WORLD  TRADE  
ORGANIZATION  RESTRICTED 
WT/TPR/S/259 
17 January 2012  
 
(12-0160) 
Trade Policy Review Body  
   
 
  
 
TRADE POLICY REVIEW 
 
Report by the Secretariat 
 
TURKEY 
 
  
 
This report, prepared for the fifth Tr ade Policy Review of Turkey, has been 
drawn up by the WTO Secretariat on its own responsibility.  The Secretariat has, 
as required by the Agreement establishing the Trade Policy Review Mechanism 
(Annex 3 of the Marrakesh Agreement Establishing the World Trade 
Organization), sought clarification from Turkey on its trade policies and 
practices. 
 
Any technical questions arising from th is report may be addressed to Cato 
Adrian (Tel.:  0022 739 5469) and Thomas Friedheim (Tel.:  0022 739 5083). 
 
Document WT/TPR/G/259 contains the policy statement submitted by Turkey. 
 
 
 
Note: This report is subject to restricted circ ulation and press embargo until the end of the first 
session of the meeting of the Trade Policy Review Body on Turkey. Turkey WT/TPR/S/259 
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CONTENTS 
 
  Page 
SUMMARY   vii 
 
I.  ECONOMIC ENVIRONMENT       1  
 (1)   MAJOR FEATURES OF THE ECONOMY  1  
 (2)   RECENT ECONOMIC DEVELOPMENTS  1  
 (3)   TRADE PERFORMANCE  4  
 (4)   OUTLOOK  8 
II.  TRADE AND INVESTMENT REGIMES  9  
 (1)   GENERAL FRAMEWORK  9  
 (2)   POLICY OBJECTIVES  11  
 (3)   TRADE AGREEMENTS AND ARRANGEMENTS  12  
 (i)   WTO 12  
 (ii)   Regional agreements 16  
 (iii)   Bilateral free-trade agreements 18  
 (iv)   Other preferential trade arrangements 20  
 (4)   INVESTMENT REGIME  20  
III.  TRADE POLICIES AND PRACTICES BY MEASURE    26  
 (1)   MEASURES DIRECTLY AFFECTING IMPORTS  26  
 (i)   Import procedures and requirements 26  
 (ii)   Ordinary customs duties 28  
 (iii)   Other duties and charges (ODCs) 33  
 (iv)   Tariff-rate quotas and tariff exemptions 34  
 (v)   Fees and charges for services rendered 35  
 (vi)   Application of internal taxes 37  
 (vii)  Import prohibitions, restrictions, and licensing 41  
 (viii)  Customs valuation 44  
 (ix)   Rules of origin 44  
 (x)   Anti-dumping, countervailing duty, and safeguard regimes 45  
 (2)   MEASURES DIRECTLY AFFECTING EXPORTS  52  
 (i)   Export procedures and requirements 52  
 (ii)   Export taxes, fees, and charges 53  
 (iii)   Export restrictions 53  
 (iv)   Export subsidies, finance, assistance, and promotion 55  
 (3)   MEASURES AFFECTING PRODUCTION AND TRADE  58  
 (i)   Subsidies 58  
 (ii)   Technical barriers to trade, standards and certification 61  
 (iii)   Sanitary and phytosanitary measures 66  
 (iv)   Free zones, special economic areas 68  
 (v) Transit 69 WT/TPR/S/259 Trade Policy Review 
Page iv 
  
