Document: WT/DS334/R Page D-1 ANNEX D REBUTTAL SUBMISSIONS BY THE PARTIES Contents Page Annex D-1 Executive summary of the rebuttal submission by the United States (15 December 2006) D-2 Annex D-2 Executive summary of th e rebuttal submission by Turkey (20 December 2006)
Date: 15 December 2006
Document codes: WT/DS334/R
Complainant: U.S.
Respondent: Turkey
Third parties: Argentina, Australia, China, Egypt, EU, South Korea, Pakistan, Thailand
Dispute stage: Panel
Agreements cited: Art. XI:1, X:1, X:2, III:4, X:3(a)  GATT 1994Art. 4.2  AgricultureArt. 1.4, 3.3, 3.5(e), 3.5(f), 3.5(b), 3.5(d), 3.5(g), 3.5(h), 1.2, 1.3, 1.5, 1.6, 3.2, 3.5(a), 5.1, 5.2, 5.3, 5.4  Import LicensingArt. 2.1, Annex 1  Trade-Related Investment Measures (TRIMs)

ANNEX D

REBUTTAL SUBMISSIONS BY THE PARTIES

Contents Page
Annex D-1 Executive summary of the rebuttal submission by the United States
(15 December 2006)
D-2
Annex D-2 Executive summary of th e rebuttal submission by Turkey
(20 December 2006)
D-10

ANNEX D-1

EXECUTIVE SUMMARY OF THE REBUTTAL SUBMISSION
BY THE UNITED STATES
(15 December 2006)

1. Turkey has employed a non-transparent, discr etionary import licensing system for rice that
prohibits or restricts the importation of rice and provi des less favourable treatment to whatever rice is
imported in spite of the hurdles Turkey has imposed . Turkey requires importers to submit an import
license – the Control Certificate i ssued by Turkey's Ministry of Agriculture and Rural Affairs
("MARA") – in order to import rice. Turkey has furthermore restricted rice imports by declining to
issue such Certificates. Further, since Sept ember 2003, Turkey has applied a tariff-rate quota
("TRQ") for rice under which it requires importers to submit two import licenses (the Control
Certificate and an import permit from Turkey's Foreign Trade Undersecretariat ("FTU")) to import at
the in-quota rates and also to purchase domestic ri ce. Turkey's import licensing regime for rice is
inconsistent with several provisions of the General Agreement on Tariffs and Trade 1994 ("GATT
1994"), the Agreement on Import Licensing Procedures ("Import Licensing Agreement"), the
Agreement on Agriculture ("Agriculture Agreement"), and the Agreement on Trade-Related
Investment Measures ("TRIMs Agreement").

2. Despite Turkey's claims, the Control Certif icate is neither required for customs purposes nor
does it establish the fitness and co mpatibility of imported products w ith the relevant phytosanitary
standards. The Control Certificate is not used fo r customs purposes; in fact, the Certificate is in
addition to the normal customs documentation. Nor is it submitted to Turkish Customs – instead it is
submitted to MARA. Further, MARA conducts its in spections for fitness and compatibility only after
it has already granted a Control Certificate, so the Certificate is not even necessary for phytosanitary
purposes. Therefore, MARA has no reason to require an importer to obtain a Control Certificate other
than to provide MARA with an opportunity to permit or deny the importation of rice.

3. With respect to the over-quota rates, MARA has imposed restrictions on the issuance of
Control Certificates to import rice. The United States has provided extens ive documentary evidence
that Turkey denies these import licenses pursuant to so-called "Letters of Acceptance," in which the
Minister of Agriculture orders the blanket denial of Control Certificates to those importers who do not
purchase domestic paddy rice. When importers have challenged MARA's denial of Control
Certificates in Turkish court, Turkey has successfully defended its failure to issue Certificates. At
least two courts have agreed with Turkey that th e Letters of Acceptance are binding, and that MARA
is acting in accordance with Turkish law in not granting the Certificates.

4. Turkey has completely ignored this documen tary evidence in its su bmissions. In fact,
Turkey's arguments before this Panel are diamet rically opposed to the arguments it advances in
Turkish court. Turkey's arguments in this proceedi ng are inconsistent with the Letters of Acceptance,
the rejection letters MARA issued to importers, a nd recent domestic court decisions. Instead, Turkey
focuses on its unverified Control Certificate data. Ho wever, such data only serve to confirm that the
restrictions on the issuance of Control Certifi cates at the over-quota rates are in place and being
enforced. Further, the United States has provided evid ence, in the form of the Letters of Acceptance,
rejection letters, and court documen ts, that Turkey's import licensing system for rice is discretionary,
which is all that is needed to support finding s that MARA's Control Certificates constitute a
restriction on importation under Article XI:1 of the GATT 1994 and a breach of Article 4.2 of the
Agreement on Agriculture.

5. With respect to in-quota qu antities of rice, Turkey makes th e receipt of import licenses from
FTU contingent upon the purchase of large quantities of domestic paddy rice (t he "domestic purchase

requirement"). This domestic purchase requirement is an additional import restriction that is
inconsistent with Article XI:1 of the GATT 1994 an d Article 4.2 of the Agriculture Agreement. And
because only domestic rice qualifies for the purchase requirement, Turkey's requirement alters the
conditions of competition in a manner that discr iminates against imported rice. Consequently,
imported rice receives treatment less favourable than domestic rice and Turkey's requirement is
inconsistent with Article III:4 of the GATT 1994.

The Control Certificate is an "Import License" Under Article XI:1 of the GATT 1994

6. The Certificate of Control is an "import license" for purposes of Article XI:1 of the GATT
1994 because MARA requires a Certificate in order for importation to take place. In paragraphs 59-
62 of the US First Submission, the United States noted that the ordinary meaning of the term "import
license" was "formal permission from an authority to bring in goods from another country". In order
to import rice into Turkey, an importer has to obtai n a Certificate of Control from MARA. To obtain
the Certificate, an importer must follow certain pr ocedures, including completing an application form
and attaching an invoice. Because a Certificat e of Control from MARA constitutes formal written
permission from the Government of Turkey to import goods – in this case, rice – from another
country, a Certificate is an "import license" within the ordinary meaning of that term. Footnote 1 to
Article 1 of the Import Licensing Agreement, whic h provides relevant context for interpreting the
term "import license" in Article XI:1, clarifies that a Member's characterization of a particular
procedure as something other than "licensing" cannot be used to evade the disciplines of the Import
Licensing Agreement.

7. Turkey has attempted to characterize the Cer tificate of Control as something other than an
import license by arguing that the Certificate "amo unt[s] to administrative forms that are required
exclusively for 'customs purposes'." Turkey set forth a list of customs-related items that, if requested
by a document, would allegedly prove that doc ument was exclusively for customs purposes (and
hence should not be considered an import license). It then asserted that, since MARA requests that
importers provide such customs-related information in their applications for Control Certificates, such
Certificates are clearly used for customs purposes and, as a consequence, are not import licenses for
purposes of Article XI:1.

8. Of course, the question is not what information is requested for a document, but rather what is
the function of the document. It would not be di fficult for Members to provide that every import
license asked for nothing more than some subset of the informati on normally requested for customs
purposes. That would not render every import license exempt from the disciplines of the covered
agreements. In this instance, if the Control Cer tificate were truly no more than ordinary customs
documentation, the United States would not be pro ceeding with this dispute. But clearly Control
Certificates are very different from ordinary cust oms documentation. Not only are they separate and
apart from the ordinary customs documentation that Turkey also
 requires; in fact, they are not even
documents of Turkish Customs, but of MARA. And th ey do not serve to facilitate customs entry. To
the contrary, they serve to restrict entry.

9. Turkey's argument is not even consistent w ith Turkey's own approach, particularly its own
statement that the FTU import permit is an import license. The FTU import permit, which Turkey
requires from importers in order to import rice under the TRQ, arguably collects even more customs-
related information than the Control Certificate does, and so, by Turkey's logic, should not be
considered an import permit. At bottom, however, Turkey's proposed interpretation is flawed because
it is contrary to customary rules of tr eaty interpretation, as reflected in the Vienna Convention on the
Law of Treaties.

10. Article 31(1) of the Vienna Convention provides that: "a treaty shall be interpreted in good
faith in accordance with the ordinary meaning to be given to the terms of the treaty in their context

and in the light of its object a nd purpose". For purposes of the Article XI:1 analysis, one relevant
term whose ordinary meaning must be discerned is "import license". The United States has shown
that the ordinary meaning of the term "import lic ense" is "formal permission from an authority to
bring in goods from another country" and the United States has gone on to explain the text in its
context and in light of the Agreement's object and purpose. Turkey, however, has ignored the
ordinary meaning of the term "import license".

11. MARA's Control Certificate clearly lies with in the ordinary meaning of the term "import
license". If a form constitutes formal permission from an authority to bring in goods from another
country, it is an "import license" under the ordinary meaning of the terms in Article XI:1. Here, the
Certificate of Control fits this criterion. Without this document, which must be approved by MARA,
not Turkish Customs, Turkey does not permit importers to import rice into Turkey. The Certificate is
not something that is obtained by presenting go ods at the border to customs and providing the
necessary information to clear customs. Rather it is obtained in advance of shipment – in fact it
would appear prudent to obtain it before making a sale of the rice. It is a prerequisite for importation
in addition to the ordinary customs documentation.

12. Instead of explaining the ordinary meaning of the term "import license" in Article XI:1 of the
GATT 1994, Turkey has seemingly argued that the term must be limited by the definition of the term
"import licensing" in Article 1 of the Import Licensi ng Agreement. Turkey seems to suggest that, as
import licenses under the Import Licensing Agreement are "procedures ... requiring the submission of
an application or other documentation (other than that required for customs purposes)", if the Control
Certificate requires documentation for customs purposes, it is not an import license for purposes of
Article XI:1. Turkey's argument is incorrect.

13. The definition of "import licensing" in Article 1 is prefaced with the phrase "[f]or purposes of
this Agreement," which acts to limit that specific definition to the provisions of the Import Licensing
Agreement. That definition is not a definition for purposes of Article XI:1 of the GATT 1994 nor is it
an exemption to Article XI nor does it restrict th e scope of Article XI. Rather, the definition is
relevant context for interpreting the meaning of the term "import license" in Article XI:1 of the GATT
1994. And in any event the context provided by th e Article 1 definition confirms that the term
"import license" in Article XI:1 covers the Certif icate of Control. That definition of "import
licensing" contains two key phrases that are relevant for the Panel's Article XI:1 analysis. The
definition (1) covers administrative procedures "u sed for the operation of import licensing regimes"
but (2) exempts from its scope those administrati ve procedures that require the submission of
documentation "required for customs purposes".

14. With respect to the first point, the fact th at a document is necessary in order to clear customs
does not mean that it is not an import license. Ind eed, the very nature of an import license is that it
will be used for customs purposes since importation ca nnot occur without it. The relevant inquiry is
simply this: what else is the form in question actua lly used for? In this case, the Certificate of
Control, which is approved by the Turkish Ministry of Agriculture, not Turkish Customs, is being
used as an import license: the document, when i ssued, constitutes formal written permission from the
Government of Turkey to import rice. Turkey is not granting these Certificates outside the TRQ for
imports of non-EC origin rice in order to enforce restrictions on such imports. Regarding the second
point, the question is what is "required" for "cus toms" purposes. According to the ordinary meaning
of those terms, this provision provides an exemption from the disciplines of the Import Licensing
Agreement for administrative procedures requiring the submission of documentation that is necessary
for purposes of a government's levying of duties on imports.

15. Customs authorities throughout the world collect information from importers with respect to
the type of good being imported, quantity, value, and country of origin. All of these pieces of
information are "required" in order for a customs authority to make a determination as to how much

of a duty to levy upon the import of a particul ar good. MARA's Control Certificate does not
contribute to this process, since it is completely d uplicative of what Turkish Customs already requires
importers to provide separately. As would be expected, Turkish Customs requires that importers
supply information that is necessary for a customs authority to be able to levy duties on imported
merchandise, including: importer identification information, HTS number, description of the
merchandise, quantity, country of origin, value, country where the merchandise was loaded, and the
port. MARA requires that an importer submit much of this same information on its application for a
Control Certificate. It is clear that MARA's Control Certificate is not "required" for customs purposes
when Turkish Customs itself already collects this information. Thus, the context provided by
Article 1 supports a finding that the Control Certif icate is an import license within the ordinary
meaning of that term under Article XI:1 of the GATT 1994.

16. MARA requires that importers obtain a Control Certificate in order to import rice for the
reason suggested in the name of the document: MARA has injected itself into the importation process
for purposes of "control". As evidenced by the Le tters of Acceptance, MARA uses the denial of
Certificates of Control outside the TRQ to control all imports of rice into Turkey.

17. Turkey also has argued that one of the purpo ses of the Control Certificate is to ensure the
fitness and compatibility of goods with health standards and that MA RA will only approve a
Certificate when the product to be imported has me t certain requirements, including "fitness for use".
But Turkey and the United States agree that MARA does not even collect the phytosanitary certificate
and make its inspection until after
 MARA has already granted the Control Certificate. Accordingly,
Turkey's argument that the Control Certificate process is meant to ensure the fitness and compatibility
of imported products with health standards is not supported by the facts.

