turkey's request for 
a preliminary ruling, para.  53. 
76 See Appellate  Body Reports, US – Countervailing Measures (China) , para.  4.9; Korea – Pneumatic 
Valves  (Japan) , para.  5.6. 
77 Appellate  Body Reports, China – HP-SSST (Japan) / China – HP-SSST (EU ), para. 5.14. See also 
Appellate  Body Report, US – Countervailing Measures (China) , para. 4.9. 
78 Appellate  Body Reports, China – HP-SSST (Japan) / China – HP-SSST (EU ), para. 5.14 (quoting 
Appellate  Body Report, Korea – Dairy , para.  139); Korea – Pneumatic Valves  (Japan) , para.  5.6. See also 
Panel  Report s, US – Large Civil Aircraft (2nd complaint) (Article  21.5 – EU), para.  7.318, India – Export Related 
Measures , para.  2.15. 
79 Turkey's request for a preliminary ruling, para.  66 (quoting Appellate  Body Reports, Korea – 
Pneumatic Valves  (Japan) , para.  5.9 and Russia – Railway Equipment , para . 5.28).  
80 Turkey's request for a preliminary ruling, paras.  6. 
81 Turkey's request for a preliminary ruling, para.  66. WT/DS583/12/Add.1  
 
- 23 - 
 
  does not challenge the reimbursement scheme per se , but that the reimbursement scheme confers 
a subsidy that is prohibited by virtue of the localisation requirement. Moreover, as the localisation 
requirement is the "element" that violates Article  3.1(b) of the SCM  Agreement, the European  Union 
submits it would have been "inaccurate and misleading" to identify the reimbursement scheme as a 
distinct measure challenged.82  
3.32.   The Panel first notes that the narrative description of the localisatio n requirement measure 
explains that it requires companies to produce pharmaceuticals locally in Turkey to qualify for 
inclusion in the reimbursement scheme under Turkey's social security system. The description of the 
legal basis for the complaint notes th at the reimbursement scheme includes the granting of a subsidy 
and that the localisation requirement measure would, according to the European  Union, make that 
subsidy contingent upon the use of domestic over imported products. The Panel also recalls that i n 
Annex A to its consultations request, pursuant to Article  4.2 of the SCM  Agreement, the 
European  Union provided a statement of available evidence with respect to the existence and nature 
of the subsidy. That statement lists 17 legal instruments and two b roader categories of other 
evidence, namely (i) a series of seven public announcements informing that certain imported 
medicines would no longer be reimbursed, and (ii) a broader reference to other instruments through 
which Turkey implements and administer s the alleged measures at issue. This list overlaps with 19 
out of the 23 "legal and other instruments" listed in the panel request.83 We note that at least seven 
of these legal instruments refer broadly to the underlying reimbursement scheme (through 
references to "reimbursement policies", "reimbursement system", "reimbursement procedures", 
"reimbursement principles" etc.). We consider this an important "attendant circumstance" in terms 
of whether Turkey was given adequate notice of the subsidy that is rel evant to the European  Union's 
claim.  
3.33.   The Panel is of the view that the European  Union is not required to identify the subsidy as a 
challenged measure if it is not challenging the subsidy per se , but rather one particular element of 
the broader reimbursemen t scheme. The Panel sees nothing in the European  Union's panel request 
to indicate that the European  Union is arguing that the reimbursement scheme writ large  is 
inconsistent with any element of the SCM  Agreement. Rather, its claim is narrowly focused on a lleged 
limits on the eligibility for that subsidy based on whether the product is produced domestically or 
imported. The Panel also recalls that a panel request need not address the arguments and evidence 
in respect of whether a particular covered agreemen t is applicable and whether the measure at issue 
is inconsistent with a provision of that agreement. The Panel, therefore, does not consider that the 
European  Union is required to demonstrate in the panel request how the reimbursement scheme 
falls within t he definition of a subsidy in Article  1.1 of the SCM  Agreement. The Panel finds the 
explanation of the legal basis for the complaint under Article  3.1(b) of the SCM  Agreement presents 
the problem clearly within the meaning of Article  6.2 of the DSU.  
4  CONCL USION  
4.1.  In sum, the Panel finds that:  
a. Turkey's request for a preliminary ruling was not untimely;  
b. the localisation requirement measure, alleged import ban, and prioritization measure were 
identified with sufficient specificity to comply with Article  6.2 of the DSU when reading 
the panel request on its face, as a whole, and in light of the attendant circumstances; 
and 
c. the European  Union provided a brief summary of the legal basis of the complaint sufficient 
to present the problem clearly with r espect to its claims under Article  X:1 of the 
 
82 European  Union 's response to Turkey's request for a preliminary ruling, para.  98. See also 
European  Union 's comments on Turkey's commen ts on European  Union 's response to Turkey's request for a 
preliminary ruling, paras.  57-60. 
83 Compared to the list in Annex A to the consultations request, the panel request refers to four 
additional legal instruments. The panel request specifies that "[f]or greater clarity", each of these instruments 
"puts in place and evidences the measures already identified and included in the request for consultations by 
the Europe an Union  in this dispute and explained below" (European  Union 's panel request, footnotes 18, 19, 
20, and 21).   WT/DS583/12/Add.1  
 
- 24 - 
 
  GATT  1994 and Article  3.1(b) of the SCM  Agreement. Both claims, therefore, are 
properly within the Panel's terms of reference.  
4.2.  The Panel reminds the parties that a conclusion that a measure or claim is within i ts terms of 
reference does not equate to a finding that the European  Union has sufficiently established the 
existence and nature of the measure, the applicability of the relevant provisions of the covered 
agreements, or the inconsistency of Turkey's measur es with those agreements. The Panel agrees 
with the panel in Thailand – H Beams, that a finding that a panel request complies with the 
requirements in Article  6.2 "does not relate directly to the sufficiency" of the parties' subsequent 
written and oral arg uments "nor does it determine whether the complaining party will manage to 
establish a prima facie  case of violation during panel proceedings".84 The Panel will carefully 
scrutinize the arguments and evidence adduced by the parties during the proceedings b efore 
reaching any conclusions on the substance of the matter before it.  
4.3.  Finally, we recall that the standard of Article  6.2 of the DSU is not perfection. A panel request 
will satisfy the requirement in Article  6.2 to identify the specific measures at issu e if such measures 
are discernible from the panel request.85 The European  Union's panel request in this case satisfies 
this standard. At the same time, "[p]arties to disputes must not leave it to panels to divine the 
identity of measures at issue"86 or the  legal basis of their claims. The Panel notes that the drafting 
of consultations and panel requests are entirely within the power of the complaining Member and 
there are no time limits that would require a rushed process.87 Although the Panel finds that th e 
panel request in this case has met the minimum requirements of Article  6.2, procedures such as this 
one can be avoided if complaining Members are more precise in the drafting of their requests. Such 
increased precision would be consistent with the princi ple that Members should participate in dispute 
settlement in good faith and aid in the prompt and orderly resolution of disputes while ensuring the 
protection of all parties' due process rights.  
 
 
 
_______________  
 
 
 
84 Panel  Report , Thailand – H-Beams, para. 7.43. See also  Panel Report, US – Gambling , Annex B, 
para. 39.  
85 Appellate  Body Report, US – Continue d Zeroing , para . 170. 
86 Appellate  Body Report, Ukraine – Ammonium Nitrate (Russia), para. 6.37. 
87 See Panel  Report, China – Publications and Audiovisual Products , para.  7.58.  WT/DS583/ 12/Add.1  
 
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  ANNEX  B 
COMMUNICATIONS REGARDING THE IMPACT OF THE COVID -19 PANDEMIC ON THE PROCEEDINGS  
Contents  Page  
Annex B -1 Panel's communication to the parties regarding the postponement of 
the first substantive meeting and proposed modifications to the Working 
Procedures and timetable, dated 12 August 2020  26 
Annex B -2 Panel's communication transmitting the revised Working Procedures 
and timetable, dated 25 Aug ust 2020  28 
Annex B -3 Panel's communication to the parties regarding the possibility of holding 
the first substantive meeting in virtual format, dated 3 February 2021  30 
Annex B -4 Panel's communication to the parties regarding its decision to conduct 
the first substantive meeting in virtual format, dated 17 February 2021  31 
Annex B -5 Panel's communication to the parties transmitting proposed revisions to 
the Working Procedures and Timetable, and a draft Protocol for 
logistical aspects of the v irtual hearing, dated 25 February 2021  32 
Annex B -6 Panel's communication to the parties transmitting revised Working 
Procedures and Timetable, and Protocol for logistical aspects of the 
virtual hearing, dated 5  March 2021  34 
Annex B -7 Panel's communication to the parties establishing the remaining steps 
in the Timetable, dated 3 May 2021  36 
 
 WT/DS583/ 12/Add.1  
 
- 26 - 
 
  ANNEX  B-1 
COMMUNICATION FROM THE PANEL  
12 August  2020  
 
Dear representatives of the parties,  
 
At the time that it adopted the Working Procedures for this dispute, the Panel indicated that if any 
change to the proceedings were to become necessary because of the COVID -19 pandemic, the Panel 
would amend the Working Procedures following consultation with the parties. In a 10  July 2020 
communication to the parties, the Panel noted that the travel restrictions in place at that time would 
restrict travel to Geneva by s ome participants in the proceedings. The Panel stated that it would 
continue to monitor developments with respect to travel restrictions with a view to confirming or 
consulting further with the parties, by the middle of August, on the timing of the first s ubstantive 
meeting currently scheduled for 22 -24 September 2020. The Panel invited the parties to provide 
their views on how the Panel should proceed if the current restrictions were to remain in place, and 
they did so on 17 July 2020.  
 
As the parties are aware, there has been an upsurge in COVID -19 cases across many countries. 
Entry into Switzerland is still not permitted from most countries outside of the EU/Schengen area. 
Under the current Swiss travel restrictions, two of the three panelists would be pr evented from 
travelling to Geneva, and key members of the parties' delegations may also be impacted. 
Furthermore, travel restrictions taken by countries of departure/return in the light of the upsurge in 
COVID -19 cases could further impact on the participa nts' ability to travel to Switzerland. While the 
situation is fluid, there have been no recent additions to the small list of non -EU/Schengen countries 
exempted from the Swiss travel restrictions. The Secretariat has received no indication that any 
signifi cant change to the Swiss travel restrictions is to be expected in the near future.  
 
Accordingly, the Panel concludes that, based on the information available at this time, it 
will not be possible to hold an in -person first substantive meeting on 22 -24 Sep tember 
2020.  
 
In their letters of 17 July 2020, both parties proposed that if an in -person meeting is impossible in 
September, the first substantive meeting should be postponed to a later date. In this connection, 
Turkey indicated that "[h]earings conduct ed in person and in the presence of all three Panelists, of 
the delegations of both parties to the dispute, and of the Secretariat team, are an invaluable part of 
a WTO dispute settlement process."   
 
At the same time, both parties agreed that the Panel sho uld conduct the proceedings in a manner 
that avoids undue delay. More specifically, the European Union proposed that the Panel should 
amend its Working Procedures to have just one substantive meeting with the parties in person, and 
have the parties file th eir second written submissions prior to that meeting. The meeting could 
possibly be preceded by an exchange of written questions and answers. The European Union 
suggested that the postponed first substantive meeting could be held on the dates for which the  
second substantive meeting with the parties had already been scheduled, i.e. 12 -13 January 2021.  
 
The Panel agrees with the parties that the postponement of an in -person first substantive meeting 
should not delay the conduct of the proceeding. The Panel is also mindful that having an exchange 
of the parties' first and second written submissions prior to the substantive meeting is the well -
established procedure in the context of compliance panel proceedings under Article 21.5 of the DSU. 
In the circumstanc es of this dispute, the Panel sees no legal impediment under the DSU to amending 
its Working Procedures and Timetable to provide for the parties to exchange their first and second 
written submissions prior to the first substantive meeting. At the same time , the Panel does not wish 
to foreclose the possibility of holding a second substantive meeting with the parties and considers 
that the exchange of second written submissions prior to the first substantive meeting should be 
without prejudice to that questio n.  
 
Accordingly, the Panel proposes to modify its Working Procedures to provide that the parties will file 
their second written submissions prior to the rescheduled first substantive meeting (change to WT/DS583/12/Add.1  
 
- 27 - 
 
  para. 3(2) of the Working Procedures), and to provide  that the Panel may hold a second substantive 
meeting with the parties if so requested by either party (see para. 15). The modifications to the 
Working Procedures include a clarification that the third parties would receive the parties' rebuttal 
submission s (see para. 30(e)).  
 
The Panel also proposes to suspend all dates in the current Timetable, and adopt a new partial 
timetable to provide that:  
 
• the European Union shall file its second written submission on Monday, 21 September 2020 ; 
 
• Turkey shall fil e its second written submission on Monday, 16 November 2020 ; 
 
• the first substantive meeting with the parties will be scheduled for 12-13 January 2021 , with 
the third -party session scheduled for the morning of 13 January , on the understanding that 
the Pan el will consult with the parties at the end of November 2020 on the dates and 
modalities for the conduct of the first substantive meeting, and determine at least one month 
prior to the hearing whether, in the light of the circumstances prevailing then, it is possible 
to proceed with an in -person meeting on those dates;  
 
• the Panel will fix the dates for any written questions or answers  prior to the first substantive 
meeting in conjunction with consulting with the parties by the end of November on the dates 
and modalities for the conduct of the first substantive meeting;  
 
• all remaining dates in the timetable, including the dates for any second substantive meeting 
with the parties, are left " To Be Determined " pending further consultation with the parties 
at or following the first substantive meeting.  
 
Revised versions of the Working Procedures and the Timetable, reflecting the suggest ed 
modifications, are attached to this communication.  
 
The Panel requests that the parties provide any comments on these modifications to the 
Working Procedures and Timetable by 5 p.m. on Friday, 14 August 2020, with a view to 
enabling the Panel to finaliz e its amended Working Procedures and Timetable and 
transmit them to the parties and the third parties.  
  
 
Best regards,  
 
 
Gudmundur Helgason  
Chairman of the Panel  
 
 
 
 
 
 
 WT/DS583/ 12/Add.1  
 
- 28 - 
 
  ANNEX B -2 
COMMUNICATION FROM THE PANEL  
25 August  2020  
 
Dear representatives of the parties and third parties,  
 
At the time that it adopted the Working Procedures for this dispute, the Panel indicated that if any 
change to the proceedings were to become necessary because of the COVID -19 pandemic, the Panel 
would amend the Working Procedures following consultation with the parties. In a 10  July 2020 
communication to the parties, the Panel noted  that the travel restrictions in place at that time would 
restrict travel to Geneva by some participants in the proceedings. The Panel stated that it would 
continue to monitor developments with respect to travel restrictions with a view to confirming or 
consulting further with the parties, by the middle of August, on the timing of the first substantive 
meeting currently scheduled for 22 -24 September 2020. The Panel invited the parties to provide 
their views on how the Panel should proceed if the current res trictions were to remain in place, and 
they did so on 17 July 2020.  
 
As the parties and third parties are aware, there has been an upsurge in COVID -19 cases across 
many countries. Entry into Switzerland is still not permitted from most countries outside of  the 
EU/Schengen area. Under the current Swiss travel restrictions, two of the three panelists would be 
prevented from travelling to Geneva, and key members of the parties' delegations may also be 
impacted. Furthermore, travel restrictions taken by countri es of departure/return in the light of the 
upsurge in COVID -19 cases could further impact on the participants' ability to travel to Switzerland. 
While the situation is fluid, there have been no recent additions to the small list of non -EU/Schengen 
countrie s exempted from the Swiss travel restrictions. The Secretariat has received no indication 
that any significant change to the Swiss travel restrictions is to be expected in the near future.  
 
Accordingly, the Panel concludes that, based on the information a vailable at this time, it 
will not be possible to hold an in -person first substantive meeting on 22 -24 September 
2020.  
 
In their letters of 17 July 2020, both parties proposed that if an in -person meeting is impossible in 
September, the first substantive meeting should be postponed to a later date. In this connection, 
Turkey indicated that "[h]earings conducted in person and in the presence of all three Panelists, of 
the delegations of both parties to the dispute, and of the Secretariat team, are an invalu able part of 
a WTO dispute settlement process."   
 
At the same time, both parties agreed that the Panel should conduct the proceedings in a manner 
that avoids undue delay. More specifically, the European Union proposed that the Panel should 
amend its Workin g Procedures to have just one substantive meeting with the parties in person, and 
have the parties file their second written submissions prior to that meeting. The meeting could 
possibly be preceded by an exchange of written questions and answers. The Euro pean Union 
suggested that the postponed first substantive meeting could be held on the dates for which the 
second substantive meeting with the parties had already been scheduled, i.e. 12 -13 January 2021.  
 
The Panel agrees with the parties that the postpon ement of an in -person first substantive meeting 
should not delay the conduct of the proceeding. The Panel is also mindful that having an exchange 
of the parties' first and second written submissions prior to the substantive meeting is the well -
established procedure in the context of compliance panel proceedings under Article 21.5 of the DSU. 
In the circumstances of this dispute, the Panel sees no legal impediment under the DSU to amending 
its Working Procedures and Timetable to provide for the parties to ex change their first and second 
written submissions prior to the first substantive meeting. At the same time, the Panel does not wish 
to foreclose the possibility of holding a second substantive meeting with the parties and considers 
that the exchange of sec ond written submissions prior to the first substantive meeting should be 
without prejudice to that question.  
 
Accordingly, in a communication to the parties on 12 August 2020, the Panel proposed to modify its 
Working Procedures to provide that the parties  will file their second written submissions prior to the WT/DS583/12/Add.1  
 
- 29 - 
 
  rescheduled first substantive meeting (change to para.  3(2) of the Working Procedures), and to 
provide that the Panel may hold a second substantive meeting with the parties if so requested by 
either party (see para. 15). The modifications to the Working Procedures include a clarification that 
the third parties would receive the parties' rebuttal submissions (see para. 30(e)).  
 
The Panel also proposed to suspend all dates in the current Timetable, and adopt a new partial 
timetable setting out the dates for the parties' rebuttal submissions and a provisional date of 
12-13 January 2021 for the first substantive meeting.  
 
In their comments, neither party objected to the proposed procedure. However, the Eur opean Union 
requested that the Panel extend the proposed deadline for filing its second written submission, from 
21 September 2020 to 30 October 2020. In its comments, Turkey indicated that if the proposed 
deadline for the European Union's second written s ubmission were to be extended, then the deadline 
for Turkey's second written submission would also have to be extended accordingly.  
 
The Panel has decided to grant the European Union's request to extend the deadline for its second 
written submission, from 21 September 2020 to 30 October 2020 . The Panel accordingly extends 
the deadline for Turkey's second written submission from 16 November 2020 to 29 January 2021 .  
 
Revised versions of the Working Procedures and the Timetable, reflecting the modifications adopted 
by the Panel on today's date,  are attached to this communication.  
 
 
Best regards,  
 
 
Gudmundur Helgason  
Chairman of the Panel  
 
 WT/DS583/ 12/Add.1  
 
- 30 - 
 
  ANNEX B -3 
COMMUNICATION FROM THE PANEL  
3 February  2021 
 
Dear representatives of the parties,  
 
In a communication to the parties on 10 July 2020 regarding the timing of the first substantive 
meeting, the Panel noted that the travel restrictions in place at that time would restrict travel to 
Geneva by some participants and invited the parties to provide their views on how the Panel should 
proceed if the restrictions were to remain in place. In their letters of 17 July 2020, both parties 
proposed that, if it would be im possible to hold an in -person first substantive meeting as initially 
scheduled on 22 -24 September 2020, the first substantive meeting should be postponed to a later 
date. The parties also agreed that the Panel should conduct the proceedings in a manner tha t avoids 
undue delay.  
 
In a communication to the parties and third parties on 25 August 2020, the Panel confirmed that it 
would not be possible to hold an in -person first substantive meeting on 22 -24 September 2020 
because of the travel restrictions that r emained in place. The Panel agreed with the parties that the 
postponement of an in -person first substantive meeting should not delay the conduct of the 
proceedings. After consultation with the parties, the Panel adopted a new partial Timetable setting 
out the dates for the parties' rebuttal submissions and a provisional window for the timing of the 
first substantive meeting.  
 
The partial Timetable, as revised on 25 August 2020, states that the provisional window for the 
timing of the rescheduled first subs tantive meeting is March/April 2021, "pending further 
developments in terms of the pandemic and ongoing travel restrictions". The revised partial 
Timetable also states that the Panel expects to consult with the parties on the dates/modalities for 
the condu ct of the first substantive meeting after receiving the parties' second written submissions.  
 
As the parties are aware, there has been a recent upsurge in COVID -19 cases across many countries, 
including Switzerland. Entry into Switzerland is currently res tricted and a number of countries 
imposes travel restrictions upon return. In addition, meetings of more than five people, such as an 
in-person substantive meeting of the Panel with the parties and third parties, are currently prohibited 
in Switzerland unt il at least the end of February 2021. The Secretariat has to date received no 
indication of whether or how these restrictions may then be extended or amended.  
 
Based on the information available at this time, the Panel thus considers that it will not be p ossible 
for the participants in these proceedings to plan to hold an in-person  first substantive meeting 
(including the third -party session) within the March/April  2021 provisional window for the timing of 
the rescheduled first substantive meeting.  
 
Accordingly, and in keeping with the parties’ agreement that the Panel should conduct the 
proceedings in a manner that avoids undue delay, the Panel proposes to hold a first substantive 
meeting with the parties (including third party session) in the form o f a virtual meeting. The Panel 
is informed by the Secretariat that virtual meetings have of late been conducted in numerous other 
panel proceedings. The Panel proposes to hold this virtual first substantive meeting during the period 
12-16 April 2021  or, alternatively, 19-23 April 2021 .  
 
The Panel requests that the parties provide any comments they may have on the 
possibility of holding a virtual first substantive meeting and the feasibility of these 
suggested dates, by no later than 5 p.m. on 10 February 2 021.  
 
 
Best regards,  
 
Gudmundur Helgason  
Chairman of the Panel  
 WT/DS583/ 12/Add.1  
 
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  ANNEX B -4 
COMMUNICATION FROM THE PANEL  
17 February  2021 
 
The Panel thanks the parties for their comments on the possibility of holding the first substantive 
meeting in virtual format in April, as suggested by the Panel in its communication of 3  February 
2021.  
 
The Panel has given due regard to Turkey's suggestio n to delay the first substantive meeting until 
June or July, so that it could be conducted in -person. However, the Panel considers that it is highly 
uncertain whether conditions for an in -person meeting in Geneva will prevail by June or July 2021. 
The infe ction rate in Europe remains high and the vaccination process is still at an early stage.  
 
Accordingly, the Panel has decided to proceed by holding a first substantive meeting with the parties 
(including a third -party session) in virtual format, during th e week of 19-23 April 2021 .  
 
As suggested by both parties, the Panel will provide for an exchange of written questions and 
answers in advance of the first substantive meeting.   
 
The Panel will consult with the parties in due course on issues regarding th e organization of the first 
substantive meeting, including logistical issues and the conduct of any question and answer sessions. 
The Panel will endeavour to adopt procedures enabling the effective participation of the parties in 
an interactive exchange, t aking into account the comments already received from the parties.   
 
As indicated in the partial revised timetable adopted by the Panel on 25 August 2020, the Panel will 
consult with the parties on subsequent steps in the timetable, including any second s ubstantive 
meeting, at or following the first substantive meeting.  
 
 
Best regards,  
 
 
Gudmundur Helgason  
Chairman of the Panel  
 
 WT/DS583/ 12/Add.1  
 
- 32 - 
 
  ANNEX B -5 
COMMUNICATION FROM THE PANEL  
25 February  2021 
 
Dear representatives of the parties,  
 
In its 17 February 2021 communication to the parties, the Panel indicated that it would provide for 
an exchange of written questions and answers in advance of the first substantive meeting, and 
consult with the parties in due course on issues regarding the  organization of the first substantive 
meeting, including logistical issues and the conduct of any question and answer sessions.  
 
The Panel recognizes that a virtual hearing imposes limitations on the ability of the parties, as well 
as the Panel itself, t o respond in real -time to any issues requiring internal coordination and 
consultation. This consideration informed the Panel's decision to provide for an exchange of written 
questions and answers in advance of the first meeting, which may be expected to li mit the number 
of oral questions from the Panel at the meeting.  
 
The Panel considers that the effective participation of the parties and other participants in the 
meeting can also be served by:  
• scheduling the meeting spread out over several days, betwee n the hours of 15h00 -18h00 
(Geneva time), to shorten the duration of the daily exchanges and thereby allow the parties 
and third parties sufficient time for internal coordination and consultation outside of those 
hours;  
• making the interactive/Q&A session  primarily an opportunity for the parties to comment on 
the other's opening statement and to comment on the other's written responses to the pre -
meeting written questions from the Panel;  
• ensuring that the parties and third parties have sufficient time to  prepare their written 
responses and also that the responses are received sufficiently in advance of the meeting to 
enable the parties and third parties to provide meaningful comments;  
• ensuring that any oral questions which the Panel or the parties intend to pose are transmitted 
to the parties and third parties, as appropriate, in writing sufficiently well in advance of the 
interactive/Q&A session;  
• scheduling the third -party session to take place in between the delivery of the opening 
statements and the interactive/Q&A session with the parties so as to afford the parties more 
time to prepare comments on one another's oral statements; and  
• allocating to the parties for their closing statements more time (45 minutes) than is typically 
the ca se in a panel meeting, thereby allowing either party to use its closing statement as an 
opportunity to deliver prepared comments on the other party's opening statement, third -
party oral statements, or the other party's oral comments during the interactive/ Q&A 
session.  
The Panel's proposed approach for conducting the first substantive meeting is reflected in the 
attached procedures and timetable which include:  
• Proposed revisions to the Working Procedures to modify the provisions governing the 
conduct of th e first substantive meeting with the parties and the third -party session;  
• Protocol for logistical aspects of the virtual hearing; and  
• Proposed revisions to the partial timetable, including dates for the written exchange prior to 
the meeting, and a pro posed schedule for the sessions during the week of 19 -23 April 2021.  
The Panel trusts that most of the proposed revisions to the Working Procedures, as reflected in track 
changes, are largely self -explanatory. For greater clarity:  WT/DS583/12/Add.1  
 
- 33 - 
 
  • The Panel notes that t here are limitations on the possibility for providing interpretation 
through a virtual meeting platform. Moreover, neither of the parties requested interpretation 
at the organizational phase, and no third party made any request for interpretation after 
receiving the working procedures, as envisaged by paragraphs 14 and 20 of the Working 
Procedures adopted by the Panel. The attached Working Procedures are adjusted 
accordingly.  
• The Panel proposes allocating each party 75 minutes for its opening statement. If either 
party considers that it requires more (or substantially less) time for its opening statement, 
it is invited to so indicate in the context of providing its comments on these proposed 
Working Procedures (rather than at the later date typically prov ided for in paragraph 15(b) 
of the Working Procedures).  
The Protocol for logistical aspects of the virtual hearing is similar to the procedures adopted in other 
panel proceedings. Paragraph 17 makes explicit that the Panel may pause a session at any time,  at 
its own initiative or upon request by a party, to enable any necessary internal coordination and 
consultation within a party's delegation and/or among the panelists.  
 
