WT/DS583/ARB25  
 
 25 July 2022 
(22-5590) Page: 1/50 
  Original: English  
 
 
 
TURKEY – CERTAIN MEASURES CONCERNING THE PRODUCTION,  
IMPORTATION AND MARKETING OF PHARMACEUTICAL PRODUCTS  
ARBITRATION  UNDER ARTICLE  25 OF THE DSU 
AWARD OF THE ARBITRATOR S 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 WT/DS 583/ARB25  
 
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 TABLE OF CONTENTS  
1  INTRODUCTION  ................................ ................................ ................................ ...........  8 
2  MEASURES TAKEN TO STREAMLINE THE PROCEEDINGS  ................................ .............  11 
3  MANDATE OF THE ARBITRATORS  ................................ ................................ ...............  11 
4  ARGUMENTS OF THE PARTIES  ................................ ................................ ....................  12 
5  ARGUMENTS OF THE THIRD PARTIES  ................................ ................................ .........  12 
6  ANALYSIS  ................................ ................................ ................................ ..................  13 
6.1  Relevant background information and the localisation requirement  ................................ ....13 
6.1.1   Reimbursement of pharmaceutical products active in the  Annex  4/A list .......................... 13 
6.1.2   The localisation requirement  ................................ ................................ ...................... 14 
6.2  Articles III:4 and III:8(a) of the GATT  1994 ................................ ................................ ....14 
6.2.1   Panel findings  ................................ ................................ ................................ ........... 15 
6.2.1.1   The Panel's interpretation of the term "products purchased" as requiring a governmental 
agency to acquire ownership of the products at issue  ................................ ............................. 15 
6.2.1.2   The Panel's finding that the SSI does not purchas e pharmaceutical products from retail 
pharmacies  ................................ ................................ ................................ ....................... 16 
6.2.1.3   The Panel's finding that retail pharmacies are not governmental agencies purchasing 
products on behalf of the SSI  ................................ ................................ .............................. 17 
6.2.1.4   The Panel's conclusion  ................................ ................................ ............................ 18 
6.2.2   Whether the Panel erred in its interpretation of Article  III:8(a) of the GATT  1994 ............. 18 
6.2.2.1   Overview of Article  III:8(a) of the GATT  1994 ................................ ........................... 18 
6.2.2.2   Whether the Panel wrongly assumed Article  III:8(a) of the GATT  1994 to require a 
purchase by governmental agencies  ................................ ................................ ..................... 19 
6.2.3   Application of Article  III:8(a) of the GATT  1994 ................................ ............................ 24 
6.2.3.1   Whether there is procurement by the SSI of pharmaceutical products incl uded in the 
Annex  4/A list  ................................ ................................ ................................ .................... 25 
6.2.4   Conclusion  ................................ ................................ ................................ ............... 30 
6.3  Article  XX(b) of the GATT  1994 ................................ ................................ ..................... 30 
6.3.1   Panel findings  ................................ ................................ ................................ ........... 31 
6.3.1. 1  Order of analysis ................................ ................................ ................................ ....31 
6.3.1.2   The declared objective of the measure and its importance  ................................ .......... 31 
6.3.1.3   The Panel's finding that the measure was not taken to (not designed to) pursue the 
declared objective  ................................ ................................ ................................ .............. 32 
6.3.1.4   The Panel's con clusion  ................................ ................................ ............................ 33 
6.3.2   Whether the Panel erred in its interpretation of Article  XX(b) of the GATT  1994 ................ 34 
6.3.2.1   Whether the Panel erred by confusing the "design" and "necessity" steps of the legal test 
under Article  XX(b) of the GATT  1994 ................................ ................................ ................... 35 
6.3.2.2   Whether the Panel erred by requiring that a measure address a health risk that has "a 
substantial degree of probability" of materializing for that measure to be "designed to" protect 
human, animal, or plant life or health  ................................ ................................ ................... 37 
6.3.2.3   Whether the Panel erred by relying on previous panel reports dealing with other provisions
 ................................ ................................ ................................ ................................ .......38 
6.3.3   Whether the Panel erred in its application of Article  XX(b) of the GATT  1994 .................... 40 WT/DS 583/ARB25  
 
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 6.3.4   Article  11 of the DSU ................................ ................................ ................................ .41 
6.3.5   Conclusion  ................................ ................................ ................................ ............... 43 
6.4  Article  XX(d) of the GATT  1994 ................................ ................................ ..................... 44 
6.4.1   Panel findings  ................................ ................................ ................................ ........... 44 
6.4.2   Whether the Panel applied the wrong legal standard in rejecting Türkiye's defence under 
Article XX(d) of the GATT  1994 ................................ ................................ ............................ 44 
6.4.3   Conclusion  ................................ ................................ ................................ ............... 48 
7  AWARD  ................................ ................................ ................................ ......................  48 
7.1  Articles III:4 and III:8(a) of the GATT  1994 ................................ ................................ ....48 
7.2  Article  XX(b) of the GATT  1994 ................................ ................................ ..................... 49 
7.3  Article  XX(d) of the GATT  1994 ................................ ................................ ..................... 49 
7.4  Recommendation  ................................ ................................ ................................ ......... 50 
 
  WT/DS 583/ARB25  
 
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 LIST OF ANNEXES  
ANNEX A  
WORKING PROCEDURES FOR THE ARBITRATION  
Contents  
Annex  A-1 Agreed Procedures for Arbitration under Article  25 of the DSU, notified by the parties to the 
Dispute Settlement Body on 22  March 2022 (WT/DS583/10)  
Annex  A-2 Working Procedures for Arbitration under Article  25 of the DSU, adopted by the Arbitrators on 
10 May 2022 
ANNEX B  
NOTICE OF RECOURSE TO ARBITRATION UNDER A RTICLE  25 OF THE DSU  
Contents  
Annex  B-1 Türkiye's notice of recourse to arbitration under Article  25 of the DSU  
ANNEX C  
ARGUMENTS OF THE PARTIES  
Contents  
Annex  C-1 Executive summary of Türkiye's written submission  
Annex  C-2 Executive summary of the European  Union's written submission  
ANNEX D  
ARGUMENTS OF THE THIRD PARTIES  
Contents  
Annex  D-1 Executive summary of the Russia n Federation's third party's written submission  
Annex  D-2 Executive summary of Switzerland's third party's written submission  
 
 
 
  WT/DS 583/ARB25  
 
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 ABBREVIATIONS  USED IN THIS AWARD  
Abbreviation  Description  
Agreed Procedures  Agreed Procedures for Arbitration under Article  25 of the DSU , notified by 
the parties  to the Dispute Settlement Body on 22  March 2022  
(WT/DS583/10)  
DSB Dispute Settlement Body  
DSU Understanding on Rules and Procedures Governing the Settlement of 
Disputes  
GATS  General Agreement on Trade in Services  
GATT  1994 General  Agreement on Tariffs and Trade 1994  
GPA Agreement on Government Procurement  
Panel  Report  Final Panel  Report as issued to the parties in Turkey – Certain Measures 
Concerning the Production, Importation and Marketing of Pharmaceutical 
Products , attached to Türkiye 's notice of recourse to arbitration 
(WT/DS583/12 and WT/DS583/12 /Add.1)  
SCM Agreement  Agreement on Subsidies and Countervailing Measures  
SSI Social Security Institution  
TMMDA  Turkish Medicines and Medical Devices Agency  
TPA Turkish Pharmacists' Association  
TRIMs  Agreement  Agreement on Trade -Related Investment Measures  
Vienna  Convention   Vienna Convention on the Law of Treaties, done at Vienna, 23 May 1969, 
UN Treaty Series, Vol. 1155, p. 331  
Working Procedures  Working Procedures for Arbitration under Article  25 of the DSU, adopted 
by the Arbitrators on 10  May 2022 
WTO World Trade Organization  
 
  WT/DS 583/ARB25  
 
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 CASES CITED IN THIS AWARD  
Short title  Full case title and citation  
Australia – Salmon  Appellate  Body Report, Australia – Measures Affecting Importation of Salmon , 
WT/DS1 8/AB/R , adopted 6  November  1998, DSR 1998:VIII, p.  3327 
Brazil – Retreaded 
Tyres  Appellate  Body Report, Brazil – Measures Affecting Imports of Retreaded Tyres , 
WT/DS332/AB/R , adopted 17  December  2007, DSR 2007:IV, p.  1527 
Brazil – Retreaded 
Tyres  Panel  Report , Brazil – Measures Affecting Imports of Retreaded Tyres , 
WT/DS332/R , adopted 17  December  2007, as modified by Appellate  Body Report 
WT/DS332/AB/R, DSR 2007:V, p. 1649  
Brazil – Taxation  Panel  Report s, Brazil – Certain Measures Concerning Taxation and Charges , 
WT/DS472/R , Add.1 and Corr.1 / WT/DS497/R , Add.1 and Corr.1, adopted 
11 January  2019, as modified by Appellate  Body Reports WT/DS472/AB/R / 
WT/DS497/AB/ R, DSR 2019:II, p. 345  
Canada – Aircraft  Appellate  Body Report, Canada – Measures Affecting the Export of Civilian Aircraft , 
WT/DS70/AB/R , adopted 20  August  1999, DSR 1999:III, p. 1377  
Canada – Renewa ble 
Energy / Canada – 
Feed-in Tariff Program  Appellate  Body Reports, Canada – Certain Measures Affecting the Renewable 
Energy Generation Sector / Canada – Measures Relating to the Feed -in Tariff 
Program , WT/DS412/AB/R  / WT/DS426/AB/R , adopted 24  May 2013, DSR 2013:I, 
p. 7 
Canada – Renewable 
Energy / Canada – 
Feed-in Tariff Program  Panel  Reports, Canada – Certain Measures Affecting the Renewable Energy 
Generation Sector / Canada – Measures Relating to the Feed -in Tariff Program , 
WT/DS412/R  and Add.1 / WT/DS426/R  and Add.1, adopted 24  May 2013, as 
modified by Appellate  Body Reports WT/DS412/AB/R/ WT/DS426/AB/R, 
DSR 2013:I, p. 237  
China – HP-SSST (EU)  Appellate  Body Reports, China – Measures Imposing Anti -Dumping Duties on High -
Performance Stainless Steel Seamless Tubes ("HP -SSST") from Japan / China – 
Measures Imposing Anti -Dumping Duties on High -Performance Stainless Steel 
Seamless Tubes ("HP -SSST") from the European  Union , WT/DS454/AB/R  and Add.1 
/ WT/DS460/AB/R  and Add.1, adopted 28  October  2015, DSR 2015:IX, p. 4573  
China – Rare Earths  Appellate  Body Reports, China – Measures Related to the Exportation of Rare 
Earths, Tungsten, and Molybdenum , WT/DS431/AB/R  / WT/DS432/AB/R  / 
WT/DS433/AB/R , adopted 29  August  2014, DSR 2014:III, p. 805  
China – Rare Earths  Panel  Reports, China – Measures Related to the Exportation of Rare Earths, 
Tungsten, and Molybdenum , WT/DS431/R  and Add.1 / WT/DS432/R  and Add.1 / 
WT/DS433/R  and Add.1, adopted 29  August  2014, upheld by Appellate  Body 
Reports WT/DS431/AB/R / WT/DS432/AB/R / WT/DS433/AB/R, DSR 2014:IV, 
p. 1127 
Colombia – Textiles  Appellate  Body Report, Colombia – Measures Relating to the Importation of 
Textiles, Apparel and Footwear , WT/DS461/AB/R  and Add.1, adopted 22  June 2016, 
DSR 2016:III, p. 1131  
EC – Asbestos  Appellate  Body Report, European  Communities – Measures Affecting Asbestos and 
Asbestos -Containing Products , WT/DS135/AB/R , adopted 5  April 2001, 
DSR 2001:VII, p. 3243  
EC – Asbestos  Panel  Report, European  Communities – Measures Affecting Asbestos and Asbestos -
Containing Products , WT/DS135/R  and Add.1, adopted 5  April 2001, as modified by 
Appellate  Body Report WT/DS135/AB/R, DSR  2001:VIII, p. 3305  
EC – Fasteners 
(China)  Appellate  Body Report, European  Communities – Definitive Anti -Dumping Measures 
on Certain Iron or Steel  Fasteners from China , WT/DS397/AB/R , adopted 
28 July 2011, DSR 2011:VII, p.  3995 
EC – Hormones  Appellate  Body Report, European  Communities – Measures Concerning Meat and 
Meat Products (Hormones) , WT/DS26/AB/R , WT/DS48/AB/R , adopted 
13 February  1998, DSR 1998:I, p.  135 
EC – Seal Products  Appellate  Body Reports, European  Communities – Measures Prohibiting the 
Importation and Marketing of Seal Products , WT/DS400/AB/R  / WT/DS401/AB/R , 
adopted 18  June 2014, DSR 2014:I, p. 7  
EC – Tariff Preferences  Panel  Report, European  Communities – Conditions for the Granting of Tariff 
Preferences to Developing Countries , WT/DS246/R , adopted 20  April 2004, as 
modified by Appellate  Body Report WT/DS2 46/AB/R, DSR 2004:III, p. 1009  
EC and certain 
member States – 
Large Civil Aircraft  Appellate  Body Report, European  Communities and Certain Member States – 
Measures Affecting Trade in Large Civil Aircraft , WT/DS316/AB/R , adopted 
1 June 2011, DSR 2011:I, p. 7  WT/DS 583/ARB25  
 
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 Short title  Full case title and citation  
EU – Biodiesel 
(Argen tina) Appellate  Body Report, European  Union – Anti-Dumping Measures on Biodiesel from 
Argentina , WT/DS473/AB/R  and Add.1, adopted 26  October  2016, DSR 2016:VI, 
p. 2871 
EU – Energy Package  Panel  Report, European  Union and its member States – Certain Measures Relating 
to the Energy Sector , WT/DS476/R  and Add.1, circulated to WTO  Members 
10 August  2018 [appeal/adoption pending]  
India – Agricultural 
Products  Appellate  Body Report, India – Measures Concerning the Importation of Certain 
Agricultural Products , WT/DS430/AB/R , adopted 19  June 2015, DSR 2015:V, 
p. 2459 
India – Solar Cells  Appellate  Body Report, India – Certain Measures Relating to Solar Cells and Solar 
Modules , WT/DS456/AB/R  and Add.1, adopted 14  October  2016, DSR 2016:IV, 
p. 1827 
India – Solar Cells  Panel  Report, India – Certain Measures Relating to Solar Cells and Solar Modules , 
WT/DS456/R  and Add.1, adopted 14  October  2016, as modified by Appellate  Body 
Report WT/DS456/AB/R, DSR 2016:IV, p.  1941 
Indonesia – Chicken  Panel  Report, Indonesia – Measures Concerning the Importation of Chicken Meat 
and Chicken Products , WT/DS484/R  and Add.1, adopted 22  November 2017, 
DSR 2017:VIII, p. 3769  
Indon esia – Import 
Licensing Regimes  Appellate  Body Report, Indonesia – Importation of Horticultural Products, Animals 
and Animal Products , WT/DS477/AB/R , WT/DS478/AB/R , and Add.1, adopted 
22 November  2017, DSR 2017:VII, p.  3037 
Japan – Alcoholic 
Beverages II  Appellate  Body Report, Japan – Taxes on Alcoholic Beverages , WT/DS8/AB/R , 
WT/DS10/AB/R , WT/DS11/AB/R , adopted 1  November  1996, DSR 1996:I, p. 97  
Mexico – Taxes on 
Soft Drinks  Appellate  Body Report, Mexico – Tax Measures on Soft Drinks and Other Beverages , 
WT/DS308/AB/R , adopted 24  March  2006, DSR 2006:I, p. 3  
Peru – Agricultural 
Products  Appellate  Body Report, Peru – Additional Duty on Imports of Certain Agricultural 
Products , WT/DS457/AB/R  and Add.1, adopted 31  July 2015, DSR 2015:VI, p.  3403 
Philippines – Distilled 
Spirits  Appellate  Body Reports, Philippines – Taxes on Distilled Spirits , WT/DS396/AB/R  / 
WT/DS403/AB/R , adopted 20  January  2012, DSR  2012:VIII, p.  4163 
US – COOL 
(Article  21.5 – Canada 
and Mexico)  Appellate  Body Repor ts, United  States – Certain Country of Origin Labelling (COOL) 
Requirements – Recourse to Article  21.5 of the DSU by Canada and Mexico , 
WT/DS384/AB/RW  / WT/DS386/AB/RW , adopted 29  May 2015, DSR 2015:IV, 
p. 1725 
US – Gasoline  Appellate  Body Report, United  States – Standards for Reformulated and 
Conventional Gasoline , WT/DS2/AB/R , adopted 20  May 1996, DSR 1996:I, p. 3  
US – Gasoline  Panel  Report, United  States – Standards for Reformulated and Conventional 
Gasoline , WT/DS2/R , adopted 20  May 1996, as modified by Appellate  Body Report 
WT/DS2/AB/R, DSR 1996:I, p.  29 
US – Shrimp 
(Article  21.5 – 
Malaysia)  Appellate  Body Report, United  States – Import Prohibition of Certain Shrimp and 
Shrimp Products – Recourse to Article  21.5 of the DSU by Malaysia , 
WT/DS58/AB/RW , adopted 21  November  2001, DSR 2001:XIII, p.  6481 
US – Sonar  Mapping  GATT Panel  Report, United  States – Procurement of a Sonar Mapping System , 
GPR.DS1/R, 23  April 1992, unadopted [91SONARM]  
US – Tuna II (Mexico) 
(Article  21.5 – Mexico)  Appellate  Body Report, United States – Measures Concerning the Importation, 
Marketing and Sale of Tuna and Tuna Products – Recourse to Article  21.5 of the 
DSU by Mexico , WT/DS381/AB/RW  and Add.1, adopted 3  December  2015, 
DSR 2015:X, p. 5133  
 WT/DS 583/ARB25  
 
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Parties:  
 
European  Union  
Türkiye1 
 Arbitrators:  
 
Mateo Diego -Fernández Andrade, 
Chairperson  
Seung Wha Chang  
Guohua Yang  
Third Parties:  
 
Brazil  
Canada  
China  
India 
Indonesia   
 
Japan  
Russia n Federation  
Switzerland  
Ukraine  
United  States  
 
 
1  INTRODUCTION  
1.1.  This Arbitration concerns issues of law and legal interpretations developed in the Panel  Report , 
Turkey – Certain Measures Concerning the Production, Importation and Marketing of Pharmaceutical 
Products .2 These issues of law and legal interpretations relate to  certain provisions of the General 
Agreement on Tariffs and Trade 1994 (GATT  1994) applied in the context of Türkiye 's "localisation 
requirement ". 
1.2.  The Panel was established on 30  September  2019 to consider a complaint by 
the European  Union with respect to the consistency of the localisation requirement and certain other 
measures for pharmaceutical products  adopted by Türkiye  with provisions of the GATT  1994, the 
Agreement on S ubsidies and Countervailing Measures (SCM  Agreement), and the Agreement  on 
Trade -Related Investment Me asures (TRIMs  Agreement ).3  
The Panel  Report  was issued to the parties on 11  November 2021 . In ruling on the 
European  Union 's claims regarding the localisation requirement, the Panel found that:  
a. the European  Union  had established the existence of the localisation requirement as a 
"single measure", whereby (i)  Türkiye  required foreign producers to commit to localise in 
Türkiye  their production of certain pharmaceutical products; and (ii)  where commitments 
were not g iven, accepted , or fulfilled, relevant products were no longer reimbursed by 
Türkiye 's Social Security Institution (SSI)4; 
b. the localisation requirement was not covered by the government procurement derogation 
in Article  III:8(a) of the GATT  1994, and was therefore subject to the national treatment 
obligation in Article  III:4 of the GATT  1994 and Article  2.1 of the TRIMs  Agreement5; 
c. the localisation requirement was inconsistent with the national treatment obligation in 
Article  III:4 of the GATT  19946; and  
 
1 Formerly "Turkey". (See Membership of the World Trade Organization (Revision), WT/INF/43/Rev.23, 
4 June 2022) For ease of reference, we refer to Türkiye in this Award,  except when quoting from the 
Panel  Report  or submissions preceding this change of name a nd when referring to the title of a Panel Exhibit .  
2 We refer to the Final Report issued by the Panel to the parties on 11  November 2021 as the 
"Panel  Report". In accordance with paragraph 5 of the Agreed Procedures for Arbitration under Article  25 of the  
DSU (Agreed Procedures), the Panel  Report  in the three working languages of the WTO was attached to 
Türkiye 's notice of recourse to arbitration. (WT/DS583/12 and WT/DS583/12/Add.1)  
3 Request for the Establishment of a Panel by the European  Union, WT/DS58 3/3. 
4 Panel  Report, para.  8.1.b.i.  
5 Panel  Report, para.  8.1.b.ii.  
6 Panel  Report, para.  8.1.b.iii.  WT/DS 583/ARB25  
 
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 d. Türkiye  had not established that the localisation requirement was justified under 
Article  XX(b) or Article  XX(d) of the GATT  1994.7 
The Panel also made findings of inconsistency with the GATT  1994 in respect of another 
measure challenged by the European  Union , namely Türkiye 's "prioritization measure". In this 
respect, t he Panel found that :  
a. the European  Union  had established the existence of an overarching measure whereby 
Turkish authorities gave priority to the review of applications for inclusion in the 
"Annex  4/A list "8 and to good manufacturing practices and marketing authorization 
applications concerning  domestic pharmaceutical products over the review of applications 
of like imported products9; and  
b. the prioritization measure was inconsistent with Article  III:4 of the GATT  1994.10 
The Panel concluded that, to the extent that the y were inconsistent with the GATT  1994, the 
measures at issue  nullified or impaired benefits accruing to the European  Union  under that 
Agreement .11 The Panel recommended that Türkiye  bring its measures into conformity with its 
obligations under the GATT  1994.12 
1.6.  At the request of t he parties,  the Panel suspended its wor k before the circulation of the 
Panel  Report  to Members .13  
1.7.  On 22  March  2022, Türkiye  and the European  Union  notified Agreed Procedures for Arbitration 
under Article  25 of the DSU (Agreed Procedures)  to the Dispute Settlement Body (DSB) .14 Under the 
Agreed Procedures, "[ t]aking into account that the Appellate  Body is not presently able to hear an 
appeal in this dispute" , the parties agreed "to enter into arbitration under Article  25 of the DSU to 
decide any appeal from any final panel report as issued to the parties in dispute DS583".15 The 
parties  further  agreed t o "abide by the arbitration award, which shall be final"16, with the 
understanding that  "un-appealed" panel findings  would form an integral part of such an  award .17 
 