Recent Court Decisions Confirm That the "Letters of Acceptance" Are Legal Restrictions
Under Turkish Law and That Turkey Prohibits or Restricts Importation of Rice in
Contravention of Article XI:1 of the GATT 1994

18. Turkey has continued to advance the argumen t that the Letters of Acceptance are internal,
informal documents that are unenforceable and have no legal status in Turkey, and that the instances
where the United States has documented that MARA h as denied the issuance of Control Certificates,
such as the Torunlar case, are ex ceptions from the norm. In making this argument, Turkey has
ignored the contents of the Letters, which impose a bl anket denial of Control Certificates outside the
TRQ governing all imports of rice into Turkey. Turk ey has also ignored the content of the rejection
letters and the court documents submitted by the Un ited States, which make clear that the denials of
Control Certificates are not based on importers' failure to meet particular administrative requirements
in individual cases, but rather that MARA simp ly does not issue Control Certificates unless an
importer purchases domestic paddy rice. Turkey's argum ent also fails to accord with the fact that, in
April 2006, a Turkish court agreed with MARA's pos ition that the Letters of Acceptance provided for
a blanket denial of Control Certificates to impor ters who do not purchase domestic paddy rice. In
sum, Turkey's arguments before the Panel rega rding the legal validity and enforceability of the
Control Certificates stand in sharp contrast to the arguments it has made in domestic court and
contradict the facts.

19. Turkey has now acknowledged that there have been 14 lawsuits brought by importers against
MARA with respect to MARA's failure to grant a Control Certificate, nine of which are ongoing and
five of which were decided in favour of the government's position. The United States does not
possess copies of all of the briefs and court deci sions but, in two of those cases, counsel for MARA
argued that the Letters of Acceptance precluded the granting of Control Certificates – and the relevant
Turkish court agreed, denying the importer's motion for a stay.

20. For example, the court's decision in the He lin case makes clear that MARA is correct under
Turkish law in relying on the Le tters of Acceptance to deny Contro l Certificates to applicants.
MARA argued that it was simply following "the le tter and spirit of the law" when it relied on the
Letters of Acceptance to deny a Control Certificate to Helin, and the court agreed, finding no basis for
Helin's claim that MARA acted illegally. It is al so clear from the court decision that the Letters are
sweeping in scope; they apply to all rice imports, not simply those covered by Helin's case. Further, it
is clear from the decision that the denial in Helin's case had nothing to do with any alleged failure on
the part of the importer to provide certain documen ts or comply with the applicable administrative
requirements. MARA did not issue a Control Certificate for the simple reason that, pursuant to
Ministerial approvals by the Minister of Agriculture, it does not issue them.

21. In sum, Turkey has relied on the Letters of Acceptance as the basis for denying Control
Certificates to importers. It has argued in its own domestic courts that the Letters of Acceptance are
binding under Turkish law and that, as a result, MARA must deny the issuance of Control
Certificates. The Turkish courts have agreed w ith the government's position. And, according to
Turkey, the government is bound to comply with court decisions, in whole and without delay,
pursuant to the Turkish Constitution. This contrasts with Turkey's argument before this Panel that the
Letters of Acceptance are informal, internal documen ts that are unenforceable by Turkish courts and
have no legal standing in Turkey.

Control Certificate Data Provided by Turkey Conf irms That Turkey Has Restrictions in Place
on the Issuance of Control Certificates for Non-EC Origin Imports Outside the TRQ

22. As just discussed, Turkey's Minister of Agricultu re has ordered officials in his Ministry not to
grant Control Certificates in clearly-worded, unambiguous documents. When importers have sued the
government in Turkish court to demand that they be issued Control Certificates, Ministry lawyers
have argued that MARA is bound by such orders. The Turkish courts have ruled in favour of the
government's position. These facts alone demonstrate th at Turkey is in breach of Article XI:1 of the
GATT 1994. Thus, an examination of import and Co ntrol Certificate data is unnecessary to establish
that Turkey is in breach of Article XI. Neverthe less, the US analysis of that data only serves to
confirm that Turkey has imposed restrictions on the importation of non-EC origin rice outside the
TRQ regime.

23. As a preliminary matter, the United States notes that Turkey has not provided copies of the
actual Control Certificates, as the Panel requested, or even identified the importers. As a result, the
United States is unable to confirm that the data are accurate. Further, the data leave many questions
unanswered. Nevertheless, the da ta strongly support th e US claim that there is a prohibition or
restriction on imports at the over-quota rates of duty. Second, Turkey argues that it has granted a
certain number of Certificates of Control over a given period of time. But that does not address the
fact that Turkey is prohibiting or restricting imports at the over-quota rates. Thus, the question is not
whether Certificates are being granted in general, but whether Certificates are being granted for MFN
trade (that is, not involving in-quota quantities or im ports of EC origin milled rice which, under the
EC Quota Arrangement, enter Turkey duty free and are exempted from Turkish import restrictions).

24. Turkey's own data on Control Certificates re veal that, from September 10, 2003 through April
1, 2006, MARA in fact did not grant Control Certificates for non-EC origin imports of rice outside the
TRQ regime, except for two brief pe riods of time, covering minuscule amounts of rice. The data
indicate that, with few, relatively small excepti ons, the Certificates MARA granted were for rice
under the TRQ. When the TRQ closed, imports of non- EC-origin rice declined to very low levels, or
ceased altogether. Therefore, the data submitted by Turkey lend additional confirmation to the US
claim that MARA is enforcing a prohibition or restriction on MFN trade in rice.

Even if Turkey Were Not Enforci ng the Restrictions on Over Quota Imports, Such Restrictions
Would Still Constitute a Prohibition or Restriction on Importation Under Article XI:1 of the
GATT 1994 and Discretionary Import Licensing Under Article 4.2 of the Agreement on
Agriculture

25. The United States has provided evidence that Tu rkey prohibits or restricts the importation of
rice outside the TRQ regime. The Letters of Acceptance, on their face, constitute an import
prohibition or restriction. In the Letters of Accep tance, the General Directorate of the Turkish Grain
Board recommends to the Minister of Agriculture th at Control Certificates are not to be granted for
specified periods of time, and the Minister of Agriculture signs the documents, thereby providing
Ministerial approval for that decision. In addition, when importers have filed suit against MARA for
not granting such Certificates for the import of ri ce outside the TRQ, MARA has relied on the fact
that the Letters of Acceptance provide that no Contro l Certificates are to be granted as the sole legal
basis for denying them. At least two Turkish cour ts have agreed with MARA that the Ministerial
approvals contained in the Lette rs of Acceptance have effect under Turkish law and that, as a
consequence, MARA cannot issue Control Certifi cates. Further, the import data and Control
Certificate data confirm that Turkey has restrictions in place on the issuance of Control Certificates
outside the TRQ for rice of non-EC origin.

26. Turkey's Control Certificate data confirm th e presence of restrictions on over-quota imports
of rice, although there were a few alleged instances where Turkey did grant Control Certificates for
non-EC imports outside the TRQ. These instances are, as of yet, unverifiable because Turkey has not
made the actual Certificates available for inspecti on, and the majority of those Certificates were
allegedly granted in a six-week time period imme diately following a meeting of the WTO Committee
on Agriculture where the United States was highly critical of Turkey's import licensing regime for
rice. However, for the United States to demonstr ate successfully that Tu rkey is in breach of
Article XI:1 of the GATT 1994 and Article 4.2 of the Agreement on Agriculture, the United States is
not required to show that no Control Certificates were granted at the MFN rate. The United States has
demonstrated that Turkey is restricting at least some trade in rice, and that is sufficient to demonstrate
a breach of Article XI:1.

27. Further, there are restrictions in place on thei r face in the form of the Letters of Acceptance;
Turkey has relied upon those documents in open court as the legal basis for denying Control
Certificates; and the Turkish courts have agreed with the Turkish government that the petitioning
importers have no grounds for their lawsuit because the Letters of Acceptance are clear that
Certificates are not to be granted. The fact that a few Certificates may have been issued does not
change the fact that there is a legal prohibition or restriction in place. The Letters of Acceptance are
an order from Turkey's Minister of Agriculture to the Provincial Agricultural Directorate that Control
Certificates are not to be granted to importers who do not purchase domestic paddy rice. If importers
were not already dissuaded by the Letters, it is unlikely that importers would have mis-read the
significance of the court decisions described above.

28. Even if Turkey's data had demonstrated that the Letters of Acceptance were not enforced at
all, that would not change the conclusion that th e Letters breach Article XI:1 of the GATT 1994. A
mandatory measure may still be found WTO-inconsiste nt even if it is not being enforced. In the US –
1916 Act dispute, the Appellate Body agreed that the pa nel could find a statute inconsistent "as such"
with provisions of the covered agreements, desp ite the fact that the United States had never
successfully prosecuted a case under the statute a nd had never imposed the criminal penalties
provided in case of a violation. And in the Malt Beverages (GATT) dispute, the panel found that
mandatory legislation that was either not being en forced or only being enforced nominally did not
shield measures from being found in breach of the GATT 1947.

29. Here, it is clear that Turkey is enforcing the Letters of Acceptance, with the support of the
Turkish judicial branch, and the United States has documented several instances of where the
restrictions on the issuance of Control Certificates ha ve been enforced, in the form of letters and court
documents. Nevertheless, as noted by the Malt Beverages (GATT) panel, non-enforced mandatory
measures may still breach a Member's obligations, and can affect the decision-making of economic
actors. Here, even had they not been enforced, the Letters of Acceptance were known to many
importers, and, as a consequence, could have deterred them from appl ying for Certificates to import
rice at the MFN rates, or led them to seek to im port under the TRQ. Thus, even were the Panel to
conclude that the Letters were not enforced at all, the Panel should still find, in line with findings of
past panels with respect to non-enforced mandatory measures, that Turkey's restrictions on MFN trade
in rice are inconsistent with Article XI:1.

30. Lastly, Turkey's failure to issue Control Cer tificates for the import of rice at the over-quota
rates of duty breaches both Article XI:1 of the GATT 1994 and Article 4.2 of the Agreement on
Agriculture because it constitutes discretionary impor t licensing. The Communiqués provide that, in
order to apply for a Control Certificate, importers must submit the Certificate application form, the
pro forma invoice or invoice, and "other documents which may be asked for, depending on product,
by the Ministry". This language appears to provi de MARA with the discretion not to grant Control
Certificates if an importer does not present certain unspecified documents – for example, a receipt
showing that the importer has procured the appropria te quantity of domestic paddy rice. The Letters
of Acceptance, even if they are, as Turkey implau sibly argues, "informal internal documents" that are
never enforced, provide strong evidence of this discr etion. In each Letter cited by the United States,
Turkey's Minister of Agriculture accepts r ecommendations from the Provincial Agricultural
Directorate to delay the start date for issuance of C ontrol Certificates. Therefore, it is certainly clear
that Turkey believes it has the discretion not to grant Cont rol Certificates if it wants to, and the United
States has provided documentary evidence highlighti ng instances where Turkey has denied or failed
to grant such Certificates. Discretionary impor t licensing is prohibited under Article 4.2 of the
Agreement on Agriculture as well as Article XI:1 of the GATT 1994. Accordingly, Turkey's
discretionary import licensing system for rice is a prohibited measure under Article 4.2 of the
Agreement on Agriculture, as well as a restriction on importation under Article XI:1.

Turkey's Domestic Purchase Requirement Provi des Less Favourable Treatment to Imported
Rice in Breach of Article III:4 of the GATT 1994 and Imposes an Additional Cost on Importing
Rice in Contravention of Article XI:1 of the GATT 1994

31. The United States has made two claims with resp ect to Turkey's requirement that importers of
rice under the TRQ purchase large quantities of domes tic paddy rice as a condition upon importation.
First, the United States has argued that the dom estic purchase requirement breaches Article III:4 of
the GATT 1994 because Turkey predicat es the ability to obtain a license to import rice under the
TRQ, and hence to sell rice domestically, on purch asing domestic rice rather than imported rice.
Purchasing imported rice does not provide the same benefit, thereby altering the conditions of
competition and providing an incentive to purchase domes tic rice. Thus, imported rice is treated less
favourably than domestic rice.

32. The United States also has argued that the domestic purchase requirement imposes an
additional cost on importing rice, thereby constitu ting a restriction on importation contrary to
Article XI:1 of the GATT 1994. In sum, the Unite d States has argued that it is more expensive to
purchase one, two, or three tons of domestic rice as a condition upon importation, than to purchase
zero
 tons of domestic rice in order to import. Turkey has been unable to rebut the US argument
because it is a mathematical impossibility that it would cost an importer more to purchase zero tons of
rice than it would to purchase x tons of rice, wher e x is any number greater than zero. Turkey
completely ignores this fact, instead focusing its an alysis on the cost of each ton that is purchased,

when the relevant question is the total cost to the importer of having to comply with the domestic
purchase requirement in order to import rice.

33. Turkey also argues that, through the TRQ, it is simply pursuing the "legitimate objectives" of
"greater market supply" and "market stabilization". On this point, the United States would simply
note that Turkey has not invoked an Article XX defense in this dispute, and neither of the objectives
cited by Turkey are listed in Article XX.

34. Turkey has argued that the US calculation of the cost of domestic purchase in Exhibit US-52,
where the United States set forth several possibl e domestic purchase scenarios under the third TRQ
opening, is inaccurate. Yet Turkey has failed to id entify which specific figures in the model it finds
objectionable. This is not surprising, since the United States utilized numbers that were supplied by
Turkey or are consistent with data provided by Turkey.