As regards the proposed timetable:  
• Given the time differences affecting the paneli sts and the representatives of the parties (the 
week of 19 -23 April 2021 will span the nine -hour time difference of GVA – 7 hrs to GVA 
+ 2 hrs), the timetable proposes sessions between the hours of 3 pm – 6 pm (Geneva time).  
• In its 17 February 2021 comm unication, the Panel indicated that at or following the first 
substantive meeting, it would consult with the parties on the steps in the timetable 
subsequent to the first substantive meeting, including any second substantive meeting. The 
proposed revisions  to the partial timetable include proposed dates for the Panel and the 
parties to send written questions following the meeting, and for the parties and third parties 
to provide their written responses (with corresponding dates in the revised Working 
Proced ures). The Panel is proposing such dates at this juncture on the understanding that it 
may assist the parties and third parties with their planning, and that fixing dates for these 
steps would not prejudge whether to hold a second substantive meeting. Howe ver, should 
either party prefer to not include the dates for these steps in the current revision of the 
timetable and Working Procedures at this time, it may so indicate in its comments on the 
attached timetable and Working Procedures and the Panel will le ave them "TBD" until it 
consults with the parties on the timetable at the first substantive meeting.  
As reflected in the attached procedures and timetable, the Panel proposes to send its advance written 
questions to the parties and third parties on 8 Marc h 2021. Accordingly, with a view to finalizing 
arrangements for the conduct of the first substantive meeting and the timetable for the written 
exchange of questions and answers, which are to some extent interlinked, the Panel hereby invites 
the parties to provide, no later than 3 March 2021 , any comments they may have on the Panel's 
proposed approach as reflected in these proposed procedures and timetable.  
 
 
Best regards,  
 
 
Gudmundur Helgason  
Chairman of the Panel  
 
 WT/DS583/ 12/Add.1  
 
- 34 - 
 
  ANNEX B -6 
COMMUNICATION FROM THE PANEL  
5 March  2021 
 
Dear representatives of the parties,  
 
The Panel thanks the parties for their comments on the proposed revisions to the partial Timetable, 
revisions to the Working Procedures, and Protocol for logistical aspects of the virtual meeting. The 
Panel does not consider it necessary to make the changes suggested by the parties for the following 
reasons:  
 
• With re spect to Turkey's request to change the schedule of the daily meeting sessions, 
between 3pm – 6pm (Geneva time) to 2pm – 5pm (Geneva time), Turkey's request appears 
to be premised on the current +2 hour time difference between Geneva and Ankara. 
However, w hile Geneva is currently 2 hours ahead of Ankara, the Secretariat advises that, 
by the week of 19 -23 April, the time difference between Geneva and Ankara will only be 
+1 hour. If this is correct, then it is not necessary to make any change to the proposed 
meeting hours in order to accommodate Turkey's concern. The Panel notes that the meeting 
hours being between 3pm – 6pm are in any event an indicative time, and the actual duration 
of each daily session will be a function of the length of the parties' openi ng statements 
(Tuesday), the number of third party statements (Wednesday), the length of the parties' 
comments/responses to questions (Thursday), and the length of their closing statements 
(Friday).  
 
• With respect to Turkey's request to provide for the p ossibility for interpretation, the Panel 
notes that the relevant provision of the Working Procedures is only directed to situations 
involving the simultaneous interpretation offered by the WTO Secretariat into one or more 
of the other official WTO language s. As there has been no request for interpretation into 
French or Spanish in this case, the relevant sentence in paragraph 15(a) can be deleted (it 
concerns providing paper copies of opening statements to WTO interpreters to facilitate live 
interpretation,  into one or both of the other official WTO languages, for other parties or third 
parties participating in the session). The Panel notes that the Secretariat does not provide 
interpretation of a panel meeting into any language that is not one of the three official WTO 
languages. Insofar as Turkey wishes for its delegation to include its own interpreter, so that 
it can conduct simultaneous interpretation for certain members of its delegation, it is free to 
do so. The Secretariat will liaise with Turkey on an y associated technical limitations with 
Webex in the context of assisting the parties on technical and logistical aspects of the virtual 
meeting.  
 
• Paragraph 15(e) of the revised Working Procedures provides that "The parties and the Panel 
shall transmit any questions they expect to pose orally by no later than 16 April 2021. If the 
parties' opening statements raise any additional issues that the Panel wishes to address 
through oral questions, the Panel will transmit those questions in writing sufficiently  well in 
advance of the interactive/Q&A session with the parties." As indicated in the Communication 
to the parties of 25 February 2021, the Working Procedures have the objective of "ensuring 
that any oral questions which the Panel or the parties intend to  pose are transmitted to the 
parties and third parties, as appropriate, in writing sufficiently well in advance of the 
interactive/Q&A session" – which, as the Panel recalls, is scheduled for Thursday, 
22 April 2021.  
 
o In its comments, Turkey requests th at the oral questions be sent no later than 
Wednesday, 14 April 2021, otherwise it "leaves the parties with little time to 
prepare" because the meeting itself starts on Monday, 19 April 2021. The Panel does 
not agree that sending questions that the Panel e xpects to pose orally six days in 
advance of the interactive/Q&A session, scheduled for Thursday, 22 April 2021, 
leaves little time for the parties to prepare, especially taking into account that the 
Panel only expects to meet with the parties for up to on e hour on Monday, and for 
sessions that should not last more than 3 hours each on the Tuesday and WT/DS583/12/Add.1  
 
- 35 - 
 
  Wednesday. Furthermore, as already indicated in the Panel's Communication of 
25 February 2021, its "decision to provide for an exchange of written questions a nd 
answers in advance of the first meeting … may be expected to limit the number of 
oral questions from the Panel at the meeting."  
 
o In its comments, the European Union stresses that the working procedures "should 
not preclude either the Panel or the part ies from asking questions that were not sent 
out in advance". Bearing in mind the virtual nature of the meeting and any ensuing 
physical constraints on internal coordination and consultation within each party's 
delegation, the Panel considers it appropriat e to transmit questions to the parties in 
advance of the interactive Q&A session with the parties. Further, as drafted, the 
revised Working Procedures allow the parties to comment on one another's opening 
statements, including any issues that were not cove red by any questions sent out in 
advance. Thus, the Panel does not see the need to add the words "endeavour to" in 
the places suggested by the European Union. For the same reasons, the Panel does 
not consider that the reference to "follow -up" questions in paragraph 9 unduly 
circumscribes the Panel's discretion in the manner that might be implied by the 
European Union's suggested drafting change.  
 
However, to avoid any misunderstanding, the Panel has made a small revision to fully align the 
wording of item 18 of the partial Timetable to paragraph 15(e) of the Working Procedures, so that 
item 18, regarding questions sent by Friday, 16 April, indicates: "Panel and parties to transmit any 
questions that will be posed orally during the first substantive meeting (including third -party 
session)". The Panel has also made a small revision of item 17 of the partial Timetable, setting the 
deadline for the third parties' written responses to the Panel's written questions to 29 March 2021, 
in alignment with the deadline for the parties' written responses to the Panel's written questions.  
 
Turkey points out that the Protocol for logistical aspects of the virtual hearing indicates 5 April 
instead of 6 April (the date indicated in the revised Working Procedures) as the dead line for the 
parties and third parties to transmit their delegation lists and for any third party to indicate whether 
it intends to make an oral statement at the meeting. The correct date is 6 April, and the necessary 
change has been made to the Protocol.  
 
The revised partial Timetable and revised Working Procedures, as well as the Protocol, are hereby 
adopted.  
 
As indicated in the partial Timetable, the Panel will transmit its advance written questions to the 
parties and third parties on Monday, 8 March 2021.  
 
A separate communication will be sent to the third parties.  
 
 
Best regards,  
 
 
Gudmundur Helgason  
Chairman of the Panel  
 
 
 
 
 WT/DS583/ 12/Add.1  
 
- 36 - 
 
  ANNEX B -7 
COMMUNICATION FROM THE PANEL  
3 May  2021 
 
The Panel recalls that it adopted the most recent version of its revised partial Timetable on 5 March 
2021. This partial Timetable provided that the Panel would send a second set of wri tten questions 
following the first substantive meeting scheduled for 20 -23 April 2021 and set the deadline of 28 
May 2021 for the parties' written responses to these questions. This partial Timetable left all 
remaining steps, including the date of any seco nd meeting, to be determined following further 
consultation with the parties.  
 
The Panel recalls that Paragraph 15 of its Working Procedures provides that it "shall hold at least 
one substantive meeting with the parties. Upon request by either party, the Panel may hold a second 
substantive meeting with the parties." At the substantive meeting held in April, the Panel invited the 
parties to present their views on the necessity of holding a second substantive meeting, on the 
timing of such a meeting, on the format of such a meeting (i.e. in -person or virtual again), and on 
any alternatives to holding a second meeting.  
 
At the meeting, the European Union argued that a second substantive meeting is not a legal 
requirement under the DSU, is unnecessary in the c ircumstances of this case, and would cause 
undue delay. In the European Union's view, it would suffice for the Panel to provide the parties with 
an opportunity to submit written comments on one another's responses to the second set of 
questions. Turkey rec ognized that there is no legal requirement to hold a second meeting, but argued 
that the Panel should follow the usual practice and do so because of the inherent limitations of the 
substantive meeting being held in virtual format, and because of the fact -intensive nature of the 
case. In Turkey's view, such a meeting could be a one -day meeting and be held in virtual format.  
 
Having considered the views of the parties, the Panel considers that an additional substantive 
meeting is not warranted.  
 
If the purpo se of an additional substantive meeting were simply to afford the parties an opportunity 
to deliver oral statements that comment on one another's written responses to the second set of 
questions, then the same result can be achieved simply by inviting the parties to provide such 
comments in writing. To be justified, an additional substantive meeting at this stage of the 
proceedings would necessitate the submission, either prior to or following the meeting, of either 
additional written submissions from the p arties, or responses to a third set of questions from the 
Panel, or both.  
 
The parties' first and second written submissions already present the parties' detailed arguments on 
the factual and legal issues in dispute, and the Panel is not persuaded that th ere is any special 
circumstance in this case that would justify the extraordinary step of inviting the parties to make a 
third written submission. The Panel considers that a third set of written questions from the Panel to 
the parties would also be unwarra nted, taking into account that the Panel has endeavoured to be 
comprehensive in the two sets of written questions already sent to the parties. Accordingly, the 
Panel considers that any further submissions required to justify holding an additional substanti ve 
meeting at this stage of the proceedings would result in undue delay.  
 
The Panel may elaborate on the reasons for its decision in the Report.  
 
Instead of holding an additional substantive meeting, the Panel invites the parties to provide written 
comments on one another's responses to the second set of questions by 18 June 2021. While the 
original Timetable adopted by the Panel in April 2020 provided that the parties would have two 
weeks to provide written comments on one another's responses to the  second set of questions, the 
Panel is of the view that a longer period of three weeks is more appropriate in the current 
circumstances. The Panel considers that this additional time will ensure that the due process rights 
of the parties are respected, tak ing into account the views presented by both parties at the 
substantive meeting.  
 WT/DS583/12/Add.1  
 
- 37 - 
 
  The Panel will accord the parties the same amount of time for each of the remaining steps in the 
revised final Timetable as in the original Timetable, adopted by the Panel in  April 2020, as regards: 
(i) the submission of the integrated executive summaries of the parties (ii) the parties' comments 
on the draft descriptive part of the Report (iii) the parties' comments on the Interim Report (iv) the 
parties' comments on one anot her's comments on the Interim Report.  
 
Given that these time periods were set in the original Timetable following consultation with the 
parties, and the Panel is not altering any of them, the Panel does not consider it necessary to invite 
the parties to pr ovide further comments on the revised final Timetable.  
 
Accordingly, the attached revised final Timetable is hereby adopted.  
 
 
Best regards,  
 
 
Gudmundur Helgason  
Chairman of the Panel  
 
 
 
_______________  
 
 WT/DS583/ 12/Add.1  
 
- 38 - 
 
  ANNEX  C 
ARGUMENTS OF THE PARTIES  
Contents  Page  
Annex  C-1 Integrated executive summary of the arguments of the European Union  39 
Annex  C-2 Integrated executive summary of the arguments of Turkey  54 
 
 
 WT/DS583/ 12/Add.1  
 
- 39 - 
 
  ANNEX  C-1 
INTEGRATED EXECUTIVE SUMMARY OF THE ARGUMENTS OF THE EUROPEAN UNION  
1. INTRODUCTION  
 
1. Turkish authorities have adopted plans to achieve progressively the localisation in Turkey of 
the production of a substantial part of the pharmaceutical products consumed in Turkey. In order to 
achieve th at objective, Turkey requires foreign producers to commit to localise in Turkey their 
production of certain pharmaceutical products. If such commitments are not given, are not accepted 
by Turkish authorities, or are not fulfilled, the pharmaceutical produc ts concerned are excluded from 
the scheme for the reimbursement of the pharmaceutical products sold by pharmacies to patients 
operated by Turkey 's social security system (the "reimbursement system ").  
 
2. The above described localisation requirement (the "Localisation Requirement "), is designed to 
apply on an ongoing basis, or at least until the localisation objectives established by the Turkish 
government are achieved. The Localisation Requirement is periodically adapted, modified, updated 
or extended with  respect to, inter alia , the products it applies to and/or the extent of localisation 
sought.  
 
3. The specific commitments to be implemented in order to comply with the Localisation 
Requirement are established for each foreign producer in a non -transparent  manner and may differ 
from producer to producer.  
 
2. THE LOCALISATION REQUIREMENT  
 
2.1. FACTUAL BACKGROUND  
 
4. Turkey 's Universal Health Insurance (Genel Sağlık Sigortası) system provides all insured and 
uninsured individuals in Turkey "with a comprehensive, fair and equitable access to healthcare 
services, regardless of their economic status." The large majority of the population is covered by 
universal health insurance. The system is mainly funded by social security premiums based on 
employer and employee contributions, and any deficit is covered from public funds.  
 
5. The major actor in the Universal Health Insurance system is the Social Security Institution 
("SSI"), affiliated to the Ministry of Labour and Social Security. The SSI administers  the Universal 
Health Insurance system. Its duties are, among others, to implement the social security policies by 
taking into consideration the national development strategies and policies. The SSI is responsible 
for reimbursing all healthcare goods and s ervices covered by that system, including pharmaceutical 
products. Thus, it provides the major part of the funding for healthcare in Turkey.  
 
6. The Turkish Medicines and Medical Devices Agency ( "TMMDA "), an institution affiliated to the 
Ministry of Health, is the Turkish regulatory authority on human medicinal products, medical devices 
and cosmetics. It is responsible for the regulation, evaluation and monitoring of these products.  
 
7. The distribution of pharmaceutical products in Turkey is organis ed differently in the in -patient 
sector (patients treated in hospitals) and the out -patient sector (ambulatory care including patients 
purchasing medicines from private pharmacies).  
 
8. The distribution of pharmaceuticals in the in -patient sector is based on the principle that 
persons registered with the SSI can receive medical treatment free of charge in hospitals contracted 
to the SSI. In the in -patient sector, the only major source of funding is the SSI. Pharmaceutical 
products are distributed to in -patients by hospital pharmacies. These pharmacies can be public or 
private, but they are always parts of hospitals, and not separate entities. They only serve in -patients 
and cannot sell medicines to out -patients or to the public. There are no co -payments for in-patient 
pharmaceuticals. Any prescriptions for in -patient use are specifically marked as "in-patient ", unlike 
those for out -patients.  
 WT/DS583/12/Add.1  
 
- 40 - 
 
  9. Hospitals can purchase pharmaceuticals either from wholesalers or directly from producers. 
However, they are requir ed to purchase pharmaceuticals through a tendering process.  
10. Pharmaceutical products are distributed to out -patients by pharmacies, which are private 
entities. Pharmacies purchase pharmaceuticals from warehouses, which are supplied by 
pharmaceutical com panies. Pharmaceutical products are delivered on the basis of reimbursement of 
costs. Pharmaceuticals are not purchased by hospitals, or by Turkish government agencies, but by 
patients or consumers, from private pharmacies. In the out -patient sector, the t wo major sources 
of funding for pharmaceutical products are the SSI and out of -pocket payments. Patients purchase 
their prescription pharmaceuticals from private pharmacies. The SSI reimburses the pharmacies 
based on the invoices submitted by the pharmacie s. Unlike in -patient pharmaceuticals which are 
fully reimbursed, there are co -payments or contributions for out -patient pharmaceuticals. In the 
majority of cases, these include a payment of 10% or 20%, for pensioners and employed persons 
respectively, as w ell as an additional fixed amount per pack. These contributions are collected by 
pharmacies.  
 
11. The reimbursement of the costs of pharmaceuticals purchased by persons covered by the 
universal health care system is governed by the Protocol on the procure ment of medicines from 
pharmacies concluded between the Turkish Pharmacists ' Association (TEB) and the SSI. Pharmacies 
covered by the reimbursement system periodically send the invoices for all their sales of 
pharmaceutical products to out -patients to the SSI, which reviews them and, assuming that it 
accepts them, reimburses the balance of the invoices within a certain period.  
 
12. In the out -patient sector, the pharmaceuticals that could benefit from reimbursement are 
determined by the Drug Reimbursement C ommittee (DRC) and the Alternative Drug Reimbursement 
Committee (ARC), which are both affiliated to the SSI.  
 
13. The reimbursement system is based on a positive list of goods and services (Reimbursement 
List). Pharmaceutical products are included into the  Reimbursement List on the basis of applications 
by pharmaceutical companies. In order to be reimbursed, products must be not only included, but 
also listed as "active ". After a product has been included in the Reimbursement List, it can either be 
excluded  entirely ( "delisted "), or kept on the list but "deactivated " (or, variously, made "passive ", 
"passivated " or "passivized "). While neither delisted nor deactivated products are reimbursed, the 
consequences of delisting and deactivation differ. Deactivated products can be reactivated relatively 
easily, for example upon submission of the distribution certificate to the SSI subject to certain 
conditions or upon request. On the other hand, relisting a delisted products  is more difficult and 
requires an applicat ion. 
 
2.2. THE LOCALISATION REQUIREMENT  
 
14. On 2 July 2013, the Turkish Parliament approved the Government 's Tenth Development Plan 
for 2014 -2018.  
 
15. With respect to healthcare in particular, the Plan includes a "Healthcare Industries Structural 
Transfo rmation Program " which aims to relieve the pressure on social security spending and Turkey 's 
current account deficit created by the increased demand for pharmaceuticals and medical devices. 
The Program also aims to ensure that Turkish production could meet  a higher proportion of domestic 
demand of pharmaceuticals and medical devices, especially for high -value added products. The 
Program sets the target of meeting 60 percent of domestic pharmaceutical demand by value through 
domestic production. Among the pe rformance indicators to assess compliance with that target is the 
"ratio of exports to imports in pharmaceuticals.  
 
16. This localisation objective has been confirmed and further refined in various legal instruments 
or statements by or on behalf of the Tur kish government, such as the Structural Transformation 
Program for Healthcare Industries Action Plan of 7 November 2014, the "2016 Action Plan of the 
64th Government " of 10 December 2015 or the 11th Development Plan for the period 2019 -2023.  
 
17. Between 7 and 9 December 2017, representatives of the TMMDA gave a presentation in which 
they explained that, in order to meet the objectives of the 10th Development Plan and the 64th 
Governmental Action Plan (addressing pressure on social security expenditure and the trade deficit 
by meeting 60% of the need for medicines through domestic production), it is necessary to rely on 
localisation.  
 WT/DS583/12/Add.1  
 
- 41 - 
 
  18. Despite t he diversity of instruments used, and despite the fact that much of the detailed 
implementation of the Localisation Requirement takes place in bilateral communications between 
Turkish authorities and individual pharmaceutical companies, there is no doubt t hat all of these steps 
are taken within the framework of a single Localisation Requirement, in order to achieve the 
objectives described above. Indeed, many of the relevant legal instruments and documents 
expressly refer, for example, to the Tenth Developm ent Plan or to the Action Plan of the 64th 
Government. Turkish authorities have repeatedly emphasized that the Localisation Requirement is 
a single, cohesive measure, and that individual steps such as the announcements on the removal of 
certain products fr om the Reimbursement List are taken within the framework of that measure.  
 
19. The localisation policy has been designed and implemented in five phases, depending on (a) 
the existing market share of domestic producers; (b) the number of locally produced ge neric 
products and local producers in the equivalent group; (c) the existence of an equivalent group. Each 
phase progressively targets products with less existing domestic production, and more sophisticated 
products. Thus, these so -called "phases " are not temporal in nature, but refer essentially to product 
categories. The implementation of the phases is a dynamic process. Multiple phases have been put 
in practice in parallel, and products have been shifted between different phases. Thus, all of them 
should  be understood as ongoing.  
 
20. The first phase  covers imported products for which the overall market share of domestic 
manufacturing in the equivalent group is between 50% and 100% and for which three or more local 
generic products, produced by three or m ore producers, exist.  
 
21. The second phase  covers imported products for which the overall market share of domestic 
manufacturing in the equivalent group is more than 10%, and for which two or more local generic 
products, produced by two or more producers,  exist.  
 
22. The third phase  covers imported products for which the overall market share of domestic 
manufacturing in the equivalent group is less than 10%, or for which there is only one local producer 
in the equivalent group.  
 
23. The fourth phase  covers  imported products for which there is an equivalent group, but in 
which there is no domestic production.  
 
24. Finally, the fifth phase  covers imported products for which there is no equivalent group or 
domestic production, and would cover patented products . 
 
25. The conditions on the basis of which a product may fall within one of these phases can change 
over time.  
 
26. While the localisation measure has foreseen all five phases from the outset (and continues to 
do so), the summary set out above indicates t hat not all of them have been put in practice yet. The 
evidence shows that, so far, products have been deactivated within the framework of the first and 
second phase.  
 
27. When the Localisation Requirement is applied to certain products, under any of the p hases, 
companies may typically be informed that the covered products would be delisted or deactivated 
from the Reimbursement List unless companies offer commitments. In particular, the Turkish 
authorities have periodically published "announcements on the l ocalisation process ", which state 
that certain products in the annexed list ( "Annex -4/A") would be deactivated from the 
Reimbursement List within a certain period, unless companies commit to localise the production of 
pharmaceuticals in Turkey. In other, i ndividual communications addressed to one or more 
companies, companies are inter alia  informed that their products are to be included in the localisation 
process, invited to make commitments, notified of the authorities ' decision to accept the 
commitments,  refuse them, delist or deactivate their products (as the case may be), and instructed 
on the various steps to be followed (including follow up, possible updates or alternative 
commitments, variation applications etc.).  
 
28. Evidence, such as announcements  and communications shows that the Localisation 
Requirement has been implemented. Turkish authorities informed companies of a number of 
products included in the Localisation Requirement. Moreover, a number of pharmaceutical products WT/DS583/12/Add.1  
 
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  covered by the first an d second phases, for which no commitments were given or the commitments 
were not accepted, have been deactivated as of 8 February 2018 and 31 July 2018.  
 
29. Much of the communication related to the implementation of the Localisation Requirement 
takes pla ce bilaterally between Turkish authorities and the companies concerned. TMMDA has invited 
companies to meetings in order to discuss the "evaluation " of products, requested companies to 
submit localisation commitments, provided instructions on the process, notified companies of the 
outcome of the assessment and of the next steps or required companies with accepted localisation 
commitments to submit progress reports at regular intervals. At times, Turkish authorities have 
made it clear to companies that their  products will be deactivated.  
 
2.3. THE LOCALISATION REQUIREMENT IS INCONSISTENT WITH ARTICLE III:4  OF THE GATT  1994  
 
30. The European Union explained first, that the domestic and imported pharmaceutical products 
at issue are like and, second, that the Localisation Requirement is a law, regulation, or requirement 
affecting the internal sale, offering for sale, purchase, transportation, distribution, or use of products.  
 
31. The Localisation Requirement accords less favourable treatment in violation of Ar ticle III:4 of 
the GATT 1994. It expressly reserves a major advantage – reimbursement, which covers 
approximately 90% of the entire Turkish pharmaceuticals market – to domestic like products to the 
exclusion of imported like products. While imported produc ts caught by the Localisation Requirement 
can still be imported and sold, their exclusion from reimbursement creates a clear disincentive on 
their sales in Turkey. Consumers are unlikely to choose a non -reimbursed product over a like 
reimbursed product. Th is modifies the conditions of competition between domestic and imported like 
products in a way that is highly detrimental to imports. It takes away the ability of imported products 
to compete on the basis of an "effective equality of opportunities ". 
 
2.4. TURKEY HAS FAILED TO SHOW THAT ARTICLE III:8( A) OF THE GATT  1994  APPLIES TO THE 
LOCALISATION REQUIREMENT  
 
32. The jurisprudence held that WTO respondents invoking provisions which, like Article III:8(a), 
set out measures to which a more general provis ion "does not apply ", bear the burden of proof.  
 
2.4.1.  The Localisation Requirement is not a "law, regulation or requirement 
governing procurement " 
 
33. The European Union considers that this condition for the application of Article III:8(a) is not 
fulfilled because no procurement is involved, which means that Turkey 's measures (neither the 
reimbursement scheme for out -patient pharmaceuticals, nor the Localisation Requirement itself) do 
not constitute a process pursuant to which Turkey acquires products, a nd do not "govern " 
procurement.  
 
34. It is impossible for a measure to "govern " procurement if no procurement is involved. There 
can be no procurement where there is no "acquisition " of products, i.e. where the government does 
not obtain any products. Furt hermore, as is clear from the jurisprudence, Article III:8(a) does not 
apply unless the measure governs "the process pursuant to which a government acquires products ". 
The Appellate Body has tied the concept of "procurement " to the concept of "acquisition " or 
"obtainment " of products.  
 
35. The European Union rejects Turkey 's argument that the SSI acquires the medicines because 
it pays for their cost, and is therefore the "ultimate buyer " of those products, the pharmacies being 
just an "agent for the SSI " and the "distribution network of the SSI ". 
 
