Document: WT/DS334/R Page F-1 ANNEX F REPLIES BY THE PARTIES TO THE QUESTIONS POSED BY THE PANEL AND OTHER PARTIES AFTER THE SECOND SUBSTANTIVE MEETING, AND COMMENTS BY THE PARTIES ON THE OTHER PARTY'S REPLIES Contents Page Annex F-1 Replies by the United States to the questions posed by the Panel and Turkey after the second substantive meeting (6 February 2007) F-2
Date: 6 February 2007
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 F

REPLIES BY THE PARTIES TO THE QUESTIONS POSED BY THE PANEL
AND OTHER PARTIES AFTER THE SECOND SUBSTANTIVE MEETING,
AND COMMENTS BY THE PARTIES ON THE OTHER PARTY'S REPLIES

Contents Page
Annex F-1 Replies by the United States to the questions posed by the Panel
and Turkey after the second substantive meeting (6 February 2007)
F-2
Annex F-2 Comments by the United States on the replies by Turkey to the
questions posed by the Panel af ter the second substantive meeting
(20 February 2007)
F-22
Annex F-3 Comment by the United States on the comments by Turkey on the
replies by the United States to the questions posed by the Panel and
Turkey after the second substantive meeting (28 February 2007)
F-43
Annex F-4 Replies by Turkey to the questions posed by the Panel after the
second substantive meeting (6 February 2007)
F-44
Annex F-5 Comments by Turkey on the replies by the United States to the
questions posed by the Panel and Turkey after the second
substantive meeting (20 February 2007)
F-79

ANNEX F-1

REPLIES BY THE UNITED STATES TO QUESTIONS POSED BY THE PANEL
AND TURKEY AFTER THE SECOND SUBSTANTIVE MEETING
(6 February 2007)

Questions from the Panel

Q99. (Both Parties) The Panel has examined th e data provided by each of the parties.
Certain data contained in some of the Exhibits provided by the Parties show significant
discrepancies. For example:

 (a) Figures in Exhibits US-45 and TR-23 for rice imports from 2001 to 2006;

Please explain why, in your view, this is the case, referring to relevant evidence, as appropriate.

1. The United States notes, as a general matter, that a number of the Panel's questions relate to
discrepancies in the data submitted by Turkey a nd the United States. The United States had noted
some of the same discrepancies, and furtherm ore observed that even accounting for these
discrepancies, the overwhelming evidence – the Letter s of Acceptance, the rejection letters given to
importers, the voluminous court documents, stat ements made by Turkish counsel and other
government officials, and newspaper articles – indicates that Turkey is restricting trade in rice and is
thus in breach of Article XI:1 of the General Agreement on Tariffs and Trade 1994 ("GATT 1994").
2. There are at least two possible reasons for the apparent discrepancy between the rice
importation data in Exhibits US-45 and TR-23. Fi rst, the US numbers are estimated on a "milled rice
equivalent" basis, under which imports of paddy ri ce and brown rice are converted into the weight
they would be as milled rice. (When paddy rice is fi rst milled into brown rice, the rice is de-husked.
When brown rice is further processed into milled rice, the bran is removed. Thus, the total weight of
the initial raw material, paddy rice, is reduced by a certain factor for brown rice and a certain factor
for milled rice.) The US data uses milled rice equi valent because milled rice is the final product that
is consumed, so the conversion enables a better co mparison between total s upply (including imports)
and total demand.
3. By contrast, it appears that Turkey's numbers, which are higher than the US numbers, are
based on the "product weight" of paddy and brown ri ce prior to milling. Turkish trade data provided
by the United States in Exhibit US-53 are on a produc t weight basis. In Exhibit US-81, the United
States has added an annual totals column for each ye ar to the original tables provided in Exhibit US-
53. The annual totals for 2003, 2004, and 2005 in E xhibit US-81 are comparable to the annual totals
for the same years provided by Turkey in Annex TR-23. With respect to the 2006 data, the annual
total of Turkish rice imports contained in Exhibit US-81 is approximately 58,000 metric tons less than
the figure provided by Turkey in Annex TR-23. The data provided by the United States in Exhibit
US-81 are official Turkish import data for rice. To the extent Turkey's data provided in Annex TR-23
is different, Turkey is in the best position to explain the discrepancy.
4. A second possible reason for the discrepancy is that Turkey and the United States appear to
use different sources for estimating rice importation. Turkey uses Undersecretariat for Foreign Trade
(FTU) data, which is reportedly based on imports. The United States Department of Agriculture
(USDA) derives Turkish rice imports from export data . To do so, it uses a combination of sources.
To estimate Turkey's imports of rice from the United States, USDA uses export data from the US

Department of Commerce, Bureau of Census. 1 To estimate Turkey's imports of rice from other
countries, USDA uses export data from the customs au thorities of other countries or entities, such as
EuroStat, China Customs, and the Thai Customs Department.2
5. In addition, Turkey does not specify whether it used data covering a marketing year (MY) or
a trade (i.e., calendar) year (TY) to arrive at its estimate. The United States provided data estimates
for both periods for each year. Therefore, it is un clear to which estimate Turkey's figure should be
compared. However, it is interesting to note that bot h the US and Turkish data follow a similar trend.
Imports appear to have been significantly lower in 2003/2004 3 than in 2001/2002 and 2002/2003
before rebounding in 2004/2005 and 2005/2006, although not to the levels seen prior to 2003/2004.
Turkey issued its first Letter of Acceptance on September 10, 2003 and, as previously noted, during
the period September 10, 2003 through at least la te-April 2004, there was no mechanism to import
rice into Turkey because the TRQ had not yet been ope ned. This explains the decrease in imports in
2003/2004. The fact that Turkey's restrictions have remained in place since that time explains why
import levels have not recovered to pre-2003/2004 levels.
 (b) Figures in Exhibits US-53 and TR-25 for paddy rice imports in January and
December 2004 and January to May 2006; for brown rice imports in March
2003 and January to September 2006; and for milled rice imports in July 2004
and January to July 2006.

6. The United States cannot explain the discrepancies in the data. The United States provided
data that was compiled by the State Institute of Statistics, which the United States understands has
been renamed the Turkish Statistics Corporation (TUIK). The United States obtained this information
by downloading it from the website of the wide ly used Global Trade Information Service
(www.gtis.com), a "supplier of international merchand ise trade data," to which the United States is a
subscriber. The GTIS website states that the data posted on its database was obtained from Turkey's
State Institute of Statistics.
4 Thus, the United States has provided the Panel with official Turkish
import data for rice. To the extent Turkey has prov ided data that is different from its official data,
Turkey is in the best position to explain the discrepan cies. With respect to milled rice imports in July
2004, the United States did not find a discrepancy between US and Turkish data.
 (c) Figures in Exhibits US-55 and TR-28 for landed CIF prices of paddy rice in
December 2004; of brown rice in March 2003, March to June 2004, September
to December 2004 and June 2006; and of milled rice in December 2005.

7. Please see the answer to (b) above. The discrepan cies in the quantity of imports between the
official Turkish import data provided by the Unite d States and the data provided by Turkey probably
account for most of the discrepancies in the data fo r landed CIF prices. Turkey is in the best position
to explain the discrepancies.
 On the other hand, some figures provided by the United States and Turkey show a high
degree of similarity. For example:

 (a) Figures in Exhibits US-45 and TR-24 for milled rice consumption from 2001 to
2005.

1 See Exhibit US-73.
2 See Exhibit US-73.
3 The 2003/2004 figure in Exhibit US-45 corresponds to the 2004 column in Annex TR-23, and each of
the figures in the remainder of this paragraph follows the same pattern.
4 See Exhibit US-73.

8. The primary source for USDA's milled rice consumption estimate is the Turkish rice industry.
This may explain why Turkey's official estimate of milled rice consumption is similar to that of the
United States.
 (b) Figures in Exhibits US-53 and TR-25 for paddy rice imports throughout 2003,
February to November 2004, throughout 2005, June and July 2006; for brown
rice imports in January, February and April to December 2003, throughout
2004 and 2005; and for milled rice import s throughout 2003 (except for May),
throughout 2004 (except for July), and throughout 2005.

9. As previously noted, the United States has pr ovided official Turkish trade data compiled by
the State Institute of Statistics. In the instan ces noted by the Panel above, Turkey has apparently
relied on the same data, which explains why the figures are similar.
 (c) Figures in Exhibits US-55 and TR-28 for landed CIF prices of paddy rice
throughout 2003, April to November 2004, throughout 2005 and June to August
2006; of brown rice throughout 2003 (e xcept for March), throughout 2005, and
April to June 2006; and of milled rice throughout 2003, throughout 2004,
throughout 2005 (except for December) and from January to July 2005.

10. Please see the answer to (b) above.
Q100. (Both Parties) The Panel has considered the information provided by Turkey on
"Monthly landed CIF values" in Exhibit TR-28, and noted a sharp increase in paddy rice prices
in June 2003, January and November 2004, February 2005 and March 2006. Likewise, it has
noted a sharp increase in milled rice prices in September 2003, January and August 2004 and
September 2005. It has also noted a signific ant fall in the price for milled rice in December
2003. Please explain why, in your view, these shar p increases and this significant fall in prices
occurred, referring to relevant evidence, as appropriate.

11. The United States has the following observations regarding the price fluctuations noted by the
Panel:
– June 2003: It is unclear to the United States what may have caused the increase in the
price of imported paddy rice in June 2003.

– September 2003: On September 10, 2003, Turkey imposed a legal prohibition on the
granting of Control Certificates for MFN trade in rice in the form of Letter of
Acceptance 964. This had the effect of constricting the supply of milled rice in the
Turkish market, which put upward pressure on prices. Imports of milled rice from
Egypt dropped from 12,042 metric tons in August 2003 to zero in September 2003.
Imports of milled rice from China dropped from 21,038 metric tons in August 2003 to
zero in September 2003. And imports of m illed rice from the United States dropped
from 6,990 metric tons in August 2003 to zero in September 2003. Because EC
origin rice imports were unaffected by the Minister's decision, as they are imported
duty free under a separate quota regime, rela tively expensive Italian milled rice was
the only imported milled rice available for purchase. This also had a significant
effect on average imported milled rice prices.

– December 2003: It is unclear whether there was an actual drop in milled rice prices.
According to Turkish import data, China shipped 10,000 tons of milled rice in
December 2003. However, there is no record in Annex TR-33 of any Control
Certificate(s) granted by MARA for the im port of Chinese milled rice that was used

in December 2003. Assuming that the data provided in Annex TR-33 is correct, and
assuming that the Turkish price data is b ased on erroneous import data, there may not
have been a drop in price at all.

– January 2004 : As submitted in Exhibit US-55, Turkish trade data shows that there
were no paddy rice imports and negligible milled rice imports (of EC-origin) in
January 2004. As previously mentioned, there had been a legal prohibition in place
on the granting of Control Certificates for MFN trade in rice since September 10,
2003. It is possible that, after four months with no MFN rice imports, market prices
for paddy and milled rice began to react.

– August 2004: The most likely reason behind the increase in average imported milled
rice prices was two-fold. Imports of Italian milled, one of the most expensive types
of imported rice in the Turkish market, which had been absent from the market during
the previous five months, resumed in August. At the same time, imports of
Vietnamese milled rice, one of the lowest pr iced imported milled rice in the Turkish
market, which had been present in the mark et during the previous months, ceased in
August.

– November 2004 : With the TRQ closed in September/October 2004, and a legal
prohibition on the granting of Control Certificates for MFN trade in rice still in place,
imports of rice in the two months preceding November 2004 were severely restricted.
Turkey re-opened the TRQ on November 1, 2004. The shortage of imported rice in
the market may have caused an increase in the price of imports of paddy rice as
shipping resumed.

– February 2005: The average US landed CIF price in 2005 was $260 per metric ton,
5
so this price spike appears to be an anomal y, which is amplified due to the fact that
there was a very small quantity of paddy rice imported that month.

– September 2005 : The TRQ was now closed and, with the legal prohibition on the
granting of Control Certificates for MFN trade still in place, importers could only
import EC origin rice. Indeed, Turkey's import data shows that only Italian milled
rice was present in the market in Septem ber 2005, and Italian milled is one of the
most expensive types of imported rice in th e Turkish market. This probably explains
the average price increase of imported rice.

– March 2006: The average US landed CIF price in 2006 was $274 per metric ton, 6 so
this price spike also appears to be an anomaly.

Q101. (United States) Could the United States provide monthly figures (separately for paddy,
brown and milled rice) for 2003-2006 concerning:

 (a) Total US rice production;

 (b) Total US rice exports; and,

 (c) Total US rice exports to Turkey.

5 See paragraph 70 of the US Rebuttal Submission which explained how this figure was derived.
6 This figure was derived by summing the US monthly totals for 2006 in Annex TR-25 and dividing
value by quantity.

12. Please see Exhibit US-74, which contains a nnual US rice production data and annual and
monthly data on total US rice exports and total US rice exports to Turkey. With respect to monthly
data on US rice production, USDA does not maintain this data, so the United States is unable to
provide it. USDA does not follow what industry mills on a monthly basis, and it does not collect data
on paddy production on a monthly basis because pa ddy production is concen trated between August
and October each year.
13. According to this data, US rice producers exported to Turkey 14,333 metric tons of paddy rice
in December 2003, 12,475 metric tons of paddy rice in January 2004, and 15,900 metric tons of paddy
rice in March 2004. Yet Turkish import data shows that, between October 2003 and May 2004,
Turkey did not import any rice from the United States. Letter of Acceptance 964, in which Turkey's
Minister of Agriculture ordered that no Control Certificates were to be granted, was issued on
September 10, 2003, and the TRQ did not open until at least late-April 2004. Thus, the discrepancy
between the US export data and Turkey's impor t data during the October 2003/May 2004 period
provides further evidence that Tu rkey enforces the Letters of Acceptance and is prohibiting or
restricting imports of rice. The United States believes that, because importers could not obtain
Control Certificates, this rice was most likely put into bonded warehouses and, thus, did not register in
Turkey's import statistics.
Q116. (United States) According to the information contained in Exhibit TR-33, since 1 May
2006, 27 Certificates of Control have been a pproved for MFN rice imports from the United
States. However, 25 of these approved Certificates of Control do not appear to have, as yet,
been utilised. Although these Certificates of Co ntrol have been approved after the date when
the panel was established, could the United States comment on this.

14. The United States cannot confirm that these 27 Ce rtificates of Control have actually been
approved because Turkey has rejected the Panel' s request that Turkey provide copies of the
Certificates. In response to questioning from the Panel during the two substantive meetings, Turkey
asserted that providing such information would viol ate elements of Turkish domestic law; however,
Turkey did not identify a specific provision to that effect. Moreover, as the United States noted
during that meeting, it is not uncommon for WTO pa nels to adopt procedures for the protection of
confidential information submitted by a party. Such procedures, which ensure that only the panelists,
the WTO Secretariat, and designated representati ves of the other party have access to such
information, have generally worked well in the past and could have been employed in this dispute if
Turkey had concerns. In response, Turkey asserte d that it was less a matter of what Turkey could
provide than what it was choosing to provide to the Panel.
15. Had Turkey provided copies of the Certificates it asserts were granted, this might have helped
to clarify the situation with respect to other, cont rary evidence before the Pa nel. For example, the
United States has provided documentary evidence s howing that two Turkish rice importers, ETM and
Mehmetoglu, applied for Control Certificates after Ma rch 24, 2006 and were denied. In both cases, it
was clear that the importers' applications were not denied for missing documents or other process
deficiencies; rather, Turkish officials made clear th at they were not granting Control Certificates for
MFN trade at all. Further, the rumor that MARA had granted a Control Certificate to Mehmetoglu
without requiring it to purchase domestic paddy rice reportedly caused 40 Turkish rice producers and
importers to visit MARA in order to protest the alleged issuance of a Certificate under these
circumstances. In response, Mehmetoglu strongly denied it had been granted such a Certificate.
7
Further, a recent article in the Turkish publication, Referans, also notes that, despite Minister

7 See Exhibit US-21.

Tuzmen's announcement that importation without do mestic purchase would be permitted starting in
April, "no companies were given a permission to import until August 1 [2006]."8
16. The United States also questions why importers would have applied for Control Certificates
for the volumes allegedly granted, given the actual leve l of trade. As noted in paragraph 54 of the US
Rebuttal Submission, Turkey asserts that it granted C ontrol Certificates for 400,000 metric tons of US
rice, while Turkey's import data shows that 90,000 metric tons of US rice entered Turkey in 2006. US
export statistics record 17,789 9 metric tons of US rice shipped to Turkey in 2006, and no future sales
have been recorded in the USDA Export Sales Report. The United States understands that any
additional entries would have come from US rice Turkey finally released from bonded warehouse that
had previously been refused entry. Under these circumstances, there would have been no reason for
importers to apply for Control Certificates of the magnitude reported for imports of US rice.
17. Finally, the United States also notes that by the time any Control Certificates for MFN rice
imports were allegedly made available from May- July 2006 (recall that Letter of Acceptance 390
states that the period for granting Control Certif icates would expire on August 1, 2006), shipment
arrangements for that period would likely already ha ve been made. Under Article 2 of the September
21, 2005 Notification, importers had to purchase domestic paddy rice prior to April 1, 2006, in order
to import under the TRQ regime which "expired" on July 31, 2006.
10 Given the pattern in previous
years, that rice imports would be halted after July 31, by April 1, 2006, importers likely had already
planned out their importations under the TRQ through July 31, 2006.
Q117. (United States) Could the United States cl arify whether the import figures provided in
Exhibit US-45 for imports (rows 6, 7 and 8) co rrespond to imports of milled rice or total rice
imports?

18. The import figures in Exhibit US-45 correspond to total rice imports. However, they are
adjusted on a milled rice equivalent basis, as explai ned in the answer to Question 99. To convert
paddy and brown rice into milled ri ce equivalent, USDA uses a conve rsion factor of 70 per cent for
volumes of paddy rice and 88 per cent for volumes of brown rice. In other words, the total weight of
paddy rice is reduced by 30 per cent in order to ar rive at the milled rice equivalent, and the total
weight of brown rice is reduced by 12 per cent in order to arrive at the milled rice equivalent.11
Q131. (Both Parties) In its resp onse to question 40 (d) posed by the Panel, Turkey submits that
Certificates of Control provide importers wi th "trade facilitation benefits", such as
"guaranteeing consistency and uniformity in th e customs clearance proc edures ... provid[ing]
greater commercial predictability and legal certai nty to importers (in relation to what they can
expect to happen at border control), and ... reduc [ing] the possibility for goods to be blocked at
customs with the potential for costly and time-consuming customs litigation."

 (a) Are Certificates of Control in their current form the only instruments by which
Turkey can achieve those "trade-facilit ation benefits" or would there be any
other way of achieving these same benefits ? Please justify your answer, making
reference to relevant evidence, as appropriate.

8 See Exhibit US-75. As described in the US Answer to Question 150, Turkey instituted minimum
import prices for rice on August 1, 2006. The article also noted that rice importation was only permitted in
specific periods, and that the TRQ system was enacted to protect domestic producers.
9 See Exhibit US-74.
10 See Exhibit US-11.
11 Andy Aaronson and Nathan Childs, "Developing Supply and Utilization Tables for the US Rice
Market," Rice Situation and Outlook/RCS-2000/November 2000, page 45. See Exhibit US-80.

19. Turkey's Minister of Agriculture has ordered that no Control Certificates be granted for
importing rice at the MFN rate. The United States fails to see how denying these Control Certificates
facilitates trade in rice; in fact, it has the opposite effect, prohibiting or restricting trade. Further,
Turkey has not succeeded in its asserted goal of re ducing the volume of lawsuits, given the large
number of lawsuits brought by importers whose Cont rol Certificate applications have been denied.
Control Certificates serve neither a customs nor an SPS purpose and only serve as an access point for
MARA to restrict the rice trade. Elimination of th e Control Certificate requirement would be the best
way to facilitate trade.
 (b) Does the fact that Certificates of Co ntrol allegedly provide importers with trade
facilitation benefits mean that, in th e absence of the requirement to obtain
Certificates of Controls, the importation of rice would in some way be more
cumbersome? If so, please describe in what manner the importation of rice
would be more cumbersome in the absence of such requirement, justifying your
answer with appropriate arguments and evidence.

20. In its answer to Panel Question 14, the United States explained the steps involved in the rice
importation process in Turkey.
12 An importer must file paperwor k with four different government
agencies – FTU, MARA, the Turkish Grain Board, and Turkish Customs – and obtain two separate
import licenses – the import permit from FTU and the Control Certificate from MARA. In addition,
an importer must fill out the same type of customs-related paperwork three times – for the two import
licenses and again for Turkish Customs. Moreover, an importer has to make two separate trips to
Turkish Customs and two separate trips to MARA – once to the Provincial Agricultural Directorate in
Ankara and once to the regional Agricultural Provincial Directorate – as part of the process.
21. Article 1.6 of the Import Licensing Agreement requires that "[a]pplication procedures ... shall
be as simple as possible." It further provides that "[a]pplicants shall have to approach only one
administrative body in connection with an application. Where it is strictly indispensable to approach
more than one administrative body, applicants shall not need to approach more than three
administrative bodies." As previously described by the United States, the rice importation process in
Turkey is far from simple. This highly cumbersome system would certainly be less so if the domestic
purchase and Control Certificate requirements were eliminated. Further, the United States has
demonstrated that multiple Turkish agencies are collecting the same customs-related information from
importers, and that MARA's collection of this information serves neither a customs nor an SPS
purpose. Accordingly, it is not "strictly indispen sable" that applicants approach more than one
Turkish agency in order to import rice. Even if it were, Turkey requires that importers approach four
agencies, which is more than the Import Li censing Agreement permits under the "strictly
indispensable" exception.
Q134. (Both Parties) In response to question 44 (f) posed by the Panel, regarding the denial of
Certificates of Control, Turkey provided the Pane l with Exhibit TR-36, listing the application
date, origin, quantity and quality of the rice for which each Certificate of Control was requested
during the years 2003 to 2006. As reasons for de nial, the list states the following: "Missing
documents not completed", "Upon the demand of the Company" and "Incomplete
Administrative Requirements".

 (a) What should be understood from these reasons?

22. Without being able to examine the actual C ontrol Certificates, it is impossible to state
definitively how these terms should be understood.

12 See paragraphs 22-33 of the US Answers to Panel Questions.

 (c) Are detailed reasons for denial provided in writing to the requesting companies
in the document of rejection or are these reasons communicated to applicants in
a similarly succinct manner as what is indicated in Exhibit TR-36?

23. It is our understanding from conversations with importers and the documentary evidence we
have submitted that no or very little explanation is provided to importers whose Control Certificate
applications are rejected. (Indeed , MARA sometimes fails to respond at all.) In some cases, as the
United States has previously discussed, MARA offi cials have communicated to importers, either
orally or in writing, that a Control Certificat e application was being rejected because MARA was
simply not granting, or could not grant (as a matter of Turkish law), Control Certificates. The United
States submits that, whatever other procedural fl aws MARA may have identified with particular
applications, this was the fundamental reason for the rejections.
Q136. (Both Parties) According to Turkey's stat ements (see, for example, para. 25 of its first
submission), Certificates of Control for the im portation of rice are valid for periods of 12
months.

 (a) If this is the case, why would impo rters not import rice during periods in which
Certificates of Control are allegedly not being approved, but some Certificates of
Control are presumably still valid?

24. As the data and arguments provided by Turkey demonstrate, MARA issues two types of
Control Certificates: Control Certificates for in -quota imports and Control Certificates for out-of-
quota imports. In Annexes TR-20 and TR-33, Turkey separates Control Certificates into these two
categories. There is no category provided for "dual use" Certificates, or Certificates that can be used
for either in-quota or out-of-quota trade in rice. Further, Turkey has repeatedly differentiated between
in-quota and out-of-quota Control Certificates through out its submissions in this dispute. For
example:
– in paragraph 27 of Turkey's First Submission, Turkey notes that the Control
Certificate "has not been used differently on the basis of whether it related to TRQ or
MFN rice import applications" (emphasis added);

– in its response to Question 83 from the Panel, Turkey stated that it "does not consider
the number of out-of-quota Certificates of Control for 2004 and 2005 is
'disproportionate,' ... In addition, the comparison between out-of-quota and in-quota
Certificates of Control in 2005 shows no disproportion at all, as figures show that 394
Control Certificates were approved for out -of-quota imports and 432 for in-quota
imports") (emphasis added);

– in paragraph 20 of Turkey's Rebuttal Submission, Turkey stated 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)" (emphasis added); and

– in paragraph 36 of Turkey's Rebuttal Submission, Turkey refers to the " ' de minimis'
rate of approval of Certificates of Control in connection with MFN imports")
(emphasis added).

25. Because Control Certificates granted for in-quo ta trade cannot be used for out-of-quota trade
(and vice versa), when the TRQ is closed, in-quot a Control Certificates granted while the TRQ was
open would no longer be valid.

26. In addition, while Turkey asserts that Control Ce rtificates are valid for periods of 12 months,
this is, at a minimum, not always the case. The Panel will recall that the Communiqués state that the
validity periods of Certificates cannot be extended, but are silent on the issue of whether those periods
can be shortened.
13 Exhibit US-79 contains a Control Certif icate that MARA issued on August 15,
2003. The Certificate provides that it cannot be u sed beyond September 1, 2003 (the beginning of the
Turkish rice harvest). 14 The validity period of this particular Control Certificate is far less than
12 months.
 (b) During periods when the TRQ was not open, why would imports of rice not
occur under Certificates of Control that were presumably still valid?

27. Please see answer to Question 136(a).
 (c) Is there any difference between the Certificates of Control issued to import at
the MFN rate, under preferential trade ag reements and under the TRQ? If so,
please specify the differences between them. If not, does this mean that a same
Certificate of Control could have b een equally used to import under the
different rates? Did an importer have to specify whether the intended import
was to be in-quota or over-quota when a pplying for a Certificate of Control?
Please make reference to relevant evidence, as appropriate.

28. Please see answer to Question 136(a).
 (d) Would a Certificate of Control still be valid for twelve months, even during a
period when a TRQ was in place? Would an in-quota Control Certificate
maintain its validity of 12 months, and therefore still allow imports to take place
at the preferential in-quota tariff rate, despite the tariff quota period closing?

29. Please see answer to Question 136(a).
 (e) Does the amount permitted to be impo rted under the Certificate of Control hold
any relation with the amount permitted to import when applying for an import
license to the Turkish Foreign Trade Undersecretariat (FTU)?

30. Please see answer to Question 136(a).
Q139. (United States) The United States has claime d that Turkey has acted inconsistently with
a number of provisions of the Import Licensing Agreement, inter alia, because it has failed to
notify its alleged import licensing regime for ri ce. The United States also noted (in its first
written submission, para. 127) that it "requested that Turkey notify its non-automatic import
licensing regime for rice to the Import Licensing Committee." Has the United States notified
Turkey's alleged licensing regime, as provided fo r in paragraph 5 of article 5 of the Import
Licensing Agreement? If not, why?

31. The United States notes that such a notification would be the first use of the paragraph 5
mechanism. The United States contemplated maki ng such a notification to the Import Licensing

13 See, e.g., Article 9 of the 2004, 2005, and 2006 Communiqués (Exhibits US-7 and US-78; Annex
TR-1).
14 The Control Certificate number and date of issuance – August 15, 2003 – are noted in the upper right
hand corner of the document. The document is stamped "26 Agustos 2003," which is the date on which the
importation was made. The phrase "FIILI ITHALAT 01/09/2003 Tarihine kadar yapilmalidir" towards the
bottom left side of the document means "The importation must be carried out by September 1, 2003."

Committee but concluded that any such notification would not add to the notification that the United
States has already provided to the Committee on Import Licensing of Turkey's import licensing
regime through the invocation of the dispute settle ment procedures, including notifying Members of
the Committee of the US request for the establishmen t of a panel and the claims concerning Turkey's
regime.
32. The United States claims in this dispute include that Turkey operates a discretionary import
licensing system that is in breach of several WTO provisions, including paragraphs 1.4(a) and (b), 1.6,
3.5 (a), (e), (f), and (h), 5.1, 5.2 (a), (b), (c), (d), (e), (g), and (h), 5.3, and 5.4 of the Import Licensing
Agreement. The question of the existence and na ture of Turkey's import licensing regime will be
resolved through the DSB recommendations and rulings on the issues at stake in this dispute.
Q140. (United States) In paragraph 26 of its first written submission, the United States claims
that on 30 December 2004, MARA's General Directorate would have issued a Letter of
Acceptance which recommended "yet another 'delay' in the opening date for issuing
Certificates of Control until August 1, 2005". How can this statement be reconciled with the
figures in Annex TR-33 that show that Certificates of Control for imports of US rice would have
been issued in April and May 2005 and that imports over the quota took place during these two
months?

33. Without being able to examine the actual Control Certificates, the United States cannot
investigate the authenticity of these claims and th e circumstances surrounding the alleged issuance of
Certificates. Even assuming that Turkey's figures ar e correct, this was at most a temporary relaxation
of the legal prohibition for US imports. In this re gard, the United States notes that, to the extent
Certificates were in fact granted, this would have closely followed US statements at the March 16,
2005 meeting of the WTO Committee on Agriculture, where the United States noted that Turkey's
import licensing regime for rice appeared to be inc onsistent with several provisions of the covered
agreements, including Article III of the GATT 1994, the TRIMs Agreement, and Article 4.2 of the
Agreement on Agriculture.
15
34. As noted in paragraphs 47 and 48 of the US Rebuttal Submission, Annex TR-33 purports to
show that, during one six-week period during Ap ril/May 2005, MARA allegedly issued Control
Certificates to import U.S.-origin paddy rice at the MF N rate. However, that data also indicates that,
prior to March 16, 2005, MARA had not issued an y Control Certificates for the importation of U.S.-
origin rice at the MFN rate during the second TRQ ope ning. And during this six-week period, it is
noteworthy that Egyptian milled rice continued to be imported under the TRQ – in other words, any
relaxation of the legal prohibition only seemed to apply to imports of US rice.
35. Moreover, under Turkey's figures, after May 12 the status quo resumed with nearly every
Control Certificate granted for importation of U.S.-o rigin rice occurring at the in-quota rate. Thus, at
most, Turkey's figures indicate that March/Apr il certificates were an anomaly following US
statements at the WTO. Importers brought in US rice almost exclusively under the TRQ for 2 ½
years, except for one six-week period where ev ery single Control Certificate for US rice was
purportedly issued for out-of-quota imports.
36. The United States notes that even if the Un ited States could confirm that these Control
Certificates were granted, the United States has provi ded voluminous evidence in the form of Letters
of Acceptance, importer rejection letters, court documents, statements from Turkish officials, and
newspaper articles that Turkey restricts rice importa tion in contravention of Article XI:1 of the GATT
1994. Further, as noted in paragraphs 60-62 of th e US Rebuttal Submission, the Appellate Body and
a GATT panel have found that mandatory measures th at were not enforced at all were, nonetheless,

inconsistent with GATT/WTO rules. Here, all of the evidence and data points to the fact that the legal
prohibition on the granting of Control Certificates at the MFN rate was consistently enforced for 2 ½
years, except for possibly one six-week period. Th erefore, the Panel should still find that Turkey's
restrictions on MFN trade in rice are inconsistent with Article XI:1.
Q143. (Both Parties) Were so-called "Letters of Acceptance" issued prior to the ones
identified by the United States in its submissions. If so, can you provide any evidence as to the
existence of these earlier Letters of Acceptance?

37. The United States does not possess any Letters of Acceptance that were issued prior to
September 10, 2003. US industry had raised concerns with the US government since 2001 that
Turkey had been imposing a seasonal ban on rice imports during the Turkish rice harvest, so it is very
possible that Turkey's Minister of Agriculture had issued such Letters.
Q145. (Both Parties) In its statement during the second substantive meeting with the Panel
(para. 12), the United States argued that Turkis h courts have attributed legal effect to the
so-called "Letters of Acceptance" and upheld MARA's enforcement of such Letters. In
response, in its closing statement during the same meeting (para. 9), Turkey argued that, in a
specific case cited, a "Court of first instance appears to have given effect to an ultra vires act
[from the Minister of Agriculture and Rural Affai rs]". What should be the appropriate value
given by the Panel, if any, to interpretations of domestic law developed by local courts? What
should be the appropriate value given by the Pane l, if any, to interpretations of domestic law
advanced by the administration of a Member be fore a local court? Was the allegedly erroneous
interpretation of Turkish domestic law develope d by the local court appealed by the Turkish
administration? Should interpretations of domestic law developed by local courts be accorded a
different value by the Panel if they were issued by higher courts?