Turkey's Argument That the Domestic Purchas e Requirement Was Not Meant to Promote the
Development of Turkey's Rice Industry Is Not Credible

35. The United States has argued that the TRIM s Agreement does not require that a Member
demonstrate the existence of a TRIM, in addition to showing that a measure satisfies the elements of
the illustrative list contained in the Annex to that ag reement, in order to pr ove a breach of the TRIMs
Agreement. However, even if it were necessary for the United States to show that the domestic
purchase requirement is a TRIM in order to prevail on the Article 2.1 claim, the United States has
done so. Turkey's professed inability to unders tand how the TRQ could have possibly affected
investment in the domestic rice sector is not cr edible. The TRQ regime serves to aid in the
development of the Turkish rice industry and this eff ect is intended. Turkey is forcing rice importers
to purchase large quantities of domestic rice as a condition upon importation. This scheme makes it
much more likely that rice produced by Turkish farm ers will be purchased, and at higher prices. The
Letters of Acceptance, as well as the substantial increase in Turkish produc tion of paddy rice since
2003, confirm that Turkey instituted the domestic purchase requirement in order to strengthen the
domestic rice industry.

36. The reasoning of the Indonesia – Autos panel on the investment issue supports the US
argument that the domestic purchase requirement is a TRIM. The panel found that the Indonesian
measures met the alleged "investment requirement" because they "aimed at encouraging the
development of a local manufacturing capability for finished motor vehicles and parts and
components in Indonesia. Inherent to this obj ective is that these measures necessarily have a
significant impact on investment in these sectors." Tu rkey notes that the refe rences in the Indonesian
legislation to investment objectives differentiates that measure from the TRQ regime, because the
TRQ legislation does not mention such objectives.

37. But the panel report also provides that "there is nothing in the TRIMs Agreement to suggest
that a measure is not an investment measure simply on the grounds that a Member does not
characterize the measure as such". In other words, the fact that Turkey did not specifically state
investment objectives in the TRQ legislation does not preclude the conclusion that the domestic
purchase requirement has an investment component. If the legal test rested upon a Member's
characterization of a measure, then nothing w ould qualify, because a respondent in WTO dispute
settlement would always characterize the measure at issue as not an investment measure. The
relevant inquiry is what the measure in fact does. Nonetheless, Turkey did indicate in its Letters of
Acceptance that the domestic purchase requirement had investment objectives, and one of those
objectives – strengthening the competitiveness of th e domestic industry – was cited by Indonesia as
one of the investment objectives of the Indonesian measure that was the subject of a successful
TRIMs claim in the Indonesia – Autos dispute.

ANNEX D-2

EXECUTIVE SUMMARY OF THE
REBUTTAL SUBMISSION BY TURKEY
(20 December 2006)

I. INTRODUCTION
1. These rebuttals provide Turkey with the opportuni ty to clarify a number of issues that have
arisen since the First Submission and particularly du ring the Oral Hearing. They are made in the light
of the questions later posed by the Panel and the answers provided by the United States. In them,
Turkey addresses principally the alleged "denial" of approval of Certificates of Control and the TRQ
regime, providing additional elements of clarificat ion and specific rebuttals to the allegations and
statements made by the United States.

II. ON THE ALLEGED DENIAL OF APPROVAL OF CERTIFICATES OF CONTROL
A. T
HE CERTIFICATES OF CONTROL ARE NOT "IMPORT LICENSES"
2. Certificates of Control are not import licenses, but administrative forms that are required
exclusively for " customs purposes". As indicated by Turkey in its First Submission 1, an important
element of interpretative guidance in order to dete rmine what may be considered as an import licence
is to be found in Article 1.1 of the Agreement on Import Licensing Procedures.

3. The United States has not offered any evidence, arguments or legal rationale to define or
circumscribe the concept of " customs purposes ". Turkey believes that, de jure and de facto , its
Certificates of Control are not and have never b een applied as anything other than administrative
forms serving legitimate " customs purposes " and aimed at collecting necessary customs clearance
information and providing a considerable degree of trade facilitation for both importers and customs
authorities.

4. Turkey submits that the " customs purposes" of Certificates of Control are evident both de jure
and de facto. In Turkey, as in all WTO Members, the process of importation and customs clearance is
more than just compliance with the obligation to pa y the applicable duty and other charges. Customs
clearance also includes compliance with all administrative requirements and fulfilment of various
"customs purposes".
2 If all the required information is provi ded by the importers, the Certificates of
Control are automatically approved.

5. Turkey agrees with the United States that the scope and objective of the Agreement on Import
Licensing Procedures cover both the administrative procedures referred to as " licensing" (i.e.,
procedures that are de jure labelled as import licensing procedures) and the other similar
administrative procedures that may function as de facto import licensing procedures, regardless of
how a WTO Member characterizes them.

6. However, Turkey disagrees with the United States that the phrase " other than that required
for customs purposes" is meant to provide an exception from th e application of this Agreement for all
documents that are actually " customs" in nature. Following the argument put forward by the United
States, the Agreement on Import Licensing Procedur es would not apply to customs documentation.
This is not legally correct and clearly escapes the intent and logic of the drafters of the Agreement on

1 See paras. 47-57 of Turkey's First Submission.
2 See, in particular, para. 53 of Turkey's First Submission.

Import Licensing Procedures. One thing is an ad ministrative procedure that serves the purposes of
import licensing regimes (or that de facto acts as an import licensing regime), and another thing is an
administrative procedure that is required for " customs purposes". Turkey concludes that the United
States has misinterpreted the Agreement on Import Licensing Procedures and subsequently jumped to
a hurried, un-demonstrated and un-ev idenced conclusion that, either de jure or de facto , Turkey's
Certificates of Control are not " customs in nature " and are used by Turkey to evade its WTO
commitments under that Agreement3.

7. Turkey strongly disagrees w ith the conclusion reached by the United States in its reply to
Question 58 by the Panel. Along the sa me lines, the United States argues that ' Turkey is using the
denial of the Control Certificate, which has all of the characteristics of an import license, as a WTO-
inconsistent trade barrier ". Again, after having avoided proving that the " customs purposes " of
Turkey's Certificates of Control should not be c onsidered within what the WTO system regards as
"customs" in nature, the United States avoids indicati ng what are to be regarded as the defining
characteristics of an " import license ". Turkey believes that this is an essential point and a crucial
issue in relation to what the Panel is asked to review for purposes of understanding the dispute and
finding a solution.

8. Turkey considers that the actual scope of the " carve-out" for " customs purposes " provided
under Article 1.1 of the Agreement on Import Lice nsing Procedures can only be clarified by an
analysis of what " customs purposes" actually consist of. There is no 'narrow' or 'large' scope of the
"carve-out", once it is assessed that a certain form is meant to comply with "customs purposes".

9. In relation to this, Turkey wishes to emphasize that it is not the scope and the content of the
information requested by MARA for approval of th e Certificate of Control that can change an
administrative document used for " customs purposes" into an " import license". Turkey believes that
the distinguishing factor between an " import license" and other documentation (such as that used for
"customs purposes") is a matter of procedures and not of c ontent of the documentation. In its Oral
Statements, Turkey has already indicated to the Pa nel that the line of argument put forward by the
United States would result in any document used in relation to importation (i.e., SPS certificates,
certificates of origin, certificates of compliance w ith technical regulations) being regarded as an
"import license ". This is not the case. Turkey submits once again that the United States has not
shown which elements of the Certificate of Cont rol turn this administrative document into an " import
license". It has merely asserted that it is an "import license".

10. Turkey would also like to draw the attenti on of the Panel to the trade facilitation purpose of
the Certificates of Control, which is two-fold as it serves both the importers and MARA's officials in
the exercise of their verification and inspection duties. In particular, the Certificates of Control offer
importers a considerable degree of legal certain ty and commercial predictability of customs
procedures (i.e., inspections, identity checks and documentation review).
4

11. On the other side, Certificates of Contro l enhance the necessary efficiency of MARA's
officials in the management of their inspection and control duties. These forms are needed in order to
facilitate the necessary cooperation, between MARA a nd customs authorities, which is required in the
case of imports of agricultural products. In this r espect, Turkey also considers that there is nothing
particularly "revealing" in that it is MARA (i.e., Turkey's Ministry of Agriculture and Rural Affairs)
that approves the Certificates of Control and carries-out customs inspections for sanitary and
phytosanitary purposes.

3 See, in particular, paras. 9-10 of the Oral Statements by the United States.
4 See, in particular, Turkey's Replies to Questions posed by the Panel, question No. 14.

12. Finally, the fact that Certificates of Control are required for all imports, including TRQ
imports which are already subject to an automatic import licensing regime, clearly proves that the
Certificates of Control are required for " customs purposes" only and are not " import licenses". In its
first submission, the United States wrongly stated that rice imports under the TRQ did not require
Certificates of Control and argued that this made cl ear that the purpose of the Certificates of Control
was to act as " import licenses".
5 The United States appears now to accept the fact that Certificates of
Control are required for imports within the TRQ, ye t it still avoids proving legally and factually that
the Certificates of Control are " import licenses" and resorts to another unfounded and un-evidenced
assumption.

B. T
HE CERTIFICATES OF CONTROL ARE NOT "OTHER MEASURES"
13. As an alternative to the Certificates of Control being considered as " import licenses ", the
United States argues that the alleged 'denial' of Certificates of Control to importers constitutes a
"prohibition" or " restriction" of rice importation made effective by an " other measure " within the
meaning of GATT Article XI:1. Turkey believes that the United States has failed in its pleadings and
written replies to the questions by the Panel 6 to establish the grounds on which Turkey's Certificates
of Control (and the alleged denial thereof) can or should be considered " other measures" for purposes
of the application of GATT Article XI.

14. GATT Article XI:1 aims at preventing WTO Members from introducing or maintaining
quantitative restrictions on the importation of pr oducts into their territory by means of " prohibitions"
or " restrictions" other than duties, taxes and other ch arges, independently of whether these
prohibitions or restrictions are achieved through quotas, import licenses or " other measures". Turkey
reaffirms that the essential element to establish whether or not any measure introduced by a WTO
Member results in a quantitative rest riction is the existence of a " prohibition" or " restriction" on
imports. This must be analyzed and proved both in terms of the de jure and de facto operation of the
measure being reviewed. Only when a de jure or de facto "prohibition" or " restriction" of imports
can be demonstrated, the specific measure being considered would amount to an " other measure" of
the type that GATT Article XI:1 considers illega l because it institutes or maintains a quantitative
restriction.

15. Turkey believes that the United States has not made a prima facie case on the existence of a
'denial of Certificates of Control to importers'. The United States appears to be claiming the existence
of a de jure "prohibition" or "restriction" not on the basis of legislation in force, but on evidence (i.e.,
mere communications such as the so-called Letters of Acceptance and oral instructions given to
officials) rather suited for a de facto complaint. Turkey notes that the United States has not made
clear whether its claim relates to a de jure or de facto "restriction" and " prohibition." In any event,
Turkey also believes that the Un ited States has not established a prima facie case on the existence of
either a de jure or a de facto "prohibition" or "restriction."

16. The United States has not identified any legisla tive measure relating to the alleged denial of
approval of the Certificates of Control that would support a claim of a de jure " prohibition" or
"restriction." On the other hand, when complaints ar e brought against alleged measures that are not
expressed in the form of written and publicly available documents (i.e., de facto complaints), the
Panel should exercise particular caution before supporti ng a conclusion as to the existence of a rule or
norm. In this respect, Turkey recalls the general ru les applicable to the burden of proof set out by the
Appellate Body in US – Wool Shirts and Blouses, and reiterated by the Panel in EC – Asbestos.7

5 See, inter alia, para. 55 of the First Submission by the United States.
6 See, United States' Replies to Questions posed by the Panel, question No. 56.
7 European Communities – Measures Affecting Asbestos and Asbestos-Containing Products , Panel
Report, paras 8.79 and 8.81.

17. Turkey submits that the United States has not provided conclusive evidence that there is an
instance of de jure "prohibition" or "restriction". In fact, such evidence is not available and nothing
can be found in Turkey's legislative and ad ministrative framework to prove otherwise. 8 In addition,
Turkey submits that the United States has also not provided conclusive evidence that there were
instances of de facto " prohibition" or " restriction" of rice importation made effective through the
alleged 'denial of Certificates of C ontrol to importers'. In order to establish whether or not there is
"another measure " within the meaning of GATT Article XI :1, Turkey believes that this factual
determination must be made.

18. Turkey has already provided ample evidence showing that no de facto " prohibition" or
"restriction" is to be found in relation to the approval of Certificates of Control.
9 In particular,
Certificates of Control have been approved througho ut the period of over 2 and a half years during
which the United States allege that a 'blanket deni al' was being enforced (i.e., between 10 September
2003 and 1 April 2006, including the months thereafter). A total of 2,242 Certificates of Control were
approved between 2003 and 9 November 2006.10 This stands as clear and irrefutable evidence against
the idea that Turkey was maintaining a de facto import " prohibition" through a 'blanket denial' of
Certificates of Control. In addition, and most im portantly for purposes of the case at stake, Turkey
submits that, of those 2,242 approved Certificates of Control, 1,335 (i.e., 59.5%) were approved in
relation to out-of-quota trade (i.e., MFN or FTA trade). 11 The figure of 2,242 represented an approval
rate of over 95% of all applications lodged by import ers for approval of Certificates of Control. In
particular, between 2003 and September 2006, a total of 2,324 applications for approval were put
forward and resulted in the approval of 2,223 Certificates of Control. Only 102 applications (equal to
a mere 4.38%) were rejected for 'non-compliance w ith the requirements set forth in the relevant
legislation'.12 Turkey believes that a rejection rate of less than 5% cannot be quantified or qualified
into a de facto import "restriction".