36. First, this interpretation would expand the scope of Article III:8(a) far beyond what was 
intended by the drafters. Article III:8(a) is a government procurement exception, not a government 
financing exception. Second, the act of payment does not on its own constitute an "acquisition ", 
much less a "purchase " of anything, generally or even in Turkish law. Third, the fact that Turkey 's 
Public Procurement Law exempts the SSI from tendering procedures which apply to government 
procurement also tends to suggest that no procurement is involved, and certainly that no "process 
pursuant to which the government acquires products " is involved. Fourth, the Protocol concluded 
between pharmacists and the SSI similarly does not support Turkey 's position. To the extent the 
Protocol discusses "procurement ", it concerns procurement by patients, i.e. the persons acquiring WT/DS583/12/Add.1  
 
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  or obtaining the medicines from  pharmacies. Fifth, the SSI does not procure, purchase, obtain or 
acquire anything under the reimbursement scheme for out -patient pharmaceuticals, the Localisation 
Requirement itself (which is, as Turkey points out, the measure challenged by the EU) is not  a law, 
regulation or requirement that governs procurement.  
 
2.4.2.  Turkey has failed to show that the Localisation Requirement entails the 
purchase of products by governmental agencies   
 
37. The Appellate Body has explained that the word "purchased " in Article III:8(a) refers to "the 
type of transaction used to put into effect " the procurement that is at issue. The term "procurement ", 
as interpreted by the Appellate Body, already contains the concept of "obtaining " products. Since 
the "purchase " requireme nt is additional, it must mean something more. Therefore, simply put, if 
there is no acquisition of property, there is no "purchase " and Article III:8(a) does not apply.  
 
38. The EU considers that in the context of the reimbursement system and the Localisa tion 
Requirement, the SSI engages in neither procurement nor the purchase of any products.  
 
39. The "purchase " requirement is additional to the "procurement " requirement, and, with respect 
to out -patients, no Turkish governmental agency ever acquires pharmaceutical products, whether 
through purchase or otherwise. R etail pharmacies cannot be regarded as agents of the SSI, even 
when one looks at their relationsh ip with patients purchasing prescription medicines.  
 
40. The "approval " in the Medula system, which takes place at the time of the transaction between 
the pharmacy and the out -patient, is merely to confirm that the out -patient is under SSI coverage 
and tha t the medicines contained in the prescription are within the Reimbursement List. It does not, 
however, guarantee that the SSI will reimburse the price of that product. The risk of non -
reimbursement by the SSI, even where a transaction is approved in Medula , is significant and is 
borne by the pharmacies. This risk is not compatible with the pharmacies acting as agents of the 
SSI in the provision of medicines by the SSI to the population. A significant number of retail 
pharmacies in Turkey are not in any rela tionship with the SSI. Moreover, it is the retail pharmacies 
that place orders for medicines with wholesale pharmacies in the desired quantities. Upon delivery, 
it is of course the retail pharmacy that holds the title to the medicines, and does so until th ey are 
sold to an outpatient (which could in turn be covered by the SSI, a private insurer, or not at all, 
something that the pharmacy does not know until the moment of provision). Retail pharmacies also 
do not know how long it will take them to sell the p roducts. Thus, they bear the risk that the 
medicines ' expiry date will pass before they are sold, in which case they can no longer sell them or 
be reimbursed for them, and have to dispose of them.  
 
2.4.3.  The Localisation Requirement does not involve any p rocurement or purchase 
"for governmental purposes " 
 
41. Even if it could be said that the Turkish government engages in procurement and purchases 
pharmaceutical products, this would not be for "governmental purposes ", because the products are 
not purchased for the use of government, to be consumed by government, or to be provided by 
government to recipients in the discharge of public functions.  
 
42. Turkey disagrees and explains, at length, the reasons why healthcare is an important 
governmental ob jective. However, while reimbursing medicines is obviously linked to the protection 
of human health, the Localisation Requirement is not.  
 
43. The relevant question under this part of the Article III:8(a) test is not simply whether the 
measure is linked to  a governmental objective. It must also be shown that products are "purchased 
for the use of government, consumed by government, or provided by government to recipients in 
the discharge of its public functions".  Retail pharmacies cannot be regarded as agen ts of the SSI. 
However one characterises the different payments involved, it is clear that no Turkish governmental 
agency provides  the pharmaceutical products to anyone – pharmacies do. Even if it was somehow 
considered that the government procures and pur chases those products, consumers use them, and 
not the government.  
 
2.4.4.  Even if procurement and purchase by governmental agencies for governmental 
purposes was involved, it would be "with a view to commercial resale " 
 WT/DS583/12/Add.1  
 
- 44 - 
 
  44. If the Panel were to reach this  stage of the analysis, it would have accepted, before reaching 
that question, that the Localisation Requirement governs the procurement and purchase of 
pharmaceutical products by governmental agencies for governmental purposes. This would mean 
that the go vernment procures and purchases pharmaceutical products when it reimburses a part of 
their cost to the pharmacies which ultimately sell them to consumers. Accepting this logic would 
mean also accepting that the procurement and purchase are undertaken with a view to commercial 
resale.  
 
2.4.5.  If the reimbursement system were covered by Article III:8(a), the Localisation 
Requirement would still be inconsistent with Article III:4 of the GATT 1994  
 
45. A Member that can avail itself of Article III:8(a), is not free to discriminate in any way, as long 
as there is some connection to the products being procured and purchased.  
 
46. Article III:8(a) must be read narrowly, as permitting only measures that discriminate on the 
basis of the origin of the products being p urchased and procured. It does not permit, for example, 
measures that discriminate on the basis of the origin of some other products (for example, inputs 
into the products being purchased and procured), as has already been recognized in Canada – 
Renewable Energy  and India – Solar Cells . Nor does it permit measures that discriminate on the 
basis of whether certain investment or production commitments pertaining to the product being 
(allegedly) purchased have been considered acceptable by Turkish authorities.  
 
47. Thus, it would be entirely coherent to say that the Localisation Requirement, which requires 
the localisation of production in general, accords less favourable treatment under Article III:4 of the 
GATT 1994, even if the reimbursement system was found  to be covered by Article III:8(a) because 
it governs the purchase and procurement of pharmaceutical products by Turkey.  
 
2.5. THE LOCALISATION REQUIREMENT IS INCONSISTENT WITH ARTICLE X:1 OF THE GATT  1994  
 
48. The Localisation Requirement is imposed through a number of legal instruments resulting from 
governmental action, and setting out rules with which compliance is necessary to obtain an 
advantage from a government. These various legal instruments, including presentations and private 
communications, fall under the category of either "law", "regulation " or "administrative rulings ". At 
the same time, given the fact that the Localisation Requirement is to a significant extent "embodied " 
through "specific laws or decrees " or "formal legal instruments ", it should, as a whole, also be 
described as a "law or regulation ".   
 
49. The Localisation Requirement is a measure of general application. First, as to its subject 
matter, it is a measure directed to imports of the covered pharmaceutical products in Turkey 
generally. Second, although the detailed implementation of the Localisat ion Requirement takes place 
in bilateral communications between Turkish authorities and individual pharmaceutical companies, 
all of these steps are taken within the framework of a single Localisation Requirement. The 
presentations and private communication s are also "of general application " as they convey rules 
affecting an unidentified number of economic operators not limited to those specific companies.  
 
50. The Localisation Requirement as a single and cohesive measure has been "made effective ". 
There is no doubt that this measure has been brought into effect by Turkish authorities, both 
generally and through application in individual cases.  
 
51. The Localisation Requirement pertains to "requirements on imports, or affecting the sale of 
imports ". Since the  measure at issue is a localisation requirement on the covered imports, as a 
condition for them to benefit from reimbursement, it directly affects the internal sale of 
pharmaceutical products.  
 
52. A number of key elements of the Localisation Requirement were not published promptly in 
such a manner as to enable governments and traders to become acquainted with them.  
 
53. Overall, only the instruments containing the broad outlines of the Localisation Requirement 
have been appropriately and promptly publishe d: the Tenth Development Plan, the Structural 
Transformation Program for Healthcare Industries Action Plan of 7 November 2014, and the 2016 
Action Plan of the 64th Government, the 2015 HISC Circular.  
 WT/DS583/12/Add.1  
 
- 45 - 
 
  54. Its substantive content has, for the most part, bee n put in place in an entirely non -transparent 
manner, through a series of announcements, presentations and communications, none of which 
have been adequately and promptly published. Specifically, certain terms and conditions of the 
Localization Requirement  that are also its key elements have not been adequately published: the 
process and various steps that must be taken as part of localisation; the phases of localisation, and 
the product categories to which those phases relate; the requirements about commit ments and 
alternative localisation commitments; criteria for accepting or refusing commitments; the criteria, 
phases and deadlines for delisting or deactivate their products; instructions on the various steps to 
be followed (including follow up, possible u pdates or alternative commitments, variation 
applications); instructions for submitting progress reports.  
 
55. Although the Turkish authorities published the various announcements on localisation, they 
did not elaborate on the details of the localisation policy of pharmaceuticals. Moreover, even those 
announcements were not published in an adequate way, but were simply placed on the websites of 
Turkish government authorities.  Also, the HSPC Decision was made accessible only to companies 
making products inc luded in the first two phases of the localisation measure but not "generally made 
available " to governments and traders.  
 
2.6. THE LOCALISATION REQUIREMENT IS NOT JUSTIFIED UNDER ARTICLE XX( B) OF THE GATT  1994  
 
2.6.1.  The Localisation Requirement is not de signed to achieve the public health 
objective alleged by Turkey  
 
56. The Localisation Requirement is not designed to achieve the public health objective alleged by 
Turkey. Rather, it has been designed to promote the economic development and industrial poli cy 
objectives pursued by Turkey in the pharmaceutical sector. Those objectives are reflected in various 
policy documents of the Turkish Government. Those documents evidence a preoccupation with the 
large size of Turkey 's trade deficit in the pharmaceutical  sector, together with a desire to promote 
the domestic production of higher value -added pharmaceutical products with a view to becoming 
competitive in global markets, thereby contributing to the development of Turkey 's economy. These 
are legitimate econom ic development and industrial policy industrial objectives. But Turkey can and 
ought to pursue them in a manner consistent with its obligations  under the WTO Agreement.  
 
57. The structure and design of the Localisation Requirement cannot be reconciled wit h the public 
policy alleged by Turkey in this dispute. If Turkey 's objective were to ensure access to medicines, it 
would facilitate imports of pharmaceutical products, rather than restrict those imports. Far from 
being necessary to ensure access to medici nes, the Localisation Requirement could undermine that 
objective by causing a shortage of supply of medicines.  
 
58. Turkey has recognized that that the Turkish authorities assessed, before the implementation 
of Phase 1 and Phase 2, that there was no signi ficant risk of shortage of supply of the pharmaceutical 
products covered by those phases. Yet, in the absence of such risk of shortage of supply, the 
Localisation Requirement cannot possibly be considered "necessary " in order to ensure access to the 
pharma ceutical products covered by those two phases.  At the same time, Turkey 's explanations 
have the implication that the Turkish authorities consider that the Localisation Requirement cannot 
be applied with regard to other products where local production is n ot sufficient yet (the products 
covered by Phases 3 to 5) because restricting imports of those products could, by Turkey 's own 
admission, entail the "risk of a sudden shortage of supply ". 
 
2.6.2.  The Localisation Requirement is not necessary to achieve the public health 
objective alleged by Turkey  
 
2.6.2.1  Turkey has not met its burden of proving that there is a risk of shortage of 
supply of the products covered by the Localisation Requirement  
 
59. In order to prove that the Localisation Requirement is justified under Article XX(b), Turkey is 
required to prove that there is a risk of shortage of supply of the pharmaceutical products within the 
scope of the Localisation Requirement. In accordance wit h the guidance provided by the Appellate 
Body in India- Solar Cells , Turkey has the burden of demonstrating that there is a risk that "the 
quantity of available supply from both domestic and international sources in the relevant 
geographical market may be insufficient to meet demand ", having regard to all relevant factors 
affecting supply and demand, including those identified in the above quoted passage.  WT/DS583/12/Add.1  
 
- 46 - 
 
   
60. The Localisation Requirement covers a very wide range of pharmaceutical products, with very 
different physical characteristics and therapeutic uses. In view of that, Turkey must demonstrate 
separately the existence of a risk of shortage with regard to, at least, each category of "equivalent 
products ". 
 
61. Turkey has failed to meet that burden of proof . Indeed, Turkey has provided no relevant 
evidence of the existence of a risk of shortage of supply.  Quite to the contrary, Turkey has stressed 
that there is no risk of shortage of supply as regards the products covered by the First and Second 
phases.  
 
62. Turkey has been able to identify just five instances of alleged disruption of supply since 2012. 
The anecdotal evidence concerning those alleged five instances is hardly probative of a genuine risk 
of shortage of supply affecting each and every pharmaceu tical product actually or potentially covered 
by the Localisation Requirement, which could render necessary the adoption of that measure. 
Rather, it suggests that disruptions of supply are infrequent, limited in time and, more often than 
not, attributable to factors other than a disruption of imports, including the Turkish administration 's 
own inefficiencies.  
 
2.6.2.2  Turkey has not met its burden of proving that local production of the 
products concerned contributes to achieve the alleged objective  
 
63. Local production of pharmaceutical products is not a panacea for improving access to 
medicines. In specific contexts, and subject to certain conditions, local production may be a useful 
tool, alongside other policy tools, for improving access to medicines. I n other contexts, however, 
local production may fail to contribute to improving access to medicines. Indeed, depending on the 
circumstances, efforts to promote local production may well be counterproductive, by increasing 
unnecessarily the costs of medicin es or lowering their quality.  
 
64. Turkey has not demonstrated how, in the specific context of the Turkish market for each of 
the categories of "equivalent products " covered by the Localisation Requirement, local production 
would contribute to improve acce ss to those products by the Turkish citizens, as compared to the 
situation preceding the introduction of that measure.  
 
65. Turkey concedes implicitly that there is no evidence of such contribution, but seeks to justify 
the lack of evidence by arguing that  "at this stage it is difficult to isolate the contribution ". The 
implementation of Phases 1 and 2 started in 2016 and 2017, respectively. If the Localisation 
Requirement were capable of making a contribution to the stated objective, some effects should be  
noticeable by now.  
 
2.6.3.  The Localisation Requirement is very trade -restrictive  
 
66. The Localisation Requirement is extremely trade -restrictive because, in practice, it has the 
effect of excluding imports from a very large part of the Turkish market.  
 
2.6.4.  There are adequate less or non -trade -restrictive alternatives to the 
Localisation Requirement in order to achieve the objective alleged by Turkey  
 
67. The shortage of medicines can occur for many different reasons. Given their multifaceted 
causes, there is  no single response to the shortages of medicines. As mentioned above, local 
production of pharmaceutical products is not a panacea for improving access to medicines. In specific 
contexts, and subject to certain conditions, local production may be a useful  tool for improving 
access to medicines. But there are other tools available. Such other tools include the creation of 
contingency reserves of medicines at risk of shortage, and in particular of those previously identified 
as essential, the diversification  of sources of supply, the simplification of supply chains, the 
facilitation of imports, the improvement of pricing mechanisms and procurement procedures, the 
harmonization and simplification of regulatory requirements and increased international cooperati on. 
The World Health Organization has recommended "to develop strategies that may be used to 
forecast, avert or reduce shortages/stockouts ". Those strategies do not include any measure 
resembling the Localisation Requirement.  
 WT/DS583/12/Add.1  
 
- 47 - 
 
  68. Furthermore, in those ca ses where local production can be an effective tool, it can be more 
effectively supported by resorting to alternative measures which, unlike the Localisation 
Requirement, do not restrict trade in a manner inconsistent with the WTO Agreement. The World 
Health Organization has developed a comprehensive "Policy Framework for Government support for 
local production and access ". Again, that framework does not include any measure resembling the 
Localization Requirement.   
 
2.6.5.  The Localisation Requirement is n ot applied in accordance with the chapeau of 
Article XX  
 
69. The application of the Localisation Requirement is not calibrated to reflect the difference in 
health risks that may arise in relation with different pharmaceutical products. In principle, the 
Localisation Requirement applies to all pharmaceutical products covered by the Reimbursement 
Scheme, regardless of how essential they are, and regardless of the degree of risk of shortage of 
supply of each group of equivalent products. To th e extent that Turkey modulates the application of 
the Localisation Requirement, by dividing its implementation into five phases, such modulation is at 
odds with the public health objective allegedly pursued by Turkey. Indeed, as explained above, 
Phase 1 an d Phase 2, the only ones implemented so far by Turkey, cover pharmaceutical products 
where, by Turkey 's own admission, there is no risk of shortage of supply and, hence, no health risk.  
 
2.7. THE LOCALISATION REQUIREMENT IS NOT JUSTIFIED UNDER ARTICLE XX( D) OF THE GATT  1994  
 
2.7.1.  The Localisation Requirement is not designed to ensure compliance with laws 
and regulations requiring Turkey to "ensure accessible, effective and financially 
sustainable healthcare "  
 
70. Turkey has identified just two provision s included in Article 405 of Presidential Decree No. 4, 
of 2018, as "laws or regulations " requiring Turkey to ensure the financial sustainability of the SSI.  
Having regard to the characteristics identified as relevant by the Appellate Body in previous cas es, 
those two provisions cannot be considered as "laws" or "regulations " within the meaning of Article 
XX(d) of the GATT 1994. As indicated by the title of Article 405 and by its own terms, Article 405(1) 
of Presidential No 4 is but an aspirational provisi on, whose only function is to set out the "main 
purpose " that should guide the functioning of the SSI. As such, Article 405(1) lacks the requisite 
degree of specificity and normativity to qualify as a "law" or "regulation " within the meaning of 
Article XX( d). Furthermore, Turkey has not shown that Article 405(1) is legally enforceable as such, 
let alone that its breach may result in any sanctions or penalties.  In turn, paragraph 2 a) of Article 
405 limits itself to describe one of the SSI 's "tasks" in very  general terms. The "national development 
strategies and policies and annual implementation programs " mentioned in that provision are policy 
documents, which do not qualify by themselves as "laws" and "regulations " within the meaning of 
Article XX(d). Furt hermore, pursuant to paragraph 2 a), the SSI is merely instructed to "take into 
account " those policy documents and "work on their development ". Again, this provision lacks the 
requisite degree of specificity and normativity to qualify as a "law" or "regulation" within the meaning 
of Article XX(d). In addition, Turkey has not shown that Article 405(2) a) of Presidential Decree No 
4 is legally enforceable, let alone that its breach may result in any sanctions or penalties.  
 
2.7.2.  The Localisation Requirement is not necessary to ensure compliance with laws 
and regulations requiring Turkey to "ensure accessible, effective and financially 
sustainable healthcare " 
 
2.7.2.1  Turkey has not met its burden of proving that local production o f the 
products concerned contributes to achieve the alleged objective of ensuring "financially 
sustainable healthcare "  
 
71. There is no reason to assume that production costs will be lower in Turkey than in any other 
WTO Member. To the contrary, the re -localization of the production of medicines from another WTO 
Member to Turkey may entail higher costs as a result of the ensuing loss of economies of scale and 
the need to amortize investment costs. Moreover, in the long term, localising the production of 
reimbursable medicines pursuant to the Localisation Requirement, in combination, with the import 
ban will lead to less competition on the Turkish market and higher prices.  
 
2.7.2.2  The Localisation Requirement is very trade -restrictive  
 WT/DS583/12/Add.1  
 
- 48 - 
 
  72. As explained above in section 2.6.2.3, the Localisation Requirement is extremely trade -
restrictive because, in practice, it has the effect of excluding imported products from a very large 
part of the Turkish market.  
 
2.7.2.3  There are adequate less trade -restrictive alternatives in order to achieve 
the objective alleged by Turkey the alleged objective of ensuring "financially sustainable 
healthcare " 
 
73. There are many alternatives to ensure the financial sustainability of Turkey 's health system 
without breach ing Turkey 's obligations under the WTO Agreement. For example, Turkey could 
implement one or more of the following alternatives: improving the functioning of Turkey 's SSI, with 
a view to making it more efficient and reducing unnecessary expenditure; increa sing the co -
payments of patients; increasing the overall tax revenue by raising tax rates or ensuring a more 
efficient collection; transferring funds from other budgetary lines to the financing of the SSI, etc.  
 
2.7.3.  The Localisation Requirement is not applied in accordance with the chapeau of 
Article XX  
 
74. There is no "rational connection " between that objective and the manner in which the 
Localisation Requirement is applied. Indeed, the Localisation Requirement applies equally to all 
imported product s, regardless of their price. Even if an imported product is less costly to the SSI 
than its domestic counterpart, it will still be excluded from reimbursement. As a result, the 
Localisation Requirement may well have the effect of increasing the reimbursem ent costs for the 
SSI, thereby defeating the objective invoked by Turkey.  
 
2.8. THE LOCALISATION REQUIREMENT IS INCONSISTENT WITH ARTICLE  2.1 OF THE TRIM S AGREEMENT  
 
75. The Localisation Requirement is an investment measure related to trade in goods that i s 
inconsistent with Article III:4 of the GATT. For those reasons, the Localisation Requirement is 
incompatible with Article 2.1 of the TRIMS Agreement. Turkey does not contest that the Localisation 
Requirement is an "investment measure " within the scope of  the TRIMS Agreement. As explained 
above, the Localisation Requirement is not excluded from the scope of Article III:4 by virtue of 
Article III:8(a). Therefore, the Localisation Requirement is inconsistent with Article 2.1 of the TRIMS 
Agreement.  
 
2.9. THE LOCALISATION REQUIREMENT IS INCONSISTENT WITH ARTICLE 3.1( B) OF THE SCM  AGREEMENT  
 
76. The European Union has submitted this claim in the alternative to its claim with regard to the 
Localisation Requirement under Article III:4 of the GATT 1994. In other w ords, the European Union 
requests the Panel to rule on this claim only in the event that the Panel were to conclude that the 
Localisation Requirement is not in breach of Article III:4 of the GATT 1994, or that such breach is 
justified under any other provi sion of the GATT 1994.  
 
2.9.1.  Financial contribution  
 
2.9.1.1  Direct transfer of funds  
 
77. The payments made by the SSI to the pharmacies under the Reimbursement Scheme involve 
a "direct transfer of funds " from the SSI to the pharmacies. Therefore, those payments constitute 
"financial contributions " within the meaning of item (i) of Article 1.1 (a) (1) of the SCM Agreement.  
 
2.9.1.2  Entrustment or direction of the provision of goods  
 
78. As explained above, the European Union considers that the Reimbursement Scheme does not 
involve a "procurement " or "purchase " of pharmaceutical products "for gov ernmental purposes " 
within the meaning of Article III: 8(a) of the GATT 1994. However, if the Panel agreed with Turkey 
that the SSI does "procure " and "purchase " pharmaceutical products "for governmental purposes ", 
the European Union submits that the subse quent provision of those goods by the pharmacies to the 
out-patients would constitute, by itself, a "financial contribution " within the scope of Article 
1.1(a)(1)(iv) of the SCM Agreement.  
 WT/DS583/12/Add.1  
 
- 49 - 
 
  2.9.2.  Benefit  
 
79. The financial contributions identified in the  previous section confer a direct "benefit ", within 
the meaning of Article 1.1(b) of the SCM Agreement, upon the out -patients who are beneficiaries of 
the Turkish Social Security System.  It is beyond question that the out -patients are "better off " as a 
result those financial contributions. As acknowledged by Turkey, "the payments made by the SSI to 
retail pharmacies cover the costs of pharmaceutical products and essentially replace the payments 
that would have been otherwise required from patients ".  By co nferring a direct benefit to the out -
patients, the Reimbursement Scheme also confers an indirect benefit to the Turkish producers of 
the pharmaceutical products covered by the Reimbursement Scheme.  
 
80. Previous panels have cautioned against extrapolating the case -law on the pass through of 
input subsidies invoked by Turkey to different situations. It is far more relevant to consider the 
guidance provided by the panels Brazil – Aircraft (Article 21.5 – Canada II) and Canada – Aircraft 
Credits and Guarantees , which have examined specifically the situation where, as in the present 
case, a subsidy is granted to a purchaser of goods on condition that she purchases goods from 
certain producers. The decision of the Arbitrator in US-Upland Cotton  does not involve a  departure 
from the approach followed by the above -mentioned panels.  
 
81. Turkey notes that, unlike in Brazil – Aircraft (Article 21.5 – Canada II) , in the present case 
there is no direct contractual relationship between the out -patients and the producers  of 
pharmaceutical products. This difference, however, is irrelevant. The mere circumstance that 
pharmacies and the wholesalers act as intermediaries does not alter the essential fact that the 
financial contributions lower the costs to the out -patients, wh o, as final customers, drive the demand 
for the product. Nor, consequently, does that circumstance deprive the domestic producers from the 
advantage vis -à-vis competing products on the market mentioned by the panel Brazil – Aircraft 
(Article 21.5 – Canada II). 
 
82. Turkey further contends that "the choice of the pharmaceutical product is not left to the 
patient ". However, this is contradicted by Turkey 's own description of the Reimbursement Scheme, 
which evidences that patients do have certain choices. In particular, where a product is a "generic " 
or belongs to a group of "equivalent products " (which is the case for the majority of the products, 
includin g all the products covered by phase 1 and phase 2 of the localisation measure, the only ones 
implemented so far), the out -patient is allowed to purchase the product of his choice among the 
generic or equivalent products.  
 
2.9.3.  Contingency upon the use of  domestic over imported goods  
 
83. The subsidy identified in the preceding sections is contingent upon the use of domestic over 
imported goods by the out -patients. Both the financial contributions and the benefits thereby 
conferred are conditional upon the  out-patients being provided pharmaceutical products included in 
the Reimbursement List, for their personal use. In turn, the inclusion of a product in the 
Reimbursement List is conditional upon the product being produced in Turkey.  
 
3. THE IMPORT BAN ON L OCALISED PRODUCTS  
 
3.1. THE EUROPEAN UNION ESTABLISHED THE EXISTENCE AND CONTENT OF THE IMPORT BAN ON LOCALISED 
PRODUCTS  
 
84. By this measure, when the production of a pharmaceutical product has been localised in 
Turkey in accordance with the Localisation Requirement, applied in conjunction with the Turkish 
rules for approving the importation and marketing of pharmaceutical products, that pharmaceutical 
product can no longer be imported in Turkey.  
 
85. According to the Regulation on Marketing A uthorisation, a pharmaceutical product can either 
be granted a local marketing authorisation or an import marketing authorisation. The same product 
cannot hold two marketing authorisations, one "local" and one "import ". Therefore, to the extent 
that a phar maceutical product has been localised in Turkey in accordance with the Localisation 
Requirement, it can no longer be imported. According to the Announcement on import applications, 
in the absence of the required import marketing authorisation, a pharmaceut ical company cannot 
obtain the inspection certificate necessary for importation.  
 WT/DS583/12/Add.1  
 
- 50 - 
 
  86. When companies commit to localise their production of a pharmaceutical product (that was 
previously imported under an import marketing authorisation) in Turkey, as requir ed by the 
Regulation on Variations, they have to apply for a variation of their marketing authorisation, from 
import to local status.  
 
