WORLD TRADE  
ORGANIZATION  WT/REG240/M/1 
28 September 2009 
 (09-4526) 
Committee on Regional Trade Agreements 
Fifty-fourth Session  
 
 
 
CONSIDERATION OF THE FREE TRADE AGREEMENT BETWEEN  
TURKEY AND ALBANIA, GOODS 
 
Note on the Meeting of 15 September 2009  
 
Chairman:  Mr D. Brauns (Germany) 
  
1. The meeting was convened in document  WTO/AIR/3410, dated 7 August 2009. 
2. Under Agenda Item B.IV of its 54
th Session, the Committee on Regional Trade Agreements 
(hereinafter CRTA or the Committee) took up cons ideration of the Free Trade Agreement between 
Turkey and Albania (hereinaft er 'the Agreement'), goods.  
3. The Chairman  noted that the Agreement had entered into force on 1 May 2008 and had been 
notified by the Parties to the WTO on 9 May 2008 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/REG240/N/1).  The te xt of the Agreement was available, together 
with its Annexes, on the Parties' official webs ites.  The Factual Presentation on the goods aspects 
(document WT/REG240/1, dated 31 March 2009) had been prepared by the Secretariat on its own 
responsibility in full consultation with the Parti es, in accordance with paragraph 7(b) of the 
Transparency Mechanism for Re gional Trade Agreements (document WT/L/671).  In addition, 
written questions and replies were recently dist ributed in document WT/R EG240/2, dated 24 June 
2009.   He proposed to organize the consideration of the Agreement by asking first the Parties and 
then other Members to give any general comments.  The Committee would then turn to the specifics 
of the Agreement using the Factual Presentation to gui de the debate.  He also proposed to go through 
the Factual Presentation by section, and then through the questions and replies document.  
4. The representative of Albania
 was pleased to present the Agreement for consideration by the 
Committee.  Albania was fully committed to properly implementing all its WTO obligations and 
believed that the Transparency Mechanism for RTAs  was an important instrument for providing a 
clear picture on RTAs’ transparency and their im plementation in accordance with WTO rules and 
procedures.  She thanked the WTO Secretariat and th e delegation of Turkey for their cooperation in 
having prepared the Factual Presentation, other WT O Members for their questions on the Agreement, 
and all WTO Members for their presence at the meet ing.  The Agreement was the third RTA notified 
by Albania to the WTO and the second to be cons idered by the Committee, following the Agreement 
with the European Community, which was consider ed by the CRTA in April 2008.  The Agreement 
had been signed on 22 December 2006 and had entered into force on 1 May 2008.  Its objectives were to enhance bilateral economic and commercial relations, promote the expansion of bilateral trade, 
contribute to the removal of barriers to trade, and create conditions for further encouragement of 
investments, particularly to develop joint investments in  the Parties.  Over the last five years, bilateral 
trade had increased 2.7 times.  She believed that th e Agreement would give an important impetus to 
economic relations between the Par ties, by contributing to the development of the Albanian economy 
and enhancing the competitiveness of its products in regional and global markets.  Turkey was one of WT/REG240/M/1 
Page 2  
 