19. Individual instances of non-approval by MARA of particular rice importers' applications must
be seen as a natural component of the interaction between any WTO Member's administration and its
business community and cannot be generalized into a ' denial of Certificates of Control to import rice ',
particularly when the trade statistics and approval rates clearly indicate otherwise. The particular
cases and instances of rejection used by the United Stat es to build large part of their allegations were
linked to a number of un-related irregularities and to their non-compliance with some of the
requirements set forth for application in the relevant Turkish legislation.13

8 See, in particular, Turkey's First Submission at paras. 64 and 67.
9 See, in particular, Turkey's First Submission at paras. 63 to 69.
10 See Annex TR-33 of Turkey's Replies to Questions posed by the Panel.
11 See Annex TR-41 herewith.
12 See Annex TR-35 of Turkey's Replies to Questions posed by the Panel.
13 In relation to aspects of confidentiality and access to information, Turkey would like to address one
issue which represents a very unfor tunate and worrying development. The United States has recently argued
that "(…) most of the importers that the United States has contacted have been unwilling to provide additional
documentation since the first panel meeting (…) ", implying that Turkish public authorities are putting "pressure"
on rice importers not to give any information and documentation to the United States. Turkey strongly believes
that the United States should circumstantiate this seri ous accusation and prove it with factual evidence. Since it
is these importers which have had close ties with the United States and are the source of most of the information
and documentation that the United States has provided to the Panel, Turkey believes that these statements
should be treated with particular caution. Turkey maintains that neither its Government, nor its public
authorities, have put any kind of "pressure" on rice importers in order to discourage them from further
cooperating with the United States. At the same time, Turkey requests that the Panel demand an explanation
from the United States on the allegations that the questions posed by the Panel were leaked to certain importers.
This is again a serious accusation that the United States must be prepared and able to corroborate with evidence.
If anything, it would appear somewhat odd that the same operators that ar e now reluctant to further cooperate

20. Turkey has repeatedly indicat ed that the "Letters of Acceptance" were mere instruments of
internal communication among Turkish administrators and public officials. These communications
often contained confidential positions and/or politic al statements which were aimed at debating or
developing unofficial policy recommendations. These administrative communications never resulted
in the adoption of laws or regulations. The fact th at the existence and alleged legal value of the so-
called "Letters of Acceptance" were used by certa in parts of the Turkish administration during the
course of domestic judicial proceedings doesn't change their nature as unofficial and unenforceable
communications which are internal to the administ ration and aimed at developing or debating policy
recommendations.

21. Furthermore, Turkey would like to emphasize through specific examples that a considerable
amount of Certificates of Control were approved by MARA during the allege d period of operation of
the so-called 'blanket denial' of approval of Ce rtificates of Control made operational through the
"Letters of Acceptance". If anything, this shoul d be seen as convincing evidence that the so-called
"Letters of Acceptance" were (and are) only internal communications suggesting policy
recommendations and not formal trade policy measures binding on the administration.

22. In addition, evidence shows that the approval of Certificates of Control always followed, with
minimal delays, the applications for approval that ha d been lodged by rice importers. This is contrary
to what the United States claimed in its First Subm ission, in paragraph 24, that "the letter then
recommends that the MARA once again 'delay' the period for issuing Certificates of Control until July
1, 2004". The fact that the compiled data show th at Certificates of Control were not approved during
certain periods (i.e., between 26 December 2003 an d 20 May 2004) does not prove that the approval
of Certificates of Control was being delayed and does not prove that trade did not take place. It only
proves that, during certain periods, Certificates of Control were not approved.

23. This may have been the result of the comb ination of two factors, namely the absence of
applications for approval and/or the existence of considerable "left-over" approved volumes in the
hands of the importers as a result of the differe nce between the approved and realized quantities of
rice imports.
14 It should be noted, in particular, that the applications for approval of Certificates of
Control were, and remain, formal acts made by im porters on the basis of business considerations and
commercial calculations (i.e., profit margins, competitiveness of imported over domestic rice,
speculative positions, currency fluctu ations, etc.). These business determinations may have resulted
in the lack of requests for approval of Certificat es of Control during certain periods, but were never
the result of specific policy decisions by the Government of Turkey.

24. Turkey believes that the ev idence available and the allegations so far put forward by the
United States only go as far as indicating that a limited amount of Certificates of Control (if 2,242 can
be considered a small amount, both in terms of their number and quantity of allowed imports) were
approved during a given period. As already indicated by Turkey, this in itself clearly proves that there
was never a de facto import "prohibition". Most importantly, though, it falls short from proving that
either Turkey was rejecting approval of Ce rtificates of Control, by virtue of a de jure or de facto
policy of import " restriction". Turkey believes that the burden of proof rests squarely on the United

with the United States would tell the United States th at the Government of Turk ey has leaked to them
confidential information.
14 In this respect, Turkey wishes to confirm once again that the period of validity of an approved
Certificate of Control is of 12 months. Contrary to the allegation made by the United States in its replies to the
questions posed by the Panel (question No. 38), the law does not give any right to MARA to shorten the validity
periods of the Certificates of Control. Article 9 of the relevant Communiqués specifies that the validity periods
of the Certificates of Control cannot be extended. Therefore, it is clear that in legal terms MARA has no right to
shorten the validity periods of the Certificates of Control.

States to prove this occurrence beyo nd the mere judicial rhetoric. Turkey considers to have already
provided enough factual evidence to indicate that there was never any de facto import "prohibition" or
"restriction".

25. Turkey believes that the United States has not established a causal link, as established in
Argentina – Hides and Leather,
15 between the "contested measure" (on which, incidentally, there is no
clarity: is it the alleged 'blanket denial', is it the "Letters of Acceptance", is it the Certificate of Control
as such, or is it something else?) and the level of im ports of rice into Turkey. In fact, the United
States has not even provided factual evidence that Turkey's level of imports was low. The number of
Certificates of Control which were approved and th e approval rate, together with the lack of any
"causally-linked" factual evidence provided by the United States in support of its complaint, suggest
that the case brought by the United States is larg ely centred on individual rejections, which were
perfectly compatible with Turkish legislation and with Turkey's obligations under the WTO, and not
on policies or measures of general application.

26. Turkey strongly contests the novel argument raised by the United States that a " de minimis"
rate of approval of Certificates of Control in c onnection with MFN rice impor ts (even if proved and
evidenced) would automatically result in a de facto import " restriction". Turkey believes that the
"de minimis" rate of approval of Certificates of Cont rol in connection with MFN rice imports, if it
actually occurred, would have to find its natu ral and logical explanation in the business
determinations and commercial decisions made by importers and traders in the normal course of trade.
It is clear that both the TRQ and the FTA volumes of rice imports always provided appealing and real
commercial and tariff advantages which the importers systematically tried to exploit. The trade
statistics are clear testimony to these market trends. These very same trade statistics also show that,
during the periods when the TRQ was closed or expi red, rice originating in countries other than the
EC (i.e., Argentina, Bulgaria, China, Egypt, Indi a, Pakistan, Russia, Syria, Thailand, the United
States, Uruguay and Vietnam) was imported at MFN or applied rates and, therefore, Certificates of
Control were approved.
16

III. THE TRQ REGIME
A. THE TRQ REGIME IS NO LONGER IN FORCE
27. Turkey would like to reaffirm that the legi slative framework providing for the TRQ regime,
including the domestic purchase requirement, is no longe r in force and that Turkey has no intention to
renew it. In light of this consideration, Turkey would like once again to respectfully invite this Panel
to refrain from making any finding on the TRQ re gime and its domestic purchase requirement or,
should this Panel consider this necessary for the positive solution of the dispute, to refrain from
making any recommendations on this matter.

28. Turkey has already noted that WTO case law s upports the view that a panel is required to
make recommendations to bring a measure found incons istent into conformity 'provided that' such
measure is still in force. In this respect, Turkey quoted United States – Certain EC Products,17 Chile –
Price Band,18 and Dominican Republic – Cigarettes.19 The United States appears to believe that these

15 Argentina – Measures Affecting the Export of Bovine Hides and the Import of Finished Leather ,
Panel Report, para. 11.21.
16 See, in particular, Annex TR-33 to Turkey's Replies to Questions posed by the Panel.
17 See, United States – Import Measures on Certain Products from the European Communities ,
Appellate Body Report, para. 81.
18 See, Chile – Price Band System and Safeguard Measures Relating to Certain Agricultural Products ,
Panel Report, para. 7.112.

cases are not of relevance to the dispute and, if of any relevance, they should be read as supporting the
United States' view.

29. The United States believes that the reports cited respect the "distinction between measures
that expired prior to the commencement of the panel proceedings and measures that expire after that."
Turkey notes instead that under WTO case law, th is distinction draws a line between the cases in
which no finding is necessary and the cases in which, if a finding is made, no recommendation is due.
Turkey finds that WTO case law supports the view that no finding is necessary on measures expired
before the commencement of the Panel proceedings, wh ereas in the case of measures expired after the
commencement of the Panel proceedings, if a finding is made, no recommendation is due.

30. After having clarified that the expiry of th e measures before or after the commencement of
the Panel's proceeding is only relevant for the Pane l in order to decide whether or not to make a
finding on the expired measure, but not on whether the Panel should issue recommendations, Turkey
notes that the "commencement of the panel pro ceedings" corresponds to the establishment of the
Panel (i.e., the 17 March 2006 for this dispute). As described in greater detail in Turkey's first
submission, a great part of the legislative frame work establishing Turkey's TRQ regime expired well
before the establishment of this Panel and on ly two measures (i.e., Decree 2005/9315 and the
implementing Communiqué No. 25943) expired shortly after the establishment of the Panel.

31. Turkey does not consider that a finding on an y of these measures, including the ones expired
soon after the commencement of panel proceedings , is necessary to secure a positive solution to the
dispute. Turkey has repeatedly maintained, bot h at the consultations phase and throughout the
submissions and oral statements presented so far, that it has no intention to renew these measures,
neither extending them nor adopting new legislativ e instruments. Therefore, Turkey respectfully
requests the Panel not to make findings on any of th e measures relating to the TRQ regime or, in the
alternative, to limit its findings to those measures which were still in force after the establishment of
the Panel. In any event, Turk ey respectfully requests that th e Panel refrain from making any
recommendation with respect to the TRQ regime.

B. O
BSERVATIONS ON THE TRQ REGIME
32. With respect to the objectives, mechanis ms, eligibility criteria and inherent commercial
advantages of the now expired TRQ regime, Turkey notes that TRQs were opened in 2004 and 2005,
not to protect or distort trade, but to achieve th e necessary supply of rice into Turkey and to stabilize
the domestic market. In fact, it is well known that Turkey is a net importer of rice and that imports
are essential to stabilize the market (both in te rms of price and quantities available). The TRQ
provided a tariff advantage to imported rice up to pr edetermined quantities. Any interested importer
could apply for a TRQ licence, which was systema tically allocated on a "first-come-first-served"
basis. There has never been discrimination on the basis of country of origin of the rice or
nationality/affiliation of the importer applying for a license. The requirements for the application and
evaluation procedures of the import licenses have always been clear, transparent and easy to
implement for all importers. Similarly, the administrative procedures for licensing have always been
simple and user-friendly. All docum ents required for application have always been published. When
all application requirements were met, the import li censes have systematically been issued within 5
days.

33. The tariff quota system was never meant to act as a, and never had any, restrictive or
discriminatory effects on trade and rice imports. In particular, it is wrong and misleading to state, as
the United States does, that the fulfilment of the domestic purchase requirement by importers

19 See, Dominican Republic – Measures Affecting the Importation and Internal Sale of Cigarettes ,
Panel Report, para 7.363.

'provides the only way to import rice into Turkey'. Rather, the system was voluntary and conferred an
advantage to the importers meeting the requirements stipulated in the legislation. Importers have
always been free to make use of the system or not . Turkey has already shown that the high volumes
of in-quota imports and the high numbers of licen ces which have been issued are testimony to the
attractiveness and appeal that the tariff advantag e has had in the business determinations made by
individual rice importers. This in-quota advantage has always existed in parallel to the ability to
import at the less advantageous MFN rates of duty.

34. Turkey has shown that the opening of the TR Q always resulted in the modification of the
conditions of competition between domestic and imported products in favour of imported products.
Turkey believes that the figures used by the Unite d States to construct its simulation scenarios are
extreme theoretical figures which are not based on general trade statistics, policies or laws. The
United States has not linked these hypothetical scen arios to actual instances of trade and to specific
occurrences. Turkey has provided a wealth of data to show that the actual advantages of importing
rice within the TRQ were real and that trade statis tics clearly show that importers largely benefited
from TRQ openings.

35. The choice to import within the TRQ in order to benefit from the tariff advantage was always
dictated by business determinations and commercial d ecisions that were in no way influenced by the
Turkish Government. These determinations and calcu lations were made by importers on the basis of
a number of economic and market factors such as domestic and world prices of rice, domestic
consumption, exchange rates, conditions of compe tition between rice of different origins, consumers'
preferences, marketing strategies, etc. In any ev ent, the TRQ always provided a significant advantage
in favour of imported rice, even if the domestic purchase requirement of the TRQ acted as a balancing
factor with respect to the tariff advantage.

36. The domestic purchase requirement was introdu ced because Turkey had to pursue, at the
same time, two legitimate objectives: the one of grea ter market supply (through the TRQ) and that of
market stabilization (through the domestic purchase requirement). The domestic purchase
requirement of Turkey's TRQ regime partly modera ted (or even magnified, as the data for 2004 and
2005 milled rice imports indicate) the advantageous e ffects, and not the adverse effects as claimed by
the United States, that the TRQ was conferring to imported rice. The TRQ always conferred an
advantage. The TRQ success rate, in terms of quot a utilization, is clear evidence of this. The
domestic purchase requirement did not take away this advantage, it was simply an element used by
Turkey to define the scope of the advantage. Th e domestic purchase requirement must be seen as a
fundamental trait of the TRQ system itself, just lik e the in-quota preferential rates of duty. Turkey
maintains that it was fully entitled to decide, in lin e with its economic policies, the characteristics of
the TRQ. For those importers that did not consid er TRQ trade advantageous, MFN always remained
an option. Turkey has shown that, contrary to what is claimed by the United States, TRQ and MFN
rice importation always co-existed.