87. Several documents confirm that companies are required to change their marketing 
authorisation from import to local w ithin the Localisation Requirement: TMMDA 's presentation of 7 -
9 October 2016 on localisation; TMMDA 's presentation "Project Transition from importing to 
manufacturing " of 6 March 2017, TMMDA 's communication of 10 October 2017, entitled "Preparing 
a progres s report for your products in localization process ", several letters sent by TMMDA to 
companies whose localisation commitments have been accepted, the HSPC Decision regarding the 
Localisation Process, a press article dated 14 March 2017, TMMDA 's communicat ion of 31 January 
2018, entitled "Localization Process ". 
 
88. Turkey does not deny the existence of an import ban for the localized pharmaceutical product 
with respect to the marketing authorisation already granted (product with the same formulation and 
pharmaceutical form, already authorized by the Ministry, to the same real person or legal entity).  
 
89. The European Union disagrees with Turkey 's claims that additional marketing authorizations 
can be issued for: (i) applications made by s ister companies for pharmaceutical products with the 
same composition and pharmaceutical form and (ii) for different therapeutical indications.  
 
90. First, according to the Regulation on Marketing Authorisation, only one company is authorized 
to import, re gister and sell a pharmaceutical product, except for co -marketing.  
 
91. Second, a different marketing authorisation is not granted for a different indication. Marketing 
authorizations may cover several indications. Additional therapeutic indications are su bmitted via 
variation applications to the same marketing authorisation already granted. Moreover, the 
Localisation Requirement applies to pharmaceutical products irrespective of their indications and, if 
companies do not comply with the Localisation requir ement, pharmaceutical products are 
deactivated from the Reimbursement List for all their indications.  
 
92. In any event, a legal ban on certain goods or any goods, even with exceptions, remains a 
prohibition within the meaning of Article XI:1 of the GATT 1 994. 
 
3.2. THE IMPORT BAN IS INCONSISTENT WITH ARTICLE XI:1  OF THE GATT  1994  
 
93. The Import Ban on localised products is inconsistent with Turkey's obligations under Article 
XI:1 of GATT 1994, because, once a foreign producer has localised production of a  certain 
pharmaceutical product pursuant to the Localisation Requirement, applied in conjunction with the 
Turkish rules for approving the importation and marketing of pharmaceutical products, that product 
can no longer be imported. Therefore, Turkey instit utes and maintains a prohibition or restriction, 
other than duties, taxes or other charges, on the importation of pharmaceutical products of the 
territory from other WTO Members.  
 
94. The Import Ban is not an internal measure that is merely "enforced at th e time of importation ". 
The absence of an import marketing authorisation makes impossible the granting of this certificate 
and therefore importation itself becomes impossible. Therefore, the Import Ban directly relates to 
the importation of pharmaceutical products.  
 
95. The Import Ban prohibits the importation of pharmaceutical products with the same 
formulation and pharmaceutical form as those localised in Turkey in accordance with the Localisation 
Requirement. Since the products prohibited from importation are not  produ cts imported into 
Turkey 's territory, this measure falls outside Article III:4.  
 
96. The Import Ban does not cover domestic products as such (which are already on Turkey 's 
territory) and foreign products that are not (yet) localized and can still be impor ted. The mere fact 
that the marketing authorization rules also apply to domestic products does not mean that the 
Import Ban is a "law, regulation or requirement of the kind referred to in paragraph 1 which applies 
to an imported product and to the like dom estic product " within the meaning of the Ad Note to Article 
III. 
 WT/DS583/12/Add.1  
 
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  3.3. THE IMPORT BAN ON LOCALISED PRODUCTS CANNOT BE JUSTIFIED UNDER ARTICLE XX( D) OF THE GATT  
1994  
 
3.3.1.  The Import Ban is not a measure "to secure compliance" with the Localisation 
Requir ement  
 
97. The Import Ban is not a mean "to enforce obligations" under the Localisation Requirement to 
manufacture domestically as it does not oblige foreign producers to actually manufacture in Turkey. 
It merely seeks to prevent alleged circumvention rela ted to reimbursement. Turkey ensures 
compliance with the Localisation Requirement through the exclusion of pharmaceutical products from 
the reimbursement scheme.  
 
98. Although the Import Ban might have the incidental consequence of ensuring that the 
commit ments of the foreign producers to produce domestically are not abused, and, therefore, the 
Import Ban "may share the same policy objective" with the Localisation Requirement, that alone is 
insufficient to establish that the Import Ban was meant to "secure compliance" with the Localisation 
Requirement.  
 
3.3.2.  The Import Ban is also not "necessary" within the meaning of Article XX(d).  
 
99. First, as regards the importance of interests or value, the Import Ban allegedly secures 
compliance with the Localisati on Requirement. The latter is designed to promote the economic 
development which are essentially commercial in nature and, thus, not as important as, for instance, 
the protection of human life and health against a life threatening  health risk.  
 
100. Secon d, the contribution of the Import Ban to fight circumvention of the Localisation 
Requirement is limited, if at all. Once production is localised (after a process including progress 
reports), the circumvention of reimbursement rules is a separate issue that  does not ensure 
compliance with the already finalised localisation process.  
 
101. Third, the trade restrictiveness of the Import Ban is very high since it prohibits importation of 
localised products.  
 
102. Fourth, regarding alternative measures, Turkey could reasonably be expected to employ a 
labelling requirement. Products are imported following a detailed procedure that includes an 
inspection certificate for importation. Therefore, Turkey already has detailed information as to the 
imported produ cts compared to those manufactured domestically. Such alternative measure would 
preserve Turkey 's right to achieve its desired level of compliance with the Localisation Requirement 
as pharmacies could easily distinguish between an imported and a domestical ly manufactured 
product to reimburse only the latter. Moreover, this alternative measure is significantly less trade -
restrictive than the Import Ban since it would allow the importation of localised products.  
 
4. THE PRIORITIZATION MEASURE  
 
4.1. THE EUROPEAN UNION ESTABLISHED THE EXISTENCE AND NATURE OF THE PRIORITIZATION MEASURE  
 
103. By this measure, Turkey gives priority to the review of applications for inclusion of domestic 
pharmaceutical products in the list of products covered by the reimbursem ent system, as well as 
with respect to some licensing policies and processes, over the review of the applications of like 
imported products.  
 
104. The panel request shows that the European Union challenged the Prioritization Measure as 
such and not as an o ngoing practice as Turkey alleges.  
 
105. The following action plans and programmes confirm the existence and content of an 
overarching Prioritization Measure with respect to locally manufactured pharmaceutical products :  
 
i. The Structural Transformation P rogram for Healthcare Industries Action Plan of 7 
November 2014 whose "Action 2 " has "the objective of prioritizing medicines and 
medical devices produced in Turkey in the reimbursement and pricing policies and 
licensing processes.";  
 WT/DS583/12/Add.1  
 
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  ii. The 2016 Action P lan of the 64 th Government 10 December 2015 that lists as Action 
No 46 "[T]o improve the reimbursement, pricing and licensing processes for medical 
devices and strategic and domestic medicines";  
iii. The 65 th Government Programme of 24 May 2016 providing t hat :"When it comes to 
reimbursement and pricing policies and licensing procedures, we will give priority to 
domestically produced medicines and medical devices ". 
 
106. The SSI Regulation on Drug Reimbursement of 10 February 2016 implements the 
abovementio ned actions and programmes with respect to the inclusion on the Reimbursement List. 
For example, Articles 5 (g), 6(ç) and 9 (c) provide that various bodies are responsible for: a fast 
track review of pharmaceutical products manufactured in Turkey for the p urpose of being placed on 
the Reimbursement List; assessments about locally manufactured products and decisions to be taken 
at an extraordinary meeting of the Drug Reimbursement Committee in relation to those products; 
prioritizing the review of locally ma nufactured pharmaceutical products.  
 
107. Locally manufactured pharmaceutical products are also given priority with respect to the 
applications for good manufacturing practices ( "GMP") and marketing authorisations.  
 
108. The Priority Assessment Guideline e nables giving priority, inter alia, to applications regarding 
pharmaceutical products whose production is transferred to Turkey applications for locally 
manufactured products for exportation purposes and applications relating to products which have 
strateg ic importance for Turkey 's policies.  
 
109. Some of the relevant provisions of the  Priority Assessment Guideline are the following:  
 
i. Article 10 e) provides that " applications relating to products which have strategic 
importance in terms of country policies are assessed by the Commission independently 
of the scoring criteria in the guideline .";  
 
ii. Article 10 f) provides that " the applications relating to locally manufactured products 
having export relation among marketing authorisation application s are assessed by the 
Commission according to the criteria of planned exportation time, planned exporting 
countries, planned exportation size and the starting date of exportation ." 
 
iii. Article 10 ğ) provides that " the priority matter of locally manufactu red product 
applications relating to the transferring of production of imported medicines to our 
country is assessed by the Commission ." 
 
110. In addition, Annex 3 of the Priority Assessment Guideline attributes certain coefficients to 
applications concerning Local production, applications concerning a Local active substance and 
applications involving the performance of bioequivalence studies in Turkey.  
 
111. Finally, TMMDA representatives also confirmed in a press article of 24 February  2018 that local 
manufacturing is among the criteria governing the assessment of the prioritisation process of 
pharmaceutical products.  
 
4.2. THE PRIORITIZATION MEASURE IS INCONSISTENT WITH ARTICLE III:4  OF THE GATT  1994  
 
112. The Prioritization Measure ac cords "less favourable" treatment to imported pharmaceutical 
products than that accorded to like domestic products. This measure consists in granting priority to 
the review of applications regarding pharmaceutical products of national origin for inclusion in the 
reimbursement scheme, and the review of GMP and marketing authorisation applications. The fact 
that the products of domestic origin are granted priority review whereas the imported products are 
not distorts the conditions of competition to the detri ment of imported products.  
 
113. Turkish legislation mandates giving priority to locally manufactured products:  
 
i. mandates listing pharmaceutical products manufactured in Turkey on the agenda of the 
Medical and Economic Assessment Committee and of the Dr ug Reimbursement 
Committee as prioritized topics for review to be include in the Reimbursement List and 
that these Committees hold extraordinary meetings for that purpose;  
 WT/DS583/12/Add.1  
 
- 53 - 
 
  ii. the Priority Assessment Guideline enables giving priority, inter alia, to appli cations 
regarding pharmaceutical products manufactured in Turkey;  
 
iii. Turkey 's actions plans and programmes confirm that it grants priority to domestically 
produced pharmaceutical products for reimbursement, pricing policies and licensing 
procedures.  
 
114. Even if eventually Turkish authorities do not grant priority to each application involving locally 
manufactured products, local manufacturing represents nonetheless a mandatory priority criteria 
during the application review. It is clear from the terms,  design, structure, and expected operation 
of the Prioritization Measure that it is a de jure discriminatory measure, and that, by its very nature, 
it accords less favourable treatment to imports. This suffices to find that the Prioritization Measure 
manda tes action inconsistent with Article III:4 of the GATT 1994. It is not necessary to analyse the 
actual market impact, what proportion of applications are granted priority eventually or other 
consequences of the measure further. In any event, Turkey 's actio ns plans and programme show 
that Turkey effectively grants priority to domestically produced pharmaceutical products for 
reimbursement, pricing policies and licensing procedures.  
 
5. CONCLUSIONS  
 
115. For the reasons set out in this submission, the Europe an Union requests the Panel to find that:  
 
1) The Localisation Requirement is inconsistent with Turkey's obligations under Article III:4 
of GATT 1994, Article X:1 of GATT 1994 and Article 2.1 of the TRIMs Agreement;  
 
2) To the extent that the Panel found that the Localisation Requirement is not inconsistent 
with Article III:4 of the GATT 1994, that such measure is inconsistent with Article 3.1(b) 
of the SCM Agreement;  
 
3) The Import Ban on localised products is inconsistent with Turkey's obligations under 
Article XI:1 of GATT 1994; and  
 
4) The Prioritization Measure is inconsistent with Turkey's obligations under Article III:4 of 
GATT 1994.  
 
 
 WT/DS583/ 12/Add.1  
 
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  ANNEX C -2 
INTEGRATED EXECUTIVE SUMMARY OF THE ARGUMENTS OF TURKEY  
I. INTRODUCTION  
1. The present dispute concerns certain measures taken in the framework of Turkey 's social 
security system. These measures are aimed at e nsuring a fair and uninterrupted access to medicines 
for all patients in Turkey while maintaining the financial stability of the system. This dispute thus 
raises important systemic issues about the freedom of a WTO developing country Member to 
organise and  manage its healthcare system in a manner that ensures an optimal balance between, 
on the one hand, a wide scope and coverage and, on the other hand, the financial viability of the 
system. In the midst of the COVID -19 pandemic, it has become more obvious t han ever before that 
Governments must play a central role in protecting the health of their population and guaranteeing 
access to medical products, including medicines, vaccines and medical devices.  
2. The Turkish healthcare system is unique in terms of it s generosity and coverage. It guarantees 
the provision of medicines to almost the entire Turkish population at minimal cost. In order to make 
this possible, the Turkish authorities control strictly the conditions for placing medicines on the 
Turkish market , their prices and the manner of their distribution to patients. Medicines that are 
placed on the Turkish market for supply to outpatients are purchased by the Turkish Social Security 
Institution ( "SSI") and dispensed to patients via retail pharmacies.  
3. The claims brought by the European Union against measures taken by Turkey with respect to 
medicines ignore the public health objectives behind those measures and are based on a 
fundamental misunderstanding of the Turkish social security and healthcare syst ems. The European 
Union treats the supply of medicines to patients as individual commercial transactions between 
economic operators aiming at profit maximisation. Such erroneous interpretation ignores that 
medicines are dispensed to patients by retail phar macies under contract with the Turkish 
Government on the basis of prescriptions by medical doctors at prices set by the Turkish 
Government. The measures challenged by the European Union form an integral part of the Turkish 
social security system and help t o ensure the procurement of medicines under optimal conditions. 
They cannot be seen in isolation from the Turkish social security system as a whole. Interfering in 
the design and the functioning of the statutory social security schemes of the Members goes beyond 
the aims of the WTO covered agreements and was clearly not the intention of the Contracting Parties 
while negotiating and signing those agreements.  
II. FACTUAL BACKGROUND  
4. The two key actors in the system of provision of medicines to patients in T urkey are the 
Turkish Medicines and Medical Devices Agency ( "TMMDA "), operating under the Ministry of Health, 
and the SSI, operating under the Ministry of Family, Labour and Social Services.1 TMMDA is the 
authority that determines the conditions for placing the medicines on the market, fixes the retail 
prices of the medicines and ensures their safety and availability on the market. The SSI is the single 
public authority purchaser of healthcare  services, including medicines, from the healthcare service 
providers for both outpatients and inpatients.  
1. The placing of medicines on the Turkish market  
5. In order to be placed on the Turkish market, medicine must obtain (i) a Good Manufacturing 
Practices ( "GMP") certification, (ii) a marketing authorization, (iii) a fixed price and (iv) a sales 
permit. These authorizations are delivered by the TMMDA.  
6. The vast majority of medicines that are actively sold and prescribed in Turkey a re covered by 
the social security system. However, medicines can be placed on the Turkish market even if they 
are not covered by the social security system, if they meet all quality, safety and efficacy 
 
1  This Ministry has been recently renamed as Ministry of Labour and Social Security and there is a 
separate Ministry of Family and Social Services.  WT/DS583/12/Add.1  
 
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  requirements and receive the relevant authorizations.  In that sense, any measure taken with respect 
to the functioning of the social security system, including its scope, has no impact on the access of 
medicines to the Turkish market.  
2. The purchasing of medicines for the patients  
7. Medicines placed on the  Turkish market and covered by the Universal Health Insurance 
Scheme are purchased by the SSI and provided to patients either directly by hospitals for inpatient 
treatment, or through retail pharmacies for outpatient treatment. In both cases, the costs of 
medicines necessary for a patient 's treatment are covered by the State.  
8. The rules relating to the provision and payment for healthcare services, including medicines 
are set out in the SSI 's Drug Reimbursement Regulation, and in the Health Implementation  
Communiqué ( "SUT"). Notably, the list of medicines for which the costs are covered by the SSI is 
included in Annex 4/A to the SUT entitled "list of medicines to be paid for " which is revised regularly 
to reflect both inclusion and exclusion of medicines i n and from the list. Pharmaceutical companies 
must apply to the SSI to request the inclusion of their products in Annex 4/A.  
9. The inclusion of a medicine in Annex 4/A is not permanent as the status of that medicine 
might change over time. Medicine liste d in Annex 4/A may be "passivized ", meaning that the 
payment for that medicine by the SSI is temporarily suspended, in certain circumstances foreseen 
by law. Medicines that have been "passivized " may be re -activated upon request of the 
pharmaceutical compa ny if the conditions for setting the product 's status to "passive " are no longer 
valid or removed from Annex 4/A if their re -activation is not requested within ten months from the 
date of their passivation.  
10. Imported medicines may be "passivized " if they do not comply with the localisation measure. 
Medicines which are "passivized " as a result of the localisation measure are not excluded from Annex 
4/A after ten months from the moment of their passivation but instead retain the "passivized " status.  
11. The retail prices of all medicines sold in Turkey are regulated. The public price of a medicine 
included in Annex 4/A paid by the SSI is different from the retail price of that product and results 
from the application of public discounts, the amounts of whi ch are set out in the SUT for each type 
of medicine.  
12. The medicines listed in Annex 4/A are grouped in pharmaceutical equivalent groups based on 
price comparisons between products with similar dosage, having the same active substance(s) and 
for the sam e indication. If a medicine does not have an equivalent group, the SSI pays 100% of its 
price. However, if a product has an equivalent group, the price paid by the SSI is determined 
according to the "internal reference pricing mechanism " which relies on a single reimbursement price 
per each equivalent group. This price is determined on the basis of the price of the product having 
the cheapest unit price and at least 1% market share. For pharmaceutical products with an 
equivalent group, the maximum price pai d by the SSI is the lowest price in the equivalent group 
increased by 10%. If a patient prefers a more expensive product from the same equivalent group, 
he or she must pay the difference between the price of that product and the price paid by SSI.  
13. Finally, pharmacy discounts apply to the prices paid by the SSI for all medicines included in 
Annex 4/A and dispensed by retail pharmacies to patients. The pharmacy discount rates are 
calculated based on the annual income of a retail pharmacy and are listed i n the Protocol signed 
between the SSI and the Turkish Pharmacists Association.  
14. This system ensures that the prices paid by the SSI for medicines are as low as possible in 
order to maintain financial sustainability of the healthcare system in Turkey.  
3. The provision of medicines to the patients  
15. Medicines listed in Annex 4/A and prescribed by medical doctors are dispensed to outpatients 
by the retail pharmacies on behalf of the SSI.  
16. This is in line with the Turkish legislation which provides that  healthcare services, including 
provision of medicines, are provided based on contracts concluded between the SSI and domestic 
and/or foreign healthcare service providers.  WT/DS583/12/Add.1  
 
- 56 - 
 
  17. Under Turkish law, a pharmacy is considered as a primary healthcare service pro vider and is 
defined as "a healthcare organization that provides health services, opened according to the law 
under the ownership and responsibility of a pharmacist ". In line with Law No. 5510, the provision of 
medicines to outpatients in Turkey is carried  out by retail pharmacies contracted with the SSI.  
18. All retail pharmacists in Turkey are members of the Turkish Pharmacists ' Association ( "TPA"), 
which is authorized to conclude protocols on behalf of the retail pharmacies. The SSI and the TPA 
have conc luded a "Protocol on the Provision of Medicines to the Persons Covered by the Social 
Security Institution by the Pharmacies which are Members of the Turkish Pharmacists ' Association " 
("the Protocol ").  
19. The Protocol sets out the rules and procedures reg arding the direct payments made by the 
SSI to retail pharmacies for medicines listed in Annex 4/A and dispensed by the pharmacies to 
patients. The Protocol includes an annex with a standard contract between the SSI and retail 
pharmacies, which is signed by  individual retail pharmacies and the SSI and renewed on an annual 
basis.  
20. The SSI approves the provision of the medicines to be dispensed to patients through the 
electronic information system, Medula,  and pays the invoice it receives for those medicin es from the 
pharmacies contracted with the SSI . This means that, patients do not pay for those medicines as 
their costs are covered by the SSI. Patients pay, however, a prescription fee and a contribution fee 
to the social security system. Both of these fe es aim at preventing abuses of the healthcare system, 
including overconsumption of medicines, as well as ensuring its financial sustainability. These fees 
are not economically significant and many patients, such as those with chronic diseases, are in fact 
exempted from the contribution fee.  
21. Out of the 26.600 retail pharmacies in Turkey, 25.300 are under contract with the SSI. Retail 
pharmacies which do not have individual contract with the SSI do not have access to and do not use 
the SSI 's Medula system. Although these retail pharmacies may sell medicines included in Annex 
4/A, they cannot invoice those medicines to the SSI. These are mostly retail pharmacies located in 
touristic areas and pharmacies that focus their offer on cosmetic prod ucts rather than medicines.  
III. THE MEASURES AT ISSUE  
22. The European Union challenges three measures. First, the European Union challenges the 
localisation measure whereby "Turkey requires foreign producers to commit to localise in Turkey 
their production of certain pharmaceutical products ". Second, the Europea n Union challenges the 
alleged import ban on localised products. Third, the European Union challenges the prioritization 
measure whereby "Turkey gives priority to the review of applications for inclusion of domestic 
pharmaceutical products in the list of p roducts covered by the reimbursement system, as well as 
with respect to some licensing policies and processes, over the review of the applications of like 
imported products ". The European Union 's claims with respect to all three measures must be 
rejected.  
IV. THE LOCALISATION MEASURE  
23. Good health is impossible without access to medicines. Guaranteeing sufficient domestic 
production is an important step for ensuring access to medicines. Indeed, local production of 
medicines, especially in developing count ries, is widely recognized as an important way to increase 
access to medicines and improve public health.  
24. The localisation measure aims at ensuring an uninterrupted access to safe, effective and 
affordable medicines in Turkey by guaranteeing domestic s upply of medicines and financial 
sustainability of the social security system.  
25. For a developing country having such a generous social security system as Turkey, the prices 
of medicines must be set at the lowest possible rate so as to ensure the financ ial sustainability of 
the system without compromising patients ' access to medicines. In that context, local production of 
medicines prevents the risk of a shortage of supply, if pharmaceutical companies decide to supply 
other countries where they can recei ve a higher price for their products.  
26. "Localisation " under the localisation measure does not mean that the entire production process 
needs to take place in Turkey. Rather, "localisation " requires that the bulk production, i.e. the WT/DS583/12/Add.1  
 
- 57 - 
 
  establishment of a fi nished pharmaceutical form (granular, tablet, solution) from raw materials 
(active substances) and excipients (inactive substances), takes place in Turkey. The localisation 
measure does not impose any restrictions on pharmaceutical companies ' ability to im port the active 
substance(s) or excipients into Turkey and does not require the use of domestic inputs of any kind.  
27. The selection of pharmaceutical products subject to localisation was carried out by the TMMDA 
on the basis of two main criteria, namely:  (i) whether a medicine holds a valid marketing 
authorization and sales permit in Turkey, and (ii) whether that medicine is included in Annex 4/A. 
All medicines that fulfil these two criteria are initially considered within the scope of localisation. 
While  determining the scope of the localisation measure, no distinction was made based on whether 
companies producing the medicines concerned have domestic or foreign capital.  
28. The localisation measure was designed to be implemented through five phases. So far, only 
Phase 1 and Phase 2 have been implemented by Turkey. The classification of a medicine into one of 
the phases was based on two criteria: (i) the market share of the domestic production, and (ii) the 
existence of substitute medicine on the Turkish market. The two criteria have been selected to 
ensure the effectiveness of the localisation measure in the long term, while minimizing the risk that 
in the short term it could lead to a temporary shortage of supply. Indeed, the fact that Phase 1 and 
Phase 2 cover medicines which are already available on the market is justified by the need to 
guarantee that if companies are not willing to comply with the localisation measure, patients in 
Turkey will continue to have access to medicines included in these phas es.  
A. The European Union has failed to establish the existence and precise content of 
the localisation measure  
29. While a complaining party may challenge any act or omission, it must establish the existence 
and precise content of the measure it challeng es. The constituent elements that must be 
substantiated to prove the existence of a challenged measure depend on how the measure is 
described or characterized by the complainant.2 If the complainant challenges a single measure 
composed of several differen t instruments, it must provide evidence of "how the different 
components operate together as part of a single measure and how a single measure exists as distinct 
from its components ".3 
30. Turkey takes issue with the fact that the European Union referred to the localisation measure 
as a "single and cohesive measure " which is based on a number of plans, instruments or tools but 
that the European Union failed to identify those instruments and tools precisely.  
31. By failing to identify them precisely, the ch allenged measure becomes a moving target. This 
is particularly relevant in the context of the European Union 's claim under Article X:1 of the GATT 
1994 where the European Union has submitted that not all legal instruments that form part or give 
effect to t he localisation measure have been published promptly. The European Union should have 
identified the specific instruments and tools which form part or give effect to the localisation 
measure. By failing to do so, the European Union did not to identify the p recise content and scope 
of the measure it challenges.  
32. Establishing the existence and precise content of the challenged measure is a threshold issue. 
Therefore, to the extent that the European Union is found not to have established the existence 
and/or  precise content of what it describes as the "localisation requirement ", the Panel should not 
proceed with examining the European Union 's claims against that measure.  
B. The localisation measure is covered by Article III:8(a) of the GATT 1994  
33. Article III:8(a) of the GATT 1994 establishes a derogation from the national treatment 
obligation of Article III for government procurement activities falling within its scope. Thus, 
measures satisfying the requirements of Article III:8(a) are not subject to the national treatment 
obligation set out in Article III:4.  
34. The localisation measure meets the requirements of Article III:8(a) and thus is not subject to 
the national treatment obligation of Article III:4. Furthermore, given that the localisation m easure 
 
2  Appellate Body Report, Argentina – Import Measures , para. 5.108.   
3  Appellate Body Report, Argentina – Import Measures , para. 5.108.   WT/DS583/12/Add.1  
 
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  falls outside the scope of Article III, by virtue of Article III:8(a), that measure cannot be found to 
be inconsistent with Article 2.1 of the TRIMs Agreement.4  
35. Turkey notes that for the purpose of interpreting and applying Article III:8(a) in  this case, it 
is important for the Panel to look at the system of the provision of medicines included in Annex 4/A 
as a whole rather than at the individual transactions between different entities. The European Union 's 
approach to Article III:8(a) is very formalistic, fails to take into account the specificities of Turkey 's 
healthcare system and, if followed, would prevent WTO Members from organising their healthcare 
systems in the most cost -effective manner. It also goes against the approach taken in the E uropean 
Union 's legal system whereby contracts through which a statutory insurance fund pays part of the 
costs of medical equipment provided by a private company directly to patients appear to fall within 
the scope of "public supply contracts " and thereby public procurement.  
1. The localisation measure is a "law, regulation, or requirement governing procurement " 
36. Article III:8(a) of the GATT 1994 applies to measure constituting "laws, regulations or 
requirements governing procurement ". This means that th ere must be "an articulated connection 
between the laws, regulations, or requirements and the procurement, in the sense that the act of 
procurement is undertaken within a binding structure of laws, regulations, or requirements ".5  
37. The localisation measure constitutes a "requirement " because compliance with the localisation 
measure determines whether or not a medicine will be covered by the "reimbursement scheme ", i.e. 
whether that medicine will continue to be paid for by the SSI for  the benefit of the Turkish population. 
The European Union appears to agree that the localisation measure constitutes a "requirement ". 
38. Furthermore, the localisation measure "governs " the procurement of medicines included in 
Annex 4/A because the compli ance with the localisation measure determines whether a medicine 
will remain included and keep the active status in Annex 4/A. Only medicines with an active status 
in Annex 4/A are subject to the SSI procurement. It follows that there is an articulated con nection 
between the localisation measure and the procurement.  
39. Contrary to what the European Union argues, the Turkish healthcare and social security 
system involves the procurement  by the SSI of medicines included in Annex 4/A and dispensed to 
patients . 
40. The term "procurement " refers to "the process pursuant to which a government acquires 
products ".6 In the present case, the existence of procurement, i.e. the process pursuant to which 
the SSI acquires medicines included in Annex 4/A, is demonstrated  by the fact that the SSI controls 
the entire process of obtaining and dispensing those medicines to patients. More specifically, (i) the 
SSI decides which medicines are listed in Annex 4/A; (ii) the SSI, together with the TMMDA, sets 
the prices of those m edicines at all stages of the supply chain including the public price charged to 
the SSI, which is lower than the retail price charged for those medicines to a private party as a result 
of the application of statutory public discounts; (iii) the SSI signs contracts with retail pharmacies 
pursuant to which the latter dispense medicines included in Annex 4/A to patients in Turkey, (iv) the 
SSI approves the provision of medicines to be dispensed to patients through the Medula system and 
thereby purchases those  medicines for the patients, and (v) finally, the SSI pays the public price for 
those medicines based on consolidated invoices it receives from the retail pharmacies.  
41. It follows that, contrary to what the European Union argues, the role of the SSI is n ot limited 
to a mere financing of medicines included in Annex 4/A but is much broader and involves 
procurement  of those medicines. The retail pharmacies play an important role in that process by 
acting on behalf of the SSI on the basis of the Protocol and the contracts signed between individual 
pharmacies and the SSI.  
 