7 Panel  Report, para.  8.1.b.iv. In light of these findings, the Panel declined to rule on 
the European  Union's alternative and conditional claim under Arti cle 3.1(b) of the SCM  Agreement and 
exercised judicial economy over the European  Union's additional claims under Article  2.1 of the 
TRIMs  Agreement and Article  X:1 of the GATT  1994. In addition, the Panel exercised judicial economy over the 
European  Union' s claim that the localisation requirement applied in conjunction with the Turkish rules for 
approving the importation and marketing of pharmaceutical products (which had been referred to by the 
European  Union as the "import ban on localised products") was inconsistent with Article  XI:1 of the GATT  1994. 
(Ibid., paras.  8.1.b.v and 8.1.c)  
8 As explained further below, to be reimbursable, a pharmaceutical product must be included as "active" 
in the list in Annex  4/A to the Health Implementation Communiqué. ( See para.  6.4.  below ) 
9 Panel  Report, para.  8.1.d.i.  
10 Panel  Report, para.  8.1.d.ii.  
11 Panel  Report, para.  8.2. 
12 Panel  Report, para.  8.3. The Panel also made findings regarding a request for a preliminary ruling by 
Türkiye pertaining to its terms of reference. In that regard, the Panel found that: (i)  Türkiye 's request for a 
preliminary ruling was not untimely; (ii)  the localisation requirement, the i mport ban on localised products, and 
the prioritization measure had been identified with sufficient specificity to comply with Article  6.2 of the DSU; 
and (iii)  the European  Union had provided a brief summary of the legal basis of the complaint sufficient to 
present the problem clearly with respect to its claims under Article  X:1 of the GATT  1994 and Article  3.1(b) of 
the SCM  Agreement, so that both claims were properly within the Panel's terms of reference. (Ibid., 
para. 8.1.a.i -iii) 
13 On 22  December  2021,  the Panel informed the parties that it had granted the European  Union's 
request that the Panel suspend its work, pursuant to Article  12.12 of the DSU, for a period of one month. 
(WT/DS583/6 ) On 21  January  2022, 10  February  2022, and 24  February  2022, the Panel informed the parties 
that it had agreed to the European  Union's requests for extensions of the suspension of the Panel's work. 
(WT/DS583/7, WT/DS583/8, and WT/DS583/9 ) On 24  March  2022, the Panel agreed to the parties' joint 
request for a further ind efinite suspension of the panel proceedings , and extended the suspension of the 
Panel's work indefinitely. ( WT/DS583/11 ) 
14 WT/DS583/10.  
15 Agreed Procedures, para.  1. (fns  omitted)  
16 Agreed Procedures, para.  15.  
17 Agreed Procedures, para.  9.  WT/DS 583/ARB25  
 
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 1.8.  On 25 April 2022, Türkiye  notified the DSB of its decision to initiate an arbitration under 
Article  25 of the DSU  through a notice of recourse to arbitration, attaching the Panel  Report , in 
accordance with paragraph 5 of the Agreed Procedures .18 On the same day, Türkiye  filed its written 
submission.  
1.9.  On 28  April 2022, three arbitrators were selected in accordance with paragraph 7 of the Agreed 
Procedures . On 30 April, 1  May, and 3  May 2022, we accepted  our appointment  and confirmed  that 
we had no conflict of interest . On 4 May 2022, Members were informed of our appointment as 
Arbitrators.19 On 5 May 2022, Mr Diego -Fernández Andrade  was elected as Chairperson  for th e 
Arbitration .20 The next day, the parties were informed that he would act as Chairperson.  
1.10.   Following an organizational meeting with the parties on 10  May 2022, we adopted  Working 
Procedures  for Arbitration under Article  25 of the DSU (Working Procedures)21, including a W orking 
Schedule for th e Arbitration , to be read in conjunction with the DSU , the Agreed Procedures , and 
relevant provisions of the Working Procedures for Appellate Review .22 Annex  A-2 of the Addendum 
to this Award, WT/DS583/ARB25/Add.1, contains the se Working Procedures , including the Working 
Schedule.   
1.11.   In accordance with the adopted Working Schedule, t he European  Union  filed its written 
submission on 13 May 2022. On 16  May 2022, the Russian  Federation  (Russia)  and Switzerland  each 
filed a third party's written submission.23 On the same day, Brazil, Canada, China, Japan, Ukraine, 
and the United  States  each notified its intention to appear at the hearing as a third  party.24 
Subsequently, on 15  June 2022, Indonesia  notified its intention to appear at the hearing as a 
third party.25 
1.12.   On 3 June 2022, the Chairperson sent a letter to the parties and third parties with relevant 
preliminary information regarding the hearing. In thi s letter, among other things, the Chairperson 
confirme d that the hearing would be held in -person, with a possibility to attend remotely via Webex . 
In this connection, t he Chairperson informed that Mr Yang would participate in the hearing remotely 
since, due to COVID -19-related restrictions, he would have difficulties travelling to Geneva for the 
hearing. The Chairperson also indicated that we would endeavour to send parties and third parties 
a list of questions or topics in advance of the hearing. On 10  June 2022, the Chairperson sent a 
subsequent letter to the parties and third parties  providing  additional  information regarding remote 
access to the hearing.  
1.13.   On 15  June 2022, parties and third parties shared their delegation lists, indicating in -person 
and remote  participants .26 On 16  June 2022, we shared a list of questions with the parties and 
third parties to facilitate the conduct of the hearing and assist them in preparing for the hearing .  
1.14.   The hearing was held on 21 -22 June 2022 . The parties and eight third parties ( Brazil, Canada, 
China, Japan, Russia, Switzerland, Ukraine, and the United  States ) made oral statements and/or 
responded to questions.   
1.15.   The Award is being  issued to the parties in English on 21 July 2022 , within 90 days of the 
commencement of the Arbitration . Pursuant to Article  25.3 of the DSU, we will notify the Award  in 
English, French , and Spanish to the D SB, the Council for Trade in Goods, the Committee on Subsidies 
and Countervailing Measures, and the Committee on Trade -Related Investment Measures . 
 
18 WT/DS583/ 12 and WT/DS583/12/Add.1.  
19 WT/DS583/13.  
20 Pursuant to paragraph 7 of the Agreed Procedures and paragraph 7 of the Working Procedures.  
21 Pursuant to paragraph 11 of the Agreed Procedures.  
22 WT/AB/WP/6.  
23 Pursuant to paragraph 16 of the Agreed Procedures and paragraph 23 of the Working Procedures.  
24 Pursuant to paragraph 16 of the Agreed Procedures and paragraph 24 of the Working Procedures.  
25 Pursuant to paragraph 16 of the Agreed Procedures and paragrap h 26 of the Working Procedures.  
26 Canada, the European  Union , and Japan subsequently updated their delegation lists.  WT/DS 583/ARB25  
 
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 2  MEASURES TAKEN TO STREAMLINE THE PROCEEDINGS  
2.1.  Paragraphs 12 and 13 of the Agreed Procedures read27:  
12. The parties request the arbitrators to issue the award within 90 days following the filing 
of the Notice of Appeal. To that end, the arbitrators may take appropriate organizational 
measures to streamline the proceedings, without prejudice to the proced ural rights and 
obligations of the parties and due process. Such measures may include decisions on page 
limits, time limits and deadlines as well as on the length and number of hearings required.  
13. If necessary in order to issue the award within the 90 day time -period, the arbitrators 
may also propose substantive measures to the parties, such as an exclusion of claims based 
on the alleged lack of an objective assessment of the facts pursuant to Article  11 of the 
DSU.[*] 
[* fn  original]  5 For greater certainty, the proposal of the arbitrators is not legally binding and it will be 
up to the party concerned to agree with the proposed substantive measures. The fact that the party 
concerned does not agree with the proposed substantive measures shal l not prejudice the consideration 
of the case or the rights of the parties.  
2.2.  In accordance with paragraph 12 of the Agreed Procedures, we adopted organizational 
measures to streamline the proceedings. These organizational measures included setting  up an 
organizational meeting with the parties to consider a draft set of Working Procedures at the outset 
of the Arbitration, decisions on page limits for submissions28, decisions on  time limits for opening 
and closing statements at the hearing29, sending questions  to parties and third parties in advance 
of the hearing  to facilitate the conduct of the hearing , and adopting a tight hearing schedule. We 
also took internal organizational  steps to streamline our work and ensure that our Award could be 
issued within 90 d ays of the commencement of the Arbitration .30  
2.3.  Moreover, at the organizational meeting with the parties as well as  at the hearing, we consulted 
with the parties  about  the possibility of excluding  Türkiye's claims raised under Article  11 of the DSU 
from the scope of the Arbitration. We eventually did not consider it necessary to propose formally 
that these claims be excluded from the scope of the Arbitration for the purpose of issuing our Award 
within 90 days.  
3  MANDATE OF THE ARBITRATORS  
3.1.  These Arbitration proceedings took place under Article  25 of the DSU. The Agreed Procedures 
define  our mandate in this particular dispute. They make clear that th e Arbitration is "to decide any 
appeal from any final panel report as issued to the parties in dispute DS583" .31 In accordance with 
the Agreed Procedures, u nless otherwise provided for there in, the Arbitration is governed, mutatis 
mutandis , by the provisions of the DSU and other rules and procedures app licable to appellate 
review.32  
The scope of the Arbitration is further set out in paragraphs 9 and 10 of the Agreed Procedures, 
which provide :  
9. An appeal shall be limited to issues of law covered by the panel report and legal 
interpretations developed by the panel. The arbitrators may uphold, modify or reverse 
the legal findings and conclusions of the panel. Where applicable, the arbitration award 
 
27 Agreed Procedures, paras.  12-13. Paragraph 28 of the Working Procedures reads:  
The arbitrators shall issue the award within 90 days fo llowing the commencement of this 
arbitration. If necessary, in order to issue the award within the 90-day time-period, the 
arbitrators may propose substantive measures to the parties.  (fn omitted)  
28 See paragraphs 13, 14, and 25 of the Working Procedures . 
29 See p aragraph 33 of the Working Procedures . Additional time limits were subsequently set for the 
closing statements of third parties.  
30 These included meeting  frequently , drafting descriptive parts of the Award early in the proceedings, 
and setting  up a working schedule for the timely exchange of drafts and written comments for the purpose s of 
preparing questions, conducting our deliberations, and finali zing the Award.  
31 Agreed Procedures, para.  1. (fn  omitted)  
32 Agreed Procedures, para.  11.  WT/DS 583/ARB25  
 
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 shall include recommendations, as envisaged in Article  19 of the DSU. The findings of 
the panel which have not been appealed shall be deemed to form an integral part of the 
arbitration award together with the arbitrators' own findings.  
10. The arbitrators shall only address those issues that are necessary for the resolution 
of the dispute. They shall address o nly those issues that have been raised by the parties, 
without prejudice to their obligation to rule on jurisdictional issues.33 
We are mindful that our task as Arbitrators under Article  25 of the DSU is to facilitate the 
solution of the dispute that has b een submitted to arbitration by the parties. Our Award, to which 
the parties agreed to abide34, will not go through the process of being adopted by the DSB.  We are 
also mindful that the Agreed Procedures mandate us to address only those issues raised by the 
parties that are necessary for the resolution of the dispute.35 
The following issues are raised in this Arbitration :  
a. whether the Panel erred in its interpretation and /or application of Article  III:8(a) of the 
GATT  1994 in finding that the localisation requirement was not covered by the government 
procurement derogation in this provision, and was therefore subject to the national 
treatment obligation under Article  III:4 of the GATT  1994 and Article  2.1 of the 
TRIMs  Agreement ;  
b. whether the Panel 's findings under Article  III:4 of the GATT  1994 should be declared moot 
and of no legal effect or, alternatively, be reversed ;  
c. whether the Panel erred in its in terpretation and /or application of Article  XX(b) of the 
GATT  1994 in finding that Türkiye  had not established that the localisation requirement 
was justified under this provision ;  
d. whether the Panel failed to make an objective assessment of the matter befo re it pursuant 
to Article  11 of the DSU when addressing Türkiye 's claim that the localisation requirement  
was justified under Article  XX(b) of the GATT  1994; and  
e. whether the Panel erred in its application of Article  XX(d) of the GATT  1994 in finding that 
Türkiye  had not established that the localisation requirement was justified under this 
provision .  
3.5.  It is within these parameters that we issue our Award.  In reaching our conclusions, we 
thoroughly considered all the arguments made by the parti es and third parties . Not all these 
arguments are explicitly discussed in this Award and issues are addressed only to the extent 
necessary for the resolution of the dispute before us.  
4  ARGUMENTS OF THE PARTIES  
4.1.  The claims and arguments  of the parties are ref lected in the executive summaries of their 
written submissions.36 Türkiye 's notice of recourse to arbitration and the executive summaries of 
the parties' claims and arguments are contained in Annexes B and  C of the Addendum to this Award, 
WT/DS583/ARB25/Add.1.  
5  ARGUMENTS OF THE THIRD PARTIES  
5.1.  The arguments of the third parties that filed a written submission ( Russia and Switzerland ) are 
reflected in the executive summaries of their written submissions37, and are contained in Annex  D 
of the Ad dendum to this Award, WT/DS583/ARB25/Add.1.  
 
33 Agreed P rocedures, paras.  9-10.  
34 Agreed Procedures, para.  15.  
35 Agreed Procedures, para.  10.  
36 Pursuant to paragraph 15 of the Working Procedures.  
37 Pursuant to paragraph 15 of the Working Procedures.  WT/DS 583/ARB25  
 
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 6  ANALYSIS  
6.1.  In this Award, we address claims and arguments pertaining to the Panel's findings under 
Articles III:4 and III:8(a) of the GATT  1994, before turning to claims and arguments pertaining to 
the Panel's fin dings under Article  XX(b) and those under Article  XX(d). We first provide a brief 
overview of relevant background information, including a short description of the localisation 
requirement.38 
6.1  Relevant background information and the localisation requirement  
6.1.1   Reimbursement of pharmaceutical products active in the  Annex  4/A list 
6.2.  Türkiye 's Universal Health Insurance Scheme "provides 'comprehensive, fair and equitable 
access to healthcare services ', including access to pharmaceutical products, to virtually anyone  
residing in Turkey" .39 Within the Ministry of Health, the Turkish Medicines and Medical Devices 
Agency (TMMDA) is responsible for the registration, marketing approval and authorization, pricing, 
legal classification, and inspection of all human medicinal products.40 For its part, the SSI, which is 
affiliated with the Ministry of Family, Labour and Social Services, is in charge of implementing social 
security policies and is responsible for, inter alia , paying for pharmaceuticals.41  
6.3.  Pharmaceutica l products are prescribed by medical doctors and distributed to outpatients42 by 
retail pharmacies, which are private entities. All retail pharmacies are members of the Turkish 
Pharmacists' Association (TPA).43 
6.4.  To be "reimbursable" by the SSI, a pharmaceutical product must be included as "active"44 in a 
list included in Annex  4/A to the Health Implementation Communiqué45 (the Annex  4/A list). The 
SSI determines which pharmaceutical products are included in the Annex  4/A list.46 Products in the 
Annex 4/A list are put in equivalent groups, and a single "reimbursement price" set for each 
equivalent group (the lowest price in the equivalent group increased by 10%).47 
6.5.  The amounts charged by pharmacies for pharmaceutical products covered by the social se curity 
system are met from payments made by the SSI and out -of-pocket payments by outpatients.48 
According to a Protocol concluded between the SSI and the TPA49, individual retail pharmacies sign 
(and annually renew) standard contracts with the SSI. On the  basis of these contracts, pharmacies 
periodically invoice the SSI for all pharmaceutical products included in the Annex  4/A list that they 
have provided to outpatients during the relevant period. The SSI reviews these invoices using a 
sampling method and reimburses the reimbursement price.50 If the public price of a pharmaceutical 
product is greater than a maximum reimbursement price set by the SSI, outpatients must pay the 
 
38 This overview is based on the Panel's account of the factual aspects of th e dispute .  
39 Panel  Report, para.  2.2 (quoting SSI, "Universal Health Insurance" (Panel Exhibit EU -2) and referring 
to Social Insurance and Universal Health Insurance Law, Law No.  5510 (31  May 2006), Official Gazette 
No. 26200 of 16 June 2006 (Panel Exhibits EU -1, TUR -2); referring to M.  Tatar, "Short PPRI Pharma Profile, 
Turkey 2017", WHO Collaborating Centre for Pharmaceutical Pricing and Reimbursement Policy (Panel Exhibit 
EU-3), p.  7; Social Security Institution Activity Report  2018 (Panel Exhibits EU -109, TUR -7), p. 1; Türkiye 's 
first written submission  to the Panel , para.  28). 
40 Panel  Report, para.  2.3 (referring to G. Oner and M. Kecik, "Turkish Medicines and Medical Devices 
Agency", presentation at 2014 WHO Technical Briefin g Seminar (Panel Exhibit EU -5); Türkiye 's first written 
submission  to the Panel , para.  40). 
41 Panel  Report, para.  2.4 (referring to Law on Social Security Institution, Law No.  5502 (16  May 2006), 
Official Gazette No.  26173 of 20  May 2006 (Panel Exhibits EU -4, TUR -3), Article  3; Türkiye 's first written 
submission  to the Panel , para.  39; second written submission  to the Panel , para.  19).  
42 Outpatients are distinguished from inpatients, who receive pharmaceutical products in hospitals.  
43 Panel  Report, paras.  2.7 and 2.14 (referring to Law on Turkish Pharmacists Association No.  6643 
(25 January 1956), Official Gazette No.  9223 of 2  February  1956 (Panel Exhibit TUR -27), Article  1). 
44 Panel  Report, para s. 2.8 and 2.13. 
45 Panel  Report, para.  2.8 (referring to Social Security Institution Health Implementation Communiqué, 
Official Gazette No.  28597 of 24  March 2013 (Panel Exhibits EU -95, TUR -10)).  
46 Panel  Report, paras.  2.8 and 2.10 -2.12, and fn  79 to para.  2.21.  
47 Panel  Report, para.  2.9.  
48 Panel  Report, para.  2.7.  
49 TPA Protocol (Panel Exhibits EU -52, TUR -20).  
50 Panel  Report, para.  2.14 and fn  59 thereto. The reimbursement price of medicines  is further detailed 
at para graph  2.15 of the Panel  Report.  WT/DS 583/ARB25  
 
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 difference, unless they decide to opt for an equivalent product. In addition, outpa tients generally 
also pay a contribution fee and a prescription fee to retail pharmacies.51 
6.6.  Retail pharmacies and the SSI use an electronic information system , the "Medula system ", 
which "enables the registration, tracking and invoicing of medicines that a re obtained from 
pharmacies through a single application".52  
6.1.2   The localisation requirement  
6.7.  The localisation requirement is a measure, whereby: (i)  Türkiye  requires foreign producers to 
commit to locali se in Türkiye  their production of certain pharmaceutical products; and (ii)  where 
commitments are not given, accepted, or fulfilled, products are no longer reimbursed by the SSI.53 
It has different phases, which progressively target different products depending on thei r market 
share and the existence of equivalent products in the domestic market.54 
6.8.  The localisation process starts with the identification of the relevant products by the Turkish 
authorities. Pharmaceutical companies producing these products are informed th at their products 
are to be included in the scope of the localisation requirement. The pharmaceutical companies then 
enter into discussions with the competent authorities with a view to preparing a transition plan and 
submitting commitments to produce loca lly. Any commitments made by pharmaceutical companies 
that have been accepted are followed up through regular progress reports presented by the 
pharmaceutical companies to the TMMDA. If a company does not submit a localisation commitment, 
the relevant prod ucts are no longer reimbursed  by the SSI. This is also the case if a commitment is 
considered not to be appropriate, or if a company does not fulfil its commitment.55  
6.9.  The localisation requirement relates to Türkiye 's policy objective of achieving the grad ual 
transition from imports to domestic manufacturing of pharmaceuticals.56 The objective is to meet 
60% of domestic pharmaceutical  demand through domestic production, 60% being the share of 
locally produced medicines in terms of sales value of the total d omestic demand for medicines.57 
6.2  Articles III:4 and III:8(a) of the GATT  1994  
6.10.   Türkiye's first ground s of challenge in this Arbitration pertains to Article  III:8(a) of the 
GATT  1994. Türkiye claims that the Panel erred in the interpretation and application o f 
Article  III:8(a) in finding that the localisation requirement did not involve a "purchase" and thus did 
not fall within the ambit of this provision.58 Türkiye requests us to reverse relevant findings of the 
Panel, including its finding that the localisat ion requirement is not covered by Article  III:8(a), and is 
therefore subject to the national treatment obligation under Article  III:4 of the GATT  1994 and 
Article  2.1 of the TRIMs  Agreement.59 Türkiye also requests us to declare moot and of no legal effect, 
or reverse60, the Panel's findings under Article  III:4, including its finding that the localisation 
requirement is inconsistent with that provision.61  
 
51 Panel  Report, para.  2.16.  
52 Panel  Report, para.  2.17 ( quoting Social Security Institution, Directorate General for Provision of 
Services Healthcare Software Department, "Medula Project" presentation, 2019 (Panel Exhibit TUR -112), 
p. 17). 
53 Panel  Report, para.  7.31.  
54 Panel  Report, paras.  2.23-2.24.  
55 Panel  Report, paras.  2.25-2.26.  
56 Panel  Report, para.  2.20.  
57 Panel  Report, fn  75 to para.  2.20 (referring to Republic of Turkey, Minist ry of Development, Tenth 
Development Plan 2014 -2018 (2014), approved by Decision No.  1041 of the Grand National Assembly of 
Turkey of 2  July 2013 (Tenth Development Plan 2014 -2018) (Panel Exhibit EU -12), point 1.16; Türkiye 's 
responses to the Panel's secon d set of questions, para.  72).  
58 Türkiye's notice of recourse to arbitration, p p. 1-2.  
59 Türkiye requests us to reverse the conclusions and findings in paragraphs 7.61 -7.107 and 8.1.b.ii of 
the Panel  Report. (Türkiye's notice of recourse to arbitration, pp. 1-2) 
60 In this connection, Türkiye asks us to complete the legal analysis and find that all the elements of 
Article  III:8(a) are met, although Türkiye considers that the Panel's findings under Article  III:4 should be 
reversed, irrespective of any compl etion of legal analysis. (Türkiye's notice of recourse to arbitration, p p. 1-2; 
written submission, paras.  8-9 and 114 -115)  
61 Türkiye's notice of recourse to arbitration, p p. 1-2. Türkiye refers to the Panel's findings in 
paragraphs  7.121 -7.127 and 8.1.b. iii of the Panel  Report. (Ibid , p. 2.)  WT/DS 583/ARB25  
 
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 6.11.   The European  Union requests that we reject Türkiye's claims and find that the Panel did not 
err in its interpretation or application of Article  III:8(a).62 Should we find error with the Panel's 
interpretation or application of Article  III:8(a), the European  Union  submits that there would be no 
basis to declare moot or reverse the Panel's findings under Article  III:4, unless we complete the 
legal analysis and make a positive finding that the localisation requirement is covered by 
Article  III:8(a).63 Should we find it appropriate to complete th e legal analysis, we should conclude 
that Article  III:8(a) does not apply to the localisation requirement.64  
6.12.   We begin by briefly summarizing key Panel findings, before turning to consider relevant 
interpretation and application issues raised in this Arbit ration.  
6.2.1   Panel findings  
6.13.   Before the Panel, the European  Union claimed that the localisation requirement was 
inconsistent with Article  III:4 of the GATT  1994 and Article  2.1 of the TRIMs  Agreement.65 Türkiye 
responded that the localisation requirement fell wi thin the scope of Article  III:8(a) of the GATT  1994 
and was thus not subject to the provisions invoked by the  European  Union.66  
6.14.   In the Panel 's own words, the following elements need to be satisfied for a measure to fall 
within the scope of Article  III:8(a )67: (i) the challenged measure must  qualify as " laws, regulations, 
or requirements governing … procurement"; (ii)  the challenged measure "must involve a 'purchase' 
of products by a 'governmental agency'"; (iii)  "the products must be purchased 'for governm ental 
purposes'"; and (iv)  "the products must not be purchased 'with a view to commercial resale or with 
a view to use in the production of goods for commercial sale'."68 The Panel started its assessment 
with the second element. The Panel proceeded to set out its interpretation of the term "purchased" 
in the context of the phrase "products purchased by governmental agencies"69 and look at whether 
the localisation requirement involved "the 'purchase' of pharmaceutical products included in the 
Annex  4/A list by governmental agencies".70  
6.2.1.1   The Panel's interpretation of the term "products purchased" as requiring a 
governmental agency to acquire ownership of the products at issue  
6.15.   Beginning with the ordinary meaning of the words "products purchased", the Panel cons idered 
that "in everyday usage a person or entity [was] said to purchase a product at the moment that the 
person or entity acquire[d] ownership of a product through some kind of payment."71 To the Panel, 
the acquisition of ownership (i.e. property rights) was a purchase's defining characteristic, 
distinguishing it from renting or leasing a product.72 Turning to contextual elements, the Panel 
recalled that "'procurement' refer [red] to 'the process pursuant to which a government acquire[d]  
products', and that the word 'purchased' … refer[red] to 'the type of transaction used to put into 
effect' that acquisition."73 Thus, the concept of "purchase" covered only a subset of the various types 
of transactions that could be used to put into effect "procurement". The Panel considered that 
interpreting the term "purchased" in accordance with its ordinary meaning, i.e. as covering only the 
type of transaction through which the government acqui red ownership of the products, gave the 
term "purchase" a meaning distinct from the broader concept of "procurement" that could involve 
 