38. The United States notes that regardless of the precise legal status in Turkey's municipal law of
the Letters of Acceptance, Turkey's issuance of these letters restricts trade in breach of Article XI:1.
Nevertheless, the evidence supports the conclusi on that these documents are not, as Turkey asserts
here, ultra vires, and the Panel need not accept Turkey's assertion.
39. Turkey's initial position in this dispute w as that the Letters of Acceptance were
internal/confidential and unenforceab le documents. These assertions, even if true, would not have
changed the fact that Turkey had in place a measu re, for WTO purposes, that prohibited or restricted
rice imports at the MFN rate. In any case, the Un ited States has shown that these assertions were
factually incorrect. The United States provided docum entary evidence demonstrating that the Letters
are not, in fact, internal/confidential, in the fo rm of court documents showing that the Turkish
government relied on the Letters in Turkish domestic court to defend its failure to issue Control
Certificates. The United States also provided documentary evidence that the Letters are being
enforced, in the form of Turkish court decisions, in which the courts agree with the government's
position, as well as import data and rejection letters to importers. Turkey's own Control Certificate
data supports the US contention that Turkey has been restricting rice trade at the MFN rate.
40. Turkey's new assertion is that at least two Turkish Ministers of Agriculture acted ultra vires
in issuing the Letters of Acceptance. As a general matter, when examining a Member's measure,
WTO panels are not bound by that Member's character ization of the measure. As noted by the Panel
in the 1916 Act dispute:

[O]ur understanding of the term "examina tion" as used by the Appellate Body 16 is
that panels need not accept at face valu e the characterisation that the respondent
attaches to its law. A panel may analyse the operation of the domestic legislation and
determine whether the description of the functioning of the law, as made by the
respondent, is consistent with the legal struct ure of that Member. This way, it will be
able to determine whether or not the la w as applied is in conformity with the
obligations of the Member concerned under the WTO Agreement.17
41. In this specific case, Turkey's sugges tion that the Letters of Acceptance are ultra vires is
strongly contradicted by other evidence. Not only the court opinions, but the overwhelming body of
evidence presented, support the conclusion that the letters are legally binding. The Minister of
Agriculture is the head of the Ministry of Agriculture and Rural Affairs (MARA). The Communiqués
make clear that the Control Certificate system is administered by MARA. The application for the
Control Certificate is contained in an annex to each Communiqué. The determination as to whether a
Control Certificate is to be granted is in the hands of MARA, as provided by Article 2 of the
Communiqués. Further, under Article 2, MARA's gr anting of a Control Certificate application is
contingent on an importer's provision of certain documents that MARA may ask for, depending on the
product. Thus, on the face of the regulation, MARA h as the authority to deny the issuance of Control
Certificates if certain unspecified documents are not provided. In fact, Tu rkey has been denying
Control Certificates to importers who do not present documentation, in the form of proof of domestic
purchase and an FTU import permit, demonstrating th at the requirement to purchase domestic paddy
rice has been satisfied. Therefore, Turkey's Minister of Agriculture not only is the head of the agency
that issues (or fails to issue ) Control Certificates , but the regulation the Minister administers provides
ample authority to deny Control Certificates if certain unspecified product-specific documentation is
not provided.
42. Turkey's "ultra vires" argument is also at odds with its st atements to its domestic courts and
with the conclusions of those courts. Turkey has asked , or is continuing to ask , in at least 14 Turkish
domestic court proceedings,
18 that the courts enforce the Letters of Acceptance. Turkey is continuing
to argue in domestic court that the Letters are valid and that it cannot grant Control Certificates. At
least five Turkish courts have uphe ld the government's position thus far. 19 Whatever any court of
appeal might or might not say on this issue, ther e is simply no evidence at this time to support
Turkey's assertion in this proceeding that its issuance of Letters of Acceptance was ultra vires under

16 Appellate Body Report, India – Patent Protection for Pharmaceutical and Agricultural Chemical
Products, WT/DS50/AB/R, adopted January 16, 1998, para. 67. In that dispute, the Appellate Body noted that
the United States had alleged that India's "administrative instructions" with respect to mailbox applications
would not override, as a legal matter, the application of certain mandatory provisions of India's Patents Act, but
that India disagreed with the US characterization of the Indian measure. The Appellate Body upheld the Panel's
finding that the measure in question was in breach of WTO rules, noting the Panel's statement that it had
"reasonable doubts" concerning India's assertions with respect to how the Indian courts would reconcile the
administrative instructions with the applicable provisions of the Patents Act. Id., paras. 74-75. The Appellate
Body further noted that the Panel had the authority to examine India's law to determine whether it was in
compliance with the TRIPs Agreement:

To say that the Panel should have done otherwise would be to say that only India can assess whether
Indian law is consistent with India's obligations under the WTO Agreement. This clearly cannot be so.

Id., para. 66.
17 Panel Report, United States – Anti-Dumping Act of 1916 , WT/DS136/R, adopted 26 September
2000, at para. 6.51.
18 See Turkey's Answers to Questions, Reply to Question 53(e).
19 See Turkey's Answers to Questions, Reply to Question 53(e).

Turkish municipal law. Again, however, whatever the status of the Letters, they do restrict trade, and
Turkey is therefore in breach of Article XI:1.
43. In order to resolve this dispute, it is thus not necessary to answer as a general matter the
precise evidentiary weight to be given to court op inions, which will vary from Member to Member.
Indeed, because of variations in the municipal legal systems of different Members, it is unlikely that
there is one set of answers to the Panel's questions that would be applicable to all Members.
44. WTO panels may consider domestic court pro ceedings, including arguments advanced by a
Member in those proceedings and the decisions re ndered by domestic tribunals, as relevant factual
evidence in evaluating what a measure brought to WTO dispute settlement actually does and how it
works in practice. In this case, the Panel should consider the Turkish government's stated position in
domestic court on what the Letters of Acceptance mean and what force and effect the Turkish courts
decide those Letters have as a matter of Turkis h law, as relevant factual evidence in evaluating
whether Turkey is prohibiting or restricting imports of rice through a discretionary import licensing
regime.
20 The United States believes that the evidence presented on this score is compelling.
Q150. (Both Parties) In paragraph 37 of its response to question 18 (c) posed by the Panel, the
United States asserts that it "has been informed by the trade (sic) that MARA is orally
informing importers that the MFN tariffs will henceforth be calculated based upon
government-determined reference prices for paddy, brown, and milled rice, respectively, rather
than on the actual customs value of the merchandise." Could the United States provide further
information and evidence to support this assertion.

45. The TRQ regime "expired" on July 31, 2006. The very next day, FTU sent a letter to Turkish
Customs noting that FTU and MARA had arrived at a "mutual understanding" regarding Turkey's
Control Certificate system. Specifically, as of August 1, 2006, duties would no longer be calculated
on the actual value of imported rice but on certain re ferences prices: CIF $340 USD per metric ton for
imported paddy rice, CIF $425 USD per metric t on for imported brown rice, and CIF $570 USD per
metric ton for imported paddy rice. On August 10, 2006, Turkey's General Directorate of Customs
ordered all Turkish customs houses to take the a bove-mentioned reference prices into account when
determining the price for purposes of calculating duty levels.
21 To the knowledge of the United
States, neither document was ever published.
46. In the August 10, 2006 Order, the General Di rectorate of Customs noted that, under the
understanding reached between MARA and FTU, calcu lation of the applicable duty according to the
reference price calculation is made a component of Control Certificates for rice:
 ... a mutual understanding is reached for application of a reference price in the
control documents drawn up in connecti on with the export of rice and rice paddy
pursuant to the Communiqué of Standar dization in Foreign Trade with number
2006/5.

20 See Panel Report, United States – Countervailing Measures Concerning Certain Products from the
European Communities, WT/DS212/R, adopted January 8, 2003, as modified by the Appellate Body Report,
WT/DS212/AB/R, at paras. 7.124-7.128 (noting that relevant factual evidence a Panel must consider in
analyzing whether a Member has complied with WTO rule s includes municipal court decisions, declarations
made by governmental authorities, and domestic applica tion of a measure, and that such evidence must be
examined jointly when evaluating whether the measure is in breach).
21 The United States submitted this document in Exhibit US-68.

[The references prices noted above] will be considered as references prices in case a
control document is drawn up and this fact is communicated to the Ministry of
Agriculture and Rural Affairs.
Consequently, since the values mentioned above w ill be considered as reference in
the establishment of control documents for the subject items from the date of
01.08.2006, this fact has to be taken into account while determining the price. 22
(emphasis added).
47. On October 19, 2006, Turkey's General Dir ectorate of Customs sent another unpublished
letter to its customs houses. 23 This second document makes refere nce to the August 10, 2006 letter
which noted the memorandum of understanding between MARA and FTU regarding the new
reference prices that were executed in accordance with the 2006 Comm uniqué. In sum, the document
states that the reference price system has not b een properly enforced – some companies had been
importing rice at a lower unit value than the applic able reference prices – and emphasizes that it is
necessary for customs officials to en force the reference prices. It s uggests that customs officials had
not been adequately considering the values specified in the invoices, which are attached to the Control
Certificates, when determining the basis on whic h customs duties would be levied. The document
concludes that:
it is extremely important to take the invoi ces that are attached to the import licenses
issued by the Ministry of Agriculture and Ru ral Affairs, and, that are declared by the
companies, as the basis in determining th e value that will be the basis of customs
tariff in the importation of the products in question.
In this regard, it is absolutely necessary that the values indicated on the invoices
attached to the import licenses be taken into consideration in the import customs
procedures for the goods in question, and that during the approval phase, the
declaration should be checked against the invoices attached to the import licenses for
any inconsistencies (emphasis in the original).
48. One Turkish importer, Mehmetoglu, attempted to avoid the reference price on milled rice
imports by importing 42,000 metric tons of mille d rice from Egypt at $305 per ton, even though the
company was obliged under the reference price regi me to pay duties on $570 per ton. The company
apparently paid the duty on $305 per ton and presented a letter of credit from its bank to Turkish
Customs to cover the difference. Accord ing to a December 5, 2006, article in Referans, Mehmetoglu
expressed its intention to contest any assertion that it needed to pay the difference, on the grounds that
the reference price scheme was illegal. Mehmetoglu' s action apparently was the subject of discussion
in Turkish Parliament, and Turan Comez, a me mber of Parliament from Balikesir, submitted a
question to Minister Tuzmen asking him to inves tigate this specific Mehmetoglu transaction, from
which he alleged Mehmetoglu realized $5 million in illegal revenues.
24
49. On December 15, 2006, perhaps in respon se to the controversy generated by "the
Mehmetoglu affair," Turkey's Minister of Agricu lture, Mehdi Eker, issued a public explanation of
Turkey's rice import regime through the Office of Press and Public Relations. In that explanation,
Minister Eker noted that FTU started the refere nce price system in response to these WTO panel
proceedings and in order to protect domestic rice produ cers. He further noted that any rumor that the
reference rice system has been suspended was false and that, as of December 15, 2006:

22 Exhibit US-68.
23 See Exhibit US-76.
24 See Exhibit US-75.

our Ministry had not issued an import license (Control Document) that is below the
Reference Prices ... .
25
Minister Eker closed by stating that Turkish Cu stoms had opened an inves tigation into Mehmetoglu,
in response to the inquiry that had been raised by Mr. Comez.

50. The December 15th statement by Turkey's Minister of Agriculture is significant for at least
two reasons. First, the Minister has conceded that the Control Certificate is an import license. This
admission provides further evidence that the Contro l Certificate is an import license for purposes of
Article XI:1 of the GATT 1994 and that Turkey's Control Certificate system, as set forth in the
Communiqués and the Letters of Acceptance, co nstitutes "import licensing" under the Import
Licensing Agreement.26
51. Second, the Minister has made clear that th e reference prices are not merely taken into
consideration when issuing a Control Certificate and determining on what value the customs duty is
levied. Rather, the reference prices, not the actua l value of the merchandise, are the values on which
the customs duty is levied. Moreover, if an impor ter attempts to avoid the reference price, that
importer risks being investigated. In other words, Turkey has put in place minimum import prices for
rice, and those prices are being enforced. Mi nimum import prices on the import of agricultural
products are specifically listed as prohibited in f ootnote 1 to Article 4.2 of the Agreement on
Agriculture.
52. For purposes of this dispute, Turkey's estab lishment of minimum import prices for rice
provides further evidence that Tu rkey restricts trade in rice and operates a discretionary import
licensing regime. A joint examination of the official Customs documentation, Minister Eker's
statements on December 15th, and the Hurriyet newspaper article reveals that MARA will not grant a
Control Certificate for the import of rice unless the importer agrees to pay a duty based on the
applicable reference price, rather than on the actual value of the imported rice. Instead of granting
import licenses automatically, Turkey utilizes discretion in determining whether or not to grant them.
If the importer agrees to the reference price, Turkey may decide to grant the license; if the importer
does not agree to the reference price, Turkey will no t issue the license. Accordingly, Turkey's import
licensing regime prohibits or restricts trade in contravention of Article XI:1 of the GATT 1994 and
constitutes discretionary import licensing under Article 4.2 of the Agreement on Agriculture.
Q152. (United States) In its statement during the second substantive meeting with the Panel
(para. 21), the United States argued that it woul d be necessary for the Panel to make a finding
and recommendation regarding the so-called "d omestic purchase requirement", in order to
resolve the dispute between the parties.

 (a) Could the United States explain why this would be the case, in its view.

53. Turkey argues that the Panel should decline to make a finding or issue a recommendation
with respect to the domestic purchase requirement be cause it allegedly has ceased to exist. However,
as the United States has pointed out, under its term s of reference and under DSU Article 19.1, the
Panel is charged with making findings and recomme ndations on the measures identified in the US
panel request, including the domestic purchase requir ement. Inasmuch as the domestic purchase

25 See Exhibit US-77 (emphasis added).
26 The United States further notes that Minister Eker's statement acknowledges that the TRQ resulted in
an 87 per cent increase in domestic rice production since 2002 and that, as a result, domestic rice increased from
40 to 66 per cent as a percentage of total domestic c onsumption. The statement makes clear that the institution
of Turkey's import system for rice, including the TRQ with domestic purch ase, was done with the objective of
protecting domestic producers and increasing investment in the Turkish rice sector.

requirement was in existence at the time this Panel was established, that measure is within the Panel's
terms of reference, the Panel is charged with ex amining that measure as it existed on the date of
establishment.27 The TRQ regime existed on March 17, 2006, the date this Panel was established by
the DSB.
54. Further, the United States considers that findi ngs and a recommendation with respect to the
domestic purchase requirement are necessary to resolve the dispute. First , the United States believes
that, contrary to Turkey's assurances, the TRQ regime is still in existence. Turkey has previously re-
opened the TRQ on two separate occasions after it claime d that the TRQ had expired. In one of those
instances, Turkey informed the WTO Committee on Agriculture that the TRQ had expired and would
not be re-imposed. Yet Turkey subsequently re- opened the TRQ with domestic purchase. The fact
that Turkey closes the TRQ periodically does not change the fact that the regime continues to exist.
Turkey has neither repealed the legislation providing the legal basis under Turkish law for imposing a
TRQ with an absorption requirement nor amended t hose regulations to ensure that FTU cannot re-
open the rice TRQ. Because Turkey continues to argue that its TRQ scheme is beneficial in that it
allegedly provides stability in the market with respec t to price and supply and is beneficial to imports,
it is likely that Turkey will re-open the TRQ when it deems appropriate.
55. Second, if the Panel were not to make findings and a recomme ndation with respect to the
domestic purchase requirement , and if Turkey were to re-open the TRQ and impose a domestic
purchase requirement, Turkey might argue before a WTO compliance panel that that panel would not
have jurisdiction to make findings on the measure because it was not a "measure taken to comply"
under Article 21.5 of the DSU. Were this argument to succeed, the United States would have to again
request original panel proceedings, thereby needless ly prolonging a dispute that this Panel has the
authority and mandate to resolve.
 (b) In paragraph 20 of its statement, the United States also argued that its request
that the Panel make findings and recommendations regarding the TRQ regime
would be supported by the interpretation contained in the Appellate Body report
in the Dominican Republic - Import and Sale of Cigarettes case. Could the
United States elaborate on this assertion, explaining in what manner does the
Appellate Body's decision in that ca se support its request. Please refer to
specific sections of the report, as approp riate, and their relevance to the present
case.

56. The United States made this statement in response to Turkey's continued unsupported
allegations that WTO panel reports support its ar gument that this Panel does not need to make
findings and recommendations on the domestic purch ase requirement. Turkey has continually argued
that WTO panels should not make findings on measur es that have ceased to exist. What Turkey
ignores is that, in determining whether a measure is still in existence, the relevant date for purposes of
WTO dispute settlement is the date of panel estab lishment. Every single dispute cited by Turkey
respects the distinction between measures that existe d on the date of panel establishment, such as the
domestic purchase requirement, and those measures that did not exist on the date of panel
establishment.
57. The outcome of the Dominican Republic – Cigarettes dispute also supports the US position.
In that dispute, the panel made an adverse finding with respect to the Dominican Republic's Selective
Consumption Tax, which existed on the date of panel establishment, but which was subsequently
modified. However, the panel decided not to make a recommendation to the DSB that the Dominican

27 See paragraphs 19-22 of the US Oral Statement at the Second Panel Meeting and paragraphs 42-47
of the US Oral Statement at the First Panel Meeting.

Republic bring the measure into conformity with WT O rules, on the grounds that the measure was no
longer in force.
28
58. The Appellate Body disagreed with the pane l by making a broad recommendation that the
Dominican Republic bring its measures into complian ce with WTO rules. Specifically, in paragraph
130 of its report, the Appellate Body states:
The Appellate Body also recommends that the Dispute Settlement Body request the
Dominican Republic to bring its ... measures [other than the tax stamp requirement],
found in the Panel Report as modified by th is Report, to be inconsistent with the
GATT 1994, into conformity with its obligations under that Agreement.
29
The Appellate Body's broad recommendation cove rs the Selective Consumption Tax and other
measures that the panel had found to be inconsistent with WTO rules.

59. Further, in paragraph 129, the Appellate Body recommended that the DSB request the
Dominican Republic to bring into conformity with WTO rules its tax stamp requirement, a measure
that existed on the date of panel establishment, even though the Dominican Republic had modified
that requirement subsequent to panel establishment:
In view of the above, the Appellate Body recommends that the Dispute Settlement
Body request the Dominican Republic to bring the tax stamp requirement, found in
this Report and in the Panel Report as modified by this Report to be inconsistent with
the GATT 1994, into conformity with its obligations under that Agreement if, and to
the extent that, the said modifications to the tax stamp regime have not already done
so.
30
In recommending that the Dominican Republic bri ng into conformity a measure which had already
been modified, the Appellate Body acknowledged th e modification without prejudging whether it had
brought the Dominican Republic into compliance.

60. Similarly, in EC – Biotech , the panel made a recommendation with respect to a measure the
EC asserted no longer existed.
31 While the measure in that dispute allegedly expired prior to panel
establishment, the panel's reasoning in determining the need to make a recommendation is relevant for
the instant dispute. First noting that the aim of WTO dispute settlement, pursuant to Article 3.7 of the
DSU, was "to secure a positive resolution to a dispute,"32 the panel stated:
In addition to noting the continuing exis tence of opposition to approvals amongst
member States, we also recall the informal, de facto nature of the general moratorium
on approvals, which means that it can be re-i mposed just as soon as it can be ended.
In these circumstances, we agree that even if the general moratorium ceased to exist
after August 2003, if we were to find that the European Communities acted

28 Panel Report, Dominican Republic – Measures Affecting the Importation and Internal Sale of
Cigarettes, WT/DS302/R, adopted May 19, 2005, as modified by the Appellate Body Report,
WT/DS302/AB/R, at para.8.3 ("Dominican Republic – Cigarettes").
29 Appellate Body Report, Dominican Republic – Measures Affecting the Importation and Internal Sale
of Cigarettes, WT/DS302/AB/R (emphasis added).
30 Appellate Body Report, Dominican Republic – Measures Affecting the Importation and Internal Sale
of Cigarettes, WT/DS302/AB/R (emphasis added).
31 Panel Reports, European Communities - Measures Affecting the Approval and Marketing of Biotech
Products, WT/DS291, 292, 293/R, para. 8.16 ("EC – Biotech").
32 Panel Reports, European Communities - Measures Affecting the Approval and Marketing of Biotech
Products, WT/DS291, 292, 293/R, para. 7.1309.

inconsistently with its WTO obligations by applying a general mo ratorium in August
2003, this could help prevent a WTO-inc onsistent general moratorium from being
reintroduced and, in this way, secure a positive resolution to this dispute.33
In a footnote to paragraph 7.1311, the panel further noted:

[I]f we were not to make findings on the general moratorium, there would effectively
be a possibility of shielding it from scrutiny by a panel because this type of de facto
measure could be ended shortl y before or during panel pr oceedings and promptly re-
imposed thereafter.
61. The panel ultimately recommended that the DSB request that the EC bring its measure into
conformity with its WTO obligations "if, and to the extent that, that measure has not already ceased to
exist."34
62. Turkey's domestic purchase requirement existed on the date of panel establishment, and this
Panel is charged with making findings and reco mmendations to the DSB, in accordance with
Article 19.1 of the DSU and the Panel's terms of re ference, in order "to secure a positive resolution to
a dispute" pursuant to Article 3.7 of the DSU. Turkey's mere assurance that it has no intention of re-
opening the TRQ with domestic purchase does not provi de legal grounds for the Panel to disregard its
mandate and the text of the DSU, and the guidance provided by past panels supports this conclusion.35

33 Panel Reports, European Communities - Measures Affecting the Approval and Marketing of Biotech
Products, WT/DS291, 292, 293/R, para. 7.1311.
34 Panel Reports, European Communities - Measures Affecting the Approval and Marketing of

In its reasoning, the panel cited the Panel Report in Canada – Wheat as an example of where a panel
did not make a recommendation with respect to a measure that had been amended after panel establishment.
That report, which addresses a measure that was amended during panel proceedings, is inapplicable to the
present dispute, where the panel is addre ssing a measure that one party argues has ceased to exist during the
panel proceedings. Nevertheless, the panel in Canada – Wheat noted that, during the panel proceedings, Canada
had acknowledged that the amended measure, on which the panel made its recommendation, had the "same"
"substantive effect" as the measure that existed on the date of panel establishment. (And the United States
agreed with that assessment, as noted in US Response to Panel Question 67 in that dispute.) Panel Report,
Canada - Measures Relating to Exports of Wheat and Treatment of Imported Grain , WT/DS276/R, adopted
September 27, 2004, para. 7.3 ( Canada – Wheat "). That the text of the DSU requires panels to make a
recommendation is meant to ensure that a WTO-inconsistent measure cannot be subsequently re-imposed by the
respondent. Because Canada's amended measure was subs tantively the same as the original measure, a panel
recommendation that Canada bring that measure into conformity with its WTO obligations would also have
precluded Canada from re-imposing the original measure.
35 See Panel Report, Indonesia – Certain Measures Affecting the Automobile Industry , WT/DS54, 55,
59, 64/R, adopted July 23, 1998, para. 14.9. The panel decided to make a finding on a measure that Indonesia
deemed "obsolete" since it had allegedly been terminated after the panel was established:

In any event, taking into account our terms of reference, and noting that any revocation of a challenged
measure could be relevant to the implementation stag e of the dispute settlement process, we consider
that it is appropriate for us to make findings in respect of the National Car programme. In this
connection, we note that in previous GATT/WTO cases, where a measure included in the terms of
reference was otherwise terminated or amended af ter the commencement of the panel proceedings,
panels have nevertheless made findings in respect of such a measure. We sh all therefore proceed to
examine all of the claims of the complainants.

Questions from Turkey

Question TR-1: Could the United States indica te which specific provision of the Turkish
law on Certificates of Control (i.e., Communiqu é of Standardization for Foreign Trade No.
2005/5, 2006/5 and 2007/21) defines, de jure, a Certificate of Control as an import license?

63. The United States has not found any provision in the Communiqués that states "the Certificate
of Control is an import license." However, this is irrelevant for purposes of the Article XI:1 analysis.
Article XI:1 states that:
No prohibitions or restrictions other than duties, taxes or other charges, whether made
effective through quotas, import or expor t licences or other measures, shall be
instituted or maintained by any contracting party on the importation of any product of
the territory of any other contracting party ... .
64. According to customary rules of interpretation of public international law, as reflected in
Article 31 of the Vienna Convention on the Law of Treaties , the text of Article XI:1 of the GATT
1994 must 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 and purpose." The ordinary meaning
of the term "import licence" is formal permission from an author ity to bring in goods from another
country. Thus, the relevant starting point for pu rposes of Article XI:1 is whether the Control
Certificate constitutes formal permission from the Tu rkish government to br ing in rice from another
country. The United States has made a prima facie case that the Control Certificate does amount to
such permission and therefore is an import license for purposes of Article XI:1. The United States has
also rebutted Turkey's argument th at the Control Certificate is required for either customs or SPS
purposes.
36
65. Turkey has not identified any provision in Artic le XI:1 or elsewhere in the WTO Agreement
that a Member must label a document an "import li cense" in order for it to be one. Indeed, how a
Member characterizes an instrument does not determine whet her an instrument constitutes formal
permission from an authority to bring in goods fro m another country, or is otherwise a measure for
purposes of WTO dispute settlement. 37 Footnote 1 to Article 1 of the Import Licensing Agreement,
which provides relevant context to the interpretation of the term "import license" in Article XI:1 of the
GATT 1994, makes clear that regardless of how a Me mber characterizes or refers to particular
administrative procedures, such procedures are still c onsidered "import licensing" if they satisfy the
criteria in Article 1.
66. In this case, however, the United States believes that Turkey's characterization of the Control
Certificate is relevant to the Panel's determination. As previously noted in the US Answer to
Question 150, Turkey's Minister of Agriculture, Mehmet Eker recently stated that:
our Ministry had not issued an import license (Control Document) that is below the
Reference Prices ... .38

Footnote omitted. One of the referenced panel reports in the footnote was the Panel Report in United
States – Measures Affecting Imports of Wool Shirts and Blouses from India, WT/DS33/R, adopted 23 May 1997
(where the Panel made a finding on a measure that the United States withdrew during the panel proceedings).
36 Further, neither the words "de jure" nor "de facto" appear anywhere in the text of Article XI:1, so the
United States is unsure of the legal basis for this distinction that Turkey is apparently making.
37 See US Response to Panel Question 145.
38 Exhibit US-77 (emphasis added).

Thus, the Turkish official that is the ultimate au thority on Control Certificates has characterized the
Control Certificate as an import license. As noted by the United States in response to Panel Question
145, past panels have found that the characteriza tion of a government's measures by a governmental
authority is relevant evidence in evaluating the mean ing of a measure, and the United States urges the
Panel to take Minister Eker's statement into account.

Question TR-2: Could the United States identi fy which specific provisions of Turkish law
provide the Turkish Ministry of Agriculture and Rural Affairs, (i.e., MARA) with the discretion
necessary to deny the approval of applications for Certificates of Control which otherwise
comply with the requirements of the law?

67. As noted in previous US submissions and statements, paragraph 2 of the Communiqués
provides that, in order to obtain a Control Certificate from MARA, an importer must provide the
application form, an invoice, and "other documents which may be asked for, depending on product,
by the Ministry."
39 This provides MARA with the discr etion necessary to deny the issuance of
Control Certificates for rice, which should be auto matically issued. Instead, the Ministry demands
that importers provide proof of purchase of domestic paddy rice and an FTU import permit (which is
issues contingent on such purchase) before approving a Control Certificate application.
68. In addition, at least two Ministers of Agriculture have issued Letters of Acceptance, ordering
that no Control Certificates be granted unless this documentation is provided. Whether these Letters
are an exercise of the discretion provided in Article 2 or override Article 2, the Letters are being
enforced. The Government of Turkey is arguing in multiple domestic courts that it cannot grant
Control Certificates pursuant to the Letters, and the courts are agreeing with the government's
position. Thus, the Letters of Acceptance are bindi ng under Turkish law or, at the very least, provide
strong evidence that Turkey operates a discretionary import licensing regime.
Question TR-3: What leads the United States to argue that there should be an a priori
exclusion of the Certificates of Control approved in relation to out-of-quota FTA trade from the
alleged application of the "blanket denial" for all out-of-quota requests for approval?

69. Turkey continues to mis-characterize the US claim. The US claim is that Turkey is
prohibiting or restricting imports of rice at the MF N rate by failing to issue Control Certificates.
Since 2003, the United States has been requesting that Turkey provide copies of Control Certificates
that it has granted. To date, Turkey has not done so. However, Turkey recently has clarified that it
does require "in-quota Control Certificates" under the TRQ, as well as "out-of-quota Control
Certificates" for both MFN and "FTA" trade, the latter of which apparently refers to trade with the
EC, Macedonia, and other entities/countries with which Turkey has negotiated "free trade
agreements." The US argument that there was a bl anket denial of Control Certificates was made in
support of the claim that there is a prohibition or restriction on MFN rice imports. Whether
Certificates are required for non-MFN, out-of-quota trade is irrelevant.

39 See Annex TR-1, which contains the text of the 2006 Communiqué. Paragraph 2 of the 2005
Communiqué contains the same language in Turkish. See Exhibit US-7. Paragraph 2 of the 2004 Communiqué
uses the phrase "other documents that may be required by the Ministry of Agriculture and Rural Affairs." See
Exhibit US-78.

ANNEX F-2

COMMENTS BY THE UNITED STATES TO THE REPLIES BY TURKEY
TO THE QUESTIONS POSED BY THE PANEL
AFTER THE SECOND SUBSTANTIVE MEETING
(20 February 2007)

1. The United States appreciates the opportunity to provide comments on the "Replies by
Turkey to the Questions Posed by the Panel" submitted by Turkey on February 6, 2007. The United
States has reviewed Turkey's answers and will pr ovide comments on some of those answers as set
forth below. With respect to those answers on which the United States is not providing comments, the
United States submits that Turkey's arguments are su bstantially the same as in previous submissions
and statements or are rebutted el sewhere in the US comments, so the United States will refrain from
repeating its arguments.
Q100. (Both Parties) The Panel has considered the information provided by Turkey on
"Monthly landed CIF values" in Exhibit TR-28, and noted a sharp increase in paddy rice prices
in June 2003, January and November 2004, February 2005 and March 2006. Likewise, it has
noted a sharp increase in milled rice prices in September 2003, January and August 2004 and
September 2005. It has also noted a signific ant fall in the price for milled rice in December
2003. Please explain why, in your view, these shar p increases and this significant fall in prices
occurred, referring to relevant evidence, as appropriate.

2. Turkey's contention that the price trends noted by the Panel can be explained by sales of
paddy rice for planting during certain periods is not supported by Turkish trade data. There is an
8-digit Harmonized Tariff System code for "ri ce in the husk (paddy or rough) for sowing"
(HS1006.1010). The United States has submitted a more detailed version of Turkish trade data for
paddy rice imports.
1 This more specific break-out of the paddy rice sub-heading shows that none of
the sales that Turkey describes in the first paragraph of its response actually occurred.
Q102. (Turkey) Aside from the alleged lack of competitiveness of rice from the United States,
what other reasons may explain in Turkey's view the fact that, according to the information
provided by Turkey in Exhibit TR-25, there seem to have been no imports of:

(a) Paddy rice or brown rice in the months of October in 2003, 2004 and 2005. In
addition, the data in Exhibit TR-33 sugg est that no rice imports whatsoever
(paddy, brown or milled) took place in February and March 2004. Further, the
data in Exhibit TR-33 seem to suggest that there were no rice imports other than
EC/Former Yugoslav Republic of Maced onia out-quota rice imports in
October - December 2003 and in September - October 2005.

(b) Milled rice from the United States during: (i) January - May 2004; (ii) July
2004; (iii) September - November 2004; (iv) July - December 2005; and, (v)
January 2006 - onwards.

(c) Paddy rice from the United States duri ng: (i) October - December 2003; (ii)
February - May 2004; and, (iii) September - November 2005

3. From September 10, 2003 through the date of panel establishment and beyond, Turkey
maintained a legal prohibition on the granting of Control Certificates for MFN trade. Turkey

1 See Exhibit US-82.

instituted minimum import prices for rice on Augus t 1, 2006 – the day after the TRQ allegedly
expired – and Turkish import data during the September-December 2006 period shows that rice
imports have ceased.2 Turkey's maintenance of a discreti onary import licensing regime, including the
TRQ with domestic purchase, is the most compelling reason that rice imports have ceased altogether
in certain periods, as the United States has previously argued.
4. Several of the explanations provided by Turkey are unsupported by the evidence on the
record. Turkey argues that ther e was an increase in rice stocks by the beginning of 2004; however,
the data on the record shows just the opposite, with Turkish rice stocks declining from 260,000 metric
tons on September 1, 2003 3 to 135,000 metric tons on September 1, 2004. 4 Turkey contends that
there was a steep increase in world rice prices in 2004, but that would not explain the decline in
imports that began in September 2003. With respect to prices in 2004, one cannot measure the effect
of an increase in world prices for rice in the Turk ish market without knowing the domestic prices for
rice in Turkey during the period in question. Annex TR-29 shows that TMO purchasing prices
increased significantly in 2004 from the previous ye ar, and Exhibit US-54 demonstrates that Turkish
wholesale prices rose throughout the 2003-2006 time period. Turkey has taken issue with the data in
Exhibit US-54 but has not provided a clear explanation as to why that data is inaccurate. The Panel
has requested that Turkey provide data on domestic rice prices in Turkey but, to date, Turkey, which
is in the best position to supply this data, has not done so. The Panel should draw the appropriate
inference from Turkey's failure to provide this data.
5. Turkey also argues that import decisions have always been exclusively determined by
business considerations. Yet an examination of th e data shows that the United States has exported
large quantities of rice throughout the world since September 2003, yet has been unable to export to
Turkey during certain time periods, which implies that something other than business considerations
was driving the import trends. Moreover, Turkey maintains that preferential tariffs on rice from the
EC and Macedonia could affect importers' choices. However, the EC quota only covers 28,000 metric
tons of milled rice, a small percentage of the Turk ish rice market. Further, as the United States noted
in paragraph 51 of the US Rebuttal Submission, Mace donia is a non-factor in the rice trade. It does
not export rice. Even Turkey's Annex TR-33 shows that only one-third of the Control Certificates
allegedly granted for the impor tation of Macedonian rice were ever utilized; some of those
Certificates were only utilized in part; and the total quantity of Macedonian rice allegedly imported
was less than 1,500 metric tons.
Q103. (Turkey) In reference to the previous quest ion, is Turkey of the view that the lack of
imports during the indicated periods was a result of a lack of applications for Certificates of
Control to import rice or rather of a reject ion of those applications? Please reason your
response, referring to relevant evidence, as appropriate.