   Page 
 
 (vi) Countertrade and barter 69 
 (vii) Government procurement 69  (viii)  State trading, state-owned enterprises, and privatization 72  
 (ix)   Competition policy 75  
 (x)   Price controls 77  
 (xi)   Trade-related intellectual property regime 77  
IV.  TRADE POLICIES BY SECTOR 81  
(1)  A
GRICULTURE   81 
 (i)   Main features 81  
 (ii)   Policy framework 81  
 (iii)   Border measures 82  
 (iv)   Domestic programmes 83  
 (v)   Agricultural state-owned enterprises 85  
 (vi)   Export measures 86  
 (vii)  Evolution of support and protection 87  
(2)  ENERGY    89 
 (i)   Oil and oil products 90  
 (ii)   Natural gas 90  
 (iii)   Coal 91  
 (iv)   Electricity 92  
 (v)   Renewable energy 93  
 (vi)   Energy efficiency 94  
(3)  MANUFACTURING  94 
 (i)   Automotive sector 94  
 (ii)   Iron and steel 95  
 (iii)   Textiles and clothing 96  
(4)  SERVICES   96 
 (i)   Banking 98  
 (ii)   Telecommunications 100  
 (iii)   Transport 102  
 (iv)   Tourism 105  
 (v)   Construction 106  
REFERENCES   109 
APPENDIX TABLES  111 
 
 
    Turkey WT/TPR/S/259 
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Page 
CHARTS 
 
 
I. ECONOMIC ENVIRONMENT  
I.1 Composition of merchandise trade, 2006 and 2010 5 
I.2 Direction of merchandise trade, 2006 and 2010 6  
 
III. TRADE POLICIES AND PRACTICES BY MEASURE 
 
III.1 Share of bound tariff lines, by non-agricultural goods 30 III.2 Bound and applied duties on agricultural products, by HS 2-digit, 2011 32 
 
 IV. TRADE POLICIES BY SECTOR 
 
IV.1 Nominal Protection Coefficients of selected agricultural commodities 88 IV.2 Turkey's level and composition of support to agricultural producers 89 
IV.3 (a) Turkey's construction sector, 1999-2011 
 (b) International activity of Turkish contractors, 2001-10 107  
 
TABLES 
 
 
I. ECONOMIC ENVIRONMENT  
I.1 Main economic indicators, 2006-10 2 
I.2 Balance of payments, 2006-10 7 
 
II. TRADE AND INVESTMENT REGIMES  
II.1 Independent regulatory institutions, 2011 10 
II.2 Selected notifications to the WTO, January 2011 to 8 November 2011 12 II.3 WTO dispute settlement cases involving Turkey as respondent or complainant, 1995-2011 15 
II.4 Bilateral trade agreements, 2011 19 
II.5 Foreign direct investment restrictions, 2011 22 II.6 Turkey's FDI regulatory restrictiveness index, 2010 24 
II.7 Foreign direct investment, 1995-2010 25 
  
III. TRADE POLICIES AND PRACTICES BY MEASURE 
 III.1 Structure of MFN tariffs in Turkey, 2011 29 
III.2 Summary analysis of MNF tariff, 2011 30 
III.3 Tariff averages, 2011 33 III.4 Key features of concessional entry schemes, 2011 35 
III.5 Fees and charges  36 
III.6 Excise duties or special consumption tax on motor vehicles, 2011 38 
III.7 Excise duties on alcoholic beverages, 2011 40 
III.8 Excise duties on tobacco products, 2011 40 III.9 Import prohibitions, 2011 42 
III.10 Imports requiring a licence, 2011 43 
III.11 Definitive anti-dumping measures in force, August 2011 47 WT/TPR/S/259 Trade Policy Review 
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Page 
 
 
III.12 Definitive anti-circumvention measures in force, May 2011 50 
III.13 Definitive safeguard measures in force, 2011 52 III.14 Export prohibitions, 2011 54 
III.15 Exports requiring a licence, 2011 54 
III.16 Key features of the export insurance programmes, 2011 57 III.17 Key features of the st ate aid programmes, 2011 59 
III.18 Free zones trade, 2007-10 69 
III.19 Selected public enterprises, 2011 73 
III.20 Privatization, 2003-2010 75 
III.21 Cases handled by the Competition Authority, 2000-10 77 III.22 Membership in international agreements, conventions, and treaties, 2010 78 
 
 IV. TRADE POLICIES BY SECTOR 
 
IV.1 Exports of commercial services, 2006-10 97 IV.2 Imports of commercial services, 2006-10 97 
 