4  Panel Reports, Canada – Renewable  Energy / Canada – Feed-in Tariff , para. 7.118. (footnotes 
omitted).  
5  Appellate Body Reports, Canada – Renewable Energy / Canada – Feed-in Tariff Program , para. 
5.58.   
6  Appellate Body Reports, Canada – Renewable Energy / Canada – Feed-in Tariff Progra m, para. 
5.59. WT/DS583/12/Add.1  
 
- 59 - 
 
  2. The procurement is done "by governmental ag ency" 
42. The term "governmental agency " in Article III:8(a) of the GATT 1994 has been interpreted as 
referring to "an entity acting for or on behalf of government and performing governmental functions 
within the competences conferred on it ".7 
43. The SSI  constitutes a governmental agency within the meaning of Article III:8(a) of the GATT 
1994 because it is a public institution established by law, which acts on behalf of the Turkish 
government and performs governmental function namely the provision of soci al security and 
healthcare, including pharmaceutical products, to the Turkish population.  
44. The European Union agrees with Turkey that the SSI is a "governmental agency " within the 
meaning of Article III:8(a) but argues that the SSI does not purchase me dicines included in Annex 
4/A. In essence, the European Union argues that "purchase " refers to a specific contractual 
arrangement which requires the governmental agency to acquire property over a product and to 
have a physical possession over that product.  This is wrong.  
45. Although Article III:8(a) does not define the concept of "purchase ", the ordinary meaning of 
that term suggests that it involves a payment in exchange for a good. The specific features of a 
purchase, including whether the governmental a gency obtains the physical possession or property 
rights over the product, will vary depending on factors such as the nature of the purchased product. 
Turkey considers that nothing in the ordinary meaning of the word "purchase " or in the text of Article 
III:8(a) suggests that a purchase must, in each and every case, involve acquiring property rights 
over a product.  
46. The SSI purchases the medicines included in Annex 4/A from the retail pharmacies and 
instructs them to dispense those medicines directly to patients. In particular, a specific purchase 
transaction occurs when a patient presents a prescription for a medicine included in Annex 4/A in a 
retail pharmacy and the provision of that medicine to the patient is approved through the Medula 
system. At tha t moment, the SSI acquires the right to dispose of that medicine by dispensing it – 
through the pharmacy – to the patient. Contrary to what the European Union argues that approval 
does not merely confirm that the patient is under SSI coverage and that the medicine contained in 
the prescription is included in Annex 4/A. Importantly, that approval also means that the medicine 
may be invoiced by the pharmacy to the SSI at the previously set public price, which thereby 
purchases that medicine for the patient.  
47. Article III:8(a) applies in the present case also because the purchase of medicines included in 
Annex 4/A by the retail pharmacies from the wholesalers is made on behalf of the SSI. In order to 
provide the services pursuant to the Protocol and the indi vidual contracts between retail pharmacies 
and the SSI, retail pharmacies must first obtain pharmaceutical products included in Annex 4/A from 
the wholesalers in order to then dispense them to patients. Nothing in Article III:8(a) precludes the 
interventio n of another entity as long as that entity intervenes on behalf of the relevant 
governmental agency. In the present case, the retail pharmacies are classified as primary healthcare 
service providers and as such perform certain duties on behalf of the SSI. It follows that to the 
extent the retail pharmacies perform certain duties for the SSI, based on the provisions of the 
Protocol and the individual contracts with the SSI, they act as governmental agencies.  
48. Contrary to what the European Union argues, pa tients do not purchase medicines listed in 
Annex 4/A. Rather they are the receivers of the prescribed medicines that are purchased for them 
by the SSI. The existence of a purchase transaction requires mutual rights and obligations between 
the parties. Ther e are no mutual rights and obligations between the patients and the pharmacies. 
The mutual rights and obligations, based on the Protocol and the individual contracts, arise only 
between the pharmacies and the SSI.  
 
7  Appellate Body Reports, Canada – Renewable Energy / Canada – Feed-in Tariff Program , para. 
5.61. WT/DS583/12/Add.1  
 
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  3. The localisation measure involves procu rement of products purchased for "governmental 
purposes " 
49. The term "products purchased for governmental purposes " in Article III:8(a) refers to 
"products purchased for the use of government, consumed by government, or provided by 
government to recipient s in the discharge of its public functions ".8 
50. Medicines included in Annex 4/A are purchased for governmental purposes within the meaning 
of Article III:8(a) because they are provided by the SSI, through the retail pharmacies, to patients 
in the discha rge of its public function, namely the provision of healthcare services to the Turkish 
population. The European Union appears to agree that the provision of healthcare services 
constitutes a public function but takes issue with the fact that it is the reta il pharmacies that dispense 
medicines listed in Annex 4/A to patients.  
51. Turkey explained that for practical reasons, in order to improve the efficiency of the system 
and to reduce its costs, medicines purchased by the SSI are dispensed to patients by t he retail 
pharmacies which act on behalf of the SSI. The fact that retail pharmacies act on behalf of the SSI 
is demonstrated by the provisions of the Turkish legislation, the terms of the Protocol and the 
individual contracts signed between the SSI and th e retail pharmacies. It is also confirmed by the 
fact that retail pharmacies receive a service fee from the SSI for the service they provide on its 
behalf, that is the provision of medicines included in Annex 4/A to patients as well as the fact that 
retail pharmacies collect the contribution fee from the patients for the SSI.  
52. Turkey also explained that in the past, the SSI itself obtained the medicines from the 
wholesalers and dispensed them to patients through pharmacies run by the SSI. Since that sys tem 
was not efficient, it has been changed, with the introduction of the Transformation in Health Program 
in 2003, to a system whereby medicines are dispensed through retail pharmacies. The essence of 
the system after the reform remains unchanged, the only  difference being that part of the tasks 
previously carried out by the SSI has now been delegated to the retail pharmacies.  
53. Interestingly, the European Union appears to agree that pharmacies act on behalf of the SSI 
when they dispense medicines to pati ents in the context of its claim under Article 3.1(b) of the SCM 
Agreement where it argues that the SSI "entrusts " or "directs " the pharmacies to perform the 
function of "providing goods " to outpatients and that such function is one "normally vested in the  
government ". 
4. The procurement is not done with a view to commercial resale or with a view to production of 
goods for commercial sale  
54. Article III:8(a) of the GATT 1994 does not apply to procurement "with a view to commercial 
resale or with a view to production of goods for commercial sale ". A "commercial resale " is a "resale 
of a product at arm 's length between a willing seller and a willing buyer ".9  
55. The procurement of medicines by the SSI is not done with a view to commercial resale since 
medicines are not resold on the commercial market but are dispensed by retail pharmacies – on 
behalf of the SSI – to patients. They are provid ed to patients upon presentation of a relevant 
prescription and are, at that moment, purchased for the patients by the SSI.  
56. The fact that the patient may need to pay a contribution fee or the difference between the 
price of the received medicine and t he price paid by the SSI in case the patient opts for a more 
expensive medicine within the equivalent group does not mean that there is a commercial resale 
transaction between that patient and the pharmacy. The payment made by the patient is not 
economical ly significant compared to the cost of the medicine.  
57. When dispensing medicines included in Annex 4/A to patients, retail pharmacies provide a 
service on behalf of the SSI and receive a fixed service fee for that service. This further confirms 
 
8  Appellate Body Reports, Canada – Renewable Energy / Canada – Feed-in Tariff Program , para. 
5.74.   
9  Appellate Body Reports, Canada – Renewable Energy / Canada – Feed-in Tariff Program , para. 
5.70.   WT/DS583/12/Add.1  
 
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  that the  provision of medicines included in Annex 4/A to patients does not constitute "commercial 
resale ". 
58. Similarly, the SSI does not procure the medicines with a view to using them in the production 
of goods for commercial sale. Medicines listed in Annex 4/A  are procured by the SSI with a view to 
ensure the access to medicines and, more generally, to provide adequate healthcare to the Turkish 
population. Those medicines are dispensed to patients to address their specific health needs.  
C. The localisation meas ure is not inconsistent with Article X:1 of the GATT 1994  
59. The Panel must reject the European Union 's claim under Article X:1 of the GATT 1994 for the 
following reasons.  
60. First, the European Union keeps changing the scope of its claim. Indeed, in its  Panel Request 
and its written submissions, the European Union has taken issue with the non - or inappropriate 
publication of certain elements, terms and conditions of the localisation measure, the localisation 
measure as a single measure or some specific l egal instruments or documents.  
61. Second, to the extent that what the European Union challenges is the "Localisation 
Requirement " as a single measure, the European Union fails to show that that measure falls within 
the scope of Article X:1 of the GATT 19 94. In particular, the European Union fails to show that the 
localisation measure is a "law, regulation, judicial decision or administrative ruling of general 
application " which has been made effective by Turkey. It also fails to demonstrate that that meas ure 
has not been published promptly in such a manner as to enable governments and traders to become 
acquainted with it.  
62. Third, to the extent that what the European Union challenges is the lack of adequate and 
prompt publication of some specific legal i nstruments or documents, if those legal instruments and 
documents have not been identified in the Panel Request, they are outside the Panel 's terms of 
reference. This applies in particular to the Roadmap and the HSPC Decision regarding the Localisation 
Process. Regarding the other legal instruments and documents, such as the localisation 
announcements, private communications and presentations, the European Union has failed to show 
that they fall within the scope of Article X:1 of the GATT and that they have  not been published 
promptly and adequately as required by Article X:1.  
63. Announcement which are published on a publicly accessible government website in their final 
version are published "in a manner as to enable governments and traders to become acqua inted 
with them ". Private communications sent and presentations delivered by government officials do not 
have a general scope of application, nor have been "made effective " and therefore fall outside the 
scope of Article X:1.  
D. The localisation measure i s justified under Article XX(b) of the GATT 1994  
64. Should the Panel find that the localisation measure does not fall within the scope of Article 
III:8(a) of the GATT 1994 and is inconsistent with Article III:4 of the GATT 1994 and Article 2.1 of 
the TRIM s Agreement – quod non – any such inconsistency is justified under Article XX(b) of the 
GATT 1994.  
65. Article XX(b) justifies GATT -inconsistent measures that are "necessary to protect human, 
animal or plant life or health ". The responding party must show  that the measure is provisionally 
justified under paragraph (b) of Article XX and meets the requirements of the chapeau.  
1. The localisation measure is provisionally justified under Article XX(b) of the GATT 1994  
66. To be provisionally justified under A rticle XX(b), the policy objective pursued by the measure 
must be the protection of human, animal or plant life or health; and the measure must be necessary 
to fulfil that policy objective. The determination whether the challenged measure is necessary to 
fulfil that policy objective is based on a weighing and balancing of the importance of the interests or 
values at stake, the extent of the contribution to the achievement of the measure 's objective, and 
its trade restrictiveness.10 If the Panel finds that the challenged measure is necessary, it may confirm 
this finding by comparing the measure at issue with alternative measures that are less -trade 
 
10  Appellate Body Report, Brazil – Retreaded Tyres , para. 178.   WT/DS583/12/Add.1  
 
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  restrictive while providing an equivalent contribution to the achievement of the measure 's objective. 
The burde n to identify such alternative measures rests of the European Union.  
a. The localisation measure is designed to protect human life and health  
67. The localisation measure is designed to ensure an uninterrupted access to safe, effective and 
affordable medi cines for all patients in Turkey which falls within the range of policies to protect 
human life and health within the meaning of Article XX(b) of the GATT 1994.  
68. Local production is recognised by the WHO and other international organisations as an 
effective tool for improving access to medicines. By requiring that certain medicines be produced 
domestically in order to be included in Annex 4/A, the localisation measure seeks to ensure that 
those medicines are available to patients in Turkey.  
69. Contrar y to what the European Union argues, the localisation measure is not a tool to remedy 
any potential short -term shortage of supply but serves the long -term objective of ensuring stable 
access to safe, effective and affordable medicines in Turkey.  
70. This requires addressing long -term pressures exerted on the Turkish healthcare and social 
security system, including a growing and aging population, in addition to any acute risks to the 
supply of medicines that may arise from global pandemics or other emergenc ies. Access to medicines 
requires both their availability and affordability. Turkey considers that local production of medicines 
in Turkey is necessary to preserve and improve the long -term availability of safe and effective 
medicines which the healthcare system can continue to provide in a financially sustainable manner.   
71. The fact that the localisation measure is designed to protect human life and health by ensuring 
adequate access to medicines in Turkey is confirmed by the design and structure of that measure, 
as well as the authorities responsible for its implementation. It is also recognised in a number of 
official documents.   
72. Furthermore, the fact that the localisation measure may be seen as pursuing an industrial 
policy objective, in addition to the public health objective, does not preclude the measure from being 
justified under Article XX(b) of the GATT 1994. A measure may pursue multiple objectives which will 
often be intertwined and may be advanced in a mutually supportive manner.11 The fact that policies 
supporting local production of medicines may be seen as pursuing both public health and industrial 
objectives and that these two objectives are complementary has been recognized by the WHO and 
the European Union itself in its recent Pharmaceutical Strategy for Europe.  
b. The localisation measure is necessary to  protect human life and health  
73. The localisation measure is "necessary " because it pursues an extremely vital objective, is apt 
to materially contribute to that objective and is not trade restrictive.  
74. First, it is well established that the more vita l or important the interests or values pursued by 
a measure, the easier it is to accept that measure as necessary12 and that the preservation of human 
life and health is "both vital and important to the highest degree ".13 The European Union agrees that 
the "objective to ensure adequate access to medicines falls within the scope of Article XX(b) of the 
GATT 1994 and is ‘extremely vital and important '". 
75. Second, the localisation measure is apt to make a material contribut ion to the objective of 
ensuring stable access to medicines in Turkey. This is supported by a number of documents and 
statements from the WHO and other international organisations such as UNCTAD, UNIDO or the 
OHCHR which endorse local production as a way t o improve access to medicines and thereby improve 
public health.  
76. Whereas local production of medicines may have different effects in different countries, the 
factors which may jeopardize the successful implementation of a localisation policy, such as a weak 
regulatory environment, a lack of availability of quality -assured materials or a skilled workforce, are 
 
11  Appellate Body Reports, US – Clove Cigarettes , paras. 113, 115, US – Tuna II (Mexico) , para. 
302.   
12  Appellate Body Report, Korea – Various Measures on Beef , para. 162.  
13  Appellate Body Report, EC – Asbestos , para. 172.  WT/DS583/12/Add.1  
 
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  not present in Turkey. Furthermore, the available studies suggest that localisation policies materially 
contribute to ensuring access to medicine s, especially for rural populations.  
77. Finally, contrary to what the European Union argues Turkey is not required to present 
quantifiable effects of the localisation measure. In fact, since the implementation of the localisation 
measure is still ongoing , given that only two of its five phases have been implemented so far, it is 
too early to accurately evaluate and quantify the effects of the measure. In that regard, the Appellate 
Body has recognized that "certain complex public health […] problems may be  tackled only with a 
comprehensive policy comprising a multiplicity of interacting measures " and thus, in short term, it 
might be "difficult to isolate the contribution to public health […] objectives of one specific measure 
from those attributable to the other measures that are part of the same comprehensive policy ".14 
78. Third, the localisation measure is not trade restrictive. The localisation measure does not 
restrict the importation of medicines to Turkey but relates to the status of certain medicine s in Annex 
4/A, which provides the list of medicines paid for by the SSI.  
79. Medicines which do not comply with the localisation measure may continue to be imported 
and placed on the Turkish market without any restrictions. While the SSI will not procure  such 
medicines, as acknowledged by the European Union, other entities such as private insurance 
companies may still purchase those medicines. The localisation measure is also implemented in a 
flexible manner whereby pharmaceutical companies are granted a transition period and may propose 
localisation of alternative products. These features of the localisation measure ensure that its trade 
restrictiveness is limited as much as possible. In any event, any trade -restrictive effects of the 
localisation measure  are outweighed by a material contribution which that measure makes to the 
achievement of its public health objective.  
80. There are also no less trade restrictive alternative measures which are reasonably available 
and would achieve the objective of ensur ing access to medicines in Turkey to the same degree as 
the localisation measure. In fact, the European Union has failed to satisfy its burden of proof because 
it merely enumerated general categories of measures which may be "useful for improving access to  
medicines " but failed to explain how any of these measures would contribute to ensuring 
uninterrupted access to safe, effective, and affordable medicines in Turkey.  
81. In any case, the alternative measures put forward by the European Union do not consti tute 
viable "alternative measures ". First, since the localisation measure serves the long -term objective 
of ensuring uninterrupted access to safe, effective and affordable medicines, any measure that may 
remedy an ad hoc  short-term shortage of supply is no t an alternative to the localisation measure. 
Second, measures which are already in place in Turkey do not constitute alternative measures, so 
that they cannot be taken into account. Finally, measures which rely on investment promotion, such 
as the facilit ation of joint ventures with foreign pharmaceutical manufacturers are not capable of 
ensuring reliable access in times of increased worldwide demand for medicines, as demonstrated by 
the COVID -19 pandemic.  
2. The localisation measure is applied in accordan ce with the chapeau of Article XX of the GATT 
1994 
82. Measures which are provisionally justified under one of the paragraphs of Article XX cannot, 
pursuant to the chapeau of Article XX, be applied in a manner that constitutes arbitrary or 
unjustifiable di scrimination between countries where the same conditions prevail or that constitutes 
a disguised restriction on international trade.  
83. The localisation measure applies indistinctly to pharmaceutical products falling within the 
scope of localisation irres pective of the country of origin of the products. While based on objective 
criteria, it provides necessary flexibility for taking into account the circumstances of specific 
pharmaceutical companies. Pharmaceutical companies whose products are subject to lo calisation 
are able to request exemption by proposing to localise an alternative product or request additional 
time to complete localisation.  
84. Furthermore, the implementation of the localisation measure through five phases follows a 
discernible logic an d has a clear rational connection with its public health objective. Turkey sought 
to minimize the risk of a short -term shortage of supply due to the implementation of the measure 
 
14  Appellate Body Report, Brazil – Retreaded Tyres , para. 151.   WT/DS583/12/Add.1  
 
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  by including in the first and second phases only medicines that, to a certain  extent, are already 
produced in Turkey. This approach balances long -term supply security with avoiding short -term 
shortages and does not give rise to a contradiction, contrary to what the European Union suggests.  
85. It follows that the localisation measu re is applied in conformity with the chapeau and is 
therefore justified under Article XX(b).  
E. The localisation measure is justified under Article XX(d) of the GATT 1994  
86. In the alternative, the localisation measure is justified under Article XX(d) of the GATT 1994 
because it is necessary to secure compliance with the laws and regulations requiring Turkey to 
ensure accessible, effective and financially sustainable healthcare.  
87. To justify a measure that is inconsistent with the GATT 1994 under Article XX(d), the 
responding party must identify (i) "laws or regulations " that are consistent with the provisions of the 
GATT 1994. The challenged measure must be (ii) "necessary " to "secure compliance " with the "laws 
or regulations " that the responding party identifies. In addition, the measure must meet the 
requirements of the chapeau of Article XX.  
1. Laws and regulations requiring Turkey to ensure accessible, effective and financially  
sustainable healthcare system  
88. The term "laws and regulations " in Article XX(d) covers "rules of conduct and principles 
governing behaviour or practice that form part of the domestic legal system of a Member ".15 Such 
rules or principles may be laid do wn in specific provisions of a specific instrument, or several 
elements or parts of one or more instruments under a Member 's domestic legal system.16 Rules of 
international law "may have direct effect within the domestic legal systems of some Members with out 
specific domestic action to implement such rules ".17 
89. Articles 2, 56 and 60 of the Turkish Constitution, Law No. 5510 and Article 405 of Presidential 
Decree No. 4, as well as several international human rights treaties to which Turkey is a party, in 
particular Articles 9 and 12 of the International Covenant on Economic, Social and Cultural Rights 
("ICESCR ") and Articles 11(1) and 12 of the European Social Charter ( "ESC"), together impose a 
rule that Turkey must provide accessible, effective and financially sustainable healthcare. The 
ICESCR and ESC are international agreements that contain fundamental rights and freedoms and 
therefore apply directly in the Turkish domestic legal order by virtue of Article 90 of the Turkish 
Constitution. These  domestic and international instruments are themselves not GATT inconsistent. 
As a result, the obligation to ensure accessible, effective and financially sustainable healthcare falls 
within the scope of Article XX(d) of the GATT 1994.  
2. The localisation m easure is necessary to secure compliance with such "laws or regulations " 
90. A measure is necessary to secure compliance with GATT -consistent laws and regulations if 
two conditions are met.  
91. First, the measure is designed ‘to secure compliance ' with sp ecific rules, obligations, or 
requirements under the relevant provisions of such ‘laws and regulations '", meaning that it must not 
be "incapable " of securing compliance with the identified rules or regulations.18  
92. The localisation measure, by encourag ing domestic production of medicines in Turkey, with a 
focus on local production of common medicines which are most essential for healthcare needs, is 
not "incapable " of ensuring that the provision of those medicines by the SSI remains financially 
viable i n the future, so as to ensure accessible and effective healthcare.  
93. Second, the assessment of the "necessity " of the challenged measures involves the "weighing 
and balancing " of (i) the importance of securing compliance with the laws or regulations at issue; 
(ii) the contribution of the measure to securing compliance with the laws or regulations at issue; 
 
15  Appellate Body Report, India – Solar Cells , para. 5.106.  
16  Appellate Body Report, India – Solar Cells , para. 5.111.   
17  Appellate Body Report, India – Solar Cells , para. 5.140.  
18  Appellate Body Reports, India – Solar Cells , para. 5.58; Colombia – Textiles , para. 5.135; Panel 
Report, Indonesia – Chicken , para. 7.248.   WT/DS583/12/Add.1  
 
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  and (iii) the trade -restrictiveness of the measure.19 If this assessment renders the preliminary 
conclusion that the measure is necessary, the burden  shifts to the complainant to show that the 
invoked objective could be achieved with less trade -restrictive alternative measures.  
94. The right to health and social security are of central importance in guaranteeing human 
dignity. Ensuring the long -term su stainability of the Turkish social security system as well as the 
stable supply of medicines are interrelated objectives that ultimately serve a vital and important 
health interest.20 The European Union appears to agree that ensuring accessible, effective  and 
financially sustainable healthcare is of vital importance.  
95. The localisation measure contributes to securing compliance with the obligation to ensure 
accessible, effective, and financially sustainable healthcare by encouraging the domestic producti on 
of medicines listed in Annex 4/A. Turkey submits that for the financial sustainability, the healthcare 
system should rely more on domestic products, since the medicines which are domestically produced 
are less costly over the years and they are more eas ily supplied.  
96. As explained above in the context of Article XX(b), the localisation measure is not trade 
restrictive and, in any event, the degree of restrictiveness is offset by the measure 's contribution to 
its objective.  
97. Finally, there are no l ess trade restrictive alternative measures which are available to Turkey 
and would achieve its objective to the same degree as the localisation measure. By providing an 
open-ended list of vaguely described policies, the European Union has failed to identif y "alternative 
measures " for the purpose of Article XX(d) of the GATT 1994. In any case, the general measures 
put forward by the European Union would not preserve Turkey 's chosen level of protection. In 
particular, the suggestion that Turkey cuts spending and raises taxes and patients ' co-payments 
would negatively impact the accessibility of the healthcare system and risk further impoverishing 
already disadvantaged populations.  
3. The localisation measure is applied in accordance with the chapeau of Article  XX 
98. The localisation measure serves the long -term objective of ensuring uninterrupted access to 
medicines in Turkey while preserving the financial sustainability of the Turkish healthcare system. 
The measure thus covers all pharmaceutical products incl uded in Annex 4/A, i.e. products that are 
purchased by the SSI and provided to patients. The fact that the measure does not differentiate on 
the basis of the price of the pharmaceutical products cannot lead to a conclusion that its application 
amounts to a rbitrary or unjustifiable discrimination. Indeed, access and sustainability must be 
ensured with regard to all medicines included in Annex 4/A.  
99. Accordingly, the manner in which the localisation measure is implemented has a clear rational 
connection to  its aim and therefore the localisation measure meets the requirements of the chapeau 
of Article XX of the GATT 1994.  
F. The localisation measure is not inconsistent with Article 3.1(b) of the SCM 
Agreement  
100. The European Union 's alternative claim under  Article 3.1(b) of the SCM Agreement must be 
rejected because the system of the provision of medicines included in Annex 4/A to patients does 
not involve the granting of a subsidy and, in any case, any alleged subsidy is not contingent upon 
the use of dome stic over imported products.  
1. No financial contribution  
101. For a subsidy to exist there must be a financial contribution that confers a benefit. The 
evaluation of the existence of a "financial contribution " involves examining the nature of the 
transaction through which something of economic value is transferred by  a government to economic 
operators as opposed to its effects.21 Article 1.1 (a)(1) of the SCM Agreement outlines various 
 
