WORLD TRADE  
ORGANIZATION   
WT/REG288/M/1 
4 November 2011 
 (11-5617) 
Committee on Regional Trade Agreements 
Sixty-second Session  
 
 
 
CONSIDERATION OF THE FREE TRADE AGREEMENT  
BETWEEN TURKEY AND SERBIA, GOODS  
 
Note on the Meeting of 22 September 2011 
 
Chairman:  Mr. F. Riegert (France) 
 
 
1. The 62nd Session of the Committee on Regional Trade Agreements (hereinafter 'CRTA' or 
the 'Committee') was convened in Airgram WTO/AIR/3790/Rev.1 dated 12 September 2011. 
2. Under Agenda Item E.I of this session, th e CRTA considered the Free Trade Agreement 
(FTA) between Turkey and Serbia (hereinafter th e 'Agreement'), goods.  The Chairman recalled that 
during the CRTA meeting of 4 March 2009, Memb ers had agreed to consider RTAs involving 
non-Members under the TM's procedures and that RTAs notified since 14 December 2006, including 
future notifications, should be ta ken up before the others.  Memb ers had made it clear that the 
consideration of such agreements by the Committee had no implications for the views or positions of 
any Member with respect to the consistency of th at RTA with the WTO rules and would be without 
prejudice to the rights and obligations of Member s under the WTO Agreements, as clearly stated in 
paragraphs 1 and 5 of the Transparency Mechanis m Decision.  Members had also agreed that the 
consideration of such agreements in the CRTA would be organized under a separate Agenda Item. 
3. The Chairman said that the Agreement had entered into force on 1 September 2010 and had 
been notified by Turkey on 10 August 2010 to th e WTO under Article XXIV:7(a) of the GATT 1994 
and the Understanding on the Interpretation of Article XXIV of GATT 1994 as an Agreement 
establishing a free trade area (document WT/REG288/N/1) .  The text of the Agreement was available, 
together with its Annexes, on the Parties' offici al websites.  The Factual Presentation on the goods 
aspects (document WT/REG288/1 dated 29 June 2011), had been prepared by the Secretariat on its 
own responsibility in full consultation with the Part ies and in accordance with paragraph 7(b) of the 
Transparency Mechanism (TM) for Regional Trade Agreements (document WT/L/671).   
Additionally, he informed Members that written questions and replies on the Agreement had been 
distributed in document WT/REG288/2, dated 12 Se ptember 2011.  He proposed to organize the 
consideration of the Agreement by first asking the Parties and then other Members for general 
comments.  The Committee would then turn to th e specifics of the Agreement using the Factual 
Presentation to guide the debate.  He  then proposed to go through the questions and replies document.  
4. The representative of Turkey thanked the Secretar iat and Serbia for their efforts and intense 
cooperation during the preparation of the Factual Pre sentation of the Agreement.  He emphasized that 
he attached great importance to the TM and rea ffirmed his strongest support for a rules-based 
multilateral trading system, as well as for strengt hened WTO rules, disciplines and mechanisms in 
particular on RTAs.   
5. He said the Agreement had been signed in Istanbul on 1 June 2009 and had entered into force 
on 1 September 2010.  The Agreement aimed at esta blishing a free trade area for trade in goods WT/REG288/M/1 
Page 2  
 
