Document: WT/DS334/R Page A-1 ANNEX A EXECUTIVE SUMMARIES OF THE FIRST WRITTEN SUBMISSIONS BY THE PARTIES AND WRITTEN SUBMISSIONS BY THE THIRD PARTIES Contents Page Annex A-1 Executive summary of the first written submission by the United States (27 September 2006) A-2 Annex A-2 Executive summary of the first written submission by Turkey
Date: 27 September 2006
Document codes: WT/DS334/R
Complainant: U.S.
Respondent: Turkey
Third parties: Argentina, Australia, China, Egypt, EU, South Korea, Pakistan, Thailand
Dispute stage: Panel
Agreements cited: Art. XI:1, X:1, X:2, III:4, X:3(a)  GATT 1994Art. 4.2  AgricultureArt. 1.4, 3.3, 3.5(e), 3.5(f), 3.5(b), 3.5(d), 3.5(g), 3.5(h), 1.2, 1.3, 1.5, 1.6, 3.2, 3.5(a), 5.1, 5.2, 5.3, 5.4  Import LicensingArt. 2.1, Annex 1  Trade-Related Investment Measures (TRIMs)

ANNEX A

EXECUTIVE SUMMARIES OF THE FIRST WRITTEN SUBMISSIONS
BY THE PARTIES AND WRITTEN SUBMISSIONS BY THE THIRD PARTIES

Contents Page
Annex A-1 Executive summary of the first written submission by the
United States (27 September 2006)
A-2
Annex A-2 Executive summary of the first written submission by Turkey
(18 October 2006)
A-10
Annex A-3 Third party written submis sion by China (18 October 2006) A-18
Annex A-4 Third party written submis sion by Egypt (18 October 2006) A-22
Annex A-5 Third party written submission by the European Communities
(18 October 2006)
A-28

ANNEX A-1

EXECUTIVE SUMMARY OF THE FIRST WRITTEN SUBMISSION
BY THE UNITED STATES
(27 September 2006)

1. Simply put, this dispute is about market access. During the Uruguay Round, Turkey
committed itself to permit imports of rice at a bound ra te of 45 percent. Instead, Turkey has instituted
a non-transparent, discretionary import licensing system to restrict and, at tim es, eliminate imports of
rice. Specifically, since 2003, Turkey has applied a tariff-rate quota ("TRQ") for rice and has required
licenses in order to import rice both at the in-quot a and over-quota rates. With respect to the over-
quota rate, Turkey's Ministry of Agriculture and Rural Affairs ("MARA") simply fails to issue
licenses in accordance with a series of unpublished "Letters of A cceptance", in which the Minister of
Agriculture agrees to "delay" the start date for the issuance of import licenses, or "Certificates of
Control". Importers who have applied for licenses ofte n wait for months or even years for a
response to their applications, and if they do receive a response, their license applications are
denied with little reason (e.g., spelling errors) or denied with no reason provided at all. One
importer went to court in October 2004 seeking a court order for the government to grant him
an import license after his application forms were returned and ultimately denied: as of
December 2005, his rice was still
 sitting in a warehouse while the litigation remained pending.

2. With respect to the in-quota quantities, Tu rkey has made the receipt of licenses from the
Turkish Foreign Trade Undersecretariat ("FTU") co ntingent upon the purchase of large quantities of
domestic rice. The amount of rice that importers are required to purchase in order to import under the
TRQ is contingent on three factors: (1) the type of rice to be imported (paddy, brown, or milled); (2)
the source of the purchased domestic rice (the Turk ish Grain Board ("TMO"), on the one hand, or
Turkish producers or producer associations on th e other); and (3) if purchased from Turkish paddy
rice producers or producer associations, the region wh ere the rice originates. As a result of this
complicated system, the ratio of imported-to-purchased domestic rice varies greatly, depending on the
interaction among the three variables, and in most cases, an importer has to purchase a larger
 quantity
of domestic rice than the quantity of rice it wishes to import.

3. Because Turkey fails to issue licenses at the over-quota rate and Turkey closes the TRQ
during the annual Turkish rice harvest, there is a co mplete ban on imports of rice during the August-
October time period. Turkey relaxes and strengthens these import licensing measures at will, often
with no advance written notice to importers, and fre quently in contravention of what has been
published in Turkey's Official Gazette. In taki ng these measures, Turkey has acted inconsistently
with several provisions of the General Agreement on Tariffs and Trade 1994 ("GATT 1994"), the
Agreement on Import Licensing Procedures ("Import Licensing Agreement"), the Agreement on
Agriculture ("Agriculture Agreement"), and the Agreement on Trade-Related Investment Measures
("TRIMs Agreement").

4. The United States has sought to avoid disput e settlement on this issue and instead reach a
mutually acceptable solution with Turkey. However, US attempts to resolve this issue have thus far
been unsuccessful. Therefore, on November 2, 20 05, the United States requested consultations with
the Government of Turkey pursuant to Articles 1 and 4 of the Understanding on Rules and
Procedures Governing the Settlement of Disputes ("DSU"), Article XXII:1 of the GATT 1994,
Article 6 of the Import Licensing Agreement, Articl e 8 of the TRIMs Agreement, and Article 19 of
the Agriculture Agreement regarding Turkey's import restrictions on US rice. Pursuant to this
request, the United States and Turkey held cons ultations on December 1, 2005. These consultations
failed to reach a mutually satisfactory resolution to this dispute. On Febr uary 6, 2006, the United
States requested the establishment of a panel pursuant to Article 6 of the DSU, Article 6 of the Import

Licensing Agreement, Article 8 of the TRIMs Ag reement, and Article 19 of the Agriculture
Agreement. The Dispute Settlement Body ("DSB" ) established the Panel on March 17 with standard
terms of reference. Despite the ongoing Panel proceedings, the United States remains willing to reach
a solution to this matter with Turkey.

