WORLD TRADE  
ORGANIZATION  WT/COMTD/RTA/1/2 
7 October 2008 
 (08-4751) 
Committee on Trade and Development 
Dedicated Session on Regional Trade Agreements Original:   English 
 
 
 
EGYPT-TURKEY FREE TRADE AGREEMENT (GOODS) 
 
Questions and Replies  
 
 
 The following communication, dated 26 September 2008, is being circulated at the request of the delegations of Egypt and Turkey.   The document reproduces the questions addressed to the Parties and the responses submitted. 
 
_______________ 
 
 
Questions from the delegation of the European Communities
 
 
1. The agreement was notified under paragraph 4(a) of the Enabling Clause on 
5 October 2007. 
- Could the Parties explain the reasons for having notified this agreement under the 
Enabling Clause and not under Article XXIV:7(a) of GATT 1994? 
 
 In accordance with the WTO classifications, both Turkey and Egypt ar e developing countries 
and thus the Free Trade Agreement between the two falls under the definition of Article 2(c) of the 
Enabling Clause.  To this end, Egypt and Turkey ag reed to notify this agreement pursuant to Article 4 
of the Enabling Clause.  
 
2. In paragraph 2 of the Factual Presentation it is described that Turkey is the world's 
34th exporter and 22nd top importer while Egypt ranks as the world's 69th top exporter and 
47th top importer in 2006 in terms of merchandise trade.  
 Despite these differences in trading and economic potential, Turkey's liberalization 
commitments are less ambitious than the Egyptian ones, since Egypt is to liberalise 86.8 per cent 
of tariff lines, representing 95 per cent of Egypt's imports from Turkey, while Turkey 
liberalizes a lower percentage, this is 82.1 per cent of tariff lines and a corresponding 
83.4 per cent of trade in terms of Turkey's imports from Egypt.   
- Could Turkey explain the reasons for pursuing less ambitious liberalization 
commitments? 
  In the framework of the Turkey -Egypt FTA the Parties agreed to eliminate all customs duties 
and charges having equivalent effect on produc ts classified under HS Heading 25-97, with the 
exception of Annex I to the agreement.  Turkey ag reed to implement this tariff elimination by the 
entry into force of the agreement, while Egypt ag reed to liberalize on a gradual basis phasing out on 
2020. WT/COMTD/RTA/1/2 
Page 2  
 
   Regarding agricultural products the Parties agreed to exchange concessions on selected 
products mostly in the form of in quota tariff reducti on or in quota tariff elimination.  Turkey also 
granted tariff elimination on an unlimite d basis on some agricultural tariff lines. 
 
According to our calculations based on the Turkey 's HS 12-digit level, Turkey granted tariff 
liberalization on 874 tariff lines (29 per cent of total agricultural tariff lines), 147 of which constitute 
in quota tariff elimination, 379 constitute in quot a tariff reduction, 22 constitute unlimited tariff 
elimination, and 326 constitu te unlimited tariff reduction. 
 
As a result, although the liberalization figure stated in the Factual Presentation (82.1 per cent) 
indicate that Turkey undertook less ambitious liberalization commitments; as far as industrial 
products are concerned the Parties commitments (and  exclusions) are exactly the same and regarding 
agricultural products Turkey agreed to liberalize on more number of products with better modalities. 
 
So despite the fact that, Turkish liberaliza tion commitments are more substantial, the 
underlying reasons that Turkey is assumed to unde rtake less ambitious liberalization commitments 
can be explained as follows.  
• The differences in sub-classification of tariffs between Turkey and Egypt
:  As seen in the Tables 
III.2 and III.3 of the Factual Presentation, the to tal number of agricultural tariff lines (Section I-
IV) constitute 14.1 per cent of total number of  tariff lines according to Egyptian classification, 
whereas the total number of agricultural tariff lin es constitute 16.7 per cent of total tariff lines 
according to Turkish classification.  In other word s, the ratio of tariff lines of agricultural products 
within total tariff lines differ and this ratio is hi gher for Turkey.  Therefore, the relatively high 
number of tariff lines in agricultural products infl uences the overall liberalization calculations at 
the expense of Turkey.  So we can say that th e differences between both countries in terms of 
trade and economic potential was taken into account during the negotiations. 
 