37. In relation to the allegations made by the United States that the so-called eligibility criteria
would restrict the categories of importers/traders able to purchase domestic rice for the purpose of
importing under the TRQ, Turkey recalls that there is no eligibility requirement in order to be able to
purchase domestic rice. On the contrary, any restriction of the categories of eligible purchasers would
have defeated the purpose and objectives of the TRQ system in that it would have diminished the
chances that the entire TRQ be allocated and that the market be adequately supplied and,
consequently, stabilized. The relevant legislation simply provides that domestic rice may only be
purchased from paddy producers having permission to plant paddy rice, their cooperatives and unions,
or from the TMO. Provided that the domestic purchase requirement had been complied with, any
type of rice (i.e., paddy, brown and/ or milled) could be imported into Turkey at the preferential tariff
rates accorded by the TRQ.

IV. CONCLUSIONS
38. Turkey submits that the United States has not made a prima facie case, it has not proved its
allegations, its legal arguments do not find grounds in WTO law and the interpretative guidance
offered by WTO case law, and this dispute largel y rests on a misunderstanding of facts and a number
of individual instances that have little to do with international trade policy and more with domestic
judicial proceedings and individual cases.

39. Turkey believes that this dispute may also be the consequence, to a considerable extent, of the
relative lack of comparative advantage of rice from the United States vis-à-vis competing exporting
countries trading with Turkey (i.e., the degree of competitiveness of United States' rice).

40. The real background to this case is that th e United States has seen its rice progressively lose
market share in Turkey to the adva ntage of other exporting countries. This is true both in relation to
TRQ and MFN trade and particularly significant in a scenario of continued expansion of market
access opportunities. Turkey never adopted its TRQs with the particular intent to diminish the market
access opportunities of the United States (or, for that matter, of any other exporting country). The
yearly increases in imported volumes are proof of this.

41. The success of the TRQ and the high utilizatio n rates are testimony to the fact that the
advantage provided by the TRQ was real and appeali ng enough for importers to exploit it, despite the
allegedly burdensome impact of the domestic purch ase requirement. The fact that imports from the
United States may have declined (at the MFN rates as well as within the TRQ) has only to do with the
progressive loss in competitiveness of rice from the Un ited States vis-à-vis its competitors, and with
the business determinations and commercial decisions freely made by rice importers on the basis of a
number of economic and market factors. The most recent import statistics seem to support this
conclusion. The market-share of rice from the United States has not increased now that imports are
occurring only at the MFN (or applied) rates of duty and that the TRQ regime no longer applies.

ANNEX E

ORAL STATEMENTS BY THE PARTIES
AT THE SECOND SUBSTANTIVE MEETING

Contents Page
Annex E-1 Executive summary of the opening oral statement by the United
States at the second substantive meeting (25 January 2007)
E-2
Annex E-2 Closing oral statement by the United States at the second
substantive meeting (18 January 2007)
E-7
Annex E-3 Opening oral statement by Turkey at the second substantive
meeting (17 January 20007)
E-9
Annex E-4 Closing oral statement by Tu rkey at the second substantive meeting
(18 January 2007)
E-17

ANNEX E-1

EXECUTIVE SUMMARY OF THE OPENING ORAL STATEMENT
BY THE UNITED STATES AT THE SECOND SUBSTANTIVE MEETING
(25 January 2007)

1. Over the past several months, the Panel has read numerous submissions, examined dozens of
exhibits, and listened to both Parties present oral argument. The United States wishes to provide a
few general thoughts that we belie ve could help the Panel as it ex amines the evidence and evaluates
the arguments that are being presented by the Parties with respect to the major claims.

The Control Certificate

2. With respect to the issues of whether a Cont rol Certificate is an "import license" for purposes
of Article XI:1 of the GATT 1994 and whether the Control Certificate system constitutes "import
licensing" under the Import Licensing Agreement, Turkey errs in casting the US claim as an attack on
the SPS measures of all WTO Members. The United States maintains its own SPS measures on
agricultural products, and it goes without saying th at the United States believes that SPS measures are
critical to protecting the health and life of its citi zens, plants, and animals and those of other nations,
and has no interest in undermining its ability or the ability of other Members to adopt legitimate
measures to ensure the compatibility of agricultural products with SPS measures.

3. That being said, none of this discussion of SPS measures is relevant for resolving the dispute
that is currently before this Panel. Turkey's SPS argument simply overlooks the relevant inquiry:
what is Turkey using the Control Certificate for?

4. Turkey has acknowledged that MA RA conducts its SPS inspection after
 the Certificate has
already been approved, so meeting SPS requirements is not a requirement for receiving a Certificate,
and the Certificate is not a control or inspection pro cedure. Nor is the Certificate used simply as part
of customs clearance. The Certificate, which is administered by the Ministry of Agriculture and Rural
Affairs (MARA), requests submission of the same t ype of customs-related in formation that Turkish
Customs already requires of importers, despite th e fact that MARA is not involved in customs
administration. Yet if MARA does not issue a Control Certificate, an importer cannot import rice into
Turkey.

5. If a Control Certificate issued by MA RA is unnecessary for SPS purposes and unnecessary
for customs purposes, then why does MARA require th at importers obtain a Certificate? The answer
is clear: to restrict imports of rice. A Panel finding that MARA's Control Certificate is an "import
license" for purposes of Article XI:1 and constitut es "import licensing" under the Import Licensing
Agreement is consistent with the ordinary meaning of these terms in their context and in light of the
object and purpose of the GATT 1994 and the Im port Licensing Agreement respectively, and
consistent with the facts in this dispute.

MFN Trade in Rice

6. With respect to the issue of over-quota trade, since September 10, 2003, Turkey has restricted
rice imports outside the TRQ
 by not granting Control Certificates for non-EC origin imports. Turkey
continually responds to this fact by stating that, in fact, it does grant Control Certificates and then it
provides a large number. The number, which has changed over time and is currently 2,242, is
incorrect and misleading for at least the following reasons, as shown in Exhibit US-71.

7. The 2,242 figure includes Certificates issued in two legally irrelevant time periods, namely
the period prior to September 10, 2003, whic h is the date on which the first Letter of Acceptance of
which the United States is aware was issued, and the period after March 17, 2006, which is the date
when the Panel was established. Including these periods in the calculation makes the number of
Certificates granted outside the TRQ appear larger than they really are during the legally relevant
period. Subtracting those Certificates from the figure provided by Turkey yields a total of 1,718
Control Certificates allegedly granted.

8. The US claim is that Turkey is using Contro l Certificates to restrict out-of-quota (or MFN)
rice trade. Three adjustments need to be made to arrive at the total figure for MFN trade:

 – First, the figure provided by Turkey includes Certificates granted for in-quota

imports. Certificates granted for in-quota trade represent 43 per cent of the Control
Certificates granted, so inclusion of these Certificates further distorts the figure
provided by Turkey. Subtracting those Certificates from the figure provided by
Turkey yields a total of 969 Control Certificates allegedly granted.

 – Second, the figure provided by Turkey includes Certificates granted for EC origin
imports. Such imports are not subject to Turkish restrictions because they come in
under a preferential trade arrangement; hence, the United States is not alleging that
Turkey is failing to grant Control Certifi cates to importers of EC origin rice.
However, Turkey has included those Certif icates in its calculation anyway. Given
that Certificates granted for imports of EC origin rice represent 91 per cent of the
Control Certificates granted outside the TRQ, the number that Turkey has provided
vastly overstates the number of Control Certificates that MARA has issued for out-of-
quota imports of rice of non-EC origin. Subtracting those Certificates from the figure
provided by Turkey yields a total of 91 Control Certificates allegedly granted.

 – Third, the figure provided by Turkey also includes 35 Certificates granted for imports
of rice from Macedonia. In a Power Point presentation posted on the website of
Turkey's Secretariat General for EU Affairs, Turkey noted that, under the Turkey-
Macedonia agreement, "Turkey has preferential import possibility within tariff quota
(8,000 tons, 0% duty)".
1 Subtracting those Certificates from the figure provided by
Turkey yields a total of 56 Control Certificates allegedly granted.

This figure is a mere 2.5 per cent of the 2,242 Control Certificate figure provided by Turkey.

9. Turkey has not provided the original Control Certificates, so the United States is unable to
confirm that these 56 Certificates, or at least the ones provided with respect to US imports, were
actually granted, despite the existence of a legal prohibition on the issuance of Control Certificates
outside the TRQ. But these numbers pale in compar ison to the 740 Control Certificates that MARA
allegedly issued to importers under the TRQ during the same time period. In any event, a closer look
at this figure reveals how even this tiny amount of Certificates overstates the amount of out-of-quota
rice that Turkish authorities permitted to enter the Turkish market.

10. If the data are accurate, during the peri od September 10, 2003 – March 17, 2006, MARA
granted:

 – one Certificate for out-of-quota imports of rice for each of the following countries:
Bulgaria (550 metric tons), China (742 metric tons), Pakistan (21 metric tons), and
Thailand (21 metric tons);

1 See Exhibit US-72 (http://www.abgs.gov.tr/tarama/tarama_files/11/SC11DET_16g_Rice.pdf).

 – two Certificates for out-of-quota imports from Vietnam (300 metric tons total);

 – ten Certificates for out-of-quota imports from Egypt. Those Certificates covered
approximately 9,700 metric tons of rice over a 2 ½ year period. By contrast, during
that same period, Turkish trade data indi cates that 250,000 metric tons of Egyptian
rice were imported using the TRQ's domestic purchase requirement; and

 – 40 Certificates for out-of-quota imports of US rice. However, all but two of those
Certificates were granted in a single period in April-May 2005, just after the United
States had raised the issue of Turkey's failure to issue Control Certificates in Geneva.

Therefore, Turkey's own data supports a finding that there is a legal prohibition on the import of MFN
rice.

11. Even if it were true that Turkey granted th is small number of Control Certificates outside the
TRQ – despite the existence of a legal prohibiti on, as the United States has documented – the United
States still has met its burden to demonstrate a breach of Article XI:1 of the GATT 1994 and
Article 4.2 of the Agreement on Agriculture, for two reasons.

12. First, in order to demonstrate that a measure is inconsistent with Article XI:1, a complainant
may show that there is a restriction
 on importation. The United States has proven that there is a legal
prohibition in place, in that the Letters of Acceptance state as much on their face, and Turkish courts
have supported that interpretation and upheld MARA 's enforcement of the Letters. However, the
United States has also demonstrated the presence of a restriction, which itself establishes a breach.
And the United States has presented volumes of evid ence in support of its claim that there is a
restriction – the Letters of Acceptance, the re jection letters to importers, the numerous court
documents, and articles from the Turkish press. Tu rkey has failed to rebut this evidence, as its
arguments before the Panel flatly contradict what th e documents say on their face and/or what Turkey
is arguing in Turkish court.

13. Second, even if the documents submitted by the United States had no legal relevance in
Turkey, as Turkey claims against all evidence to the contrary, the United States has still met its
burden because the evidence it has provided shows that the granting of Control Certificates is
discretionary. In the Letters of Acceptance, Tu rkish government officials state that Control
Certificates must not be granted during particular time periods. Even if those Letters were completely
disregarded by Turkish officials, the documents are compelling evidence that Turkish authorities
possess the discretion not to issue Control Certificates . And the rejection letters and court documents
show that this discretion has been utilized. Discretionary import licensing is a restriction on
importation, which is prohibited by Article XI:1 of the GATT 1994, and is specifically prohibited
under Article 4.2 of the Agreement on Agriculture.

14. In sum, while Turkey's own data bear out that there is a legal prohibition in place, the United
States has, in any event, established that there is a legal restriction in place on imports of rice outside
the TRQ and, even if that were not the case, that Turkey's import licensing system for rice is
discretionary. That is all the United States must prove to sustain findings of inconsistency under these
two provisions, and the United States has met that burden.

The Domestic Purchase Requirement

15. With respect to the domestic purchase requi rement, the key question to ask is whether a
measure is providing differential treatment. If a measure treats an imported product less favourably
than the like domestic product, the measure is inconsistent with Article III:4 of the GATT 1994. As is

clear from the text of this provision, as well as from the guidance provided by previous panels, any
additional obstacle or hurdle to selling imported pr oducts domestically, any incentive or disincentive
that favours the purchase of domestic over importe d goods will adversely affect the competitive
position of imported products in the domestic market and constitutes a breach of Article III:4.

16. In this instance, Turkey's domestic purchase re quirement meets this standard. The domestic
purchase requirement provides an advantage to domestic rice over imported rice because one can only
obtain the advantage of an import license to import rice under the TRQ by purchasing domestic rice.
The choice facing an importer is stark: an importe r who applies for a portion of the TRQ and presents
a receipt to Turkey's Foreign Trade Undersecretaria t (FTU) for the purchase of 1,000 metric tons of
US or Egyptian rice will not be permitted to import rice. However, if that same importer presents to
FTU a receipt from a Turkish paddy rice producer fo r the purchase of 1,000 metric tons of Turkish
paddy rice, FTU will grant that im porter a permit to import a quantity of rice specified under Turkish
regulations, provided that there is quota remaining. It is clear that this scheme provides an incentive
to purchase domestic rice and correspondingly a disincentive to purchase imported rice, thereby
giving domestic rice a tremendous advantage in the Turkish market.