6. Without examining the actual Control Certificate data, it is impossible to discern whether
there was a lack of applications for Control Cer tificates. However, the United States would not be
surprised if that were indeed the case; as th e United States has demonstrated, Turkey's legal
prohibition on the granting of out-of-quota Control Certificates for MFN trade in rice prohibited or
restricted the importation of rice at least through the date of panel establishment. Even Turkey's
alleged Control Certificate data shows that it gr anted only 56 out-of-quota Control Certificates at the

2 See Exhibit US-81rev, which is Exhibit US-81 as revi sed to include December 2006 data. Turkish
data shows imports of US paddy rice in July and August, but US export statistics show a minuscule level of US
rice exports to Turkey in 2006, except for approximately 16,000 metric tons of paddy rice in March 2006. As
the United States previously has mentioned, the large amount of alleged Turkish imports of US rice in the July-
August 2006 period can only be accounted for by US rice that had been stored in Turkish bonded warehouses.
3 September 1 is the first day of the rice marketing year in Turkey.
4 See Exhibit US-45.

MFN rates over a 2 ½ year period and, as the United States explained previously, many of those
alleged Certificates were either not utilized, covered the importation of very small amounts of rice, or
were anomalies. Importers would have known from past years that Turkey would ensure that all
imports of rice, with the exception of imports c overed by a preferential agreement (e.g., the EC),
would be made through the TRQ while it was open, and that such imports would cease during the
Turkish rice harvest when the TRQ was closed. Fu rther, no rice importer could have mistaken the
significance of MARA's apparent decision to go to court to enforce its denial of such Control
Certificates, as well as the court decisions siding with the government's position.
7. With respect to the new table provided by Turkey, the United States is unable to verify the
accuracy of this data without examining the actual Control Certificates, which Turkey has opted not to
provide, and the data in the chart regarding approve d Control Certificates is not consistent with the
data Turkey provided in Annex TR -33. However, even Turkey's data shows that 11 out of 28
applications for a Control Certificate were rejected , a nearly 40 per cent rejection rate. The United
States believes it unlikely that, in the periods covered by the table, almost 40 per cent of Control
Certificate applications for rice warranted denial for reasons such as missing documentation or
incomplete administrative requirements. Turkey's table provides further evidence that Turkey is
restricting the importation of rice and operates a discretionary import licensing regime for rice.
Q105. (Turkey) Exhibit TR-35 seems to show lower figures of rejected applications for
Certificates of Control in 2005 and 2006, than Exhibit TR-36. In particular, Exhibit TR-36
would suggest that there were 85 rejections in 2006 versus 38 shown in Exhibit TR-35. Could
Turkey explain these discrepancies, including th eir implications for the total number of
rejections and the percentage of rejections shown in Exhibit TR-35.

8. Turkey has confirmed that it rejected 85 appli cations for Control Certificates in 2006. This
admission provides further evidence that Turkey is restricting the importation of rice and operates a
discretionary import licensing regime for rice.
Q108. (Turkey) According to Exhibit TR-25 there were no imports of milled rice in April 2004;
however, Exhibit TR-33 indicates that 21,000 kg of rice were imported from Pakistan in the
same month. Could Turkey please explain th is, or any other similar, discrepancies between
Exhibits TR-33 and TR-25?

9. The United States agrees that this in-quota im portation could not have occurred on April 23,
2004. FTU did not announce the details of the first TRQ opening until April 27, 2004, so this
importation could not have occurred before that date.
Q109. (Turkey) In its reply to question 4(c) posed by the Panel, Turkey stated that
Exhibit TR-8 provided "import data, broken down into types of rice and into MFN and TRQ
imports for the years 2004 to 2006" (emphasis added). Actually, the table in Exhibit TR-8 seems
to show import figures broken down by types of rice and by "Total imports" (A), "Import
Licenses Issued" (B) and a third column indicati ng the difference between A and B, which is
supposed to show the "Total out of quota imports".

(a) Can Turkey please confirm this.

(b) As regards milled rice, the correspondi ng figure for imports of US rice in the
third column is negative. According to f ootnote 2 to the table, the negative sign
indicates that the total quantity of impo rt licenses was larger than the actual
imports. Does the negative sign also mean that there were no out of quota
imports of US milled rice during the period under consideration?

10. Without being able to examine the actual Cont rol Certificates, which Turkey has elected not
to provide, the United States is unable confirm the authenticity of the data provided in the table.
Q110. (Turkey) In its question 7 posed to both Parties, the Panel had asked, inter alia , for
information regarding Turkey's average prices for domestic production of, separately, paddy,
brown and milled rice in its market, for the peri od from July 2003 to the end of 2006 (including
estimates, as appropriate). In response to this question, Turkey indicated that "reference
should be made to Annex TR-27". However, th e data in Exhibit TR-27 seems to refer only to
individual purchases by companies in 2005. It does not show monthly averages and specify the
type of rice it refers to, nor does it cover the p eriod requested by the Panel. In the absence of
such information, can Turkey comment on the data provided by the United States in Exhibit
US-54. Can Turkey find a relation between the price data provided in Exhibit TR-27 and that
provided in Exhibit TR-29?

11. As an initial matter, Turkey has not provided th e information requested by the Panel, and the
Panel should draw an appropriate inference.
12. With respect to the role of TMO in the Turkis h market, Turkey understates the effect that
TMO's decisions have on market prices. TMO sets the purchase prices for rice produced domestically
which, in turn, influences the prices that Tu rkish producers and producer associations charge
importers who must purchase their rice in order to import rice from abroad. TMO also helps establish
the domestic purchase requirements under the TRQ. Under each TRQ opening, it has the discretion to
import an additional 50,000 tons of rice in order to stabilize the market, and the mere possibility that it
may utilize this discretion will have an effect on pri ces. As Turkey itself notes in its reply to Panel
Question 111, TMO "acts as an intervention agency." Whether TMO makes small or large purchases,
it still has a major role in influencing "market" prices for rice in Turkey. The fact that TMO may have
been purchasing less rice was by design: the domestic purchase requirements under the second and
third TRQ openings were set in such a way that an importer could import more rice by purchasing rice
directly from the Turkish producers and producer associations than by purchasing the rice from TMO.
Thus, importers, rather than TMO, now bore the burden of purchasing and storing domestic rice.
13. Regarding Turkey's comparison between the pricing data in Exhibit US-54 and Annex TR-29,
prices for paddy rice will, of course, be lower than prices for milled rice, so it is clear that TMO
purchasing prices for paddy rice will be lower than the price of US milled rice. However, the record
does not support Turkey's contention that prices paid by individual companies for paddy rice
purchased directly from producers are lower than TM O purchasing prices for paddy rice in general.
The average price for paddy rice purchased from producers in 2005 – 640 New Turkish Lira (or
$477) per metric ton – was higher than the average TMO purchasing price in 2005 – 612 New Turkish
Lira (or $456) per metric ton.
5
Q111. (Turkey) In its reply to question 9 posed by the Panel, Turkey provided Exhibit TR-30
showing overall purchases and sales of milled and paddy rice by the Turkish Grain Board
(TMO) during the period 2003 to 16 November 2006. Could Turkey please explain the reasons
for the significant difference in the quantities of paddy rice sold by the TMO in 2004, as
compared to the quantities sold in 2005 and 2006, respectively?

14. The TRQ regime was designed to reduce TMO stocks, which were high entering 2004,
6 so the
fact that the quantities of paddy rice sold by TMO declined in 2005-2006 are evidence that the regime

5 The 640 and 612 New Turkish Lira figures were taken from Annexes TR-27 and TR-29, respectively.
The equivalent dollar amounts were derived by multiplying those figures by 0.744759956, the average interbank
exchange rate for 2005, which can be found in Exhibit US-52.
6 See Annex TR-30.

was operating as intended. Importers purchased mo re rice from Turkish producers than from TMO
because, under the second and third TRQ openings, one could import more rice by purchasing rice
from domestic producers and producer associations than from TMO. Second, the fact that importers
were purchasing domestic rice at all had nothing to do with the purported "advantage" of having to
make purchases of large quantities of domestic rice as a condition upon import; rather, importers
made such purchases because that was the only way to import rice not covered by a special quota
arrangement.
Q112. (Turkey) How does Turkey explain th e sudden occurrence of over-quota imports of
United States rice in May 2005 shown in Exhibit TR-33?

15. The United States respectfully refers to its previous answer. From September 10, 2003
through the date of panel establis hment, there was virtually no MFN trade in rice. However, in one
six-week period, every Control Certificate allegedl y granted for US rice was out-of-quota. Even if
Turkey could substantiate this which, to date, it has not, this was an anomaly and does not detract
from the conclusion that Turkey prohibited or restri cted the importation of rice at the MFN rates at
least through the date of panel establishment, and operates a discretionary import licensing regime for
rice. As noted by the United States in paragraphs 60-62 of the US Rebuttal Submission, the alleged
non-enforcement of the legal prohibition in limited in stances, even if Turkey could substantiate it,
does not excuse an Article XI:1 breach.
Q114. (Turkey) In its reply to question 15 posed by the Panel, Turkey refers to Exhibit TR-33.

(b) With reference to the data in that sa me Exhibit, please provide the reasons,
other than commercial considerations, which explain why no Certificates of
Control for over quota imports for US rice seem to have been issued between
September 2003 and April 2005 and consequently no over quota imports of US
rice seem to have actually occurred during the same period, with the exception
of one shipment of 611 tons of paddy rice (date of Certificate of Control
15.09.2004; importation date 16.09.2004).

(c) The period mentioned in the preceding paragraph seems to coincide that in
which the United States claims that consecutive so-called "Letters of
Acceptance" from MARA's General Directorate would have delayed the date
for issuing Certificates of Control (see paras. 23 to 26 of the United States first
written submission). If, in Turkey's view, the lack of imports and approved
Certificates of Control bears no relation with the issuance of Letters of
Acceptance, could Turkey then explain what reasons, other than commercial
considerations, may explain this apparent coincidence.

16. Throughout this dispute, Turkey has argued that there is no blanket ban on the issuance of
Control Certificates and, if there was, it is not enforced; therefore, the US Article XI:1 claim
necessarily fails. This argument attempts to distort the US claim, mis-states the correct legal test
under Article XI:1 of the GATT 1994, and ignores past panel reports which provide useful guidance
on the subject.
17. The US claim is that Turkey prohibits or rest ricts trade in rice at the MFN rates for paddy,
brown, and milled rice.
7 It does so by failing to issue Contro l Certificates. The earlier US argument

7 As discussed in paragraph 13 of the US First Submission, the MFN rates are 45 per cent ad valorem
for paddy, brown, and milled rice. However, Turkey's domestic tariff schedule provides different effective tariff
rates for paddy, brown, and milled rice: 34 per cent ad valorem for paddy rice, 36 per cent ad valorem for brown
rice, and 45 per cent ad valorem for milled rice. In the US panel request, the United States claimed that Turkey

that there was a blanket ban on the issuance of Co ntrol Certificates was based on the US belief that
Turkey did not require such Certificates under the TRQ. Turkey has clarified that it does require
importers to obtain Certificates under the TRQ, whic h provides further evidence that the TRQ regime
is discretionary – as is the entire Turkish import licensing regime for rice. Thus, Turkey's argument
that it grants Control Certificates under the TRQ does not rebut the US claim that it is denying the
issuance of such Certificates at the MFN rates.
18. Second, Article XI:1 provides that a breach o ccurs if a measure prohibits or restricts
importation. Thus, even if Turkey did issue some Control Certificates, that would not rebut the US
claim that Turkey is restricting imports through the use of a discretionary import licensing regime.
The United States has provided voluminous evidence th at Turkey is restricting imports of rice – the
Letters of Acceptance, the rejection letters, th e court cases decided in favor of the government,
statements of Turkish officials, newspaper ar ticles and, most recently, the December 15, 2006
statement from the Turkish Minister of Agriculture
8 and documentary proof that Turkey has imposed
a minimum import pricing scheme as part of its Control Certificate process for rice. 9 That Turkey is
restricting imports of rice and has exercised discretio n in denying the issuance of Control Certificates
is confirmed by Turkish trade data, Turkey's own Control Certificate data, and Turkey's refusal to
provide the actual Control Certificates that the Panel has repeatedly requested.
19. Turkey's contention that it has granted Certif icates at the MFN rates for Egypt, China,
Vietnam, Thailand, and Pakistan demonstrates the weakness of its argument. As the United States
discussed in paragraph 10 of its Oral Statemen t during the second panel meeting, the fifteen
Certificates referenced here by Turkey, assuming that they were granted, were exceptions to the rule,
covering minuscule amounts of trade. We cannot confirm that the Certificates were even granted
because Turkey has chosen not to provide the actual Certificates. Further, whereas Turkey allegedly
granted 56 Control Certificates for MFN rice imports during the September 10, 2003 through
March 17, 2006 period, it allegedly granted 740 in-quota Control Certificates for rice during that same
period.
10 Even if MARA approved 56 Certificates duri ng that time, the data still shows that the
overwhelming majority of Certificates were issued to importers who "chose" to purchase large
quantities of domestic paddy rice as a condition for obtaining a license to import rice, rather than
importers who imported without having to make su ch purchases. Thus, the wide disparity in Annex
TR-33 between the number of Certificates allegedly granted in quota and at the MFN rates provides
further compelling evidence that Turkey is restricting rice imports at the MFN rates.
20. Essentially, Turkey's response to the documentary evidence provided by the United States has
been that the documents do not mean what they say on their face and, that even if they did, the Letters
of Acceptance are not enforced. It is troubling that Turkey continues to maintain this position despite
taking a directly contrary view in its aggressive enfo rcement of those Letters in Turkish court. In any
event, non-enforced mandatory measures may still be found to be incons istent with GATT/WTO
rules, as evidenced by the Malt Beverages panel report. Turkey has failed to distinguish, or even
address, this report in any of its submissions or statements, instead arguing that the Letters of
Acceptance are not laws and regulations so they are not subject to WTO rules. But Article XI:1 of the
GATT 1994 necessarily has a broad scope of app lication and does not make an exception for
measures based on their form or how a Member chooses to characterize them; if it did make such an
exception, Article XI:1 would have no teeth. Turkey has imposed a legal prohibition on the issuance
of Control Certificates for those importers w ho do not purchase domestic paddy rice, in order to

denied or failed to grant import licenses to import rice "at or below the bound rate of duty" in order to cover
importation at the effective tariff rates, as well as the MFN rates.
8 See Exhibit US-77.
9 See Exhibits US-68 and US-76.
10 See Exhibit US-71.

prohibit or restrict MFN trade in rice. The Letters provide for the denial of Certificates on their face,
and Turkey has not denied their authenticity.
Q115. (Turkey) During the second substantive meeting with the Panel, the United States
presented Exhibit US-71, in which the number provided by Turkey of the allegedly approved
Certificates of Control of 2,242, was broken down in order to exclude the ones that in its opinion
were not relevant, such as those approved during an allegedly "irrelevant time period", as well
as those granted for in-quota imports and for rice imports from the EC and the Former
Yugoslav Republic of Macedonia (with whom Turk ey has preferential trade agreements). The
United States thus suggested that, once all these exclusions were made, the final number of
relevant Certificates of Control allegedly approved by Turkey was 56. Can Turkey comment on
this number and what would it imply. If in Turkey's view, the final number suggested by the
United States is not correct, could Turkey provide its reasons, referring to relevant evidence, as
appropriate.

21. In its answer, Turkey contends that Control Certificates allegedly granted for the import of
EC and Macedonian rice are relevant to the US claim that Turkey is prohibiting or restricting MFN
trade in rice. The United States respectfully refers to its answer to Panel Question 114. Turkey wants
the US claim to be that Turkey denies all Control Ce rtificates. As previously mentioned, that is not
the US claim. The US claim is that Turkey is pr ohibiting or restricting imports at the MFN rates by
denying Control Certificates for the importation of rice at those rates. Accordingly, the fact that
Turkey may grant Certificates to the EC and Macedonia under special quota regimes and may grant
Certificates under the TRQ with domestic purchase does not rebut the US claim. The United States
notes, however, that while Turkey argues that the number 56 is irrelevant, it does not contest the
validity of that figure.
22. Turkey now argues that, if it had intended to u se Certificates to restrict rice imports, it would
have denied Certificates for EC and Macedonian rice under the special quota regimes because imports
from the EC and Macedonia presented a threat to the domestic industry. That contention is not
supported by the evidence on the record. First, as previously noted by the United States in its
comment on Turkey's reply to Panel Question 1 02, Macedonian rice is a complete non-factor.
Second, the EC quota regime covers 28,000 metric t ons of milled rice. This is a relatively small
quantity of rice, relative to the Turkish market. As neither EC rice nor Macedonian rice would pose a
threat to the Turkish rice industry, there would have been no reason to block such imports.
23. Turkey also alleges that the US calculation of 2.5 per cent is incorrect because the United
States used the wrong denominator in its calcula tion. The United States used the number 2,242
because that is the number Turkey provided, and the Un ited States stands by its calculation. Even if
Turkey were correct and the actual number were either 3.25 per cent or 6 percent, it is striking that the
overwhelming majority of importers "chose" to import rice under a regime where they had to
purchase massive quantities of domestic rice as a condition for importing rice, rather than importing
the rice "free and clear." Any of these figures woul d provide further compelling evidence that Turkey
is restricting trade in rice.
24. Lastly, the United States would like to clarify its characterization of time periods as "relevant"
or "irrelevant." The United States is not alleging that Turkey did not grant Control Certificates prior
to September 10, 2003 and does not need to prove that Turkey has not granted Control Certificates
after the date of panel establishment in order to establish a breach. Turkey has attempted to inflate the
alleged number of Control Certificates it has granted during the time period where the United States is
alleging a breach (September 10, 2003 through Marc h 17, 2006) by referring to Certificates it may
have issued during other periods (i.e., prior to September 10, 2003 and afte r panel establishment).
Turkey's attempt to re-cast the US claim to its lik ing is what prompted the United States to make the
distinction between periods that are "relevant" and periods that are "irrelevant."

25. In fact, it would have been more precise to say that, on the one hand, there were periods
where the United States was alleging a breach and, on the other hand, there were periods where it was
not alleging a breach (pre-September 10, 2003) or did not need to allege breach to sustain its claims
for purposes of WTO dispute settlement (post-panel establishment). In fact, these other periods are

highly relevant, because Turkey's actions in these periods provide strong evidence of a breach during
the period covered by the US claims.
26. Indeed, the United States has provided documenta ry evidence that Turkey is continuing to
prohibit or restrict imports since March 17, 2006 th rough the denial of Control Certificates and the
imposition of a minimum import price regime for rice , which appears to be having the same effect on
imports. Since Minister Tuzmen's announcement that Control Certificates will be issued as of April
1, 2006, Turkish import data shows that only 1,044 metric tons of rice were imported into Turkey
between that date and the end of 2006.11
27. Moreover, as demonstrated in Exhibit US-71, the United States is not alleging that Turkey
was prohibiting or restricting trade in rice prior to September 10, 2003; therefore, the period January
1, 2003 through September 9, 2003 should provide a relevant "control" period for how Turkey's
import regime should work in the absence of such a prohi bition or restriction. In fact, the evidence to
be gathered from this period is compelling. According to Annex TR-33, Turkey allegedly granted
274 Control Certificates at the MFN rates from January 1 - September 9, 2003. There was no TRQ
regime during that time, so all of these Certificates were issued outside the TRQ. This figure is
significant because, from September 10, 2003 through March 17, 2006, the period in which the United
States is alleging a breach, Turkey allegedly granted ju st 56 Certificates at the MFN rates. Thus, over
the 2 ½ year period in which the United States is alleging a breach, Turkey granted only 56
Certificates, whereas during the previous eight months where the United States is not alleging a
breach, Turkey granted almost five times that number of Certificates.
Q125. (Turkey) In its reply to question 14 po sed by the Panel, Turkey submitted "that the
import procedure which applies for imports at both MFN and TRQ rates is described in the
scheme provided in Annex TR-32". In that Exhi bit, Turkey has identified the legal basis for
both the procedure for importation at MFN rate and that for importation at TRQ rate. During
the second substantive meeting with the Panel, however, Turkey stated that Communiqué No.
2006/5 on the Standardization in Foreign Trade had been replaced by new legislation.

(a) Can Turkey confirm that Communiqué No. 2006/5 on the Standardization in
Foreign Trade has been replaced by new legislation and provide a copy of such
new legislation.

28. In its response, Turkey contends that Communiqué No. 2006/5 (the 2006 Communiqué) has
been repealed and replaced by Communiqué No. 2007/21 (the 2007 Communiqué). However, Turkey
has provided no documentary evidence that the 2006 Communiqué has been repealed. Article 12 of
the 2006 Communiqué states that the 2005 Communiqué h as been abolished. By contrast, Article 12
of the 2007 Communiqué notes that two other Co mmuniqués have been abolished but it does not
mention the 2006 Communiqué.
29. The 2007 Communiqué appears to be the same as the 2006 Communiqué in most respects.
However, the 2007 Communiqué contains a new Article 8, which provides that:
[u]nder the protocol that will be made betw een the Ministry of Agriculture and Rural
Affairs and Undersecretariat for Customs a ll-important information related to the

11 See Exhibit US-81rev.

realized importation will be provided to the Ministry of Agriculture and Rural Affairs
by Undersecretariat for Customs.
30. As the United States noted in its response to Panel Question 150, Turkey's reference price
system for rice, which is enforced by Turkish Customs, is linked to the issuance of Control
Certificates. In an August 10, 2006 Order, the Ge neral Directorate of Customs noted that, under an
understanding reached between MARA and FTU, calcu lation of the applicable duty according to the
reference price calculation is made a component of Control Certificates for rice:
... a mutual understanding is reached for application of a reference price in the control
documents drawn up in connection with the export of rice and rice paddy pursuant to
the Communiqué of Standardization in Foreign Trade with number 2006/5.
[The references prices noted above] will be considered as references prices in case a
control document is drawn up and this fa ct is communicated to the Ministry of
Agriculture and Rural Affairs.
Consequently, since the values mentioned above w ill be considered as reference in
the establishment of control documents for the subject items from the date of
01.08.2006, this fact has to be taken into account while determining the price.
12
(emphasis added).
Article 8 of the 2007 Communiqué appears to opera tionalize the obligation of Turkish Customs under
an interagency agreement to provide informati on on invoice values to MARA so that MARA can
consider that data in making a de termination regarding whether to issue a Control Certificate. This
provision demonstrates a direct link between the refe rence price scheme for rice and MARA's Control
Certificate system, thereby providing further evidence that Turkey restricts trade in rice and operates a
discretionary import licensing regime.

(b) Can Turkey confirm what is the basis, in Turkish domestic legislation, for the
authority that the Turkish Foreign Trade Undersecretariat (FTU) has to issue
Communiqués on the Standardization in Foreign Trade. Is it Decree No.
2005/9454 on "The Regime for Technical Regulations and Standardization for
Foreign Trade" in Exhibit TR-2?

31. In paragraph 19 of the US First Submission, th e United States noted that Article 1 of the 2005
Communiqué states that it had been promulgated pur suant to subparagraph 2(g) of the 1996 General
Assessment.13 Article 14 of the 2007 Communiqué states that the "Annex" to the 1996 General
Assessment was abolished; however, it is silent on whether the rest of the General Assessment
remains in force. As a result, while subparagraph 2(g) of the General Assessment was not cited in
either the 2006 or 2007 Communiqués, Turkey has not provided any evidence that that provision has
become inoperative.
Q128. (Turkey) Article 6 of Turkey's Comm uniqué No. 31 on the Approval of Control
Certification at the Importation of Foodstuffs and Packaging Materials that come into Contact
with Foodstuffs and on Control Procedures at Im portation Stage apparently contains the list of
documents required for the issuance of a Certific ate of Control for imports into Turkey. In
section 6 B) c), this provision lists "other documents that must be presented according to the
type of product".

12 Exhibit US-68.
13 See Exhibit US-1.

(b) In its reply to question 25 posed by the Panel, the United States argued that the
language in the 2005 and 2006 MARA Communiqués was "broad enough to
provide MARA with the flexibility to 'ask for' other documents on a
product-by-product basis". Does Turkey agree with this statement? If the
United States' statement is not correct, could Turkey provide its reasons,
referring to relevant evidence, as appropriate.

32. Article 2 states that "it is necessary to appl y to [MARA] "with control certificate form
(Annex VII), pro forma invoice or invoice, and othe r documents which may be asked for, depending
on product, by the Ministry."
14 Turkey argues that this language does not provide MARA with the
flexibility to ask for documents other than the application form and invoice on a product-specific
basis. In sum, Turkey is contending that Article 2 does not mean what it says on its face. The United
States has also demonstrated that, in fact, Turkey has imposed a legal prohibition on the granting of
Control Certificates for the importation of rice unless importers provide documentation certifying that
they have purchased the requisite quantity of domestic paddy rice. (Turkey failed to cite documentary
proof of domestic purchase in its answer as one of the required documents.) Thus, Article 2 allows
MARA to request other documents and MARA has utilized that discretion to do so, and deny or fail to
issue Certificates where those documents are not provided.
33. Turkey also argues that it is "clear" that th e reference to "other documents which may be
asked for, depending on product, by the Ministry" refers to SPS-related documentation, such as an
SPS certificate. The United States does not agree. The language used in Article 2 – "other
documents" – is broad and could c over virtually any document that MARA would require. If MARA
had meant to refer only to SPS-rela ted documentation, it could have e xplicitly said so. In addition,
Article 2 requires importers to submit customs-rela ted documentation – i.e., the invoice or pro forma
invoice – as part of the application process. Thus, it is not clear from the text of Article 2 that "other
documents" should be interpreted to encompass onl y SPS-related documents. Turkey admits as much
in its answer when it contends that the additiona l document requirement "is simply nature of the
product (i.e., the degree of processing that the product has been subject to)." Accordingly, Turkey's
arguments run directly contrary to the text of Ar ticle 2, as well as MARA's implementation of that
Article.
Q129. (Turkey) Turkey has argued that the Cert ificates of Control act "as an element of trade
facilitation ... provid[ing] legal certainty and co mmercial predictability to importers engaged in
rice importation" (Turkey's oral statement during the first substantive meeting with the Panel,
para. 6), as well as pursue " inter alia , sanitary and phytosanitary objectives" (Turkey's
response to question 14 posed by the Panel, page 7).

(a) Please explain how these sanitary a nd phytosanitary purposes are achieved
through the Certificate of Control, and how can MARA and Turkish Customs
Officials verify the products complian ce with relevant standards and technical
regulations, without having either seen the appropriate sanitary and
phytosanitary certificate or having made the relevant physical inspection of the
good to be imported.

34. Turkey states that the Control Certificate "allo ws MARA and Turkey's customs authorities to
verify, on a single document, all required customs information, including the product's compliance

14 Article 6 of Communiqué No. 2003/31 on the "Issuance of Control Certification at the Importation of
Foodstuffs and Packaging Materials th at come into Contact with Foodstuffs and on Control Procedures at
Importation Stage," as amended (Annex TR-21), also notes that MARA requests certain documents from
importers, including the Control Certificate form, proforma invoice, and "[o]ther documents that must be
presented according to the type of the product."

with relevant standards and technical regulations." Turkey has acknowledged that actual verification
of product compliance with SPS controls occurs af ter MARA has issued the Certificate, so this
statement is not correct. Further, Turkey has not explained why it is necessary for both MARA and
Turkish Customs (not to mention FTU, with respect to its import permit) to verify the same customs-
related information twice in two separate documents . Turkish Customs already requires submission
of this information
15 and MARA does not conduct inspections until after it has granted the Certificate,
so the Certificate is extraneous. The function of the Control Certificate is to prohibit or restrict
imports of rice (and other agricultural products as MARA sees fit).
(c) Please provide supported arguments, ma king reference to relevant evidence, as
appropriate, that can counter the Unit ed States' assertion (in its response to
question 14 posed by the Panel, footnote 11 to para. 23) that, according to
Turkish importers, the Ministry of Agriculture and Rural Affairs (MARA)
"does not request the phytosanitary certificate at the stage when it decides
whether or not to grant the Control Certificate. Rather, MARA does not
require the presentation of a phytosanitary certificate until the Provincial
Agricultural Directorate that has jurisdiction over the port where the
importation is to be realized asks for it . But this step only takes place after
MARA has already granted the Control Certificate."

35. Turkey is now contending that MARA requi res SPS information and commitments from rice
importers at the time they apply for Control Certificates. (Turkey refers to this as "early-screening" in
its answer to Panel Question 132(a).) This cont radicts the evidence, as bot h Turkey and the United
States agree that the SPS process does not begin until after
 Certificates have been approved. The
United States also would note that in Turkey's description of the rice importation process in its answer
to Panel Question 14, Turkey makes no mention of any such requirement.16
Q133. (Turkey) In its question 44 (e) posed by the Panel after the first substantive meeting with
the parties, the Panel asked Turkey to "provide a copy of each of the 2,223 Certificates of
Control approved between 2003 and September 2006". In its response, Turkey stated that
photocopies of such Certificates of Control were available; that the relevant Ministries were
not, however, authorized to provide all the copies to the Panel; and that, in any event, Turkey
would be able to provide to the Panel in strict confidence copies of any individual Certificate of
Control listed in Annex TR-33 upon its request.

(a) Can Turkey elaborate on the legal reasons why, under Turkish domestic
legislation, the government would not be authorized to provide the copies
requested by the Panel.

(b) If Turkey cannot provid e a photocopy of each of the 2,223 Certificates of
Control approved between 2003 and September 2006, can it then at least provide
a photocopy of each of the 56 approved C ertificates of Control characterized as
"relevant" by the United States during the second substantive meeting with the
Panel (see para. 8 of the United States statement during the second substantive
meeting with the Panel and Exhibit US-71).

(f) If Turkey cannot provide the full photoco pies requested in paragraphs (b), (c),
(d) and (e) above out of concerns for the privacy of the companies involved, can
it at least provide those same photocopi es after having blacked out the names of
the companies.

15 See Exhibit US-62.
16 See Step 1 and Step 2 on pages 7-8 of Turkey's Replies to the First Set of Panel Questions.

36. The Panel first asked Turkey to provide the lega l basis for its refusal to provide the Control
Certificates at the first panel meeting. Turkey could not identify any sp ecific provision and asserted
that it was less a matter of what Tu rkey could provide than what it was choosing to provide to the
Panel. Now, in the next-to-last-submission, Turkey has identified what it claims to be a provision of
Turkish law that prohibits Turkey from providing the Certificates. Turkey has not provided an actual
copy of this document, and the document is not read ily available, so it is impossible for the Panel or
the United States to discern whether the cited provision provides what Turkey says it does.
37. The United States has two observations on this matter. First, Turkey is claiming that
Article 13 of the Turkish Statistical Law prohibits Turkey from providing the Control Certificates.
Yet in its answer to Panel Question 133, Turkey h as offered to provide these documents to the Panel
(but only the Panel). To the extent Turkey is indicating that there is an exception to its law that would
allow it to submit copies of the Certificates to the Panel in connection with this proceeding, there is no
basis for concluding that the exception would not equally be applicable were Turkey to also provide
these copies to the United States. However, the United States notes again that the contents of the
Turkish Statistical Law are known only to Turkey, and it is possible, given Turkey's offer to provide
copies to the Panel (only), that the Law does not in fact prohibit Turkey from providing the
Certificates, as Turkey now asserts.
38. Second, the Panel has asked Turkey to provide copies of the Control Certificates at the first
panel meeting, in its first set of questions to the parties (Question 44(e)), at the second panel meeting,
and in its second set of questions to the parties (Question 133(b)). Turkey's answer to Question 133 is
that Turkey will provide copies of the Certificates if the Panel wants such documents . The Panel has
now requested that Turkey provide th is information on no fewer than four
 occasions during these
panel proceedings. It is clear that the Panel wants Turkey to provide this information. Yet Turkey
still has not provided it. The Panel should draw an appropriate inference from Turkey's refusal to
comply with the Panel's repeated requests for this information.
39. The United States has obtained only a handful of Certificates which pre-date the period in
which the United States is alleging a breach. We provided a copy of one of those Certificates in
Exhibit US-79. Turkey continues to maintain the position that all Control Certificates are valid for
twelve months. However, the particular Certif icate the United States submitted was valid for only
two weeks and expired just prior to the beginning of the Turkish rice harvest. Only Turkey has copies
of the Control Certificates during the period in which the United States is alleging a breach.
(e) In its reply to question 44 posed by th e Panel, Turkey refers to Exhibit TR-36,
with a list of rejected Certificates of Co ntrol, including the reasons for denial,
until 21 September 2006. Can Turkey provide a photocopy of each of the
rejected applications as well as of the corresponding letters by which it notified
the requesting companies of the rejection of a requested Certificate of Control,
for the importation of rice correspondi ng to each of the cases cited in
Exhibit TR-36.