62 European  Union's written submission, para.  2.  
63 European  Union's written submission, paras.  88 and 104 -105. 
64 European  Union's written submission, paras.  3 and 8 9. 
65 Panel  Report, para.  3.2.  
66 Panel  Report, paras . 3.3.b and 7.32.  
67 The Panel addressed the "government procurement derogation" in Article  III:8(a) before making any 
findings under Article  III:4 of the GATT  1994 or Article  2.1 of the TRIM s Agreement , on account that measures 
satisfying the requirements of Article  III:8(a) were not subject to the national treatment obligations set out in 
other paragraphs of Article  III. (Panel  Report , fn 239 to para.  7.32)  
68 Panel  Report, para.  7.37. 
69 Panel  Report , para.  7.65. (emphasis added)  
70 Panel  Report, para.  7.63.  
71 Panel  Report, para.  7.70.  
72 Panel  Report, para.  7.70.  
73 Panel  Report, para.  7.71 (quoting Appellate  Body Reports, Canada – Renewable Energy / 
Canada  – Feed-in Tariff Program , para.  5.59). (emphasis added by the Panel)  WT/DS 583/ARB25  
 
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 other types of transactions by which products might be procured (e.g. leasing).74 The Panel further 
noted  the requiremen t in Article  III:8(a) that the products purchased must be for a governmental 
purpose. The Panel recalled that this referred to what was consumed by the government or provided 
by the government to recipients in the discharge of its public functions.75 The P anel considered that 
both of those actions presupposed that the government acquired ownership of the product being 
consumed.76  
6.16.   Next, the Panel considered that, if situations in which a government paid for products used 
by non -governmental consumers were t reated as "purchases" by the government simply on the 
basis that the government paid for the products, Article  III:8(a) would extend to an open -ended 
range of protectionist measures. A purchase could then include coupons for food, subsidies for 
renovating real estate, and tax credits for environmentally friendly purchases. Recalling that 
Article  III:8(a) was a limited derogation from the national treatment obligation under Article  III, the 
Panel considered that such a result would undermine the object and p urpose of the GATT  1994.77 
6.17.   The Panel concluded that, in the context of Article  III:8(a), a product was "purchased" by a 
government only if the government acquired ownership of that product through some kind of 
payment. The Panel thus disagreed with Türkiye's assertion that the SSI "pa[id] for the 
pharmaceutical products and thus [was] the ultimate buyer (or the purchaser)" regardless of 
whether the SSI ever acquired ownership of those products.78 
6.2.1.2   The Panel's finding that the SSI does not purchase pharmaceutical products from 
retail p harmacies  
6.18.   The Panel next assessed whether Türkiye's pharmaceutical reimbursement system involved a 
purchase by the SSI, i.e. whether the SSI acquired ownership of pharmaceutical products included 
in the Annex  4/A list, whether at the time of approval in t he Medula system or otherwise.79 
Specifically, the Panel sought to determine whether the SSI acquired any legal rights, of the type 
typically associated with ownership of goods, over the products, taking into account rights acquired 
by the retail pharmacie s (that acquired ownership of pharmaceutical products when purchasing them 
from wholesalers) and outpatients (who acquired ownership of pharmaceutical products when 
obtaining them from pharmacies).80 
6.19.   The Panel was unable to discern any basis upon which it could conclude that the SSI acquired 
any legal rights over the pharmaceutical products it paid for, let alone that it acquired the type of 
legal rights typically associated with ownership of goods. The Panel did not see anything to suggest 
that the SSI acq uired "any right of possession, any right of control, any right of exclusion, any right 
to derive income, or any right to freely dispose of the pharmaceutical products".81 By way of 
example, the Panel noted that the SSI did not ever acquire the right to ta ke physical possession of 
the pharmaceutical products. While acknowledging that physical possession of goods was not a 
constitutive element of a purchase82, the Panel considered the absence of any such right to take 
physical possession to be a strong indic ator that the entity paying for these goods had not acquired 
any right of ownership. The Panel considered that this was a particularly strong indicator with goods 
that could freely be transported and stored, such as pharmaceutical products.83 
 
74 Panel Report, para.  7.71. The Panel agreed with the European  Union that the common element of 
these other contractual arrangements was that, "while they may lead to the acquisition of products (for 
example, in the case of rental, the acquirer takes possession and has the right to use the product for a certain 
period of time), they d[id] not lead to the acquisition of property  over products." (Ibid. (quoting 
European  Union's first written submission to the Panel, para.  202) (emphasis original))  
75 Panel  Report, p ara. 7.72 ( referring to Appellate  Body Reports, Canada – Renewable Energy / 
Canada  – Feed-In Tariff Program , para.  5.68).  
76 Panel  Report, para.  7.72.  
77 Panel  Report, para.  7.73.  
78 Panel  Report, paras.  7.74 and 7.81  (quoting Türkiye's first written submission to the Panel, 
paras.  206-208).  
79 Panel  Report, para.  7.82.  
80 Panel  Report, para.  7.84.  
81 Panel  Report, para.  7.85.  
82 Panel  Report, paras.  7.75, 7.79 , 7.83, and 7.86.  
83 Panel  Report, para.  7.86.  WT/DS 583/ARB25  
 
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 6.20.   In addition, the Panel found no basis to support Türkiye's assertion that the SSI obtained the 
right to dispose of the pharmaceutical products that it paid for, according to its own choices. In this 
connection, the Panel observed that, following approval in the Medula system, the pharmaceutical 
product needed to be provided to the individual outpatient named in the prescription. All relevant 
decisions and choices associated with the disposition of pharmaceutical products were made by the 
prescribing doctor, the pharmacy , and the outpatient. The Panel did not discern any SSI involvement 
in choosing who received and consumed pharmaceutical products that the SSI paid for : "Neither the 
SSI nor any other governmental agency played any role in directing, or redirecting, pharma ceutical 
products to recipients of their choosing. "84 
6.21.   The Panel was not persuaded by Türkiye's argument that the SSI could be deemed to acquire 
title to pharmaceutical products included in the Annex  4/A list and prescribed to patients at the time 
of approv al in the Medula system. The Panel observed that approval through the Medula system 
served as confirmation that the patient was within SSI coverage and that the prescribed 
pharmaceutical products were in the Annex  4/A list. That approval confirmed, inter alia, that the 
pharmaceutical product may be invoiced by the pharmacy to the SSI at the previously set price.85 
In the Panel's view, it would require an artificial and strained construction of the facts to characterize 
this confirmation as a transaction thr ough which "the SSI acquire[d] the right to dispose of those 
medicines by dispensing them, through the retail pharmacies, to patients", and "the title to those 
medicines [was] then immediately transferred to patients."86 The Panel also observed that Türkiy e 
had not pointed to any reference to the SSI acquiring "title" over pharmaceutical products in the 
Protocol signed between the SSI and the TPA or any other evidence on record.87 The Panel concluded 
that the SSI did not acquire ownership of pharmaceutical products included in the Annex  4/A list 
and therefore the SSI's reimbursement of part or all of the cost of those products did not qualify as 
a "purchase" by the SSI in the context of Article  III:8(a).88 
6.2.1.3   The Panel's finding that retail pharmacies are not governmental agencies 
purchasing products on behalf of the SSI  
6.22.   The Panel next addressed Türkiye's alternative argument that there was a "purchase" covered 
by Article  III:8(a) of the GATT  1994 because retail pharmacies purchased medicines from 
wholesale rs on behalf of the SSI, and were, to that extent, "governmental agencies".89 
6.23.   The Panel agreed with Türkiye that Article  III:8(a) did not necessarily preclude a 
governmental agency from purchasing products through an intermediary. However, to fall within t he 
scope of Article  III:8(a), a governmental purchase effected through an intermediary needed to lead 
to the government acquiring ownership of the product purchased.90 
6.24.   In the circumstances of this case, it was clear that the pharmacies' purchases of 
pharma ceutical products from wholesalers did not entail, or result in, the acquisition of ownership 
of those products by the SSI. The Panel recalled that the SSI did not acquire ownership of 
pharmaceutical products and, therefore, the SSI's reimbursements of par t or all of the cost of those 
products did not qualify as a "purchase" by the SSI. Rather, the retail pharmacies acquired and 
retained ownership until it was transferred to outpatients. To the Panel, this sufficed to establish 
that retail pharmacies did no t qualify as "governmental agencies".91 The Panel noted the parties' 
arguments about the extent to which the SSI controlled the actions of retail pharmacies. To the 
Panel, even if it could be said that the SSI instructed and directed pharmacies what to do,  this would  
not make them "governmental agencies" or mean that there are purchases by the government, so 
 
84 Panel  Report, para.  7.87.  
85 Panel  Report, para. 7.88 (referring to Türkiye's responses to the Panel's first set of questions, 
para. 26; European  Union's responses to the Panel's first set of questions, paras.  10-22; opening statement at 
the Panel meeting, para.  24). 
86 Panel  Report, para.  7.88 (quo ting and referring to Türkiye's second written submission  to the Panel , 
para. 73; responses to the Panel's first set of questions, paras.  32-34; closing statement at the Panel meeting, 
para. 23; responses to the Panel's second set of questions, para.  43). 
87 Panel  Report, para.  7.88. 
88 Panel  Report, para.  7.90.  
89 Panel  Report, paras.  7.92 and 7.94.  
90 Panel  Report, para.  7.96. 
91 Panel  Report, para.  7.98.  WT/DS 583/ARB25  
 
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 long as the pharmacies acquired ownership of pharmaceutical products independently of 
the government.92  
6.25.   Based on the foregoing and recalling its earlier finding that the SSI never acquired ownership 
of the pharmaceutical products that it paid for, the Panel concluded that the private retail pharmacies 
did not qualify as "governmental agencies" in the context of Article  III:8(a).93 
6.2.1.4   The Panel's conclusion  
6.26.   Having found that the localisation requirement did not involve the "purchase" of relevant 
pharmaceutical products by governmental agencies, the Panel found that "the localisation 
requirement [was] not covered by the government procurement deroga tion in Article  III:8(a) of the 
GATT  1994, and [was] therefore subject to the national treatment obligation in Article  III:4 of the 
GATT  1994 and Article  2.1 of the TRIMs  Agreement".94 The Panel ultimately found the localisation 
requirement to be inconsist ent with Article  III:4 of the GATT  1994.95 
6.2.2   Whether the Panel erred in its interpretation of Article  III:8(a) of the GATT  1994  
6.27.   In this Arbitration, Türkiye claims that the Panel erred in its interpretation of the "purchase 
requirement" in Article  III:8(a) o f the GATT  1994, which led to errors in the application of that 
provision to the facts of the case. Türkiye alleges two interpretation errors. First, the Panel erred in 
considering that Article  III:8(a) required that a purchase be made by a governmental ag ency. 
Second, the Panel erred in finding that a purchase necessarily implied a transfer of ownership of the 
product from the seller to the entity purchasing the products.96  
6.28.   The European  Union requests us to dismiss these claims. The European  Union  notes t hat the 
interpretative arguments made by Türkiye in this Arbitration were not before the Panel.97 The 
European  Union  also contends that Article  III:8(a) only applies to purchases by a governmental 
agency.98 Therefore, the Panel was correct to consider whether there was governmental purchasing  
for the purpose s of its analysis under Article  III:8(a). The Panel was also correct to find that the 
concept of "purchase" entailed a transfer of ownership to the purch aser.99 
6.2.2.1   Overview of Article  III:8(a) of the GATT  1994  
6.29.   Article III is a cornerstone of the multilateral trading system. The general principle, which is 
articulated in the first paragraph, postulates that internal measures "should not be applied so as to 
afford protection to domestic production".100 Other paragraphs of Article  III constitute specific 
expressions of this overarching, general principle.101 Article  III:4 of the GATT  1994, in particular, 
prohibits Members from treating imported products less favour ably than like products of national 
origin in respect of all laws, regulations, and requirements affecting their internal sale, offering for 
sale, purchase, transportation, distribution, or use.  
6.30.   Article  III:8(a) of the GATT  1994 establishes a derogation fr om the national treatment 
obligation under Article  III102, including Article  III:4. As such, Article  III:8(a) provides for a 
carve -out from a cornerstone principle of the GATT  1994, but does so only for specific types of 
measures dealing with government pro curement. It reads : 
 
92 Panel  Report, para.  7.100.  
93 Panel  Report, para.  7.103.  
94 Panel  Report, para.  8.1.b.ii. See  also ibid., paras.  7.104  and 7.107.  
95 Panel  Report, para.  8.1.b.iii. See  also ibid., para.  7.127. In light of this finding and other findings 
under Article  XX of the GATT  1994, the Panel exercised judicial economy over the European  Union's claim 
under Article  2.1 of the TRIMs  Agreement. (Ibid., para s. 7.245 and 8.1.b.v)  
96 Türkiye's written submission, paras.  8 and 19. See also Türkiye's notice of recourse to arbitration, 
pp. 1-2; written submission, paras.  31-32 and 50.  
97 European  Union 's written submission, par a. 32; opening statement at the hearing, para.  12.  
98 European  Union 's written submission, para.  33.  
99 European  Union's written submission, para.  53. 
100 Appellate  Body Report, Japan – Alcoholic Beverages II , p. 18, DSR 1996:I, p.  111. 
101 Appellate  Body Report, EC – Asbestos , para.  93. 
102 Appellate  Body Reports, Canada – Renewable Energy / Canada – Feed-in Tariff Program , para.  5.56.  WT/DS 583/ARB25  
 
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 The provisions of this Article  shall not apply to laws, regulations or requirements 
governing the procurement by governmental agencies of products purchased for 
governmental purposes and not with a view to commercial resale or with a vi ew to use 
in the production of goods for commercial sale.  
6.31.   Article  III:8(a) contains several elements d escribing the types and the context of measures  
falling within the ambit of this provision. It describes the types of measures falling within its ambit 
as "laws, regulations or requirements governing the procurement" of products. Article  III:8(a) also 
specifies what is procured and by whom. The subject matter of the procurement is a "product", and 
it is being procured "by governmental agencies" . Moreover, t here needs to be procurement of 
"products purchased for governmental purposes" . Finally, Article  III:8(a) refers to procurement of 
products  purchased "not with a view to commercial resale or with a view to use in the production of 
goods for commercial sale ".  
6.32.   These various elements inform each other  and Article  III:8(a) should be interpreted 
holistically.103 These elements are also cumulative in nature, such that a measure failing to meet 
any one of those requirements will not be exempted from the national t reatment obligations of 
Article  III:4 of the GATT  1994 and Article  2.1 of the TRIMs  Agreement.104 
6.2.2.2   Whether the Panel wrongly assumed Article  III:8(a) of the GATT  1994  to require 
a purchase by governmental agencies  
6.33.   As summari zed above, the Panel focused its analysis on whether the localisation requirement 
involved a "purchase" of pharmaceutical products included in the Annex  4/A list by governmental 
agencies (i.e. the SSI or retail pharmacies on behalf of the SSI). The Panel di d not elaborate on 
whether Article  III:8(a) of the GATT  1994 should be interpreted as requiring a purchase by 
governmental agencies or whether a purchase could be made by a different entity. We understand 
the Panel to have simply assumed that Article  III:8(a) required a purchase by governmental 
agencies.105  
6.34.   The Panel's approach seems to have been guided by the manner in which Türkiye presented 
its arguments in the panel proceedings. Before the Panel, Türkiye submitted that the SSI purchased 
pharmaceutical p roducts included in the Annex  4/A list because the SSI paid for those 
pharmaceutical products or  because it acquired title to those products. In the alternative, Türkiye 
argued that the purchase of pharmaceutical products from wholesalers by retail pharmac ies was 
made on behalf of the SSI and this meant that the retail pharmacies were themselves "governmental 
agencies" purchasing pharmaceutical products.106 
6.35.   In this connection, the European  Union  argues that the Panel cannot be faulted for focusing 
on whether  there was governmental purchasing since Türkiye's case before the Panel was either 
that the SSI purchases products as a governmental agency or that pharmacies purchase products 
as governmental agencies on behalf of the SSI.107 The European  Union  noted that  new arguments 
are not per se excluded from the scope of our review. However, to the European  Union , we would 
need to exclude new arguments that, like those of Türkiye, would require us to solicit, receive, and 
review new facts.108  
6.36.   Under paragraph 9 of the  Agreed Procedures , "[a]n appeal shall be limited to issues of law 
covered by the panel report and legal interpretations developed by the panel." Having reviewed the 
parties' submissions before the Panel, we agree with the European  Union  that the first int erpretative 
 
103 Appellate  Body Reports, Canada – Renewable Energy / Canada – Feed-in Tariff Program , para. 5.57. 
104 Appellate  Body Reports, Canada – Renewable Energy / Canada – Feed-In Tariff Program , 
paras.  5.57, 5.69, and  5.74.  
105 By way of example, the Panel referred to : Article  III:8(a) as requiring "a 'purchase' of products by a 
'governmental agency' "; "the phrase 'products purchased by governmental agencies'" in Article  III:8(a) ; "the 
term 'purchase' in Article  III:8(a)" ; "the concept of a 'purchase' by a government" ; "the limitation in 
Article  III:8(a) that a product is 'purchased' by a government if  the government acquires ownership of it" ; and 
"the fact that Article  III:8(a) is limited to the acquisition of products, through procurement and 'purchase' by 
the government ". (Panel  Report , paras.  7.37, 7.65, 7.71, 7.73, and 7.97)  
106 Panel  Report , para.  7.64.  
107 European  Union's written submission, para.  32; opening statement at the hearing, para.  12. 
108 The European  Union  referred to the Appellate  Body Report in Canada – Aircraft. (European  Union 's 
response s to questions at the hearing)  WT/DS 583/ARB25  
 
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 issue raised by Türkiye in this Arbitration was not raised as such in the panel proceedings. Türkiye's 
argument at the panel stage was that there was a purchase by governmental agencies : the SSI or 
retail pharmacies acting on behalf of the SSI.109 In this Arbitration, Türkiye argues more broadly on 
interpretation that the purchase does not need to be made by a governmental agency.110 At the 
same time, Türkiye is raising a legal argument relating to the proper interpretation of the words 
"products purchased" in Article  III:8(a), which were before the Panel and which the Panel interpreted 
and applied. Since the Panel considered that the words "products purchased" in Article  III:8(a), 
which were properly before it, implied a purchase by a governmental  agency, Türkiye's first 
interpretation claim in the Arbitration covers  an issue of law covered by the Panel  Report . 
Importantly, the arguments raised by Türkiye relate to the proper interpretation of Article  III:8(a) 
and do not require us to solicit, receive, or review new facts. We thus proceed to analyse , in 
accordance with customary rules of interpretation of public international law as foreseen in 
Article  3.2 of the DSU, whether the Panel wrongly assumed that a purchase of products for 
governmental purposes must be made by a governmental agency .111 
6.37.   According to Türkiye, "the plain reading of Article  III:8(a) indicates that it is the procurement  
that must be made by [a] governmental agency", not the purchase.112 Therefore, provided 
procurement  is made by a governmental agency, the relevant products might be purchased by 
another entity.113 Türkiye further argues that the words "procurement" and "purchase" necessarily 
have different meanings, or Article  III:8(a) would have referred to "laws, regul ations or 
requirements governing the purchase by governmental agencies  of products for governmental 
purposes ".114 Türkiye concludes "[p]recisely because all essential elements of the purchase 
transaction have already been set by the procuring governmental a gency, the actual purchase can 
be entrusted to a non -governmental agency."115  
6.38.   The European  Union considers that, by its own terms, and as was confirmed by the 
Appellate  Body in prior disputes116, Article  III:8(a) only applies to purchases by government 
agencies.117 The European  Union  argues that "procurement" refers to the process pursuant to which 
the government acquires or obtains products while "purchase" refers to the specific transaction by 
which the government acquires or obtains the products. It follow s that the entity purchasing the 
products must also be the government.118 To the European  Union , the mere fact that a government 
closely regulates certain products, or their price, does not mean that it procures or purchases 
them.119 The European  Union  also finds it telling that Türkiye fails to clearly specify which other 
entity, other than the government itself, purchases in a government procurement scenario.120  
 
109 Türkiye's main argument was that the SSI, as a governmental agency, purchased medicines itself. 
Türkiye also stated that the purchase did not necessarily need to be made by a governmental agency in the 
sense that "nothing i n Article  III:8(a) precludes the intervention of another entity as long as that entity 
intervenes on behalf of the relevant governmental agency." This was in the context of Türkiye's alternative 
argument that retail pharmacies purchased medicines on behalf  of the SSI and were therefore themselves 
governmental agencies. (Türkiye's first written submission to the Panel, para.  209; responses to the Panel's 
second set of questions, paras.  44 and 47 -49. See also Panel  Report , paras.  7.64 and 7.93 -7.94)  
110 Türkiy e's notice of recourse to arbitration, p p. 1-2; written submission, paras.  8, 19, 31, and 50. In 
Türkiye's view, the entity purchasing products can be any entity, not necessarily an entity acting as an 
intermediary on behalf of the government, as long as t he other elements of Article  III:8(a) are met. (Türkiye's 
written submission, para.  31; responses to questions at the hearing)  
111 Our approach accords with that of the Appellate  Body, which considered that new arguments are not 
per se  excluded from the scop e of appellate review to the extent they do not require the consideration of new 
facts. (Appellate  Body Reports, Canada – Aircraft , para.  211; Peru  – Agricultural Products , para.  5.88) In 
US – COOL (Article  21.5) , it considered the argument that Article  IX of the GATT  1994 constituted relevant 
context for the interpretation of Article  III:4 of the GATT  1994. While this was a new argument on appeal, the 
Appellate  Body considered that it related to the proper interpretation of the term "treatment no  less 
favourable" in Article  III:4, which was before the panel and addressed in the panel report. (Appellate  Body 
Report s, US – COOL (Article  21.5) , para.  5.350)  
112 Türkiye's written submission, para.  21. (emphasis original)  
113 Türkiye's written submission, para. 26.  
114 Türkiye's written submission, para.  28.  
115 Türkiye's written submission, para.  29.  
116 European  Union 's written submission, paras.  18-25 and 28.  
117 European  Union's written submission, para.  33.  
118 European  Union 's written submission, para.  26.  
119 European  Union's written submission, para.  31.  
120 European  Union's written submission, para.  17. WT/DS 583/ARB25  
 