5. In its first written submission, the United States advanced claims regarding (1) Turkey's
denial of licenses to import rice at the over-quota rates (or Turkey's WTO bound rate of duty); (2)
Turkey's TRQ regime, coupled with a domestic pur chase requirement, which regulates in-quota trade;
(3) Turkey's overall import licensing regime, that is, the denial of import licenses and the TRQ, acting
in conjunction to restrict rice imports and distort the Turkish rice market; as well as other claims
related to Turkey's import regime or restrictions on imports of rice.

US Claims Relating to Turkey's Denial of Import Licenses

6. Turkey's denial of licenses to import rice at or below the bound rate of duty is inconsistent
with Article XI:1 of the GATT 1994 because it prohibits or restricts imports at the over-quota rate,
and when the TRQ is closed, it acts as a complete ban on rice imports. Turkey's denial of import
licenses also constitutes discretionary import licensi ng: under Turkish law, MARA is supposed to
grant import licenses automatically but in fact it do es not issue any licenses at all. In addition, the
Certificate of Control is an import license for purposes of Article XI:1, because MARA requires
importers to complete an application for a Certificat e, and that application must be granted in order
for the importation to take place. The Certificate of Control would in any event be a prohibition or
restriction on importation that is made effective by an "other measure" because, as the panel in India –
Autos found, Article XI:1 conveys "an intention to cover any type of measures restricting the entry of
goods into the territory of a Member, other than t hose specifically excluded, namely, duties, taxes or
other charges". Turkey's failure to issue Certificates of Control not only restricts the entry of rice into
Turkey: in fact, it prohibits entry other than the in-quota quantity of the TRQ.

7. The range of measures that Members may not in stitute or maintain under Article XI:1 is quite
broad. The provision encompasses all prohibitions or restrictions on importation other than those
enumerated, regardless of whether a Member utilizes a quota, an import or export licensing regime,
"or other measures" to effect the prohibition or restriction. Several panels have characterized the
scope of this provision as "broad" and "comprehensive".

8. Turkey's denial of import licenses except fo r the in-quota quantity under the TRQ constitutes
a "prohibition" on importation for purposes of Article XI:1 of the GATT 1994. A "prohibition" exists
when it is legally impermissible to trade or bring in a particular good from another country. Turkey's
ban on the importation of rice outside its TRQ regi me is effected through MARA's denial of
Certificates of Control to importers. An importer who wants to import rice outside the TRQ regime is
required to obtain a Certificate of Control from MARA as a condition of importation. However,
through a series of unpublished Letters of Acceptance, the Minister of Agriculture decided, starting in
September 2003, that MARA would "delay" the issuance of Certificates of Control.

9. The wording of the Letters demonstrates th at Turkey imposes a "prohibition" on imports of
rice within the meaning of Article XI:1 as it is cl ear on their face that the Minister of Agriculture
instructs officials in his Ministry not to issue th e Certificate of Control document to importers, and
without such documents, importation cannot occur (u nless Turkey has re-opened its distortive TRQ).
Specifically, in each Letter, the General Director ate recommends that there be a "delay" in the
issuance of such Certificates over a certain period of time, and the Minister of Agriculture signs the
Letter to indicate his acceptance of the recommendation. When the time period covered by a Letter is
about to expire, the General Directorate issues a new Letter in which it recommends a further "delay"
in the start date for issuing Certificates. Without a Certificate of Control, an importer cannot import
rice into Turkey, unless Tu rkey has re-opened its TRQ and the importer purchases domestic rice. In

sum, Turkey, through its decision not to issue Certif icates of Control, effectively prohibits all imports
of rice at its WTO bound rate (the minimum market access to which it has committed). It is only
when Turkey decides to re-open its distortive TRQ that imports may occur at all. During the times
when that TRQ is closed – generally from August through October, a period which tracks the Turkish
rice harvest – there is no mechanism to import rice into Turkey at all, a total ban on imports of rice.
Minister Tuzmen confirmed that Certificates of Control were not being granted in a letter to
Ambassador Portman when he stated that "the control certificate will be issued as of April 1, 2006".

10. This situation is not unlike that in Turkey – Textiles, in which the panel found that India had
made out a prima facie case that Article XI:1 had been breached by showing that Turkey's measures,
"on their face", imposed quantitative restrictions on imports. Similarly, in the instant dispute, the
wording of the Letters of Acceptance is clear: the Mini ster of Agriculture gave a series of orders that
no Certificates of Control shall be granted. Without such Certificates, no importation can occur. And
that is exactly how MARA officials interprete d those documents, as evidenced by a May 1, 2006
letter from a Provincial Agriculture Directorate to a Turkish importer of US rice. The Directorate
denied the importer's April 25, 2006 request for a Certificate of Control to import medium grain
milled rice from the United States "since it is not possibl e to prepare a control certificate according to
our laws and regulations".

11. Turkey's ban on the issuance of Certificates of Control, which ensured that importation of rice
could not take place outside the TRQ regime, also constitutes a "restriction ... on importation"
contrary to Article XI:1. The ordinary meaning of the word "restriction" is a "limitation on action, a
limiting condition or regulation". The India – Autos panel, citing with approval this definition of
"restriction" and recalling the broad reach of Article XI:1, stated that "any form of limitation imposed
on, or in relation to importation constitutes a r estriction on importation within the meaning of
Article XI:1". Turkey's failure to grant Certifi cates of Control to importers clearly places a limitation
on imports. Turkey's decision not to issue Certifi cates of Control also demonstrates that it maintains
discretionary, or non-automatic, import licensing, th rough which it makes effective restrictions on
importation. In India – Quantitative Restrictions , the panel found that two aspects of India's import
licensing system constituted discretionary import li censing, because licenses we re granted in some,
but not in all cases, and as a result, found Article XI:1 breaches in both instances. Here, Turkey fails
to grant Certificates of Control 100 per cent of the time, demonstrating that Turkey utilizes its
discretion to impose restrictions on importation.