40. In Annex TR-36, Turkey put together a char t listing several denied Control Certificate
applications along with the alleged reasons for de nial. This chart was submitted to the Panel on
November 30, 2006. Turkey now claims that it does not maintain the information it would have
needed in order to create Annex TR-36. The Panel should draw the appropriate inference from
Turkey's failure to provide the information the Panel is requesting.
Q135. (Turkey) The United States has submi tted, as Exhibit US-29, photocopy of an
application for a Certificate of Control for the importation of 10,000 tons of rice, allegedly

"returned due to spelling errors". The Panel no tes that "spelling errors" were not listed as
"reasons for denial" of Certificates of Control in Exhibit TR-36.

(a) Can Turkey confirm whether spelling er rors would be grounds for the rejection
of an application for a Certificate of Control? If so, under which of the three
categories ("Missing documents not co mpleted", "Upon the demand of the
Company" or "Incomplete Administrati ve Requirements") would a spelling
error fall? What is the legal basis for rejecting applications owing to "spelling
errors"?

(b) Can Turkey confirm whether the speci fic photocopy submitted by the United
States as Exhibit US-29 corresponds to the application identified as number 3 in
the list of "Denied Control Certificates Applications and Reasons for Denial in
2003", provided by Turkey in Exhibit TR-36?

41. In its response, Turkey asserts that it cannot respond to the Panel's question because the
Control Certificate application submitted by the United States is not in MARA's records. If that is
indeed the case, then the data Turkey has provided in Annex TR-36 is incomplete, and there could be
more instances where MARA rejected Control Ce rtificate applications on which Turkey has not
reported. Beyond that, the United States takes note of Turkey's confirmation in its response that it
sometimes rejects Control Certificates due to spelling errors. Further, contrary to Turkey's contention,
the United States does not rely solely on individual episodes of rejection to make its case that
applications are not being issued. The United Stat es has submitted to the Pa nel documents issued by
Turkey's Minister of Agriculture providing unam biguously that no Control Certificates are to be
granted during certain time periods, and those docum ents cover a 2 ½ year time period with no gaps.
There was a restriction on the granting of Control Certificates at the MFN rates in place at least
through the date of panel establishment. The i ndividual episodes of rejection, as well as the court
cases in which the Turkish government has argued in favor of the legal prohibition and Turkish courts
have upheld the government's position, provide evidence that the legal prohibition that was codified in
the Letters of Acceptance is being enforced. Further, even enforcement of a clear legal prohibition is
not necessary to sustain a successful claim that WTO rules have been breached.
Q136. (Both Parties) According to Turkey's stat ements (see, for example, para. 25 of its first
submission), Certificates of Control for the im portation of rice are valid for periods of 12
months.

(a) If this is the case, why would import ers not import rice during periods in which
Certificates of Control are allegedly not being approved, but some Certificates of
Control are presumably still valid?

(b) During periods when the TRQ was no t open, why would imports of rice not
occur under Certificates of Control that were presumably still valid?

42. In its answer to Panel Question 136(a) and (b), Turkey asserts that "Certificates of Control ...
are not quantity-specific." In Exhibit US-19, the United States provided a blank copy of a Control
Certificate. The ninth item that an importer must list when it submits its application for a Control
Certificate is "Quantity of the Commodity." In Annex TR-33, Turkey even lists the specific quantities
covered by each Control Certificate it allegedly gr anted, as well as the specific quantities that were
allegedly imported under each Certificate. Thus, Turk ey's contention that a Control Certificate is not
quantity-specific is belied by the Control Certificate document itself.
43. Throughout these panel proceedings, Turkey has ma de various assertions that contradict the
documentary evidence then on the record or docu mentary evidence later provided. Without being

able to examine the actual Control Certificates, which Turkey refuses to provide, the United States
cannot agree that Control Certificate issuance is never conditioned on importation of specific
amounts. In fact, most of the Control Certificates for imports of US rice granted during the period in
which the United States is alleging a breach were alle gedly issued for quantities that are much smaller
than a typical shipment of US paddy rice. A rational importer would apply for one Control Certificate
to import 10,000 tons of paddy rice, not multiple C ontrol Certificates. Yet the data provided by
Turkey in Annex TR-33 shows that the majority of Control Certificates allegedly issued between
September 10, 2003 and March 17, 2006 were for the importation of 2,000 metric tons of rice or less,
and the amount of rice covered by each Certificate was often recorded right down to the ton because
Turkey was enforcing a TRQ. Further, Letter of Acceptance 390 provides that, as of April 1, 2006,
Control Certificates could be issued but only one at a time and with strict quantitative limits – 10,000
metric tons for milled rice and 15,000 metric tons for paddy rice. 17 Thus, the evidence in the record
demonstrates that regulating quantity is a critical element of the Control Certificate process.
(c) Is there any difference between the Certificates of Control issued to import at
the MFN rate, under preferential trade ag reements and under the TRQ? If so,
please specify the differences between them. If not, does this mean that a same
Certificate of Control could have b een equally used to import under the
different rates? Did an importer have to specify whether the intended import
was to be in-quota or over-quota when a pplying for a Certificate of Control?
Please make reference to relevant evidence, as appropriate.

(d) Would a Certificate of Control still be valid for twelve months, even during a
period when a TRQ was in place? Would an in-quota Control Certificate
maintain its validity of 12 months, and therefore still allow imports to take place
at the preferential in-quota tariff rate, despite the tariff quota period closing?

(e) Does the amount permitted to be import ed under the Certificate of Control hold
any relation with the amount permitted to import when applying for an import
license to the Turkish Foreign Trade Undersecretariat (FTU)?

44. As the United States noted in its answer to this question, Turkey has maintained throughout
these proceedings that it differentiates between "in- quota Certificates of Control" and "out-of-quota
Certificates of Control." These were terms coined by Turkey, not the United States and, in Annex
TR-33, Turkey set forth what it purported to be a lis t of all of the Control Certificates it has granted,
broken down into "in quota" and "over quota." In the column "In Quota/Over Quota," there was not a
single instance in 58 pages listing over 2,000 alleged Control Certificates in which the word "both"
was entered in that column. In every single case, the Certificate was issued for either
 in-quota imports
or over-quota imports.18 Apparently, Turkey has now realized th e implications of that distinction and
is attempting to reverse itself, arguing that there is no such thing as in-quota or out-of-quota
Certificates of Control. But its reversal is contra dicted by its own prior arguments and the evidence it
has itself provided.
Q138 (Turkey): The United States has submitte d, as Exhibit US-35, a letter dated 24 March
2006, by which the Turkish Minister of State in forms the United States Trade Representative
that the Control Certificates "will be issued as of April 1, 2006".

(a) Does this letter imply that Certificates of Control were not being issued at the
time when the letter was issued?

17 See Exhibit US-36.
18 Except for eleven entries where the "In Quota/Over Quota" column was left blank.

(c) Can Turkey also elaborate on its closing statement during the second substantive
meeting with the Panel (para. 3), that the letter "was designed to reassure the
United States that, with the phasing-out of the TRQ, traders would likely resume
trading on MFN terms" and that "[i]t was not an implicit confirmation of any
systematic denial of the approval of Certificates of Control".

45. Turkey was unable to answer this question when the Panel first posed it at the second panel
meeting. Now Turkey is arguing that the letter wa s meant to "reassure the United States that, with the
phasing-out of the TRQ, traders would have likely re sumed trading on MFN terms" and that the letter
"does not imply that Certificates of Control were not being issued." However, that is exactly what the
letter implies. The letter states that Control Cer tificates "will be issued as of April 1, 2006." The
logical implication of that statement is that Certific ates were not being issued prior to that date. This
is confirmed by the rest of the letter, which shows that the offer to issue Control Certificates was put
forward by Turkey as a way to resolve this dispute. Turkey would not have offered something it was
already doing as a concession to the United States in order to settle the dispute. Rather, Turkey was
offering to do something it was not doing at that point in time.
46. Moreover, the letter does not state that traders would likely resume trading on MFN terms.
What the letter provides is that the Government of Turkey would issue Control Certificates as of April
1, 2006.
47. Further, Turkey's new explanation that the letter meant to reassure the United States that trade
would likely resume on MFN terms implicitly recognizes that traders were not trading at the MFN
rates while the TRQ was open. The United States wo uld not have needed reassurance that MFN trade
would likely resume unless there was no MFN trade at the time Minister Tuzmen delivered the letter.
48. Turkey's ex poste interpretation and explanation of Minist er Tuzmen's letter is inconsistent
with the wording of the letter and the context in which it was issued and serves to confirm the US
claim that Turkey was prohibiting or restricting MFN trade in rice.
 (b) What relation, if any, does the date of 1 April 2006, mentioned in the Turkish
Minister of State's letter, bear with the end of the TRQ on 31 July 2006 (please
make reference to relevant evidence, as a ppropriate.)? Was the adoption of any
new or modified measure necessary to achieve the results indicated in the
Minister's letter? If so, has any such measure been adopted as a result of the
Minister's letter? What is the factual and legal relationship between the letter in
Exhibit US-35 and any measure adopted to put that into effect, on the one hand,
and, on the other hand, the Letter of Acceptance signed by the Minister of
Agriculture and reproduced in Exhibit US-36?

49. Turkey's assertion is contradicted by the evid ence. Minister Tuzmen's letter, in which he
states that Control Certificates will be issued as of April 1, 2006 and that the TRQ will "cease to
exist" after July 31, 2006 was presented to Ambassador Portman on March 24, 2006. On the same
day, Turkey's Minister of Agriculture appr oved the recommendation contained in Letter of
Acceptance 390 which provides that the "start date to issue certificates will be April 1, 2006 and the
closing date will be August 1, 2006."
19 August 1, 2006 was the day after the TRQ was set to "expire"
(and we now know that, on that date, Turkey put in place a reference price system for rice which
implicates various WTO obligations of Turkey). The evidence supports the conclusion that Letter of
Acceptance 390 was the measure by which Turkey meant to implement the commitments contained in

19 See Exhibit US-36. See also Exhibit US-24 ("The Decree to 'open the doors as of April 1, 2006'
came from the Ministry of Agriculture. . . It is said that the Minister of Agriculture, Mr. Mehdi Eker, had
positively responded to the requests of starting the rice import in April").

Minister Tuzmen's letter. As the United States ha s documented – in the form of importer rejection
letters, newspaper articles, and Turkish trade data – Turkey did not do so.
50. On a final note, Turkey continues to argue th at the Letters of Acceptance are internal,
unofficial documents that were never enforced. The United States has already documented that
Turkey introduced these documents in domestic cour t proceedings and that Turkey's lawyers argued
that they constituted the sole legal authority for MA RA's denial of Control Certificates. The United
States has also shown that at least two Turkish c ourts have concurred with the government's position
and enforced the restriction on the issuance of Cont rol Certificates for MFN trade. Lastly, Turkey's
argument that it does grant Control Certificates for rice is unresponsive to the US claim that Turkey is
prohibiting or restricting rice imports by failing to grant Control Certificates for MFN trade.
Q141. (Turkey) In its statement during the seco nd substantive meeting with the Panel (para.
6), Turkey asserted that "[t]here is no provision that gives the relevant authority discretion not
to approve Certificates of Control." In other subm issions (see, for example, para. 78 of its first
submission and reply to question 23 from the Pa nel), Turkey has stated that the so-called
"Letters of Acceptance" are internal co mmunications aimed at developing policy
recommendations.

(a) If the Minister of Agriculture and Rural Affairs has no discretion not to
approve Certificates of Control, under what legal basis have then officers from
the same ministry submitted intern al communications to the Minister
recommending that Certificates of Control not be approved? What could
explain a Director General of MARA repeatedly making a recommendation to
the Minister to adopt a policy if the Minister had no discretion to adopt such
policy?

(b) What legal basis, if any, would give the Director General of MARA the authority
to issue these so-called "Letters of A cceptance". Please also specify under what
basis these letters could extend to the subject of the issuance of Certificates of
Control.

(c) What factors or events would tri gger these recommendations from the Director
General of MARA?

(d) Would one of the reasons that could trigger such a recommendations from the
Director General of MARA be that there is a sufficient level of domestic
production or a high level of imports?

(e) Could the Minister refuse the recommenda tion made by a Director General of
MARA through a so-called "Letter of Acceptance"? Please provide
documentary evidence in support of your response.

51. In its answer to question (e), Turkey ackno wledges that "the Minister may refuse the
recommendation made by a Director General of MARA." There are consequences when a
recommendation is refused and consequences when a recommendation is approved. When a
recommendation is refused, no action is taken. On the other hand, when a recommendation is
approved, the Minister is ordering that action be taken to implement that recommendation. In this
dispute, the United States has provided documentary evidence of several instances where a
recommendation from the Director General was approved. It is not a coincidence that, in the 2 ½ year
period covered by these recommendations, Turkish trade data shows that MFN trade in rice was
virtually shut down when the TRQ was closed. Ev en Turkey's alleged Control Certificate data –
which, again, we are unable to verify because Turkey is refusing to provide the actual Certificates –

shows that, while only 56 Control Certificates were allegedly issued at the MFN rates during that
period, there were 740 Control Certificates allege dly issued under the TRQ with domestic purchase,
which no rational economic actor would select if he or she had the choice.
20
52. Further, Turkey acknowledges that the "demands of interest groups" or high levels of imports
could trigger the issuance of Letters of Ac ceptance, yet it maintains the position that the
recommendations contained therein would never have been implemented. Instead, it contends that the
Letters are merely set forth to "discuss" policy r ecommendations and to define an "internal policy."
The United States has already shown that the Letters had effects that were not simply "internal" and
that what was set forth in the Letters was enforced . But even a cursory examination of the Letters
does not support Turkey's contention as to their character. The Letters do not engage in an analysis of
potential options for further discussion. They set forth a recommendation that is accepted on the
signature of the most senior official in the Ministry of Agriculture.
Q142. (Turkey) Can Turkey provide evidence of so-called "Letters of Acceptance" containing
policy recommendations that the Minister of Agriculture and Rural Affairs did not approve?

53. Letters of Acceptance are not privileged a nd internal communications because Turkey
introduces them in open domestic court. Turkey is refusing to provide information that the Panel is
requesting, and the Panel should draw an appropriate inference.
Q144. (Turkey) Please describe the procedure that follows the issuance of a so-called "Letter of
Acceptance". Would such a letter, after being accepted by the Minister, be communicated to
the provincial MARA offices, and if so, how?

54. Recommendations that are approved by the Mini ster of Agriculture are circulated to
provincial levels so that they can be enforced.
Q145 (Both Parties): In its statement during the second substantive meeting with the Panel
(para. 12), the United States argued that Turkis h courts have attributed legal effect to the
so-called "Letters of Acceptance" and upheld MARA's enforcement of such Letters. In
response, in its closing statement during the same meeting (para. 9), Turkey argued that, in a
specific case cited, a "Court of first instance appears to have given effect to an ultra vires act
[from the Minister of Agriculture and Rural Affai rs]". What should be the appropriate value
given by the Panel, if any, to interpretations of domestic law developed by local courts? What
should be the appropriate value given by the Pane l, if any, to interpretations of domestic law
advanced by the administration of a Member be fore a local court? Was the allegedly erroneous
interpretation of Turkish domestic law develope d by the local court appealed by the Turkish
administration? Should interpretations of domestic law developed by local courts be accorded a
different value by the Panel if they were issued by higher courts?

55. Turkey cannot argue before this Panel that th e Letters of Acceptance are not enforceable and
not enforced, while simultaneously arguing (successfu lly) in its own domestic court that those same
Letters are enforceable and must be enforced. Ther e is no basis to conclude that Turkey's contrary
arguments and aggressive enforcement of the Letters of Acceptance in its own courts are not relevant
evidence in determining the legal status of the Lette rs. Turkey now claims that it did not appeal one
of the court decisions "for reasons of judicial expe diency." It seems more plausible that Turkey did
not appeal the decision because the Government of Tu rkey argued for the court to make that decision
and the court agreed with the government's position.

20 See Exhibit US-71.

Q146. (Turkey) Could Turkey please confirm, making reference to relevant evidence, as
appropriate, the dates during which the tariff quota for the various types of rice imports
(paddy, brown, milled) was opened and closed. Could Turkey also please confirm whether or
not there was a domestic purchase requirement at all periods and if so, whether or not there
were specific domestic purchase ratios to im ported paddy, brown and milled rice to which
importers could determine how much domestic rice needed to be purchased to be able to import
a certain volume of paddy, brown or milled rice.

56. The United States disagrees with Turkey's asser tion that Turkey specified the domestic
purchase ratios in each of the three TRQ openings t hus far. In the first TRQ opening, the exact
quantities of rice an importer had to purchase were not specified and, thus, it was within TMO's
discretion how much rice had to be purchased with respect to each individual importation. See
Exhibit US-3. This can be confirmed by examin ing the Turkish version of the regulation in both
Exhibit US-3 and Annex TR-12. Contrary to what is contained in Turkey's English version of the
regulation, there is no column specifying the dome stic purchase requirement in the original Turkish
version. Turkey appears to have inserted a column in the English version that is not contained in the
Turkish version.
Q147. (Turkey) Could Turkey please explain wh y data from Exhibit TR-33 seem to indicate
that in-quota imports of non-EC origin ri ce occurred during periods in which the Panel
understands the TRQ was not in place (January , September and October 2004; August and
September 2005; and August 2006)?

57. In the US view, Turkey has yet to substantiate that any rice imports have occurred at the MFN
rates. The only concrete eviden ce that has been presented has co me from the United States, in the
form of the Letters of Acceptance, the importer rejection letters, the cour t filings and decisions,
statements from Turkish officials, and newspaper articles, which demonstrate that the opposite is true.
58. A review of the instances identified by the Panel shows that the vast majority of the alleged
Certificates identified by the Panel covered in-quota importations that occurred within three days after
the TRQ was closed. It is impossible to know for certain without examining the Certificates and other
accompanying documentation themselves, but a likely explanation is that the Certificates and FTU
import permits were approved for in-quota importati on before the TRQ was closed, but completion of
the customs process was delayed so the importation di d not officially occur until the beginning of the
following month. As the United States previously noted in its answer to Panel Question 14, the
importer obtains the FTU import permit first, then the Control Certificate, and then must undergo
several other steps, including the SPS assessment at the applicable provincial directorate of MARA,
returning to Turkish Customs to provide all of the necessary documentation, and then going to the
port to secure the release of the product. If any one of these steps is delayed, or the importer is unable
to pay for the merchandise in full or make alterna tive arrangements, the importation can be delayed.
Thus, it is not inconceivable that, in a few cases where the importer was attempting to realize an
importation just before the TRQ closed, the process ran over a few days.
59. Indeed, such a scenario is envisioned by Communiqué No. 2003/31 on the "Issuance of
Control Certification at the Importation of Foodstuffs and Packaging Materials that come into Contact
with Foodstuffs and on Control Procedures at Impor tation Stage," as amended, provided in Annex
TR-21. Article 5(e) provides that:
[r]egarding products, for which import procedures have been initiated following the
registration of the customs declaration before the expiry date of the control certificate
but the control certificate of which has e xpired at the date of delivery of the
commodity to the relevant party, the procedures are completed regardless of such
expiry.

Thus, the fact that a few in-quota imports of non-EC origin rice entered during periods when the TRQ
was closed does not mean that such imports entere d at the MFN rates, as Turkey contends. That
would be impossible because, as Turk ey has stated repeatedly in th e past, there are in-quota Control
Certificates and over-quota Control Certificates, and Annex TR-33 shows that there was no overlap
between the two. Rather, these few instances where in-quota imports allegedly took place after the
TRQ was closed, on the basis of in-quota Control Certificates that were technically no longer valid,
were likely examples of the scenario provided for in Article 5(e) above.

Q148. (Turkey) In its response to question 18 po sed by the Panel, Turkey responds that "no
change was introduced into its import regime for rice in November 2005 or as a consequence of
the initiation of WTO dispute settlement proceedings". The only change would have been that
the TRQ lapsed on 31 July 2006, without being renewed.

(a) Please explain why the TRQ has not been reopened since?

(b) In its response to question 79 posed by the Panel, Turkey stated in turn that the
TRQ regime "pursued, at the same time, two legitimate objectives, i.e., that of a
greater market supply and that of market stabilization". Can Turkey explain
how these two objectives could now be guaranteed in the absence of the TRQ
regime.

(c) In its response to question 82 posed by the Panel, Turkey stated that "[t]he
domestic and international economic i ndicators also lead Turkey to the
assumption that there will not be, at le ast for the foreseeable future, needs for
market intervention and stabilization of the types that the TRQ helped address."
Is the Panel then right in concluding that if any of those domestic and
international economic indicators were to change, Turkey could then reevaluate
the convenience of reintroducing a TRQ reg ime for the importation of rice? If
this is not the case, please explain ma king reference to relevant evidence, as
appropriate.

60. Turkey claims that it has not re-opened the TRQ because TRQs are costly to administer and it
prefers market forces. However, the TRQ was successful in achieving its objective of increasing
Turkish domestic production and re ducing imports, which is confirmed by documents that the United
States has submitted, including Exhibits US-77, in which Turkey's Minister of Agriculture states that
the 87 per cent increase in paddy production was the result of the domestic purchase requirement.
Thus, there may be some validity to Turkey's contention that there is no longer a need to re-open the
TRQ, although for different reasons than Turkey po sits. Turkey is in a position to re-open the TRQ
when it deems appropriate, and past history indicates it will do so.
(e) Were Turkey to reintroduce a TRQ regi me for the importation of rice, would
any change need to be introduced in the current domestic legislation? Is the
legislation that allowed for the establishment of the TRQ still in force?

61. The United States notes that Turkey agrees th at Decree No. 2004/7333 is still in force.
Turkey did not answer the Panel's question as to wh ether that Decree would need to be modified in
order to re-open the TRQ. Given that the re ferenced Decree supported the three previous TRQ
openings, the United States submits that the Decree w ould not have to be modified for Turkey to re-
open the TRQ.
Q149. (Turkey) In paragraph 50 of Turkey's rebu ttal, Turkey argued that "[i]t is clear that a
TRQ system without the domestic purchase requi rement would have resulted in too great an
advantage in favour of imported products. This outcome would have also carried negative

consequences in terms of the viability and affordability of Turkey's market intervention
mechanisms and its ability to comply with WTO obligations in relation to its committed levels of
Aggregate Measurement of Support." Could Turkey please explain how, in its view, it would
have failed to comply with WTO obligations in relation to its committed levels of Aggregate
Measurement of Support without the domestic purchase requirement as a part of its tariff
quota mechanism?

62. Turkey has not answered the ques tion posed by the Panel. Furthe r, if Turkey considered that
a TRQ without domestic purchase would have resulted in too great an advantage for imported rice, the
United States believes that the obvious alternative would have been not to impose a TRQ at all and
simply allow rice importation at the MFN rates. Th e United States also notes that, in any event, the
AMS requirement does not create an exception to other WTO obligations.
Q151 (Turkey): In its reply to question 75 posed by the Panel, Turkey asserted that the correct
methodology for interpretation of the TRIMs Agreement should require a preliminary
assessment of the existence of both the trade and the investment elements of an alleged TRIM.
Turkey also stated that, in order to establis h the existence of a violation of the TRIMs
Agreement, its domestic purchase requirement must first be found to be inconsistent with the
provisions of GATT Article III. Finally, Turkey invited the Panel to reject the United States
claims regarding an alleged violation of the TRIMs Agreement because the United States has
not proved how Turkey's domestic purchase requirement would result in a trade-related
investment measure and if so whether it woul d violate GATT Article III. Please clarify the
implications of the above statements in relation to the "order of examination" of the US claims:

(a) Does Turkey propose that the Panel first examine US claims under GATT
Article III:4 and then consider th e claims under the TRIMs Agreement
separately?

(b) In the negative, can Turkey explain why would the United States be required to
prove how Turkey's domestic purchase requirement would result in a
trade-related investment measure in the first place?

(c) Alternatively, does Turkey believe th at once the Panel has made a ruling under
GATT Article III:4, it should resort to judicial economy and refrain from
making a finding under the TRIMs Agreement?

63. The United States agrees that, with respect to the domestic purchase requirement, the Panel
should examine the US claim of an Article III:4 breach before turning to the US claim of a breach of
Article 2.1 and paragraph 1(a) of Annex 1 of the TRIMs Agreement. The United States recognizes
that, if the Panel finds that Turkey has breached Article III:4 of the GATT 1994 by instituting a
domestic purchase requirement, it need not make a finding under Article 2.1 and paragraph 1(a) of
Annex 1 of the TRIMs Agreement.
64. With respect to the substance of this claim, the United States stands by its previous arguments
that the domestic purchase requirement contains an investment element. These arguments are
supported by the nature of the domestic purchase requirement, Turkish pr oduction data, and other
evidence, including statements from Turkish officials in Letters of Acceptance. By contrast, Turkey's
assertions ignore the evidence. Turkey now alleges that certain factors – for example, the renewal and
modernization of farm systems and technologies and an increase in the harvested area – provide
evidence that the increase in domestic rice production resulted from increases in productivity, rather
than the domestic purchase requirement. Turkey's argument does not necessarily follow. All of these
factors also could provide evidence that the dome stic purchase requirement worked as intended. For
the previous three years, Turkish producers ha ve been assured that their entire crop would be

purchased at above-market prices which, as the data demonstrates, has encouraged them to increase
their harvested area. These developments have led to increased industry profits, some of which could
have been expended on modernizing farming equipment and investing in new technologies.
65. Further evidence that the domestic purchase re quirement has led to investment in the
domestic industry that has benefitted many Turkish rice producers can be found in four letters that
Turkish producer groups sent to the US Embassy in Ankara at the beginning of February.
21 The four
letters, which are virtually identical, state that the WTO case "is penalizing us". Further, the letters
threaten that if the United States does not drop its "meaningless" WTO case, "it will damage our
bilateral trade relations" and there will be a "boycott of all American products we use such as seeds,
machines, fertilizer and agricultural medicine ...".
66. Lastly, Turkey's argument that rice imports have increased from 2004 through 2006 is
misleading. First, imports of rice in 2004 fe ll from 2003 levels because Turkey imposed its
restrictions on September 10, 2003, when Turkey's Mi nister of Agriculture issued the first Letter of
Acceptance, and imports of rice were not permitte d to resume until late-April 2004, when FTU first
opened the TRQ. As shown in Exhibit US-45, TY (trade, or calendar year) imports were 151,000
metric tons in 2004, as compared to 320,000 metric t ons in 2003. With rice exports virtually zeroed
out for nearly eight months, it is no surprise th at imports would have subsequently increased.
However, they did not rebound to previous levels . While TY imports in 2005 were 298,000 metric
tons, they fell again in 2006 to approximately 154 ,000 metric tons, which is virtually the same
quantity of imports as in 2004.22

21 See Exhibit US-83.
22 As shown in Exhibit US-45, USDA forecasted that TY2006 imports would be 200,000 metric tons
(milled equivalent basis). In Exhibit US-81rev, the December 2006 trade data has been added, and the actual
figure for TY2006 is 186,513 metric tons (product weight basis). Using the conversion factors referenced in the
US answer to Panel Question 117, this figure is reduced to 153,983 metric tons on a milled equivalent basis.

ANNEX F-3

COMMENT BY THE UNITED STATES ON THE COMMENTS BY TURKEY
ON THE REPLIES BY THE UNITED STATES TO THE QUESTIONS POSED
BY THE PANEL AND TURKEY AFTER THE SECOND SUBSTANTIVE MEETING
(28 February 2007)

 In its comments on the US 6 February 2007 answers to Panel Question 150 and
Question TR-1, Turkey states that the United Stat es has mistranslated the Turkish term "Kontrol
Belgesi". Specifically, Turkey states that the term's proper English translation is "control document",
rather than "import license".

 The United States appreciates Turkey having brought this matter to its attention. As a result,
the United States has now reviewed the US transla tions in this dispute, and discovered that, in
Exhibits US-76 and US-77, its translators transl ated "Kontrol Belgesi" as "import license", while in
other exhibits they translated this term as "contro l document". In light of the fact that the United
States has confirmed with its translators that they cons ider either term to be a correct translation, and
that the term used by Turkish officials has not changed, the Un ited States wishes to withdraw its
assertion in paragraphs 50 and 66 of the US answer s to the Panel's second set of questions, which is
based on the translation as "import license". The United States notes that this does not change its
conclusion, supported by other evidence and argume ntation, that Turkey's Control Certificate
constitutes an "import license" for WTO purposes.

ANNEX F-4

REPLIES BY TURKEY TO QUESTIONS POSED BY THE PANEL
AFTER THE SECOND SUBSTANTIVE MEETING
(6 February 2007)

Q99. (Both Parties) The Panel has examined th e data provided by each of the parties.
Certain data contained in some of the Exhibits provided by the Parties show significant
discrepancies. For example:

 (a) Figures in Exhibits US-45 and TR-23 for rice imports from 2001 to 2006;

 (b) Figures in Exhibits US-53 and TR-25 for paddy rice imports in January and
December 2004 and January to May 2006; for brown rice imports in March
2003 and January to September 2006; a nd for milled rice imports in July 2004
and January to July 2006.

 (c) Figures in Exhibits US-55 and TR-28 for landed CIF prices of paddy rice in
December 2004; of brown rice in March 2003, March to June 2004, September
to December 2004 and June 2006; and of milled rice in December 2005.

On the other hand, some figures provided by the United States and Turkey show a high degree
of similarity. For example:

 (a) Figures in Exhibits US-45 and TR-24 for milled rice consumption from 2001 to
2005.

 (b) Figures in Exhibits US-53 and TR-25 for paddy rice imports throughout 2003,
February to November 2004, throughout 2005, June and July 2006; for brown
rice imports in January, February and April to December 2003, throughout
2004 and 2005; and for milled rice imports throughout 2003 (except for May),
throughout 2004 (except for July), and throughout 2005.

 (c) Figures in Exhibits US-55 and TR-28 for landed CIF prices of paddy rice
throughout 2003, April to November 2004, throughout 2005 and June to August
2006; of brown rice throughout 2003 (e xcept for March), throughout 2005, and
April to June 2006; and of milled ri ce throughout 2003, throughout 2004,
throughout 2005 (except for December) and from January to July 2005.

Please explain why, in your view, this is the case, referring to relevant evidence, as appropriate.

Turkey submits that it uses realized import data collected by the Undersecretariat for Customs and
processed by the Turkish Statistics Institute (TUIK), a nd it confirms the data that it has provided in
Annexes TR-23, TR-25 and TR-28. Turkey and the United States have taken these figures from the
same source (i.e., TUIK), and, as also noted by the Panel, much of these figures match with each
other. However, for those periods showing discrep ancies, some of the figures included in Exhibit
US-53 reflect lower amounts than those included in Annex TR-25 and some others are even missing.
In this sense, Turkey once again confirms its figur es and believes the discrepancies are due to errors
of Exhibit US-53. Moreover, Turkey would like to cl arify that it has acquired the relevant statistics
officially from TUIK, while the method through which the United States provided these statistics
remains unknown. Monthly landed CIF prices shown in Annex TR-28 are calculated by dividing total
value of the importation by total quantity for every month.

Q100. (Both Parties) The Panel has considered the information provided by Turkey on
"Monthly landed CIF values" in Exhibit TR-28, and noted a sharp increase in paddy rice prices
in June 2003, January and November 2004, February 2005 and March 2006. Likewise, it has
noted a sharp increase in milled rice prices in September 2003, January and August 2004 and
September 2005. It has also noted a signific ant fall in the price for milled rice in December
2003. Please explain why, in your view, these shar p increases and this significant fall in prices
occurred, referring to relevant evidence, as appropriate.

Turkey submits that there are many types of rice and paddy rice which differ in terms of type, quality
and also price. HS Code 1006.10 includes paddy rice for sowing, which has a greater value in price
(up to 3,600 US$/tonne). In June 2003, for example, the sharp increase in average landed CIF value
results from 4 imports of paddy rice for sowing of a single firm, with an average CIF value of 3,395
US$/tonne. The average landed CIF value of padd y rice in June 2003 is 233 US$/tonne if these
4 imports are excluded. On the other hand, the padd y rice import in January 2004 is realized in one
single consignment from the United States, with an average CIF value of 897 US$/tonne, which
almost equals the average CIF value of paddy for sowing. There are 2 import consignments in
November 2004 for paddy rice, with landed CIF values of 1,329 US$/tonne and 268 US$/tonne
respectively. In the same manner, a single import of paddy rice for sowing having 1,101 US$/tonne
CIF value in February 2005 and again a single impor t of paddy rice for sowing having a CIF value of
1,530 US$/tonne in March 2006 increases the averag e landed CIF values. Provided that these imports
are excluded from the imports figures, the average values would be 149 US$/tonne in February 2005
and 289 US$/tonne in March 2006 respectively.