• Trade surplus and diversity of imports:   The Factual Presentation states that with the FTA, Egypt 
liberalizes 95 per cent of Egypt's imports from Tu rkey, while Turkey liberalizes 83.4 per cent of 
trade in terms of Turkey's imports from Egypt.  The figures related to liberalization of trade does 
not take into account the fact that the trade surp lus is in favour of Turkey and Turkish exports 
cover a substantial number of tariff lines.  In th at respect, Turkish exports/imports to/from Egypt 
is recorded as respectively US$902.7 million and US$679.9 million in the year 2007.  Thus the 
surplus was US$222.7 million in favour of Turkey.  On the other hand Turkish exports to Egypt 
covered 3.578 tariff lines whereas Turkish im ports from Egypt covered 790 tariff lines.  
 
On the other hand, the statement that Turkey h as liberalized 83.4 per cent of trade in terms of 
Turkey's imports from Egypt does not include in quota  tariff liberalization.  Taking into account 
the concessions in agricultural products we see that  Turkey has liberalized 86 per cent of trade in 
terms of Turkey's imports from Egypt.   
 
• The inclusion of MFN exemptions in the calculations for agricultural products : As seen in the 
Tables III.2 and III.3 of the Factual Presentation, the rates of tariff elimination is calculated based 
on both the tariff elimination provided by Parties (the column "Number of duty-free lines 2007") 
and the MFN exemptions already existing on the date  of entry into force of the agreement (the 
column "MFN duty-free 2007").  In this rega rd, as it is seen from Table III.2 and III.3 the 
agricultural products that are subject to MFN exem ption consists 14 per cent of the total number 
of agricultural tariff lines for Egypt while this figur e is 10 per cent for Turkey.  This is one of the 
reasons why it is assumed that Egypt has liberalized more in terms of percentage compared to Turkey.   WT/COMTD/RTA/1/2 
 Page 3 
 
 
  • The exclusion of in quota liberalization fo r agricultural products from the calculations:   The 
calculations of the Factual Presentation contain on ly tariff lines that have been subject to full 
liberalization.  This methodology takes no noti ce of the rest of the market access opportunities 
established by Protocol II of the agreement,  namely tariff reductions and in-quota tariff 
eliminations. 
 
3. Box III.3 of the Factual Presentation indicates that there are products under 
HS Sections VI, IX, XVIII-XX which remain dutiable.  
- Could Turkey describe the industrial produc ts which remain dutiable and the reasons 
for not having liberalized them?  What percen tage do they represent in terms of trade 
and tariff lines? 
  According to the FTA, products within Ch apters 25-97 of the Harmonized Commodity 
Description and Coding System with the exception of  the products listed in Annex I to the agreement 
are considered as industrial products.  The Parties agreed to eliminate customs duties and charges 
having equivalent effect for all indus trial products.  Turkey eliminated tariffs by the entry into force of 
the agreement while Egypt is to phase out du ties over a transitional period of 13 years. 
The products listed in the Annex I of the FTA are defined as agricultural products according 
to the Article I (ii) of the Annex I of Agreemen t on Agriculture.  Although the products in Annex I of 
the FTA remain within the Chapters 25-97, they ar e also treated as agricultural products according to 
the WTO definition.  On the other hand, the Anne x I to the Turkey-Egypt  FTA has been designed 
taking into account the Annex I of the Euro Med iterranean Agreement estab lishing an Association 
between the European Communities and their member st ates of the one part and the Arab Republic of 
Egypt, of the other part.  Because of the Cust oms Union between Turkey and the EU these products 
have also been excluded from the coverage of Turk ey-Egypt FTA in order to achieve parallelism.   
 
4. With respect to paragraph 14 of the Factual P resentation, Turkey is to eliminate duties 
on imports of all industrial goods as of entry into force of the agreement while Egypt is to phase 
out duties over a transition period of 13 years.  
- Could the Parties elaborate on the reasons for this asymmetrical liberalization process? 
 
Due to the existence of an asymmetry in the industrial capacity and competitiveness of the 
Parties, and taking into account of the need for a tr ansitional period for the Egyptian industry to better 
adjust itself to the competition r esulting from the full liberalization of the trade in industrial goods 
between two countries, Parties agreed on a longer tran sitional period for tariff elimination in industrial 
products for Egypt.   
 