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 6.39.   The interpretative issue raised by Türkiye is framed as one concerning the words "products 
purch ased", the notion of "purchase", or what Türkiye has called the "purchase requirement".121 At 
the outset, we note that the noun "purchase " is not found in Article  III:8(a). In addition, we recall 
that the words of Article  III:8(a) should not be read in isolation from the remaining text of that 
provision.  
6.40.   Starting our interpretation with the text of Article  III:8(a), this provision excludes from the 
scope of the national treatment obligation under Article  III, "laws, regula tions or requirements  
governing the procurement by governmental agencies of products purchased for governmental 
purposes…". In relevant part, the French text of Article  III:8(a) refers to "l'acquisition, par des 
organes gouvernementaux, de produits achetés  pour les besoins des pouvoirs publics". The Spanish 
text refers to "la adquisición, por organismos gubernamentales, de productos comprados para cubrir 
las necesidades de los poderes públicos".122 
6.41.   The phrase "products purchased by governmental agencies" tha t the Panel proceeded to 
interpret123 is not found verbatim in Article  III:8(a). In the English, French, and Spanish versions of 
Article  III:8(a), the noun "procurement" is directly followed by the term "by governmental agencies". 
The plain reading of Artic le III:8(a) indicates that it is the procurement  that is qualified by the 
proposition "by governmental agencies". Considering the text and grammatical structure of the 
provision, we are of the view that the reference to "governmental agencies" relates to t he identity 
of the entity carrying out the procurement. This reading of Article  III:8(a) accords with the 
Appellate  Body's observations in the context of its interpretation of various elements of this 
provision. The Appellate  Body observed that "'procureme nt' is the operative word in Article  III:8(a) 
describing the process  and conduct of the governmental agency", and "[t]he reference to 
'governmental agencies' defines the identity of the entity carrying out the procurement."124 
6.42.   The text of Article  III:8(a) also suggests that "procurement" is to be distinguished from a 
"purchase".125 Conceptually, procurement may be put into effect through different types of 
transactions, such as purchase, lease, or rent.126 In other words, not every procurement needs to 
be effectuated by way of a purchase. We thus agree with the Panel that the concept of "purchase" 
covers only a subset of the various types of transactions that could be used to put into effect 
"procurement".127 
6.43.   Procurement refers generally to "[t]he acti on of obtaining  something; acquisition; an instance 
of this".128 The words " acquisition , par des organes gouvernementaux" and " adquisición , por 
organismos gubernamentales " in the French and Spanish versions of Article  III:8(a) confirm that, in 
the context of that provision, "procurement" refers to a governmental agency acquiring  products.129 
The express reference to "the procurement … of products purchased" ("acquisition … de produits 
achetés" and "adquisición  … de productos comprados" ) indicates that, for the purpose s of 
Article  III:8(a), such acquisition has to be put into effect through a purchase transaction. This also 
stems from the lack of any reference to other types of transactions (such as lease or rent). The word 
"procurement" in Article  III:8(a) therefore refers to  the process pursuant to which the government 
 
121 Türkiye's notice of recourse to arbitration, p p. 1-2; written submission, paras.  2 and 18 -19.  
122 The WTO  Agreement  provides that the English, French, and Spanish language s each are authentic. 
According to Article  33 of the Vienna  Convention , "[w]hen a treaty has been authenticated in two or more 
languages, the text is equally authoritative in each language" and "[t]he  terms of the treaty are presumed to 
have the same meaning in each authentic text."  
123 Panel  Report , para.  7.65. (emphasis added) See para. 6.14.  above.  
124 Appellate  Body Report s, Canada – Renewable Energy / Canada – Feed-in Tariff Program , para.  5.59.  
125 The principle of effective treaty interpretation requires us to give meaning to every term of the 
provision. (Appellate  Body Report, US – Gasoline , p. 23, DSR 1996:I, p. 21)  
126 This is, for example, reflected in the Agreement on Government Procurement (GPA). Article  II.2 of 
the GPA, which deals with the scope of that Agreement, indicates that "covered procurement means 
procurement for governm ental purposes … by any contractual means, including: purchase; lease; and rental or 
hire purchase, with or without an option to buy". We are mindful of the fact that the GPA is plurilateral in 
nature and  that Türkiye is not a party to that Agreement . We consider , however,  that the GPA reflects some 
general understanding that a purchase is one of the ways in which procurement may occur.   
127 Panel  Report, para.  7.71. 
128 Oxford English Dictionary online, https://www.oed.com/view/Entry/151913 , accessed on 
1 July 2022.  
129 Emphasis added. In its French and Spanish versions , Article  III:8(a) do es not refer to "marchés 
publics" and "contratación pública", but to "acquisition" and "adquisición".  WT/DS 583/ARB25  
 
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 acquires  or obtains  products and the words "products purchased" are used to describe the type of 
transactio n used to put into effect that procurement.130  
6.44.   The verb in the past participle form "purchased" links the "products" being procured by 
governmental agencies with the remaining part of Article  III:8(a), namely the phrase "for 
governmental purposes and not w ith a view of commercial resale …". The French version refers to 
"l'acquisition … de produits achetés pour les besoins des pouvoirs publics". The Spanish version 
refers to " la adquisición … de productos comprados para cubrir las necesidades de los poderes 
públicos ". The wording "for governmental purposes" can be contrasted with the wording of 
Article  XVII:2 of the GATT  1994 on State Trading Enterprises.131 Article  XVII:1 stipulates obligations 
for state trading enterprises and Article  XVII:2 sets out a derog ation from those obligations for 
certain government procurement transactions. Article  XVII:2 provides that "[t]he provisions of 
paragraph  1 of this Article  shall not apply to imports of products for immediate or ultimate 
consumption in governmental use  and not otherwise for resale or use in the production of goods for 
sale." Article  XVII:2 thus more narrowly refers to "imports of products for immediate or ultimate 
consumption in governmental use". Article  III:8(a) does not refer to governmental use or 
governmental consumption. In our view, the broader language "for governmental purposes" does 
not necessarily refer to government as the end to which the products procured and purchased are 
directed. It rather refers to the products procured and purchased f or the needs ("purposes", 
"besoins", "necesidades") of the government. We agree with the statement in  the Appellate  Body 
reports cited by the parties that the phrase procurement of products purchased "for governmental 
purposes" in Article  III:8(a) refers t o what is consumed by the government or what is provided by 
the government to recipients in the discharge of its public functions.132  
6.45.   In its analysis of the words "products purchased", the Panel noted , and we agree,  that cases 
of governmental procurement w ill typically involve situations where a government obtains products 
for its own use or consumption.133 An obvious example is where a governmental agency purchases 
a good, uses it to discharge its governmental functions, and the good is totally consumed in the 
process. This would typically involve a purchase by the government. Government procurement 
through a purchase of products to be provided by the government  to recipients in the discharge of 
its public function  (when the government is not the end user of  the products)  may also typically , but 
not necessarily,  involve a purchase by the government of those products.  
6.46.   Importantly, nothing in the text of Article  III:8(a) explicitly specifies wh ich entity  purchases 
products for the purpose s of government procur ement. When a provision omits to further qualify an 
action, this can serve as an indication that no limitation is intended to be imposed on the manner or 
circumstances in which such action may be taken. If we were to read into Article  III:8(a) a 
requiremen t that a purchase necessarily needs to be made by a governmental agency, we would be 
adding to the text of Article  III:8(a) or moving the preposition "by governmental agencies" to relate 
to the words "products purchased" in this provision. The text and structure of the phrase 
"procurement by governmental agencies of products purchased" together with the contextual 
elements discussed above suggest to us that while a typical government procurement scenario under 
Article  III:8(a) would involve a purchase by  governmental agencies of the products being procured, 
there is no such requirement in Article  III:8(a). We cannot exclude that another entity may purchase 
the relevant products, so long as there is procurement by a governmental agency  and procurement 
of products purchased for governmental purposes .  
 
130 This accords with the Appellate  Body's interpretation of Article  III:8(a) . It understood  "the word 
'procurement' to refer to the process pursuant to which a government acquires products" and "[t]he word 
'purchased' … to describe the type of transaction used to put into effect that procurement ". (Appellate  Body 
Reports, Canada – Renewable Energ y / Canada – Feed-in Tariff Program , para.  5.59) It also accords with the 
parties' understanding of the concept of procurement. According to Türkiye, procurement is "the process of 
obtaining products". ( Türkiye's written submission, para.  27; response s to questions at the hearing) The 
European  Union  understands  procurement as the governmental agency obtaining or acquiring products. 
(European  Union 's written submission, para.  29; response s to questions at the hearing)  
131 We consider that Article  XVII:2 of the  GATT  1994 provides relevant interpretati ve context . This is 
consistent with the Appellate  Body's approach. (Appellate  Body Reports, Canada – Renewable Energy / 
Canada  – Feed-in Tariff Program , para.  5.68) 
132 Appellate  Body Reports, Canada – Renewable Energy / Canada – Feed-in Tariff Program , para.  5.68. 
See also Türkiye's written submission, para.  99; European  Union 's written submission, para.  97.  
133 Panel  Report, para.  7.66.  WT/DS 583/ARB25  
 
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 6.47.   We emphasi ze that, for the derogation in Article  III:8(a) to apply, different requirements need 
to be met. In particular, Article  III:8(a) requires a procurement by governmental agencies  of 
products purchased for governmental purposes . Our interpretation set out above does not extend 
the scope of the derogation contained in Article  III:8(a) beyond what is set by the provision itself.134 
In other words, Article  III:8(a) would not extend to an open -ended range of p rotectionist measures 
and allow Members to circumvent their national treatment obligations, simply because the possibility 
is not excluded that, in certain circumstances, the relevant purchase transaction might be entered 
into by a non -governmental agency.  Our understanding takes into account the fundamental purpose 
of Article  III to avoid protectionism in the application of internal tax and regulatory measures135 and 
reflects the carefully drafted balance between the national treatment obligation under Arti cle III and 
the derogation contained in Article  III:8(a).  
6.48.   Both parties extensively refer to the Appellate  Body reports in Canada – Renewable Energy / 
Canada – Feed-in Tariff Program  and India – Solar Cells .136 In particular, the European  Union  
considers the Appellate  Body to have clarified that  the entity purchasing products needs to be a 
governmental agency.137 We carefully read the panel and Appellate  Body reports in these two 
disputes . In Canada – Renewable E nergy / Canada – Feed-in Tariff Program , the Appellate  Body 
considered that "[t]he reference to 'governmental agencies' defines the identity of the entity carrying 
out the procurement" and "'procurement' is the operative word in Article  III:8(a) describing  the 
process and conduct of the governmental agency. "138 The word "purchased" is then used to describe 
the type of transaction used to put into effect that procurement.139 Our understanding of 
Article  III:8(a) properly accords with these observations.  The Ap pellate  Body in India – Solar Cells 
"recall[ed]", without more, that "the entity purchasing products needs to be a 'governmental 
agency'."140 This statement was not the result of an interpretation of Article  III:8(a) by the 
Appellate  Body. It is found in a short paragraph briefly summari zing the various elements of 
Article  III:8(a) in reference to the Appellate  Body reports in Canada – Renewable Energy / 
Canada  – Feed-in Tariff Program . Yet, whether a non -governmental entity could be the purchasing 
entity for the purpose s of Article  III:8(a) was not at issue in  either of these two disputes. The 
Appellate  Body did not discuss the proper interpretation of the words "products purchased" with 
respect to the interpretative issue raised by Türkiye in this Arbitration. The key interpretative issue 
in both disputes related to the word "products" in Article  III:8(a), not to the notion of "purchase" or 
who purchases products.141 While certain statements, taken out of context, could arguably suggest 
that the Appe llate Body read Article  III:8(a) to cover only purchases by governmental agencies, 
these statements are, in our reading, a reflection that, in those disputes, governmental agencies 
were both procuring and purchasing the product at issue. To that extent, these Appellate  Body 
reports provide only limited assistance to the interpretative issue raised in this Arbitration.142  
 
134 We also consider that merely c haracterizing a treaty provision as a "derogation" does not justify a 
stricter or narrower interpretation of that provision than would be warranted by applying the normal rules of 
treaty interpretation. (See e.g. Appellate  Body Report, EC – Hormones , para.  104) 
135 See e.g. Appellate  Body Report, Japan – Alcoholic Beverages II , pp. 16 -17, DSR 1996:I, 
pp. 109-110.  
136 See e.g. Türkiye's written submission, para.  25; European  Union 's written submission, 
para. 19 et seq.; parties' responses to questions at the hearing.  
137 European  Union 's written submission, paras.  18-19. To the European  Union, the Appellate  Body 
made a general interpretative finding that is directly relevant to this dispute, and it was appropriate  for the 
Panel to follow this clear legal interpretation. (Ibid., paras.  21-22 and fn  18 to para.  22 (referring to 
Appellate  Body Report, US – Shrimp (Article  21.5 – Malaysia) , paras.  108-109); opening statement at the 
hearing, para.  15) 
138 Appellate  Body Reports, Canada – Renewable Energy / Canada – Feed-in Tariff Program , para s. 5.59 
and 5.66 .  
139 Appellate  Body Reports, Canada – Renewable Energy / Canada – Feed-in Tariff Program , para.  5.59.  
140 Appellate  Body Report, India – Solar Cells , para.  5.18 (referring to Appellate  Body Reports, 
Canada  ‒ Renewable Energy / Canada – Feed-in Tariff Program , para.  5.74).  
141 The disputes concerned the imposition of domestic content requirements, which mandated electricity 
generators to source a certain amount  of renewable energy equipment domestically. The discrimination 
relating to generation equipment contained in the domestic content requirements was found not to be covered 
by the derogation of Article  III:8(a) on the basis that the product discriminated ag ainst under Article  III:4 (the 
electricity generation equipment) was not in a competitive relationship with the product procured by way of 
purchase under Article  III:8(a) (electricity). (Appellate  Body Reports, Canada – Renewable Energy / 
Canada  – Feed-in Tariff Program , paras.  5.63, 5.79, and 5.84; India – Solar Cells , para.  5.40)  
142 As indicated in paragraph 6.44.  and fn  130 above, our interpretation accords with the observations 
that the Appellate  Body made on interpretation with respect to the words "procurement" and "products 
purchased".  WT/DS 583/ARB25  
 
- 24 - 
 6.49.   For the reasons set out above, we consider that the "procurement by governmental agencies 
of products purchased for governmental purposes"  would typically involve the procurement of 
products through a purchase  by a governmental agency. However, Article  III:8(a) does not contain 
an unequivocal requirement to that effect. We do not foreclose the possibility that, in certain 
circumstances, the relevant purchase transaction may be entered into by a non -governmental entity 
so long as the products are procured by  a governmental agency  and procurement is of products 
purchased  for governmental purposes . We therefore find that the Panel erred in considering, as a 
starting point for its analysis in paragraph 7.65 of the Panel  Report , that Article  III:8(a) required a 
purchase  by governmental agencies.  
6.50.   As further explained in paragraph 6.70.   below, having agreed with Türkiye in respect of its 
first interpretation challenge, and given our analysis o f Türkiye's related application claim, we do not 
consider it necessary for the resolution of this dispute to address Türkiye's second interpretation 
challenge in this Arbitration.  
6.2.3   Application  of Article  III:8(a) of the GATT  1994  
6.51.   Türkiye makes several clai ms regarding the Panel's application of Article  III:8(a) of the 
GATT  1994. Türkiye's first application claim is that, as a result of its erroneous interpretation that 
there needed to be a purchase by a governmental agency, the Panel erred in finding that 
Article III:8(a) did not apply on the basis that there was no purchase of pharmaceutical products by 
the SSI.143 Türkiye raises three additional application claims. Türkiye submits that, as a result of its 
erroneous interpretation that a purchase implied a t ransfer of ownership to the purchaser, the Panel 
erred in finding that there was no purchase of pharmaceutical products by the SSI because the SSI 
did not acquire ownership of those products. In addition, Türkiye submits that, even if the Panel's 
interpret ation were correct, the Panel should have concluded that there was a transfer of ownership 
to the SSI through the Medula system and thus a purchase by the SSI. Finally, in the alternative, 
Türkiye claims that the Panel erred in finding that retail pharmaci es did not purchase pharmaceutical 
products from wholesalers on behalf of the SSI.144  
6.52.   The European  Union  requests us to reject these claims. The European  Union  considers Türkiye 
to be mostly taking issue with factual findings of the Panel. Since Türkiye has not invoked Article  11 
of the DSU, the European  Union  considers that any challenge of factual findings by the Panel is 
outside the scope of our review. The E uropean  Union  also disputes the allegations put forward by 
Türkiye in support of each of its application claims.145 
6.53.   Starting with Türkiye's first application claim, we note that this claim is premised on us 
disagreeing with the Panel's assumption that Artic le III:8(a) required a purchase by governmental 
agencies. We concluded above that "procurement by governmental agencies of products purchased 
for governmental purposes" would typically involve the procurement of products through a purchase 
by a governmenta l agency . However, Article  III:8(a) does not contain an unequivocal requirement 
to that effect.146 We thus agreed with Türkiye that the Panel's assumption that Article  III:8(a) 
required a purchase by governmental agencies was incorrect .  
6.54.   According to Türkiy e, Article  III:8(a) applies in this case because retail pharmacies purchase 
the medicines included in Annex  4/A list, and the procurement is made by the SSI.147 Türkiye argue s 
that the SSI and other governmental agencies (the TMMDA) decide the legal framewo rk governing 
the acquisition of medicines to be provided in the discharge of their public function, leaving no room 
for market -based or profit -maximi zing price negotiations. Türkiye contends that the SSI: (i)  decides 
which medicines are included in the Annex  4/A list; (ii)  sets the price of those medicines (together 
with the TMMDA); (iii)  signs the Protocol with the TPA and individual contracts with the retail 
pharmacies tasking them with ensuring the availability and distribution of those medicines 
throughout the country; (iv)  approves the provision of medicines to be dispensed to patients through 
 
143 Türkiye's notice of recourse to arbitration, p p. 1-2; written submission, para.  52.  
144 Türkiye's notice of recourse to arbitration, p p. 1-2; written submission, paras.  56, 61, and 75.  
145 European  Union 's written submission, para s. 3, 13-16, 58 -59, 62 -64, 67 -75, and 78 -84.  
146 See para.  6.49.  above.  
147 Türkiye's written submission, para s. 52 and 55  (referring to Panel  Report, para.  7.98; 
European  Union's first  written submission to the Panel, para.  15; second written submission to the Panel, 
para. 101).  WT/DS 583/ARB25  
 
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 the Medula system; and (v)  pays for the dispensed medicines based on invoices it receives from 
retail pharmacies.148  
6.55.   The European  Union  responds that no govern mental agency of Türkiye engages in 
procurement since no governmental agency obtains or acquires the medicines included in the 
Annex  4/A list.149 To the European  Union, whether the SSI or other governmental agencies decide 
which medicines to reimburse, set the price of medicines, enter into contracts with pharmacies, 
approve reimbursements in the Medula system, and pay pharmacies' invoices for reimbursement, 
or more generally decide the legal framework for medicines does not show that they engage in the 
procurement  of those medicines.150 The European  Union  emphasi zes that "procurement" refers to 
"the process pursuant to which the government acquires  or obtains products, as opposed to merely 
financing or regulating their acquisition".151 
6.56.   Central to Türkiye's fir st application claim is whether there is procurement  by a governmental 
agency of products purchased for governmental purposes within the meaning of Article  III:8(a), 
i.e. whether the SSI procures the pharmaceutical products included in the Annex  4/A list.152 The 
Panel did not make a finding on this issue. As summari zed above, the Panel noted that there were 
several elements in Article  III:8(a) and decided to start its analysis with the second element it had 
identified, looking at whether the localisation req uirement involved "the 'purchase' of pharmaceutical 
products included in the Annex  4/A list by governmental agencies".153 The Panel did not consider it 
necessary to assess the other elements of Article  III:8(a), including that relating to procurement.  
Given  that the issue of procurement is central to Türkiye's first application claim, for  us to determine 
whether this claim has merit, we must ascertain whether the SSI procures the pharmaceutical 
products included in the Annex  4/A list.154 The parties agree tha t there are sufficient Panel factual 
findings or uncontested facts on the panel record for us to complete the analysis in this respect.155 
In addition, neither party has raised any due process concerns. The parties, however, disagree on 
the conclusion we sh ould reach upon completion  of our analysis .156  
6.2.3.1   Whether there is procurement by the SSI of pharmaceutical products included in 
the Annex  4/A list  
6.57.   As reflected in para graph s 6.41.   -6.44.  above, "procurement" is the operative word in 
Article  III:8(a) of the GATT  1994 describing the process  and conduct  of the governmental agency. 
It is to be distinguished from a "purchase", which refers to the type of transaction to put into effect 
procurement under Article  III:8(a). As further discussed above, conceptually, procurement may be 
put into effect through different types of transactions, but Article  III:8(a) specifically refers to 
 
148 Türkiye's written submission, para.  53. 
149 European  Union's written submission, para.  59 (referring to Panel  Report , paras.  7.84, 7.86 -7.88, 
and 7.100).  
150 European  Union's written submission, para.  59. 
151 European  Union 's written s ubmission, para.  29. (emphasis original)  
152 Türkiye does not clearly identify the purchase transactions through which procurement allegedly 
occurs. In the context of its first application claim, Türkiye refers to procurement by the SSI through the 
purchase  by retail pharmacies from wholesalers. ( Türkiye's written submission , para.  55) Elsewhere in its 
submission, Türk iye refers to the procurement by the SSI "through purchase transactions by the retail 
pharmacies or between the SSI and the retail pharmacies". (Ibid., para.  98) At the hearing, Türkiye stated that 
procurement is the process whereby the SSI obtains medicines for governmental purposes through the private 
retail pharmacies acting as an intermediary between the wholesalers and the outpat ients. (Türkiye's responses 
to questions at the hearing)  
153 Panel  Report, para.  7.63.  
154 The Panel noted that the work of the Appellate  Body had been suspended for nearly two years and 
that Members remained unable to reach consensus on any selection process to fill the vacancies required for 
the Appellate  Body to function . (Panel  Report , para.  7.104 and fn  436 thereto) In the present case, given the 
Panel's factual findings and uncontested facts on the record, we find that we can complete th e analysis on the 
issue of procurement. ( See para.  6.59.  et seq.  below .) We are wary of the systemic concerns raised by 
Türkiye and Switzerland. Türk iye submits that the Panel's approach, should it have led us to decline completing 
the analysis, would have effectively precluded its right to have effective recourse to the WTO dispute 
settlement, "including an appeal review through Article  25 arbitration  or otherwise". (Türkiye's written 
submission, para.  91) Switzerland notes the parties' right to appeal, including through an "appeal arbitration" 
under Article  25 of the DSU. (Switzerland's third  party's submission, para.  15) 
155 The parties confirmed that our mandate includes the possibility of completing the legal analysis. 
(Parties' responses to questions at the hearing)  
156 See e.g. Türkiye's written submission, paras.  55 and 94 -95; European  Union 's written submission, 
paras.  59 and 91 -92.  WT/DS 583/ARB25  
 