On the other hand, all of the rice imports in Sept ember 2003 had been realized from Italy, and have
higher exporting value due to the high quality of the product. Furthermore, there are only two
consignments for rice importation in January 2004 and yet one of them has a CIF landed price of
2,743 US$/tonne. This price was questioned by the Tu rkish authorities, and the importer declared that
the type of rice was "Carnaroli" and that the price w as true, and that at the moment the price of this
type of rice amounts to 1.25 €/Kg. Again, when in August 2004 and September 2005 imports of rice
from Italy took place, the average CIF values started to increase (imports from Italy generally start
after August that is crop season). The fall in price in December 2003 is a result of the importation of
10,450 tonnes of rice with average CIF value of 264 US$/tonne.

In any event, Turkey submits that it should be noted that values may often be distorted by importers'
declarations.

Q102. (Turkey) Aside from the alleged lack of competitiveness of rice from the United States,
what other reasons may explain in Turkey's view the fact that, according to the information
provided by Turkey in Exhibit TR-25, there seem to have been no imports of:

 (a) Paddy rice or brown rice in the mont hs of October in 2003, 2004 and 2005. In
addition, the data in Exhibit TR-33 suggest that no rice imports whatsoever
(paddy, brown or milled) took place in February and March 2004. Further, the
data in Exhibit TR-33 seem to suggest that there were no rice imports other than
EC/Former Yugoslav Republic of Macedonia out-quota rice imports in
October – December 2003 and in September – October 2005.

 (b) Milled rice from the United States during: (i) January – May 2004; (ii) July
2004; (iii) September – November 2004; (iv) July – December 2005; and, (v)
January 2006 – onwards.

 (c) Paddy rice from the United States during: (i) October - December 2003;
(ii) February - May 2004; and, (iii) September - November 2005

In Turkey, the crop season of paddy rice starts in the second half of September. The major importers
of rice into Turkey used to be the millers, although their import sh are has recently decreased. As a
result, generally, in the crop season the demand for importation tends to decrease due to the high
volumes of paddy rice supply in the market.

On the other hand, there are two main reasons for the lack of imports in February - March 2004. The
first one is the increase of rice stoc ks by the beginning of 2004, due to the fact that huge volumes of
rice imports took place in 2003 (in particular, milled rice imports increased from 131,431 to 214,528
tonnes). The second reason is the steep increase of the world price for rice in 2004, as Annex TR-43
shows, that caused the fall of competitiveness of im ported over domestic rice and resulted in a further
decrease in the demand for importation.

In any event, Turkey submits once again that the trends in the Turk ish rice market have always been
exclusively determined by business determinations ma de by traders. Turkey has outlined above few
elements which have affected importers' choices during a specific period. Other elements that play a
substantial role on the importers' determination are, inter alia, the preferential tariff applied on EC and
Macedonian rice within the quotas, together with the quota rent exploitations and licenses entitlement;
import networks used by the traders; their commerc ial traditions; consumer preferences; quality of the
rice; brand names; requests by distribution chai ns; currency fluctuations; existence of tariff
advantages; and proximity of export markets.

Q103. (Turkey) In reference to th e previous question, is Turkey of the view that the lack of
imports during the indicated periods was a result of a lack of applications for Certificates of
Control to import rice or rather of a reject ion of those applications? Please reason your
response, referring to relevant evidence, as appropriate.

Turkey submits that the lack of imports during certain periods was the result of a lack of applications
for Certificates of Control. This largely depend ed on a combination of factors. Among those, the
decrease in the demand of imported rice as a consequence of the increase of the world price for rice
and the large presence of stocks certainly affected requests for Certificates of Control for the period
going from February to March 2004. As for the d ecrease of imports of paddy in the month of
October, Turkey refers to the reasons provided in its answer to question 102.

Turkey submits the following table with the breakdown of requests, rejections and approvals for each
rice product (i.e., types of rice) in each period specifi ed in question 102 as it relates to trade with the
United States:

PERIOD Total
Application Rejected Approved Product
January-May 2004 2 2 0 milled rice
July 2004 2 0 2 milled rice
September-November 2004 1 0 1 milled rice
July-December 2005 5 5 0 milled rice
January-9 November 2006 6 4 2 milled rice
October-December 2003 0 0 0 paddy rice
February-May 2004 2 0 2 paddy rice
September-November 2005 10 0 10 paddy rice

Q104. (Turkey) Exhibit TR-8 shows that in 2004 Certificates of Control were issued for
France, Iran and "Iskenderun Customs Antr." However, Exhibit TR-33 does not show any
Certificates of Control for these three. Could Tu rkey explain this potential discrepancy? Also,
what is covered by "Iskenderun Customs Antr."?

Annex TR-8 does not show the figures pertaining to the Certificates of Control approved by the
Ministry of Agriculture and Rural Affairs (MARA) , but it shows instead the total quantities, for each
country, for which import licenses were issued by the Undersecretariat for Foreign Trade (UFT) under
the TRQ system. The non-existence of Certificates of Control for imports of rice from these three
countries in Annex TR-33 indicates that despite th e fact that these importers obtained the licenses
from the UFT to import under the TRQ, in the end th ey did not request a Certificate of Control,
therefore they did not import rice (either under the TRQ or over-quota). In addition, Turkey submits
that "Iskenderun Customs Antr." refers to the warehouse at the Iskenderun Customs point of entry.

Q105. (Turkey) Exhibit TR-35 seems to show lower figures of rejected applications for
Certificates of Control in 2005 and 2006, than Exhibit TR-36. In particular, Exhibit TR-36
would suggest that there were 85 rejections in 2006 versus 38 shown in Exhibit TR-35. Could
Turkey explain these discrepancies, including th eir implications for the total number of
rejections and the percentage of rejections shown in Exhibit TR-35.

Turkey submits that the data provided in Annex TR -36 are more updated and respectfully requests the
Panel to take into consideration the mentioned A nnex. On the other hand, Turkey submits an updated
version of Annex TR-35, showing rejections up to 9 November 2006.

Q106. (Turkey) The data in Exhibit TR-33 seem to indicate that the total number of approved
Certificates of Control for 2003, 2004 and 2006 were higher, and for 2005 they were lower, than
what is indicated in Exhibit TR-35. Could Tu rkey explain these discrepancies, including their
implications for the total number of approvals and the percentage of rejections shown in
Exhibit TR-35.

The data provided in Annex TR-33 are more update d and Turkey respectfully requests the Panel to
take into consideration the mentioned Annex.

Q107. (Turkey) The figures for Bulgaria a nd Russia in Exhibit TR-25 seem to show a
discrepancy with the actual figures or dates for Bulgarian and Russian imports in
Exhibit TR-33. Could Turkey please explain this apparent discrepancy?

The data concerning realized import figures or dates provided in Annex TR-33 is prepared by MARA,
which records these figures after the product is released for free circulation following customs control.
This method of recording may, at times, lead to certain minor statistical discrepancies with the records
of the General Directorate of Imports of the UFT. Turkey requests the Panel to take into
consideration, in relation to the realized import figures, Annex TR-25, prepared by the mentioned
General Directorate.

Q108. (Turkey) According to Exhibit TR-25 there were no imports of milled rice in April 2004;
however, Exhibit TR-33 indicates that 21,000 kg of rice were imported from Pakistan in the
same month. Could Turkey please explain th is, or any other similar, discrepancies between
Exhibits TR-33 and TR-25?

Turkey respectfully submits that a closer scrutiny of Annex TR-33 would reveal that the Certificate of
Control relating to the import of 21,000 Kg. of ri ce realized from Pakistan was approved on 8 June
2004, but the date of importation was inadverten tly recorded as 23 April 2004. Annex TR-25 shows
that the mentioned importation from Pakistan was realized in June.

Q109. (Turkey) In its reply to question 4(c) posed by the Panel, Turkey stated that
Exhibit TR-8 provided "import data, broken do wn into types of rice and into MFN and TRQ
imports for the years 2004 to 2006" (emphasis added). Actually, the table in Exhibit TR-8
seems to show import figures broken down by types of rice and by "Total imports" (A),
"Import Licenses Issued" (B) and a third column indicating the difference between A and B,
which is supposed to show the "Total out of quota imports".

 (a) Can Turkey please confirm this.

Turkey confirms.

 (b) As regards milled rice, the corresponding figure for imports of US rice in the
third column is negative. According to footnote 2 to the table, the negative sign
indicates that the total quantity of impo rt licenses was larger than the actual
imports. Does the negative sign also mean that there were no out of quota
imports of US milled rice during the period under consideration?

Turkey submits that the negative sign does not necessarily mean that there were no out-of-quota
imports. The negative sign indicates that the actual realized imports were less than import licenses
issued in that period. So, as a result, actual importa tion might have been realized either within the
tariff quota or out-of-quota. However, if the sign is positive, then we assume that all of the import
licenses issued have been fully u sed (due to the tariff advantage) , and the difference between total
imports and import licenses issued are definitely realized out of the quota (though, theoretically all of
the importation might have been realized out-of-quota since we do not know the actual usage of the
import licenses).

Q110. (Turkey) In its question 7 posed to both Parties, the Panel had asked, inter alia , for
information regarding Turkey's average prices for domestic production of, separately, paddy,
brown and milled rice in its market, for the peri od from July 2003 to the end of 2006 (including
estimates, as appropriate). In response to this question, Turkey indicated that "reference
should be made to Annex TR-27". However, th e data in Exhibit TR-27 seems to refer only to
individual purchases by companies in 2005. It does not show monthly averages and specify the
type of rice it refers to, nor does it cover the p eriod requested by the Panel. In the absence of
such information, can Turkey comment on the data provided by the United States in Exhibit
US-54. Can Turkey find a relation between the price data provided in Exhibit TR-27 and that
provided in Exhibit TR-29?

In the years 2005 and 2006, the Turkish Grain Boar d (TMO) was not determining market prices, due
to the fact that it made purchases of very little quantities of paddy rice (i .e., approximately 14,000
tonnes), so the prices quoted by TMO cannot represent the price actually paid by the purchasers to the
paddy producers. However, as indicated in Annex TR-27, 559,280 tonnes out of 600,000 tonnes of
domestically grown paddy rice were purchased from paddy producers by the importing firms that
wanted to take advantage of the TRQ system. As a result, Turkey strongly believes that the average
purchase price of 0.64 YTL/Kg of domestic paddy rice realized in the transactions between the firms
and paddy producers pertaining to 559,280 tonnes of paddy rice is the clear indication of the price of
paddy rice in 2005.

The comparison between the data provided in Exhi bit US-54 and in Annex TR-29 shows that the
purchasing prices declared by the TMO remain lowe r. The research for price realized by TMO takes
as a basis the prices of products th at are processed in Edirne, Band ırma, Samsun and Tekirda ğ, the
regions where paddy rice is cultivated and it is only natural that the price increases in certain amounts
in areas that are rather far to these regions because of the transportation cost. The above-noted margin
of difference of prices between the United States and Turkish data may also stem from the possibility
that the United States may have taken the prices established in certain luxurious shopping centres as
average Turkish price for rice. The basis of the data compiled by the USA Rice Federation provided
in Exhibit US-54 remains unknown.

Annex TR-27 and Annex TR-29 show that the pri ces paid by individual companies for paddy rice
directly purchased from producers (Annex TR-27) are lower than TMO purchasing prices for paddy
rice in general (Annex TR-29). One explanation to this fact is the transportation cost that is necessary
in case of TMO purchases, which simply does not exis t when producers sell their products directly to
the traders. On the other hand, producers may prefer to sell their products to individual companies due
to the cash payment advantage. In these cases, those producers deliver their products without further
loss of time and receive payment in return, of course also taking into account certain price
disadvantage.

Q111. (Turkey) In its reply to question 9 posed by the Panel, Turkey provided Exhibit TR-30
showing overall purchases and sales of milled and paddy rice by the Turkish Grain Board
(TMO) during the period 2003 to 16 November 2006. Could Turkey please explain the reasons
for the significant difference in the quantities of paddy rice sold by the TMO in 2004, as
compared to the quantities sold in 2005 and 2006, respectively?

The differences between the quantities of paddy ri ce sold by the TMO in 2004 and 2005-2006 are a
consequence of the lower amount of purchases of dom estic rice made by TMO, for a number of
reasons (i.e., the higher world market prices of ri ce with the related higher degree of competitiveness
of Turkish rice, the relative weakness of the Turkis h Lira, and last but not least the operation of the
TRQ). The lower purchases of domestic rice resulted in lower sales of TMO stocks during the 2005
and 2006 period. With particular respect to the TR Q, it is clear that it provided a great advantage
through its preferential tariffs. To fulfil the domestic purchase requirement, traders purchased
domestic rice mainly from domestic producers, as it was cheaper than buying it from the TMO.
Therefore, the TMO, which acts as an interventi on agency, had lower quantities of domestic rice to
purchase and, consequently, less domestic rice to sell.

Q112. (Turkey) How does Turkey explain th e sudden occurrence of over-quota imports of
United States rice in May 2005 shown in Exhibit TR-33?

Turkey strongly objects to the United States' claim in relation to the alleged reasons behind the sudden
occurrence of over-quota imports in May 2005. Tu rkey believes that the e xplanation rests in the
business determinations and commercial decisions made by the individual rice traders on the basis of

the traditional factors that trigger importation of specif ic consignments of rice from an origin rather
than another. The United States is not providing ev idence to prove otherwise. Turkey submits that
this information is probably easier to be found with the individual importers that made those business
determinations and commercial decisions. To this en d, Turkey believes that the United States is in a
better position to secure this type of information.

Q113 (Turkey): In its reply to question 14 posed by the Panel, Turkey submitted "that the
import procedure which applies for imports at both MFN and TRQ rates is described in the
scheme provided in Annex TR-32":

 (a) In that Exhibit, when referring to "Importation at the MFN rate", Turkey has
stated that "[a]fter approval [of the Co ntrol Certificate by MARA], importers
can start customs procedures". Is this statement compatible with Turkey's
assertion in its closing statement during the second substantive meeting with the
Panel (para. 12) that "[t]he Certificate of Control is a document used as part of
Turkey's customs procedures". Is in Turk ey's view the approval of Certificates
of Control by MARA part of Turkey's customs procedures or do customs
procedures rather begin only after the approval of such Control Certificates?

Turkey submits that the Certificate of Control is a document used as a part of Turkey's customs
procedures. In the mentioned statement, the phrase "customs procedures" stands for the procedures at
customs points-of-entry. It is not intended to mean that the approval of the Certificates of Control was
not a part of customs procedures within the mean ing of the Import Licensing Agreement. As already
specified in its Oral Statements, importation and customs-clearance in Turkey involve a number of
steps, which include a documentation element, a verification element, a physical inspection element
and, ultimately, a tax collection element. The Cer tificate of Control is part of the documentation
element whose procedure starts at MARA and ends at customs. The approval of the Certificate of
Control by MARA is, therefore, an integral part of the customs procedures. Article 2 of the
Communiqué of Standardization for Foreign Trade No. 2006/5, states that: " at import stage of the
products, which have been included in the annex lists (Annex I, Annex II/A-B, Annex III, Annex IV,
Annex V/A-B, Annex VI-A), control certificates appr oved by the Ministry of Agriculture and Rural
Affairs shall be asked for by relevant customs administration."

 (b) In other sections of its submissions, Turkey has stated that no import licenses
are required for imports at MFN rate (see, for example, paras. 3 and 28 of its
first submission). If the latter statement is correct, why in the last column on
"Documents" required for Importation at MFN rates in Exhibit TR-32, is there
a reference to "C. Import license". On the other hand, there seems to be no
similar mention of "Import license" under the column on document
requirements for "Importation under TRQ". Can Turkey clarify this situation?

Turkey submits that the reference to "C. Impor t License" under the column on documents for the
"Importation at the MFN Rate " is due to an error. In this r espect, Turkey respectfully requests the
Panel to take into consideration the corrected vers ion of Annex TR-32 attached herewith. Indeed that
reference should have been inserted under the column on documentation under " Importation under
the TRQ ". Turkey has repeatedly stated that while Certificates of Control, as part of the customs
documentation, are required for both TRQ and over-quota imports (including MFN and FTA imports),
the import license granted by the UFT is required only for imports under the TRQ.

Q114. (Turkey) In its reply to question 15 posed by the Panel, Turkey refers to Exhibit TR-33.

 (a) According to the data in that Exhibi t, Certificates of Control would have been
regularly issued for imports of US pa ddy and milled rice throughout the first

eight months of 2003. However, the ta ble shows that from September 2003 to
the end of May 2004 there seem to have been no Certificates of Control issued
for imports of rice from non-European orig in either in or outside the TRQ. In
addition, it seems that no Certificates of Control were issued for non-EC out-of-
quota rice imports from September 2003 to August 2004. Could Turkey explain
the reasons for these changes in trend?

As previously explained, the lack of imports in that particular period was due to the lack of
application for Certificates of Control as a consequence of two main factors (i.e., the presence of large
stocks of rice in the market due to huge volum es of rice imports occurred in 2003 and the steep
increase of the world price for rice in 2004) that caused the fall of competitiveness of imported over
domestic rice and resulted in a further decrease in the demand for importation. These factors could
have encouraged the importers to resort to stocks and/or withhold their business determinations.

 (b) With reference to the data in that same Exhibit, please provide the reasons,
other than commercial considerations, which explain why no Certificates of
Control for over quota imports for US ri ce seem to have been issued between
September 2003 and April 2005 and consequently no over quota imports of US
rice seem to have actually occurred duri ng the same period, with the exception
of one shipment of 611 tons of paddy rice (date of Certificate of Control
15.09.2004; importation date 16.09.2004).

Turkey submits that, according to the data provide d in Annex TR-33, Certificates of Control have
been granted within the mentioned time period for im portation of rice originating in countries such as
Egypt, China, Vietnam, Thailand and Pakistan, to gether with the rice from the United States. The
relative lack of approved over-quota Certificates of Control for importation of US-origin rice, and
consequently the lack of imports thereof, are due to the lack of competitiveness of US-origin rice.

 (c) The period mentioned in the precedi ng paragraph seems to coincide that in
which the United States claims that consecutive so-called "Letters of
Acceptance" from MARA's General Directorate would have delayed the date
for issuing Certificates of Control (see paras. 23 to 26 of the United States first
written submission). If, in Turkey's view, the lack of imports and approved
Certificates of Control bears no relation with the issuance of Letters of
Acceptance, could Turkey then explain what reasons, other than commercial
considerations, may explain this apparent coincidence.

Turkey has already explained why, with particul ar reference to the period going from February to
March 2004, no imports of rice occurred in Turkey and refers to the answer to question 114(a). Rather
than with the Letters of Accepta nce, the lack of imports was co nnected, in addition to commercial
considerations, with world prices, presence of st ocks and high volumes of imports in the preceding
years.

On the other hand, Turkey has also submitted that the fact that the Letters of Acceptance were not
enforced and did not affect market trends is ev ident from the fact that a considerable amount of
Certificates of Control were in fact approved by MARA during the alleged pe riod of operation of the
Letters of Acceptance. For example, as indicated by Turkey in previous submissions, despite the
existence of a "contrary recommendation" containe d in a so-called Letter of Acceptance (i.e., the
Letter of Acceptance No. 107, as referred to by the United States in its First Submission), 224
Certificates of Control were, in fact, approve d between 10 September 2003 and 30 June 2004. If
anything, this should be seen as convincing eviden ce that the so-called Lett ers of Acceptance were
(and are) only internal communications suggesti ng policy recommendations and not formal trade
policy measures binding on the administration. This general trend is confirmed during later periods of

alleged enforcement of the Letters of Accepta nce up to September 2006. As a second example,
despite the existence of a "contrary recommendation" contained in what the United States describes as
the Letter of Acceptance No. 905, 544 Certificates of Control were, in fact, approved between 1 July
2004 and 1 January 2005. The fact that importers chose to import through the FTA and TRQ (when in
force) is a result of the advantages conditions and related benefits offered by the preferential rates.

Q115. (Turkey) During the second substantive meeting with the Panel, the United States
presented Exhibit US-71, in which the number provided by Turkey of the allegedly approved
Certificates of Control of 2,242, was broken down in order to exclude the ones that in its opinion
were not relevant, such as those approved during an allegedly "irrelevant time period", as well
as those granted for in-quota imports and for rice imports from the EC and the Former
Yugoslav Republic of Macedonia (with whom Turkey has preferential trade agreements). The
United States thus suggested that, once all these exclusions were made, the final number of
relevant Certificates of Control allegedly approved by Turkey was 56. Can Turkey comment on
this number and what would it imply. If in Turkey's view, the final number suggested by the
United States is not correct, could Turkey provide its reasons, referring to relevant evidence, as
appropriate.

In Exhibit US-71, the United States extracts the number of 56 Certificates of Control given for out-of-
quota MFN imports, and argues that this should pr ove the existence of a legal prohibition being
imposed on the approval of Certificates of Control. However, Turkey believes that this argument, and
the relevance of this number, is based on a wrong assumption. The wrong assumption is that of
considering irrelevant imports from the EC and Macedonia, and consequently excluding them, when
comparing Certificates of Control approved for in -quota (TRQ) and over-quota trade. Turkey submits
that if it had intended to use the Certificates of C ontrol as an instrument to restrict rice imports and
protect domestic producers, there would have been no reason to exclude imports under the two FTAs
from the alleged denial of approval of Certificat es of Control. Certainly imports from the EC and
Macedonia might constitute an even greater threat to domestic production because of the greater tariff
advantage. Turkey fails to unde rstand why and on which legal basis the United States continues to
consider these imports irrelevant in their arguments.

In addition, Turkey believes that, even accepting the exclusion of FTA imports, the calculations
elaborated by the United States are still distortive. Th e United States in fact refers to different time-
periods when comparing the total number of appr oved Certificates of Control (i.e., January 2003 to
November 2006) with the total number of Certifi cates of Control approved for MFN trade (i.e., 10
September 2003 to 17 March 2006). In paragraph 8 of its Oral Statements at the second meeting of the
Panel, the United States alleged that the fi gure of 56 Certificates of Control represents a mere
2.5 per cent of the 2,242 Certificates of Control figure provided by Turkey . A correct calculation
would result, again given the exclusion of FTA imports and considering the period between
10 September 2003 and 17 March 2006, in a figure of 3.25% (i.e., 56 out of 1,718) of total approved
Certificates of Control for importation of MFN rice. On the other hand, Turkey submits that the
relevant time period to be cons idered is between January 2003 and November 2006. The calculations
done in relation to this period show that the percen tage of the total approved Certificates of Control
for importation of MFN rice amounts to 6%. Turkey also submits that the period arbitrarily selected
by the United States does not take into account the fact that Certificates of Control have a validity of
one year from the date of approval. Therefore, if anything, Turkey submits that the period of
reference, for the purposes of actual trade o ccurring from 10 September 2003 onwards should be,
ideally, that starting on 11 September 2002 (with respect to the approval of Certificates of Control).

Q118. (Turkey) Could Turkey clarify whether, in the exhibits it has submitted to the Panel (in
particular in Annexes TR-8, TR-23, TR-25 and TR-33), the figures provided for imports of
paddy, brown and milled rice are actual data on imported volumes or are rather the volumes of

paddy and brown rice imports shown as milled rice equivalents (i.e., have they been converted
to milled rice equivalents)?

Turkey submits that the figures in Annex TR-8 are milled rice equivalents of total imports of paddy
rice, brown rice and rice imports. The figures included in Annexes TR-23, TR-25 and TR-33
represent actual data on imported volumes of these products.

Q119. (Turkey) Using the figures provided by Tu rkey as absolute numbers, and not as milled
rice equivalents, the Panel has noted differences in the data concerning import volumes and the
number of approved Control Certificates provide d by Turkey, particularly between Annexes
TR-33 and TR-20 bis and between TR-33 and TR-23.

 (a) Can Turkey clarify these divergences.

 (b) Can Turkey confirm which of these fi gures the Panel is to consider as final,
providing relevant evidence to support the final figures.

Annex TR-20 covers the period un til September 21, 2006; while the mo re updated data can be found
in Annex TR-33, covering until 9 November, 2006. Turkey thus respectfully requests the Panel to
take into consideration Annex TR-33.

On the other hand, as previously explained in the answer to Question 107, Turkey requests the Panel
to take into consideration Annex TR-25 for data on realized imported quantities.

Q120. (Turkey) Could Turkey clarify the units used in the table in Exhibit TR-28?

The unit used is US$/tonnes.

Q121 (Turkey): During the second meeting with th e Panel, Turkey submitted a photocopy from
the "FAO Rice Market Monitor – December 2006" , with a table entitled "Export Prices for
Rice". Could Turkey confirm whether it intends th is photocopy to be part of Turkey's exhibits
to the Panel?

Yes, the table entitled "Export Prices for Rice" from the FAO Rice Market Monitor should be
included in Annex TR-43.

Q122. (Turkey) In its reply to question 13 posed by the Panel (para. 20) the United States
argued that "there are no restrictions on EC -origin rice that enters under the EC quota but…
importers are required to purchase domestic paddy rice with respect to any imports of EC rice
over the 28,000 metric ton annual cap". Could Turkey comment on this assertion? Are imports
of EC rice above the 28,000 annual quota subject to a domestic purchase requirement?

Turkey confirms that, as for the rice originating from any other country, there has never been any
restriction on rice imported from the EC. EC-origi n milled rice benefits of a duty-free quota of
28,000 metric tonnes. Out of the duty-free quota, EC rice can be imported at the MFN or applied
rates as well as under the TRQ regime. In this latter case, importers must satisfy the domestic
purchase requirement. In any event, whether importe d through the duty-free quota, at MFN or applied
rates, or under the TRQ tariff advantage, the approval of Certificates of Control is always an element
of importation.

Q123. (Turkey) During the second meeting with the Panel, the United States submitted
information asserting that that "under the Turk ey-Macedonia FTA, Turkey has preferential
import possibility within tariff quota (8,000 tonnes, 0% duty)" (Exhibit US-72).

 (a) Could Turkey please confirm the info rmation regarding this bilateral tariff
quota with zero in-quota duty?

Turkey confirms this information.

 (b) Could Turkey also please indicate if rice imports from the Former Yugoslav
Republic of Macedonia, either under this tariff quota, or MFN, are subject to
obtaining a Certificate of Control or to a domestic purchase requirement?

Rice imports from Macedonia are subject, like rice orig inating from all other destinations, to approval
of Certificates of Control, whether the importation is to be realized under the TRQ regime, the FTA or
at the MFN or applied rates. The purchase of dome stic rice is required onl y for the importation under
the TRQ regime.

 (c) Does Turkey have preferential trade arrangements with any other country for
the importation of rice into Turkey? If so, could Turkey please provide
information regarding such agreements, indicating their key characteristics with
regard to rice imports into Turkey?

At present, there is no preferential trade agreement covering trade in rice other than with the EC and
Macedonia.

Q124. (Turkey) Exhibit TR-25 refers to paddy ri ce imports in June 2004 from "Samsun FTA".
Could Turkey explain what is covered by "Samsun FTA"?

Turkey submits that the reference made to "Sam sun FTA" should, in fact, read "Samsun FTZ", or
"Samsun Free Trade Zone". Free Trade Zones (alte rnatively also known as Free Economic Zones or
Special Economic Zones) are places, in which some incentives are applied so as to promote economic
activity and which are accepted as being outside of the Turkish Customs Territory despite being
physically located within the borders of Turkey.

Q125. (Turkey) In its reply to question 14 po sed by the Panel, Turkey submitted "that the
import procedure which applies for imports at both MFN and TRQ rates is described in the
scheme provided in Annex TR-32". In that Exhi bit, Turkey has identified the legal basis for
both the procedure for importation at MFN rate and that for importation at TRQ rate. During
the second substantive meeting with the Panel, however, Turkey stated that Communiqué
No. 2006/5 on the Standardization in Foreign Trade had been replaced by new legislation.

 (a) Can Turkey confirm that Communiqué No. 2006/5 on the Standardization in
Foreign Trade has been replaced by new le gislation and provide a copy of such
new legislation.

Communiqué No. 2006/5 was repealed and repl aced by Communiqué No. 2007/21 which was
published in the Official Gazette No. 26406 on 17/01/2007.
1 However, Turkey submits that there is
no amendment affecting the importation of rice into Turkey.

 (b) Can Turkey confirm what is the basis, in Turkish domestic legislation, for the
authority that the Turkish Foreign Trade Undersecretariat (FTU) has to issue
Communiqués on the Standardization in Foreign Trade. Is it Decree No.

1 A copy of this Communiqué is attached as Annex TR-44.

2005/9454 on "The Regime for Technical Regulations and Standardization for
Foreign Trade" in Exhibit TR-2?

Turkey confirms that Decree No. 2005/9454 on "The Regime for Technical Regulations and
Standardization for Foreign Trade", provided in Anne x TR-2, is the legal basis for all Standardization
Communiqués of UFT, in particular of both Communiqués No. 2006/5 and No. 2007/21.

 (c) Can Turkey also confirm what is the ba sis, in Turkish domestic legislation, for
the authority that the Turkish Ministry of Agriculture and Rural Affairs
(MARA) has to issue Communiqués, such as Communiqué No. 2006/5.

Turkey would like to clarify that Communiqué No. 2006/5 is promulgated by UFT (and not by
MARA) on the basis of Decree No. 2005/9454 on "T he Regime for Technical Regulations and
Standardization for Foreign Trade". The Communiqué attributes to MARA the task of determining…
"the conformity of the substances which are on th e annex lists of this Communiqué and which are
subject to the Entry into The Free Circulation Re gime, The Internal Process Regime, The Regime On
The Process Under The Customs Control and The Temporary Import Regime, in respect of human
health and safety, animal and plant existence and health."
2

In general, under the Turkish legal system (like in many other legal systems), the administration has
the power to issue implementing legislation laying down rules which are common, abstract, objective,
and consistent with prim ary legislation. For example, Communiqué No. 2003/31,
3 issued by MARA,
has been enacted (as stated in Article 3 of th e mentioned Communiqué) on th e basis of the Decree
Having the Force of Law No. 560 concerning the Production, Consumption and Inspection of Foods, 4
Law No. 4128 amending the said Decree Having the Fo rce of Law, and the Decree Having the Force
of Law No. 441 on the Establishment and Functions of the Ministry of Agriculture and Rural Affairs,
and the provisions related to f oodstuffs and other agricultural and fishery products of the
Communiqués on the Standardization in Foreign Trade.

As a further example, Communiqués No. 2001/10
5 and No. 2002/11, 6 also issued by MARA, have
been prepared on the basis of the Turkish Food Codex Regulation.7

 (d) Can Turkey confirm whether Communiqué No. 2003/31 on the "Issuance of
Control Certification at the Importation of Foodstuffs and Packaging Materials
that come into Contact with Foodstuffs and on Control Procedures at
Importation Stage" (as amended)", provided in Exhibit TR-21, is still in force?

Turkey confirms that Communiqué No. 2003/31 is still in force.

 (e) Can Turkey confirm whether Decree No. 2005/9454 on "The Regime for
Technical Regulations and Standardization for Foreign Trade", in Exhibit TR-2,
is still in force?

Turkey confirms that the Decree No. 2005/9454 on "The Regime for Technical Regulations and
Standardization for Foreign Trade" is still in force.

2 See Article 1, Communiqué No. 2006/5 and No. 2007/21 in Annexes TR-1 and TR-44.
3 See Annex TR-21.
4 Published in the Official Gazette No. 22327 on 28 June 1995 and amended by Law No. 5179
published in the Official Gazette No. 25483 on 05 June 2004.
5 See Annex TR- 5.
6 See Annex TR-6.
7 Published in the Official Gazette on 16 November 1997.

 (f) When was the requirement that importers obtain a Certificate of Control for the
importation of rice first introduced? Through which legal instrument?

Turkey submits that the requirement for Certificat es of Control has been regulated under different
regimes for more than 20 years. Since 1995, it has been regulated through the Communiqués of
Standardization for Foreign Trade.

Q126 (Turkey): In its statement during the second substantive meeting with the Panel (para. 6),
Turkey asserted that "[t]here is no provision that gives the relevant authority discretion not to
approve Certificates of Control." In this regard, Turkey seems to have made the argument that
the lack of discretion can be inferred from the absence of any explicit provision that gives such
authority to the Turkish Ministry of Agriculture and Rural Affairs (MARA). If this is a proper
characterization of Turkey's argument, please pr ovide additional legal basis and/or arguments
to support Turkey's assertion regarding MARA's a lleged lack of discretion. If not, please
explain why, with reference to relevant legal evidence.

Turkey confirms that there is nothing in Turk ish law providing for the ability of the Turkish
Government or its administration to use the Certif icate of Control as an import license and that there
is no provision that gives the relevant authority the discretion not to approve Certificates of Control.
In particular, the wording of Article 2 of Communiqué No. 2006/5
8 (as well as Article 2 of
Communiqué No. 2007/219 which replaced it and Communiqué No. 2005/510 which was previously in
force) clearly suggests that the approval of the Certificate of Control automatically follows the
importer's submission of the duly compiled form, toge ther with the relevant documents, to MARA or
to the Provincial Directorates.