17. Turkey has taken issue with the US calculati ons in Exhibit US-52 regarding the cost of the
domestic purchase requirement, calculations which utilize Turkey's own figures or numbers consistent
with Turkey's figures. As of yet, Turkey has failed to explain which of these figures it now finds
objectionable. It continues to focus on the cost pe r ton rather than the total cost to the importer.
However, arguing over the cost of the domestic purchase requirement is irrelevant for purposes of the
Article III:4 analysis. Again, the issue is wh ether the measure provides differential and less
favourable treatment to imports. Under the TR Q, purchasing imported rice will not qualify an
importer to import rice from abroad; only the purch ase of domestic rice will do that. The differential
treatment provided by Turkey to imported and domestic rice with respect to the absorption
requirement appears on the face of Turkey's regulations and is undisputed.

18. The domestic purchase requirement also is inc onsistent with Article XI:1 of the GATT 1994.
Under the TRQ, importers must purchase large quantities of domestic rice in order to import rice --
oftentimes between 2-4 times the quantity of domes tic rice as the quantity of imported rice an
importer wants to import. As demonstrated by th e US calculations, which Turkey has failed to rebut,
the domestic purchase requirement presents importers of rice with considerable expense as a condition
for importing under the TRQ. The cost of satisfy ing the domestic purchase requirement acts as a
restriction on the importation of rice in contravention of Article XI:1.

The Role of Panels in the WTO Dispute Settlement System

19. Quite simply, the United States believes that th e role of a Panel established pursuant to the
DSU is to assist the DSB to resolve the dispute presented by the parties. Panels are charged under the
DSU with making findings and recommendations in or der to do so. The United States believes that
the Panel should evaluate the arguments raised by th e parties in light of its role and responsibilities as
set forth in the DSU and in its terms of reference.

20. In this regard, Turkey continues to request that the Panel ignore its mandate and not make
findings or a recommendation on the TRQ regime, because that regime has allegedly expired. The
United States has argued in its previous submissions and statements that the Panel is charged with
making such findings and a recommendation with resp ect to the measures as they existed when this
Panel was established. This interpretation is borne out by the text of the DSU, past panel reports cited
by both Turkey and the United States, and the Appellate Body report in Dominican Republic – Import
and Sale of Cigarettes . The TRQ regime existed on March 17, 2006, the date this Panel was
established by the DSB. This fact is uncontested.

21. Turkey insists that it is not necessary for the Panel to make findings or a recommendation
regarding the domestic purchase requirement in order to resolve the dispute between the Parties. But
consider the following facts:

 – Turkey and the United States continue to disagree on whether the TRQ regime is still
in existence.

 – Turkey has previously re-opened the TRQ on two separate occasions after the TRQ
allegedly expired and, in one of tho se instances, Turkey informed the WTO
membership sitting as the WTO Committee on Agriculture that the TRQ had expired
and would not be re-imposed.

 – Turkey has never repealed the legislation providing the legal basis under Turkish law
for imposing a TRQ with an absorption requirement.

 – Turkey continues to argue that there is nothing wrong with its TRQ scheme because it
provides stability in the market with resp ect to price and supply. This line of
argument strongly suggests that it will re-open the TRQ when it deems appropriate.

Given these facts, would it be helpful for the Panel to disregard its mandate and not make findings or
a recommendation? The United States thinks that the answer is clearly 'no'. And Turkey has
identified no legal basis under the DSU for the Panel to ignore its mandate.

22. There is yet another reason that the Panel s hould reject Turkey's argument on this matter. If
the Panel were to find that the domestic purchase requirement is inconsistent with WTO rules but did
not recommend that Turkey bring its measure into compliance with such rules, Turkey could re-
impose a domestic purchase requirement and then claim before a WTO compliance panel – likely
comprised of the same three panelists who are hear ing this dispute – that the panel would not have
jurisdiction to make findings on the consistency of that measure with WTO rules because it was not a
"measure taken to comply" under Article 21.3 of th e DSU. Returning to the same question – would
such a development be helpful for resolving the dispute between the parties? – the United States again
submits that the answer is 'no'.

ANNEX E-2

CLOSING ORAL STATEMENT BY THE UNITED STATES
AT THE SECOND SUBSTANTIVE MEETING
(18 January 2007)

1. Madam Chair and members of the Panel, we w ould like to thank you for agreeing to serve on
this Panel in order to help resolve this dispute between the United States and Turkey. We would also
like to thank the Secretariat for all of their hard work on this matter. Our closing remarks will be
brief.

2. The manner in which Turkey has presented its arguments gives the impression that the issues
in this dispute are more complicated than they actually are. In fact, the issues in this dispute are very
straightforward:

3. First, does the undisputed fact that importers a re required to purchase large quantities
of domestic paddy rice in order to import rice act as a restriction on the importation of rice?

 – Consider, when analysing whether the domestic purchase requirement restricts
importation at the border, that importers need to purchase at least as much domestic
paddy rice as they want to import, which increases the cost of importation and ties up
capital that could be used to import more rice.

 – And consider that Turkey has accepte d all of the numbers utilized in the US
calculation of the total cost of domestic purchase, except for one case where Turkey
has actually reverted to a number that the United States originally provided (the
$295/metric ton spot price).

4. Second, does the fact that only the purchase of domestic rice confers the ability to import
create an incentive to purchase domestic rice over imported rice?

 – Consider further that past panels have found that any
 additional obstacle or
disincentive to the internal sale of an imported product, as compared to the like
domestic product, is sufficient to show a national treatment violation.

5. Third, does the Control Certificate constitute an import license?

 – Consider that this is a document that an importer must acquire from MARA in order
to have permission to import rice into Turkey , and that this description comports with
the ordinary meaning of the term "impor t license", namely "formal permission from
an authority in order to import goods into a country".

 – Consider further that there is no disp ute between the parties that Turkey's SPS
procedure occurs after
 the Certificate is granted. There is also no dispute between the
parties that the Certificate is not issued by Turkish Customs, does not replace the
normal customs documentation that is necessary for customs clearance, nor that
Turkish Customs already requires much of the same customs-related information as
that requested for the Control Certificate.

6. Fourth, is Turkey prohibiting or
 restricting the import of rice by operating a
discretionary import licensing system and denying the issuance of Control Certificates?

 – Consider that the Letters of Acceptance on their face constitute a legal prohibition on
the issuance of Control Certificates for MF N imports; that Turkey's argument before
the Panel that these Letters have no legal force is diametrically opposed to the
argument the Turkish government is current ly making in Turkish court; and that at
least two Turkish courts have upheld the government's position that the Letters of
Acceptance have legal force under Turkish law.

 – Consider further that, incredibly, Turkey is now claiming in this proceeding that
Turkey's Agriculture Minister acted ultra vires in issuing the Letters – just as Turkish
importers are claiming in Turkish domestic court cases – yet instead of settling those
cases and granting Control Certificates, the Turkish government continues to argue in
several domestic court cases that what the Minister did was perfectly legal and
enforceable under Turkish law.

 – Lastly, consider that Turkish import data confirms that, except in rare instances,
Turkey has not issued Control Certificates for MFN trade in rice, despite the much
lower cost of importing outside the TRQ; and that neither the Panel nor the United
States can confirm that this data is accura te because Turkey has refused the Panel's
request to provide the actual Control Certif icates, a refusal from which the Panel may
draw an appropriate inference.

7. Madam Chair, members of the Panel, the clear answer to all of these questions is 'yes'. The
United States has set forth compelling and voluminous documentary evidence in making out its prima
facie case, which Turkey has been unable to rebut. Indeed, it is difficult to conceive of how the
United States could have provided more
 documentary evidence in this dispute given that the measure
in contention is a non-transparent import licensing regime. Instead, Turkey has relied on an argument
we would describe as follows: how a Member characterizes a measure, not what the measure actually
does, will determine whether that measure is subj ect to WTO disciplines. This is a dangerous
argument that would allow Members easily to evade their WTO obligations, and we urge you to reject
it.

8. Madam Chair, members of the Panel, that conc ludes our closing statement. We thank you for
your attention, and we look forward to receiving your questions in due course.

ANNEX E-3

OPENING ORAL STATEMENT BY TURKEY
AT THE SECOND SUBSTANTIVE MEETING
(17 January 2007)

Dear Madame Chair, distinguished Members of the Panel,

Introduction

1. Turkey would like to reiterate its gratitude to the Panel for its work and assistance in the
resolution of this dispute.

2. Turkey welcomes the opportunity to submit its view s in this last oral hearing in front of the
Panel. Turkey has already provided a comprehensiv e set of information, arguments, statistical data,
written replies to questions by the Panel, and rebuttals to the claims made by the United States.

3. In this oral statement, Turkey wishes to emphasise certain factual and legal arguments aimed
at addressing certain issues brought by the United States in its last submission and confirming
Turkey's conclusion that its regime for the importation of rice is fully compatible with WTO rules. In
particular, this oral statement addresses a number of factual and legal consid erations related to: the
Certificates of Control; the expired Tariff Rate Quot a (TRQ); and other general allegations made by
the United States.

Certificates of Control

4. Turkey's Certificates of Control are not import licenses, both de jure and de facto. They are
not legally constructed as instruments having an im port licensing function and they have never been
applied as an import licensing instrument. Turkey be lieves that the exact understanding of this issue
is fundamental in order to evaluate its rice impor t regime. The allegations and arguments brought by
the United States continue to confuse between cause and effects on the basis of a wrong or misleading
interpretation of the evidence provided. Turkey will now attempt yet again to clarify the legal nature,
administrative framework and factual trends that ha ve surrounded the operation of the Certificates of
Control during the period under examination.

5. Turkey believes that the scrutiny of WTO inc onsistency of its instrument known as Certificate
of Control must be conducted under either a de jure or de facto lens. It must be noted that this
scrutiny is paramount to the de jure or de facto review of the existence or not of a prohibition or
restriction, which Turkey considers essential to interpret the Certificate of Control as an " other
measure" under GATT Article XI. This other review has already been thoroughly conducted by
Turkey in its earlier submissions.
1

6. Turkey believes that its Certificate of Control is not de jure inconsistent with any of its WTO
obligations. This is proved and supported by bot h legal considerations and factual evidence. In
particular, Turkey submits that there is nothing in Turkish law providing for the ability of the Turkish
Government or its administration to use the Certificate of Control as an import license. There is no
provision that gives the relevant authority discretion not to approve Certificates of Control. To do so
would be not only inconsistent with the function a nd customs purposes of the Certificate of Control,
but also illegal in that Turkish law clearly provides for import licensing systems and procedures under

1 See paras. 63-69 of Turkey's First Submission; paras. 16-17 of Turkey's Oral Statements; and
paras. 18-20 of Turkey's Rebuttals.

separate legislative instruments. Turkey maintain s that the United States has not proved the existence
of any legal element of de jure inconsistency with WTO obligations . The allegations brought by the
United States (i.e., that Certificates of Control a pplied only to MFN trade; that the period of validity
was only four months, that the approved quantities had to be imported all at once; that volume
restrictions were imposed; and that no Certificates of Control were needed for FTA imports) were
incorrect and have been systematically rebutted by Turkey.

7. Furthermore, the existence of the so-calle d Letters of Acceptance cannot be intended as
evidence of a de jure WTO inconsistency of the Certificate of Control instrument per se. The Letters
of Acceptance are not legal features of the Certificate of Control system. Turkey would like to
emphasise that this is a crucial element in or der to properly understand the legal framework and
operation of the Certificate of Control. If anything, as rightly argued by the European Communities
in its Third Party Written Submission, the Letters of Acceptance may only provide an element of
factual evidence for a de facto finding and are rather suited for a de facto complaint. The United
States has not made such complaint and it has no t provided any related arguments. And yet, the
United States emphasises in its Rebuttal Submission
2 that it is the Letters of Acceptance that restrict
rice imports. There is an inherent confusi on here. The United States has not made a de facto
complaint but relies exclusively on the fact of the Letters of Acceptance.

8. To further support the argument that there is no de jure violation of WTO obligations, Turkey
would like to refer to the factual evidence that it has so far provided, which clearly indicates that
Certificates of Control have been approved th roughout the period under examination (i.e.,
10 September 2003 to date). The fact that Certifi cates of Control have been approved in relation to
applications for TRQ rice imports in higher rates th an what has occurred with respect to applications
for MFN rice imports, cannot prove a de jure WTO inconsistency of the instrument of Certificate of
Control per se. Turkey believes that the United States has not proved the existence of any factual
element of de jure inconsistency with WTO obligations.

9. On the other hand, in fact, with respect to the de facto scrutiny of the WTO consistency of the
Certificate of Control instrument, Turkey believes that the statistical data provided in previous
submissions clearly show that Certificates of Cont rol were, in reality, approved throughout the period
of scrutiny. It is true that Certificates of Contro l were, at times, mainly approved for imports of rice
within the TRQ, but Turkey believes that th is cannot, in itself, be valid proof of a de facto
discrimination or WTO inconsistency of the instrument per se. The United States has failed to prove
that Turkey has systematically not approved Certifi cates of Control. The United States has merely
claimed the existence of an alleged 'blanket denial', but Turkey believes to have satisfactorily proved
that no 'blanket denial' was ever in place. In par ticular, Turkey questions the curious approach of the
United States that considers the Certificates of C ontrol approved for over-quota trade as exceptions to
the 'blanket denial'. Either there is a 'blanket denial' or there is not.

10. Certificates of Control are approved on the basis of specific requests which are put forward by
importers or traders (in terms of the number of Certifi cates of Control, type of rice, origin of rice, and
quantities sought for importation). The United Stat es has not provided conclusive evidence that
individual requests were not approved because of a 'blanket denial'. The United States has alleged
that the low rate of approval of Certificates of Control in relation to MFN rice imports during certain
periods is proof of the existence of a 'blanket de nial'. This cannot be regarded as sufficient and
conclusive evidence. Turkey belie ves that the low rate of approval of Certificates of Control during
certain periods was the consequence of the low rate of requests put forward by importers.