5. Paragraph 15 of the Factual Presentation indi cates that Protocol II of the agreement sets 
out concessions on certain basic agricultural, pr ocessed agricultural and fishery products.  
These concessions are in the form of reductions or , in some cases, elimination of in-quota duties 
on a limited number of agricultural products.  As  a result, tariffs in the agricultural sector have 
not been eliminated.  
- Why did the Parties agree to exclude all agric ultural products from tariff elimination? 
  With respect to the role of the agricultura l sector in the economies of the Parties, their 
respective agricultural policies and particularly the sensitivity of the agricultural products, the Parties 
have preferred to exchange market  access opportunities at a modest a pproach rather than an ambitious 
form of tariff elimination.  WT/COMTD/RTA/1/2 
Page 4  
 
   Most of the concessions concerning agricultural products are in the form of in-quota duty 
elimination.  However, there are some agricultu ral products that enjoy tariff elimination with 
unlimited quota, such as fishery products and live plan ts (see Table B to Protocol II of the Free Trade 
Agreement between Egypt and Turkey). 
 
 On the other hand, in accordance with Article 10. 3 of the agreement, the Parties do intend to 
establish a progressive liberalization of their trade in  agricultural products which are of interest to 
both Parties.  
 
- What other products were excluded from the agreement and how were they chosen? 
 
 With reference to the answer given above, there are no other products excluded from the 
agreement. 
 
- Could the Parties indicate under what conditi ons would they consider proceeding with a 
more progressive liberalization of trade in agricultural products, as envisaged in Article 10.3? 
 
 The Parties would consider further liberalizati on of trade in agricultural products taking into 
account of the developments in the global agricultu ral trade, emerging needs of Parties and their 
respective performances in fulfillin g the existing quotas.  These cond itions will be determined upon 
an agreement by the two Parti es through the Joint Committee. 
 
6. Paragraph 38 of the Factual Presentation indi cates that there are no provisions in the 
agreement for the elimination and prohibition of customs duties and quantitative restrictions on 
exports of agricultural exports.  
- Could the Parties explain the reasons for not having included related provisions?  
 
 The Parties are fully aware that the any such  application should be in compliance with the 
disciplines defined in paragraph 2(a) of Article XI  of GATT 1994.  On the other hand, the Parties are 
also fully aware that such flexibilities are provided to member states without prejudice to Article 12 of Agreement on Agriculture.    In the framework of the Turkey -Egypt FTA the Parties agreed to eliminate all customs duties 
and charges having equivalent effect on industri al products. Regarding agricultural products the 
Parties preferred to exchange concessions on selected products.  
 
 As a result, due to the sensitivity and the importance of the agricultural sector for both 
countries, the Parties preferred to maintain this right in the preferential regime under the conditions 
defined in GATT XI and the Agreement on Agriculture.   
 
7. Paragraph 51 of the Factual Presentation indi cates the Parties' willingness to consider 
further liberalization of trade in services.  
- Could the Parties indicate whether they have started discussing a blueprint for an 
Agreement on Trade in Services?  If not, when do they plan to do so? 
 
 In the Article 29 of the agreement, the Parties have declared their intention to achieve gradual 
liberalization of their trade in services in accordance  with the provisions of GATS.  In this regard, 
taking into account the international developments an d their existing and future  bilateral and regional 
obligations, the Parties are willing to consider further liberalization of Trade in Services.  
 
 However, the Parties so far have not  initiated discussions on this issue.   WT/COMTD/RTA/1/2 
 Page 5 
 
 
  Questions from the delegation of Australia  
 
8. The coverage of the FTA is essentially limit ed to non-agricultural goods.  Is there any 
intention to extend the scope of the agreement to cover agriculture or to further extend 
liberalization (86.8 per cent of tariff lines for Egypt and 82.1 per cent of tariff lines for Turkey 
at the end of the implementation period)? 
 In accordance with Article 10.3 of the agreemen t, the Parties do intend to consider further 
liberalization of their trade in agricultural products, wh ich are of interest to both Parties.  Taking into 
account of the developments of trade in agricu ltural products, the Parties may consider further 
liberalization in the next meetings of the Joint Committee established under the context of 
Turkey-Egypt FTA. 
 