According to general principles of Turkish legal sy stem, as in the legal systems of other countries,
rights exist unless an exception providing for rest rictions and prohibitions expressly applies.
Therefore, when the law does not pr ovide for restrictions or prohib ition to rights, these are granted,
naturally, automatically and totally. Since there is no provision that gives the relevant authority the
express discretion not to approve Certificates of Control, it is MARA's legal duty and responsibility to
approve the Certificates of Control for importers who meet the requirements established by the
relevant legislation under the Turkish legal system.

Moreover, according to the case law of the Council of State, which is the administrative high court of
Turkey, public authorities cannot use their authority arbitrarily. There is no margin for any kind of
discretion to be exercised by either MARA, any of its Provincial Directorates, or the UFT in the
approval of Certificates of Control.

Q127 (Turkey): Does the relevant legislation explic itly grant importers the right to obtain the
requested Certificates of Control once they ha ve completed all the legal requirements and
submitted all the relevant legal documents?

The relevant Turkish legislation specifies that, in or der to obtain Certificates of Control, all that
importers must do is submit the duly compiled form and the invoice, together with other documents
required according to the nature and kind of the pro duct. As stated above, upon submission of the
required documentation, MARA has the legal duty a nd responsibility to approve Certificates of
Control. From this, it follows that importers have the right to obtain approved Certificates of Control.

8 See Annex TR-1.
9 See Annex TR-44.
10 See Annex TR- 22.

Q128. (Turkey) Article 6 of Turkey's Co mmuniqué No. 31 on the Approval of Control
Certification at the Importation of Foodstuffs and Packaging Materials that come into Contact
with Foodstuffs and on Control Procedures at Im portation Stage apparently contains the list of
documents required for the issuance of a Certific ate of Control for imports into Turkey. In
section 6 B) c), this provision lists "other docu ments that must be presented according to the
type of product".

 (a) Please clarify which of the documents contained in section 6 B) c) are requested
for the issuance of a Certificate of Control for imports of rice.

The "other documents" that must be presented accord ing to the type of product are, in general,
requested for processed agricultural products and ag ricultural products which are composed of more
than one component. As rice does not involve more than one component, no other document such as
"the component list" is requested for the approval of the Certificate of Control for imports of rice.

 (b) In its reply to question 25 posed by the Panel, the United States argued that the
language in the 2005 and 2006 MARA Communiqués was "broad enough to
provide MARA with the flexibility to 'ask for' other documents on a product-by-
product basis". Does Turkey agree with th is statement? If the United States'
statement is not correct, could Turkey pr ovide its reasons, referring to relevant
evidence, as appropriate.

Taking into account the main provisions and the objective of the Communiqués 2005/5 and 2006/5 to
allow only safe products to be imported into Turk ey, it is clear that the phrase "other documents"
refers to the documents intended for the human he alth and safety, animal and plant existence and
health. The term "other docum ents" is required since different documents may be required for
different products according to the characteristics of the products. However, Turkey would like to
emphasize that no "other documents" are require d for importation of rice under the above-mentioned
Communiqués.

Turkey firmly objects to the argument made by the United States that the phrase "... For obtaining
control certificate, it is necessary to apply to the mentioned Ministry or to provincial affiliates
(bodies) authorized by the Ministry with control certificate form (Annex VII), pro forma invoice or
invoice and other documents which may be asked for, depending on product, by the Ministry " in
Article 2 of Communiqué No. 2006/5 would provide MARA with the flexibility to ask for other
documents. The necessary documents required for rice importation are clearly stated in Communiqué
No. 2003/31. In this Communiqué, the rationale for re questing additional documents is simply nature
of the product (i.e., the degree of processing that the product has been subject to). In particular, for
importation of unprocessed products such as milled, brown and paddy rice, no documents other than
the Certificate of Control, legal entity form, and the pro forma invoice are requested by MARA.

 (c) Please confirm whether there is any legal instrument or other published list that
specifies all the documents that are requested for the issuance of a Certificate of
Control for imports of rice. How are importers informed of the documents
required?

Besides the mentioned Communiqués 2005/5, 2006/5, as well as the latest Communiqué 2007/21,
importers can access the list that states the necessary documents for the approval of Certificate of
Control at: http://www.kkgm.gov.tr/birim/gidakont/Kontrol_Belgesi/liste2.html

 (d) Is the payment of any type of fees required for the approval of Certificates of
Control for the importation of rice?

An administrative fee is to be paid to the provincial directorates in return for the services rendered.

 (e) Please confirm whether there are any other documents, not contained in
section 6 B) c), which are additionally required by MARA for the issuance of a
Certificate of Control for imports of rice in to Turkey. If this is the case, please
provide a copy of the relevant legal instrument or instruments.

 (f) Please specify any conditions these docume nts must comply with in order to be
accepted and for the Certificate of Control to be subsequently issued.

No document, other than the duly compiled form, the legal entity form, and the pro forma invoice are
requested for the approval of Certificates of Control for the importation of rice.

Q129. (Turkey) Turkey has argued that the Cert ificates of Control act "as an element of trade
facilitation ... provid[ing] legal certainty and co mmercial predictability to importers engaged in
rice importation" (Turkey's oral statement during the first substantive meeting with the Panel,
para. 6), as well as pursue " inter alia , sanitary and phytosanitary objectives" (Turkey's
response to question 14 posed by the Panel, page 7).

 (a) Please explain how these sanitary and phytosanitary pur poses are achieved
through the Certificate of Control, and how can MARA and Turkish Customs
Officials verify the products complian ce with relevant standards and technical
regulations, without having either seen the appropriate sanitary and
phytosanitary certificate or having made the relevant physical inspection of the
good to be imported.

As already extensively indicated, the Certificate of Control is a reference document needed to process
the customs clearance of specific consignments of a variety of goods, including rice. It allows MARA
and Turkey's customs authorities to verify, on a si ngle document, all required customs information,
including the product's compliance with relevant standards and technical regulations. Turkey has
already explained that, in relation to certain prod ucts (i.e., foodstuffs and other sensitive commodities
imported for human or animal consumption), the level of development of its post-entry market
surveillance does not allow a satisfactory achievement of sanitary and phytosanitary objectives. For
this very reason, a strict and rigorous process of product pre-approval and early certification (by
MARA, which is the competent ministry for rice) is still needed.

The Certificate of Control achieves these objec tives by centralizing the competence and the
responsibility for products' compatibility in the author ity (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 products. With particular respect to the SPS function of the
Certificate of Control, ahead of the actual inspecti on that occurs at customs point-of-entry, an element
of particular relevance is the importers' early guara ntee that the products comply with the applicable
standards.
11 Turkey believes that these aspects ar e essential to ensure the necessary degree of
administrative integration, foreseeability of custom s clearance, and uniformity of action between the
central government and the SPS control and inspection laboratories at customs points-of-entry.

 (b) Can Turkey also explain why an importer would be required to submit, in
addition to a Certificate of Control, a customs declaration and a sanitary and
phytosanitary certificate if MARA and Turkish Customs Officials are able to

11 For rice, the ones included in points A and E of the Certificate of Control (see Annex TR-4).

verify "all required customs informatio n, including the product's compliance
with relevant standards and technical regulations" through the Certificate of
Control?

As indicated in previous submissions, this system mirrors the various phases that characterize the
process of importation. The Government of Turkey needs to be made aware as early as possible about
the planned importation of certain SPS-sensitive products such as rice. While it is true that "all
required customs information, including the produ ct's compliance with relevant standards and
technical regulations" may be verified by MARA ahead of actual importation through the approval of
the Certificate of Control, an important phase o ccurs at customs level, where SPS inspections are
actually conducted on the specific consignments.

 (c) Please provide supported arguments, making reference to relevant evidence, as
appropriate, that can counter the Unit ed States' assertion (in its response to
question 14 posed by the Panel, footnote 11 to para. 23) that, according to
Turkish importers, the Ministry of Agriculture and Rural Affairs (MARA)
"does not request the phytosanitary certificate at the stage when it decides
whether or not to grant the Control Certificate. Rather, MARA does not
require the presentation of a phytosanitary certificate until the Provincial
Agricultural Directorate that has jurisdiction over the port where the
importation is to be realized asks for it . But this step only takes place after
MARA has already granted the Control Certificate."

The assertion made by the United States corresponds to reality. However, what the United States
continues to misunderstand is the SPS informati on and commitments that MARA requires from the
rice importers at time of application for a Certificate of Control. The SPS certificate for the specific
consignment of rice intended for importation is not asked by MARA during the stage of the approval
of Certificate of Control as the latter can be utili zed within a 12 month time period. Actual SPS
inspection and certification can only be made at customs point-of-entry. What is relevant and
requested at the time of application for a Certificate of Control is the indication by the importer of the
future compliance of the imported rice with th e relevant Turkish SPS measures and the importer's
commitment that the actual consignment will match the information provided when applying for the
Certificate of Control. As strange as this may seem or appear on the basis of the complaint brought
by the United States, this process actually enhan ces the commercial predictability of the process of
importation and has proved a powerful instrument of trade facilitation in that it offers an early
guarantee that the products comply with the applicab le SPS requirements. As indicated by Turkey in
previous submissions, this is an element of trad e and administrative facilitation for both the traders
involved and the Turkish administration.

 (d) Please also provide more information re garding the process of risk assessment,
mentioned by Turkey in its response to question 14 posed by the Panel, for the
importation of rice. At what stage of the importation are products examined,
including through laboratory analyses, if that were the case, in order to assess
their safety? Do these laboratory analyses and quarantine procedures take place
at random, at the discretion of the customs or agriculture authorities, or do they
follow certain guidelines? Please provide, as appropriate, copy of the relevant
documents laying down such guidelines or setting out the discretion to decide in
which cases to conduct such laboratory analysis.

If the product is found proper after the document and id entity checks, the next stage is the physical
inspection. Physical inspection is the stage of control that, when necessary, includes laboratory
analyses. With respect to the importation of unprocessed agricultural products such as rice, laboratory
analysis is in most cases found to be necessary. Du ring the analyses, the issues that are essential for

food safety and can pose risk to human health (such as pesticides, microbiological criteria,
contaminants, heavy metals) are primarily considered.

Q130. (Turkey) In paragraph 22 of Turkey's or al statement during the second meeting of the
parties, Turkey states that "once approved, the Certificate of Control is a guarantee for the
importer that all elements and requirements ne eded to clear customs are present and will allow
importation".

 (a) How does the Certificate of Contro l "guarantee ... that all elements and
requirements needed to clear customs are present" when MARA has not, at this
stage, seen a sanitary and phytosanitary cert ificate, which according to Turkey's
response to question number 14 posed by the Panel, is to be submitted to the
provincial directorate of MARA after the approval of the Certificate of Control?

Turkey refers to the replies provided under question 129.

 (b) Provided that the product is fou nd to pass the necessary sanitary and
phytosanitary requirements on importation, in what way, if any, would Turkish
Customs deny the importation of a product?

Turkey submits that if the product meets the n ecessary sanitary and phytosanitary requirements,
Turkish customs authorities cannot deny the importation.

Q131. (Both Parties) In its resp onse to question 40 (d) posed by the Panel, Turkey submits that
Certificates of Control provide importers wi th "trade facilitation benefits", such as
"guaranteeing consistency and uniformity in th e customs clearance procedures ... provid[ing]
greater commercial predictability and legal certai nty to importers (in relation to what they can
expect to happen at border control), and ... reduc [ing] the possibility for goods to be blocked at
customs with the potential for costly and time-consuming customs litigation."

 (a) Are Certificates of Control in their current form the only instruments by which
Turkey can achieve those "trade-facilitat ion benefits" or would there be any
other way of achieving these same benefits? Please justify your answer, making
reference to relevant evidence, as appropriate.

Turkey believes that the Certificates of Control cu rrently meet the traditional test of reasonableness
and necessity used to determine the degree of their trad e-facilitation. In particular, with respect to the
SPS functions of the Certificate of Control, Turkey considers that this instrument perfectly complies
with Article 8 of the SPS Agreement and every si ngle provision of Annex C to the SPS Agreement on
"Control, Inspection and Approval Procedures". The information provided by Turkey throughout the
panel proceedings should clearly allow for a posi tive review on the basis of the requirements of
Annex C.

Turkey remains willing, however, to look at ot her possibilities to enhance the degree of trade-
facilitation of its Certificate of Control. One su ch possibility, under Article 4 of the SPS Agreement,
could be that of negotiating an equivalence or mutual recognition agreement between Turkey and the
United States (or other interested countries). In th is case, the United States would have to objectively
demonstrate to Turkey that its measures achieve Tu rkey's appropriate level of SPS protection. The
United States has never requested consultations with the aim of achieving such bilateral agreement.

 (b) Does the fact that Certificates of Controls allegedly provide importers with trade
facilitation benefits mean that, in th e absence of the requirement to obtain
Certificates of Controls, the importation of rice would in some way be more

cumbersome? If so, please describe in what manner the importation of rice
would be more cumbersome in the absence of such requirement, justifying your
answer with appropriate arguments and evidence.

In the absence of Certificates of Control, the importation would not necessarily be more cumbersome,
but more lengthy, costly, unpredictable and less comme rcially certain. As indicated by Turkey in
previous submissions, these are all elements that, u ltimately, do not facilitate trade. Long procedures
at customs level are costs. The unpredictability of compliance with SPS requirements is, ultimately, a
cost to traders and a strain to the already scarce administrative resources of Turkey. A low degree of
commercial predictability discourages trade. Turkey genuinely believes that the Certificate of Control
provides an element of trade-facilitation with respect to all these possible costs.

Q132 (Turkey): In its response to question 39 posed by the Panel, Turkey asserted that "[t]he
process of early certification by MARA and the ac tual verifications and inspections at customs
level are the only effective instruments for Turkey to guarantee that the products placed in free
circulation on its market are safe and fit fo r consumption" (emphasis added). Turkey has
further stated that Certificates of Control serve, inter alia, the purpose of determining
compliance with relevant specifications, standard s and technical regulations (including for the
protection of human health and safety, animal or plant life or health, environmental protection,
fitness for use, etc.) (see, for example, paras. 54, 64 and 67 of Turkey's first submission).

 (a) The Panel notes, however, that cont rols take place after the Certificates of
Control have been actually approved a nd there seems to be no mention of that
purpose in the appropriate legislation. Can Turkey provide the legal basis or
arguments to support its assertion regarding this point.

The Certificates of Control include the importers' d eclarations that the products comply with the
applicable standards and are intended to provide pre-advice of the planned customs clearance at
particular points-of-entry of individual consignments. Importers must declare that the rice they wish
to import conforms to provisions of the Law on A doption of KHK (Statutory Law) by amending
respecting the Law No. 5179 on Production, C onsumption and Inspection of Foodstuffs and to
provisions of the Law No. 6968 respecting Agricult ural Pest Control and Agricultural Quarantine.
12
Turkey has already repeatedly stat ed that Turkish customs procedures take place both at central level
(i.e., with MARA's approval of Certificates of Cont rol) and at border level (i.e., the physical checks
on the rice being imported, which must show co mpliance "in practice" with all requirements,
standards and technical regulations certified "in th eory" by MARA when approving the Certificate of
Control on the basis of the information provided by th e importers). Turkey believes that the fact that
physical inspections take place upon importation and after the Certificates of Control have been
approved does not affect the fundamental role the Ce rtificates of Control carry-out in their assessment
and early-screening of whether the products are fit for consumption.

Turkey also wishes to clarify th at Article 1(d) of Decree No. 2005/9454, which provides for the legal
basis of Communiqué No. 2006/5 (and Communiqué No. 2007/31), provides that one of the
objectives sought is " to secure that the imported products a re in conformity with the technical
regulations and/or are safe without discriminating between import products and domestic products, to
protect the health and safety of persons, the exist ence of animals and plants and the environment and
to fulfil the requirements for public morality, public policy and public security;"
13

It is, in fact, pursuant to the objectives listed under Article 1(d) of Decree No. 2005/9454, and in full
exercise of the competences granted by such D ecree, that the UFT issued Communiqué No. 2006/5,

12 See Annex TR-4, points A and E.
13 See Annex TR-2.

which confers MARA the responsibility of determini ng the conformity of the products (listed in the
Annexes; Annex VI-A for rice) with respect to human health and safety, animal and plant health and
safety.
14

Turkey therefore believes that the legitimate objectives of, inter alia, the protection of human health
and safety, animal or plant life or health, pursued by the Certificate of Control, are clearly enshrined
in Turkey's legislation providing for the Certificate of Control.

 (b) Are Certificates of Control in their current form the only instruments by which
Turkey can achieve these objectives or would there be any other way of
achieving them? If so, please describe how, justifying your answer with
sufficient arguments and evidence.

Turkey believes that the Certificate of Control repr esents the best-suited instrument to ensure a safe,
uniform and consistent application of the requirements envisaged by the relevant legislation for food
products. As Turkey has already submitted, the eff ectiveness of its post-entry market surveillance in
relation to certain products (i.e., foodstuffs and other sensitive commodities imported for human or
animal consumption) is still in the process of de velopment. This explains why the Government of
Turkey still places (in what must be considered a totally WTO legitimate 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
cannot be conducted solely after impor tation and cannot be left entirely to customs authorities. In this
respect, the Certificate of Control is meant to centralize the competence and the responsibility for
products' compatibility in the authority (i.e., MARA for agricultural products such as rice) which is
best suited to verify compliance with all the relevant legislation, both at a central and at a border level,
and which will ultimately be liable for the products' safety.

Q133. (Turkey) In its question 44 (e) posed by th e Panel after the first substantive meeting with
the parties, the Panel asked Turkey to "provide a copy of each of the 2,223 Certificates of
Control approved between 2003 and September 2006". In its response, Turkey stated that
photocopies of such Certificates of Control were available; that the relevant Ministries were
not, however, authorized to provide all the copies to the Panel; and that, in any event, Turkey
would be able to provide to the Panel in strict confidence copies of any individual Certificate of
Control listed in Annex TR-33 upon its request.

 (a) Can Turkey elaborate on the legal reasons why, under Turkish domestic
legislation, the government would not be authorized to provide the copies
requested by the Panel.

 (b) If Turkey cannot provide a photocopy of each of the 2,223 Certificates of
Control approved between 2003 and September 2006, can it then at least provide
a photocopy of each of the 56 approved C ertificates of Control characterized as
"relevant" by the United States during the second substantive meeting with the
Panel (see para. 8 of the United States statement during the second substantive
meeting with the Panel and Exhibit US-71).

 (c) Can Turkey indicate how many of the 2,223 Certificates of Control approved
between 2003 and September 2006 were the result of the applicant resubmitting
their application after it had been rejected by the Turkish authorities and
provide a photocopy of each one of these Certificates of Control.

14 See Article 1 of Communiqué No. 2006/5, Annex TR-1.

 (d) Please provide statistics regarding the total number of resubmissions of
applications for Certificates of Control for the importation of rice and
subsequent approval or rejection of these, together with the time taken to
respond to the applications by the Mini stry of Agriculture and Rural Affairs
(MARA). Could any of the rejected applications listed in Annexes TR-35 and
TR-36 have been resubmitted and later approved, and would therefore appear
in Exhibit TR-33?

 (e) In its reply to question 44 posed by the Panel, Turkey refers to Exhibit TR-36,
with a list of rejected Certificates of Co ntrol, including the reasons for denial,
until 21 September 2006. Can Turkey provide a photocopy of each of the
rejected applications as well as of the corresponding letters by which it notified
the requesting companies of the rejection of a requested Certificate of Control,
for the importation of rice corresponding to each of the cases cited in Exhibit
TR-36.

 (f) If Turkey cannot provide the full photoco pies requested in paragraphs (b), (c),
(d) and (e) above out of concerns for the privacy of the companies involved, can
it at least provide those same photocopi es after having blacked out the names of
the companies.

Reply to question 133(a):

According to Article 13 of the Turkish Statistical Law, the confidential data acquired, processed and
kept for official statistics cannot be passed-on to any administrative, judicial or military office,
authority or person, and cannot be utilized except for statistical purposes or be utilized as a tool for
proof. Public officials or other authorities that gath er the information have to abide by this rule.
Article 53 of the same law provides that public of ficials violating the prohibitions embodied in
Article 13 will be punished in accordance with Article 258 of the Turkish Criminal Code No. 5237.

Reply to question 133(b) and (f):

Turkey has already provided a consolidation of th e relevant information in Annex TR-33. With
respect to the actual Certificates of Control, Turk ey understands that the documents provided to the
Panel would have to be made available also to the United States. Given the strict confidentiality
requirements provided by Turkish law (see reply to question 133(a) above) and the well-established
communications and information-exchanges between the United States and a number of Turkish rice
traders, the Turkish officials involved in this Pa nel proceeding do not feel comfortable in risking
information leaks and possible criminal accusations of violation of Turkish law on confidentiality.
The Panel will understand that possession of copies of the actual Certificates of Control (including
importers' data, imported/exported quantities, customs values, approving officials, etc.) may give rise
to instances of domestic litigation in commercial, fiscal or criminal courts.

Turkey stands firm in relation to the truthfulness, completeness and usefulness of the information that
it provided earlier by means of its Annex TR-33 conso lidation. However, Turkey is not in a position
to provide copies of the actual Certificates of Control for circulation. Exceptionally, Turkey would be
willing to provide "blacked-out" copies of the 56 "rel evant" Certificates of Control only to the Panel
and after a clear understanding with the Panel and be tween the parties to this dispute that these
documents would not be made available to the Unite d States nor to any other entity beside the Panel
and the WTO Secretariat. Needless to say that Turkey would have no objection to the United States
making available to the Panel, for purposes of these proceedings, copies of the actual Certificates of
Control obtained by individual importers which may be in the United States' possession.

Reply to question 133(c) and (e):

Turkey submits that this information and documen tation is not available in the records kept by
MARA.

Reply to question 133(d):

It is possible that the rejected applications ha ve been re-submitted and later approved, but this
information is not recorded by MARA. Importe rs are free to re-apply for the same amounts or
different amounts with new applications.

Q134. (Turkey): In response to question 44 (f) po sed by the Panel, regarding the denial of
Certificates of Control, Turkey provided the Pane l with Exhibit TR-36, listing the application
date, origin, quantity and quality of the rice for which each Certificate of Control was requested
during the years 2003 to 2006. As reasons for denial, the list states the following: "Missing
documents not completed", "Upon the de mand of the Company" and "Incomplete
Administrative Requirements".

 (a) What should be understood from these reasons?

Turkey submits that the expression " Incomplete Administrative Requirements " refers to applications
that are incomplete or missing the documents which are required together with the Certificate of
Control form, or to applications where the Certif icates of Control form is either incomplete or
contains wrong information. For example:

 (i) The wrong customs classification of the imported good;

 (ii) The choice of a customs point-of-entry which is not available for importation of
foodstuffs; and

 (iii) The missing information on the origin of the imported good.

Another instance of application of the expression " Incomplete Administrative Requirements " may
occur when the information included in the documents and related to, inter alia, the name of the firm,
the address, the name of the product, the country of or igin, is inconsistent. Similarly, an application
will be deemed incomplete if the relevant letters under the heading " According to the feature of the
Commodity to be imported please mark the following related heading with circle " (i.e., the importer's
SPS declaration) are not selected.

The expression " Upon the Demand of the Company " refers to cases where the applicant company
withdraws its application. The expression " Missing Documents not Completed " refers to cases in
which the applicant company is informed of the "incomplete administrative requirements" regarding
its application and is given additional time to co mplete and/or correct the missing/wrong information,
but fails to complete or correct those missing elements or mistakes in the application.

 (b) Can Turkey provide further detail regar ding the reasons for denial of the listed
applications for Certificates of Control?

Turkey submits that, as all the applications have been returned to the applicant firms, detailed
information cannot be submitted.

 (c) Are detailed reasons for denial provided in writing to the requesting companies
in the document of rejection or are these reasons communicated to applicants in
a similarly succinct manner as what is indicated in Exhibit TR-36?

As explained in detail in the answer to Questi on 134(a), the reasons for denial of approval of
Certificates of Control are normally straightforward and communicated verbally to applicants in the
normal course of business. In fact, MARA always makes sure that the representatives of applicant
companies are promptly informed of the missing or wrong parts of the applications.

Q135. (Turkey) The United States has submi tted, as Exhibit US-29, photocopy of an
application for a Certificate of Control for the importation of 10,000 tons of rice, allegedly
"returned due to spelling errors". The Panel no tes that "spelling errors" were not listed as
"reasons for denial" of Certificates of Control in Exhibit TR-36.

 (a) Can Turkey confirm whether spelling errors would be grounds for the rejection
of an application for a Certificate of Control? If so, under which of the three
categories ("Missing documents not co mpleted", "Upon the demand of the
Company" or "Incomplete Administrati ve Requirements") would a spelling
error fall? What is the legal basis for rejecting applications owing to "spelling
errors"?

 (b) Can Turkey confirm whether the speci fic photocopy submitted by the United
States as Exhibit US-29 corresponds to the application identified as number 3 in
the list of "Denied Control Certificates Applications and Reasons for Denial in
2003", provided by Turkey in Exhibit TR-36?

Turkey submits that it cannot provide an answer to this question as the mentioned application cannot
be found among MARA's records. In general terms, it is not MARA's policy to systematically deny
applications on the basis of minor spelling mistakes. This would be dispropor tionate and defeat basic
principles of reasonableness and trade-facilitation. Ho wever, in certain instances, spelling errors may
insist on crucial elements of the application (such as the HS code number) and the process of
importation. In those instances, confusion may lead to individual rejections. To this end, however,
Turkey would like to underline that these rare occurre nces must also be seen in light of the extreme
simplicity of application and/or re-application. Importers work closely with MARA and have
generally developed long-standing an d personal relations with MARA's officials. It does not take
much or a long time to re-apply making a small (but possibly important) correction that will avoid
later problems or misunderstandings. Again, Turk ey regrets that the United States would use an
individual episode to imply or suggest a pattern of systematic rejection of applications for futile
reasons. This has never occurred and the large vol umes of trade and low percentages of rejections
stand as clear and powerful testimony to the contrary. Turkey also submits that the specific
photocopy submitted by the United States in Exhibi t US-29 does not correspond to the application
identified as number 3 in the list of "Denied Control Certificates Applications and Reasons for Denial
in 2003" provided by Turkey in Annex TR-36 since the dates of application do not match.

Q136. (Both Parties) According to Turkey's stat ements (see, for example, para. 25 of its first
submission), Certificates of Control for the im portation of rice are valid for periods of 12
months.

 (a) If this is the case, why would impo rters not import rice during periods in which
Certificates of Control are allegedly not being approved, but some Certificates of
Control are presumably still valid?

 (b) During periods when the TRQ was not open, why would imports of rice not
occur under Certificates of Control that were presumably still valid?

 (c) Is there any difference between the Certificates of Control issued to import at
the MFN rate, under preferential trade ag reements and under the TRQ? If so,
please specify the differences between them. If not, does this mean that a same
Certificate of Control could have b een equally used to import under the
different rates? Did an importer have to specify whether the intended import
was to be in-quota or over-quota when a pplying for a Certificate of Control?
Please make reference to relevant evidence, as appropriate.

 (d) Would a Certificate of Control still be valid for twelve months, even during a
period when a TRQ was in place? Would an in-quota Control Certificate
maintain its validity of 12 months, and therefore still allow imports to take place
at the preferential in-quota tariff rate, despite the tariff quota period closing?

 (e) Does the amount permitted to be impo rted under the Certificate of Control hold
any relation with the amount permitted to import when applying for an import
license to the Turkish Foreign Trade Undersecretariat (FTU)?

Reply to question 136(a) and (b):

Turkey submits that there was no period in which th e Certificates of Control were not approved, but
applications were at times simply not submitted due to importers' commercial considerations relating
to the profitability of the importation and other co mmercial factors. The reason why importers might
not have used validly approved Certificates of C ontrol in certain period is related to a number of
factors, including the presence of domestic stocks which satisfied the internal demand of rice and that
may have made importation of rice simply less profit able in certain periods. Turkey would also like
to draw the attention of the Panel that importers traditionally apply for Certificates of Control in
relation to quantities greater than the ones that th ey actually intend to import. Turkey has never
regarded this as a problem and ha s never conditioned the approval of Certificates of Control to the
importation of the exact amounts stated on the Certificates of Control. Certificates of Control are not
and never were import licenses and, unlike import licenses, are not quantity-specific.

Reply to question 136(c):

There is no difference between the Certificates of Control approved for importation of rice under the
MFN or applied rates, the TRQ regime, or the FTA preferential rates. The importer did not have to
specify under which of the three possibilities it intende d to import. However, as also shown in Annex
TR-32, an import licence from the UFT General Directorate of Imports was necessary for the
approval of Certificates of Control by MARA fo r those importers who wished to import under the
TRQ regime or the FTA in-quota volumes of trade.

Reply to question 136(d):

The right to import at preferential tariff rates with in the TRQ system is granted by means of import
licenses issued by the UFT. Certificates of Cont rol do not grant the right to import at the TRQ
preferential rates. There are no in-quota or out-o f-quota Certificates of Control. Certificates of
Control are, at times, approved in relation to im portation of rice within a preferential quota (TRQ or
FTA). In these cases, the validity of the Certifi cates of Control is, as mandated by law, 12 months,
but an importer would no longer be able to import w ithin the preferential quota if the TRQ has closed
or if the quota has been filled. This is the trad itional operation of a TRQ system and it works in this
way in all WTO Member countries. This is, however , an academic case, in that all importers will

want to quickly import the rice within the quota to benefit of the tariff advantage. In any event,
should they not be able to import within the quot a before the expiry of the TRQ or before the
exhaustion of the quota, the Certificate of Control will remain valid and will allow them to import at
the MFN or applied rates of duty.

Reply to question 136(e):

No. When applying for a Certificate of Control, importers are free to apply for the quantity they wish,
regardless of the quantity indicated in the import licenses issued by the FTU . Only the quantity for
which they have obtained an UFT import license may, however, enter under the preferential rates.

Q137 (Turkey): In its reply to question 49 posed by the Panel, (para. 79) the United States
argues that

"The fact that Turkey's Annex 20 shows a wide differential in 2003 and 2006
between Control Certificates granted and actual imports is not reflective of a
lack of competitiveness but rather the exis tence of the import restrictions raised
by the United States in these panel proceedings. In Exhibit US-59, the United
States has presented the data from Annex 20 in graphical form. In 2003, the
pace of Turkish imports was tracking the volume of outstanding Control
Certificates at pace – at least in January through early-September 2003 – before
imports were halted. The most likely explanation as to why realized imports fell
short of Control Certificate volumes in 2003 was Turkey's decision, pursuant to
Letter of Acceptance 964, to prohibit the issuance of Control Certificates as of
September 10, 2003. Thus, rice imports were prohibited for nearly four months,
or one third of the calendar year. In 2004 and 2005, realization rates were very
high because, according to Turkey's im port data, virtually all imports were
within the TRQ regime. By contrast, Control Certificates covering nearly 1
million tons in 2006 are grossly out of line with actual imports through
September 2006 and outpace trade-to-date by nearly 500 per cent ..."
Can Turkey provide arguments to respond to these assertions, making reference to relevant
evidence, as appropriate.

Turkey strongly disagrees with the allegations put forward by the United States. First, Turkey rejects
the idea of the existence of any import restricti on on rice. Turkey has already submitted relevant
evidence against the allegations of the United States. In particular, Turkey has shown that a total of
2,242 Certificates of Control (59.5% of which fo r out-of-quota trade) were approved between 2003
and 9 November 2006, despite the existence of the so-called "Letters of Acceptance" and this alone
stands as clear and irrefutable evidence against th e idea that Turkey was maintaining prohibitions or
restrictions on the importation of rice.

Turkey also submits that rice imports were neve r "prohibited for nearly four months." When
Certificates of Control were not approved this was me rely a result of both the absence of applications
for approval and/or the existence of considerable "left-over" approved volumes in the hands of the
importers. Turkey has already pointed-out that, in its view, the applications for approval of
Certificates of Control were submitted by the importe rs solely on the basis of business considerations
and commercial calculations. These business considerations may be dictated, inter alia , by profit
margins, the fall in competitiveness of imported over domestic rice as a consequence of the steep
increase of the world price for rice, speculative pos itions, currency fluctua tions, and the presence of
large quantities of stocked rice among business operators.

Secondly, Turkey submits that it sees no relation be tween the alleged existence of import prohibitions
or restrictions and the differential between the quant ities stated in the Certificates of Control and the
ones realized as actual imports. Once importers obtained approval of Certificates of Control, actual
importation depended exclusively on their evaluation of the profitability of the commercial operation
(see the factors listed above). When Certificates of Control are approved (and the administration has
carried-out its early review on the safety of the im ports through the approval of the Certificates of
Control), the decision on actual importation ex clusively depends on the importers' business
determinations. In this respect, Turkey submits that , even if import restrictions had really been in
place through the alleged denial of approval of Cer tificates of Control, this would still have had no
influence on the choice of an importer as to whether or not the importation should have been realized.
On the contrary, if restrictions had really been in place, importers would have had an even greater
interest to realize the importation through Certificate of Control so hardly obtained.