11. Importers put forward requests for approval of Certificates of Control on the basis of business
determinations and commercial considerations that are totally independent from Governmental

2 See paras. 45, 55 and 65 thereof.

influence or the alleged trade-restrictive prac tices. These business determinations are based on a
number of commercial factors, such as the import networks used by the traders, their commercial
traditions, consumer preferences, quality, brand na mes, requests by distribution chains, currency
fluctuations, existence of tariff advantages, quota re nt exploitations, licenses entitlement, proximity of
export markets, etc. The United States has not proved that the alleged 'blanket denial' existed de facto
other than through unsupported a llegations and indirect assumptions. One such assumption is the
trade-distortive intentions of Turkey as allegedly evidenced in the so-called Letters of Acceptance.

12. As previously indicated by Turkey in its submissions, Turkey accepts that the so-called
Letters of Acceptance were written and were in ci rculation. However, while these letters were
internal communications aimed at developing policies, they were not the policies themselves. These
administrative communications never resulted in the a doption of laws or regulations and, therefore,
they are not to be regarded as measures of the type that support a de jure complaint. The fact that
these Letters of Acceptance have been used in ope n Court proceedings by MARA and, in the case
referred to by the United States in their rebuttals,
3 have been used by Turkish Court to discharge
MARA from the accusations of the plaintiff, cannot be considered as evidence of a systematic denial
of approval of Certificates of Control and cannot turn the Lette rs of Acceptance into measures
equivalent to laws or regulations.

13. Turkey submits that the Letters of Accept ance were used, during domestic trial proceedings,
to demonstrate that MARA's Provincial Directorat e was acting under intra-ministerial administrative
instructions in relation to individual applications . The Turkish Court stated that the conduct of
MARA's Provincial Directorate was in line with ministerial guidelines. The ruling of the Court
discharged MARA by finding that the Provincial Dir ectorate was acting within the confines of its
ministerial hierarchy. Furthermore, the fact that a Turkish Court of first instance has given value to a
Letter of Acceptance is not relevant. This Panel has to decide whether, de jure, there is any provision
in the Turkish law on Certificates of Control whic h gives any administrative authority the discretion
to deny their approval. There is none. The cases ci ted are not relevant because the Turkish Courts
have not decided on this issue.

14. When the Letters of Acceptance are consider ed as factual evidence, the record shows that,
despite their existence and the informal circulation within the administration, Certificates of Control
were approved in relation to app lications made for all types of rice imports (i.e., MFN, FTA and
TRQ). The applications for approval of Certificat es of Control, whether for MFN, FTA or TRQ rice
volumes, were always made by individual importe rs on the basis of business determinations and
commercial factors. The relatively small amount s of requests under MFN, as compared to TRQ
requests, cannot be factual evidence of the alleged existence of a 'blanket denial', but stands, on the
contrary, as further evidence that importers prefer red to deal with TRQ rice for the obvious tariff
advantage that such trade entailed. Turkey fails to understand how the United States can persevere in
disregarding this obvious truth. The individual in stances of domestic litigation must be objectively
seen as a natural component of the interaction between any WTO Member's administration and its
business community and cannot be used to prove an instance of systematic trade restriction, let alone
a trade prohibition (i.e., the 'blanket denial').

15. Turkey would now like to briefly turn to the issue of the purpose and function of the
Certificate of Control. As already extensively i ndicated, the Certificate of Control is a reference
document needed to process the customs clearance of specific consignments of a variety of goods,
including rice. First and foremost, the Certificat e of Control allows MARA and Turkey's customs
authorities to verify, on a single document, all re quired customs information, including the product's
compliance with relevant standards and technical regulations.

3 See paras. 24-26 of the United States' Rebuttal Submission.

16. In relation to certain produc ts (i.e., foodstuffs and other sensitive commodities imported for
human or animal consumption), the effectiveness of Turkey's post-entry market surveillance is still in
the process of development. It is for this very reason that the Government of Turkey still places (in
what must be considered a totally WTO leg itimate approach under both the Agreement on the
Application of Sanitary and Phytosanitary Measures and the Agreement on Technical Barriers to
Trade) emphasis on conducting strict and rigorous processes of product pre-approval and early
certification (by MARA, which is the competent ministry for rice). This scrutiny would be difficult to
conduct after importation and cannot be entirely left to customs authorities.

17. The Certificate of Control system is designed to centralize the competence and the
responsibility for products' compatibility in the auth ority (i.e., MARA for agricultural products such
as rice) which is best suited to verify compliance with all the relevant legislation, and which will
ultimately be liable for the products' safety. The a pproval by MARA of the Certificates of Control is,
therefore, meant to grant a safe, uniform and consis tent application of the requirements envisaged by
the relevant legislation for food prod ucts. This is the function of the Certificate of Control. Contrary
to what is being claimed by the United States, the function of the Certificate of Control is not that of
an import license. Turkey believes that ample legal arguments and factual evidence have been
provided up to now to support this statement both de jure and de facto. Turkey wishes again to draw
the attention of the Panel to this crucial aspect.

18. Nothing in WTO law and practice prevents WTO Members from deciding what domestic
instruments may be best suited to achieve the legitimate goals of customs inspection, product
certification, product safety, fitness for use, etc., which are essential to responsibly engage in
international trade while, at the same time , fulfilling WTO obligations and preserving full
sovereignty. It is obvious that a review and WTO scrutiny of these mechanisms is available to verify
that such instruments do not become trade barriers or disguised forms of protectionism. However,
Turkey is confident that the legal arguments and considerable amount of f actual evidence provided
are clear and conclusive proof that Turkey's Certif icate of Control instrument is a legitimate and
WTO-consistent instrument, both de jure and de facto , which has been respons ibly used to pursue
legitimate regulatory objectives.

19. As already indicated in Turkey's Replies to the Questions posed by the Panel, the control
procedures at importation stage are conducted in a three-step process which consists of documentation
control, identity checks, and physical inspections. In particular, it must be underlined that the
procedures that take place at central level (i.e., with MARA, in order to successfully apply for a
Certificate of Control) and the ones that are exhaus ted at border level (i.e., the physical checks on the
rice being imported, which must show compliance "i n practice" with all requirements, standards and
technical regulations certified "in theory" by MARA when approving the Certificate of Control on the
basis of the information provided by the importers) are all part of the same process of certification,
verification, inspection and customs clearance.

20. Contrary to what is maintained by the Un ited States, this process is not "duplicative" in
nature. The Certificate of Control includes the impor ters' declarations that the products comply with
the applicable standards and is intended to provi de pre-advice of the planned customs clearance at
particular points-of-entry of individual consignm ents. As indicated above, these aspects are essential
to ensure the necessary degree of administrative in tegration, foreseeability of customs clearance, and
uniformity of action between the central government and the SPS control and inspection laboratories
at customs points-of-entry. Turkey would like to em phasize again that it sees nothing sinister in this
division of competences between MARA and customs authorities. There is nothing "revealing" in the
cooperation of various parts of its administration to wards the uniform application and supervision of
customs clearance and import control, particularly with regard to certain sensitive commodities (such
as rice, which is destined for human consumption). Suggesting, as the United States does, that it is
questionable that part of the customs purposes of the Certificate of Control are fulfilled by actions to

be undertaken with MARA appears highly objectionable. Nowhere is it stated or provided that all
customs purposes must be sought or fulfilled at once and within a single authority at customs level.

21. It is true that physical inspections of imported products do take place upon importation (i.e.,
after the Certificates of Control have been appr oved), but this must be seen as a legitimate and
perfectly normal right of any Government. The process of early certification by MARA and the
actual verifications and inspections at customs level, carried-out by MARA officials at customs
points-of-entry, appear as the only effective instru ments for Turkey to guarantee that the products
placed in free circulation on its market are safe and fit for consumption. Turkey remains eager to
discuss with the United States alternative ways to a pproach this regulatory matter in light of even
greater trade-facilitation objectives, but it is not w illing to forego its legitimate WTO rights and it
believes that its current system is fully consistent with WTO law.

22. In fact, Turkey firmly believes that its Cer tificate of Control already acts as an element of
trade facilitation. It provides legal certainty and commercial predictability to importers engaged in
rice importation. Once approved, the Certificate of Control is a guarantee for the importer that all
elements and requirements needed to clear custom s are present and will allow importation (provided,
of course, that the consignment imported corres ponds to the information supplied and passes the
phytosanitary and food safety inspections). The impor ter will then feel confident to conclude all
necessary business engagements for purposes of importati on. This element of legal certainty must be
seen as a tool of trade facilitation. It provides administrative certainty for importers and avoids
possible time-consuming and costly procedures at border control. Provided that all legal requirements
are met, Certificates of Control are always (and always have been) swiftly and automatically
approved. This must be remembered as it indi cates the relatively low administrative burden which
this instrument places on traders.

23. As a final remark on the Certificate of Control, Turkey wishes to recall that GATT
Article XI:1 does not define the concept of " import license ". Neither is this concept defined by
Article 4.2 of the Agreement on Agriculture or by any previous GATT or WTO panel or Appellate
Body decision. An element of interpretative guidan ce appears to be available under Article 1.1 of the
Agreement on Import Licensing Procedures, where it is clearly indicated that the submission of an
application or other documentation required for " customs purposes" falls outside of the definition of
import licensing.

Turkey believes that, in the absence of a precise definition of the concept of " import license" under
GATT Article XI:1, Article 1.1 of the Agreement on Import Licensing Procedures must necessarily
provide an element of interpretative guidance. Therefore, Turkey submits that, while the non-
applicability of GATT Article XI:1 cannot be an automatic result of the inapplicability of the
Agreement on Import Licensing Procedures, the practical result should be the same, as a consequence
of the recourse to the interpretative guidance on the meaning of the term " import license" offered by
the Agreement on Import Licensing Procedures for purposes of the application of the GATT 1994.

24. In WTO law, definitions provided under certain covered agreements must be of relevance for
the interpretation of other WTO agreements. In par ticular, this is required by the general need to
guarantee consistency and uniformity of application of WTO law and obligations . In relation to the
issue at stake, it would be paradoxical to consid er the Certificate of Control as not falling under
Article 1.1 of the Agreement on Import Licensing Pro cedures, in as much as it benefits of the so-
called carve-out for " customs purposes ", while it is considered an import license under GATT
Article XI:1. Turkey believes that, in order to gua rantee consistency and uniformity of application of
WTO law, the interpretative guidelines provided by Article 1:1 of the Agreement on Import Licensing
Procedures, including the " customs purposes" carve-out, must apply to GATT Article XI:1 and to the
legal reasoning conducted to determine what is an " import licence" and whether or not the Certificate
of Control fits that profile.

25. In particular, if the so-called carve-out is meant, under Article 1:1 of the Agreement on
Import Licensing Procedures, to interpret and "restrict" the scope of the Agreement on Import
Licensing Procedures in relation to instruments that have " customs purposes", Turkey firmly believes
that the same interpretative tool should be used to "restrict" the scope of application of GATT
Article XI:1 if the same " customs purposes " carve-out is applicable to a given instrument. In any
event, the fact that, on the basis of this interpre tation, the Certificate of Control is not an import
license (within the meaning of Article 1:1 of the Agreement on Import Licensing Procedures and
GATT Article XI:1), does not exempt the Certificat e of Control from being reviewed as an "other
measure" under GATT Article XI:1. To this end, Turkey believes to have provided sufficient and
conclusive arguments and factual evidence that the a lleged denial of approval of the Certificates of
Control does not fall within the meaning of GATT Article XI:1 " other measure " because no
prohibition or restriction has been proved, both de jure and de facto.

The Expired Tariff Rate Quota Regime

26. After having already thoroughly addressed the issue of the now expired TRQ regime in its
previous submissions, Turkey simply wishes here to share with the Panel a number of general
considerations with respect to its former TRQ regime.

27. First of all, Turkey would like to once agai n emphasize that the TRQ regime has expired and
it has not been renewed. Turkey has also provide d repeated reassurances and commitments not to
reintroduce it as a system of market stabilization. Turk ey would like to refer to what has already been
stated in its previous submissions. In particular , Turkey wishes to recall that, when measures are no
longer in force, WTO case law supports the view that no finding is necessary on measures expired
before the commencement of the panel proceedings, whereas in the case of measures expired after the
commencement of the panel proceedings, if a finding is made, no recommendation is due.

28. WTO case law specifically supports the view that a panel is not necessarily required to make
findings in respect of measures expired before th e commencement of the panel proceedings and that
the discretion in deciding whether or not to make a finding on such measures must be guided by the
"object and purpose of the dispute settlement system ".
4 In exercising such discretion, the Panel must
consider whether making a finding would secure a positive solution to the dispute. On the other hand,
Turkey has also noted that certain panel and Appe llate Body reports have found it "inconsistent" to
make recommendations on measures that are no longer in force and that panels are to avoid making
recommendations regarding measures that no longer ex ist, both in relation to measures that expired
before or after the commencement of the panel proceedings.

29. Turkey does not consider that a finding on an y of its expired TRQ measures, including the
ones expired soon after the commencement of pane l proceedings, is necessary to secure a positive
solution to the dispute. Turkey has repeatedly maintained, both at the consultations phase and
throughout the submissions and oral statements presented so far, that it has no intention to renew these
measures, neither extending them nor adopting new legislative instruments. Therefore, Turkey
respectfully requests the Panel not to make findi ngs on any of the measures relating to the TRQ
regime or, in the alternative, to limit its findings to those measures which were still in force after the
establishment of the Panel. In any event, Turkey respectfully requests that the Panel refrain from
making any recommendation with respect to the TRQ regime.