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 "products purchased". We also noted that procurement refers generally to "[t]he action of obtaining 
something; acquisition; an instance of this".157 To us, the words " acqui sition , par des organes 
gouvernementaux" and " adquisición , por organismos gubernamentales " in the French and Spanish 
versions of Article  III:8(a) confirm that, in the context of that provision, "procurement" refers to a 
governmental agency acquiring  produc ts.158 Therefore, as we concluded above, "procurement" 
refers to the process pursuant to which a government acquires or obtains products. This is in line 
with the parties' own understanding of procurement.159  
6.58.   The parties both consider, and we agree, that procurement is not limited to scenarios of 
ownership acquisition of the products.160 A governmental agency acquiring  or obtaining  products 
means that the governmental agency would , however , need to have a certain level of control over 
the products purc hased for governmental purposes.  Depending on the particular circumstances of 
each case, the following elements  could be relevant to whether there is procurement by a 
governmental agency: ownership of the products by the governmental agency or other proper ty 
rights or title over the products; the governmental agency holding or exercising other legal or 
contractual rights associated with the products; price setting and payment by the governmental 
agency; use of the products by the governmental agency; physic al possession of the products by 
the governmental agency; control by the governmental agency over the products; ultimate benefit 
of the products by the governmental agency; and the governmental agency bearing risks, such as 
commercial risks, associated wit h the products. We  consider th is list to be non-exhaustive and  
relevant elements  should be taken into account in a holistic manner . We also  emphasi ze that 
acquiring or obtaining products cannot be equated with merely financing or regulating the acquisition  
of products.161  
6.59.   Having carefully reviewed the Panel  Report  and having engaged with the parties at the hearing 
regarding the nature of certain Panel findings, we consider that the Panel made a number of factual 
findings relevant to the issue of procurement. The Panel made these factual findings in the context 
of its assessment of whether the SSI (itself or through retail pharmacies) purchased  pharmaceutical 
products. Although procurement cannot be equated with purchase, given the Panel's understanding 
of the concept of "purchase" as requiring a transfer of ownershi p to the purchaser and our 
understanding of the word "procurement" in the context of Article  III:8(a) as requiring a certain 
 
157 Oxford English Dictionary online, https://www.oed.com/view/Entry/151913 , accessed on 
1 July 2022.  
158 Emphasis added.  
159 Türkiye's written submission, para.  27; European  Union 's written submission, para.  29; parties' 
response s to questions at the hearing. See also fn 130 above.  
160 At the hearing, Türkiye noted that what matters is that, through procurement, the government 
obtains goods for governmental purposes. The European  Union  stated that acquiring or obtaining products 
could mean different things in different contexts. Typically, for movable goods, acquiring goods would mean 
taking p hysical possession of the goods, but there could be other ways in which the government acquires 
products (e.g. through an entitlement).  Japan also considered that governmental agencies procuring products 
needed to acquire a certain entitlement over the pro duct, but that this was not necessarily limited to property 
rights. Japan referred to the right to bring a legal action for non -performance of a contract. (Parties ' and 
third parties' responses to questions at the hearing)  
161 Our understanding of "procurem ent by governmental agencies" accords with the GATT panel's 
understanding of government procurement in the (unadopted) GATT panel report in US – Sonar Mapping . In 
the context of Article  I:1(a) of the Tokyo Round Government Procurement Code , the GATT panel stated that 
"the following characteristics, none of which alone could be decisive, provide guidance as to whether a 
transaction should be regarded as government procurement", namely "payment by government, governmental 
use of or benefit from the product, g overnment possession and government control over the obtaining of the 
product". ( GATT Panel  Report, US – Sonar Mapping , para.  4.7) There were a number of factors which, taken 
together, led the GATT panel to conclude that the purchase of a sonar mapping sys tem by a private company 
was in fact government procurement: (i)  payment for the system would be made with government money, and 
the amount of the purchase was determined by the government; (ii)  a government agency would take title to 
the sonar mapping sys tem; that agency, at the expiry of the contract, would be able to choose whether to 
continue to use, or to dispose of, the system ; and that agency would enjoy the benefits of the system's 
purchase; (iii)  the selection of the system was subject to the final  approval of the government agency, which 
also retained the right to cancel the contract between the purchaser and the supplier of the sonar mapping 
system, with compensation, at its convenience; and (iv)  the private entity would have no commercial interes t 
in the transaction in the sense of a profit motive or a commercial risk. The GATT panel concluded that, in light 
of the government's payment for, ownership  of, and use of the sonar mapping system and given the extent of 
its control over the obtaining of the system, there was government procurement. ( Ibid., paras.  4.9-4.13)  WT/DS 583/ARB25  
 
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 level of control over products, factual elements explored by the Panel for the purpose of looking at 
the issue of purchase are equa lly relevant to our assessment of the issue of procurement.  
6.60.   On the facts, and as summari zed in paragraphs 6.2.  -6.5.  above, the Panel found that to be 
reimbursable, a pharmaceutical product needed to be included in the Annex  4/A list and the SSI 
determined which pharmaceutical products are included in that list.162 Pharmaceutical products 
included in the Annex  4/A list are distributed to outpatients by retail pharmacies, which are private 
entities.163 The SSI signed a Protocol with the TPA. According to the Protocol, individual retail 
pharmacies sign and annually r enew standard contracts with the SSI. The amounts charged by 
pharmacies for pharmaceutical products covered by the social security system are met from 
payments by the SSI and out -of-pocket payments by outpatients. On the basis of their individual 
contracts  with the SSI, pharmacies periodically invoice the SSI for all pharmaceutical products 
included in the Annex  4/A list that they have provided to outpatients during the relevant period. The 
SSI reviews invoices using a sampling method and reimburses the rei mbursement price.164 If the 
public price of a pharmaceutical product is greater than a maximum reimbursement price, 
outpatients must pay the difference, unless they decide to opt for an equivalent product. Outpatients 
generally also pay a contribution fee a nd a prescription fee to retail pharmacies.165  
6.61.   The Panel further found, as a matter of fact, that the SSI did not take physical possession of 
the products at any stage; retail pharmacies took physical possession of the products when 
purchasing pharmaceutic al products from warehouses, with outpatients subsequently taking physical 
possession when receiving those products from the retail pharmacies.166 It was undisputed before 
the Panel and is undisputed in this Arbitration that the SSI does not ever acquire th e right to take 
physical possession of the pharmaceutical products that it pays for.167  
6.62.   The Panel also made factual findings regarding the electronic information system (the Medula 
system) used by the SSI and retail pharmacies to register, track, and invoice medicines.168 Following 
approval in the Medula system, the pharmaceutical product must be provided to the individual 
consumer (i.e. outpatient) named in the prescription.169 Importantly :  
[A]ll relevant decisions and choices associated with the dispo sition of pharmaceutical 
products are made by the prescribing doctor, the pharmacy, and the ultimate consumer 
(i.e. the outpatient). The Panel is unable to discern any SSI involvement in choosing 
who receives and consumes any of the pharmaceutical products  that the SSI pays for. 
Put differently, all of the pharmaceutical products paid for by the SSI would be disposed 
of in exactly the same manner in a counterfactual scenario in which the SSI did not pay 
for all or part of the cost of those products. Neither  the SSI nor any other governmental 
agency plays any role in directing, or redirecting, pharmaceutical products to recipients 
of their choosing.170 
6.63.   The Panel emphasi zed that "[a]pproval through the Medula system [was] essentially a 
confirmation that the pat ient is within SSI coverage and that the prescribed pharmaceutical products 
[were] on the Annex 4/A list."171 That approval confirms, among other things, that the 
pharmaceutical product may be invoiced by the pharmacy to the SSI at the previously set price.172 
In light of these factual elements, the Panel found no basis to support T ürkiye 's assertion that the 
SSI obtained the right to dispose of the pharmaceutical products that it paid for according to its own 
 
162 Panel  Report , para.  2.8.  
163 Panel  Report , para.  2.7.  
164 Panel  Report, para.  2.14 and fn  59 thereto.  
165 Panel  Report, para.  2.16.  
166 Panel  Report, para.  7.86.  
167 Panel  Report, para.  7.86. In the Arbitration, Türkiye takes issue with the Panel's approach to look at 
whether the SSI acquired possession over the products in the context of its analysis of "products purchased", 
but does not challenge the Panel's finding that the SSI did not acquire the right to take physical possession of 
the pharmaceutical products. (Türkiye's written submission, paras.  64-65. See also paragraph 6.65.  below ) 
168 Panel  Report , para.  2.17.  
169 Panel  Report, para.  7.87.  
170 Panel  Report, para.  7.87. 
171 Panel  Report, para.  7.88. 
172 Panel  Report, para.  7.88 (referring to Türkiye's responses to the Panel's first set  of questions, 
para. 26; European  Union 's responses to the Panel's first set of questions, paras.  10-22, opening statement  at 
the Panel meeting , para. 24). WT/DS 583/ARB25  
 
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 choices.173 The Panel observed that "Turkey ha[d] not directed the Panel to any reference to the SSI 
acquiring 'title' to pharmaceutical products in the Protocol signed between the SSI and the Turkish 
Pharmacists Association or to any other evidence on record."174 More generally, the Panel found that 
"there [was] nothing in the parties' description of Turkey's pharmaceutical reimbursement system 
to suggest that the SSI acquire[d] any right of possession, any right of control, any right of exclusion, 
any right to derive income, or any right to freely dispose  of the pharmaceutical products that it 
acquire[d]."175  
6.64.   In addition to these Panel findings, there are uncontested facts on the record that could 
potentially be relevant to the issue of procurement. In particular, we understand the parties to have 
both rel ied on the fact, before the Panel, that pharmacies control their own stock176, although  
wholesale prices are regulated.177 
6.65.   Moreover, we observe that it was undisputed before the Panel that retail pharmacies acquire 
ownership of medicines when obtaining them from wholesalers178 and final consumers 
(i.e. outpatients) subsequently acquire ownership when obtaining pharmaceutical products from 
retail pharmacies.179 Türkiye does not challenge this in the Arbitration but argues that the Panel 
should hav e nonetheless concluded that there is a transfer of ownership from the pharmacies to the 
SSI through the Medula system.180 In this context, Türkiye argues that the Panel unduly focused on 
the physical possession  of the products, thereby contradicting its finding that physical possession is 
not a constitutive element of a purchase.181 As summari zed above, the Panel assessed whether the 
SSI acquired ownership of pharmaceutical products. The Panel was unable to disce rn any basis upon 
which it could conclude that the SSI acquired any legal rights  over the pharmaceutical products it 
paid for. Only by way of example , did the Panel note that the SSI did not ever acquire the right to 
take physical possession of the pharmac eutical products. The Panel then proceeded to address, in 
some detail, T ürkiye's assertion that the SSI obtained the right to dispose of the pharmaceutical 
products. Ultimately, the Panel found that the SSI did not acquire such right or any other right 
typically associated with a transfer o f ownership.182 We do not see any contradiction in the Panel's 
reasoning, nor do we consider that the Panel would have focused on who acquires the physical 
possession of the medicines to draw decisive guidance from it. In relation to the Panel's conclusion 
that there is no transfer of ownership of the pharmaceutical products to the SSI, Türkiye otherwise 
makes allegations that go to the Panel's assessment of the facts and its appreciation of evidence. In 
the absence of a cl aim under Article  11 of the DSU, these allegations are outside of the scope of our 
 
173 Panel  Report , para.  7.87.  
174 Panel  Report , para.  7.88.  
175 Panel  Report , para.  7.85. This particular finding rests on the Panel's review of Türkiye's 
pharmaceutical reimbursement system, as described by the parties. We read this finding to be an intermediate 
finding of fact by the Panel, which led the Panel to conclude that the SSI does not acq uire ownership over the 
pharmaceutical products. We note that Türkiye takes issue with the Panel's finding that the SSI does not obtain 
the right to dispose of medicines. In this context, Türkiye takes issue with the Panel's description of the Medula 
system and asserts that the Panel "completely disregarded … evidence" reflected in Panel Exhibit TUR -117 as 
well as "completely ignored [the] fact" that the SSI pays a service fee to retail pharmacies for dispensing 
medicines to approved patients. (Türkiye's wr itten submission, para s. 69 (referring to Panel  Report , 
para. 7.87) and  71-73) With these allegations, Türkiye is in effect challenging the Panel's assessment of the 
facts and its appreciation of evidence. In the absence of a claim under Article  11 of the DSU, these challenges 
are outside of the scope of our review.  
176 Panel  Report , fn 411 to para.  7.84 (referring to E uropean  Union 's second written submission to the 
Panel, paras.  106-107; Türkiye's closing statement at the Panel meeting, para.  23).  
177 Parties' responses to questions at the hearing.  
178 Panel  Report, paras.  7.84 and 7.98.  
179 Panel  Report, paras.  7.84 and 7.98. We also note Türkiye's statement in the context of its first 
application claim in this Arbitration that "it is not disputed that the retail pharmacies purchase the medicines 
included in Annex  4/A." (Türkiye's written submission, para.  55 (referring to Panel  Report , para.  7.98; 
European  Union 's first written submission to the Panel, para.  15; second written submission to the Panel, 
para. 101))  
180 Türkiye's written submission, para.  61.  
181 Türkiye 's written submission, paras.  62-65 (referring to Panel  Report , paras.  7.83 and  7.86; 
Panel  Report s, Canada – Renewable Energy / Canada – Feed-in Tariff Program , para.  7.228).  
182 Panel  Report , para.  7.84 et seq.  WT/DS 583/ARB25  
 
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 review.183 We thus see no reason to disturb the Panel's conclusion that there is no transfer of 
ownership of the pharmaceutical products to the SSI.184  
6.66.   A close reading of the  Panel  Report  further makes clear that the Panel considered the 
pharmacies to acquire ownership over pharmaceutical products "independently" of the 
government.185 At the hearing, the parties extensively discussed paragraphs 7.99 and 7.100 of the 
Panel  Repor t and the Panel's statement that even if the Panel were to accept T ürkiye 's assertion  that 
the SSI controls all the elements concerning the acquisition of pharmaceutical products, "this would 
not make pharmacies 'governmental agencies' for the purposes of Article  III:8(a), or transform their 
purchases into purchases by the government, so long as the pharmacies acquire ownership over 
pharmaceutical products independently of the government."186 In our view, this statement has to be 
read in conjunction with the remaining analysis of the Panel regarding whether the SSI acquired 
ownership of the products. Given the Panel's detailed assessment of the facts of the case, including 
its factual findings  recalled above, we consider  the Panel to have reached the correct conclusion that 
pharmacies acquire ownership of the pharmaceutical products independently  from the government. 
It is on this basis that the Panel concluded that the SSI did not acquire owne rship of the 
pharmaceutical products through the purchase by retail pharmacies of those products from 
wholesalers.  
6.67.   Türkiye points to the level of control of the SSI over the retail pharmacies.187 Türkiye argues 
that "the SSI controls the entire process of obtaining and dispensing medicines included in Annex  4/A 
to patients."188 While we do not exclude that procurement by a governmental agency may occur 
through an intermediary, it remains that, for the purpose s of the derogation under Article  III:8(a), 
there needs to be a process whereby governmental agencies acquire or obtain products purchased 
for governmental purposes.189 Türkiye did not explain how, through any such alleged control, the 
SSI would acquire or obtain medicines through a purchase of medicines. Türkiye has not pointed to 
elements showing a sufficient level of control by the SSI over the pharmaceutical products included 
in the Annex  4/A list when they are purchased by the retail pharmacies or otherwise. The fact that 
the SSI decides which pharmace utical products are included in the Annex  4/A list and sets their 
price, enters into individual contracts with retail pharmacies, and pays the invoices that are 
periodically sent by the retail pharmacies190 does not show, in light of the Panel's findings se t out 
above, that there is procurement by the SSI. We note Türkiye's argument, as clarified at the hearing, 
that the SSI signs a Protocol with the TPA and individual contracts with the retail pharmacies tasking 
them with the distribution of those medicines  and that , to comply with their obligations regarding 
such provision of medicines, retail pharmacies need to purchase the medicines.191 This element most 
directly relates to the provision of medicines to outpatients, rather than to procurement through a 
purchase of medicines. We also recall the Panel's factual finding that all relevant decisions and 
choices associated with the disposition of pharmaceutical products are made by the prescribing 
doctor, the pharmacy, and the ultimate consumer, without SSI invol vement : "[A]ll of the 
pharmaceutical products paid for by the SSI would be disposed of in exactly the same manner in a 
counterfactual scenario in which the SSI did not pay for all or part of the cost of those products."192 
6.68.   In our view, the various elements set out above, taken together, indicate that there is no 
procurement by the SSI of products purchased for governmental purposes, whether at the moment 
when retail pharmacies purchase products from wholesalers or otherwise. While the SSI pays for 
pharmaceut ical products when they are obtained by outpatients subject to certain conditions, sets 
their price, and decides which pharmaceutical products are included in the Annex  4/A list, retail 
 
183 See fn 175 above. Türkiye also argues that medicines are "essential for human health, require 
specific storage condi tions" and their provision must be "ensured by trained professionals". (Türkiye's appellant 
submission, para.  60) Türkiye has , however , not explained how this  should affect our analysis of whether there 
is procurement by the SSI.  
184 Panel  Report , paras.  7.84-7.88.  
185 Panel  Report , para.  7.100.  
186 Panel  Report , para.  7.100.  
187 Türkiye's written submission, paras.  42, 53 -54, and 95; responses to questions at the hearing.  
188 Türkiye's written submission, para.  95. 
189 We recall that the Appellate  Body understood a "governmental agency" within the meaning of 
Article  III:8(a) to be "an entity acting for or on behalf of government and performing governmental functions 
within the competences conferred on it". ( Appellate  Body Reports, Canada – Renewable Energy / Canada – 
Feed-in Tariff Program , paras.  5.60-5.61) 
190 These factual elements appear uncontested between the parties.  
191 Türkiye's written submission, paras.  53 and 79; responses to questions at the hearing.  
192 Panel  Report, para.  7.87.  WT/DS 583/ARB25  
 
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 pharmacies and/or outpatients, rather than the SSI, obtain physical possession of the products, 
dispose of and control the products , benefit from and use the products, obtain ownership of the 
products, and manage the stocks of products. We also recall the Panel's finding that " there [was] 
nothing in the parties' d escription of Turkey's pharmaceutical reimbursement system to suggest that 
the SSI acquire[d] any right of possession, any right of control, any right of exclusion, any right to 
derive income, or any right to freely dispose of the pharmaceutical products t hat it acquire[d]."193 
Therefore, w e conclude that there is no procurement , within the meaning of Article  III:8(a) of the 
GATT  1994, by the SSI of the pharmaceutical products included in the  Annex  4/A list. 
6.2.4   Conclusion  
6.69.   In light of the considerations above, w e find that the localisation requirement does not fall 
within the ambit of the derogation in Article  III:8(a) of the GATT  1994 on the basis that there is no 
procurement by governmental agencies within the meaning of that provision. Consequently, we 
uphold,  albeit for different reasons, the Panel's finding, in paragraph s 7.107 and  8.1.b.ii of the 
Panel  Report , that the localisation requirement is not covered by the government procurement 
derogation in Article  III:8(a) of the GATT  1994, and is therefore subje ct to the national treatment 
obligation in Article  III:4 of the GATT  1994 and Article  2.1 of the TRIMs  Agreement.   
6.70.   We do not consider it necessary, for the purpose of resolving this dispute, to address further 
Türkiye's remaining claims under Article  III:8(a) set out in paragraph 6.51.  above. Procurement is 
an essential element of Article  III:8(a) and our finding on procurement is sufficient to conclud e that 
the localisation requirement is not covered by Article  III:8(a). Addressing further Türki ye's 
remaining application claims, as they pertain to the issue of "products purchased" within the meaning 
of Article  III:8(a), would not alter our conclusion t hat there is no procurement by the SSI of the 
pharmaceutical products included in the Annex  4/A list, whether at the time when retail pharmacies 
purchase pharmaceutical products from wholesalers or otherwise. Accordingly, t he Panel's 
intermediate findings,  in paragraphs 7.66 -7.81 of the Panel  Report , regarding the interpretation of 
the term "products purchased" , as well as its intermediate finding, in paragraphs 7.90, 7.103, and 
7.104, that the localisation requirement does not involve the purchase of pharm aceutical products 
included in the  Annex  4/A list by governmental agencies , are moot.194  
6.71.   We also do not consider it necessary to address Türkiye's request that we moot or reverse 
the Panel's findings under Article  III:4 of the GATT  1994 as this request was conditional upon a 
reversal of the Panel's finding under Article  III:8(a). Therefore, the Panel's finding , in 
paragraph  8.1.b.iii of the Panel  Report , that the localisation requirement is inconsistent with the 
national treatment obliga tion in Article  III:4 of the GATT  1994, remains undisturbed. Since this 
finding of inconsistency with Article  III:4 stands, we proceed to address Türkiye's claims pertaining 
to the general exceptions in Article  XX of the GATT  1994.  
6.3  Article  XX(b) of the GA TT 1994  
In the event that we "do not conclude that the localisation [requirement]  is covered by the 
government procurement derogation under Article  III:8(a) of the GATT  1994 and/or do not reverse 
the Panel's findings under Article  III:4 of the GATT  1994", Türkiye requests us to find that the Panel 
erred in concluding that the localisation requirement is not justified under Article  XX(b) of the 
GATT  1994.195 Türkiye claims that  the Panel erred in the interpretation and application of 
Article  XX(b) in finding that the localisation requirement is not " designed to" protect human, animal, 
or plant life or health.196 Türkiye also claims that the Panel failed to make an objective assessment 
of the matter before it, as required by Article  11 of the DSU, when addressing Türkiye's claim that 
the localisation requirement is justified under Article  XX(b).197 Türkiye requests  us to reverse 
relevant findings by the Panel, including its finding that the localisation requirement is not justified 
 
193 Panel  Report , para.  7.85.  
194 The parties confirmed that our mandate includes the possibility to moot Panel findings. (Parties' 
responses to questions at the hearing)  
195 Türkiye's written submission, para.  116. 
196 Türkiye's notice of recourse to arbitration, p.  2; written submission, paras.  5-6 and 116.  
197 Türkiye's notice of recourse to arbitration, p.  3; written submission, paras.  6, 116, 129, and 
196-209. WT/DS 583/ARB25  
 
- 31 - 
 under Article  XX(b).198 Türkiye also requests us to complete the legal analysis and find that the 
localisation requirement is justified u nder Article  XX(b).199 
The European  Union  disagrees with Türkiye's claims and requests us to find that the Panel did 
not err in its interpretation and application of Article  XX(b).200 In the alternative, the European  Union 
argues that Türkiye's claims regard ing the application of Article  XX(b) implicate the Panel's 
appreciation of facts and evidence and therefore fall outside the scope of our review to the extent 
that Türkiye has not alleged a violation of Article  11 of the DSU in respect of these claims.201 The 
European  Union  also argues that the Panel did not act inconsistently with Article  11 of the DSU in its 
assessment of the matter before it, when addressing Türkiye's claim that the localisation 
requirement is justified under Article  XX(b).202 
We begin by briefly summarizing key Panel findings, before turning to consider relevant 
interpretation and application issues raised in this Arbitration.  
6.3.1   Panel findings  
With respect to Türkiye's invocation of the general exception in Article  XX(b) of the 
GATT  1994, th e Panel found that the localisation requirement was not a measure taken to protect 
human, animal, or plant life or health.203 
6.3.1.1   Order of analysis  
In its analysis of Türkiye's defence under Article  XX(b)  of the GATT  1994, the Panel proceeded 
in the following o rder. First, the Panel looked at whether the objective invoked by Türkiye ( ensuring 
adequate access to affordable medicines) was an objective that related to the protection of "human 
life or health" under Article  XX(b).204 Second, the Panel considered wheth er the measure at issue 
was taken to  (i.e. was designed to ) protect human life or health. This part of the analysis consisted 
of two steps: (i)  whether there was evidence of the existence of the risk to human life or health 
(health risk) that the measure aimed to reduce; and (ii)  if the alleged health risk was found to exist, 
whether the measure was taken for the purpose of protecting human life or health by reducing that 
risk, or was instead taken for other reasons.205 Third, assuming that the meas ure was found to be 
"designed to" protect human life or health, the Panel would have considered whether the measure 
was "necessary" to protect human life or health. This part of the analysis would have required the 
Panel weighing and balancing several fact ors, including the importance of the objective sought, the 
contribution of the measure to the achievement of that objective, and the trade -restrictiveness of 
the measure, as well as comparing the measure with possible alternative measures identified by the  
European  Union .206 Fourth, assuming that the measure was found to be provisionally justified under 
subparagraph (b), the Panel would have considered whether it also satisfied the requirements of the 
chapeau  of Article  XX (i.e.  whether the measure was appli ed in a manner that did not constitute 
arbitrary or unjustifiable discrimination between countries where the same conditions prevail ed and 
whether the measure was a disguised restriction on international trade).207 
6.3.1.2   The declared objective of the measure and its importance  
With respect to the first issue, looking at the GATT  1994 and other covered agreements, as 
well as previous statements by panels and the Appellate  Body, the Panel noted that the preservation 
of human life and health was an objective that was  "both vital and important in the highest 
 