19  Appellate Body Report, India – Solar Cells , para. 5.59.  
20  Appellate Body Report, EC – Asbestos , para. 172.   
21  Appellate Body Report, US – Softwood Lumber IV , para. 52   WT/DS583/12/Add.1  
 
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  transactions deemed to be forms of financial contributions under the SCM Agreement. In the present 
case, the European Union has faile d to establish the existence of a financial contribution.  
102. First, contrary to what the European Union argues there is no financial contribution in the form 
of direct transfer of funds. This is because the payments made by the SSI to retail pharmacies f or 
medicines that are dispensed to outpatients constitute normal payments for goods purchased by the 
SSI from the pharmacies. Adopting the European Union 's view would turn virtually any government 
payment for purchased goods into a "transfer of funds ". This view does not align with the Appellate 
Body's finding that the bracketed examples in Article 1.1 (a)(1)(i) are illustrative of the conduct 
captured by the sub -paragraph (i).22 The specific examples (grants, loans, and equity infusion) 
indicate that A rticle 1.1 (a)(1)(i) is concerned with various forms of government capital or debt 
financing to an economic operator to the exclusion of normal payments for goods supplied on behalf 
of a government entity. This is confirmed by the Appellate Body 's findings  in Canada – Renewable 
Energy / Canada – Feed-in Tariff Program , where the Appellate Body rejected Japan 's argument that 
the government payments for electricity constituted direct transfers of funds.23 
103. Second, the fact that retail pharmacies can be s een as being "entrusted " or "directed " by the 
SSI to dispense medicines to outpatients, does not mean that the system of the provision of 
medicines listed in Annex 4/A amounts to a "subsidy " within the meaning of the SCM Agreement. 
This is because the prov ision of medicines included in Annex 4/A to outpatients does not confer any 
indirect benefit on the pharmaceutical companies and the direct benefit conferred on outpatients 
falls outside the scope of the SCM Agreement. Thus, a holistic analysis of the meas ure at issue shows 
that it does not qualify as a subsidy, understood as a financial contribution which confers a benefit, 
within the meaning of the SCM Agreement.  
2. No benefit  
104. The European Union argues that the two types of financial contributions i t has identified confer 
a direct benefit upon outpatients because the latter are "better -off" compared to a situation where 
they would be required to pay to the retail pharmacies the full price of the medicine included in 
Annex 4/A. The European Union furt her argues that because of the direct benefit conferred upon the 
outpatients, there is an indirect benefit  on producers of medicines included in Annex 4/A as the 
financial contributions lower the cost of those medicines to the outpatients making them more 
attractive relative to imported like products not included in Annex 4/A. These arguments must be 
rejected.  
105. First, the direct benefit  to outpatients falls outside the scope of the SCM Agreement.  
106. Indeed, the scope of the SCM Agreement is limited t o economic entities that receive a 
"benefit ". This is confirmed by the text of several provisions of the SCM Agreement, including Articles 
2.1, 6(1)(b), 11.2(ii) and 19.3, which refer to "enterprise ", "industry ", "firm" or "producer ". These 
textual referen ces and emphasis on the notion of industry or enterprise support the interpretation 
that the SCM Agreement does not contemplate an individual citizen (consumer), in the present case 
a patient, as the recipient of a "benefit ". This is confirmed by the objec t and purpose of the SCM 
Agreement which is to impose "multilateral disciplines " on subsidies which "distort international 
trade ".24 Subsidies which assist citizens by ensuring their access to medicines are not subsidies 
which distort international trade.  Thus, patients are not the "recipient " of a benefit within the 
meaning of the SCM Agreement. In that sense any "benefit " conferred on the patients falls outside 
the scope of the SCM Agreement.  
107. Second, there is no indirect benefit  to producers of pharmaceutical products included in Annex 
4/A. 
108. The European Union bears the burden to show how the "benefit " flows from the direct subsidy 
recipient (i.e. outpatient) to the indirect subsidy recipient (i.e. pharmaceutical companies). This 
cannot be simply presumed. The European Union, however, has failed to meet this burden.  
 
22  Appellate Body Report, US – Large Civil Aircraft (2nd Complaint) , para. 615.  
23  Appellate Body Reports, Canada – Renewable Energy / Canada – Feed-in Tariff Program , para. 
5.131.  
24  Panel Report, Canada – Aircraft , para. 9.119.   WT/DS583/12/Add.1  
 
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  109. The direct benefit provided to patients is not transmitted or passed through to the producers 
of pharmaceutical products because there is no relationship – contractual or of any other kind – 
between the patients and the producers. Thus, the situation in the present case is very different 
from the situation in Brazil – Aircraft (Article 21.5 – Canada II) , referred to by the European Union.  
110. Medicines includ ed in Annex 4/A are prescribed by medical doctors on the basis of specific 
health needs of a given patient and are paid for by the SSI. Patients do not know whether the 
medicine prescribed to them by a medical doctor is domestic or imported. Patients do no t go to a 
retail pharmacy and choose the medicine of their liking. They are not the "purchasers " of medicines 
included in Annex 4/A. Rather, patients come to a retail pharmacy with a prescription issued by a 
medical doctor and are provided with the medicin e that was prescribed to them in a specific dose 
and for a specific period of time.  
3. No contingency upon the use of domestic over imported products  
111. To be prohibited by Article 3.1(b) of the SCM Agreement, a subsidy must be "contingent upon 
the use of domestic over imported goods ". The European Union argues that this requirement is met 
because the alleged subsidy is contingent upon the use of domestic over imported medicines by 
patients. This argument must be rejected.  
112. The localisation measure is addressed only to producers of pharmaceutical products and not 
to patients. It therefore does not impose any condition or requirement for the patients to use 
domestic over imported medicines. Furthermore, the use of medicines by patients does not lead t o 
contingency within the meaning of Article 3.1(b) of the SCM Agreement. The term "use" refers to 
"consuming a good in the process of manufacturing " or "incorporating a component into a separate 
good, or serving as a tool in the production of a good ".25 This interpretation of the term "use" in 
Article 3.1(b) of the SCM Agreement is consistent with the fact that the "recipient " of a "benefit " as 
contemplated by the SCM Agreement is a producer, an enterprise, an industry or a firm and not 
individual citizen or consumer. Thus, the personal medical use of pharmaceutical products by 
patients in Turkey does not constitute "use" within the meaning of Article 3.1(b) of the SCM 
Agreement. This position is supported by Canada.  
113. In any case, the contingency requi rement must be satisfied at the level of the entity which 
has received the subsidy falling within the scope of the SCM Agreement, namely the economic 
operators. Indeed, any contingency relating to a "subsidy " which is outside the scope of the SCM 
Agreement  logically cannot be inconsistent with Article 3.1(b). This means that any alleged 
contingency on the "use" of domestic over imported medicines by patients  is inapposite for the 
purpose of the European Union 's claim under Article 3.1(b) of the SCM Agreemen t. 
114. Furthermore, to the extent that the European Union takes issue with the fact that the 
localisation measure requires the production of medicines in Turkey in order for those medicines to 
be included in Annex 4/A, there can be no violation of Article  3.1(b) of the SCM Agreement as it 
does not prohibit the subsidization of the domestic "production " per se . The localisation measure 
sets a local production requirement for the procurement of certain group of medicines by the SSI. 
It does not require the u se of any domestic inputs in the production process. It follows that the 
alleged subsidy to pharmaceutical companies, if anything, is conditional upon the domestic 
production of medicines and not upon the use of domestic over imported goods. A measure whic h 
requires the siting of certain manufacturing activities in a WTO Member does not make a subsidy 
contingent upon the use of domestic over imported products.26 
V. THE IMPORT BAN  
115. For placing a medicine on the Turkish market, that medicine must inter alia have received a 
valid marketing authorization. The purpose of this authorization is for the Ministry of Health to ensure 
that medicines placed on the market are effective in their designated use, are safe and feature the 
appropriate pharmaceutical pro perties.  
116. Once a real person or a legal entity obtains a marketing authorization for a medicine, they 
cannot obtain a second marketing authorization for a product which is identical in all respects , having 
 
25  Appellate Body Report, US – Tax Incentives , para. 5.8. See also Appellate Body Report,  Brazil – 
Taxation , para. 5.242.   
26  Appellate Body Report, US – Tax Incentives , paras. 5.41, 5.75 -5.76.   WT/DS583/12/Add.1  
 
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  the same composition and the same pharmaceutic al form and commercial name. This rule, set out 
in Article 20(2) of the Marketing Authorisation Regulation, applies to all medicines regardless of 
whether they are imported or produced domestically.  
117. The European Union argues that the localisation meas ure in conjunction with the single 
authorisation rule results in an "import ban " on localised medicines inconsistent with Article XI:1 of 
the GATT 1994. This claim must be rejected.  
A. The European Union has failed to establish the existence and precise content of the 
import ban  
118. To the extent that the European Union describes the measure as the "import ban on localised 
products ", it must demonstrate the existence of a formal prohibition on the importation of localised 
medicines. There is, how ever, no such prohibition on the importation of medicines in Turkey.  
119. First, the same medicine can receive a different marketing authorization if it is presented in a 
different form or has a different dosage. Second, a "special import authorization " may be requested 
in specific circumstances for exactly the same medicine. Third, a single marketing authorization may 
indicate multiple production sites in Turkey or abroad. Finally, contrary to what the European Union 
argues sister companies, with separate  legal entities, may obtain different marketing authorizations 
for the same product and products with the same active ingredient may have different marketing 
authorizations when intended for different therapeutic indications.  
120. Since the European Union  has failed to establish the existence of a measure formally 
prohibiting the importation of localised pharmaceutical products, i.e. the import ban, the Panel 
should not proceed with examining the claim of inconsistency with Article XI:1 of the GATT 1994.  
B. There is no violation of Article XI:1 of the GATT 1994  
121. The European Union 's claim must be rejected as Article XI:1 of the GATT 1994 is not applicable 
given that the measure causing the alleged restriction is an internal measure which falls within t he 
scope of Article III of the GATT 1994 and not of Article XI:1.  
122. Indeed, the measure causing the alleged restriction, if any, is not the "import ban " which 
constitutes the effect, but Article 20(2) of the Marketing Authorization Regulation. This rul e is an 
internal measure which falls within the scope of Article III of the GATT 1994.  
123. Article 20(2) of the Marketing Authorization Regulation which is part of the marketing 
authorization rules constitutes a law, regulation or requirement which affect  the internal sale and 
offering for sale of pharmaceutical products, within the meaning of Article III:4 and it therefore falls 
within the scope of that provision. This rule applies to all products, regardless of where they are 
manufactured, namely in Turk ey or abroad. It follows that the restriction, if any, is a restriction of 
not getting a second marketing authorization and is thus not a restriction "on the importation ", that 
is a restriction "with regard to " or "in connection " with the importation of ph armaceutical products. 
The mere fact that such a rule is enforced with respect to imports at the time of importation, because 
it is easier or more efficient to do so, does not render the rule a restriction "on importation " that is 
prohibited under Article XI. Otherwise, it would mean that all domestic regulations, as they apply to 
imports, would become border measures and would consequently be prohibited pursuant to Article 
XI:1 of the GATT 1994.  
124. Furthermore, even if Article XI:1 of the GATT is found t o be applicable, quod non , there is no 
"prohibition " on the importation of localised medicines as explained above. In particular, where a 
producer can obtain an import marketing authorization for the same medicine, whether in another 
form or in a different  dosage, there is no prohibition.  
C. The import ban is justified under Article XX(d) of the GATT 1994  
125. If the Panel were to conclude that there is an import ban and that this import ban is 
inconsistent with Article XI:1 of the GATT 1994, Turkey submits  that this import ban is in any case 
justified under Article XX(d) of the GATT 1994 as necessary to secure compliance with the localisation 
measure. The latter is covered by the derogation under Article III:8(a) of the GATT 1994 and thus 
is not WTO -inconsi stent.  WT/DS583/12/Add.1  
 
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  1. The effect of the measure at issue is to ensure the effectiveness of the localisation measure  
126. The measure the European Union refers to as the import ban on localised products is the 
outcome of the rules on marketing authorization when applie d to localised products. This measure 
is necessary in order to secure compliance with the localisation measure.  
127. The measure prevents pharmaceuticals manufacturers from circumventing the localisation 
measure by localizing a negligible part of producti on of a given product and supplying the remaining 
part by importation. Without this measure, Turkey will not be able to achieve the health and 
development objectives pursued by the localisation measure.  
2. The measure at issue is necessary to secure compl iance with the localisation measure  
128. The determination of whether a challenged measure is necessary to secure compliance with a 
GATT -consistent law or regulation under Article XX(d) of the GATT 1994 involves a process of 
weighing and balancing a series  of factors, including the importance of the common interests or 
values protected by that law or regulation, the contribution made by the compliance measure to the 
enforcement of the law or regulation at issue, and the accompanying impact of the law or reg ulation 
on imports or exports.  
129. The import ban contributes to the objective of the localisation policy, which is to protect human 
life and health by ensuring an uninterrupted access to safe, effective and affordable medicines for 
all patients in Turkey . As emphasized by the Appellate Body in EC – Asbestos and as acknowledged 
by the European Union, the preservation of human life and health is "both vital and important in the 
highest degree ".27 The Panel should give appropriate weight to that.  
130. The import ban on the localised products ensures that pharmaceutical products subject to 
localisation are produced in Turkey. Indeed, without the import ban pharmaceutical companies could 
easily circumvent the localisation measure by localizing only small part  of the production while 
continuing to rely on imports. It follows that the measure substantially contributes to securing 
compliance with the localisation measure.  
131. Furthermore, the trade -restrictiveness of the measure remains limited. Indeed, although  
localised pharmaceutical products cannot be imported into Turkey, the same pharmaceutical product 
may have two marketing authorizations if it is sold in a different form or if it has a different 
composition (e.g. different salts of the active substance or  excipients or different dosage). 
Additionally, the measure is limited to one manufacturer meaning that two sister pharmaceutical 
companies registered as different legal entities may request two marketing authorizations for the 
same pharmaceutical product.  Similarly, when the same pharmaceutical product has different 
indications, that pharmaceutical product may be granted two different marketing authorizations.  
132. Turkey submits that any trade -restrictiveness of that measure is in any event outweighed by  
the fact that the measure makes a material contribution to the achievement of its objective, i.e. 
ensuring compliance with the localisation measure.  
133. Finally, there are no less trade -restrictive alternative measures which would ensure 
compliance with the localisation measure to the same degree and a labelling requirement suggested 
by the European Union does not constitute a viable alternative measure. More specifically, a labelling 
requirement would not be less trade -restrictive, since medicines would still only be paid for by the 
SSI if they were produced domestically and not if they were imported. Moreover, the labelling 
requirement would not ensure the enforcement of the localisation measure to an equivalent degree 
and would impose an undue burden on  the Turkish authorities.  
3. The measure is applied in accordance with the chapeau of Article XX  
134. Finally, the measure meets the requirements of the chapeau of Article XX of the GATT. Indeed, 
the alleged import ban does not discriminate arbitrarily since it stands in clear connection to the 
objective of enforcing the Turkish marketing authorization rul es with respect to localised products. 
The measure also does not discriminate unjustifiably since there is a clear anti -circumvention 
rationale behind the measure. Finally, the alleged import ban applies equally with respect to all 
 
27  Appellate Body Report, EC – Asbestos , para. 172.   WT/DS583/12/Add.1  
 
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  localised pharmaceutical  products regardless of origin and therefore does not discriminate between 
countries where the prevailing conditions are the same.  
135. Turkey understands that the European Union agrees that the measure is applied consistently 
with the chapeau since it has  not presented any arguments with respect to the chapeau of Article 
XX. 
VI. THE PRIORITIZATION MEASURE  
136. Turkey provides the possibility to apply for priority assessment of certain applications and 
requirements relating to pharmaceutical products in specific cases and based on objective criteria.  
In each case, priority assessment can be requested for domestically manufactured products as well 
as imported products.  
137. For GMP and marketing authorization applications, the Guideline for Wor king Principles and 
Procedures of Human Medicinal Products Priority Assessment Commission ( "Prioritization Guideline ") 
sets out the criteria for priority treatment, as well as the procedure that must be followed to obtain 
priority. Imported medicines in th e scope of the Prioritization Guideline may apply for prioritization 
in the same way as domestic products. The Prioritization Guideline requires applicants to submit a 
prioritization request, which is then considered by the TMMDA. For applications for incl usion in Annex 
4/A, the Drug Reimbursement Regulation provides that the Medicine Reimbursement Commission 
evaluates and decides on applications for inclusion in the list.  
A. The European Union has failed to establish the existence and precise content of t he 
prioritization measure  
138. If the complaining party challenges a single measure composed of several different 
instruments, it must provide evidence of "how the different components operate together as part of 
a single measure and how a single measure e xists as distinct from its components ".28 Likewise, 
challenging an ongoing conduct requires "evidence of its repeated application, and of the likelihood 
that such conduct will continue ".29 
139. Based on the description of the measure in the European Unio n's first written submission, 
Turkey understood that the European Union challenges the prioritization measure as a measure of 
general application consisting of a practice or an ongoing conduct whereby Turkey gives priority to 
the review of applications of domestic medicines over the review of the applications of like imported 
products. The European Union did not initially dispute Turkey 's description of the prioritization 
measure as an ongoing conduct or practice of general application.  
140. The European Un ion, however, has failed to provide any evidence that Turkey effectively gives 
priority to domestic pharmaceutical products over imported products, thereby failing to establish the 
existence of the prioritization measure.  
141. Whereas Turkish law provides  authorities with a possibility to give priority in certain 
administrative procedures relating to pharmaceutical products, this alone does not suffice to 
establish a general practice favouring domestic products to the detriment of imports.  
142. First, the  possibility of the Chair of Medical and Economic Assessment Committee, which 
reviews applications for medicines to be included in Annex 4/A, to hold an extraordinary meeting to 
examine applications for domestically manufactured products, does not prove th e uniform practice 
which the European Union challenge, i.e. that this discretion is in fact exercised in a manner that 
prioritises locally produced medicines.  
143. Second, the fact that certain applications for priority review are scored pursuant to the 
Prioritization Guideline based on criteria which include whether a medicine is locally produced does 
not imply that granting priority is mandatory in such cases.  
144. To the extent that the European Union later argued that it challenges as such the various  legal 
instruments supporting the prioritization measure, this does not correspond to the description of the 
 
28  Appellate Body Report, Argentina – Import Measures , para. 5.108.   
29  Appellate Body Report, Argentina – Import Measures , para. 5.108 referring to Appellate Body 
Report, US – Continued Zeroing , para. 191.   WT/DS583/12/Add.1  
 
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  measure included in the Panel Request and the European Union 's earlier submissions and would 
change the scope of the measure. Turkey further notes that it remains unclear which specific legal 
instruments are allegedly challenged as such. While the European Union specifically refers to the 
SSI Regulation and the Prioritization Guideline, it also refers to "various action plans, programmes 
and legal in struments underpinning the Prioritization Measure ". In any case, the European Union has 
failed to establish the WTO -inconsistency of those legal instruments because it has not established 
that certain laws or regulations will necessarily be inconsistent wi th Turkey 's obligations. Indeed, 
the mere possibility that priority might be granted is not enough to establish an "as such " 
inconsistency with WTO Agreements.  
B. There is no violation of Article III:4 of the GATT 1994  
145. Even if it were to be concluded that the European Union has demonstrated the existence and 
precise content of the prioritization measure, quod non , Turkey submits that there is no violation of 
Article III:4 of the GATT 1994.  
146. First, the European Union does not show that the "prioriti zation measure " as a single measure 
constitutes a law, regulation or requirement. To the extent that the European Union argues that the 
prioritization measure constitutes a "requirement " because it lays down a condition to obtain an 
advantage, i.e. priorit y, this is incorrect. Indeed, even if the product fulfils the condition, namely it 
is domestically produced, it is not necessarily so that priority will be granted. In other words, the 
discretion left to the authorities prevents from qualifying the measure  as a "requirement ". 
147. Second, no less favourable treatment is accorded to imported medicines over domestic 
medicines. Indeed, given that the authorities have discretion to assess the application for 
prioritization submitted by an applicant, there is no  competitive advantage being granted to domestic 
over imported medicines. In other words, the status of a medicine as "domestic product " does not 
guarantee that such medicine will be treated with priority.  
148. Finally, the data submitted by Turkey support  the conclusion that the European Union fails to 
make a prima facie  case that imported medicines are treated less favourably than domestically 
manufactured medicines.  
VII. CONCLUSION  
149. For the reasons outlined above, Turkey respectfully requests that the Panel reject the 
European Union 's claims and confirm that Turkey 's measures are not inconsistent with its WTO 
obligations.  
 
 
 
_______________  
 
 
 WT/DS583/ 12/Add.1  
 
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  ANNEX D  
ARGUMENTS OF THE THIRD PARTIES  
Contents  Page  
Annex  D-1 Integrated executive summary of the arguments of Canada  73 
Annex  D-2 Integrated executive summary of the arguments of Japan  77 
Annex  D-3 Integrated executive summary of the arguments of Switzerland  80 
Annex D -4 Integrated executive summary of the arguments of Ukraine  84 
Annex D -5 Integrated executive summary of the arguments of the United States  87 
 
 WT/DS583/ 12/Add.1  
 
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  ANNEX D -1 
INTEGRATED EXECUTIVE SUMMARY OF THE ARGUMENTS OF CANADA  
I. CLAIMS UNDER THE SCM AGREEMENT  
1. Canada provides its views on three issues related to the Parties' claims under the Agreement 
of Subsidies and Countervailing Measures (SCM Agreement).  First, when a complainant alleges that 
the benefit is conferred on an entity other than the entity receiving the financial contribution, it is 
for the complainan t to demonstrate that the benefit is in fact "passed through".  Second, the benefit 
analysis under Article 1.1(b) should focus on the terms of the financial contribution, and not its trade 
effects.  Third, the consumption of a pharmaceutical product by an individual patient does not 
amount to "use" for the purposes of Article 3.1(b).  
2. The Appellate Body in Canada – Aircraft  found that "a 'benefit' does not exist in the abstract, 
but must be received and enjoyed by a beneficiary or a recipient."1  Moreove r, the Appellate Body 
considered that while Article 14 of the SCM Agreement applies only for the purposes of Part V, it 
nevertheless constitutes relevant context for the interpretation of "benefit" in Article 1.1(b) and 
supports the view that the benefit i n Article 1.1(b) is concerned with the benefit to the recipient .2 
3. Although the definition of a subsidy in Article 1.1 does not contain the term "recipient", the 
Appellate Body has used this term to interpret the meaning of "direct transfer of funds".  The 
Appellate Body defined "a government practice {involving} a direct transfer of funds" as "action 
involving the conveyance of funds from the government to the recipient "3 and "conduct on the part 
of the government by which money, financial resources, a nd/or financial claims are made available 
to a recipient ".4 
4. Therefore, when the financial contribution is a "direct transfer of funds", the recipient of the 
direct transfer of funds and the recipient of the benefit will usually be the same entity.  In the case 
of a loan, for example, Article 14(b) provides that the benefit to the recipient is the difference 
between "the amount that the firm receiving the loan pays on the government loan and the amount 
the firm would pay on a comparable commercial loan w hich the firm could actually obtain on the 
market."  This provision indicates that the benefit is bestowed on the "firm receiving the loan", i.e. 
the recipient of the "direct transfer of funds".  
5. However, the recipient of a financial contribution and th e recipient of a benefit may not always 
be the same entity.  This is the case when a financial contribution confers an indirect benefit  because 
it is "passed through" from one entity to another.  The Appellate Body emphasized that the pass 
through of benef it must be established on the basis of positive evidence, and cannot simply be 
presumed.5  Canada's view is that when the recipient of the direct transfer of funds and the recipient 
of the benefit are not the same entity, the complainant must establish ho w the benefit conferred to 
the recipient of the direct transfer of funds is in fact "passed through" to the producer.  
6. The benefit analysis under Article 1.1(b) entails determining whether the financial contribution 
was provided on terms that are more ad vantageous than those that would have been available to 
the recipient on the market.6  Therefore, the benefit analysis focuses on the terms of the financial 
contribution, and not its trade effects.   
7. Canada invites the Panel to take these consideration s into account when addressing the 
European Union's claim that the Reimbursement Scheme confers an "indirect benefit" to the 
producers of pharmaceutical products included in the Reimbursement  List, because the lower cost 
 
1 Appellate Body Report, Canada – Aircraft , para. 154.  
2 Ibid. para. 155.  
3 Appellate Body Report, US – Large Civil Air craft (2nd complaint), para. 614.  (emphasis added)  
4 Ibid. (emphasis added)  
5 Appellate Body Report, US – Softwood Lumber IV , paras. 142 and 143.  
6 Appellate Body Report, Canada – Aircraft,  para. 149. ( citing the Panel Report, Canada – Aircraft , para. 
9.112) WT/DS583/ 12/Add.1  
 
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  of the reimbursed products makes t hem more attractive relative to non -reimbursed imported like 
products.7   
8. In US – Tax Incentives, the Appellate Body has interpreted the term "use" in Article 3.1(b) as 
referring to the actions of "consuming a good in the process of manufacturing", "in corporating a 
component into a separate good, or serving as a tool in the production of a good."8  All these actions 
imply that the consumption or employment of a good within the meaning of Article 3.1(b) must 
occur in the context of manufacturing or production activities.  "Use" of pharmaceutical products by 
individual out -patients does not occur as part of a production or manufacturing process.  Therefore, 
it does not amount to "use" for the purposes of Article 3.1(b).  
II. CLAIMS UNDER THE GATT 1994 – INTERPRETATION OF ARTICLE III:8(A)  
9. Canada provides its views on how the Panel should interpret GA TT Article III:8(a) in the 
context of the present dispute. GATT Article III:8(a) creates a derogation from the national 
treatment obligation for "certain measures that contain rules regarding the process by which 
governmental agencies purchase products."9 
10. First, Canada recalls that in the context of Article III:8(a), the word "procurement" has been 
interpreted as referring to "the process of obtaining products , rather than […] an acquisition itself."10 
Therefore, in order for a measure to govern "proc urement" within the meaning of Article III:8(a), 
the measure must establish rules regarding the process by which governmental agencies "obtain" 
products.  
11. Secondly, even though the Appellate Body has found that the concepts of "procurement" and 
"purchas e" in Article III:8(a) are legally distinct,11 it remains that a product must somehow be 
purchased by the governmental agency.12  In this regard, the Appellate Body has explained that 
"[t]he word "purchased" is used to describe the type of transaction  used to put into effect [the] 
procurement."13 In Canada's view, while the concept of "purchase" under Article III:8(a) does not 
require the governmental agency to physically  take possession of the product, the governmental 
agency must still obtain some form  of property rights over the product.  
12. Third, in order for a measure to be protected by Article III:8(a), the procurement must be 
done by a "governmental agency", i.e. "an entity acting for or on behalf of government and 
performing governmental function s within the competences conferred on it."14  If the action of 
obtaining the product is carried out by a private entity, the procurement cannot be said to be done 
by a "governmental agency".  
13. Fourth, the product must be purchased "for governmental pur poses."15  In Canada – 
Renewable Energy / Canada – Feed-in Tariff Program , the Appellate Body found that the phrase 
"products purchased for governmental purposes" in Article III:8(a) refers to "products purchased 
for the use of government, consumed by government or provided by governments to recipients in 
the discharge of its p ublic functions ."16  In Canada's view, this suggests that in order for a WTO 
Member to avail itself of Article III:8(a) with respect to a product that is not used or consumed by 
government, the procured product must be provided by a governmental agency to  recipients on 
non-commercial terms within the context of that agency's public functions.  
 