12. Because Turkey's denial of import licenses outside the TRQ is a WTO-inconsistent
quantitative import restriction and also constitutes discretionary import licensing, Turkey also has
breached Article 4.2 of the Agriculture Agreem ent. Other panels have found, in similar
circumstances, that where a measu re with respect to agricultural products is inconsistent with
Article XI:1 of the GATT 1994, it is necessarily in consistent with Article 4.2, which provides in
footnote 1 that, inter alia, "quantitative import restrictions" and "discretionary import licensing" are
measures that Members may not maintain, resort to, or revert to. In this dispute, the United States has
demonstrated that Turkey's denial of import licenses constitutes a prohibition and restriction on
importation and that, as a result, Turkey has acted inc onsistently with Article XI:1. Similarly, Turkey
is acting inconsistently with Article 4.2 of the Agriculture Agreement. In the Uruguay Round, Turkey
committed to permit imports of rice automatically at a rate no greater than 45 per cent ad valorem. As
previously described, MARA has refused to grant import licenses to importers. This total ban on
imports outside the TRQ constitutes a quantitative impor t restriction. Further, Turkey's denial of
import licenses also amounts to discretionary import licensing, because MARA does not grant
licenses automatically. That is, the denial of licen ses demonstrates that Turkey has the discretion to
grant or not to grant them, and without these licen ses, importation cannot occur. These are measures
set out in footnote 1 to Article 4.2 as measures "of th e kind" that Turkey may not maintain, resort to,
or revert to.

13. Additionally, Turkey's import licensing regime for imports outside the TRQ is non-
transparent. For example, Turkey does not sp ecify a time frame within which import license
applications will be appr oved or rejected and does not provide applicants with the reasons for
rejection. Further, Turkey has failed to notify its import licensing regime for rice to the WTO, despite
a US request that it do so. Its regime therefor e is inconsistent with additional WTO provisions,
including Articles 1.4(a) and (b) and 3.5(e) and (f) of the Import Licensing Agreement and
Articles X:1 and X:2 of the GATT 1994.

US Claims Relating to Turkey's TRQ Regime Requiring Domestic Purchase

14. Turkey's imposition of a domestic purchase requirement under its TRQ regime on importers
of rice into Turkey is inconsistent with Artic le III:4 of the GATT 1994 because the measure treats
imported rice less favorably than domestic rice and adversely affects the conditions of competition for
imported rice in the Turkish market. There are three elements that must be satisfied to establish that
a measure is in breach of Article III:4: (1) the imported and domestic products must be "like"
products; (2) the measure is a law, regulation, or requirement "affecting their internal sale, offering for
sale, purchase, transportation, distribution or u se"; and (3) the imported products are treated less
favorably than domestic products.

15. The first prong of the Article III:4 test is whether the domestic and imported products are
"like" products. In general, "like" products are produc ts that have the same or similar properties. In
examining whether products are "like" for pur poses of Article III, several panels have found
significant the fact that a measure distinguishes between a domestic and an imported product solely on
the basis of origin. Moreover, one panel, noting th at the statute at issue made a distinction between
foreign and imported articles solely on the basis of or igin, found that "there is no need to demonstrate
the existence of actually traded like products in orde r to establish a violation of Article III:4". In this
instance, Turkey's measures, on their face, make distinctions with respect to rice based on whether the
origin of rice is foreign or domestic. The Letters of Acceptance bar the importation of foreign rice
into Turkey, plainly stating that Certificates of Cont rol will not be issued in order to protect producers
of domestic rice. The domestic purchase requirement ensures that importers of foreign rice procure
domestic rice as a condition upon importation. It is clear from the face of these measures that Turkey
considers that foreign and domestic rice compete with each other; therefore, it is difficult to avoid the
conclusion that at least some imported rice is "like" Turkish rice.

16. Even if Turkey's measures did not distingui sh between foreign and imported rice on the basis
of origin, US and Turkish rice also constitute "l ike" products with respect to a more detailed
examination. The Appellate Body, which has found a "relatively broad product scope" for finding
that products are "like" for purposes of Article III: 4, narrowed down the non-exhaustive list of factors
that might be considered in such an examination to four: tariff classification; the "properties, nature
and quality" of a product; a product's end-uses; and consumer preferences. Under this test, US and
Turkish rice are "like" products for purposes of Ar ticle III:4. Both products are classified under
HS 1006. Turkey and the United States both produce the same two varieties of rice: medium-grain
and long-grain. Their end use is the same: paddy rice and brown rice is destined for milling, and
milled rice is destined for human consumption. Furt her, US Calrose rice is directly competitive with
the Turkish Osmancik variety: in March 2005, they were selling in retail outle ts in Ankara at roughly
the same price.

17. The second element that must be demonstrated to prove that a Member has failed to observe
its Article III:4 obligations is that a measure (1) is a law, regulation, or requirement (2) "affecting
[the] internal sale, offering for sal e, purchase, ... or use" of the like products at issue. The TRQ
regime is comprised of several legal instruments, including decrees and notifications, that were
promulgated by FTU and published in Turkey's Offici al Gazette. It is unclear to the United States
whether Turkey's individual instruments should be characterized as "laws" or "regulations" but it is

clear that all of these instruments are legally bi nding under Turkish law. Regarding whether the
domestic purchase requirement could be characterized as a "requirement", the India – Autos panel
found that the term "requirement" encompassed obl igations which "an enterprise voluntarily accepts
in order to obtain an advantage from the government". In US – FSC (Article 21.5 – EC) , the panel
found that a measure containing conditions that a pe rson must satisfy to obtain an advantage from the
government is a "requirement" for purposes of Article III:4. Here, Turkey imposes a "requirement"
that importers purchase domestic rice as a condition of importation if they want to pay a reduced rate
of duty to import rice. Thus, the domestic purch ase requirement under the TRQ satisfies the "law,
regulation or requirement" standard.