  
APPENDIX TABLES 
 
I. ECONOMIC ENVIRONMENT 
 
AI.1 Structure of exports, 2006-10 113 AI.2 Destinations of exports, 2006-10 114 
AI.3 Structure of imports, 2006-10 115 
AI.4 Origins of imports, 2006-10 116 
 
 II. TRADE AND INVESTMENT REGIMES 
 
AII.1 Trade-related legislation, 2011 117  
 
III. TRADE POLICIES AND PRACTICES BY MEASURE  
AIII.1 Textiles and clothing products subject to registration 121 
AIII.2 Products subject to non- ad valorem  tariffs, 2011 122 
AIII.3 Applied MFN tariff averages by HS2, 2011 128 
AIII.4 Preferential tradin g agreements, 2011 132 
AIII.5 Preferential tariff quotas on agricultural good s, processed agricultural products, and fish and 
 fish products, 2011 135 
AIII.6 Excise duties or special consumption tax on petroleum products, 2011 138 
AIII.7 Key features of the export credit and guarantee programmes, 2011 144   
 
IV. TRADE POLICIES BY SECTOR 
 
AIV.1 Main measures of support of Turkish agriculture, 2006-10 148 AIV.2 Export subsidy rates, 2011 149Turkey WT/TPR/S/259 
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SUMMARY 
 
1. Like so many other countries across the world, Turkey felt the impact of the global financial 
crisis in 2008 and 2009, with a precipitous dec line in exports accompanied by a loss of domestic 
demand.  However, Turkey was able to capitalize on structural reforms undertaken in the aftermath of 
severe domestic economic crises in 1999 and 2001.  The reforms included market liberalization to 
promote private sector growth, privatization, agricu ltural reform, banking system strengthening, fiscal 
discipline, tight monetary policy with inflation targ eting, and a floating exchange rate regime.  Thus, 
in responding to the recent crisis, a robust ba nking sector and a good fiscal position allowed the 
Government to provide fiscal stimulus to restor e growth.  The economic decline proved short-lived 
and the subsequent rebound has been strong. 
2. Turkey's real GDP grew by 9% in 2010, and a further 7.5% increase has been projected for 
2011.  Unemployment, which rose from just over 10% in 2006 and 2007 to 14% in 2010, has been returning towards pre-crisis levels at a relatively ra pid pace.  Annual inflation, which ran at close to 
70% in the late 1990s and in 2001, has been brou ght down to 10% or less since 2004.  Turkey's 
current account deficit, which widened to the equivale nt of 6.5% of GDP in 2010, appears to pose the 
main challenge to continued rapid economic expansi on.  Although the financing of the deficit has not 
been a major issue so far, the recent crisis has hi ghlighted the effects of rapid changes in business and 
investor sentiment. 
3. The European Union remains Turkey's most important trading partner and investor.  The EU 
accounted for nearly 70% of total FDI inflows into Turkey during 2005-10.  Nearly 40% of its 
imports come from the EU, and just over 50% of ex ports go to the EU.  However, the dominance of 
the EU in Turkey's foreign trade has declined mark edly over the last five years, reflecting a notable 
shift in Turkish exports towards growth markets in its neighbourhood, in North Africa, certain CIS 
countries, and in Asia. 
4. Turkey's overall framework for the formulation and implementation of trade policy has 
remained broadly unchanged since its last Trade Po licy Review.  However, following a reorganization 
of ministries and certain public ins titutions in 2011, key functions in relation to Turkey's foreign trade 
policies now rest with the Ministry of Economy (formerly the Undersecretariat of the Prime Ministry for Foreign Trade), in cooperation and coordinati on with other ministries and authorities.  The 
Ministry of Economy regularly seeks inputs from the private sector and NGOs in the formulation and 
review of Turkey's trade policies.  A WTO-DD A Coordination Committee has been established for 
follow-up on DDA-related issues and to determine Tu rkey's strategy in multilateral negotiations.  
Turkey attaches great importan ce to the successful conclusion of the DDA, and has taken major 
initiatives to support LDCs in thei r efforts to eradicate poverty. 
5. The Customs Union between Turkey and the EU, which entered into force on 1 January 1996, 
and the negotiations for accession to the EU, which began in Octobe r 2005, have remained 
cornerstones for Turkey's trade polic ies as Turkey's commitments give rise to on-going work to align 
its legislation with the EU acquis , as well as efforts to harmonize trade preferences exchanged with 
other trading partners.  Turkey has a free-trade agreement with EFTA, and is part of the Euro-
Mediterranean Partnership.  At present, Turkey h as 16 bilateral FTAs in force, having concluded 
7 bilateral FTA negotiations since its last Trade Policy Review.  Moreover, Turkey is currently 
engaged in negotiations with 13 partners, and has initiated the la unch of negotiations with an 
additional 10 trading partners.  Turkey also pa rticipates in the Economic Cooperation Organization 
(ECO), Developing-8 (D-8), the Organization of  Islamic Cooperation (OIC), and the Black Sea 
Economic Cooperation (BSEC).  As noted in previous  TPRs, Turkey's participation in regional and 
bilateral trade agreements has contributed to improving competition in the economy, but has added WT/TPR/S/259 Trade Policy Review 
Page viii 
  