  Albania's main trading partners, as the third largest  import source and fifth largest export destination.  
She considered the Agreement to be an importa nt instrument for increasing Albanian export 
opportunities, and foreign and domestic investments etc.   Turkey was the third largest investor, after 
Italy and Greece, with US$620 million invested in Albania.  Turkish investors were involved in many sectors and, in return, 31 Albanian companies were operating in Turkey, with capital of US$7 million.  
She believed that the Agreement had positively  contributed to the economic and commercial 
environment in both Parties and would take such relations to a superior level in the future. 
5. The representative of Turkey
 thanked the Secretariat for thei r efforts and intense cooperation 
during the preparation of the Factual Presentation.  She reaffirmed Turkey's strongest support for a rules-based multilateral trading system under the WT O, and for strengthened rules, disciplines and 
mechanisms on RTAs.  The Agreement had been signed in Tirana on 22 December 2006 and had 
entered into force on 1 May 2008.  It aimed at th e gradual establishment of a free trade area for trade 
in goods by 2013.  Under the Agreement, Turkey  had abolished all customs duties on imports of 
industrial goods originating in Albania upon its entr y into force.  Albania would gradually abolish 
customs duties on imports of industrial products origin ating in Turkey over a transitional period of up 
to five years starting from the entry into force of th e Agreement.  Protocol I to the Agreement covered 
preferential trade on agricultural products.  The exchange of concessions took place on selected products in the form of tariff quotas with reduced or  eliminated rates of customs duty.  The Parties 
would examine the possibility of granting each other further concessions on agricultural products within the Joint Committee, by taking into account de velopments in bilateral agricultural trade and the 
consequences of the multilateral trade negotiations.  As a result of the concessions provided by the 
Agreement, the Parties had liberalized 96%  of their bilateral trade in goods.   
6. The definition of originating products and the methods of administrative cooperation were set 
out in Protocol II of the Agreement.  Under Protoc ol II, the Parties applied bilateral cumulation of 
origin.  Under the Stabilization and Association Pr ocess, initiated by the European Union (EU), the 
Parties had agreed to amend the “Protocol on Ru les of Origin” to provide diagonal cumulation 
between Turkey, Albania and the EU.  On 30 July  2009, in Ankara, Turkey signed the Joint 
Committee Decision amending the protocol of rules of origin under the Agreement from bilateral 
cumulation to diagonal cumulation.  The new Protocol  would enter into force as soon as the internal 
ratification procedures were completed by the Par ties.  For the proper functioning of the free trade 
area, the Agreement also contained provisions on state monopolies, competition, public procurement, 
protection of intellectual property rights, and c ooperation between customs administrations.  Among 
the regulatory provisions, standards, subsidies, safeguard, dumping and countervailing measures were 
laid down in conformity with th e relevant WTO Agreements.   
7. In 2007, the volume of bilateral trade was US $319 million an increase of 41% compared to 
the previous year.  In 2008, the volume of b ilateral trade had continued to increase reaching 
US$343 million with an increase of 8%.  In 2007, Tu rkish exports to Albania were valued at US$295 
million, while imports from Albania were around US$24 million.  In 2008, Turkish exports to Albania 
were US$306 million increasing by 4%, while imports from Albania at around US$37 million had increased by 54%.  These figures showed that, especia lly in the last two years, there had been a 
gradual increase in bilateral trade.  After the signing  of the Agreement in 2006, a rapid increase in  
Turkish investments in Albania had also been w itnessed.  In 2007, Turkish investments in Albania 
had increased from US$2 million to US$53 million.  In 2008, the positive trend had continued and 
Turkish investments was US$58 million an increase of 9% compared to 2007.  This positive trend was 
a clear sign that the Agreement had served as a stim ulus for increasing investments.  The Agreement 
had not only contributed to expanding bilateral tr ade, but also to the industrial and economic 
development of the Parties.  However, a comparis on of the first half of 2008 and 2009, showed a 
downward trend in bilateral trade.  In the first half  of 2009, Turkish exports to Albania were valued at 
US$130 million decreasing by 18%, while Turkish imports from Albania were valued at US$2 
million, a decrease of 89%.  The recent economic crisis was the main reason for the decrease in  WT/REG240/M/1 
 Page 3 
 