18. The domestic purchase requirement also clearly affects the internal sale, offering for sale,
purchase, and use of the like products. The use of the word "affecting" in Article III:4 implies that a
measure would not have to deal directly with the internal sale, offering for sale, purchase or use of a
product, but encompasses a much broader range of potential interaction with those elements. The
Appellate Body has noted that the term "affecting" should be interpreted as having a "broad scope of
application". In the instant dispute, there can be no doubt that the domestic purchase requirement is
"affecting" the internal sale, offering for sale, purchase, and use of rice. It provides the only way to
import rice into Turkey. Turkey does not produce sufficient quantities of rice to meet its domestic
needs so it must import, and imports comprise a substantial portion of the Turkish rice market.
Without documentary proof from TMO that an importer has purchased a specific quantity of domestic
rice, FTU will not grant that importer an import license to bring foreign rice into Turkey. Therefore,
the domestic purchase requirement directly affects th e internal sale, offering for sale, purchase, and
use of rice in Turkey. Because domestic producers, unlike their foreign competitors, are not required
to procure large quantities of rice from their competito rs in order to sell rice in Turkey and, unlike
their foreign competitors, are not limited in regard to whom they may sell their rice, the domestic
purchase requirement has a seriously adverse ef fect on the conditions of competition between
imported and domestic rice. Furthermore, only domestic rice can satisfy the purchase requirement –
imported rice is excluded from eligibility.

19. The third element that must be demonstrated to prove that a Member has failed to observe its
Article III:4 obligations is that a measure accords im ported products less favorable treatment than like
domestic products. Previous panels have found that measures are inc onsistent with Article III:4 if
they impose requirements on foreign products that are not imposed on domestic products; create an
incentive to purchase and use domestic products or a disincentive to utilize imported products; or
"adversely affect ... the equality of competitive oppor tunities of imported products in relation to like
domestic products". Significantly, the Appellate Body in US – FSC (Article 21.5 – EC) noted that a
measure could still be inconsistent with Article III:4 even if unfavorable treatment did not arise in
every instance. On its face and by design, Turk ey's TRQ regime treats imported rice less favorably
than domestic rice in every instance. Imported rice cannot be sold in the domestic market under any
circumstance unless the importer first purchases, at in flated prices, domestic rice. Domestic rice
producers are not subject to the same requirement in order to bring their product to market, which
provides them a tremendous advantage in the ma rket. Further, because the domestic purchase
requirement makes procuring imported rice more costly – oftentimes requiring an importer to
purchase three or four times the quantity of domestic rice as the quantity of foreign rice an importer
wants to import – the domestic purchase requireme nt creates a disincentive to purchase and import
foreign rice. Consequently, by making the sourcing of imported rice less desirable, the domestic
purchase requirement alters the decision-making calculus of domestic entities when making
purchasing decisions regarding rice. And by making imported rice ineligible to satisfy the purchase
requirement, the conditions of competition are alte red in favor of domestic rice. For these reasons,
Turkey's domestic purchase requirement accords less favorable treatment to imported rice and hence,
Turkey has acted inconsistently with Article III:4 of the GATT 1994.

20. To the extent Turkey's domestic purchase requi rement is not viewed as a "law, regulation or
requirement" within the meaning of Article III, th is requirement breaches Article XI:1 of the GATT
1994, because it is a "restriction ... on importation" w ithin the meaning of Article XI:1. The domestic
purchase requirement clearly falls within the scope of the phrase "whether made effective through
quotas, import or export licences or other measure s" because FTU will not issue an import license
under the TRQ without proof of domestic purchase and the term "other measures" is broad enough to
encompass a domestic purchase requirement. As noted by the India – Autos panel, "any form of
limitation imposed on, or in relation to importation c onstitutes a restriction on importation within the
meaning of Article XI:1". In this case, the domestic purchase requirement, on its face, imposes a
substantial restriction on imports of rice. Impor tation under the TRQ cannot be realized unless an
importer purchases large quantities of domestic rice and presents proof of such purchases to FTU.
The TRQ regime constitutes discretionary import licensing because receiving a license to import
under the TRQ is non-automatic. Rather, importa tion under the TRQ is conditioned on domestic
purchase. Further, the Turkish regulations have not always specified the amount of rice that would
need to be procured in order to receive a por tion of the quota, which has rendered importers
completely unable to ship at times, or at best, has left them in a state of considerable uncertainty as to
how much domestic rice they would need to procure in order to bring their shipments of foreign rice
into the country.

21. Another aspect of the domestic purchase require ment – the eligibility criteria – accords less
favorable treatment to US rice and thus, is incons istent with Article III:4 of the GATT 1994. Turkish
regulations restrict the issuance of import licenses under the TRQ to certain categories of persons,
namely (1) domestic producers who have a permit to grow paddy rice; (2) domestic producers who
purchase paddy rice from Turkish producer associations of which they are members; or (3) those who
procure rice from TMO, which will undoubtedly be do mestic producers as well. As a result of these
criteria, only domestic rice producers, principally those with milling capacity, will be eligible to
import rice. This state of affairs negatively a ffects competitive conditions for imported rice in the
Turkish marketplace. The Turkish millers primarily want to import paddy rice to send to their milling
facilities, increase their milling capacity, and keep out imported milled rice which competes with
Turkish milled rice and reduces the domestic price. Whereas domestic producers can sell their rice to
anyone along the production chain, from the paddy producer to the ultimate consumer, US producers
do not have that choice. They are not permitted to sell rice directly to consumers. Instead, they are
forced to market their rice through their Turkish competitors.