complexity to its trade regime and potentially detract ed efforts away from multilateral efforts to open 
its economy further. 
6. Turkey relies on internal taxes on goods and ser vices to raise government revenue, rather than 
trade taxes such as customs duties.  In 2010, intern al taxes – principally VAT levied on imports and 
exports, and the Special Consumption Tax – accounte d for almost 58% of the Turkish Government's 
tax revenue, or over 44% of total government revenues.  By contrast, customs duties represented no 
more than 1% of total government revenue in 2010. 
7. Turkey's VAT and the Special Consumption Ta x make no distinction between imported and 
domestically produced goods, in principle.  Howe ver, as the Special Consumption Tax on alcoholic 
beverages varies considerably depending on the type of product, the tax system has the potential to 
favour the consumption of some products relative to others.  The VAT is imposed at the general rate 
of 18%, but reduced rates (8% and 1%) are applied on some goods and services, and certain types of 
transactions are tax exempt. 
8. Turkey applies the Customs Union common extern al tariff (CET) to industrial goods, and its 
applied MFN tariffs for non-agricultural products ar e low, on average 5%.  However, this relative 
openness is not reflected in Turkey's WTO commitmen ts as it has left 66.5% of its non-agricultural 
tariff lines unbound, and the simple average on  the tariff lines wher e Turkey has binding 
commitments is 17.4%.  The import regime for industrial goods is de facto  even more open than the 
CET indicates, as the Customs Union and free-trade agreements provide duty-free access for many of Turkey's most important trading partners.  In a ddition, Turkey has the possibility to open tariff-rate 
quotas for non-agricultural goods, the Investment Encouragement Programme provides for duty and 
tax concessions on imports, exporters benefit from an inward-processing scheme, and a "suspension 
list" enables manufacturers to import certain raw materials and intermediary inputs at low or duty-exempt rates. 
9. Although legal provisions allow the Turkish Gove rnment to increase applied MFN rates when 
these are deemed insufficient to provide "adequate" protection to domestic industries, Turkey's MFN 
import tariffs have not changed significantly overall since 2007.  However, Turkey is an important 
user of anti-dumping measures, with 118 duty measur es in force as of August 2011, compared to 93 at 
the end of 2007, and 27 at the end of 2002.  Tu rkey imposed its first countervailing duty measure in 
2009, and has initiated investigati ons and extended safeguard measur es pursuant to the Agreement on 
Safeguards on a number of products since 2007.  Furt hermore, following an investigation launched in 
January 2011, Turkey has raised its MFN tariffs on a wide range of textiles and clothing goods. 
10. Turkey prohibits or restricts imports of various  goods to protect health and safety, ensure 
compliance with domestic legislation or internati onal obligations, for reasons of national security, 
environmental protection, etc.  Textiles and clot hing products became subject to registration to 
monitor their importation on 1 January 2010.  More  generally, Turkey has implemented an import 
surveillance system since 2004.  The system is price-based for some products. 
11. Turkey has modified its Investment Encour agement Programme since the last TPR.  The 
programme now follows a three-pillar approach based  on regional and sectoral implementation, large-
scale investments contributing to internationa l competitiveness, and a general investment 
encouragement mechanism.  A new Law on Monitori ng and Supervision of State Aids entered into 
force in October 2010.  Although state ownershi p remains important, notably in certain banks, 
transport companies, public utilities, energy an d mining enterprises, and agricultural marketing 
boards, Turkey has continued its privatization progra mme launched in 1984.  Over the last four years, 