Thirdly, the fact that realization rates were high under the TRQ does not prove anything. In fact,
importers had a far greater interest in realizing a ll of the licensed imports under the TRQ in order to
take full advantage of the preferential rates (and the quota rents). Certificates of Control for MFN
trade, which remained always available, were requ ested in greater quantities so that importers could
manage and decide when and how importation s hould take place with the necessary margin of
discretion. With particular regard to the 2006 figures, it is clear that the ratio of approved Certificates
of Control is "grossly out of line with actual im ports through September 2006" for the very simple
fact, which apparently the United States keeps forge tting, that Certificates of Control remain valid for
12 months after approval. If anything, such calcula tion and clever manipulation of the data can only
be conducted a posteriori, once importers will have autonomously decided whether or not to realize
the imports for which Certificates of Control have been approved.

Turkey simply does not understand on what basis an d for what purposes the United States is trying to
establish a connection between the alleged restriction and the difference between the realization rates,
between 2003 and 2006. In any event, as explained a bove, Turkey believes that this architecture is of
no relevance for purposes of this proceeding.

Q138 (Turkey): The United States has submitte d, as Exhibit US-35, a letter dated 24 March
2006, by which the Turkish Minister of State in forms the United States Trade Representative
that the Control Certificates "will be issued as of April 1, 2006".

 (a) Does this letter imply that Certificates of Control were not being issued at the
time when the letter was issued?

 (b) What relation, if any, does the date of 1 April 2006, mentioned in the Turkish
Minister of State's letter, bear with the end of the TRQ on 31 July 2006 (please
make reference to relevant evidence, as a ppropriate.)? Was the adoption of any
new or modified measure necessary to achieve the results indicated in the
Minister's letter? If so, has any such measure been adopted as a result of the
Minister's letter? What is the factual and legal relationship between the letter in
Exhibit US-35 and any measure adopted to put that into effect, on the one hand,
and, on the other hand, the Letter of Acceptance signed by the Minister of
Agriculture and reproduced in Exhibit US-36?

 (c) Can Turkey also elaborate on its closing statement during the second substantive
meeting with the Panel (para. 3), that the letter "was designed to reassure the
United States that, with the phasing-out of the TRQ, traders would likely resume
trading on MFN terms" and that "[i]t was not an implicit confirmation of any
systematic denial of the approval of Certificates of Control".

Reply to question 138(a) and (c):

Turkey confirms that the diplomatic Letter to Ambassador Portman was designed to reassure the
United States that, with the phasing-out of the TRQ, traders would have likely resumed trading on
MFN terms. It was not an implicit confirmation of any systematic denial of the approval of
Certificates of Control. The Letter does not imply that Certificates of Control were not being issued.

Reply to question 138(b)

Turkey submits that there is no relation between th e diplomatic Letter, dated 1 April 2006 and the
expiry of the TRQ regime on the 31 July 2006. In pa rticular, the expiry date of the TRQ regime was
already established by Decree No. 2005/9315,
15 which was adopted on 10 August 2005 and published
on 13 September 2005 and which provided the legal framework for the last TRQ opening. Turkey also
submits that no measure was either adopted or modified following the Minister's letter.

In addition, Turkey firmly rejects the idea that there would be a relation between the diplomatic Letter
of 1 April 2006 and the Letter of Acceptance include d in Exhibit US-36. The first Letter must be
considered as an official and formal diplomatic act of the Minister, aimed at addressing the United
States' concerns and at facilitating a diplomatic solu tion. The Letters of Acceptance are, instead, mere
instruments of internal communication among Turkish administrators and public officials, unofficial
policy recommendations that were never enforced. With particular reference to the letter contained in
Exhibit US-36, Turkey would like to draw the Panel's attention to the fact that, contrary to the policy
recommendation contained therein, Certificates of Control were granted in great quantities before,
during and after the period between 1 April 2006 and 1 August 2006.

Q141. (Turkey) In its statement during th e second substantive meeting with the Panel
(para. 6), Turkey asserted that "[t]here is no provision that gives the relevant authority
discretion not to approve Certificates of Control. " In other submissions (see, for example,
para. 78 of its first submission and reply to quest ion 23 from the Panel), Turkey has stated that
the so-called "Letters of Acceptance" are intern al communications aimed at developing policy
recommendations.

 (a) If the Minister of Agriculture and Ru ral Affairs has no discretion not to approve
Certificates of Control, under what legal basis have then officers from the same
ministry submitted internal communicati ons to the Minister recommending that
Certificates of Control not be approved? What could explain a Director General
of MARA repeatedly making a recommenda tion to the Minister to adopt a
policy if the Minister had no discretion to adopt such policy?

The Directorate General only makes recommendations to the office of the Minister. It is then the
responsibility of the Minister to consider or not these internal recommendations for purposes of
defining an internal policy which may or may not beco me a general policy. For a general policy to be
adopted, independently of whether or not it is with in the competence of a Mi nister and in line with
Turkish law, many other policy recommendations will be considered, coming from the same
administration or other relevant ministries.

 (b) What legal basis, if any, would give the Director General of MARA the authority
to issue these so-called "Letters of A cceptance". Please also specify under what
basis these letters could extend to the subject of the issuance of Certificates of
Control.

15 See Annex TR-9.

There is no legal basis in that the Letters of Acceptance are internal documents to any Turkish
administration that are customary for officials to interact and put forward or discuss policy
recommendations.

 (c) What factors or events would tri gger these recommendations from the Director
General of MARA?

Demands of interest groups and general policy d ecisions may trigger these recommendations within a
part of the administration.

 (d) Would one of the reasons that could trigger such a recommendations from the
Director General of MARA be that there is a sufficient level of domestic
production or a high level of imports?

Yes, this could be the case.

 (e) Could the Minister refuse the recomme ndation made by a Director General of
MARA through a so-called "Letter of Acceptance"? Please provide
documentary evidence in support of your response.

Yes, the Minister may refuse the recommendation made by a Director General of MARA.

Q142. (Turkey) Can Turkey provide evidence of so-called "Letters of Acceptance" containing
policy recommendations that the Minister of Agriculture and Rural Affairs did not approve?

There is no such document that Turkey is in the po sition to circulate given the privileged natured of
the communications internal to the Administration and the confidential nature of the information
contained therein.

Q143. (Both Parties) Were so-called "Letters of Acceptance" issued prior to the ones identified
by the United States in its submissions. If so, can you provide any evidence as to the existence of
these earlier Letters of Acceptance?

No. Letters of Acceptance relevant to this proceed ing were ever circulated within the Administration
prior to the ones identified by the United States in its submission.

Q144. (Turkey) Please describe the procedure that follows the issuance of a so-called "Letter of
Acceptance". Would such a letter, after being accepted by the Minister, be communicated to
the provincial MARA offices, and if so, how?

There is no standard procedure within the Turk ish Administration for purposes of what may happen
following the issuance of a Letter of Acceptance. It is possible that such a letter, after having been
endorsed by a Minister, could be circulated within the provincial level of the administration through
the normal channels of communication.

Q145 (Both Parties) In its statement during th e second substantive meeting with the Panel
(para. 12), the United States argued that Turkish courts have attributed legal effect to the so-
called "Letters of Acceptance" and upheld MARA's enforcement of such Letters. In response,
in its closing statement during the same meeting (para. 9), Turkey argued that, in a specific case
cited, a "Court of first instance appears to have given effect to an ultra vires act [from the
Minister of Agriculture and Rural Affairs]". Wh at should be the appropriate value given by
the Panel, if any, to interpretations of domestic law developed by local courts? What should be
the appropriate value given by the Panel, if any, to interpretations of domestic law advanced by

the administration of a Member before a local court? Was the allegedly erroneous
interpretation of Turkish domestic law develope d by the local court appealed by the Turkish
administration? Should interpretations of domestic law developed by local courts be accorded a
different value by the Panel if they were issued by higher courts?

Turkey preliminarily submits that the Letters of Acceptance cannot be defined, according to the
Turkish legal system, as "domestic law", but ra ther as policy recommendations, falling outside the
very competence of the Minister, to which the domestic courts appear to have given effect. Turkey
believes that no value should be given to the rulings issued by the Administrative Courts of Ankara by
this Panel and for purposes of this proceeding. This follows both from past Panels' and other
international tribunals' rulings and from factual considerations.

Turkey notes that the International Court of Justic e (ICJ) and the Permanent Court of International
Justice (PCIJ) made independent reviews of jurisprudence of domestic courts. In Brazilian Loans,
16
the PCIJ stated that: " The Court will endeavour to make a just appreciation of the jurisprudence of
municipal courts. If this is uncertain or divided, it will rest with the Court to select the interpretation
which it considers most in conformity with the law ".17 In Elettronica Sicula S.p.A (ELSI) ,18 the ICJ
stated that the ruling of a domestic court shall not automatically be accepted by an international
tribunal.

Turkey also notes that the Panel in US – 1916 Act
19 specifically refers to the case law of the PCIJ and
ICJ and thereafter conducts an inde pendent review of the jurisprude nce issued by domestic courts.
Turkey believes that the Panel should follow this ap proach. In line with the case law from the ICJ and
PCIJ, as well as the US – 1916 Act , this Panel should conduct an independent review of the
jurisprudence refraining from automatically accepti ng the rulings issued by domestic courts. This
means that this Panel should:

 (i) Be able to select jurisprudence that reflects the interpretation which is most in
conformity with Turkish law;
 (ii) Take into account the quality of the r easoning on what it perceives to be the dominant
interpretation; and

 (iii) Respect the hierarchy of the national court system.

Turkey believes that in following this approach, the Panel should not take into consideration the
rulings issued by the Administrative Court of Ankara.

First, Turkey believes that this Panel should keep in mind that there are ongoing lawsuits that, in
accordance with Turkish law, ch allenge the legality of the ultra vires act and, implicitly, the legality
of the Letters of Acceptance.

Second, there is not sufficient case law available and the Panel will not be able to have a satisfactory
view of the jurisprudence, at least before the ongoing cases have been decided.

Third, there is no review from a higher court.

16 Brazilian Loans, PCIJ, Ser. A. nos. 20-1.
17 Ibid, p. 124.
18 Elettronica Sicula S.p.A (ELSI) (United States of America v. Italy), ICJ Reports 1989, p 15, at p. 47.
19 United States- Anti-dumping Act of 1916 (Japan), WT/DS162/R and United States- Anti-dumping Act
of 1916 (EC), WTDS136/R.

With particular reference as to whether a different value should be given to rulings issued by courts of
different ranking, Turkey submits that the weight of the interpretation should follow the hierarchy of
the national court system. This is also in accordance with the approach adopted by the Panel in the US
– 1916 Act. In this dispute, the Panel took into account the fact that the United States' Supreme Court
had yet to address the issue. When there is estab lished practice from a higher court, a decision from a
lower court does naturally not have any value. Howe ver, even when there is no jurisprudence from a
higher court, an international tribunal should be car eful in attributing any value to a lower court's
decision. In finding the right balance between th e principle of sovereignty and the assessment of
domestic law, this Panel should take into account the legal system of the WTO Member.

In light of these considerations, and taking in pa rticular account the uncertainty created by the
ongoing lawsuits, the lack of sufficient available juri sprudence, as well as the fact that the decisions
are issued by a domestic lower court, Turkey believ es that this Panel should not give any value to
interpretations of domestic law developed by the Ad ministrative Court of Ankara for purposes of this
proceeding. Furthermore, in line with this reasoning, the arguments of a national administration
should not be attributed any value in the Panel's re view of what constitutes domestic legislation and
whether Turkey has acted consistently with the WTO Agreements.

Finally, it should be noted that the "allegedly e rroneous interpretation of Turkish domestic law
developed by the local court" was not appealed by the Turkish administration for reasons of judicial
expediency.

Q146. (Turkey) Could Turkey please confirm, making reference to relevant evidence, as
appropriate, the dates during which the tariff quota for the various types of rice imports
(paddy, brown, milled) was opened and closed. Could Turkey also please confirm whether or
not there was a domestic purchase requirement at all periods and if so, whether or not there
were specific domestic purchase ratios to im ported paddy, brown and milled rice to which
importers could determine how much domestic rice needed to be purchased to be able to import
a certain volume of paddy, brown or milled rice.

The first TRQ was opened on 20/04/2004 through Decree No. 2004/7135 and expired on 31/8/2004
with the following domestic purchase requirement ratios
20:

PURCHASED
FROM TGB
TO BE ALLOCATED BASED
ON THE PURCHASE FROM TGB
 HS CODE ITEM NAME QUANTITY
Per 1.000 Kg Paddy Rice 1006.10
(Exc. 1006.10.10)
Rice in the husk (paddy or
rough) (Not for sowing) 1.000 Kg
Per 1.000 Kg Paddy Rice 1006.20 Husked (brown) rice 800 Kg
Per 1.000 Kg Paddy Rice 1006.30
Semi-milled or wholly
milled rice, whether or not
polished or glazed
600 Kg
Per 1.000 Kg Rice 1006.10
(Exc. 1006.10.10)
Rice in the husk (paddy or
rough) (Not for sowing) 1.666 Kg
Per 1.000 Kg Rice 1006.20 Husked (brown) rice 1.333 Kg
Per 1.000 Kg Rice 1006.30
Semi-milled or wholly
milled rice, whether or not
polished or glazed
1.000 Kg

20 See Annexes TR-11 and TR-12.

The second TRQ was established by Decree No. 2004/7756 and was in place from 01/11/2004 until
31/7/2005, with the following domestic purchase requirement ratios21:

 THE ITEM TO BE ALLOCATED
 HS CODE ITEM NAME QUANTITY
Per 1.000 Kg
Paddy Rice
1006.10
(Exc. 1006.10.10)
Rice in the husk
(paddy or rough)
(Not for sowing)
1.000 Kg
(1)
Per 1.000 Kg
Paddy Rice 1006.20 Husked (brown) rice 800 Kg (2)
For the Items
purchased from
paddy producers
having permission
to plant paddy
rice or from their
cooperatives and
unions *
Per 1.000 Kg
Paddy Rice 1006.30
Semi-milled or
wholly milled rice,
whether or not
polished or glazed
600 Kg (3)
Per 1.000 Kg
Paddy Rice
1006.10
(Exc. 1006.10.10)
Rice in the husk
(paddy or rough)
(Not for sowing)
500 Kg
Per 1.000 Kg
Paddy Rice 1006.20 Husked (brown) rice 400 Kg
Per 1.000 Kg
Paddy Rice 1006.30
Semi-milled or
wholly milled rice,
whether or not
polished or glazed
300 Kg
Per 1.000 Kg Rice 1006.10
(Exc. 1006.10.10)
Rice in the husk
(paddy or rough)
(Not for sowing)
833 Kg
Per 1.000 Kg Rice 1006.20 Husked (brown) rice 666 Kg
For the Items
purchased from
Turkish Grain
Board
Per 1.000 Kg Rice 1006.30
Semi-milled or
wholly milled rice,
whether or not
polished or glazed
500 Kg
*: Applied as (1): 700 Kg, (2): 560 Kg, (3): 420 Kg if purchased from the paddy producers
having permission to plant paddy rice or fro m their cooperatives and unions located in
Balıkesir, Bursa, Çanakkale, Edirne, Kırklareli, Sakarya and Tekirdağ.

21 See Annexes TR-16 and TR-17.

The last TRQ was opened on 01/11/2005 and closed on 31/7/2006 with the following domestic
purchase requirement ratios
22:

 THE ITEM TO BE ALLOCATED
 HS CODE ITEM NAME QUANTITY
Per 1.000 Kg
Paddy Rice
1006.10
(Exc. 1006.10.10)
Rice in the husk
(paddy or rough)
(Not for sowing)
800 Kg
(1)
Per 1.000 Kg
Paddy Rice 1006.20 Husked (brown) rice 640 Kg (2)
For the Items
purchased from
paddy producers
having permission
to plant paddy
rice or from their
cooperatives and
unions *
Per 1.000 Kg
Paddy Rice 1006.30
Semi-milled or
wholly milled rice,
whether or not
polished or glazed
480 Kg (3)
Per 1.000 Kg
Paddy Rice
1006.10
(Exc. 1006.10.10)
Rice in the husk
(paddy or rough)
(Not for sowing)
500 Kg
Per 1.000 Kg
Paddy Rice 1006.20 Husked (brown) rice 400 Kg
Per 1.000 Kg
Paddy Rice 1006.30
Semi-milled or
wholly milled rice,
whether or not
polished or glazed
300 Kg
Per 1.000 Kg Rice 1006.10
(Exc. 1006.10.10)
Rice in the husk
(paddy or rough)
(Not for sowing)
833 Kg
Per 1.000 Kg Rice 1006.20 Husked (brown) rice 666 Kg
For the Items
purchased from
Turkish Grain
Board
Per 1.000 Kg Rice 1006.30
Semi-milled or
wholly milled rice,
whether or not
polished or glazed
500 Kg
*Applied as (1): 600 Kg, (2): 480 Kg, (3): 360 Kg if purchased from the paddy producers
having permission to plant paddy rice or fro m their cooperatives and unions located in
Balıkesir, Bursa, Çanakkale, Edirne, İstanbul, Kırklareli, Sakarya and Tekirdağ.

Q147. (Turkey) Could Turkey please explain wh y data from Exhibit TR-33 seem to indicate
that in-quota imports of non-EC origin ri ce occurred during periods in which the Panel
understands the TRQ was not in place (January , September and October 2004; August and
September 2005; and August 2006)?

In accordance with Turkey's reply to question 136(d), these imports took place at MFN rates, with
Certificates of Control that were approved for im portation within the TRQ but that, for whatever
business determination, importers may have decided no t to import. Given the one-year validity of the
Certificates of Control, it is clear that importers wo uld have retained the ability to import at a later
stage and under MFN conditions.

22 See Annexes TR-9 and TR-13.

Q148. (Turkey) In its response to question 18 po sed by the Panel, Turkey responds that "no
change was introduced into it s import regime for rice in November 2005 or as a consequence of
the initiation of WTO dispute settlement proceedings". The only change would have been that
the TRQ lapsed on 31 July 2006, without being renewed.

 (a) Please explain why the TRQ has not been reopened since?

As indicated in its response to question 79, Turk ey applied the TRQ system for enhancing greater
market supply and market stabilization. A new TRQ has not been introduced after the expiration of
the last TRQ in 2006 because there is no longer need fo r such an instrument to achieve the objectives
of greater market supply and market stabilization. In particular, Turkey will confess that TRQ
systems are costly to administer and it prefers market forces to freely interact.

 (b) In its response to question 79 posed by th e Panel, Turkey stated in turn that the
TRQ regime "pursued, at the same time, two legitimate objectives, i.e., that of a
greater market supply and that of market stabilization". Can Turkey explain
how these two objectives could now be guaranteed in the absence of the TRQ
regime.

Turkey refers to the answer provided to question 82 . In particular, Turkey submits that the domestic
and international economic indicators lead Turkey to the assumption that there will not be, at least for
the foreseeable future, n eeds for market intervention and stabilization of the types that the TRQ
helped address. The only real market stabilizati on instruments will remain the action of the TMO
coupled with the use of appropriate MFN and applied rates of duty.

 (c) In its response to question 82 posed by the Panel, Turkey stated that "[t]he
domestic and international economic i ndicators also lead Turkey to the
assumption that there will not be, at le ast for the foreseeable future, needs for
market intervention and stabilization of the types that the TRQ helped address."
Is the Panel then right in concluding that if any of those domestic and
international economic indicators were to change, Turkey could then reevaluate
the convenience of reintroducing a TRQ reg ime for the importation of rice? If
this is not the case, please explain ma king reference to relevant evidence, as
appropriate.

No. Turkey has already indicated, both during the cons ultations with the United States and before this
Panel, that it will no longer have recourse to the TRQ system. Turkey believes that, despite the
theoretical possibility that "domestic and international economic indicators" may change in the future,
the TRQ system is an instrument that Turkey c onsiders too costly and administrative burdensome to
achieve the intended objectives of market intervention and stabilization. Other less complicated trade
policies (i.e., the action of the TMO as an interventi on agency, the appropriate and legitimate use of
MFN and applied rates of duty) stand-out as suffici ent mechanisms to manage the market in a WTO
consistent fashion.

 (d) Explaining the domestic and internat ional indicators that lead Turkey to the
assumption that there will not be, at le ast for the foreseeable future, needs for
market intervention and stabilization of the types that the TRQ helped to
address, Turkey mentions that the do mestic rice remains competitive with
predictable production forecasts. Can Tu rkey please explain if this means that
domestic rice was not competitive before the introduction of the TRQ?

In its response to question 82, Turkey stated that the "domestic rice remains competitive". Turkey
simply meant that domestic rice used to be competiti ve and it will still be competitive, at least for the
foreseeable future.

 (e) Were Turkey to reintroduce a TRQ reg ime for the importation of rice, would
any change need to be introduced in the current domestic legislation? Is the
legislation that allowed for the establishment of the TRQ still in force?

Turkey submits that, with respect to rice-specific legislation, the reintroduction of a new TRQ system
for rice imports, of the kind that is the object of these proceedings, would require the adoption of a
new set of legislation. In particular, it would re quire the adoption of a new Decree fixing the quota
openings, quantities and coefficients, together with its implementing Communiqué, providing, inter
alia, for the quantities of domestic rice to be purch ased and for the deadlines for the relevant
applications. All the legislation which is specifica lly related to the establishment of tariff quotas for
rice has expired and a new set of rules would th erefore need to be adopted, promulgated and
published.

With respect to its general trade legislation, Tu rkey submits that Decree No. 2004/7333 is still in
force. This Decree, however, provides the legal b asis for the management of all types of quotas and
tariff quotas, irrespectively of the product, of th e nature and the trade measure allowing for the
adoption of the quotas. This legislation is not rice- specific. For example, it provides the legal basis
for the management of quotas and tariff quotas stem ming from free trade agreements, or applied as a
result of safeguard measures.

Q149. (Turkey) In paragraph 50 of Turkey's rebu ttal, Turkey argued that "[i]t is clear that a
TRQ system without the domestic purchase requi rement would have resulted in too great an
advantage in favour of imported products. This outcome would have also carried negative
consequences in terms of the viability and affordability of Turkey's market intervention
mechanisms and its ability to comply with WTO obligations in relation to its committed levels of
Aggregate Measurement of Support." Could Turkey please explain how, in its view, it would
have failed to comply with WTO obligations in relation to its committed levels of Aggregate
Measurement of Support without the domestic pu rchase requirement as a part of its tariff
quota mechanism?

Turkey submits that it has consistently complied with WTO obligations in relation to its committed
levels of Aggregate Measurement of Support for agricultural production (i.e., the de minimis level of
support), but that a TRQ system without the domestic purchase requirement would have likely
resulted in too great an advantage in favour of imported products and it woul d have carried negative
consequences in terms of the viability and affordabili ty of Turkey's market intervention mechanisms.
The calculations in relation to the amounts of domestic support that could have resulted are difficult to
make, but Turkey considered this an issue that it had to factor when designing the TRQ, foreseeing
the market-stabilization effects, and anticipating its trade and budgetary consequences.

Q150. (Both Parties) In paragraph 37 of its response to question 18 (c) posed by the Panel, the
United States asserts that it "has been inform ed by the trade (sic) that MARA is orally
informing importers that the MFN tariffs will henceforth be calculated based upon government-
determined reference prices for paddy, brown, an d milled rice, respectively, rather than on the
actual customs value of the merchandise." Could the United States provide further information
and evidence to support this assertion. Could Tu rkey provide any further information on this
regard, making reference to relevant evidence, as appropriate.

The authorities at customs points-of-entry are notifie d by the central administration of the reference
prices for paddy rice, brown rice and rice simply in order for the customs authorities to be aware of

the average prices for these commodities and to detect instances of unfair trade and tax loss that might
occur due to the importer's under-valued customs declara tions. In this way, Turkey aims at ensuring
that its customs authorities act vigilantly in cases of suspiciously out-standing margins of difference
between the notified price and the (average) reference price.

Q151 (Turkey): In its reply to question 75 posed by the Panel, Turkey asserted that the correct
methodology for interpretation of the TRIMs Agreement should require a preliminary
assessment of the existence of both the trade and the investment elements of an alleged TRIM.
Turkey also stated that, in order to establish the existence of a violation of the TRIMs
Agreement, its domestic purchase requirement must first
 be found to be inconsistent with the
provisions of GATT Article III. Finally, Turkey invited the Panel to reject the United States
claims regarding an alleged violation of the TRIMs Agreement because the United States has
not proved how Turkey's domestic purchase requirement would result in a trade-related
investment measure and if so whether it woul d violate GATT Article III. Please clarify the
implications of the above statements in relation to the "order of examination" of the US claims:

 (a) Does Turkey propose that the Panel first
 examine US claims under GATT
Article III:4 and then consider th e claims under the TRIMs Agreement
separately?

 (b) In the negative, can Turkey explain why would the United States be required to
prove how Turkey's domestic purchase requirement would result in a trade-
related investment measure in the first place?

 (c) Alternatively, does Turkey believe that once the Panel has made a ruling under
GATT Article III:4, it should resort to judicial economy and refrain from
making a finding under the TRIMs Agreement?

Turkey believes that, in the first place, the Panel should refrain from making any finding or
recommendation on the United States' claims of an alleged violation of either GATT Article III:4 and
the TRIMs Agreement due to the expiry of the TRQ regime. Turkey refers to its previous arguments
on this issue as submitted in the written pleadings.
23

Should the Panel decide to review those claims desp ite the TRQ regime's expiry, Turkey submits that
the Panel should first examine the United States' claims under GATT Article III:4 and then resort to
judicial economy and refrain from making a finding under the TRIMs Agreement.

Alternatively, in the event that the Panel should re view previously or anyway separately the claims
under the TRIMs Agreement, Turkey considers that the correct methodology for the interpretation of
the TRIMs Agreement would require the Panel to preliminarily assess the existence of both the trade
and the investment elements of the alleged TRIM (i.e., the domestic purchase requirement). This
appears to be reinforced by the reading of Article 1 of the TRIMs Agreement, according to which
"[t]his Agreement applies to investment measures related to trade in goods ", as well as by past panel
practice. In this respect, Turkey simply believes th at the United States has yet failed to prove that the
domestic purchase requirement is an investment measure.

There is no set definition of what an investment measure is.
24 The Panel in Indonesia – Autos found
the measures to meet the 'investment requirement' as the review of the legislative provisions related to

23 See, in particular, paras. 136-139 of Turkey's First Submission and paras. 37-44 of Turkey's
Rebuttals.
24 Korea, in its oral statement, for example, suggest ed that the "financial m ovement across the border"
could be understood as an essential element of any investment measure.

those measures revealed "investment objectives and investment features and which refer to investment
programmes."
25 Should this Panel follow the reasoning of the Indonesia – Autos Panel,26 it would
find that Turkey's domestic purchase requirement is not an investment measure. Turkey submits that
its domestic purchase requirement was introduced with in the TRQ in order to partly moderate the
advantageous effects of the pref erential rates (i.e., advantages which were totally in favour of
imported products). It was never meant to promot e the domestic industry; rather it was designed to
pursue the legitimate objective of market stabilization by keeping prices at level that would, at the
same time, allow trade while maintaining a viab le balance between consumer's interests and
producers' expectations. Turkey has done so provi ding an advantage to imported rice, while other
import options (i.e., MFN and FTA) remained always available. There is no investment element in
the domestic purchase requirement, nor is there one in the legislative framework providing for the
TRQ.

In this respect, it is misleading and incorrect to st ate, as the United States doe s, that the increase in
domestic production of rice is a direct result of the domestic purchase requirement and that this should
be in itself evidence of the existence of an inv estment intent. Turkey wishes to draw the Panel's
attention to the following factors:

 (i) The renewal and modernization of fa rming systems and technologies in rice
production (inter alia, more efficient irrigation systems, the utilization of high-quality
seeds, and the rehabilitation of the cultivated lands);

 (ii) The change in the methods of estima tion of production as a consequence of the new
farmers' registration system and agricultural policies of MARA; and

 (iii) The increase in the harvested ar ea, as also shown in Exhibit US-45.

These are all factors that better explain the increase in Turkey's rice production, which is rather the
result of an increase in the productivity. This productivity improvement cannot be considered, by
itself, as convincing evidence of the existence of an investment element. Turkey also wishes to point-
out that imports of rice have equally increased. As already submitted by Turkey,
27 in the period
between 2004 and 2006, in which the TRQ regime was in force, rice equivalent imports have
increased from 146,458 tonnes to 253,436 tonnes, while the rice equivalent production has increased
from 294,000 tonnes to 390,000 tonnes.

Turkey therefore believes that, if the Panel were to engage in a review under the TRIMs Agreement,
its domestic purchase requirement should not be considered a trade-related investment measure.

25 Indonesia – Certain Measures Affecting the Automobile Industry, Panel Report, para. 14.80
26 Indonesia – Certain Measures Affecting the Automobile Industry, Panel Report.
27 See Turkey's Replies to Questions posed by the Panel, question No. 49(c).

ANNEX F-5

COMMENTS BY TURKEY ON THE REPLIES BY THE UNITED STATES
TO THE QUESTIONS POSED BY THE PANEL AND TURKEY
AFTER THE SECOND SUBSTANTIVE MEETING
(20 February 2007)

Q99. (Both Parties) The Panel has examined th e data provided by each of the parties.
Certain data contained in some of the Exhibits provided by the Parties show significant
discrepancies. For example:

 (a) Figures in Exhibits US-45 and TR-23 for rice imports from 2001 to 2006;

 (b) Figures in Exhibits US-53 and TR-25 for paddy rice imports in January and
December 2004 and January to May 2006; for brown rice imports in March
2003 and January to September 2006; a nd for milled rice imports in July 2004
and January to July 2006.

 (c) Figures in Exhibits US-55 and TR-28 for landed CIF prices of paddy rice in
December 2004; of brown rice in March 2003, March to June 2004, September
to December 2004 and June 2006; and of milled rice in December 2005.

On the other hand, some figures provided by the United States and Turkey show a high degree
of similarity. For example:

 (a) Figures in Exhibits US-45 and TR-24 for milled rice consumption from 2001 to
2005.

 (b) Figures in Exhibits US-53 and TR-25 for paddy rice imports throughout 2003,
February to November 2004, throughout 2005, June and July 2006; for brown
rice imports in January, February and April to December 2003, throughout
2004 and 2005; and for milled rice imports throughout 2003 (except for May),
throughout 2004 (except for July), and throughout 2005.

 (c) Figures in Exhibits US-55 and TR-28 for landed CIF prices of paddy rice
throughout 2003, April to November 2004, throughout 2005 and June to August
2006; of brown rice throughout 2003 (e xcept for March), throughout 2005, and
April to June 2006; and of milled ri ce throughout 2003, throughout 2004,
throughout 2005 (except for December) and from January to July 2005.

Please explain why, in your view, this is the case, referring to relevant evidence, as appropriate.

Turkey reaffirms its understanding of the possible cause for the discrepancies as indicated in its Reply
to Question 99. In particular, Turkey used realized import data collected by the Undersecretariat for
Customs and processed by the Turkish Statistics In stitute (TUIK). While Turkey and the United
States appear to have taken these figures from the sa me source (i.e., TUIK), Turkey insists that it
acquired the relevant statistics officially from TUIK . On the other hand, the United States did not get
its figures and trade data directly from TUIK, but obtained them from the Global Trade Information
Service (GTIS), a private operator that draws its information from TUIK. GTIS receives monthly
data from TUIK organized by item and country basi s. However, TUIK regularly and progressively
updates the information/data which it has previously provided on the basis of the adjustments needed
to reflect trade flow corrections of information updates. Turkey believes that GTIS may not have

updated its records for the products under examination, hence the occasional discrepancies. It is clear
that this process of occasional adjustment of statistics is more likely in relation to more recent figures.

Q100. (Both Parties) The Panel has considered the information provided by Turkey on
"Monthly landed CIF values" in Exhibit TR-28, and noted a sharp increase in paddy rice prices
in June 2003, January and November 2004, February 2005 and March 2006. Likewise, it has
noted a sharp increase in milled rice prices in September 2003, January and August 2004 and
September 2005. It has also noted a signific ant fall in the price for milled rice in December
2003. Please explain why, in your view, these shar p increases and this significant fall in prices
occurred, referring to relevant evidence, as appropriate.

See Turkey's Comments to the Reply by the United States to Question 99 above.

Q116. (United States) According to the information contained in Exhibit TR-33, since 1 May
2006, 27 Certificates of Control have been a pproved for MFN rice imports from the United
States. However, 25 of these approved Certificates of Control do not appear to have, as yet,
been utilised. Although these Certificates of Co ntrol have been approved after the date when
the panel was established, could the United States comment on this.