  between Turkey and Serbia over a transitional period lasting a maximum of six years.  Turkey 
believed the Agreement was in conformity w ith Article XXIV of GATT 1994 and the other 
multilateral agreements on trade in  goods annexed to the Agreemen t establishing the WTO.  Under 
the Agreement, Turkey had abolished all custom s duties applicable on imports of industrial goods 
originating in Serbia.  Serbia, on the other hand,  was to progressively abolish customs duties on 
imports of industrial goods originating in Turkey st arting from the entry into force of the Agreement 
and ending in 2015.  Protocol I of the Agreement covered preferential trade in agricultural products.  
Turkey and Serbia had exchanged concessions on selected agricultural products as an initial 
liberalization process.  The exchange of concessions  on those agricultural products had taken place in 
the form of tariff quotas with customs duty reduction or  elimination.  He added that the Parties would 
examine the possibility of granting each other furt her concessions on agricultural products within the 
Joint Committee, while taking into account the level of  development in bilateral agricultural trade and 
the role of agriculture in their respective economies.   As a result of the concessions provided by the 
Agreement, 86% of Turkey's total imports from Serbia had become duty free upon the Agreement's 
entry into force and 90.8% of Serbia's total imports from Turkey would also be progressively 
liberalized.  Full liberalization was to be achieved by the end of 2015.  The definition of "originating 
products" and the methods of administrative cooperation were set out in Protocol II of the Agreement.  
According to this Protocol the Parties applied diag onal cumulation of origin in the context of the 
European Union's Stabilization and Association Pr ocess with the Western Balkan countries.  There 
were no regime-wide rules of origin in the Protocol ;  instead to have a final product with originating 
status, non-originating materials had to  meet a list of specific criteria. 
6. He added that for the proper functioning of th e free trade area, the Agreement also contained 
provisions on state monopolies, competition, public procurement, protection of intellectual property 
rights, and cooperation between customs administ rations.  Regulatory provisions on standards, 
safeguards, anti-dumping and subsidies were also la id down in conformity with the relevant WTO 
Agreements.  With respect to Turkey and Serbia's  bilateral trade, the value in 2010 had reached 
US$416 million, which was 14.8% higher than in the previous year.  The numbers showed that the 
signing of the FTA had stimulated an increase in bila teral trade.  However the lasting effects of the 
financial crisis had prevented the full potential of the Agreement from being achieved.  In this 
context, he mentioned that in the first seven m onths of 2011, trade between Turkey and Serbia had 
increased by 43% compared to the same period in  2010.  Such an increase reflected the positive 
effects of the FTA more clearly.  In 2010, Tu rkish exports to Serbia amounted to US$306 million 
while imports from Serbia were about US$110 milli on.  During the first seven months of 2011, 
Turkish exports to Serbia had reached US$197 milli on, while imports from Serbia amounted to about 
US$132 million, which respectively represented an in crease of 12% and 140% with respect to the 
same period the previous year.  In his delegation' s opinion the positive effect of the Agreement would 
not be limited to expanding bilateral trade between  the two countries, but would also boost economic 
cooperation in all other areas of foreign economic relations, including bilateral investments.  The 
Parties had submitted their replies to the questi ons in writing.  Finally, he thanked the WTO 
Secretariat for its valuable input and support in preparing the Factual Presentation, the Members for 
their questions and interest, and his Serb ian colleagues for their cooperation.  
7. The representative of Serbia was pleased to pr esent the Agreement, which had been signed on 
1 June 2009, after one year of negotiations, and had come into force for both Parties on 1 September 
2010.  The Stabilization and Association Agreem ent with the EU (SAA) contained a clause 
(Chapter III, Article 17) which set a condition for si gning an FTA between Serbia and Turkey; in this 
respect the conclusion of the Agreement had contri buted to the process of European integration of 
both countries.  The Agreement was of high impor tance for Serbia as it opened new possibilities for 
further development and deepening of economic re lations between Serbia and Turkey.  The main 
objectives of the Agreement were:  trade liberalizatio n, liberalization of public procurement markets, 
protection of intellectual property, liberalization of trade in services, creation of fair conditions for 
competition, encouragement of mutual investme nts and cooperation in third markets.  The  WT/REG288/M/1 
 Page 3 
 