 
  bilateral trade and she believed that this situation would be reversed over a short period of time due to 
the trade and investment opportunities created by the FTA.  
8. The representative of the United Stated  thanked the Parties and the Secretariat for the 
information provided on the Agreement.   Paragra phs 15 and 16 and Tables AI.1 and AI.2 of the 
Factual Presentation showed that Turkey had elim inated duties on 84.9% of all tariff lines, covering 
92.5% of imports from Albania.  Although 97.6% of non-agricultural tariffs were duty-free, only 
15.9% of Turkish agricultural tariff lines were duty-free under the Agreement.  Albania was to eliminate duties on 82.4% of all tariff lines, co vering 90.1% of imports from Turkey under the 
Agreement.  Although 99.9% of non-agricultural ta riffs were duty-free, only 14.7% of Albania's 
agricultural tariff lines were to become duty-fr ee under the Agreement.  Paragraph 12 and the 
corresponding footnote of the Factual Presentation noted  that the Parties had agreed to examine the 
possibility of granting each other further concessions  on agricultural products.  As of March 2009, no 
further concessions on agricultural products had be en granted.  While commending the Parties for 
having eliminated tariffs on a high percentage of  their non-agricultural tariffs under the Agreement, 
the United States was disappointed by the Parties' highly disproportionate liberalization between the 
non-agricultural and agricultural sectors.  Eliminati on of only 14.7% and 15.9% of their agricultural 
tariff lines was even less ambitious than the elimina tion of only 18.7% of Turkey's agricultural tariff 
lines in its Agreement with Tunisia, which had been considered in the 53
rd meeting of the CRTA.  
Although a high percentage of the Parties' overa ll current trade was maybe covered under the 
Agreement,  it was unclear how such minimum c overage of the agricultural sector would qualify as 
satisfying the substantially all trade requirement.   The United States believed that the Agreement 
appeared to exclude the agricultural sector for most intents and purposes and was interested in 
knowing if it was Turkey's intention to continue w ith this approach of selec tive liberalization in its 
future bilateral trade agreements.  All WTO Memb ers had their own sensitivities.  However, in the 
United States' experience and observations,  RTAs  with limited coverage or significant carve-outs 
only solidified these sensitivities over time, compli cating the effectiveness of the multilateral system 
and appearing to prevent its progress.   
9. The representative of Turkey  replied that the Parties had exchanged substantial concessions 
on industrial goods.  Due to the high sensitivities in the agricultural sector, they had decided to grant 
certain concessions within tariff quotas at this stage.  Even if these concessions were to be considered 
as limited, they constituted important market acce ss opportunities for each of the Parties.  In this 
regard in 2008, agricultural products under prefer ences had corresponded to 66% of total Turkish 
agricultural exports to Albania;  the corresponding figure for the first half of 2009 had been 71%.  
With respect to Turkish imports from Albania, th e figure had corresponded to 26% in 2008 and 95% 
in the first semester of 2009.  Taking into account  the sensitivity of the agricultural sector, Turkey 
believed that this was satisfactory.  The representative of Albania  pointed out that the Agreement had 
been negotiated in 2005-2006;  at that time, the ge neral sensitivity of the agricultural sector had been 
higher in Albania, and also there had been a high concentration of the Albanian population in rural 
areas.  For these reasons, Albania had decided to liber alize less in the agricultural sector than in the 
industrial sector.  Nevertheless, taking into acc ount new developments in trade and Albania's 
commitments to further liberalize, Albania would be willing to evaluate the possibility of further 
granting and requesting concessions in the agricultural sector.  However, for the time being, due to the 
sensitivity of the sector, Albania would maintain the cu rrent level of liberalization in the Agreement.  
10. The representative of the European Communities (EC)  thanked the Parties for presenting the 
Agreement.  As the United States had pointed out, the Agreement was not sufficiently balanced in 
sectoral coverage, and she encouraged the Parties to  make further commitments in those areas not yet 
liberalized.  Even if the Agreement did not envisag e a general review mechanism, Article 33 provided 
for an evolutionary clause under which a Party may request to extend the scope of the Agreement.  
She encouraged the Parties to make use of this clau se and to review their current commitments so that 
they could be further improved, and consequently benefit from wi der trading opportunities in all WT/REG240/M/1 
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  sectors.  The representative of Turkey
 did not exclude the possibility of using the evolutionary clause 
in the future to further improve concessions.   
11. The representative of the EC  noted from paragraph 29 and Box II.3 of the Factual 
Presentation that there were some discrepancies in  the conditions for outward processing with respect 
to rules of origin.  Article 12-13 of Protocol II of the Agreement established that outward processing 
outside the Parties' territories normally did not conf er originating status unless certain conditions were 
fulfilled.  In addition, outward processing was not allowed for textile products of HS Chapters 50 to 
63.  However, Box II.3 indicated that outward processing was not authorized.  She understood that this should read as the use of outward processing in the context of origin acquisition was limited and 
asked the Parties to confirm if her understanding w as correct and clarify further the conditions for 
outward processing.  With respect to export restrict ions, she noted that the Agreement provided for 
the elimination of existing, and the prohibition of  new export restrictions and export taxes which 
applied only to industrial products and asked the Par ties to explain the reasons for not extending this 
commitment to agricultural products.  The Parties indicated that they would answer the question on 
rules of origin in writing.  On export restrictions, although Albania
 did not provide for prohibitions on 
export duties and restrictions, it did not apply an y export duties neither on agricultural nor on 
industrial goods.  The representative of Turkey  noted that the question posed  by the EC had also been 
submitted in writing by Oman, and the response had b een provided by the Parties, according to which 
although the Parties were fully aware that any su ch application should be in compliance with 
paragraph 2(a) of Article XI of GATT 1994, they also believed that flexibilities were provided to 
Members without prejudice to Article 12 of the Ag reement on Agriculture.  In the Agreement, the 
Parties agreed to eliminate all customs duties a nd charges having equivale nt effects on export and 
import of industrial products.  However, due to the sensitivity and the importance of the agricultural 
sector, the Parties preferred to maintain this ri ght in the preferential regime under the conditions 
defined in GATT Article XI and the WTO Agreement on Agriculture.  
12. The Chairman  noted that the consideration of the goods aspects of the Free Trade Agreement 
between Turkey and Albania had allowed the Comm ittee to clarify a number of questions and oral 
discussion of the Agreement could be concluded in accordance with paragraph 11 of the Transparency 
Mechanism.  If any delegations wished to ask fo llow-up questions they were invited to forward 
submissions in writing to the Secretariat by 22 September 2009  and the Parties were asked to submit 
replies  in writing by no later than 6 October 2009.   In accordance with paragraph 13 of the 
Transparency Mechanism all written submissions , as well as minutes of this meeting would be 
circulated promptly, in all WTO official la nguages, and would be made available on the 
WTO website. 
13. The Committee took note  of the comments made. 
__________