198 Türkiye requests us to reverse the Panel's findings in paragraphs 7.157 -7.214, 7.219 , and 8.1.b.iv of 
the Panel  Report. (Türkiye's notice of recourse to arbitration, p.  3; written submission, paras.  117 and  250) 
199 Türkiye's notice of recourse to arbitration, p.  3; written submission, paras.  117, 210 -213, and 250. 
200 Europ ean Union 's written submission, paras.  2, 4, 112 , 114-158, and 163 -176. 
201 European  Union 's written submission, paras.  159-162. 
202 European  Union 's written submission, paras.  4 and 177 -181. 
203 Panel  Report, para.  7.211.  
204 Panel  Report, paras.  7.157 -7.161.  
205 Panel  Report , para s. 7.134 -7.135  and 7.165 et seq . 
206 Panel  Report , para.  7.136.  
207 Panel  Report , para.  7.138.  WT/DS 583/ARB25  
 
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 degree".208 The Panel then referred to the more specific objective of ensuring access to 
pharmaceutical products, which it found to be recognized in the WTO covered agreements, as well 
as by various international au thorities through different international instruments, and through 
multiple international initiatives and publications by international organizations.209 The Panel noted 
no disagreement between the parties that: (i)  the lack of access to pharmaceutical prod ucts posed 
a risk to human life and health; (ii)  the objective of ensuring adequate access to pharmaceutical 
products was one that relate d to the protection of human life or health under Article  XX(b) of the 
GATT  1994, and was vital and important; (iii)  WTO Members were free to decide how to organize 
their social security and healthcare systems; (iv)  governmental policies of covering all or part of the 
cost of pharmaceutical products were linked to the objective of providing universal healthcare, 
ensuring a ccess to pharmaceutical products and protecting human health; and (v)  Members may, in 
the context of Article  XX(b), take measures to address the risk of future shortages of supplies before 
such shortages actually arise.210 
6.3.1.3   The Panel's finding that the measu re was not taken to ( not designed to) pursue 
the declared objective  
The Panel subsequently turned to the second issue, namely, whether Türkiye had 
demonstrated that the localisation requirement was a measure that was taken to protect human life 
or health and, more specifically, taken to prevent a risk of long -term shortage of supply of safe, 
effective , and affordable medicines.  
The Panel focused first on whether Türkiye had properly identified a risk to human life or 
health (health risk) that the lo calisation requirement aimed to reduce. In this respect, the Panel 
noted that "[w] here there is no sufficient evidence as to the existence of a health risk, a challenged 
measure is not necessary to protect  human, animal or plant life or health."211 
The Pane l referred to Türkiye's argument that its over -reliance on imported pharmaceutical 
products created a risk of long -term shortage of supply of safe, effective, and affordable medicines 
because of several factors relating to the cost of imported pharmaceutic al products in Türkiye. These 
factors included, most notably: (i)  low prices of medicines on the Turkish market carried the risk 
that foreign producers might decide to supply other countries where they could receive a higher 
price for their products; and (ii)  imported pharmaceutical products might become unaffordable for 
the SSI if a foreign currency gained in value or the Turkish lira depreciated.212 By localising the 
production of pharmaceutical products, the localisation requirement would b e a measure designed 
to address this risk and to ensure uninterrupted access to safe, effective, and affordable 
pharmaceutical products for all patients in Türkiye.213 
In the Panel's view, the risk identified by Türkiye (a risk of long -term shortage of supp ly of 
safe, effective, and affordable pharmaceutical products caused by an over -reliance on imported 
pharmaceutical products), without establishing any substantial degree of probability, appeared to 
be theoretical, abstract, and hypothetical.214 Looking at the evidence provided by Türkiye, the Panel 
found that Türkiye had not identified any instance of shortage of supply of a specific product caused 
by foreign producers deciding to stop supplying medicines to Türkiye to instead sell in other countries 
where they can receive a higher price for their products, or caused by a medicine becoming 
unaffordable for the SSI because of a foreign currency gaining in value or the Turkish lira 
depreciating.215 
In addition to the situation described by Türkiye being merely hypothetical, the Panel found 
that this situation could be present in any sector and concern any market. It was not specific to the 
pharmaceutical sector or to Türkiye, and was therefore characterized by a level of temporal and 
 
208 Panel  Report , para.  7.157 ( quoting Appellate  Body Reports, EC – Asbestos , para.  172; 
Brazil  – Retreaded Tyres , para.  179; Panel  Report s, Brazil – Retreaded Tyres , para.  7.210; 
Indonesia  – Chicken , para.  7.225).  
209 Panel  Report , paras.  7.158 -7.160.  
210 Panel  Report , paras.  7.161 -7.162.  
211 Panel  Report , para.  7.134 (referring to Panel  Report , EC – Asbestos , para.  8.170 ; Appellate  Body 
Reports, EC – Seal Products , para.  5.197). (emphasis original)  
212 Panel  Report , paras.  7.165 and 7.172.  
213 Panel  Report , paras.  7.165 and 7.170.  
214 Panel  Report , para.  7.180. See also ibid., para.  7.173.  
215 Panel  Report , paras.  7.173 -7.177.  WT/DS 583/ARB25  
 
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 sectoral generality that was  at odds with the concept of risk under Article  XX(b). In the Panel's view, 
the generality of Türkiye's underlying argument would lead to the conclusion that there was a 
permanent risk of shortage of products concerning every sector of any WTO Member's eco nomy. 
Following this logic, international trade liberalization in products and sectors that are necessary for 
the protection of human life or health created a permanent risk to human life or health under 
Article  XX(b).216 
In the Panel's view, the hypothetic al and overly general nature of the alleged risk casts serious 
doubt on Türkiye's assertion that the localisation requirement was taken to protect against a future 
shortage of supply of safe, effective, and affordable pharmaceutical products in Türkiye.217 The Panel 
considered further that most of the legal instruments putting into place the localisation requirement 
did not refer to a public health objective or, to the extent that some of them did, such references 
were cast at a general level and were not li nked with the localisation requirement or the declared 
objective of preventing a shortage of supply of safe, effective, and affordable medicines arising from 
an over -reliance on imports.218 The Panel found that those same documents, as well as other 
documen ts pertaining to the implementation of the localisation requirement, did not contain any 
contemporaneous references to a public health objective that could support the argument that the 
localisation requirement was a measure taken to protect human health o r life. They suggested 
instead that the localisation requirement appeared to pursue an industrial policy objective.219 
The Panel acknowledged Türkiye's ongoing aim to improve the performance of its domestic 
pharmaceutical industry by meeting a higher share of domestic demand for pharmaceutical products. 
In the Panel's view, however, the evidence did not seem to relate this objective to specific public 
health concerns such as improving the safety or affordability of available pharmaceutical products, 
or addre ssing a risk that domestic pharmaceutical demand may not be met by supply from the 
international market.220 The Panel found that this cast further doubt on Türkiye's assertion that the 
localisation requirement was taken to protect against a future shortage of supply of safe, effective, 
and affordable pharmaceutical products in Türkiye.221 
The Panel found further support for its view in the fact that the objective of the localisation 
requirement, as it appeared in several official documents, had no rational re lationship to the invoked 
objective of ensuring a continuous supply of safe, effective, and affordable pharmaceutical 
products.222 The Panel did not find evidence of such rational relationship between the stated 
objective of the localisation requirement (in creasing domestic production from meeting 40% to 
covering 60% of domestic demand) and the declared objective of ensuring a continuous supply of 
safe, effective, and affordable pharmaceutical products.223 In the Panel's view, a measure adopted 
in pursuit of developing a WTO Member's pharmaceutical sector could only be seen as having a 
public health objective if there was a rational relationship between the objective set by that 
WTO Member for developing its pharmaceutical sector and the specific public health  objective 
invoked.224 The lack of such rational relationship was, in the Panel's view, a further indication that 
the localisation requirement was not a measure taken to protect human life or health.225 
6.3.1.4   The Panel's conclusion  
Having found that the localisat ion requirement was not a measure taken to protect human, 
animal, or plant life or health226, the Panel considered it did not need to assess the remaining legal 
elements of Article  XX(b) of the GATT  1994 to determine the applicability of this exception.227 
Because the localisation requirement did not fall under Article  XX(b) and therefore was not 
provisionally justified under this subparagraph, the Panel also found it unnecessary to assess 
whether the localisation requirement had been applied consistently wit h the requirements of the 
 
216 Panel  Report , para. 7.178.  
217 Panel  Report , para.  7.180.  
218 Panel  Report , paras.  7.184 -7.191.  
219 Panel  Report , paras.  7.191 -7.198.  
220 Panel  Report , para.  7.199.  
221 Panel  Report , para.  7.200.  
222 Panel  Report , para.  7.201.  
223 Panel  Report , paras.  7.201 -7.208.  
224 Panel  Report , para. 7.203.  
225 Panel  Report , para.  7.208.  
226 Panel  Report, para.  7.211.  
227 Panel  Report , para.  7.212.  WT/DS 583/ARB25  
 
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 chapeau  of Article  XX.228 The Panel refrained from making additional findings or observations on any 
disputed issues in respect of the remaining elements under Article  XX(b).229 
6.3.2   Whether the Panel erred in its interpretation of Article  XX(b) of the GATT  1994  
Article  XX(b) of the GATT  1994 provides:  
Subject to the requirement that such measures are not applied in a manner which would 
constitute a means of arbitrary or unjustifiable discrimination between countries where 
the same conditions prevail, or a disguised restriction on international trade, nothing in 
this Agreement shall be construed to prevent the adoption or enforcement by any 
Member of measures:   
 … 
(b) necessary to protect human, animal or pla nt life or health [.] 
With respect to the Panel's interpretation of Article  XX(b), the following issues have been 
brought before us:  
a. whether the Panel erred by confusing the "design" and "necessity" steps of the legal test 
under Article  XX(b);  
b. whether the P anel erred by requiring that a measure address a health risk that has "a 
substantial degree of probability" of materializing for that measure to be "designed to" 
protect human, animal, or plant life or health; and  
c. whether the Panel erred by relying on the legal tests under Article s XX(a) and XX(j) of the 
GATT  1994 and Article  XIV(a) of the GATS, as interpreted by previous panels.  
We note at the outset that Article  XX(b) allows Members to maintain measures that are 
otherwise inconsistent with obligations under the GATT  1994, to the extent that those measures are 
necessary to protect human, animal, or plant life or health, and are applied in a manner that is 
compatible with the requirements in the chapeau  of Article  XX. For an exception such as that 
contained in Article  XX(b) to apply, t he responding party bears the burden of invoking the provision 
and demonstrating that the measure in question meets the requirements of that provision.  
Starting with the text of the provision, to be justified under Article  XX(b) , a measure must be 
necessary to protect human, animal, or plant life or health. In order to assess whether a measure is 
"necessary" to achieve that objective, a panel may first assess, as an initial question, whether the 
measure is even related to, or not  incapable of, protecting human, animal, or plant life or health. 
Logically, unless a measure is "not incapable" of protecting human, animal, or plant life or health, 
then the measure cannot be justified under Article  XX(b), and this would be the end of th e inquiry.  
In order to ascertain whether a measure is not incapable of protecting human, animal, or 
plant life or health, a panel should focus on examining the relationship between the challenged 
measure, considering its design (including its content, stru cture, and expected operation) and the 
proclaimed objective. The prior examination is used to assess whether the measure can be 
considered to have been "taken to", or "designed to", protect human, animal, or plant life or health. 
If the response to this qu estion is affirmative , a panel may move to assess whether the measure 
can be considered to be "necessary" for the proclaimed objective, considering factors such as the 
extent of the contribution to the achievement of the objective, the measure's trade -restrictiveness, 
and the importance of the interests or values at stake, as well as comparing the measure with 
possible alternative measures identified by the complainant.  
This two -step analysis of the design and the necessity of a measure has been used in pre vious 
disputes230 and corresponds to the manner in which parties articulated their arguments both before 
 
228 Panel  Report , para.  7.213.  
229 Panel  Report , para.  7.214.  
230 See e.g. Panel  Report , EC – Tariff Preferences , paras.  7.198 -7.199.  WT/DS 583/ARB25  
 
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 the Panel as well as in the Arbitration.231 Having said that, panels have been cautioned in the past 
not to structure their analysis of the "design" elem ent in such a way as to lead it to truncate such 
analysis prematurely and thereby foreclose consideration of crucial aspects of the respondent's 
defence relating to the "necessity" of the measure.232 
6.3.2.1   Whether the Panel erred by confusing the "design" and "ne cessity" steps of the 
legal test under Article  XX(b) of the GATT  1994  
Regarding the question under Article  XX(b) of the GATT  1994 of whether a challenged 
measure is "designed" to protect human, animal, or plant life or health, Türkiye submits that the 
Panel erred in its interpretation of the provision, because it adopted an erroneous legal standard to 
assess the "design requirement". Türkiye argues that past panels and the Appellate  Body have 
shown a significant degree of deference in accepting that the pol icy objective of a measure is to 
protect human life or health. In light of this deferential legal standard applied in the assessment of 
a measure's design, panels must simply determine if the policy at issue falls within the range of 
policies designed to p rotect human life or health.233 
In Türkiye's view, the Panel's interpretation mixes the threshold analysis of a measure's 
"design" under Article  XX(b) with that of the measure's "necessity" and thereby limits WTO Members' 
regulatory autonomy to pursue publi c health policies under this provision.234 
In response, the European  Union argues that the Panel did not err in its interpretation of 
Article  XX(b) in finding that the localisation requirement is not "designed to" protect human life or 
health.235 
In paragraph 7.135 of its report, the Panel articulated a reasonable legal standard to assess 
whether the challenged measure was "taken for" the purpose of protecting human, animal, or plant 
life or health or was instead taken for other reasons:  
To determi ne whether a challenged measure is "designed to" protect human, animal or 
plant life or health, a panel must examine all the evidence before it, including the text 
of the relevant legal instruments, the legislative history, and other evidence regarding 
the design, structure and expected operation of the challenged measure . … If this 
threshold enquiry reveals that the challenged measure is incapable of meeting the 
stated objective, the analysis need not go further to determine whether this measure is 
necessa ry to protect this objective.236 
The Panel also noted in its report:  
When assessing whether a measure is taken to protect human, animal or plant life or 
health, prior panels have often commenced their analysis by determining the existence 
of the risk to hum an, animal or plant life or health (health risk) that the challenged 
measure aims to reduce. Where there is no sufficient evidence as to the existence of a 
health risk, a challenged measure is not necessary to protect  human, animal or plant 
life or health.237 
In its assessment of whether the localisation requirement is a measure "taken to" protect 
human, animal, or plant life or health, the Panel made the following intermediate findings:  
 
231 Türkiye's first written su bmission to the Panel, paras.  419-420 and 441 -463; second written 
submission to the Panel, paras.  162-174; written submission, paras.  165-195; European  Union's second 
written submission to the Panel, paras.  143-157; written submission, para.  120. 
232 See e.g. Appellate  Body Report, Colombia – Textiles , para.  5.77. 
233 Türkiye's written submission, paras.  135-138 and 168.  
234 Türkiye's written submission, paras.  127 and 141 -146. 
235 European  Union's written submission, paras.  4, 112 , and 116.  
236 Panel  Report , para . 7.135 . (fns omitted )  
237 Panel  Report , para.  7.134 ( referring to Panel  Report s, EC – Asbestos , paras.  8.170, 8.182, 
and 8.185 -8.194;  Brazil – Retreaded Tyres , paras.  7.42 and 7.53 -7.93; China – Rare Earths , 
paras.  7.149 -7.156; Brazil – Taxation , para. 7.859; Indonesia – Chicken , para.  7.209; US – Gasoline , 
para. 6.21; EC – Tariff Preferences , paras.  7.180 and 7.200; Appellate  Body Reports, EC – Seal Products , 
para. 5.197) . (fns omitted)  WT/DS 583/ARB25  
 
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 a. First, Türkiye, as the party invoking the general exception in Article  XX(b), had failed to 
substantiate its assertion that its alleged over -reliance on imported pharmaceutical 
products created a risk of long -term shortage of supply of safe, effective, and affordable 
medicines. In the absence of evidence, the Panel found that  the risk identified by Türkiye, 
more specifically the factors that gave rise to a risk of future shortages in respect of any 
and all pharmaceutical products, could only be characterized as theoretical, abstract, and 
hypothetical.238 
b. Second, considering the  evidence before it, including the legal instruments serving as a 
basis for the localisation requirement and the documents pertaining to its implementation, 
there were no contemporaneous references to a specific public health objective that could 
directly support the argument that the localisation requirement was a measure taken to 
protect human health or life. In the Panel's view, no evidence related the implementation 
of the localisation requirement to specific public health concerns , such as improving th e 
safety or affordability of available pharmaceutical products or addressing a risk that 
domestic pharmaceutical demand might not be met by supply from the international 
market. The relevant documents indicated instead that the localisation requirement 
appeared to pursue an industrial policy objective .239 
c. Third, there was no evidence of a rational relationship between the localisation 
requirement's stated objective of increasing domestic production from meeting 40% to 
covering 60% of domestic demand, and the  declared objective of ensuring a continuous 
supply of safe, effective, and affordable pharmaceutical products.240 
Based on those three intermediate findings, the Panel found that the localisation requirement 
was not a measure "taken to" protect human, anim al, or plant life or health within the meaning of 
Article  XX(b).241 Accordingly, it found that it did not need to assess further whether the same 
measure was "necessary" to protect human, animal, or plant life or health within the meaning of 
Article  XX(b) o r whether it was being applied consistently with requirements of the chapeau  of 
Article  XX.242 
Having described the Panel's approach, we turn our attention to considering whether, as 
argued by Türkiye, the Panel adopted an erroneous legal standard to assess  the "design" element 
in Article  XX(b).  
We recall in this regard, first, that in its report the Panel articulated a reasonable standard 
to assess whether the challenged measure was "taken for" the purpose of protecting human, animal, 
or plant life or healt h.243 Second, the Panel made three intermediate findings, all of which were 
relevant for its analysis, namely, that: (i)  the risk identified by Türkiye could only be characterized 
as theoretical, abstract, and hypothetical; (ii)  the implementation of the lo calisation requirement 
appeared to pursue an industrial policy objective rather than specific public health concerns; and 
(iii) there was no evidence of a rational relationship between the localisation requirement and the 
stated objective of ensuring a con tinuous supply of safe, effective, and affordable pharmaceutical 
products. Although the Panel did not explicitly indicate it in these terms, these findings could allow 
the Panel to reasonably conclude that the relevant legal standard for the design require ment under 
Article  XX(b) had not been met, namely, that there was no evidence of the existence of the health 
risk that the localisation requirement was alleged ly seeking to reduce and that the localisation 
requirement was incapable of meeting the alleged p ublic health objective.  
While it may be true, as Türkiye argues, that the Panel considered aspects relating to the 
manner in which the localisation requirement could contribute to its proclaimed objective, it seems 
to us that this was done in the context o f examining the expected operation of the challenged 
 
238 Panel  Report , paras.  7.165 -7.180.  
239 Panel  Report , paras.  7.181 -7.200.  
240 Panel  Report , paras.  7.201 -7.208.  
241 Panel  Report , para.  7.211.  
242 Panel  Report , paras.  7.212 -7.214.  
243 See para.  6.96.  above. It should be noted that Türkiye has challenged in this Arbitration neither the 
two-step analysis of the design and the necessity of a measure nor the standard articulated by the Panel i n 
paragraphs 7.134 and 7.135 of its report.  WT/DS 583/ARB25  
 
- 37 - 
 measure, which is relevant in the "design" analysis.244 We note in this respect that the "design" and 
the "necessity" analys es are not entirely disconnected exercises and that there can be some overlap 
in the evidence and the considerations that are relevant for each step.245 
For the reasons indicated above, we do not consider that the Panel committed legal error by 
confusing the "design" and the "necessity" steps of the legal analysis under Artic le XX(b) of the 
GATT  1994.246  
6.3.2.2   Whether the Panel erred by requiring that a measure address a health risk that 
has "a substantial degree of probability" of materializing for that measure to be "designed 
to" protect human, animal, or plant life or health  
According to Türkiye, "the Panel  … set out a legal standard requiring a 'substantial degree 
of probability' of risk and thereby erroneously introduced a quantitative dimension in the notion of 
risk under Article  XX(b) of the GATT  1994."247 In Türkiye's view , the Panel erroneously concluded 
that in cases where a responding party cannot demonstrate that there is a "substantial degree of 
probability" that the asserted risk to human life or health will materialize, the evidentiary threshold 
to be met for establi shing that the challenged measure is taken to protect human life or health 
becomes more burdensome. Türkiye argues that this interpretation regarding the measure's 
"design" introduces a quantitative dimension to the notion of risk to human life or health t hat unduly 
limits the range of public health measures that fall within the scope of Article  XX(b).248 
With respect to the interpretation of Article  XX(b), the European  Union submits that the 
Panel did not say that, in order to prove that a measure was taken  to prevent a certain risk, a 
responding party was required to demonstrate a substantial degree of probability of the asserted 
risk. Rather, the Panel stated that such demonstration would make it easier for the responding party 
to discharge its burden of p roof; the responding party could , however , meet its burden of proof 
differently. In the European  Union's view, the term "substantial degree of probability of risk" does 
not require the responding party to provide a quantitative assessment of the risk.249 
The European  Union also argues that, with respect to the application of this evidentiary 
standard, the Panel did not find that Türkiye had failed to discharge its burden of proof on the 
existence of the asserted risk because it had not provided a quantificat ion of the alleged risk. Instead 
the Panel considered that Türkiye had asserted the existence of a risk without establishing any 
substantial degree of probability, such that the risk appeared to be theoretical, abstract, and 
hypothetical. This "hypothetica l and overly general nature" was one of the factors relied upon by the 
Panel to conclude that Türkiye had not discharged its burden to prove that the measure was taken 
to protect human life or health.250 
In the relevant sections of its report, the Panel not ed Türkiye's assertion that "its 
over-reliance on imported pharmaceutical products create [d] a risk of long -term shortage of supply 
of safe, effective and affordable pharmaceutical products". Türkiye's argument in this regard was 
that "the localisation req uirement, by localising the production of pharmaceutical products, [was] a 
measure designed to address this risk ." The Panel indicated that, as the party invoking a general 
exception under Article  XX(b), Türkiye had the burden of identifying "some degree o f probability 
 