22. To the extent that the eligibility criteria to purchase rice are not viewed as a "law, regulation
or requirement" within the mean ing of Article III, these criteria breach Article XI:1 of the GATT
1994, because they constitute a "restriction ... on impor tation" within the meaning of Article XI:1.
The eligibility criteria for importing under the TRQ fa ll within the ambit of the phrase "whether made
effective through quotas, import or export licences or other measures" because FTU will not issue an
import license under the TRQ to a person who has not met the eligibility criteria, and the term "other
measures" is broad enough in scope to encompass eligibility criteri a. The eligibility criteria for
purchasing domestic rice under the TRQ act as a re striction on importation because they limit the
range of entities that may import rice into Turkey to certain categories of persons described above.
As a result of these criteria, only domestic rice produ cers, principally those with milling capacity, will
be eligible to import rice. Consumers would not have a permit to grow paddy rice or be members of a
Turkish rice producer association, and because cons umers do not have milling capacity, they would
never be interested in purchasing domestic paddy rice from TMO.

23. In addition, Turkey is in breach of Article 2.1 and Paragraph 1(a) of the Annex 1 of the
TRIMs Agreement because it has instituted a dome stic purchase requirement, which importers must
fulfill in order to obtain the advantage of importing rice at duty rates below the bound rates. To prove
that a measure is inconsistent with Article 2.1, the United States must demonstrate that the domestic
purchase requirement is a measure with the characteristics set forth in paragraph 1(a) of the Annex,

namely that such a measure (1) is mandatory or enforceable under domestic law or under
administrative rulings, or compliance with the meas ure is necessary to obtain an advantage; and (2)
requires the purchase or use by a company of domest ic products (e.g., based on the type, volume, or
value of products). Turkey's domestic purchase requirement satisfies both of these elements, and
hence, is within the ambit of paragraph 1(a). Tu rkey requires importers to purchase domestic rice in
certain specified quantities, and fulfilling (a nd documenting to FTU) the domestic purchase
requirement is necessary to obtain an advantage, namely importing rice under the lower rates of duty
under the TRQ regime.

24. Turkey's domestic purchase requirement also is inconsistent with Article 4.2 of the
Agriculture Agreement because it constitutes a measure listed in footnote 1 to Ar ticle 4.2 of the kind
which should have been converted into ordinary customs duties – namely, discretionary import
licensing and non-tariff measures maintained through state-trading enterprises. FTU will only grant a
license to import rice under the TRQ to those importe rs who procure large quantities of domestic rice
from TMO, Turkish producers, or Turkish producer associations and who present to FTU proof of
such purchase. As the issuance of licenses is not automatic but contingent on domestic purchase,
Turkey's maintenance of a domestic purchase requirement to import under the TRQ constitutes
discretionary import licensing. The domestic purchase requirement is also a non-tariff measure
maintained through a state-trading enterprise because TMO administers the domestic purchase
requirement aspect of the TRQ. An importer may only import rice under the TRQ if it purchases rice
domestically, including from TMO, which sells rice at prices it announces. In addition, the importer
must obtain proof of such purchase from TMO, which must be presented to FTU. If an importer does
not present that documentation, FTU will not grant a license to import under the TRQ. Lastly, TMO
is permitted to import 50,000 metric tons of milled rice in order to help stabilize the domestic market
in the event that prices increase.

25. Turkey also has acted inconsistently with Article 3.5(h) of the Import Licensing Agreement
because it administers the TRQ in such a way that the full amount of the quotas cannot be reached.
Specifically, Turkey sets the domestic purchase require ment so high that the entire Turkish domestic
production of rice would be purchased by importers before the in-quota amount was reached. Further,
the high cost of domestic purchase makes importing under the TRQ much more expensive to the
importer, who is likely a miller, than simply pr ocuring rice domestically, and hence discourages the
full utilization of the TRQ.

26. Turkey first opened the TRQ in April 2004, making it retroactive to September 1, 2003, and
has closed and re-opened the TRQ several times since then. Turkey most recently opened the TRQ on
November 1, 2005, while MARA was continuing to deny import licenses at the over-quota rates. This
most recent opening is likewise inconsistent with th e provisions of the covered agreements previously
discussed.

US Claims Relating to Turkey's Import Licensing Regime As a Whole

27. Moreover, Turkey's overall import licensing regime – the TRQ, licenses for which are
contingent on domestic purchase, acting in conjunction with the denial of any licenses to import at the
over-quota rates – is inconsistent with Article XI:1 of the GATT 1994. Each component of Turkey's
import licensing system – the TRQ regime and the de nial of Certificates of Control outside that
regime – is inconsistent with Article XI:1 ope rating independently, as previously described. In
addition, the two components also give rise to a breach of Article XI:1 acting in conjunction.
Turkey's denial of Certificates of Control outside the TRQ is what forces importers to utilize the TRQ:
no economically rational importer would import under the TRQ given the choice, because the
domestic purchase requirement is so large and ther efore importing under the TRQ is so costly. As a
consequence of the interaction between the two co mponents, however, all importation of rice into
Turkey takes place through the TRQ, which is a discretionary import licensing system: FTU only

grants import licenses if importers agree to purchase large quantities of domestic rice from TMO,
domestic producers, or domestic producer associatio ns. Turkey's import licensing regime for rice
constitutes a serious market access restriction under Article XI:1, but it also frequently amounts to a
prohibition on imports. Turkey has completely ba nned imports of rice outside the TRQ by denying
the issuance of import licenses. Consequently, wh en Turkey temporarily closes the TRQ each year
during the Turkish rice harvest, there is a total ba n on imports of rice into Turkey. This "seasonal
ban" was in place during the domestic rice harvest in 2003, 2004, and 2005 . Moreover, Turkey
ensures that the full amount of the quotas cannot be reached by setting the domestic purchase
requirement so high that the entire Turkish domestic production of rice would be purchased by
importers before the in-quota amount was reached.

28. Turkey's import licensing regime also constitu tes a breach of Article 4.2 of the Agriculture
Agreement. The United States al ready has established that both aspects of Turkey's import licensing
regime are inconsistent with Article 4.2 of the Agriculture Agreement: the domestic purchase
requirements under the TRQ constitute discretiona ry import licensing and non-tariff measures
maintained through state-trading enterprises, which ar e measures set forth in footnote 1 to Article 4.2;
and Turkey's denial of Certificates of Contro l outside the TRQ constitutes a quantitative import
restriction and discretionary import licensing, which also are measures set forth in footnote 1.
Furthermore, the United States previously demonstr ated that Turkey's import licensing regime as a
whole is inconsistent with GATT Article XI:1's ban regarding prohibitions or restrictions on
importation. Because Article 4.2 of the Agriculture Agreement prohibits Members from employing
quantitative import restrictions and discretionary import licensing in place of ordinary customs duties,
the two measures operating in conjunction are necessarily in breach of Article 4.2.