9. The coverage of agriculture in the agreement is limited to TRQs, some of which retain a 
very high in-quota duty.  Do the parties intend to extend the scope of the TRQ coverage or the 
concessions offered? 
 The further liberalization for agricultural pr oducts on the grounds of Article 10.3 of the 
agreement can be both in the form of extending the scope of the TRQ coverage and the concessions 
offered.   
10. Has Article 14 – allowing for Egypt to take exceptional measures of  limited duration in 
the form of increased industries or sectors undergoing restructuring – been used? 
 To date, the structural adjustment mechanism referred to under Article 14 of the Free Trade 
Agreement between Egypt and Turkey  has not been used by Egypt.  
 
11. Article 29 provides for a review of relevant services sectors and for the Parties to 
consider further liberalization of trade in serv ices, taking into account international 
developments.  When is this review expected to take place?  What services sectors do the Parties 
expect would be covered?  What internationa l developments are the Parties referring to? 
 In the Article 29 of the agreement, the Parties have declared their intention to achieve gradual 
liberalization of their trade in services in accordance with the provisi ons of GATS.  In this regard, 
taking into account of the international developmen ts and their existing and future bilateral and 
regional obligations, the Parties are willing to cons ider further liberalization of Trade in Services.   The 
international developments referred to by the Pa rties are the outcome of discussions/negotiations 
concerning trade in services undertaken at the inte rnational level, including the ongoing negotiations 
within the DDA. 
 
12. Has the Joint Committee met and reviewe d any elements of the agreement? 
 The Joint Committee established by  the Turkey-Egypt FTA held its first meeting in Ankara 
on 18-19 June 2007.  In this meeting, in accordan ce with the Article 31 (Procedures of the Joint 
Committee) of the agreement, the Parties adopted the Rules of Pro cedure of the Turkey-Egypt Joint 
Committee.  Besides, the Parties have discussed the procedural matters regarding the functioning of 
the FTA.   
 WT/COMTD/RTA/1/2 
Page 6  
 
  Questions from the delegation of the United States
 
 
13. We are concerned that Article 11 of the agree ment (see text below) on Sanitary and 
Phytosanitary Measures makes no specific referen ce to the WTO Agreement on the Application 
of Sanitary and Phytosanitary Measures (" SPS Agreement").  We would appreciate an 
explanation from the Parties to this agreemen t of which WTO agreements would be considered 
relevant under Article 11.  Are there agreements other than the SPS Agreement that the Parties 
would consider relevant?  
ARTICLE 11- Sanitary and Phytosanitary Measures  
The Parties shall not apply their regula tions in sanitary and phytosanitary 
matters as an arbitrary or unjustifiable discrimination or a disguised restriction 
on trade between them.  The Parties sha ll apply their sanitary measures within 
the rules and procedures of the GATT 1994 and the other relevant WTO agreements. 
 The relevant WTO agreements under Article 11 of the Free Trade Agreement between Egypt 
and Turkey are the WTO Agreement on the Applicati on of Sanitary and Phytosanitary Measures, the 
Agreement on Agriculture, and the Agreem ent on Technical Barriers to Trade.  
 
14. We see in tables III.1A and III.1B that 13 p er cent of Egypt's tariff lines and 18 per cent 
of Turkey's tariff lines will remain dutiable aft er full implementation of the agreement.  The 
remaining dutiable lines cover 5 per cent of Egypt's total imports from Turkey and over 
16 per cent of Turkey's total imports from Egyp t.  Do the Parties have any plans to make 
further commitments to narrow this gap and ensu re that tariffs are eliminated on more trade 
between the Parties?   
 In accordance with Article 10.3 of the agreemen t, taking into account of the developments of 
trade in agricultural products, the Parties intend to consider further liberalization of trade in 
agricultural products in the next meetings of the Joint Committee established under the context of the 
FTA. 
 