244 As noted above, in order to ascertain whether a measure is not incapable of protecting human life or 
health, a panel should focus on examining the relationship between the challenged measure, considering its 
design (including its content, structure, and expected operation) and the proclaimed objective. See 
para. 6.91.  above.  
245 See e.g.  Appellate  Body Report, Colombia – Textiles , para.  5.76. 
246 We are mindful that, in conducting its assessment of the design of a measure, a panel should not 
truncate its analysis prematurely and thereby foreclose consideration of crucial aspects of a respondent's 
defence relating to the "necessity" analysis. However, we do not consider that the Panel made such an error.  
247 Türkiye's written submission, para.  137. (fn omitted)  
248 Türkiye's written submission, paras.  127 and 130 -140. 
249 European  Union's written submission, para s. 114-127. 
250 The other two factors considered by the Panel were that: (i)  the documents pertaining to the 
implementation of the localisation requirement did not contain any contemporaneous references to the specific 
risk and objective invoked by Türkiye; and (ii)  there was no rational relationship between the localisation 
requirement's stated objective of meeting 60% (by value) of domestic pharmaceutical demand through 
domestic production and the objective of ensuring a continuous supply of safe, effective , and affordable 
pharmaceutical products. (European  Union's written submission, para.  129 (quoting Panel  Report , 
para. 7.210) ) WT/DS 583/ARB25  
 
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 that the alleged risk [existed]". More specifically, Türkiye had the burden of demonstrating "the 
existence of a risk of shortage of supply arising from its over -reliance on imported pharmaceutical 
products".251 
The Panel further noted that th ere was no "rigid or pre -determined threshold or evidentiary 
standard that should be applied in this respect"  and "[i]nsofar as a responding party present [ed] 
evidence and arguments demonstrating that there [was] a substantial degree of probability of a 
specified risk to human life or health materializing, it [would] be easier for [that] party to discharge 
its burden of proving that the challenged measure was taken to protect against that risk". It 
continued: " Conversely, insofar as a responding party assert [ed] the existence of a risk without 
establishing any substantial degree of probability, such that the risk appear [ed] to be theoretical, 
abstract or otherwise hypothetical, it [would] be more difficult for [that] party to discharge its burden 
of pro ving that the challenged measure was taken to protect against that risk ."252 
After having considered Türkiye's arguments and the available evidence, the 
Panel  concluded that Türkiye had asserted "the existence of a risk without establishing any 
substantial degree of probability, such that the risk appear [ed] to be theoretical, abstract and 
hypothetical. In the Panel's view, the hypothetical and overly general nature of the alleged risk, as 
asserted by Turkey, cast [] serious doubt on Turkey's assertion that t he localisation requirement was 
taken to protect against a future shortage of supply of safe, effective and affordable pharmaceutical 
products in Turkey".253 
Looking at the statements of the Panel identified by Türkiye254, we do not consider that the 
Panel s et out a legal standard requiring a substantial degree of probability of risk for assessing 
whether a measure has been taken to protect human, animal, or plant life or health, in accordance 
with Article  XX(b). The reference to a "substantial degree of prob ability" of the existence of the risk 
alleged by the responding party was made by the Panel, not as a proposed legal standard, but rather 
as an indicator of the existence of a risk that is not merely theoretical, abstract, or hypothetical. The 
Panel did no t foreclose the possibility that a responding party might still be able, despite the lack of 
a "substantial degree of probability" of the existence of the alleged risk, to show that a challenged 
measure was taken to protect human life or health under Artic le XX(b). The Panel only stated that, 
lacking such evidence, the task for the responding party to discharge its burden of proof that the 
challenged measure was taken to protect against that risk would be "more difficult".255 We do not 
consider that this sta tement should be construed as setting out an incorrect legal standard and 
thereby constitutes an error of interpretation.  
In the same vein, given that the Panel did not require a substantial degree of probability of 
risk as a legal standard for the "design " analysis, we are also unconvinced that the statements of 
the Panel identified by Türkiye  and referred to above introduce any quantitative dimension to the 
notion of risk to human life or health that unduly limited the range of public health measures that  
fall within the scope of Article  XX(b).  
6.3.2.3   Whether the Panel erred by relying on previous panel reports dealing with other 
provisions  
Türkiye claims that, despite the textual differences with Article  XX(b) of the GATT  1994, the 
Panel erroneously relied on pr evious panel reports dealing with Articles  XX(j) and XX(a) of the 
GATT  1994 and Article  XIV(a) of the GATS to support its incorrect legal standard.256 
Türkiye also argues that the Panel's reading of the report in Brazil  – Taxation  was incorrect 
and did not support the Panel's erroneous interpretation of Article  XX(b). Türkiye notes that, in the 
relevant sections of this  report (dealing with Article  XX(a) of the GATT  1994), the panel had found 
that, notwithstanding its deep reservations regarding the design o f the challenged measure, it was 
 
251 Panel  Report, para.  7.170.  (fn omitted)  
252 Panel  Report, para.  7.171.  
253 Panel  Report, para.  7.180 . 
254 Türkiye's written submission, para.  137 (referring to Panel  Report , paras.  7.165 -7.171).  
255 Panel  Report, para.  7.171.  
256 Türkiye's written submission, paras.  127 and 147 -161. WT/DS 583/ARB25  
 
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 not in a position to find that this measure was incapable of contributing to the proclaimed 
objective.257 
The European  Union responds that there are commonalities between Article  XX(b) and the 
provisions addressed in the rep orts cited by the Panel in the context of the discussion of the 
assessment of the existence of a risk as part of the "design" analysis, so that the contextual 
relevance of those references cannot be excluded per se . The European  Union adds that, even if the 
Panel's reference to those panel reports was incorrect, such error would be inconsequential because 
the Panel's interpretation of the relevant evidentiary standard under Article  XX(b) was not dependent 
on a reference to those panel reports.258 The Europ ean Union adds that the Panel also referred to 
panel reports relating to disputes concerning the interpretation of Article  XX(b).259 
The European  Union also argues that the Panel's reference to the panel report in 
Brazil  – Taxation  is not incorrect as it is  cited as an example of the type of enquiry to be conducted 
by panels for the purpose of evaluating the existence of a risk, when such evaluation is required by 
the applicable legal standard.260 
We will consider first Türkiye's argument that the Panel set up an incorrect standard by 
improperly relying on prior panel and Appellate  Body reports that dealt with provisions other than 
Article  XX(b). We will subsequently turn, if necessary, to the additional argument that the Panel 
misinterpreted the findings  in the panel report in Brazil  – Taxation . 
In the paragraphs identified by Türkiye261, the Panel referred to the findings in India – Solar 
Cells (under Articles  XX(j) and XX(d) of the GATT  1994), EU – Energy Package  (under Articles  XIV(a) 
of the GATS and XX (j) of the GATT  1994), and Brazil – Taxation  (under Article  XX(a) of the 
GATT  1994). The Panel's citations to those reports were made in the context of the Panel's assertion 
that "[t]his is not the first case in which a responding party has argued that a c hallenged measure 
was taken to prevent a risk of supply -side disruptions that could arise from its alleged over -reliance 
on imports of essential goods and/or services, to ensure a continuous and affordable supply of those 
goods or services ."262 
The Panel no ted that "[i]n prior cases, panels and the Appellate Body [had] consistently 
required the responding party to demonstrate, at a minimum, that the asserted risk arising from 
over-reliance on imports was more than a merely hypothetical possibility."263 The Pa nel added, that 
"in the context of Article  XX(b), as in the context of the other subparagraphs of Article  XX, a party 
invoking a general exception must identify some degree of probability that the alleged risk 
exist[ed]."264 
Looking at the references to pre vious panel reports that Türkiye has identified, we do not 
believe that these general observations made by the Panel are unreasonable or an incorrect 
description of the cited reports. We also recall that we have already found that the Panel articulated 
a proper legal standard to assess whether the challenged measure was "taken for" the purpose of 
protecting human, animal, or plant life or health.265 We find no indication that the Panel's reference s 
to the cited panel reports, based on provisions other than A rticle XX(b), were determinative in the 
articulation of that standard.  
Türkiye additionally argues that the Panel misread the report in Brazil  – Taxation  and, as a 
consequence, erroneously interpreted Article  XX(b).266 
 
257 Türkiye's written submission, paras.  162-164 (referring to Panel  Report, Brazil  – Taxation , 
paras.  7.569 , 7.571, 7.573 -574, and 7.581 -7.582) . 
258 European  Union's written submission, para.  154. 
259 European  Union's written submission, paras.  151-152. 
260 European  Union's written submission, para.  153. 
261 Türkiye's written submission, paras.  147-148 (referring to Panel  Report , paras.  7.167-7.171 and 
fn 609 to para.  7.170).  
262 Panel  Report, para.  7.166.  
263 Panel  Report, para.  7.166.  
264 Panel  Report, para.  7.170.  
265 See para.  6.96.  above.  
266 Türkiye's written submission, paras.  162-164. WT/DS 583/ARB25  
 
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We note in this regard that the Panel  Report 's reference to Brazil – Taxation  was made in 
the context of the discussion on whether the localisation requirement is a measure "designed to" 
protect human life or health. The Panel  noted that in Brazil – Taxation  the responding party had 
been found to have provided no evidence to substantiate its assertion regarding the alleged risk.267 
The Panel's reference to that case as to how the responding par ty had been unable to 
demonstrate the existence of an alleged risk is not incorrect. Moreover, we have already noted that 
there is no indication that the Panel's references to panel reports cited by Türkiye, including the one 
in Brazil – Taxation , were det erminative in the articulation by the Panel of the applicable standard 
to assess whether the challenged measure was "taken for" the purpose of protecting human, animal, 
or plant life or health.  
For the reasons indicated, we do not consider that the Panel e rred by relying on previous 
panel reports dealing with provisions other than Article  XX(b).  
6.3.3   Whether the Panel erred in its application of Article  XX(b)  of the GATT  1994  
Türkiye submits that, "as a result of its erroneous interpretation of Article  XX(b) of the 
GATT  1994, the Panel also failed to properly apply Article XX(b) to the localisation [ requirement]" in 
finding that this measure was not designed to protect human life or health.268 Türkiye also argues 
that the Panel erred "in the assessment of the risk  to human life or health underlying the localisation 
[requirement]", by narrowing the health risk asserted by Türkiye and focusing on a narrower risk.269 
In response, the European  Union argues that Türkiye's contention that the Panel erred in 
the applicatio n of Article  XX(b) is entirely predicated and dependent upon Türkiye's prior claim that 
the Panel made an erroneous interpretation of that provision. In the European  Union's view, since 
the Panel did not make any of the errors of interpretation of Article  XX(b) alleged by Türkiye, 
Türkiye's assertion that the Panel misapplied Article  XX(b) should also be dismissed.270 In the 
alternative, the European  Union  argues that Türkiye's claim regarding the application of Article  XX(b) 
implicates the Panel's appreciat ion of facts and evidence and, absent a specific challenge on this 
issue under Article  11 of the DSU, falls outside the scope of our review.271 The European  Union  adds, 
in the further alternative, that the Panel did not make the assessment errors alleged by Türkiye.272 
We start by noting that, at the hearing, Türkiye asserted that its claim regarding the Panel's 
alleged errors in the application of Article  XX(b) was  independent from its claims regarding the 
Panel's interpretation of the provision. In Türkiye's words , "this claim is not entirely dependent on 
its claim of erroneous interpretation".273  
Despite this assertion, the manner in which Türkiye has articulated its claim regarding the 
Panel's alleged erroneous application of Article  XX(b) seems to be consequential to its claims 
regarding the Panel's interpretation of the same provision. Türkiye in essence repeats the arguments 
made with respect to the Panel's all eged errors of interpretation and argues that, had the Panel 
adopted and applied the correct legal standard requiring a determination of whether the localisation 
requirement is not incapable of protecting human life or health, it would have concluded that the 
localisation requirement was "designed to" protect human life or health.274  
 
267 Panel  Report , para.  7.168 (referring to Panel  Report , Brazil – Taxation , paras.  7.573 and 7.582).  
268 Türkiye's written submission, para.  128. See also ibid., paras.  165 and 195.  
269 Türkiye's written submission, paras.  172-194. 
270 European  Union's written submission, paras.  156-158. 
271 European  Union's written submission, paras.  159-162. 
272 European  Union's written submission, paras.  163-176. 
273 Türkiye's opening statement at the hearing, para.  32. 
274 Türkiye's written submission, paras.  193-195. In support of this argument, Türkiye states that: 
(i) the assessment of the "design requirement" is a threshold examination and not a particularly demand ing 
step and that panels and the Appellate  Body have in the past shown a significant degree of deference in 
accepting that the policy objective of a measure is to protect human life or health; (ii)  the Panel should have 
concluded that the localisation requ irement falls within the range of policies designed to protect human life or 
health within the meaning of Article  XX(b); (iii)  the Panel erred in assessing the risk to human life or health; 
and (iv)  the Panel should have concluded that the localisation req uirement was not incapable of  ensuring 
uninterrupted access to safe, effective, and affordable pharmaceutical products in Türkiye. (Ibid., 
paras.  166-183 and 187 -192) WT/DS 583/ARB25  
 
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The one notable exception to the above is Türkiye's allegation that "the Panel erred in the 
application of Article  XX(b) because it re -defined the risk addressed by the localis ation 
[requirement]".275 Türkiye argues in this respect that the Panel failed to properly consider the 
arguments and evidence submitted by Türkiye with respect to the public health objective underlying 
the localisation requirement.276 Türkiye specifically submits that, despite its "express and repeated 
statements, the Panel significantly narrowed the health risk asserted by Turkey and proceeded to 
assess whether the evidence presented by Turkey showed that the localisation [requirement ] was 
taken to address that narrower risk".277 
Türkiye's allegation that the Panel failed to consider its arguments and evidence with respect 
to the public health objective underlying the localisation requirement is not a mere claim that the 
Panel failed to  properly apply the provision to the localisation requirement. It is instead a claim that 
goes to the Panel's appreciation of facts and evidence. This is an allegation that can be properly 
examined only in the context of a claim under Article  11 of the DSU , a provision that has not been 
invoked by Türkiye in this regard.278 
For these reasons, to the extent that we have found no reversible error in the Panel's 
interpretation of Article  XX(b), and considering the nature of Türkiye's application claims, we 
consider that Türkiye has failed to establish that the Panel erred in its application of Article  XX(b).  
6.3.4   Article  11 of the DSU  
As an additional ground s of challenge , Türkiye submits that the Panel failed to make an 
objective assessment of the matter as required  by Article  11 of the DSU.279 Türkiye raises two 
arguments in this regard. First, Türkiye argues that the Panel looked only at the documents 
implementing the localisation requirement, but wilfully disregarded some arguments and relevant 
evidence put forward  by Türkiye with respect to the measure's design and structure and with respect 
to the authorities responsible for its design and implementation. Second, Türkiye argues that the 
Panel looked individually at documents pertaining to the implementation of the  localisation 
requirement but failed to make a "holistic assessment" of those documents when determining 
whether the measure was taken to protect human life or health.280 
The European  Union submits that the Panel did not make any of the errors alleged by Tü rkiye 
and, in any event, those errors, whether considered singly or together, would not amount to a breach 
of Article  11 of the DSU. The European  Union recalls that panels enjoy a margin of discretion as 
triers of fact and are not required to accord to fac tual evidence of the parties the same meaning and 
weight as do the parties.281 Moreover, the mere fact that the Panel did not address explicitly each 
and every component of the challenged measure does not amount to an error, let alone an egregious 
error.282 
In relevant part, Article  11 of the DSU reads as follows:  
Article  11 
Function of Panels  
The function of panels is to assist the DSB in discharging its responsibilities under this 
Understanding and the covered agreements. Accordingly, a panel should make an  
objective assessment of the matter before it, including an objective assessment of the 
facts of the case and the applicability of and conformity with the relevant covered 
 
275 Türkiye's opening statement at the hearing, paras.  32-33. 
276 Türkiye's written submission, paras.  172-194. 
277 Türkiye's written submission, para.  178. 
278 We note that Türkiye invoked Article  11 of the DSU with respect to other aspects of the Panel's 
assessment. See Section  6.3.4  below.  
279 Türkiye's written submission, paras.  6 and 116.  
280 Türkiye's written submission, paras.  129, 196 -202, 205, and 209.  
281 European  Union's written submission, paras.  177-179. 
282 Europ ean Union's written submission, paras.  180-185. WT/DS 583/ARB25  
 
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 agreements, and make such other findings as will assist the DSB in making the 
recomm endations or in giving the rulings provided for in the covered agreements . 
As has been indicated in the past, panels are required under Article  11 of the DSU to consider 
all evidence before them, assess its credibility, determine its weight, and ensure that their findings 
have a proper basis in that evidence.283 It is generally within the discretion of panels, however, to 
decide which evidence to utilize in making findings, and, as long as they make an objective 
assessment of the matter before them , panels are not required to accord to factual evidence the 
same meaning and weight as do the parties.284 In previous cases, the Appellate  Body has highlighted 
the gravity of an allegation that a panel has failed to make an "objective assessment of the matt er 
before it" and stated that it is incumbent on a party raising a claim under Article  11 of the DSU to 
identify specific errors regarding the objectivity of the panel's assessment and "to explain why the 
alleged error meets  the standard of review under th at provision".285 
We will look first at Türkiye's argument that the Panel failed to examine all of the evidence 
relating to the design and structure of the localisation requirement and to the authorities responsible 
for its design and implementation.  
With r espect to the arguments and evidence related to the design and structure of the 
localisation requirement, we look at Türkiye's argument that the Panel failed to take into account 
the measure's implementation in five phases, which according to Türkiye pursu ed "[t]he aim of 
[encouraging] local production within a predictable period of time, rather than removing the 
imported products from reimbursement".286 
The Panel note d in its report that, by design, the localisation requirement had five phases 
"which progre ssively target different products depending on their market share and the existence of 
equivalent products in the domestic market" .287 The Panel described the design of the measure and 
each of these phases, noting at the same time that, according to Türkiye , "only Phase  1 and Phase  2 
[had] been implemented so far"288 and that "the implementation of Phases 1 and 2 [had] already 
resulted in the identification of products that [would] no longer be reimbursed by the SSI ."289 There 
is extensive discussion in the Panel  Report  with respect to the localisation requirement and its 
implementation in phases, as well as to the respective arguments of the parties in this regard.  
With respect to the authorities responsible for the localisation requirement's design and 
implementation, Türkiye argues that the Panel disregarded relevant  evidence. According to Türkiye, 
"the public health objective of the localisation [requirement] is further evinced by the fact that it has 
been designed and implemented by the authorities responsible for public health policies ."290 The 
Panel  Report  notes th e main legal instruments, as identified by the parties, that were the basis for 
the localisation requirement, namely: (i)  the Tenth Development Plan 2014 -2018; (ii)  the Structural 
Transformation Program for Healthcare Industries Action Plan; and (iii)  the 2016 Action Plan of the 
64th Government.291 The Panel  also describe d the authorities responsible for implementing the 
localisation requirement, including the role of the TMMDA, the SSI, and the Ministry of Health.  
 
283 Appellate  Body Reports, India – Solar Cells , para.  5.87; Philippines – Distilled Spirits , para.  135; 
Brazil – Retreaded Tyres , para.  185; EC ‒ Hormones , paras.  132-133. 
284 Appellate  Body Reports, India – Solar Cells , para.  5.87; Australia – Salmon , para.  267; EC and 
certain member States – Large Civil Aircraft , para.  1317.  
285 Appellate  Body Report, Indonesia – Import Licensing Regimes , para. 5.28 (quoting Appellate  Body 
Reports, China – Rare Earths , para.  5.178; EC – Fasteners (China) , para.  442). (emphasis  original ) See also 
Appellate  Body Reports, EU – Biodiesel (Argentina) , para.  6.200; US – Tuna II (Mexico) (Article  21.5 – 
Mexico) , para. 7.191; China – HP-SSST (Japan) / China – HP-SSST (EU) , para. 5.244;  Peru – Agricultural 
Products , para. 5.66; India – Agricultural Products , para.  5.179.  
286 Türkiye's written submission, para.  203 (quoting Türkiye's first written submission to the Panel, 
paras.  452-453, in turn quoting Public Announcement concerning the Lo calisation Process of 4 March 2016 by 
the TMMDA, the SSI and the Ministry of Health (Panel Exhibit EU -49)). 
287 Panel  Report , para.  2.23. (fn  omitted)  
288 Panel  Report , fn 89 to para.  2.24 (quoting Türkiye's first written submission to the Panel, para.  140).  
289 Panel  Report, fn 89 to para.  2.24. See also ibid., para.  7.22. 
290 Türkiye's written submission, para.  204. 
291 Panel  Report , para.  7.185  (referring to Tenth Development Plan 2014 -2018 (Panel Exhibit EU -12); 
Ministry of Health and Ministry of Development, Structural Transformation Program for Healthcare Industries 
 
 WT/DS 583/ARB25  
 
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Accordingly, there is no indication that the Panel disregarded arguments and relevant 
evidence put forward by Türkiye with respect to either the design and structure of the localisation 
requirement or the authorities responsible for its design and implemen tation.  
We now turn to Türkiye's argument that, with respect to the documents pertaining to the 
implementation of the localisation requirement, the Panel focused on each document individually, 
instead of analysing the way these documents interacted with ea ch other.292 In this respect, Türkiye 
is not arguing that the Panel failed to examine documents pertaining to the implementation of the 
localisation requirement. Instead, Türkiye suggests that, by considering each of these documents 
individually, the Panel failed to ascertain the public health objective of the measure.  
In essence, Türkiye's claim that the Panel failed to make an "objective assessment of the 
matter before it" is based on Türkiye's disagreement with the Panel's interpretation and application 
of Article  XX(b) and with the Panel's assessment of the facts of the case. In this respect, the Panel 
derived different conclusions from the localisation requirement's design and structure and from the 
authorities responsible for its design and implementati on than those proposed by Türkiye. Neither 
this fact nor the fact that the Panel considered documents pertaining to the implementation of the 
localisation requirement individually impl ies by itself that the Panel failed to make an objective 
assessment of t he matter as required by Article  11 of the  DSU. As noted above, it is generally within 
the discretion of a panel to decide which evidence to utilize in making its findings, and, as long as 
the panel makes an objective assessment of the matter before it, th e panel is not required to accord 
to factual evidence the same meaning and weight as do the parties. Türkiye also fails to explain why 
and how a "holistic assessment" of the same documents would have resulted in a different result for 
the Panel's analysis.293 
For the above reasons, we do not consider that the panel exceeded its authority as the trier 
of facts and thereby failed to  make an objective assessment of the matter before it, as required by 
Article  11 of the DSU.  
6.3.5   Conclusion  
In light of the considerat ions above, we find that Türkiye has not established that the Panel 
erred in the interpretation or application of Article  XX(b) of the GATT  1994 in finding that Türkiye 
had not demonstrated that the localisation requirement was a measure taken to protect h uman, 
animal, or plant life or health and was therefore justified under Article  XX(b).  
Having found that the localisation requirement was not a measure taken to protect human, 
animal, or plant life or health, the Panel did not need to assess the remaining  legal elements of 
Article  XX(b) to determine the applicability of this exception, namely, whether the measure was 
"necessary" to achieve that objective. Moreover, because the localisation requirement did not fall 
under Article  XX(b) and therefore was not provisionally justified under this subparagraph, it was also 
unnecessary for the Panel to assess whether the localisation requirement was being applied 
consistently with the requirements of the chapeau  of Article  XX. 
The Panel also did not fail to make an objective assessment of the matter before it. We 
therefore reject Türkiye's claim under Article  11 of the DSU.  
 