29. Turkey's import licensing regime is also inconsis tent with Articles 3.5(a), 5.1, 5.2(a), (b), (c),
(d), (e), (g), and (h), 5.3, and 5.4 of the Import Licensing Agreement because Turkey has not provided
information concerning the issuance of Certificates of Control at the over-quota rates of duty and the
number of Certificates that had been granted over the last year, nor has it notified its non-automatic
import licensing regime for rice to the WTO Import Licensing Committee.

30. For the reasons set out above, the United Stat es respectfully requests the Panel to find that
Turkey's import licensing regime for rice, incl uding the most recent opening of the TRQ, is
inconsistent with Articles III:4, X:1, X:2, and XI :1 of the GATT 1994; Article 4.2 of the Agriculture
Agreement; Articles 1.4(a) and (b), 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; and Ar ticle 2.1 and paragraph 1(a) of Annex 1 of the
TRIMs Agreement, and recommend that Turkey bri ng its measures into conformity with its WTO
obligations.

ANNEX A-2

EXECUTIVE SUMMARY OF THE
FIRST WRITTEN SUBMISSION BY TURKEY
(18 October 2006)

Introduction

1. This dispute relates to a number of laws a nd procedures regulating the importation of rice into
Turkey. In particular, the United States claims th at Turkey's regime for rice importation results in a
restriction of market access which is inconsiste nt with a number of provisions under the GATT 1994,
the Agreement on Agriculture, the Agreement on Import Licensing Procedures, and the Agreement on
Trade-Related Investment Measures. Turkey categor ically rejects all the allegations made by the
United States and maintains that it is in full compliance with its obligations under the WTO.

2. As a result of the Uruguay Round negotiati ons, Turkey committed to reduce its MFN bound
rate of duty applicable to rice imports to 45% ad valorem . However, the applied rates of duty
currently levied on rice imports are, respectively, 34%, 36% and 45% ad valorem for paddy, brown
and white rice. In addition, Turkey has offered, between 2004 and 2005, preferential rates for imports
of rice within predetermined tariff rate quotas (TRQ s). These annual TRQs have been opened by
Decree. The TRQ system was administered on the basis of automatic import licensing procedures and
certain legal requirements which we re applied in a non-discriminatory, predictable and transparent
fashion. The TRQ regime is no longer in force.

3. With respect to both MFN trade and (in the past) TRQ trade, rice importation occurs on the
basis of compliance, by traders, with the traditional and legitimate customs formalities and legal
requirements that Turkey, like all other WTO Members, applies to trade. Essentially, all that it is
required for rice to be customs-cleared is that the a pplicable MFN rate of duty has been paid and that
the specific consignment complies with the relevant Turkish requirements on, inter alia, food safety,
fitness for use, and standards or specifications pr ovided in technical regulations or implementing
recognized international standards. In order to facilitate the process of customs clearance, traders
must submit at importation a document, known as Ce rtificate of Control, which contains all the
information required for customs purposes. This do cument must be approved by the Ministry of
Agriculture and Rural Affairs. Contrary to what is claimed by the United States, the Certificate of
Control is not an import license and it is not meant to serve the traditional purposes of import licenses,
both de jure and de facto. No import license has ever been applied in relation to MFN trade.

4. With respect to rice imports within the TRQ, in order to benefit from the preferential tariff
rates available within the quotas, traders were required to comply, in addition to the legal
requirements applicable to all rice importation (i.e., payment of applicable duties and compliance with
the general customs formalities, including the submi ssion of approved Certificates of Control), with
legal requirements peculiar only to TRQ importation. In particular, they had to apply for an import
license which was automatically issued if all legal requirements had been duly fulfilled. These legal
requirements included a domestic purchase requirement. Turkey's automatic import licensing
procedures for imports of rice within the TRQ were always administered in a non-discriminatory,
transparent, predictable, and non-trade-distortiv e fashion which provided a considerable tariff
advantage and enhanced conditions of competition to imported rice. In any event, Turkey's TRQ
regime and its related import licensing procedures are no longer in force.

5. Turkey has systematically sought to avoi d dispute settlement on this issue and reach a
mutually acceptable solution with the United States. These efforts have been made both during the
relevant WTO committees' meetings and during the di spute settlement consultations. Turkey remains

willing to address the United States' specific trade c oncerns, but is not willing to forego its legitimate
WTO rights.

6. In its first written submission, Turkey has addr essed all factual and legal issues advanced by
the United States in its claims. Turkey respectfully requested the Panel to find that its measures, both
in relation to MFN and TRQ trade, are not incons istent with its WTO obligations and the covered
agreements. With respect to TRQ tr ade, Turkey also respectfully requ ested the Panel not to make, in
any event, any finding or recommendation as the related measures are no longer in force.

Factual Background

7. Under the Harmonized System, rice is classified under tariff item 1006. Within item 1006,
rice is classified according to th e three stages of its production process: rice in the husk, otherwise
known as paddy or rough rice (HS 1006.10); husked rice, otherwise known as brown rice (HS
1006.20); and semi-milled or wholly-milled rice, otherwise known as white rice (HS 1006.30).
Paddy, or rough, rice is rice as it is harvested from the field. It consists of kernels of rice having a
portion or portions of the protective husk (or hull) remaining. Paddy rice can be milled into either
brown rice or, if the milling process continues, white rice. Brown rice consists of kernels of rice
where the husk has been removed, but the brown laye r remains. Milled, or white, rice consists of
kernels of rice where the husk and at least the outer bran layers have been removed. Turkey's bound
MFN rate for rice is 45% ad valorem. Currently, however, the applied rates for imports of paddy,
brown and white rice are, respectively, 34%, 36% and 45% ad valorem. In addition, Turkey has also
been offering preferential rates for imports with in predetermined tariff rate quotas opened by Decree
between 2004 and 2005.