7 European Union's first written submission, para. 292.  
8 Appellate Body Reports, US – Tax Incentives , para. 5.8 and EU and certain Member States – Large 
Civil Aircraft (Article 21.5 – US), para. 5.57.  
9 Appellate Body Report, India – Solar Cells , para. 5.18.  
10 Appellate Body Reports, Canada – Renewable Energy / Canada – Feed-in Tariff Program , para. 5.59 
(emphasis added).  
11 Ibid. 
12 Appellate Body Report, India – Solar Cells , para. 5.18, "The measures within the scope of Article 
III:8(a) are "laws, regulations or requirements governing … procurement ", and the entity purchasing products  
needs to be a "governmental agency ". (emphasis added)  
13 Appellate Body Reports, Canada – Renewable Energy / Canada – Feed-in Tariff Program , para. 5.59.  
14 Ibid. p ara. 5.61.  
15 Ibid. para. 5.64.  
16 Ibid. para. 5.74.  WT/DS583/ 12/Add.1  
 
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  14. Based on the above, Canada submits that so long as the product is first "purchased" and 
"obtained" by a "governmental agency", and then provided by a "government al agency" to recipients 
on non -commercial terms within the context of that agency's public functions, the Member can 
validly rely on GATT Article III:8(a) in order to derogate from its national treatment obligation.  By 
contrast, if the product is "purcha sed" and "obtained" by a private entity, or if the product is provided 
to recipients by a private entity acting on commercial terms, then the WTO Member would not be 
able to avail itself of GATT Article III:8(a).  
15. In the case of Turkey's pharmaceutical  reimbursement system, the pharmaceutical products 
are neither "purchased" nor "obtained" by a "governmental agency".  Instead, the pharmaceutical 
products are "purchased" and "obtained" by private entities ( i.e., retail pharmacies), who receive 
reimbursem ent from the Social Security Institution (SSI) after the pharmaceutical products have 
been sold to eligible recipients.  At no point does the SSI conclude any transaction to "obtain" the 
pharmaceutical products, nor does the SSI obtain any form of "propert y rights" over the 
pharmaceutical products.  Furthermore, the pharmaceutical products are not provided to recipients 
within the context of a governmental agency's public functions – rather, the pharmaceutical products 
are distributed to eligible recipients  by private entities ( i.e., the retail pharmacies) acting in pursuit 
of their own commercial interests.  
16. If the Panel were to find that this type of pharmaceutical reimbursement system falls within 
the scope of Article III:8(a), it would effectively me an that whenever a governmental agency 
"reimburses" or "finances" a certain product, that governmental agency is engaging in "government 
procurement."  This would not only stretch the term "procurement" in Article III:8(a) far beyond its 
natural and ordina ry meaning, it would also constitute a significant expansion of the limited 
derogation established by Article III:8(a).  
III. CLAIMS UNDER THE GATT 1994 - ARTICLE XX  
17. Canada provides its views on several elements in relation to GATT 1994 Article XX: the 
availability of more than one paragraph of Article XX to potentially justify a measure; the need to 
identify a risk to human life or health under Article XX(b); the examination of trade restrictiveness 
under the necessity test applicable to Articles XX(b) and (d); and the nature of the requirements 
under the chapeau to GATT Article XX.  
18. A Member can seek to justify, under Article XX, a measure otherwise inconsistent with the 
GATT 1994, provided that the measure falls within the scope of one of the paragr aphs of Article XX 
and meets the required elements of both the specific paragraph and the chapeau to Article XX.17 
19. In Canada's view, it is open to a responding Member to seek to justify a measure under more 
than one of the enumerated paragraphs in Art icle XX.  However, the Member is still required to 
establish that the measure meets the requirements of the particular paragraph.  
20. In this dispute, Turkey has invoked Article XX(b) – measures necessary to protect human, 
animal or plant life or health – as a defence if the panel finds a violation under the GATT 1994.  
21. In order to fall within the scope of Article XX(b), first, there must exist a specific risk to human, 
animal or plant life or health that the policy objective seeks to address.18  Canada  agrees, as a 
general principle, that lack of access to medicines poses a serious threat to human life or health.  
Canada is also of the view that WTO members have the right to take action to develop domestic 
capacity in the production of medicines in a ma nner consistent with their obligations under the WTO.  
However, this does not relieve a Member seeking to rely on the exceptions under Article XX from 
establishing that the requirements under Article XX are met.  
22. To the extent the objective of Turkey's localization measure is to ensure access to medicines 
by preventing  "the risk of a shortage of supply" of medicines in the Turkish market, Canada's view 
is that the risk being identified is the risk to human life or health from a shortage of supply of 
medicines and therefore, it is incumbent on Turkey to provide evidence of this risk.  In Canada's 
view, this requires establishing two elements: (1) that there is a risk of a shortage of supply of the 
 
17 Appellate Body Report, Indonesia – Import Licensing Regimes , para. 5.94.  
18 Panel Reports, Brazil – Taxation , para 7.859.  WT/DS583/ 12/Add.1  
 
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  medicines; and (2) that a lack of sufficient supply of the medicines would be a risk to human life or 
health.  With respect to the risk of a shortage of supply, Canada would caution against mechanically 
importing the nature and standard of required evidence from Article XX(j ).   
23. Second, the measure must be designed to achieve the policy objective, which involves 
examining the structure and operation of the measure in order to assess the relationship between 
the measure at issue and the policy objective.19  In making this  assessment, the Panel should take 
into account the Members' characterization of the objective, but it is not bound by this, and may 
form its own characterization of the objective based on all the evidence put forward.20 
24. Third, if the risk to human li fe or health from a shortage is established, then the Panel must 
determine whether the localisation requirement is "necessary" within the meaning of Article XX(b).   
This means that there must be a genuine relationship of ends and means between the measure and 
the objective.21  The necessity test also involves a weighing and balancing of relevant factors 
including the contribution the measure makes to the objective, the importance of the objective and 
the relative trade restrictiveness of the measure.22   
25. In assessing the trade restrictiveness of a measure, a panel may find that a measure restricts 
trade on the basis of an actual restrictive effect illustrated by trade data23 or on a qualitative basis.24  
Further, Canada notes that incentivizing the p urchasing of domestic over imported goods has been 
found to be trade restrictive in the necessity analysis under Article XX.25   
26. Finally, an assessment of trade restrictiveness also includes an assessment of whether there 
is a less trade restrictive a lternative measure that is reasonably available and that would make an 
equivalent contribution to the objective.  
27. If a measure is provisionally justified under one of the paragraphs of Article XX, it must also 
be applied in a manner that does not consti tute "arbitrary or unjustifiable discrimination between 
countries where the same conditions prevail or a disguised restriction on international trade" 
consistent with the chapeau to Article XX.  
28. The Appellate Body has emphasized that the language of the  chapeau, as supported by the 
negotiating history of Article XX, confirms that the exceptions in paragraphs (a) to (j) of Article XX 
are limited and conditional exceptions from the obligations of the substantive provisions of the GATT 
1994 and subject to c ompliance with the requirements of the chapeau.26 
29. The task of interpreting and applying the chapeau is "essentially the delicate one of locating 
and marking out a line of equilibrium between the right of a Member to invoke an exception under 
Article X X and the rights of other Members under varying substantive provisions" while also noting 
that the "location of the line of equilibrium, as expressed in the chapeau, is not fixed and unchanging; 
the line moves as the kind and shape of the measures at stake  vary and as the facts making up a 
specific case differ."27   
30. In Canada's view, if the Panel finds that Turkey's Localization Measure is necessary, the Panel 
must seek to strike an appropriate balance between the right of Turkey to take measures to re spond 
to risks or threats to human life or health and the right of other Members to not be subject to 
arbitrary or unjustifiable discrimination with respect to their exports of pharmaceutical products.  
 
 
 
19 Appellate Body Reports, EC – Seal Products , para. 5.144.  
20 Ibid. para. 5.1 44. 
21 Appellate Body Report, Brazil – Retreaded Tyres , para. 145  
22 Ibid. paras. 142, 143 and 210.  
23 Panel Report, Colombia – Ports of Entry , para. 7.597.  
24 Appellate Body Report, Colombia – Textiles , para. 5.72.  
25 Panel Reports, Brazil – Taxation, para. 7.927.  
26 Appellate Body Report, US – Shrimp , para. 157.  
27 Appellate Body Report, US – Shrimp , paras. 158 and 159.  WT/DS583/ 12/Add.1  
 
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  ANNEX D -2 
INTEGRATED EXECUTIVE SUMMARY OF THE ARGUMENTS OF JAPAN  
I. INTRODUCTION  
1. Japan has a systemic interest in ensuring the coherent interpretation of the covered WTO 
agreements.  Japan addresses three issues regarding (i) the government procurement under Article 
III:8(a) of the GATT 1994; (ii) the relationship between Article XI:2(a), Article XX(b) and Article 
XX(j) of the GATT 1994; a nd (iii) an invocation of Article XX(b) of the GATT 1994.  
II. GOVERNMENT PROCUREMENT UNDER ARTICLE III:8(A) OF THE GATT 1994  
2. On the issue of Article III:8(a) of the GATT 1994, in Japan's view, for a measure to fall within 
its scope, as articulated by t he Appellate Body in Canada – Renewable Energy / Canada – Feed-in 
Tariff Program , it must satisfy four requirements.  
3. First, the measure must constitute "laws, regulations or requirements governing the 
procurement".  Second, the procurement governed by t he measure must be "by governmental 
agencies" of "products purchased".  Third, such procurement must be "for governmental purposes".  
Finally, the procurement must not be "with a view to commercial resale or with a view to use in the 
production of goods fo r commercial sale".   
4. Japan herein expresses its views on the second requirement regarding the scope of Article 
III:8(a).  
5. Japan recalls that, as articulated by the Appellate Body in India – Solar Cells , a governmental 
agency must purchase such produc ts. Japan also notes that the Appellate Body in Canada – 
Renewable Energy / Canada – Feed-in Tariff Program  explained that "[t]he word 'purchased' is used 
to describe the type of transaction used to put into effect [the] procurement" at issue.  
6. In the pr esent dispute, Japan observes that there are divergent views as to the meaning of 
"products purchased" under Article III:8(a) of the GATT 1994 as well as an identification of the 
purchaser of the products in question.   
7. The European Union argues that "p urchase" under Article III:8(a) of the GATT 1994 requires 
an acquisition of property over the products, and there is no "purchase" by the SSI because the SSI 
never acquires title over the pharmaceutical products.  Turkey argues that "purchase" under Articl e 
III:8(a) does not necessarily require acquiring an "entitlement" to or obtaining property rights over 
the products, but in any case, the SSI acquires the title to the pharmaceutical products from the 
retail pharmacies, and therefore, the SSI "purchases" the pharmaceutical products.  
8. Japan raises that it is not clear what "right", deriving from an "entitlement" or "property 
rights", if any, the SSI holds over the pharmaceutical products in question.  Turkey insists that the 
SSI acquires the title to the pharmaceutical products at the moment the provision of the medicine 
by the pharmacy is registered and approved in the Medula system.  However, when the retail 
pharmacies purchase the pharmaceutical products from the manufacturer, they have the authority 
to store, ship, or sell the products.  Retail pharmacies also control the timing and quantity of the 
sale, manage their inventories, and bear the risks associated with storage of the pharmaceutical 
products.  These elements lead to a conclusion that the reta il pharmacies obtain an entitlement to 
the pharmaceutical products.  By contrast, such characteristics are not found in the SSI over the 
pharmaceutical products.  WT/DS583/ 12/Add.1  
 
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  9. Therefore, the Panel must ascertain whether, as Turkey argues, the SSI does obtain an 
"entitlement" or "property right" of the pharmaceutical products in question from the retail 
pharmacies, by looking at the relevant transactions of the pharmaceutical products including through 
the Medula system.  
10. If the Panel determines that the retail phar macies purchase the pharmaceutical products, it 
must still determine whether the retail pharmacies could be considered "governmental agencies" 
within the meaning of Article III:8(a).  
11. In this regard, Japan notes the views of Canada in its third -party su bmission that retail 
pharmacies may be considered "governmental agencies" under certain circumstances, in accordance 
with the view expressed by the Appellate Body in Canada – Renewable Energy / Canada – Feed-in 
Tariff Program .   Specifically, when examinin g the nature of retail pharmacies, the Panel should 
consider whether such retail pharmacies have (i) an authority to act for or on behalf of government, 
and (ii) specific competences to discharge governmental functions.  
III. RELATIONSHIP BETWEEN ARTICLE XI:2(A), ARTICLE XX(B) AND ARTICLE XX(J)  
OF THE GATT 1994  
12. Japan provides a general observation on a relationship between Article XI:2(a), Article XX(b) 
and Article XX(j) of the GATT 1994.   
13. Article XI:2(a) of the GATT 1994 provides that th e general elimination of quantitative 
restrictions under Article XI:1 shall not extend to export restrictions applied to prevent or relieve 
critical shortages of foodstuffs or other essential products.  Articles XX(b) and XX(j), meanwhile, 
provide for gene ral exceptions for certain measures necessary to protect human, animal or plant life 
or health and measures essential to the acquisition or distribution of products in general or local 
short supply, respectively.  
14. With regard to Article XI, the Appellat e Body in China – Raw Materials has held that, "where 
the requirements of Article XI:2(a) are met, there would be no scope for the application of Article 
XX, because no obligation exists."   The Appellate Body explained that Article XI:2(a) limits the 
obligation under Article XI:1 only.   In other words, if the quantitative restrictions are permissible 
because the measure falls within the scope of Article XI:2(a), there is no GATT inconsistency to be 
justified by general exceptions under Article XX of the G ATT 1994.  
15. With regard to Article XX, Articles XX(b) and XX(j) are distinct exceptions with separate 
requirements.  As Article XX(b) permits measures "necessary to protect human, animal or plant life 
or health", a  measure that is "necessary" under Artic le XX(b) may address "health risks". On the 
other hand,  Article XX(j) permits measures "essential to the acquisition or distribution of products 
in general or local short supply".  In India – Solar Cells , the Appellate Body explained that the phrase 
"produ cts in general or local short supply" requires the party invoking the exception to demonstrate 
shortages at the time the measure was enacted.   The shortages "may continue over time, but are 
nonetheless expected not to last indefinitely".  
16. Japan also o bserves that, as noted by the panel in China – Rare Earths  in the context of Article 
XX(g), "the special circumstances that Article XX(j) was drafted to handle (severe shortages caused 
by war and other emergencies) counsel against the provision's direct us e in the interpretation" of 
other exceptions under Article XX.  
IV. INVOCATION OF ARTICLE XX(B) OF THE GATT 1994  
17. On the issue of an invocation of Article XX(b) of the GATT 1994, Japan notes that it is 
undisputed that the Member invoking an exception und er Article XX of the GATT 1994 bears the 
burden of proof in demonstrating that the challenged measures come within the scope of that 
exception.  WT/DS583/ 12/Add.1  
 
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  18. As articulated by the Appellate Body in US – Gambling , "it is for a responding party to make 
a prima facie  case that its measure is 'necessary' by putting forward evidence and arguments that 
enable a panel to assess the challenged measure".   By contrast, the burden of proof to show that 
there are reasonably available alternative measures remains with the compla inant.  
19. In the context of Article XX(b) of the GATT 1994, as articulated by the Appellate Body in EC – 
Seal Products  referring to the panel report in EC – Asbestos , under the term "to protect" in Article 
XX(b), "the notion of 'protection' … impl[ies] th e existence of a health risk".   The panel in Brazil - 
Taxation  observed that "in the specific case of subparagraph (b) of Article XX, … past panels and the 
Appellate Body have explained that the existence of a risk to human, animal or plant life or health  
must be determined in the first place. …Once that risk is found to exist, the second step is to examine 
whether the policy underlying the measure aims to reduce such risk."  
20. Therefore, the Panel must first determine whether there is a risk to human lif e or health.  As 
a bearer of the burden of proof under Article XX(b) of the GATT 1994, it is Turkey's responsibility to 
demonstrate, with sufficient evidence, that there is a risk to human life or health by the shortage of 
supply.   
21. Japan also reiterat es that it is a risk to human life or health, not a risk to shortage of supply, 
that the Panel must find to meet the first step under Article XX(b) of the GATT 1994.   
22. Once a measure is found to be designed to protect human life or health, the Panel must assess 
whether the measure is "necessary" to achieve that objective.   Determination of "necessity" requires 
"a process of 'weighing and balancing' a series of factors, including the importance of the objective, 
the contribution of the measure t o that objective, and the trade -restrictiveness of the measure."   A 
responding Member has the right to determine the level of protection it considers appropriate with 
respect to the objective pursued, but there must be no reasonably available less trade -restrictive 
alternative to achieve its desired level of protection.  
 
 WT/DS583/ 12/Add.1  
 
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  ANNEX D -3 
INTEGRATED EXECUTIVE SUMMARY OF THE ARGUMENTS OF SWITZERLAND  
I. THE REQUIREMENTS OF ARTICLE III:8(a) OF THE GATT 1994  
 
As stated by the Appellate Body, the word "procurement " refers to the process of acquiring or 
obtaining products1. In turn, the word "purchased " describes the type of t ransaction used to put into 
effect that procurement2. The Appellate Body further indicated that the entity purchasing products 
needs to be a "governmental agency "3. The Appellate Body also recalled that Article III:8 (a) of the 
GATT 1994 should be interp reted holistically. This requires in particular consideration of the linkages 
between the different terms used in the provision4.   
Switzerland considers that in order to determine whether the requirements of Article III:8(a) 
are fulfilled, the Panel s hould examine not only the relationship between the SSI and the retail 
pharmacies, but also the relationship and transactions taking place between retail pharmacies and 
wholesalers. Switzerland notes in particular that Turkey indicates that under the local isation 
measure, it is the retail pharmacies that obtain  the pharmaceutical products included in Annex 4/A 
from the wholesalers5.   
In Switzerland 's view, in determining the existence of a process of acquiring or obtaining 
products, or of a transaction  putting into effect such procurement, the question of who is "covering 
the costs " of, or ultimately "paying for ", certain products is only one factor among others to be 
analysed by the Panel. Switzerland considers that such factors need to be assessed in light of the 
particular circumstances of the case.  
In Switzerland 's view, other factors to be considered by a panel when assessing whether the 
measure is a law, regulation or requirement governing procurement by governmental agencies 
include whether th e government may choose how to dispose of the products procured, for instance 
by reallocating them to another use6; does the government control the process of obtaining the 
product, for instance  does it have a right to cancel contracts between retail pharmacies and 
wholesalers;  whether the government carries the risk associated with maintaining inventories; and 
whether tendering processes could be organized in order to acquire or obtain the products 
concerned.  
Other factors to be considered in particular when assessing whether a purchase by a 
governmental agency is involved include who obtains entitlement (with o r without physical 
possession) over the products concerned through the transaction; who carries the commercial risk 
in the transaction with the seller; and whether the purchasing entity is perceived as a governmental 
agency by the seller in the transaction .    
It would be difficult to consider that there is procurement  by governmental agencies  or a 
purchase of products within the meaning of Article III:8(a) where private entities have ownership of 
the products, control their disposition, have the right t o cancel contracts with wholesalers, bear the 
risks of unsold inventories and other commercial risks, do not go through tendering processes to 
acquire the products, or are not perceived to be government agencies by wholesalers. In 
Switzerland 's view, none of these factors are individually dispositive, but each would weigh against 
a finding that there is procurement or a purchase of a product under Article III:8(a).  
 
1  Appellate Body Report, Canada – Renewable Energy / Feed -In Tariff Program , para. 5.59.  
2  Appellate Body Report,  Canada – Renewable Energy / Feed -In Tariff Program , para. 5.59.  
3  Appellate Body Report, India – Solar Cells , para. 5.18.  
4  Appellate Body Report, Canada – Renewable Energy / Feed -In Tariff Program , para. 5.57.  
5  First Written Submission of Turkey, par a. 192; Second Written Submission of Turkey, para. 50.   
6  See GATT Panel Report, US – Sonar Mapping , paras. 4.5 -4.13. WT/DS583/ 12/Add.1  
 
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  II.  THE JUSTIFICATION OF THE LOCALISATION MEASURE UNDER ARTICLE XX OF THE 
GATT 1994  
 
a) Requirements under Article XX (b)  
Switzerland recalls that it is for a party invoking an exception or affirmative defense such as 
Article XX of the GATT 1994 to prove that the conditions contained therein are fulfilled7. To meet its 
burden of proof , Turkey must put forward evidence  and arguments  supporting its assertion that the 
challenged measure satisfies the requirements of the defence8. As underlined by the panel in Brazil 
– Taxation , "in the specific case of subparagraph (b) of Article XX, whi ch deals with the protection 
of human, animal and plant life or health, past panels and the Appellate Body have explained that 
the existence of a risk to human, animal or plant life or health must be determined in the first place "9 
and "[o]nce that risk i s found to exist, the second step is to examine whether the policy underlying 
the measure aims at reducing such risk "10. Turkey should therefore demonstrate that a risk to human 
life or health exists and that the policy underlying the measure aims at redu cing such risk.  
Further, as confirmed by the Appellate Body, "in order to determine whether a measure is 
'necessary' within the meaning of Article XX(b) of the GATT 1994, a panel must assess all the 
relevant factors, particularly the extent of the cont ribution to the achievement of a measure's 
objective and its trade restrictiveness, in the light of the importance of the interests or values at 
stake "11. 
Regarding the extent of the contribution to the achievement of a measure 's objective, in order 
to be characterized as necessary, the measure 's contribution to the achievement of the objective 
must be material, not merely marginal or insignificant12.  
The demonstration that a measure brings about a material contribution to the achievement of 
its objective can be made by resorting to evidence or data, pertaining to the past or the present. A 
panel might also conclude that a measure is necessary on the basis of a demonstration that it is apt 
to produce a material contribution to the achievement of it s objective. Such demonstration could 
consist in quantitative projections in the future, or qualitative reasoning based on a set of hypotheses 
that are tested and supported by sufficient evidence13. 
Switzerland recalls that "the aspects of a measure to be justified under the subparagraphs of 
Article XX are those that give rise to the finding of inconsistency under the GATT 1994 "14. In case of 
a finding of less favourable treatment under Article III:4 GATT 1994, the analysis of the defense 
under Article XX should thus focus on the "differences in the regulation of imports and of like 
domestic products ", which is the aspect of the measure giving rise to that finding15. Moreover, a 
respondent may not justify the inconsistency of a measure by bas ing its defence on aspects of that 
measure different from those that were found by the panel to be inconsistent16.  
Whereas the risk of shortage of supply of the products subject to the measure is certainly an 
important factor when assessing the contr ibution of the measure to the objective of ensuring access 
to medicines, it is not determinative. In any event, it is for Turkey to demonstrate specifically that 
the difference in treatment of imports and like domestic products has led, will lead or is apt  to lead 
to a more adequate access to medicines and thus contributes to the realization of the stated public 
health objective.  
 