Action Plan, November 2014 (Structural Transformation Program for Healthcare Industries Action Plan) 
(Panel  Exhibits EU -14, TUR -37); Republic of Turkey, Office of the Prime Minister, 2016 Action Plan of the 
64th Government (Implementation and Reforms), 10 December 2015 (2016 Action Plan of the 
64th Government) (Panel  Exhibit EU -15)). The Tenth Development Plan 2014 -2018 was approved by Türkiye's 
Grand National Assembly, the Structural Transformation Program for Healthcare Industries Action Plan was 
coordinated by Türkiye's Ministry of Health and Ministry of Development, and the 2016 Action Plan of the 
64th Government was approved by the Office of the Prime Minister. (Panel  Report, fns 7 5 to para.  2.20, and 
637 and 638  to para.  7.185 . See also European  Union 's written submission, para.  187) 
292 Türkiye's written submission, paras.  203-204 and 206 -208. 
293 Türkiye state s that "[t]hese errors were material and affected the Panel's finding that the localisation 
[requirement] is not 'designed to' protect human life or health" but did not further elaborate on this assertion. 
(Türkiye's written submission, para.  6. See also ib id., paras.  206-208) WT/DS 583/ARB25  
 
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Consequently, we uphold the Panel's finding , in paragraphs 7.219 and 8.1.b.iv of the 
Panel  Report , that Türkiye has not established that the loca lisation requirement is justified under 
Article  XX(b) of the GATT  1994.  
Having upheld the Panel's finding that the localisation requirement is not justified under 
Article  XX(b), we proceed to address Türkiye's alternative claim pertaining to Article  XX(d)  of the 
GATT  1994. 
6.4  Article  XX(d) of the GATT  1994  
In the event that we do not find that Türkiye has established that "the localisation 
[requirement]  falls within the scope of Article  III:8(a) of the GATT  1994 and/or is not inconsistent 
with Ar ticle III:4 of the GATT  1994", and if we also do not reverse the Panel's findings under 
Article  XX(b) of the GATT  1994 and do not find that the measure is justified under Article  XX(b), 
Türkiye submits that the Panel erred in finding that the localisation requirement is not justified under 
Article  XX(d) of the GATT  1994.294  
We begin by briefly summarizing the Panel 's findings, before turning to consider relevant 
issues raised in this Arbitration.  
6.4.1   Panel findings  
With respect to Türkiye's invocation of the ge neral exception in Article  XX(d) of the 
GATT  1994, the Panel found that Türkiye had failed to demonstrate that the localisation requirement 
was taken to (designed to) secure compliance with laws requiring Türkiye to ensure "accessible, 
effective and financ ially sustainable healthcare" for its population.295 
In the Panel's view, Türkiye's argument under Article  XX(d) was substantially the same as 
its argument under Article  XX(b). The essence of Türkiye's arguments was that the localisation 
requirement was jus tified under Article  XX(b) because it was necessary to ensure uninterrupted 
access to safe, effective, and affordable medicines in Türkiye, and under Article  XX(d) because it 
was necessary to secure compliance with laws requiring Türkiye to ensure accessib le, effective, and 
financially sustainable healthcare. The Panel found that, given the overlap, its assessment under 
Article  XX(b) extended mutatis mutandis  to the analysis of the defence under Article  XX(d).296 
6.4.2   Whether the Panel applied the wrong legal standard in rejecting Türkiye's  defence 
under Article  XX(d) of the GATT  1994  
Türkiye submits that the Panel's finding that the localisation requirement is not justified 
under Article  XX(d) of the GATT  1994 is vitiated by legal error because it is bas ed on an incorrect 
legal standard.297 By relying exclusively on its legal analysis under Article  XX(b) when examining 
Türkiye's defence under Article  XX(d), the Panel disregarded the important differences between 
these two subparagraphs and failed to addres s key elements of the legal test under Article  XX(d).298 
Türkiye requests us to carry out the legal analysis under Article  XX(d) and conclude that the 
localisation requirement is justified under that provision.299 
The European  Union disagrees with Türkiye's arguments and submits that the Panel did not 
err by relying on an incorrect legal standard under Article  XX(d). In the European  Union's view, the 
Panel correctly limited its analysis to whether the localisation requirement was designed to secure 
compliance  with laws and regulations  requiring Türkiye to ensure accessible, effective, and financially 
sustainable healthcare . The Panel correctly considered that it followed from its assessment of the 
 
294 Türkiye's written submission, para.  251. Türkiye requests us to reverse the Panel's findings in 
paragraphs 7.217 -7.219 and 8.1.b.iv of the Panel  Report . (Türkiye's notice of recourse to arbitration, p.  3) 
295 Panel  Report, para.  7.218.  
296 Panel  Report, para.  7.217 -7.218.  
297 Türkiye's written submission, paras.  252, 256 -260, and 279.  
298 Türkiye's written submission, paras.  261-278. At the hearing , Türkiye referred to its assertion before 
the Panel that its defence under Article  XX(d) is dis tinct from its defence under Article  XX(b). (Türkiye's 
responses to questions at the hearing (referring to Türkiye's response s to the Panel's first set of question s, 
para. 72)) 
299 Türkiye's written submission, paras.  252 and 280 -311. WT/DS 583/ARB25  
 
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 evidence under Article  XX(b) that Türkiye had failed to demonst rate that the localisation requirement 
was designed to secure compliance with laws requiring Türkiye to ensure "accessible, effective and 
financially sustainable healthcare" for its population. The Panel was not required to analyse the other 
components of the analysis under Article  XX(d).300 Should we conclude that the Panel adopted an 
erroneous legal standard in examining Türkiye's defence under Article  XX(d), the European  Union 
submits in the alternative that the factual findings of the panel and the undisputed facts on the panel 
record do n ot provide us with a sufficient basis to complete the analysis of the measure under 
Article  XX(d).301 Should we conclude that we can complete the analysis under Article  XX(d), the 
European  Union submits in the further alternative that the localisation requi rement is not justified 
under Article  XX(d).302 
Article  XX(d) of the GATT  1994 provides:  
Subject to the requirement that such measures are not applied in a manner which would 
constitute a means of arbitrary or unjustifiable discrimination between countries where 
the same conditions prevail, or a disguised restriction on international trade, nothing in 
this Agreement shall be construed to prevent the adoption or enforcement by any 
Member of measures:  
 … 
(d) necessary to secure compliance with laws or regulati ons which are 
not inconsistent with the provisions of this Agreement, including those 
relating to customs enforcement, the enforcement of monopolies operated 
under paragraph 4 of Article  II and Article  XVII, the protection of patents, 
trade marks and copyr ights, and the prevention of deceptive practices [.] 
Article  XX(d) allows Members to maintain measures that are otherwise inconsistent with 
obligations under the GATT  1994, to the extent that those measures are necessary to secure 
compliance with laws or re gulations which are not inconsistent with the provisions of the GATT  1994, 
and are applied in a manner that is compatible with the requirements in the chapeau  of Article  XX. 
Like in the case of Article  XX(b), for an exception under Article  XX(d) to apply, the responding party 
bears the burden of invoking the provision and demonstrating that the measure in question meets 
the requirements of that provision.  
Starting with the text of the provision, to be justified under Article  XX(d), a measure must 
be necessa ry to secure compliance with laws or regulations which are not inconsistent with the 
provisions of the GATT  1994. In order to assess whether a measure can be justified under 
Article  XX(d), a panel may first assess, as an initial question, whether the measu re is even related 
to, or not incapable of, securing compliance with the specific rules, obligations, or requirements. 
Logically, unless a measure is "not incapable" of securing compliance with specific rules, obligations, 
or requirements under the relevan t provisions of the relevant "laws or regulations", then the 
measure cannot be justified under Article  XX(d), and this would be the end of the inquiry.  
In order to ascertain whether a measure is not incapable of securing compliance with specific 
laws or re gulations, a panel should focus on examining the relationship between the challenged 
measure, considering its design (including its content, structure, and expected operation) and the 
proclaimed objective. The prior examination is used to assess whether th e measure can be 
considered to have been "taken to", or "designed to", secur e compliance with relevant laws or 
regulations. If the response to this question is affirmative , a panel may move to assess whether the 
measure can be considered to be "necessary" for the proclaimed objective, considering factors such 
as the extent of the contribution to the achievement of the objective, the measure's 
trade -restrictiveness, and the importance of the interests or values at stake, as well as comparing 
the measure with possible alternative measures identified by the complainant.  
 
300 European  Union's writ ten submission, paras.  209 and 211 -223. 
301 European  Union's written submission, paras.  210 and 224 -228. 
302 European  Union's written submission, paras.  210 and 229 -241. WT/DS 583/ARB25  
 
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This two -step analysis of the design and the necessity of a measure has been used in 
previous disputes303 and corresponds to the manner in which the parties articulated their argument s 
both before the Panel as well as in the Arbitration.304 
As noted above, the Panel found that Türkiye had failed to establish that the localisation 
requirement was taken to (designed to) secure compliance with laws requiring Türkiye to ensure 
"accessible, effective and financially sustainable healthcare" for its population. In light of the required 
elements for analysis under Article  XX(d), normally such a conclusion would have been preceded by 
an examination of: (i)  whether Türkiye had properly identified relevant laws or regulations that can 
qualify as "laws or regulations" within the meaning of Article  XX(d)305; (ii) whether those laws or 
regulations were not found to be "inconsistent with the provisions of the [GATT  1994]"; and 
(iii) whether there was a rational relationship between the localisation requirement and the 
proclaimed objective, namely, whether the localisation requirement was not incapable of securing 
compliance with the specific rules and obligations under the relevant laws or regulations. Th ese 
elements are cumulative, so that the lack of even one of them would have been sufficient for the 
Panel to reject the Article  XX(d) defence.  
In our view, it would have been more prudent had the Panel followed the order of the 
relevant analysis and artic ulated the applicable legal standard in assessing Türkiye's invocation of 
Article  XX(d) of the GATT  1994. In other words, logically and analytically, it would have been more 
reasonable for the Panel to consider first which specific legal instruments were i dentified by Türkiye 
as the relevant "laws or regulations" , whether such instruments qualified as "laws or regulations" 
within the meaning of Article  XX(d), and whether they were not inconsistent with provisions of the 
GATT  1994, before turn ing to the exam ination of the relationship between the localisation 
requirement and the specific laws or regulations for the purpose s of its "design" analysis.  
The Panel did not follow the order of analysis suggested above. Specifically, there is no 
express confirmation in the Panel  Report  of the relevant laws or regulations cited by Türkiye , nor 
any examination of the characteristics of those instruments to confirm whether they could qualify 
as "laws or regulations" within the meaning of Article  XX(d). The Panel also did  not address whether 
the relevant laws or regulations were not inconsistent with the GATT  1994. In addition, the 
Panel  Report  is silent on the applicable legal standard for the Article  XX(d) defence.  
In this connection, at the Panel stage, the European  Union  disputed that the legal 
instruments cited by Türkiye had the required degree of specificity and normativity to qualify as 
"laws or regulations" within the meaning of Article  XX(d).306 Nevertheless, the Panel seem s to 
implicitly have assumed, for the sake of focusing its analysis on the relationship issue307, that the 
legal instruments cited by Türkiye could qualify as "laws or regulations" for the purpose s of Türkiye 's 
Article  XX(d) defence308 and that, as argued by Türkiye, the relevant obligation contained in those 
 
303 See e.g.  Appellate  Body Report, India – Solar Cells , para.  5.58. 
304 See e.g.  Türkiye's first written submission to the Panel, paras.  539-548; second written submission 
to the Panel, para s. 235-246; written submission, paras.  258 and  268; European  Union's second written 
submission to the Panel, paras.  202-203; written submission, p aras. 213-214. 
305 Some relevant elements in this regard could include: the degree of normativity of the instrument and 
the extent to which the instrument operates to set out a rule of conduct or course of action that is to be 
observed within the domestic le gal system of a Member; the degree of specificity of the relevant rule; whether 
the rule is legally enforceable; whether the rule has been adopted or recognized by a competent authority 
possessing the necessary powers under the domestic legal system of a M ember; the form and title given to any 
instrument or instruments containing the rule under the domestic legal system of a Member; and the penalties 
or sanctions that may accompany the relevant rule. (See e.g.  Appellate  Body Report s, India – Solar Cells , 
para. 5.106  et seq.; Mexico  – Taxes on Soft Drinks , para.  70) 
306 European  Union 's second written submission to the Panel, paras.  207-213. 
307 At the Panel stage, when considering the justification of Türkiye's invocation of Article  XX(d), the 
parties to an important degree focused on whether there was evidence of a relationship between the 
localisation requirement and the proclaimed objective (i.e. securing compliance with laws  requiring Türkiye to 
ensure accessible, effective , and financially sustainable healthcare  for its population). (European  Union 's 
second written submission to the Panel, paras.  203-206; Türkiye's second written submission to the Panel, 
paras.  235-246) In this Arbitration , Türkiye has not challenged the legal sta ndard applicable under 
Article  XX(d).  
308 Panel  Report , para.  7.218.  WT/DS 583/ARB25  
 
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 legal instruments was for Türkiye to ensure accessible, effective, and financially sustainable 
healthcare.309 
On the basis of those assumptions, the Panel considered whether the loc alisation 
requirement could be found to be a measure taken to secure compliance with the laws and 
regulations cited by Türkiye. The Panel noted the overlap between the arguments advanced by 
Türkiye in its allegation that the localisation requirement is jus tified under Article  XX(b) because it 
is necessary to ensure uninterrupted access to safe, effective , and affordable medicines in Türkiye, 
and those advanced in the allegation that the same measure is justified under Article  XX(d) because 
it is necessary t o secure compliance with laws requiring T ürkiye  to ensure accessible, effective , and 
financially sustainable healthcare .310 
Given the overlap between both defences, the Panel was of the view that the considerations 
made in its assessment of Türkiye's defence under Article  XX(b) in this case could be extended 
mutatis mutandis  to the analysis of Türkiye's defence under Article  XX(d).311 To recall, the Panel had 
concluded that Türkiye had failed to demonstrate that the localisation requirement was a measure 
designed to (taken to) protect human life or health.312 With respect to Türkiye's invocation of 
Article  XX(d), the Panel concluded that Türkiye had failed to demonstrate that the localisation 
requirement was taken to secure compliance with laws requiring T ürkiye  to ensure "accessible, 
effective and financially sustainable healthcare" for its population.313 
We now turn to examine whether the method of analysis followed by the Panel as described 
above constitutes a legal error. We do not consider th at it does for the following reasons.  
To begin with, the Panel appears to have taken Türkiye's description of the relevant legal 
instruments at face value, and assumed arguendo  that the legal instruments cited could be said to 
"require  Türkiye to ensure ac cessible, effective, and financially sustainable healthcare " for its 
population.314 Considering this assumption, the Panel focused on whether the localisation 
requirement was taken to (designed to) secure compliance with laws requiring Türkiye to ensure the  
proclaimed objective.  
On the basis of its prior finding under Article  XX(b) that the localisation requirement pursues 
industrial policy rather than the alleged objective of ensuring a continuous supply of safe, effective, 
and affordable pharmaceutical pro ducts, and considering the equivalent arguments advanced by 
Türkiye in its Article  XX(d) defence, the Panel seems to have implicitly but necessarily reached an 
intermediate finding that there is no rational relationship between the localisation requirement  and 
the proclaimed objective of securing compliance with laws or regulations requiring Türkiye to ensure 
accessible, effective, and financially sustainable healthcare. We also understand the Panel's mutatis 
mutandis  application to suggest that a similar i ntermediate finding may apply in the context of 
Article  XX(d). In light of the manner in which Türkiye articulated its justification for the localisation 
requirement under Article  XX(d), it does not seem to constitute a legal error for the Panel to have 
extended elements of its assessment under Article  XX(b) mutatis mutandis  to the analysis of 
Türkiye's defence under Article  XX(d).  
We note once again that all the conditions and relevant elements for Article  XX(d) are 
cumulative in nature. Hence, even withou t the Panel's examination of the laws or regulations cited 
by Türkiye and their qualification under Article  XX(d), the Panel's intermediate finding on the lack of 
rational relationship between the localisation requirement and the proclaimed objective, whic h was 
made on the basis of the Panel's mutatis mutandis  application, was sufficient for the Panel to 
conclude that the localisation requirement was not taken to secure compliance with the relevant 
laws or regulations, even if taken at face value  as describ ed by Türkiye . 
 
309 Panel  Report , para.  7.217.  
310 Panel  Report , para.  7.218.  
311 Panel  Report , para.  7.218.  
312 Panel  Report , para.  7.211.  
313 Panel  Report , para.  7.218.  
314 Türkiye's first written submission to the Panel, para.  515. (emphasis added) "The essence of Turkey's 
argument s is that the measure is justified  … under Article  XX(d) because it is necessary to secure compliance 
with laws requiring Turkey to ensure accessi ble, effective and financially sustainable healthcare ." 
(Panel  Report , para.  7.218 ) WT/DS 583/ARB25  
 
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 6.4.3   Conclusion  
In light of the considerations above, we find that Türkiye has not established that the Panel 
applied an incorrect legal standard under Article  XX(d) in finding that Türkiye had failed to 
demonstrate that the localisation requirement was taken to secure compliance with laws requiring 
Türkiye to ensure accessible, effective, and financially sustainable healthcare  and was therefore 
justified under Article  XX(d) of the GATT  1994. 
Having found that the localisation requirement was not a measure taken to secure 
compliance with laws or regulations, the Panel did not need to assess the remaining legal elements 
of Article  XX(d) to determine the applicability of this exception, namely, whether the measure was 
"necessary" to secure such compliance. Moreover, because t he localisation requirement did not fall 
under Article  XX(d) and therefore was not provisionally justified under this subparagraph, it was also 
unnecessary for the Panel to assess whether the localisation requirement was being applied 
consistently with the  requirements of the chapeau  of Article  XX. 
Consequently, we uphold the Panel's finding , in paragraphs 7.219 and 8.1.b.iv of the 
Panel  Report , that Türkiye has not established that the localisation requirement is justified under 
Article  XX(d) of the GATT  1994. 
7  AWARD  
7.1.  In light of the foregoing considerations, we make the following findings and conclusions. We 
recall that, pursuant to paragraph 9 of the Agreed Procedures, the findings of the Panel that have 
not been "appealed" in the context of this Arbitrati on shall be deemed to form an integral part of the 
Award together with our own findings.  
7.1  Articles III:4 and III:8(a) of the GATT  1994  
7.2.  On interpretation, we consider that, under Article  III:8(a) of the GATT  1994, "procurement by 
governmental agencies of pr oducts purchased for governmental purposes" would typically involve 
the procurement of products through a purchase by  a governmental agency. However, 
Article  III:8(a) does not contain an unequivocal requirement to that effect. We do not foreclose the 
possibility that, in certain circumstances, the relevant purchase transaction may be entered into by 
a non -governmental en tity so long as the products are procured  by a governmental agency  and 
procurement is of products purchased for governmental purposes . We therefore find that the Panel 
erred in considering, as a starting point for its analysis in paragraph  7.65 of the Pane l Report , that 
Article  III:8(a) required a purchase  by governmental agencies.  
7.3.  On application, central to Türkiye's first claim under Article  III:8(a) is whether there is 
procurement  by a governmental agency of products purchased for governmental purposes w ithin 
the meaning of Article  III:8(a). On the basis of the Panel's factual findings and uncontested facts on 
the panel record, we conclude that there is no procurement , within the meaning of Article  III:8(a),  
by the SSI of the pharmaceutical products inclu ded in the  Annex  4/A list.  
7.4.  For these reasons:  
a. we find that the localisation requirement does not fall within the ambit of the derogation 
in Article  III:8(a) of the GATT  1994 on the basis that there is no procurement by 
governmental agencies within the meaning of that provision;  
b. consequently, we uphold , albeit for different reasons, the Panel's finding, in 
paragraph s 7.107 and 8.1.b.ii of the Panel  Report , that the localisatio n requirement is not 
covered by the government procurement derogation in Article  III:8(a) of the GATT  1994, 
and is therefore subject to the national treatment obligation in Article  III:4 of the 
GATT  1994 and Article  2.1 of the TRIMs  Agreement; and  
c. we declare the Panel's intermediate findings, in paragraphs 7.66 -7.81 of the Panel  Report , 
regarding the interpretation of the term "products purchased" , as well as its intermediate 
finding, in paragraphs 7.90, 7.103, and 7.104, that the localisation requirement does not WT/DS 583/ARB25  
 
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 involve the purchase of pharmaceutical products included in the  Annex  4/A list by 
governmental agencies to be moot and of no legal effect .  
7.5.  Having upheld the Panel's finding that the localisation requirement does not fall within the 
ambit of Articl e III:8(a), it is not necessary for us to address Türkiye's conditional requests that we 
moot or reverse the Panel's findings under Article  III:4 of the GATT  1994. Therefore:  
a. we find that the Panel's finding, in paragraph 8.1.b.iii of the Panel  Report , that the 
localisation requirement is inconsistent with the national treatment obligation in 
Article  III:4 of the GATT  1994, remains undisturbed.  
7.2  Article  XX(b) of the GATT  1994  
7.6.  On inter pretation, we do not consider that the Panel committed legal error by confusing the 
"design" and the "necessity" steps of the legal analysis under Article  XX(b) of the GATT  1994.  We 
also do not consider that the Panel set out a legal standard requiring a s ubstantial degree of 
probability of risk for assessing whether a measure has been taken to protect human, animal, or 
plant life or health, in accordance with Article  XX(b) of the GATT  1994, nor that the Panel introduced 
any quantitative dimension to the no tion of risk to human life or health that unduly limited the range 
of public health measures that fall within the scope of Article  XX(b). Finally, we disagree  that the 
Panel erred by relying on previous panel reports dealing with provisions other than Arti cle XX(b).  
7.7.  On application, to the extent that we have found no reversible error in the Panel's interpretation 
of Article  XX(b), and considering the nature of Türkiye's application claim s, we consider that Türkiye 
failed to establish that the Panel erred in  its application of Article  XX(b).  
7.8.  With respect to Article  11 of the DSU, we do not consider  that the Panel exceeded its authority 
as the trier of facts and thereby failed to make an objective assessment of the matter before it.  
7.9.  For these reasons:  
a. we uphol d the Panel's finding, in paragraph s 7.219 and  8.1.b.iv of the Panel  Report , that 
Türkiye has not established that the localisation requirement is justified under 
Article  XX(b) of the GATT  1994.  
7.3  Article  XX(d) of the GATT  1994  
7.10.   In light of the manner in whi ch Türkiye articulated its justification for the localisation 
requirement under Article  XX(d)  of the GATT  1994, we consider that it did not constitute legal error  
for the Panel to have extended elements of its assessment under Article  XX(b) mutatis mutandi s to 
the analysis of Türkiye's defence under Article  XX(d). Even without the Panel's examination of the 
laws or regulations cited by Türkiye and their qualification under Article  XX(d), the Panel's 
intermediate finding on the lack of rational relationship between the localisation requirement and 
the proclaimed objective,  which was made on the basis of the Panel's mutatis mutandis  application,  
was sufficient for the Panel to conclude that the localisa tion requirement was not taken to secure 
compliance with the relevant laws  or regulations , even if taken at face value  as described by Türkiye . 
7.11.   For these reasons:  
a. we uphold  the Panel's finding, in paragraph s 7.219 and  8.1.b.iv of the Panel  Report , that 
Türkiye has not established that the localisation requirement is justified under 
Article  XX(d) of the GATT  1994. WT/DS 583/ARB25  
 
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 7.4  Recommendation  
7.12.   Pursuant to Article  19.1 of the DSU315, we recommend that Türkiye bring into conformity with 
its obligations under the GATT 1994 its measures that were found to be inconsistent in this Award 
and in the Panel  Report316 as modified by this Award.  
 
 
__________  
 
315 "Where applicable, the arbitration award shall include recommendations, as envisaged in Article  19 of 
the DSU." (Agreed Procedures, para.  9) 
316 In accordance with paragrap h 5 of the Agreed Procedures, the Panel  Report  can be found as an 
attachment to Türkiye's notice of recourse to arbitration. (WT/DS583/12 and WT/DS583/12/Add.1)