8. The importation into Turkey of certain go ods such as processed foodstuffs, agricultural,
animal and veterinary products is subject to the levying of the app licable rates of duties and to the
common types of customs control and certification that all countries and WTO Members conduct
when foreign products cross their borders. In Tu rkey, these control requirements, and the related
authority for enforcement, are currently conferred, by the relevant legislation, to the Ministry of
Agriculture and Rural Affairs (MARA). It is MARA which holds the competence to certify
compliance of the imported goods with the applicable requirements. While most of these requirements
are for trade monitoring and information purposes only, others aim at ensuring that imported products
meet the legitimate standards for the protection of human health and safety, animal or plant life or
health, and the environment.

9. In particular, MARA determines the " fitness and compatibility " of certain products with
respect to human health and safety and in relati on other concerns. Rice falls within the list of
products which are covered by the control requirement s applicable at time of importation. In essence,
this means that rice importers must present a duly completed " Certificate of Control", which has been
checked and approved by MARA, to Turkish Customs as a condition for importation. No quantitative
restriction is foreseen under Turkish law and this re quirement is applicable to all covered products,
independently from their country of origin and the tariff rate that they benefit from when imported
into Turkey. The Certificate of Control is not, nor should it be interpreted as, an import license or an
instrument of allocation of imports to origins or traders.

10. The Certificate of Control is an official document through which the importer submits certain
information to MARA in relation to the particular pr oduct that it wishes to import into Turkey. It is a
reference document needed to process the custom s clearance of any particular consignment of
produce and, most importantly, to verify the product safety and fitness for use of the imported items
with respect to human consumption. The Control Certificate allows customs authorities to verify, on
a single document, all required customs information, including the product's compliance with relevant
standards and technical regulations. The application form to be used as a Certificate of Control is

readily available free of charge to all importers a nd does not need to be issued by MARA. After the
importer duly fills in the form and MARA approves it, it becomes an official certificate (i.e., the
Certificate of Control), and can be submitted to th e competent customs authorities at point of entry
into the customs territory of Turkey.

11. Inter alia, the Certificate of Control contains inform ation on: the tariff heading applicable to
the product being imported, the description of the product or products which will be in the
consignment, information on the importer (i.e., bus iness title, address, telephone, etc.), the importer's
tax registration number, information on the expor ter (i.e., business title, address, telephone, etc.), the
intended use of the commodity, the purpose of importa tion of the commodity (to be specified for live
aquatic products), the quantity of the product bein g imported, the batch number of the commodity
(only for agricultural veterinary drugs and related active substances) , the country of origin of the
commodity, the country in which the commodity is to be loaded for transportation to Turkey, the
customs point of entry of the commodity into Tu rkey, information on the firm which will use the
imported commodity (i.e., business title, address, tele phone, etc.), and the applicable information
indicating compliance of the imported commodity with the relevant Turkish technical regulations or
specifications implementing recognized internationa l standards (i.e., EC, WHO or FAO Codex) for
the specific imported commodity. MARA may requi re additional documents and certificates to be
provided when importation is sought. Some of th ese documents are require d for all products being
imported (the pro-forma invoice and other documents such as the nutritional specifications which may
be requested by law), while others only for certa in types of products. These latter documents may
differ in relation to the type of product and the re levant legislation in force. However, they all
establish specific information oblig ations and requirements to ensure that human health and safety,
and animal or plant life or health are protected.

12. When all required information has been dul y provided and attached to the Certificate of
Control, MARA approves it and it becomes a valid document for purposes of customs control. In
essence, it is only when the commodity to be imported is found to be " proper" (i.e., in line with all
Turkish requirements for marketability, product safety and fitness for use) that MARA will approve a
Certificate of Control. MARA will then have exha usted its customs certification mandate and it will
simply retain later powers of market surveillance. Certificates of Control have always been
systematically and regularly approved on a non-discri minatory basis both in relation to rice imports
occurring at the "over-quota" MFN or applied rate level and, most importantly for purposes of the
allegations by the United States, within the "in-qu ota" volumes established each year since 2004. In
particular, from 2003 to date, Turkey has approved a to tal of 2,223 Certificates of Control, allowing a
total importation of 2,264,857 tonnes of foreign rice (paddy, brown and milled). Of this total volume,
497,469 tonnes of rice equivalent have been allocated under the TRQ system since January 2004.

13. This clear and undisputable factual evidence is the single most powerful proof that the
Certificate of Control used by Turkey is an instru ment of customs control that has not discriminated
between exporting countries, that it has not been used differently on the basis of whether it related to
TRQ or MFN rice import applications, and that both de jure and de facto it is not intended to act as an
import license. It is not an import license, but an administrative form that, when duly filled and
approved by MARA, can be shown at point of en try into Turkey, therefore fulfilling its customs
purposes.

14. Turkish law does provide for the use of impor t licenses. These were required for imports of
rice within the TRQ, and were separate and distinct forms from the Certificates of Control in that they
did not serve a customs purpose, but rather aimed at allocating the available quota among traders and
guaranteeing predictability of the market supply. These dedicated import license forms had the
distinctive traits that import licenses have in all countries where they are utilized: the issue number;
the quota period; the authority responsible for issue; the last day of validity; the quantity expressed in

quota unit; and the security (as applicable). All these information requirements are not present on
Certificates of Control.