Turkey confirms that 27 Certificates of Control have been applied for and approved between 1 May
2006 and 9 November 2006 in relation to imports of rice from the United States at MFN rates. As
indicated in Turkey's reply to question 133(b) and (f), Turkey stands firm in relation to the
truthfulness, completeness and usefulness of the in formation that it provided earlier by means of its
Annex TR-33 consolidation. The statement made by the United States that " (I)n response, Turkey
asserted that it was less a matter of what Turkey coul d provide than what it was choosing to provide
to the Panel " does not correspond to reality. Turkey h as never used these words. Turkey has
diligently and willingly provided the Panel with all information that it is not covered by
confidentiality requirements under Turkish law. To suggest or imply the opposite is, yet again, an
unacceptable stand taken by the United States. As in dicated in Turkey's reply to question 133(b) and
(f) in relation to the ' 56 "relevant" Certificates of Control ', Turkey would be willing to provide,
exceptionally, "blacked-out" copies of these 27 Certif icates of Control only to the Panel and after a
clear understanding with the Panel and between the pa rties to this dispute that these documents would
not be made available to the United States nor to any other entity beside the Panel and the WTO
Secretariat.

In fact, as pointed-out by Turkey in its reply to question 133, Turkey understands that the documents
provided to the Panel would have to be made availa ble also to the United States. Given the strict
confidentiality requirements provided by Turkis h law and the well-established communications and
information-exchanges between the United States an d a number of Turkish rice traders, the Turkish
officials involved in this Panel proceeding do not f eel comfortable in risking information leaks and
possible criminal accusations of violation of Turkish law on confidentiality. The Panel will
understand that possession of copies of the actual Ce rtificates of Control (including importers' data,
imported/exported quantities, customs values, approving officials, etc.) may give rise to instances of
domestic litigation in commercial, fiscal or criminal courts. According to Article 13 of the Turkish
Statistical Law, the confidential data acquired, pr ocessed and kept for official statistics cannot be
passed-on to any administrative, judicial or military office, authority or person, and cannot be utilized
except for statistical purposes or be utilized as a t ool for proof. Public officials or other authorities
that gather the information have to abide by this rule. Article 53 of the same law provides that public
officials violating the prohibitions embodied in Article 13 will be punished in accordance with
Article 258 of the Turkish Criminal Code No. 5237.

In any event, and independently from the Turkish c onfidentiality requirements, Turkey notes that it is
unfortunate and unacceptable for the United States to systematically make allegations in relation to

assumptions or theories for which they have no evid ence, shifting the burden of proof onto Turkey.
Turkey believes that the burden of proof rests on the United States to prove its complex and creative
theories such as the one according to which the 27 Certificates of Control would not, in fact, have
been approved or that they were requested for approval by importers without a reason since large
quantities of previously approved, but un-impor ted, rice was stocked in bonded warehouses and
available for release on the Turkish market. Someth ing in this imaginary story is clearly wrong and
Turkey reiterates its belief that the burden of proof to substantiate its allegatio ns must stand squarely
on the United States. The United States has not proven its case.

As a final comment, Turkey would like to stress th at, ultimately, the picture painted by the United
States confirms the general reality of rice trade. Rice importation is, to a large extent, dictated and
shaped by the business determinations and commercia l decisions of traders. Turkey cannot explain
(and the United States is, presumably, in the same position) why importers would have requested
approval for 27 Certificates of Control in relation to rice from the United States while, as alleged by
the United States, they had large quantities of rea dy-to-be-customs-cleared rice available in bonded
warehouses. Assuming that the allegation made by the United States is correct, Turkey would submit
that, maybe, the real reason for this seemingly erra tic behaviour by importers must be found in their
business calculations and decisions. It is possible, for example, that those importers would have
(voluntarily!) left certain amounts of rice in bonded warehouses waiting for the appropriate moment
to release it on the Turkish market in order to maximize the economic retu rns. It is also possible that
those importers would have (voluntarily!) applied for 27 Certificates of Control in order to import rice
in the future (the Certificates of Control have a va lidity of one year from date of approval) and for
purposes of planning future importation or even just to re-stock those bonded warehouses about to be
emptied as a consequence of their business determinations.

It strikes as a bit odd that every single move or trade pattern related to rice importation would be seen
by the United States as part of a broader and far-reach ing conspiracy by Turkey with trade-distortive
and protectionist objectives. Furthermore, it appears a bit curious that the United States would not be
able to prove their allegations in relation to th e "theory" surrounding the 27 Certificates of Control
and the large quantities of rice released from bonded warehouses by collecting evidence from those
very importers of US rice that have traditionally been the primary source of evidence for the many
allegations made by the United States.

Q131. (Both Parties) In its resp onse to question 40 (d) posed by the Panel, Turkey submits that
Certificates of Control provide importers wi th "trade facilitation benefits", such as
"guaranteeing consistency and uniformity in th e customs clearance procedures ... provid[ing]
greater commercial predictability and legal certai nty to importers (in relation to what they can
expect to happen at border control), and ... reduc [ing] the possibility for goods to be blocked at
customs with the potential for costly and time-consuming customs litigation."

 (a) Are Certificates of Control in their current form the only instruments by which
Turkey can achieve those "trade-facilitat ion benefits" or would there be any
other way of achieving these same benefits? Please justify your answer, making
reference to relevant evidence, as appropriate.

Turkey believes that the United States either did not understand or did not provide an adequate answer
to question 131(a) by the Panel. In particular, the United States stated, in relevant part, that it " fails to
see how denying these Control Certificates facilitates trade in rice ". The question by the Panel was
aimed at identifying other ways, if any, through which Turkey could achieve the same "trade
facilitation" objectives that it currently seeks through the Certificate of Control. Turkey has already

provided considerable arguments in its previous submissions
1 as to the functions of the Certificate of
Control and its "trade facilitation" objectives of proportionality, legal certainty, commercial
predictability, etc. Therefore, Turkey does not wish to enter again into this debate.

Turkey simply submits that the apparent misunde rstanding of the question by the Panel, which is
shown by the United States in its reply, emphasizes the continued confusion that the United States
makes between the review of the Certificate of Control as a perfectly legitimate legal instrument
available to Turkey (i.e., a de jure review) and the scrutiny of its alleged effects, which may be based
on factual allegations of denial (i.e., a de facto review). Turkey believes that, de jure , the legal
instrument Certificate of Control easily meets any "trade facilitation" test. De facto , a "trade
facilitation" and proportionality t est cannot be diminished by a review that focuses only on a few
individual instances of rejection and related domestic litigation. These instances would have to be
seen against the background of large volumes of rice importation, very high approval rates for
Certificates of Control, and very small percentages of domestic litigation. Inte rnational trade is not a
perfect world. There will always be instances of disappointment between traders and administrations.
Turkey believes that its importation regime, as it app lies to rice, is by no means less inductive of trade
and more cumbersome than other WTO Members' trading environments.

 (b) Does the fact that Certificates of Controls allegedly provide importers with trade
facilitation benefits mean that, in th e absence of the requirement to obtain
Certificates of Controls, the importation of rice would in some way be more
cumbersome? If so, please describe in what manner the importation of rice
would be more cumbersome in the absence of such requirement, justifying your
answer with appropriate arguments and evidence.

Turkey notes that once again the United States has not answered the question put forward by the Panel
in question 131(b). In particular, the United States has failed to indicate how the process of
importation could be carried-out by Turkey, wh ile preserving its ability to pursue all legitimate
customs purposes and product certification objectives, without Certificates of Control.

However, in relation to the non-pertinent informa tion provided by the United States in its answer,
Turkey recalls that the Certificate of Control is a different legal instrument from the UFT import
license necessary to import at the more advantag eous rates of duty provided within the TRQ.
Contrary to what professed by the United States, it is not true that four agencies are involved in the
process of approval of the Certificates of Control. Th e approval of Certificates of Control, in relation
to both over-quota and in-quota trade, only requires cooperation between two Turkish authorities (i.e.,
MARA and customs). Turkey also wishes to reiterate that, since the Certificate of Control is not an
import license, no provision of the Agreement on Import Licensing Procedures applies to it.

Q134. (Both Parties): In response to question 44 (f) posed by the Panel, regarding the denial of
Certificates of Control, Turkey provided the Pane l with Exhibit TR-36, listing the application
date, origin, quantity and quality of the rice for which each Certificate of Control was requested
during the years 2003 to 2006. As reasons for denial, the list states the following: "Missing
documents not completed", "Upon the de mand of the Company" and "Incomplete
Administrative Requirements".

 (a) What should be understood from these reasons?

 (b) Can Turkey provide further detail regar ding the reasons for denial of the listed
applications for Certificates of Control?

1 See, in particular, Turkey's Rebuttals, paras. 10 , 11 and 12 and Turkey's Oral Statements at the
Second Hearing, paras. 15 to 22.

 (c) Are detailed reasons for denial provided in writing to the requesting companies
in the document of rejection or are these reasons communicated to applicants in
a similarly succinct manner as what is indicated in Exhibit TR-36?

Turkey was not aware that this issue resulted in di ssatisfaction and/or lack of transparency vis-à-vis
traders that had seen their requests rejected. As Turkey indicated in its reply to question 134, the
reasons for rejection of individual applications for Certificates of Control have always been promptly
communicated, informally or verbally, by MARA. In fact, MARA always makes sure that the
representatives of applicant companies are promptly informed of the missing or wrong parts of the
applications. This is a process of information exch ange that Turkey was convinced to have always
worked well and to the full satisfaction of traders. However, Turkey is willing to consider introducing
a more formal system of notification of the r easons for individual rejec tions should this better
guarantee the rights and expectations of traders. W ith respect to the specific reasons for denial of
approval of Certificates of Control, Turkey re fers to what already stated in its reply to
question 134(a).

Q136. (Both Parties) According to Turkey's stat ements (see, for example, para. 25 of its first
submission), Certificates of Control for the importation of rice are valid for periods of
12 months.

 (a) If this is the case, why would impo rters not import rice during periods in which
Certificates of Control are allegedly not being approved, but some Certificates of
Control are presumably still valid?

 (b) During periods when the TRQ was not open, why would imports of rice not
occur under Certificates of Control that were presumably still valid?

 (c) Is there any difference between the Certificates of Control issued to import at
the MFN rate, under preferential trade ag reements and under the TRQ? If so,
please specify the differences between them. If not, does this mean that a same
Certificate of Control could have b een equally used to import under the
different rates? Did an importer have to specify whether the intended import
was to be in-quota or over-quota when a pplying for a Certificate of Control?
Please make reference to relevant evidence, as appropriate.

 (d) Would a Certificate of Control still be valid for twelve months, even during a
period when a TRQ was in place? Would an in-quota Control Certificate
maintain its validity of 12 months, and therefore still allow imports to take place
at the preferential in-quota tariff rate, despite the tariff quota period closing?

 (e) Does the amount permitted to be impo rted under the Certificate of Control hold
any relation with the amount permitted to import when applying for an import
license to the Turkish Foreign Trade Undersecretariat (FTU)?

The answers provided by the United States appear to indicate, at best, a continued misunderstanding
of the functioning of the Certificate of Control syst em. In particular, Turkey wishes to clarify that
there is no different types of Certificates of Control applying to different types of rice trade (i.e.,
MFN, TRQ, and/or FTA). There is only one form of Certificates of Control that applies to all types of
rice imports. It is only when traders seek to impor t rice within the TRQ or FTA allocations that an
import license will be needed in addition to a Certificate of Control.

Turkey would also like to remark that Certificates of Control are stand-alone documents. Even when
approved in relation to applicati ons for imports under the TRQ or FTA arrangements, they remain
valid for a year from approval, and may be used by traders to import any type of rice (i.e., including
"MFN rice" if, meanwhile, the TRQ has been fully al located, has lapsed, or the importer has made the
business determination not to import within the pref erential trade volume). This appears to be a
simple and straight-forward concept to understand a nd Turkey is surprised th at the United States
keeps neglecting it or intentionally misunderstanding it.

Q140. (United States) In paragraph 26 of its first written submission, the United States claims
that on 30 December 2004, MARA's General Directorate would have issued a Letter of
Acceptance which recommended "yet another 'delay' in the opening date for issuing
Certificates of Control until August 1, 2005". How can this statement be reconciled with the
figures in Annex TR-33 that show that Certificates of Control for imports of US rice would have
been issued in April and May 2005 and that imports over the quota took place during these two
months?

Turkey would like to comment on the statement made by the United States in relation to the alleged
"temporary relaxation of the legal prohibition for US imports".

Firstly, Turkey strongly denies the implied idea of the existence of a discriminatory intent vis-à-vis
imports of rice from the United States. Turkey has systematically administered its import regime in a
non-discriminatory fashion (both in relation to MFN and TRQ rice imports).

Secondly, Turkey reaffirms that there has never been a " legal prohibition" to import rice. Here the
United States seems to reiterate its wrong assumption that this " legal prohibition " was adopted by
means of the so-called Letters of Acceptance. Tu rkey has already thoroughly argued and proved that
the Letters of Acceptance are not, under the Turkish legal system, legislative measures of the type that
would result in a de jure prohibition. In any event, it appears curious that the United States, while
indicating the existence of a " legal prohibition ", would introduce the concept of a " temporary
relaxation" which is not grounded in any lega l provision and appears to be of a de facto nature.
Presumably, a "temporary relaxation" of the type that the United States is referring to would need to
be embodied in a legal provision able to override the " legal prohibition" of the Letters of Acceptance.
This argument is flawed. The apparent reduction of imports is used by the Un ited States as evidence
of a "legal prohibition".

Lastly, Turkey provided evidence that, in fact, imports of MFN rice were occurring in that same
period from sources other then just the United States (for instance, Bulgaria). Therefore, the claim
made by the United States that Turkey's alleged " temporary relaxation" was targeted to imports from
the United States is unfounded and misleading.

Q145. (Both Parties): In its statement during the second substantive meeting with the Panel
(para. 12), the United States argued that Turkish courts have attributed legal effect to the so-
called "Letters of Acceptance" and upheld MARA's enforcement of such Letters. In response,
in its closing statement during the same meeting (para. 9), Turkey argued that, in a specific case
cited, a "Court of first instance appears to have given effect to an ultra vires act [from the
Minister of Agriculture and Rural Affairs]". Wh at should be the appropriate value given by
the Panel, if any, to interpretations of domestic law developed by local courts? What should be
the appropriate value given by the Panel, if any, to interpretations of domestic law advanced by
the administration of a Member before a local court? Was the allegedly erroneous
interpretation of Turkish domestic law develope d by the local court appealed by the Turkish
administration? Should interpretations of domestic law developed by local courts be accorded a
different value by the Panel if they were issued by higher courts?

Turkey maintains that the Letters of Acceptance we re internal communications aimed at developing
policies and cannot be defined, according to the Tu rkish legal system, as "domestic law." These
administrative communications never resulted in the a doption of laws or regula tions and, therefore,
they are not to be regarded as measur es of the type that may support a de jure complaint. The fact
that these Letters of Acceptance have been used in open Court proceedings by MARA and have been
used by Turkish Court to discharge MARA from the accusations of the plaintiff, cannot legally turn
the Letters of Acceptance into measures equivalent to laws or regulations. Turkey believes that the
legal status of the Letters of Acceptance does not change merely because a domestic Court of First
Instance has upheld MARA's defence in domestic proceedings. This must be taken into account by the
Panel when assessing the evidentiary weight and value of such judgments.

Turkey also believes that the amount of Certificates of Control approved in relation to applications
made for all types of rice imports (i.e., MFN, FTA and TRQ) between the alleged periods of operation
of the Letters of Acceptance stands as clear eviden ce that, despite their existence and the informal
circulation within the administration, these Letters of Acceptance were never enforced and cannot be
consider as satisfactory evidence of the existence of a "denial."

Turkey confirms its argument that the domestic courts appear to have given effect to an ultra vires act
of the Minister. It is essential to underline that the relevant Turkish legislation does not grant to
MARA any discretion in relation to the approval of Certificates of Control for which applications
have been duly compiled and submitted. Nor it is provided, contrary to what the United States
repeatedly alleges, that proof of domestic purchase is required for the approval. The United States
appears to once again misinterpret reality and malic iously confusing the approval of Certificates of
Control with the issuance of import licenses required for importation at advantageous rates (i.e., TRQ
trade, which was subject to a domestic purchase requirement).

Turkish law grants to MARA the authority and th e competence, but not the discretion, to approve
Certificates of Control for the importation, inter alia, of rice. In this respect, any instance of denial by
MARA of the approval of Certificates of Contro l, which is not based on the incompleteness or
incorrectness of the applications, is to be considered an ultra vires act. In relation to this, Turkey
refers to its Reply to Questions 126 and 127 in order to reiterate that there is no provision that gives
the discretion not to approve Certificates of Contro l. It is MARA's legal duty and responsibility to
approve the Certificates of Control in relation to a ll importers' applications that meet the requirements
established by the relevant legislation under the Turk ish legal system. Any individual decision that
contradicts this legal requirement would be an ultra vires act.

With respect to the individual administrative decisi on, the ruling of the domestic Court appears to
have discharged MARA by finding that the Provincia l Directorate was acting within the confines of
its ministerial hierarchy. Turkey submits that th e apparent legal value given by a Turkish Court of
First Instance to a Letter of Acceptance is not rele vant for purposes of the WTO proceeding at stake.
The Turkish Court did not rule on the legality of the Letter of Acceptance. This Panel has to decide
whether, de jure, there is any provision in the Turkish la w on Certificates of Control which gives any
administrative authority the discretion to deny thei r approval. There is none. The specific case cited
by the United States is not relevant because the Turk ish Courts have simply not decided on this issue
of legality. As indicated in Turkey's Reply to Question 145, in assessing the value of relevant
domestic jurisprudence, the Panel should select jurisp rudence that reflects the interpretation which is
most in conformity with Turkish law, take in to account the quality of the reasoning on what it
perceives to be the dominant interpretation, and re spect the hierarchy of the national court system.
Turkey believes that the application of these criteria should lead the Panel to disregard the evidentiary
value of the domestic judgement.

Q150. (Both Parties) In paragraph 37 of its response to question 18 (c) posed by the Panel, the
United States asserts that it "has been inform ed by the trade (sic) that MARA is orally

informing importers that the MFN tariffs will henceforth be calculated based upon government-
determined reference prices for paddy, brown, an d milled rice, respectively, rather than on the
actual customs value of the merchandise." Could the United States provide further information
and evidence to support this assertion. Could Tu rkey provide any further information on this
regard, making reference to relevant evidence, as appropriate.

Turkey wishes to reaffirm that the alleged "referen ce price" system, which falls in any event outside
of the Terms of Reference of this Panel proceeding, is another element of confusion brought by the
United States into this dispute. The alleged "refer ence price" system does not exist. There is, on the
other hand, a "reference price" which is used by Turkey to provide its customs authorities with a
benchmark in order to monitor trade flows and syst ematically identify possible instances of customs
valuation abuse by traders.

In particular, as indicated by Turkey in its reply to question 150, the Turkish authorities at customs
points-of-entry are periodically notified by the central administration of the reference prices for paddy
rice, brown rice and rice simply in order for the cu stoms authorities to be aware of the average prices
for these commodities and to detect instances of unfai r trade and tax loss that might occur due to the
importers' under-valued customs declarations. Turkey believes that, contrary to what is being claimed
by the United States, nothing in the language of Exhibit US-68 and US-76 proves the trade-distortive
nature of this Turkish instrument to avoid tax evasion and customs valuation fraud.

Furthermore, Turkey submits that the United States is again basing its allegations and its
interpretation of this system on a number of manipulat ed translations from Turkish into English. In
particular, the Turkish Minister of Agriculture has never referred to the Certificate of Control as an
"import license", but rather as a " control document" (i.e., the Turkish " Kontrol Belgesi"). This may
seem as only a minor linguistic correction, but it is one that Turkey considers important in that it
further indicates the constant attempt made by the United States to turn every single detail or
occurrence as a cornerstone of its theory of a syst ematic pattern of trade distortion and discrimination
allegedly enforced by Turkey. This is simply no t the case and a careful reading of the system proves
the opposite.

Q152. (United States) In its statement during the second substantive meeting with the Panel
(para. 21), the United States argued that it woul d be necessary for the Panel to make a finding
and recommendation regarding the so-called "d omestic purchase requirement", in order to
resolve the dispute between the parties.

 (a) Could the United States explain why this would be the case, in its view.

Turkey believes that that the United States is wrong in considering that a finding and recommendation
on its domestic purchase requirement is necessary in or der to solve this dispute. Turkey wishes to
recall that the TRQ regime together with its dom estic purchase requirement, are no longer in force.
Turkey has not re-opened the TRQ since its expiry on 31 July 2006 and it has indicated that it
considers this expiry definitive.

As Turkey has already explained, in order to re-open another TRQ w ith a domestic purchase
requirement, Turkey would have to adopt a new D ecree, fixing the quota openings, quantities and
coefficients, together with its im plementing Communiqué, providing, inter alia, for the quantities of
domestic rice to be purchased and for the deadlines fo r the relevant applications. All the legislation
which is specifically related to the establishment of tariff quotas for rice has expired and a new set of
rules would therefore need to be adopted, promul gated and published. Turkey has committed not to
adopt a new TRQ with a domestic purchase requirement. On the other side, Turkey does not
understand what other evidence would the United Stat es need in order to consider the TRQ regime
and its domestic purchase requirement expired.

The mere theoretical possibility that new legislation be enacted in the future cannot be considered as
an indication that Turkey may re-introduce a TRQ regi me. It is also not sufficient evidence that the
TRQ regime had not expired, the fact that Decree No . 2004/7333 is still in force. In relation to this,
Turkey has already noted that this Decree provides the legal basis for the management of all types of
quotas and tariff quotas, irrespectively of the product, of the nature and the trade measure allowing for
the adoption of the quotas. This legislation is not rice-specific. Moreover, contrary to what the
United States suggested, there is no mention of th e domestic purchase requirement in this Decree, and
the fact that the Decree does not specify whether the UFT can or cannot impose a domestic purchase
requirement in connection with tariff-rate quotas is not, in itself, proof of the continued existence of
the TRQ regime nor of a WTO-inconsistency of the Decree in itself. Finally, the United States has
failed to indicate which provisions of Decree No . 2004/7333 would be WTO- inconsistent and would
justify its repeal or amendment.

Turkey has maintained that the TRQ regime provide d beneficial import conditions of which importers
took full advantage. Turkey understands, however, that this has caused a great degree of discontent in
the United States. Turkey has re peatedly assured the United States during bilateral consultations and
in the course of these proceedings that it does not in tend to resort again to the TRQ regime and that,
should the need arise, it will address its objectives of market intervention and stabilization through
other WTO-consistent trade policies which are less administratively burdensome (i.e., the action of
the TMO as an intervention agency, the appropriate and legitimate use of MFN and applied rates of
duty).

Turkey considers this to be a commitment that, ultimately, the United States and the Panel should take
into serious account. In this respect, Turkey notes that in a simila r instance the Panel in Argentina –
Footwear had this to say in relation to expired measures and the threat of their recurrence: " We must
assume that WTO Members will perform their treaty obligations in good faith, as they are required to
do by the WTO Agreement and by inte rnational law. We consider, therefore, that there is no evidence
that the minimum specific import duties on footwear will be reintroduced".
2

 (b) In paragraph 20 of its statement, the United States also argued that its request
that the Panel make findings and reco mmendations regarding the TRQ regime
would be supported by the interpretation contained in the Appellate Body report
in the Dominican Republic – Import a nd Sale of Cigarettes case. Could the
United States elaborate on this assertion, explaining in what manner does the
Appellate Body's decision in that ca se support its request. Please refer to
specific sections of the report, as approp riate, and their relevance to the present
case.

Turkey wishes once again to briefly comment on the United States' assertions in relation to the expiry
of Turkey's domestic purchase requirement and this Panel's role under Article 19.1 of the
Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU).

First, Turkey would like to re-illustrate to the United States the correct interpretation of WTO case
law with respect to the Panel's authority in issu ing recommendations with respect to measures expired
before or in the course of the proceedings. Turkey already noted that while Article 19.1 of the DSU
entrusts panels to issue recommendations with r espect to measures found inconsistent with the
covered agreements, the extent of this authority may be objectively limited by the expiry of the
measures, both before and in the course of the panels ' proceedings. In this respect, Turkey recalls that
in light of WTO jurisprudence, Article 19.1 of th e DSU requires a panel to make recommendations to

2 See Argentina – Measures Affecting Imports of Footwear, Textiles, Apparel and Other Items ,
para. 6.14.

bring a measure found inconsistent in to conformity 'provided that' such measure is still in force.
Turkey quoted United States - Certain EC Products where the Appellate Body stated that the Panel
"erred in recommending the Dispute Settlement Body to request the United States to bring into
conformity a measure which the Panel has found no longer to exist ",
3 Chile - Price Band , where the
Panel stated that it would not make recomme ndations with respect to expired measures, 4 and
Dominican Republic - Cigarettes , where the Panel did not find it appropriate to recommend to the
Dispute Settlement Body that it make any request to the Dominican Republic regarding a measure
(i.e., the Selective Consumption Tax) since it was no longer in force.5

With particular respect to the Appellate Body's report in Dominican Republic- Cigarettes , Turkey
believes that it is wrong and misleading for the United States to consider that this report supports its
assertions. In that case, the Panel had decided not to make a recommendation with respect to the
Dominican Republic's Selective Consumption Tax, wh ich was modified in the course of the panel's
proceedings. The Appellate Body did not disagree
 with the Panel's decision of not making a
recommendation on the issue, nor did the Parties to the dispute. The broad recommendation included
in paragraph 130 of that Appellate Body's report in no way can be interpreted so as to include the
Appellate Body's disagreement on the Panel's conduct , while this conduct was not even raised in the
appeal. This interpretation is also upheld by the Panel in EC-Biotech, which stated that: "Similarly, in
Dominican Republic - Import and Sale of Cigarettes, the panel did not find it "appropriate" to make a
recommendation in relation to a WTO-inconsistent measure concerning the determination of the tax
base for cigarettes because that measure was "no longer in force" as a result of amendments which
were made after the panel was established […] ".6

In relation to the tax stamp requirement, which wa s amended shortly after the issuance of the Panel
report, the reason why the Appellate Body issued a ruling is because both Parties requested so, even
though they both agreed that the new legislation ha d changed the tax regime. As the Appellate Body
explained in paragraph 129 of its report, " At the oral hearing, the participants agreed that the tax
stamp regime as a whole had been altered by a new decree in October 2004. Both participants
nevertheless requested the Appellate Body to rule on the WTO-consistency of the original measure . In
view of the above , the Appellate Body recommends that the Dispute Settlement Body request the
Dominican Republic to bring the tax stamp requiremen t, found in this Report and in the Panel Report
as modified by this Report to be inconsistent with the GATT 1994, into conformity with its obligations
under that Agreement if, and to the extent that, the said modifications to the tax stamp regime have
not already done so".7

Turkey fails to understand how the two in stances of the Appellate Body's report in Dominican
Republic - Cigarettes could be of any relevance to the present dispute and how they would support the
United States' arguments. In particular, Turkey notes that the Appellate Body did not disagree with
the Panel's decision not to issue a recommendation on the Selective Consumption Tax and that the
Appellate Body issued a ruling on the tax stamp requirement (i.e., on a measure that was changed
soon after the issuance of the Panel report) only b ecause the parties to the dispute expressly requested
so.

3 See, United States – Import Measures on Certain Products from the European Communities ,
Appellate Body Report, para. 81.
4 See, Chile – Price Band System and Safeguard Measures Relating to Certain Agricultural Products ,
Panel Report, para. 7.112.
5 See, Dominican Republic – Measures Affecting the Importation and Internal Sale of Cigarettes, Panel
Report, para. 7.363.
6 See, European Communities – Measures Affecting the Approval and Marketing of Biotech Products ,
para. 7.1314.
7 See, Dominican Republic – Measures Affecting the Importation and Internal Sale of Cigarettes ,
Appellate Body Report, para. 130.

Second, Turkey also believes that the United St ates again refuses to understand that under WTO case
law the date of the establishment of the panel ma y affect the Panel's discretion in making findings,
whereas in all instances of measures expired be fore and after the commencement of the Panel
proceedings, if a finding is made, no recomme ndation is due. The relevant parts of the EC - Biotech
report quoted by the United States fully support this vi ew. In that case, the Panel made a finding with
respect to the de facto moratorium enforced by the EC, but did not issue a recommendation. The de
facto moratorium expired prior to the Panel's establishment.

In relation to this, Turkey would like to make two observations. First, the Panel considered the de
facto nature of the measure as decisive in order for it to make a finding. This appears to be a
significant difference with Turkey's domestic purchase requirement, which was not a de facto
measure. In fact, with respect to other m easures expired before the commencement of the
proceedings, the same Panel did refrain from making findings as it did not consider making those
findings necessary for the solution of the dispute.
8 Second, the Panel acknowledged the value and
importance of WTO case law on issuing recommendations on expired measures and recognized that
"the foregoing WTO jurisprudence supports the inference that panels are to avoid making
recommendations which would apply to measures t hat are no longer in existence or have been
amended".9 The Panel therefore limited its recommendations on the de facto moratorium by
requesting the European Communities to bring its measures into conformity " if, and to the extent that,
that measure has not already ceased to exist".10

In the light of these considerations, Turkey respectfully invites this Panel not to make a finding on any
of the measures establishing the domestic purchase requirement, including the ones expired soon after
the commencement of Panel proceedings. Turkey be lieves that no finding is necessary to secure a
positive solution to the dispute. As previously stated , 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 once again respectfully request s the Panel not to make findings on any of the
measures relating to the TRQ regime or, in the alte rnative, 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.

Questions from Turkey

Question TR-1: Could the United States indica te which specific provision of the Turkish
law on Certificates of Control (i.e., Communiqu é of Standardization for Foreign Trade No.
2005/5, 2006/5 and 2007/21) defines, de jure, a Certificate of Control as an import license?

Turkey believes that, rather than being " irrelevant", it is quite revealing that the United States has not
been able to find a de jure definition of the Certificate of Control as an " import licence ". In fact,
de jure, Turkey's Certificate of Control is not an " import licence " and no legal provision in the
Turkish legal system and relevant sets of laws assimilates the Certificate of Control to an " import
licence". Turkey indicated what are, de jure, the roles and functions of the Certificate of Control.

8 See, European Communities – Measures Affecting the Approval and Marketing of Biotech Products ,
paras. 7.1651-7.1654.
9 See, European Communities – Measures Affecting the Approval and Marketing of Biotech Products ,
para. 7.1316.
10 See, European Communities – Measures Affecting the Approval and Marketing of Biotech Products ,
para. 8.16.

In addition, and as systematically argued and eviden ced by Turkey in the course of these proceedings,
the Certificate of Control has also never acted or operated as a de facto "import licence". Certificates
of Control were always approved, throughout the en tire period under examination, on the basis of the
applications lodged by traders, provided that all legal requirements for approval were duly met.

Finally, with respect to the assertion made by the United States on the relevance of the
characterization allegedly made by Turkey's Minister of Agriculture, Turkey recalls it strong rejection
made in its Comments to the Reply by the United States to Question 150 above. In particular, the
Turkish Minister of Agriculture has never referred to the Certificate of Control as an " import license",
but rather as a "control document" (i.e., the Turkish "Kontrol Belgesi").

Question TR-2: Could the United States identi fy which specific provisions of Turkish law
provide the Turkish Ministry of Agriculture and Rural Affairs, (i.e., MARA) with the discretion
necessary to deny the approval of applications for Certificates of Control which otherwise
comply with the requirements of the law?

Turkey believes that the answer provided by the United States in its Reply to Question TR-2 is simply
incorrect and not based on any legal and factual evid ence. As already indicated by Turkey in its
Replies to Questions 126 and 127, upon submissi on of the required documen tation, MARA has the
legal duty and responsibility to approve Certificates of Control. From this, it follows that importers
have the right to obtain approved Certificates of Control. MARA has no discretion in approving
Certificates of Control, provided that all legal requirements are met.

The United States also continues to confuse between Certificates of Control and import licences for
in-quota imports (TRQ or FTA). Certificates of C ontrol are "neutral" instru ments that are needed
independently of the type of rice importation (i.e., MFN, TRQ or FTA imports). On the other hand,
import licences were needed only for TRQ imports a nd are still needed for FTA rice imports. Import
licences were issued, in relation to TRQ imports, behind proof of the domestic purchase requirement.
Certificates of Control have never required proof of domestic purchase. This continues to be an area
of confusion that Turkey believes the United States willingly pretends not to understand.

Question TR-3: What leads the United States to argue that there should be an a priori
exclusion of the Certificates of Control approved in relation to out-of-quota FTA trade from the
alleged application of the "blanket denial" for all out-of-quota requests for approval?

Turkey notes that " whether Certificates are required for non-MFN, out-of-quota trade " is not
"irrelevant" as the United States argues. Turkey never enforced a " blanket denial " (i.e., a total
prohibition) and it continued to approve Certif icates of Control throughout the period under
examination on the sole basis of the applications lodged by traders and the compliance of those
applications with legal requirements. The Unite d States has not shown (in fact, it has not even
claimed) that all applications there were put forward by rice traders during certain times were
systematically not approved.

The United States has merely based its overall claim on a limited number of individual rejections.
Turkey believes that this modus operandi cannot be considered as sufficient to establish a prima facie
case. In any event, it certainly appears not to be sufficient evidence of a " blanket denial" in Turkey's
approval of Certificates of Control. At best, it ma y prove the lack of applications by traders during
certain times for Certificates of Control in relation to MFN trade. Turkey has explained this in its
previous submissions on the basis of traders' bus iness determinations and commercial considerations
linked to a variety of economic factors, including th e existence of considerable tariff advantages for
importing within the TRQ.