7  Panel  Report, Turkey – Textiles , para. 9.57.  
8   Appellate Body Report, US – Gambling , para. 282.  
9   Panel Report, Brazil – Taxation , para. 7.859.  
10  Panel Report, Brazil – Taxation , para. 7.873.  
11  Appellate Body Report, Brazil – Retreaded Tyres , para. 157.  
12  Appellate Body Report, Brazil – Retreaded Tyres , para. 210.  
13   Appellate Body Report, Brazil – Retreaded Tyres , para. 151.  
14  Appellate Body Report, EC – Seal Products , para. 5.185. See also Panel Report, Brazil – Taxation , 
para. 7.886.  
15  Appellate Body Report, Thailand – Cigarettes (Philippines) , para. 177.  
16  Appellate Body Report, Argentina – Financial Services , para. 6.169. See also Panel Report, Brazil 
– Taxation , para. 7.886, Fn 1238, in which the Panel indicated that it could see no reason not to apply this 
statement by the Appellate Body in the context of  Article XVI of the GATS, in the context of Article XX of the 
GATT.  WT/DS583/ 12/Add.1  
 
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Finally, Switzerland considers that the fact that a measure may "overshoot " its intended 
objective for certain categories of  products subject to it is also to be considered by a panel in its 
assessment of the contribution of the measure to its stated objective17. A panel should also consider 
whether the discriminatory aspects actually detract from the attainment of the objecti ve of ensuring 
adequate access to medicines, instead of contributing to that objective18.   
b) Requirements under Article XX (d)  
In its assessment of whether a responding party has identified a rule that falls within the scope 
of "laws or regulations " under Article XX(d), a panel should evaluate and give due consideration to 
all the characteristics of the relevant instrument(s) and the assessment must be carried out on a 
case-by-case basis19. Relevant characteristics are in particular the degree of normativity of the 
instrument, the degree of specificity of the relevant rule, its legal enforceability, the competence of 
the adopting authority, the form and title of the instrument containing the rule, and the penalties or 
sanctions that may accompany it20.  
Switzerland recalls that even where a particular international instrument can be said to form 
part of the domestic legal syst em of a Member – for instance by way of incorporation or of direct 
effect of the relevant rules – this does not in itself demonstrate the existence of a "law or regulation " 
under Article XX(d)21. Rather, as stated by the Appellate Body, "an assessment of whether an 
instrument operates with a sufficient degree of normativity and specificity under the domestic legal 
system of a Member so as to set out a rule of conduct or course of action, and thereby qualify as a 
‘law or regulation ', must be carried out on a case -by-case basis, taking into account all the other 
relevant factors relating to the instrument and the domestic legal system of the Member "22.  
The terms "secure compliance " with laws or regulations imply that the design of the measure 
reveals that it secures compliance with specific rules, obligations, or requirements under such laws 
or regulations23. It is in this regard important to distinguish between the specific rules  with respect 
to which a measure seeks to secure compliance and the objectives  of the relevant "laws or 
regulations "24.  
Therefore, Switzerland considers that, in order to assess whether Turkey has demonstrated 
the existence of a rule falling within th e scope of laws or regulations, the Panel should carefully 
examine the degree of normativity of the relevant provisions, and the degree of specificity with 
which the relevant instruments lay down a particular rule of conduct or course of action within 
Turkey's domestic legal system, as opposed to simply providing a legal basis for action that may be 
consistent with certain objectives25.  
In particular, hortatory, aspirational, declaratory or solely descriptive language would not set 
out a "rule" becaus e it would lack sufficient normativity and specificity26.  
c) Relationship between Articles XI:2(a), XX (b) and XX (j)  
Article XI:2 (a) of the GATT 1994 does not function as an exception, but limits the scope of 
the obligation not to impose quantitat ive restrictions provided for in Article XI:1. Therefore, where 
the requirements of Article XI:2(a) are met, no obligation exists27, whereas Members can resort to 
Article XX of the GATT 1994 as an exception to justify measures that would otherwise be inco nsistent 
with their GATT obligations. Accordingly, if a measure does not meet the requirements provided for 
 
17  See Panel Report, Indonesia – Chicken , para. 7.228.  
18  See Panel Report, Brazil – Taxation , para. 7.920.  
19  Appellate  Body Report, India – Solar Cells , para. 6.6.  
20  Appellate Body Report, India – Solar Cells , para. 5.113.  
21  Appellate  Body Report, India – Solar Cells , para. 5.141.  
22  Appellate  Body Report, India – Solar Cells , para. 5.141  
23  Appellate Body Report, Argentina – Financial Services , para. 6.203.  
24  Appellate  Body Re port, Argentina – Financial Services , fn 495 to para. 6.203; Appellate Body 
Report, India –Solar Cells , para. 5.110.  
25  Appellate  Body Report, India – Solar Cells , para. 5.110.  
26  Appellate  Body Report, India – Solar Cells , para. 5.133.  
27   Appellate Body Reports, China – Raw Materials , para. 334  WT/DS583/ 12/Add.1  
 
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  in Article XI:2(a) and is found to be in violation of Article XI:1, it may nevertheless be justified under 
Article XX.  
The different paragraphs  of Article XX provide for distinct requirements and the fact that a 
measure fails to fulfill the requirements of one paragraph does not imply that it cannot be justified 
under another paragraph of Article XX.  
Whereas the different paragraphs of Artic le XX establish distinct requirements, it cannot be 
excluded that the same considerations can be relevant for the analysis under paragraph (b) and 
paragraph (j). In India – Solar Cells , the Appellate Body recalled that the term "essential ", provided 
for in  paragraph (j) is at least as close to the "indispensable " end of the continuum as the word 
"necessary ", provided for in paragraph (d), and considered that the same process of weighing and 
balancing is relevant in assessing whether a measure is necessary u nder Article XX (d) or "essential " 
within the meaning of Article XX(j)28.  
III.  APPLICABILITY OF ARTICLE XI:1 OF THE GATT 1994 TO THE IMPORT BAN 
MEASURE  
 
The fact that the rules concerning marketing authorization apply to all pharmaceutical 
products , regardless of where they are produced, does not per se  exclude the measure from the 
scope of Article XI:1.  
As indicated by the panel in Colombia – Ports of Entry  "a number of GATT and WTO panels 
have recognized the applicability of Article XI:1 to measures which create uncertainties and affect 
investment plans, restrict market access for imports or make importation prohibitively costly, all of 
which have implications on the competitive situation of an importer "29.  
Further, as stated by the panel in India – Autos , "it is the nature of the measure as a restriction 
in relation to importation which is the key factor to consider in determining whether a measure may 
properly fall within the scope of Article XI:1 "30. Acco rdingly, as confirmed by that panel, even if a 
measure cannot necessarily be considered to relate to the actual "process " of importation, or to 
constitute a "border " measure, this would not be a sufficient reason to conclude that it cannot come 
within the scope of Article XI:131. 
The Appellate Body recalled in China – Raw Materials  that Article XI of the GATT 1994 covers 
prohibitions and restrictions that have a limiting  effect  on the quantity or amount of a product being 
imported or exported32. Morev er, the scope of Article XI:1 covers measures through which a 
prohibition or restriction is produced  or becomes operative33. Further,  the disciplines of Article XI:1 
extend to restrictions of a de facto  nature34. In our view, this confirms that a measure  cannot be 
excluded from the scope of Article XI:1 solely because the regulation it rests on applies to both 
domestically manufactured and imported products.  
26. Moreover, the fact that the marketing authorization rules do not specifically  deal with the 
importation of pharmaceutical products, or the fact that those rules have not been specifically  
instituted or maintained in connection with the importation of pharmaceutical products, does not 
imply that the measure cannot fall within the scope of Article XI:1 of the GATT 1994 . In this regard, 
Switzerland notes that the EU alleges that an import marketing authorisation is To the extent that 
an import marketing authorization re presents a prerequisite for the importation of a product, the 
marketing authorization rules may constitute a restriction "on the importation ". In our view, these 
are relevant elements for the Panel 's analysis of whether the measure, based on its design and  
operation, falls within the scope of Article XI:1 of the GATT 1994.  
 
 
28  Appellate  Body, India – Solar Cells , para. 5.62 -5.63. 
29  Panel Report, Colombia – Ports of Entry , para. 7.240.  
30  Panel  Report, India – Autos , para. 7.261.  
31  Panel  Report, India – Autos , para . 7.262. 
32  Appellate  Body Report s, China – Raw Materials , para. 320.  
33  Appellate  Body Report s, Argentina – Import Measures , para. 5.218.  
34  Panel  Report India – Autos , para. 7.275, quoting Panel Report on Argentina – Hides and Leather , 
WT/DS155/R, adopted on 16 February 2001, para. 11.17  WT/DS583/ 12/Add.1  
 
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  ANNEX D -4 
INTEGRATED EXECUTIVE SUMMARY OF THE ARGUMENTS OF UKRAINE  
1. In its written submission Ukraine provided comments on certain aspects of understanding and 
meaning of Article X:1 of the GATT 1994 with respect to the introduced by Turkey measures on 
localization of the pharmaceutical products.  
2. The text of Article X:1 of the GATT 1994 reads as follows:  
"Laws, regulations, judicial decisions and administrative rulings of general application, 
made effective by any contracting party, pertaining to the classification or the valuation 
of products f or customs purposes, or to rates of duty, taxes or other charges, or to 
requirements, restrictions or prohibitions on imports or exports or on the transfer of 
payments therefor, or affecting their sale, distribution, transportation, insurance, 
warehousing inspection, exhibition, processing, mixing or other use, shall be published 
promptly in such a manner as to enable governments and traders to become acquainted 
with them. Agreements affecting international trade policy which are in force between 
the govern ment or a governmental agency of any contracting party and the government 
or governmental agency of any other contracting party shall also be published. The 
provisions of this paragraph shall not require any contracting party to disclose 
confidential infor mation which would impede law enforcement or otherwise be contrary 
to the public interest or would prejudice the legitimate commercial interests of particular 
enterprises, public or private."  
3. Ukraine considers that in order to understand whether there i s a violation of the provisions of 
Article X:1 of the GATT 1994 a measure under consideration should be examined in a whole with 
regard to if this measure:  
(1) falls within the concept of "laws, regulations, judicial decisions and administrative rulings of  
general application";  
(2) pertains "to the classification or the valuation of products for customs purposes, or to rates of 
duty, taxes or other charges, or to requirements, restrictions or prohibitions on imports or exports 
or on the transfer of payment s therefor, or affecting their sale, distribution, transportation, 
insurance, warehousing inspection, exhibition, processing, mixing or other use";  
(3) is "of general application";  
(4) is "published promptly in such a manner as to enable governments and tr aders to become 
acquainted with them".  
4. So, in order to find out is there any violation of the provisions of Article X:1 of the GATT 1994 
in the present case it is necessary to determine whether Turkey's normative acts, introducing the 
localisation requi rement, fall within the concept of "laws, regulations, judicial decisions and 
administrative rulings of general application".  
5. The terms 'laws, regulations, judicial decisions and administrative rulings' in the meaning of 
Article X:1 of the GATT 1994 hav e been already interpreted by several Panels.  
6. Thus, in EC – IT Products , the Panel examined a claim under Article X:1 of the GATT 1994: 
"Substantively, and when read as a whole within the context of Article X:1, the phrase 'laws, 
regulations, judicial decisions and administrative rulings' reflects an intention on the part of the 
drafters to include a wide range of measures that have the potential to affect trade and traders.1 
A narrow interpretation of the terms 'laws, regulations, judicial decisions a nd administrative rulings' 
would not be consistent with this intention, and would also undermine the due process objectives of 
Article X […] Based on the foregoing, we observe that the ordinary meanings of the terms 'laws, 
regulations, judicial decisions a nd administrative rulings' indicates that the instruments covered by 
 
1 (footnote original) In US – Corrosion -Resistant Steel Sunset Review, the Appellate Body similarly 
found that the expression "laws, regulations and administrative procedures" in Article 18.4 of the Anti-Dumping 
Agreement seemed to encompass the entire body of generally applicable rules, norms and standards adopted 
by Members in connection with the conduct of anti -dumping proceedings. (Appellate Body Report on US - 
Corrosion Resistant Steel Sunset Rev iew, para. 87).  WT/DS583/ 12/Add.1  
 
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  Article X:1 range from imperative rules of conduct to the exercise of influence or an authoritative 
pronouncement by certain authoritative bodies. Accordingly, we consider that the covera ge of 
Article  X:1 extends to instruments with a degree of authoritativeness issued by certain legislative, 
administrative or judicial bodies. This does not mean, however, that they have to be 'binding' under 
domestic law. […] However, whether a particular measure has a degree of authoritativeness such 
that it would be properly characterised as 'laws, regulations, administration rulings or judicial 
decisions' requires a case -by-case assessment of the particular factual features of the measure at 
issue".2 
7. Ukraine believes that in order to understand whether Article X:1 of the GATT 1994 can be 
applied the Panel has to ensure that the measure under consideration pertains to "the classification 
or the valuation of products for customs purposes, or to rates o f duty, taxes or other charges, or to 
requirements, restrictions or prohibitions on imports or exports or on the transfer of payments 
therefor, or affecting their sale, distribution, transportation, insurance, warehousing inspection, 
exhibition, processing , mixing or other use", as these are subjects of the Article.  
8. Likewise when examining measures under consideration whether they are in line with 
Article  X:1 of the GATT 1994  the measures should be examined with regard to their general 
application.  
9. In US – Underwear , the Panel interpreted the term "of general application": "We note that 
Article X:1 of GATT 1994, which also uses the language 'of general application', includes 
'administrative rulings' in its scope. The mere fact that the restraint at is sue was an administrative 
order does not prevent us from concluding that the restraint was a measure of general application. 
Nor does the fact that it was a country -specific measure exclude the possibility of it being a measure 
of general application. If, for instance, the restraint was addressed to a specific company or applied 
to a specific shipment, it would not have qualified as a measure of general application. However, to 
the extent that the restraint affects an unidentified number of economic operato rs, including 
domestic and foreign producers, we find it to be a measure of general application."3 
10. In EC – IT Products , examining the measure, the Panel found that "the CNEN amendments at 
issue in this dispute are of 'general application' within the m eaning of Article X:1 of the GATT 1994. 
This is so because the application of a CNEN is not limited to a single import or a single importer. 
Rather, the objective of the CNEN is to ensure the uniform application of the Common Customs Tariff 
to all products  falling under a specific CN code upon importation into the European Communities."4 
11. The European Union claims that in the present case not all of the legal instruments that form 
part of, or give effect to, the localisation requirement were published in such a manner as to enable 
governments and traders to become acquainted with them.5 
12. According to the European Union only the broad outlines of the localisation requirement have 
been appropriately and promptly published. Its substantive co ntent has, for the most part, been put 
in place in an entirely non -transparent manner, through a series of announcements, presentations 
and communications, none of which have been adequately and promptly published6. 
13. In its turn Turkey submits that "in  the present case, the standard of adequate publication is 
met." Turkey states that it "published the final version of the localisation announcements on the […] 
websites, which were easily acceptable to traders and governments. Therefore, the publication w as 
done "in such a manner as to enable governments and traders to become acquainted with the 
published measure", as required by Article X:1 of the GATT 1994."7 
14. Ukraine believes, that publication in line with Article X:1 of the GATT 1994 of legal instr uments, 
which form part of, or give effect to measures, that have an impact on imports or exports, is of a 
great importance for market players. A number of Panels and the Appellate Body have already 
examined this aspect.  
15. In EC – IT Products , the Panel  considered the aspect of publication in line with Article X:1 of 
the GATT 1994 and found generally: "Article X:1 addresses the due process notion of notice by 
 
2 Panel Report, EC – IT Products , paras. 7.1026 -7.1027.  
3 Panel Report, US – Underwear , para. 7.65.  
4 Panel Report, EC – IT Products , para. 7.1034.  
5 First Written Submission by the European Union, Turkey - Pharmaceutical Products  WT/DS583, para. 
249. 
6 First Written Submission by the European Union, Turkey - Pharmaceutical Products  WT/DS583, para. 
6. 
7 First Written Submission by Turkey, Turkey - Pharm aceutical Products  WT/DS583 , para. 314.  WT/DS583/ 12/Add.1 
 
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  requiring publication that is prompt and that ensures those who need to be aware of certain laws , 
regulations, judicial decisions and administrative rulings of general application can become 
acquainted with them."  […] "…if measures are to be published 'in such a manner as to enable 
governments and traders to become acquainted with them', it follows that they must be generally 
available through an appropriate medium rather than simply making them publicly available."8 
16. Likewise, the Panel in Thailand – Cigarettes (Philippines)  examined claims regarding failure to 
sufficiently publish the general r ules relating to the right to the release of guarantees deposited by 
importers for excise and other internal taxes. The Panel found that Thailand does not clearly indicate 
a definite right to the release of guarantees mentioned above. "In such circumstance s, importers 
will not be able to become acquainted with the exact nature of the right they have in respect of the 
release of guarantees for the internal taxes within the meaning of Article X:1".9   
17. With this respect Ukraine believes that determining w hether Turkey's application of the 
measure under consideration falls in line with concepts, mentioned in para 3 of this Executive 
Summary, will help to determine if there is any violation of the provisions of Article X:1 of the GATT 
1994.  
 
 
8 Panel Report, EC – IT Products , para. 7.1015. In footnote 1312 to this paragraph, the Panel referred to 
the Appellate Body Report in US – Underwear  (DSR 1997:I, p. 29) and stated that “We consider that this 
stateme nt, although addressing Article X:2, is equally applicable to Article X:1.”  
9 Panel Report, Thailand – Cigarettes (Philippines), para. 7.860.  WT/DS583/ 12/Add.1  
 
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  ANNEX D -5 
INTEGRATED EXECUTIVE SUMMARY OF THE ARGUMENTS OF THE UNITED STATES  
EXECUTIVE SUMMARY OF THE U.S. THIRD PARTY ORAL STATEMENT  
 
1. To establish that a measure is justified under Article XX, the responding Member asserting 
the defense must show that the measure at issue is: (1) provisionally justified under one of the 
Article XX subparagraphs; and, (2) applied consistently with the requirements of the chapeau.  
2. Turkey asserts, among other things, that its localization requirement for reimbursements for 
pharmaceuticals is justified under the general exceptions in Article XX(b) and (d) . In regards to its 
defense under Article XX(b), Turkey states that the localization measure is "designed to ensure an 
uninterrupted access to safe, effective and affordable medicines for all patients in Turkey which falls 
within the range of policies to protect human life and health. "  Turkey further states that "[t]he fact 
that the localisation measure is concerned with ensuring adequate access to medicines and thus 
pursues an objective of protecting human life and health is confirmed by the design and structure 
of that measure as well as by the authorities responsible for its implementation. "  In the alternative, 
Turkey states that the localization measure is justified under Article XX(d) "because the measure is 
necessary to secure compliance  with the laws and regulations requiring Turkey to ensure accessible, 
effective and financially sustainable healthcare. "    
3. In response, the European Union contends that Turkey 's localization requirement is not 
justified under Article XX(b) because it "is not designed to achieve the public health objective alleged 
ex post facto by Turkey in its first written submission, but rather to pursue Turkey 's economic 
development and industry policy goals, and is very trade restrictive. "  The European Union goes on 
to assert that the requirement is not necessary because "Turkey has not shown that the Localisation 
Requirement makes a contribution to that objective and, in any event, there are adequate 
alternatives that are less trade -restrictive or, indeed, not trade -restrictive at all. "  Similarly, the 
European Union contends that Turkey 's localization requirement is not justified under Article XX(d), 
including because Turkey has failed to identify laws and regulations that require Turkey "to ensure 
the financial sustainability of Turkey 's healthcare system with the requisite degree of spe cificity and 
normativity. " 
4. The text of Article XX establishes that for a measure to qualify under an Article XX general 
exception, the measure at issue: (1) must satisfy one of the Article XX subparagraphs; and (2) be 
applied consistently with the requirem ents of the chapeau .  
5. Therefore, to establish that measures are preliminarily justified under Article XX(b), Turkey 
must establish, consistent with the text of that provision: (1) that the measure 's objective is "to 
protect human, animal or plant life or h ealth"; and (2) that the measure is "necessary " to the 
achievement of its objective . For Article XX(d), Turkey must establish two elements set out in its 
text: (1) that the measure is designed to "secure compliance " with laws or regulations that are not 
themselves inconsistent with some provision of the GATT 1994; and (2) that the measures are 
"necessary to secure compliance. "   
6. The text of Article XX(b) does not make justification of a measure contingent on meeting 
other obligations of the covered agreemen ts, including other exceptions listed in Article XX . The text 
of Article XX(d) similarly does not rely on meeting other obligations . The chapeau to Article XX makes 
clear that "nothing in this Agreement shall be construed to prevent the adoption of or enfo rcement 
by any contracting party of measures " that meet one of the exceptions in Article XX .  
7. Respondents frequently invoke multiple subparagraphs of Article XX, as Turkey did in this 
dispute by invoking Article XX(b) and (d) . The fact that one provision o r exception could be invoked 
with regard to the same factual circumstances by a Member does not mean that another exception 
is no longer available.  WT/DS583/ 12/Add.1  
 
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  8. In relation to a challenged measure, it is for the responding Member to invoke Article XX 
and establish tha t the measure at issue satisfies an exception under Article XX . Nothing in the 
language of Article XX(b) and (d) suggests that a responding Member can raise Article XX but avoid 
meeting its burden of argument due to the nature of the asserted objective or necessity to achieve 
that objective, no matter the seriousness of the asserted concern .  
9. In its third party submission, Canada asserts that in assessing the structure and operation 
of Turkey 's localization requirement "to assess the relationship between th e measure at issue and 
the policy objective " for the analysis under Article XX(b), the Panel "should take into account the 
Members' characterization of the objective, but it is not bound by this, and may form its own 
characterization of the objective based  on all the evidence put forward. " 
10. The United States observes that it is for the responding Member to identify the objective 
that motivates a given measure . By invoking an Article XX general exception, the responding 
Member is indicating that, despite the apparent inconsistency of a measure with another WTO 
commitment, there is a basis in Article XX to justify the measure . If the Member did not identify the 
general exception at issue, it would simply not have asserted that there is any Article X X basis to 
justify the inconsistent measure .  
11. If a complainant wishes to challenge the genuineness of a respondent 's professed objective, 
it can do so by demonstrating that the measure fails to contribute toward the alleged objective, and 
that less trade r estrictive options are available to meet the objective in question . It is not for the 
respondent, or the Panel, to recharacterize or determine for itself the objective of the measure at 
issue.  
12. On Canada 's approach, there would not be a reason to conceive o f Article XX as an 
"affirmative defense, " which is not a GATT term, to be asserted by the responding Member . This is 
because if a panel "may form its own characterization of the objective based on all the evidence put 
forward, " then this characterization b y a panel is part of the panel 's "objective assessment " under 
DSU Article 11 . And if the panel should make an "objective assessment " of the objective of the 
measure, so too should the complaining party as part of bringing forward its affirmative case .  
13. Further, if a panel "may form its own characterization of the objective based on all the 
evidence put forward, " then a responding Member arguably would not need to assert any general 
exception under Article XX . That is, even with silence by a responding Membe r, a panel could 
examine the measure to determine whether it has the objective of one of the subparagraphs of 
Article XX . If the panel were to so conclude, the panel would need to ensure that the relevant 
subparagraph could not be established "based on all  the evidence put forward. "  If the panel failed 
to make that assessment, the panel would not have ensured that (in the terms of Article XX) nothing 
in the Agreement had been construed to prevent the application of a measure satisfying Article XX.  
14. The Unit ed States does not consider this to be a correct result under Article XX . Rather, 
Article XX becomes relevant if there is an apparent inconsistency of a measure with another WTO 
commitment . The responding Member is free to invoke an Article XX general exce ption to indicate 
its belief that there is a basis in Article XX to justify the measure . But if the Member chooses not to 
identify any general exception, it also chooses not to assert an Article XX basis for the otherwise 
inconsistent measure .  
EXECUTIVE S UMMARY OF THE U.S. RESPONSES TO PANEL QUESTIONS TO THIRD PARTIES  
15. Response to Questions 1(a) –(b): The Panel 's questions refer to the scope of Article III:8(a) . 
The Panel need not reach the issues raised in these questions . As noted in the chapeau of Question 
1, the terms of reference for this dispute are "confined to the specific Turkish measures at issue. " 
16. Under Article 7.1 of the DSU, the standard terms of reference – which were used in this 
dispute – call on the Panel "[t]o examine . . . the matter referred to the DSB " by the claimant, and 
"to make such findings as will assist the DSB in making the recommendations or in giving the rulings 
provided for in the covered agreements. "  As this text establishes, the Panel has two  functions: (1) 
to "examine " the matter – that is, to "[i]nvestigate the nature, condition or qualities of (something) 
by close inspection or tests "; and (2) to "make such findings as will assist the DSB in making the 
recommendations or in giving the rulin gs provided for " in the covered agreement.  WT/DS583/ 12/Add.1  
 
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  17. Article 11 of the DSU confirms this dual function of panels, and similarly provides that the 
function of panels is to "make an objective assessment of the matter " before it, and "make such 
other findings as will a ssist the DSB in making the recommendations or in giving the rulings provided 
for in the covered agreements. " 
18. As Article 19.1 of the DSU provides, these "recommendations " are issued "[w]here a panel 
or the Appellate Body concludes that a measure is inconsi stent with a covered agreement " and are 
recommendations "that the Member concerned bring the measure into conformity with the 
agreement. "  Article 19.2 of the DSU clarifies that "in their findings and recommendations, the panel 
and Appellate Body cannot ad d to or diminish the rights and obligations provided in the covered 
agreement. " 
19. The European Union identified certain measures of Turkey in its panel request, identifying 
for each measure the covered agreement or agreements for which the measures are incon sistent . 
The Panel was established with the standard terms of reference as specified by Article 7.1 of the 
DSU. Subsequently, Turkey filed a request for preliminary findings by the Panel regarding the panel 
request of the European Union, and the Panel rece ived submissions from the parties and third parties 
concerning Turkey 's request . The Panel made findings regarding Turkey 's "preliminary ruling " 
request on 10 July 2020, concluding that the measures of concern to Turkey fell within the terms of 
reference .  
20. The terms of reference for this dispute do not address the reimbursement of medicines in 
other Members . The Panel need not address the application of Article III:8(a) to such 
reimbursements . The Panel 's role in this dispute, as directed by the above cited  articles of the DSU, 
is to make recommendations where it concludes that a measure identified by the European Union in 
its panel request is inconsistent with a cited covered agreement so that Turkey, the "Member 
concerned " in this dispute, may bring the measure in question into conformity . The Panel should 
avoid providing views on other Members ' measures regarding reimbursement of pharmaceuticals or 
statements beyond the application of its interpretation of relevant WTO pro visions to Turkey 's 
specific reimbursement scheme.  
21. Furthermore, the framing of the Panel 's question, through its reference to other Members ' 
reimbursement schemes, overlooks one of the central arguments in this dispute – whether the 
localization requiremen ts of Turkey 's measures are inconsistent with Turkey 's obligations under the 
covered agreements .  
22. Finally, it is not the role of the Panel to make recommendations as to how a concerned 
Member, having been found to maintain a WTO -inconsistent measure, shoul d change its measure 
so as to be consistent with its WTO obligations . Assuming for the purpose of argument that any of 
the identified measures in this dispute are found to be inconsistent with an obligation under the 
covered agreements, Turkey would determ ine how to bring its measures into compliance with the 
obligation at issue .  
23. Directing Turkey, or any Member, as to how to structure or restructure pharmaceutical 
reimbursements to come within the scope of Article III:8(a) is not an issue before the Panel;  
moreover, such an exercise overlooks the potential conflicts with other obligations in the covered 
agreements by focusing on one obligation to the exclusion of the rest of the obligations of the WTO 
Agreements . Although a measure may fall within the scope  of Article III:8(a) such that the other 
provisions of Article III do not apply, the measure could nevertheless be inconsistent with another 
obligation or obligations under the covered agreements.  
24. Response to Question 3 : Article 3.1(b)  of the SCM Agreement disciplines subsidies that are 
conditioned on the "use of domestic over imported goods. "  The conditionality must be triggered by 
the act of "using " goods, either in the sense of employment to some end by an end user or as an 
input int o, or instrumentality of production (e.g., equipment) for, downstream production .  
25. The Oxford English Dictionary defines the ordinary meaning of "use" as "the act of putting 
something to work, or employing or applying a thing, for any (esp. a beneficial or  productive) 
purpose. " WT/DS583/ 12/Add.1  
 
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  26. Thus, the term "use" in Article 3.1(b) refers to the employment of a domestic good as an 
input or instrumentality in a productive process, or enjoyment of a good for its intended purpose by 
an end user . Therefore, the relevant good m ust be one that is "used, " either as a finished good by 
an end -user or as an input in downstream production .  
27. In contrast, Article 3.1(b) does not speak to subsidies conditional for their granting on 
domestic manufacturing . The ordinary meaning of the lang uage in Article 3.1(b) does not discipline 
subsidies by virtue of the fact that they are provided for production activities in the territory of the 
grantor . Article 3.1(b), by its terms, is directed to subsidies contingent on "the use of domestic over 
imported goods. "  That is, the conditionality for the subsidy must relate to "use."  
 
 
 
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