15. We note that paragraph 3(a) of the Enabling Clause states that "Any differential and 
more favourable treatment provided under this cl ause:  shall be designed to facilitate and 
promote the trade of developing countries".  Howe ver, according to paragraph 22 of the factual 
presentation Egypt's tariff lines falling in HS Sect ions I – IV (agricultural products) are not 
liberalized under the agreement.  According to paragraph 25 and Ta ble III.3, the majority of 
Turkey's tariff lines in these sections are al so not liberalized under the agreement.  The 
non-liberalized tariff lines in these HS Sections  account for 20 per cent of Turkey's total 
dutiable MFN tariff lines and 13 per cent of Egypt' s total dutiable MFN tariff lines.  It is not 
clear how this agreement satisfies the conditions of paragraph 3(a) if such a significant number 
of tariff lines are not liberalized under the agreement.  We would appreciate further 
clarification from the Parties to the agreemen t on how the agreement facilitates and promotes 
the trade of developing countries given the no n-liberalization of dutiable tariff lines in HS 
Sections I – IV.  We also request (1) statisti cal information on the percentage of goods trade 
between the Parties that is not covered by this agreement due to the non-liberalization of HS 
Sections I – IV and (2) that both Parties please provide the final average tariff rate for each HS 
Section not fully liberalized under the agreement.  A dditionally, do the parties have any plans to 
further liberalize trade in agricultural goods under the agreement in the future?   
With respect to all industrial products the Partie s agreed on full tariff elimination.  As far as 
the agricultural products are concerned the Par ties agreed to exchange concessions on selected  WT/COMTD/RTA/1/2 
 Page 7 
 
 
  products within modalities indicated in the relevant Annexes of Protocol II.  Furthermore, Parties 
while taking into account of the developments of tr ade in agricultural products, would consider further 
liberalization of the trade of agricultural products in  accordance with Article 10.3 of the agreement.  
This goal will be pursued through the annual meetings of the Joint Co mmittee.  So the Parties believe 
that the agreement satisfies the conditions of paragraph 3(a) of the Enabling Clause. 
 
Please also find below the statistical information re quested in the last section of the question: 
 
(1) According to the statistical figures, Turkey 's total import from Egypt was recorded as 
US$680 million in 2007.  Out of this number, US$95.2 million account for the 
agricultural products (HS Sections I – IV) that  remain dutiable in the context of FTA.  
Therefore, the percentage of dutiable goods  trade between the Parties corresponds to 
14 per cent (US$680 million/US$95.2 million). 
(2) According to Egyptian statistics, the percenta ge of trade of agricultural products that 
are not fully liberalized under the agreemen t (HS sections I-IV) is 9 per cent of 
Egyptian imports from Turkey in 2007. 
(3) The final average tariff rates for each HS Section not fully liberalized under the 
agreement: 
HS Section  Turkey  Egypt  
HS Section 1 73.3 % 8.2% 
HS Section 2 31.17 % 4.5% 
HS Section 3 21.8 % 5.6% 
HS Section 4 47.3 % 132% 
 
16. We note that paragraph 30 of the factual presentation explains that the agreement 
allows for diagonal cumulation with the partic ipants of the Pan-Euro-Mediterranean protocol 
on rules of origin provided that there is a regio nal trade agreement in place in accordance with 
Article XXIV of GATT 1994.  This appears to i ndicate that the Egypt-Turkey FTA meets the 
conditions of Article XXIV of GATT 1994.  We request further clarification from the Parties to 
this agreement as to how the Egypt-Turkey FTA meets the requirements of Article XXIV of 
GATT 1994, particularly the requirement to cover "substantially all trade" if the majority of 
trade in agricultural goods is not covered by  the agreement.  We also request further 
clarification from the Parties to this agreeme nt as to how the use of diagonal cumulation 
between the participants of the Pan-Euro-Mediterranean protocol meets the requirements of 
Article XXIV of GATT 1994.  We also seek cl arification as to why this agreement was not 
notified under Article XXIV of GATT 1994 if it is in compliance with this article.      
 As both Turkey and Egypt are developing countri es according to the WTO's classification, the 
Parties have opted to notify the agreement under the Enabling Clause.  The Parties believe that 
notification of the agreement under the Enabling Clause does not signify that the agreement cannot 
allow for diagonal cumulation among the particip ants of Pan-Euro-Mediterranean Cumulation 
System.  WT/COMTD/RTA/1/2 
Page 8  
 
   Pan-Euro-Mediterranean Cumulation is the di agonal cumulation system in operation between 
the European Communities and a number of European and Mediterranean countries.  It is based on a 
preferential agreement network, the origin protocol s of which have to consist of identical rules. 
  Therefore, Protocol III to Turkey-Egypt FTA  is drafted as exactly the same as the model 
origin protocol of Pan-Euro-Med system.  The reference to Article XXIV of GATT 1994 in 
Article 3.5.a of Protocol III of the Free Trade Agreement constitutes a broad framework.  
 
 
__________