 
  liberalization of trade in industrial products unde r the Agreement was based on the SAA between the 
EU and Serbia.  Turkey had abolished customs dutie s on all industrial products originating in Serbia, 
while Serbia had agreed to abolish customs duties on these products gradually over a six-year period.  
Trade liberalization in agricultural products was carri ed out according to an agreed list of products or 
clusters of products and quantitative quotas with a pr eferential tariff rate.  The Protocol on Rules of 
Origin was based on Protocol III of the Serbia-EU SAA, and provided for the application of diagonal 
cumulation in accordance with the Pan European Rul es of Origin.  To better understand the economic 
and commercial benefits of the Agreement, she also  presented some current information and data on 
trade between the two countries.  During 2010, bila teral trade between Serbia and Turkey reached 
€311 million.  Serbian exports had increased by  107%, amounting to €67 million, while Turkish 
exports increased by 16% to €244 million.  During Ja nuary-July 2011, Serbian exports to Turkey had 
increased by 139% and Turkish exports had incr eased by 21% compared to the same period the 
previous year.  This showed that the implementati on of the Agreement had started to achieve its goals 
and purpose.  She said that besides these positive eff ects, there was still room for further improvement 
in terms of business cooperation and trade relations u nder the Agreement.  With that in mind, she said 
that the Serbian and Turkish partners had agreed  to hold a Joint Committee meeting by the end of 
2011, to discuss the implementation of the Agre ement and the possibilities for further trade 
liberalization.  Finally, she thanked the WTO Se cretariat, the Members of the Committee and 
especially their Turkish partners for their excellent cooperation. 
8. The representative of the United States thanke d the Secretariat and the Parties for the 
materials provided that had enabled the consider ation of the Agreement.  Her delegation commended 
Serbia, a non-Member, to the extent it had particip ated and provided information so as to permit the 
issuance of this Factual Presentation.  Before getting into the substance of her remarks, she noted that 
Article XXIV's specific provisions on FTAs applied only to agreements  strictly between two or more 
Members, which was not the case in this instan ce.  Turkey's Agreement was with Serbia, a 
non-Member, and thus absolute MFN obligations app lied.  Nonetheless given Serbia's application for 
membership in the WTO, her government considered it might be helpful to draw attention to the ways 
in which the Agreement would need to be ch anged in order to meet the requirements under 
Article XXIV.  She said her authorities had looke d back at records and minutes of the Committee 
taken since early 2008 and had not found an Agre ement considered under the TM with such low 
agricultural tariff elimination figures as this one.  Un der the terms of the Agreement, and according to 
paragraphs 16 and 17;  and Tables AI.1–AI.2 of Annex I of the Factual Presentation, although 97.3% 
of Turkey's industrial tariffs were duty-free, only 13.9% of its agricultural tariff lines were duty-free 
under the Agreement.  For Serbia, which was not yet a Member of the WTO, 95.2% of industrial 
tariffs were duty-free, but only 1.7% of agricultural tariff lines were duty-free.  Despite the fact that 
Serbia had nearly carved out its entire agricultura l sector from tariff elimination under the Agreement 
– and setting aside for the moment the fact that Serbia was not a WTO Member – the Parties seemed 
to suggest in the Q&A that the requirement in Ar ticle XXIV to eliminate tariffs on substantially all 
trade would be met because 85.9% of Turkey's total imports from Serbia became duty-free upon the 
Agreement's entry into force and 90.8% of Serbia 's total imports from Turkey would become duty-
free in six years after the Agreement's entry into fo rce.  She noted that this line of reasoning ignored 
future potential trade, and the growth that would result if the Parties to an Agreement eliminated 
tariffs in all sectors of their economies.  She wondered whether the surge of imports of protected 
goods was an example of what happened when the market for goods that had been long protected 
suddenly opened up.  The Parties had noted, too,  that they had "exchanged concessions on selected 
agricultural products as an initial liberalization pro cess".  However, in her opinion such indefinite 
rendez-vous clauses had mainly allowed parties to hide behind and defer indefinitely from the 
requirement in Article XXIV to eliminate tariffs on "s ubstantially all trade", which in this case, had to 
be done in six years (i.e. within the period require d under the GATT).  She concluded by saying that 
this was not the first RTA of Turkey that the Comm ittee had considered in which Turkey had chosen 
to continue to protect its agricultural sector.  She hoped Serbia would choose to change its approach to 
Article XXIV, once it became a Member.   WT/REG288/M/1 
Page 4  
 
  9. The representative of Turkey thanked the United St ates for their interest.  He referred to their 
written answer in the Q&A document and repeated that Article 11 of the Agreement stated that 
"taking into account the role of agriculture in our  respective economies, the development of trade in 
agricultural products between the Parties, the high se nsitivity of agricultural products and the rules of 
their respective agricultural policy, the Parties sh all examine in the Joint Committee the possibilities 
of granting further concessions to each other in trade in agricultural products".  Turkey believed that it 
was possible to grant further concessions if the Pa rties considered it would be useful and in the 
interests of their economies.  In that sense, he be lieved the Agreement gave them the necessary tools 
and flexibility to implement their future liberalization process. 
10. The representative of the European Union poin ted out that in terms of liberalization 
commitments, the Agreement provided for low covera ge in the agricultural sector.  She encouraged 
the Parties to make further commitments and review the possibilities to do so in the upcoming Joint Committee governing the Agreemen t.  As the Parties had mentioned, the latter would take place 
by the end of 2011.  She therefore very much encouraged the Parties to take good note of some of the comments received and bring them to the table of the Joint Committee.  She hoped the Parties would 
make every effort to ensure that  the Agreement provided for libera lization that was across the board 
and that was useful to open up the markets in both countries for all the sectors and products.  
11. The Chairman said that the consideration of the goods aspects of the FTA between Turkey 
and Serbia had allowed the Committee to clarify a nu mber of questions and that the oral discussion of 
the Agreement could be concluded in accordance w ith paragraph 11 of the TM.  If any delegations 
wished to ask follow-up questions they were i nvited to forward submissions in writing to the 
Secretariat by 29 September 2011  and the Parties were asked to submit replies  in writing by no later 
than 13 October 2011.  In accordance with paragra ph 13 of the Transparency Mechanism all written 
submissions, as well as minutes of the meeting would be circulated promptly, in all WTO official 
languages, and would be made available on the WTO website. 
12. The Committee took note of the comments made. 
__________