30. Secondly, Turkey once again wishes to emphasize that the high volumes of in-quota imports
and the high number of TRQ licenses which were issued are testimony to the attractiveness and

4 See, European Communities – Measures Affecting the Approval and Marketing of Biotech Products ,
para. 7.1652.

appeal that the tariff advantage had among individua l rice importers. Turkey refers to Annex TR-42
where it has set out new scenarios which prove th e advantage provided by the TRQ regime. In these
scenarios, Turkey has used the Un ited States' average FOB price of US$ 295, provided by the United
States in its First Submission, and added insura nce and freight costs based on customary values
declared by Turkish importers. 5 Scenarios 3 and 4 show that the advantage provided under the TRQ
for the purchase of 1 tonne of paddy rice amounted to, respectively, US$ 31 and US$ 34.

31. Contrary to what the United States has alleged, importers always freely chose to take
advantage of this in-quota tariff preference. At all times, this opportunity has existed in parallel to the
ability to import at the less advantageous MFN rat es of duty. Turkey has already shown that the
choice to import within the TRQ, in order to benef it from the tariff advantage, was always dictated by
business determinations and commercial decisions th at were made by importers on the basis of a
number of economic and market factors such as domestic and world prices of rice, domestic
consumption, exchange rates, conditions of compe tition between rice of different origins, consumers'
preferences, marketing strategies, etc.

32. Thirdly, Turkey submits that its domestic purchase requirement was introduced within the
TRQ in order to partly moderate the advantageous effects of the preferential rates (i.e., advantages
which were totally in favour of imported produc ts). The domestic purchase requirement was never
meant to promote the domestic industry, rather it was designed to pursue the legitimate objective of
market stabilization by keeping prices at level th at would, at the same time, allow trade while
maintaining a viable balance betwee n consumer's interests and producers' expectations. There is no
"investment" element in the domestic purchase requirement.

General Considerations

33. Throughout these Panel proceedings, Turkey has argued that the United States has not made a
prima facie case, that it has not proved its allegations, th at its legal arguments do not find grounds in
WTO law and the interpretative guidance offered by WTO case law, and that this dispute largely rests
on a misunderstanding of facts and a number of i ndividual instances that have little to do with
international trade policy and more with domestic judicial proceedings. Turkey hopes that the
arguments and factual evidence that it has so far pr ovided to the benefit of the Panel and the United
States stand as sufficient and conclusive proof that Turkey never adopted a legal framework aimed
de jure at distorting trade and never implemented or applied its legislative and administrative
measures in a de facto trade distortive fashion.

34. The obvious question may be why, then, if Turkey's system has always been, both de jure and
de facto, in line with its WTO obligations, would the United States have fe lt discriminated upon and
decided to bring this matter to the attention of a WTO panel in formal dispute settlement proceedings?
Turkey believes that this dispute may, in fact, be the consequence, to a considerable extent, of the
relative lack of comparative advantage of rice from the United States vis-à-vis competing exporting
countries trading with Turkey (i.e., the degree of co mpetitiveness of United States' rice), as shown in
Annex TR-43. This circumstance would also expl ain why the United States appears to challenge so
vehemently the (now expired) TRQ and its domest ic purchase requirement, while it is widely known
that all countries and traders active in international trade are traditionally enthusiastic about TRQs and
the quota rents that they offer (provided, of course, that they are administrated in a non-discriminatory
fashion, as it was always the case for Turkey's rice TRQs).

5 For the purpose of these calculations, Turkey has us ed the United States average FOB price, as there
is concern that some Turkish CIF prices may be distorted by traders' practices of tax avoidance and tax
minimization. See also Turkey's Reply to Questions Po sed by the Panel, Questions Nos. 7 and 49(c). Turkey
notes that its average CIF price of US$ 260 is even lower than the average United States' FOB price of US$ 295.

35. As indicated in its last rebuttal submission, Turkey believes that, unfortunately, the real
background to this case may be that the United States has seen its rice exports to Turkey progressively
lose market share to the advantage of other exporting countries. This is true both in relation to TRQ
and MFN trade and particularly significant in a sc enario of continued expansion of market access
opportunities given by trends of yearly increases in imported volumes. While Turkey understands
that it would have been more desirable for purposes of the United States' maintenance of market share
that Turkey had not "burdened" its TRQ regime with the domestic purchase requirement, Turkey
believes that its TRQ regime was a totally legitimat e instrument which was adopted and administered
with only two clear objectives in mind: that of great er market supply (through the TRQ itself and the
lower applicable rates of duty) and that of market stabilization (through the domestic purchase
requirement). Turkey never adopted its TRQs with th e particular intent to diminish the market access
opportunities of the United States (or, for that matter, of any other exporting country).

36. The success of the TRQ and the high utilizatio n rates are testimony to the fact that the
advantage provided by the TRQ was real and appeali ng enough for importers to exploit it, despite the
allegedly burdensome impact of the domestic purch ase requirement. The fact that imports from the
United States may have declined (at the MFN rates as well as within the TRQ) has only to do with the
progressive loss in competitiveness of rice from the Un ited States vis-à-vis its competitors and with
the business determinations and commercial decisions freely made by rice importers on the basis of a
number of economic and market factor s. Even the most recent import statistics appear to support this
conclusion. The market-share of rice from the Un ited States has not increased even now that imports
are occurring only at the MFN (or applied) rates of duty and that the TRQ regime no longer applies.

37. As previously indicated, Turkey has systemat ically sought to avoid dispute settlement on this
issue and to reach a mutually acceptable solution w ith the United States. Despite the unfortunate
escalation of this matter into formal WTO disput e settlement, Turkey remains willing to address the
United States' specific trade concerns in line with Turkey's WTO obligations and legitimate rights.

38. Dear Madame Chair, distinguished Members of the Panel, this concludes Turkey's oral
statement. Turkey would like to reiterate its gratitu de to this Panel for its assistance in the resolution
of this dispute and stands ready to address any further questions that the Panel may have.

ANNEX E-4

CLOSING ORAL STATEMENT BY TURKEY
AT THE SECOND SUBSTANTIVE MEETING
(18 January 2007)

Dear Madame Chair, distinguished Members of the Panel,

1. The United States argues that Turkey institute d a policy to systematically deny the approval
of Certificates of Control for out-of-quota trade so as to induce traders to import within the TRQ. To
succeed, the United States must show either de jure or de facto that there was a systematic denial of
approvals so as to result in a prohibition or restriction on import. The United States has failed to do
so. The United States has not identified the provisi ons of the law governing Certificates of Control
which constitute a prohibition or restriction to support a de jure claim.

2. The United States is arguing that the absence of approvals for Certificates of Control is proof,
in itself, of the systematic policy to deny approva ls. The evidence that the United States has provided
is not sufficient to sustain this argument. The Un ited States must show that traders have applied for
and been systematically denied approvals. What has been shown is denial in individual cases. The
United States has not shown that the absence of approvals is not due to the absence of requests.

3. Let's look at the evidence provided by the Un ited States. It boils down to two things: the
Letters of Acceptance and their related Court cases as well as the correspondence between Turkey and
the United States. The diplomatic Letter to Ambassador Portman was designed to reassure the United
States that, with the phasing-out of the TRQ, trader s would likely resume trading on MFN terms. It
was not an implicit confirmation of any systematic denial of the approval of Certificates of Control.

4. Turkey has shown that the Letters of Accepta nce did not result in the 'blanket denial' of
approval of Certificates of Control. On th e United States' own calculation, a minimum of
969 Certificates of Control were applied for and approved for out-of-quota rice importation. The fact
that many of these out-of-quota Certificates of Control were used for FTA trade does not support the
argument by the United States. It merely confirms that traders preferred the terms of trade available
under the free trade agreements. These Certificates of Control were approved during the period when
the Letters of Acceptance were allegedly causing a 'blanket denial' of approvals. Turkey concludes
that the Letters of Acceptance we re not the cause of a reduction in exports by the United States nor
were they evidence of a 'blanket denial'.

5. Turkey argues that a more plausible reason for the lack of requests for approval of Certificates
of Control in relation to rice originating in the United States was the progressive fall in
competitiveness of paddy rice from the United States and the attractiveness of trade in TRQ and FTA
rice.

6. The United States has not shown that there was a systematic rejection of requests for
approval. They have given evidence in relation to five individual cases which have resulted in
domestic litigation. This represents 0.2% of the appr oved Certificates of Control. Turkey has even
indicated that there are, in fact , fourteen cases pending and the average rate of non approval is 4.38%
over the last 3 years.
1 Five or fourteen cases or 4.38% rejec tions of total requests is not convincing
evidence of large scale denial of requests. The Un ited States needs to show something more than 5 or
fourteen individual cases to show systematic denial.

1 See Annex TR-35.

7. The key issue that Turkey would like to unde rline is that the Letters of Acceptance are not
and have never been a legal instrument within th e Certificate of Control system. They are not
legislative measures or "other measu res" of the type that supports a de jure complaint. They may, at
best, be elements of factual evidence to be used to bring a de facto complaint. Turkey argues that the
United States has not brought such a case. In any event, should they be considered as evidence in
relation to a de facto review, Turkey submits that it has pr ovided substantial and convincing evidence
in order to rebut their probatory value and to indicate why importers were not applying for
Certificates of Control in respect to MFN trade, but rather for FTA or TRQ imports.

8. This factual evidence brought by Turkey is clear and stands as a powerful counter-argument
against the evidentiary value of the Letters of A cceptance. Importers were applying for TRQ and
FTA rice imports for the commercially-appealing tariff advantages that were offered by this type of
trade. In addition, requests for approval of Cer tificates of Control for rice originating in the United
States were even less likely given the progressive loss of competitiveness of paddy rice from the
United States. Turkey believes that it has provided enough evidence of this, both in terms of its own
statistical data, of the interpretation of data provide d by the United States (i.e., the scenarios) and, last
but not least, FAO data.

9. The Turkish Court of first instance, in th e Helin case, did not address whether Turkish law
provides MARA with any discretion to deny the appr oval of Certificates of Control once the requisite
formalities have been duly fulfilled. The Court of fi rst instance appears to have given effect to an
ultra vires act. Turkey notes that the other cases s ubmitted by the United States take the correct
approach and challenge the vires of the denial and, implicitly, the legality of the Letters of
Acceptance.

10. Turkey has argued that Certificates of Control are not import licences, that there is no de jure
discretion in relation to their approval when an a pplication has been duly made, and that the United
States has not shown or cited any element of Turkis h law in support of its case. The United States
cannot succeed in a de jure complaint for the very simple fact th at it has not shown what elements of
the law constitute a restriction or prohibition.

11. In any event, the fact that the Certificat e of Control is not an import license (within the
meaning of Article 1:1 of the Agreement on Im port Licensing Procedures and GATT Article XI:1),
does not exempt the Certificate of Control from being reviewed as an " other measure" under GATT
Article XI:1. However, Turkey believes it has provided sufficient and conclusive arguments and
factual evidence that the alleged denial of approval of the Certificates of Control does not fall within
the meaning of GATT Article XI:1 " other measure " because no prohibition or restriction has been
proved, both de jure and de facto . Only when a de jure or de facto prohibition or restriction of
imports can be demonstrated, the specific m easure being considered would amount to an " other
measure" of the type that GATT Article XI:1 considers illegal.

12. Why does Turkey have a Certificate of Cont rol system? The Certificate of Control is a
document used as part of Turkey's customs procedures. It is therefore a document used for customs
purposes. Importation and customs-clearance involve a number of elements. There is a
documentation element, a verification element, a physical inspection element and, ultimately, a tax
collection element. The Certificate of Control is part of the documentation phase. The fact that
responsibility for part of the documentation phase is allocated to MARA and part to the customs
authorities does not make the Certificate of C ontrol any less of a document used for customs
purposes.

13. It is perfectly legitimate and common practice in many WTO Members to allocate
responsibility for the different elements of cust oms or market entry to different governmental
authorities. The allocation of responsibility to MA RA is not decisive. The question is: is this a

document used for customs purposes? It is. Early notification and information-collection through the
Certificate of Control occurs at MARA because MARA is the competent Turkish authority in relation
to agricultural commodities.

14. On a single document, all required customs in formation, including the products' compliance
with relevant standards and techni cal regulations, is collected. In relation to certain products (i.e.,
food products and products destined to human and animal consumption), the Certificate of Control
allows the gathering of the necessary information before the goods arrive to customs.

15. Many WTO Members have pre-import documen tary requirement. We note that the United
States itself now requires, under its Public Health Security and Bioterrorism Preparedness and
Response Act of 2002 , prior notice of food importation. In particular, the Food and Drugs
Administration (FDA) and not the US Customs Service, must be notified in advance of any shipments
of food for humans and animals that are imported in to the United States. Is this requirement to be
considered an import licence? We believe not, just like the Certificate of Control is not and should
not be considered an import licence, but a legitim ate means for Turkey to achieve its legitimate
objectives.

16. Turkey remains free under WTO rules to a llocate governmental responsibilities to whatever
government authority it considers appropriate. The name of the authority is not the main issue. The
only question is whether the document is for customs purposes. The Certificate of Control is used for
customs purposes.

17. Turkey does not wish to enter into a debate on the legal questions surrounding
recommendations and findings of panels in this closing statement. Turkey asks the Panel to review its
arguments set out in the written pleadings. Turkey merely observes that the case cited by the United
States in its oral statement does not support its argument.

Turkey thanks the Panel for its continued assistan ce towards the resolution of this dispute and looks
forward to its written questions.