the sale of electricity distribution companies, port operation rights, petrochemical, and tobacco Turkey WT/TPR/S/259 
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enterprises, and a further stake in Türk Teleko m, has raised significant revenue, and further 
privatization plans are advancing for sugar processors , roads, and bridges.  Turkey has made some 
progress in the fight against abuse of intellectual property rights during the last four years.  The 
agriculture sector accounted for 8.4% of Turkey's  GDP in 2010.  Turkey ranks among the largest 
agricultural producers in the world.  Its main traditional exports include hazelnuts, fruit and 
vegetables, and oriental tobacco.  Except for th e industrial component of processed agricultural 
products, trade in agricultural commodities is not s ubject to the Customs Union CET.  Turkey has 
occasionally adjusted tariffs on selected agricultu ral products to respond to domestic supply and 
demand conditions.  It has some latitude in this re gard, given the considerab le gap between applied 
and bound MFN tariffs (on average 48% versus 72%).  The average applied import duty is effectively 
lower, as Turkey maintains numerous tariff-rate quotas under preferential agreements, and may open 
tariff-rate quotas unilaterally from time  to time to facilitate imports. 
12. Turkey has not provided agriculture support notif ications to the WTO since 2002.  Based on 
the available information, the value of support to agricultural producers in Turkey appears to have 
been increasing recently.  The ma rket-oriented Agricultural Reform Implementation Project was 
phased out in 2008.  Moreover, with the terminatio n of a direct income support scheme in 2009, an 
increasing portion of the support is now extended in the form of deficiency payments and other 
instruments, such as area-based payments.  Turkey 's market price support has increased in recent 
years, due mainly to higher domestic prices rather  than lower world market prices.  The resulting 
losses for state-owned enterprises trading in commodities such as grains and sugar have been offset by 
transfers from the Turkish Treasury.  Sixteen product groups are eligible to receive export subsidies. 
13. Although agriculture and manufacturing remain  important, the Turkish  economy is now 
dominated by services.  The tourism industry is a major earner of foreign exchange, and the Government provides incentives and other types of assistance to develop the sector further.  Other 
important sectors in terms of output, employment, and foreign trade are financial services, transportation, telecommunications, wholesale and re tail trade, and an outward-oriented construction 
industry.  With rapidly rising energy consumption, Turkey commenced reforms in the energy sector in 
2001.  The process, including privatizations, has adva nced considerably in electricity distribution, 
where the current strategy foresees that all consumer s, including households, should be able to choose 
their suppliers by 2015.  The reform efforts have b een less successful in natu ral gas, where the state-
owned enterprise BOTA Ş continues to dominate imports and the wholesale of natural gas.  Turkey is 
targeting an increasing share of renewable energy  sources to meet its growing demand for energy. 
14. The recent economic crisis has highlighted the benefits of the economic reforms undertaken 
by Turkey since 2001 and the value in maintaining a nd continuing these reforms.  On the trade side, 
Turkey's partners would benefit from increased tran sparency and predictabilit y in their access to the 
Turkish market through the conclusion of multilatera l trade negotiations leading to more extensive 
tariff binding commitments for industrial goods, lower bound rates on agricultural and manufactured 
products, simplification and rationalization of the ta riff regime, and further services commitments.  At 
the same time, Turkey's trading partners can fost er a positive trade climate by ensuring that their 
markets remain open to Turkey.