15. The tariff rate quota (TRQ) system, introduced in April 2004, created a preferential access
regime for importation of rice into Turkey. The TR Q was not introduced as an instrument to protect
or distort trade, but rather as a tool to achieve the necessary supply of rice to Turkey and to stabilize
the domestic market. Very simply, the TRQ provided a tariff advantage to import rice up to
predetermined quantities. Any interested importer of foreign rice could apply if there was compliance
with the requirements and conditions set out by releva nt Turkish legislation. In particular, to take
advantage of this system, any interested importer needed to take the following steps: apply for an
import license to the Undersecretariat of Foreign Trade (UFT), indicate compliance with the domestic
purchase requirement, receive approval by UFT, f ill-out the Certificate of Control and receive
approval from MARA, lodge the required security to guarantee actual importation, pay the applicable
customs duties at point of entry, and place the imported rice on the Turkish market.

16. The TRQ has systematically been allocated on a " first-come-first-served" basis and has never
discriminated on the basis of country of origin of the rice or nationality/affiliation of the importer
applying for a license. The requirements for the application and evaluation procedures of the import
licenses have always been clear, transparent and easy to implement for all importers. Similarly, the
administrative procedures for licensing have always been simple and user-friendly. All documents
required for application have always been published in the relevant legislation. When all application
requirements were met, the import licenses have sy stematically been issu ed with an average
administrative delay of 5 days. In addition to the import licenses obtained for purposes of quota
allocation, of course, importers also had to comply with all other customs obligations and
requirements, in particular the presentation and approval by MARA of the required Certificates of
Control. The tariff quota system was never meant to act as and never had any restrictive or
discriminatory effects on trade and rice imports. Ra ther, the system was voluntary and conferred an
advantage to the importers meeting the requirement s stipulated in the legislation, including the
domestic purchase requirement. Importers have always been free to make use of the system or not.
Evidence clearly indicates that the high volumes of in-quota imports and the high numbers of licences
and Certificates of Control which have been issued and approved (respectively) are testimony to the
attractiveness and appeal that the tariff advantag e has had in the business determinations made by
importers.

On the US Claims Relating to Turkey's Alleged Denial of Import Licences

Certificates of Control are not Import Licences within the Meaning of Article 1.1 of the Agreement on
Import Licensing Procedures

17. Turkey does not operate (and never did) an import licensing system in relation to the
importation of rice at the MFN or applied rates of duty (hereinafter, the MFN trade). On the other
hand, an import licensing system has been operated for purposes of administering the allocation of the
rice quotas which have been opened between 2004 and 2006 at preferentia l rates of duty (hereinafter,
the TRQ trade). There is a clear and distinctive difference between the administrative forms to be
used in connection with the customs procedures (i.e ., the Certificates of Control required to facilitate
customs clearance of rice imports in relation to bot h MFN and TRQ trade) and those needed to apply
for a license in order to be allocated part of the quota and benefit from the ta riff advantage (i.e., the
import licenses which are required for importation of rice in relation to TRQ trade).

18. GATT Article XI:1 does not define the concept of " import license". Neither is this concept
defined by the Agreement on Agriculture when, in footnote 1 to Article 4.2 thereof, it refers to
"discretionary import licenses " as being quantitative restrictions. According to the panel report in
EC – Bananas, "the notion of 'import licensing' is limite d to procedures requiring the submission of

an application or other documentation (other than that required for customs purposes
) to the relevant
administrative body". Turkey's Certificates of Control have not been adopted, and are not required by
Turkey, in order to comply with the " administrative procedures used for the operation of import
licensing regimes" in the meaning of Article 1 of the Agreement on Import Licensing Procedures. In
fact, there is no import licensing regime applicable to imports of rice into Turkey under MFN trade.
There is an import licensing regime only in relation to rice imports under TRQ trade.

19. Turkey's Certificates of Control amount to ad ministrative forms that are required exclusively
for " customs purposes ". If all informative data is duly provided by the importers, and MARA
determines compliance with all relevant specificat ions, standards and tec hnical regulations (i.e.,
human health and safety, animal or plant life or health, environmental prot ection, fitness for use,
product safety, public policies, etc.), the Certificates of Control are automatically approved. At that
point, importers may use them as official documents for " customs purposes", when seeking customs
clearance at point of entry into Turkey. With respect to MFN trade, there is no 'administrative
procedure' or 'licensing requirement' provided by law other than the mere approval by MARA of
Certificates of Control for "customs purposes".

20. It appears clear that Turkey's Certificates of Control are not " administrative procedures used
for the operation of import licensing regimes ", but are " required for customs purposes " within the
meaning of Article 1.1 of the Agreement on Import Licensing Procedures. Therefore, the claim by the
United States that the Certificate of Control is an import license must be rejected.

The Lack of Approval of Certain Individual Certificates of Control does not Amount to a Prohibition
or Restriction of Rice Imports within the Meaning of Article XI:1 of the GATT 1994

21. Having established that the Certificate of Cont rol is not an import license within the meaning
of the Agreement on Import Licensing Procedures, Tu rkey considers that the Certificate of Control
cannot be considered an import license under GATT Ar ticle XI:1. The United States fails to indicate
in its pleading on what grounds Turkey's Certificate of Control (and the alleged denial thereof) can or
should be considered an " other measure " for purposes of the application of GATT Article XI.
Because of the de jure and de facto operation of the Certificate of Control, it is clear that no
"prohibition" or " restriction" of rice importation through any " other measure ", falling within the
meaning of GATT Article XI:1, has occurred through th e alleged 'denial of Certificates of Control to
import rice'.

22. The United States has failed to show that Turkey 's alleged 'denial of Certificates of Control to
import rice' constitute an " other measure " within the meaning of GATT Article XI:1 and a de jure
and/or de facto " prohibition" or " restriction" of the type that GATT Article XI considers a
quantitative measure that should not be " instituted or maintained ". As there is no " restriction" or
"prohibition", the nature of the "measure" is of no relevance. For this reason, the claim by the United
States under GATT Article XI must be rejected.

The Lack of Approval of Certain Individual Cer tificates of Control does not Constitute a Measure
within the Meaning of Article 4.2 of the Agreement on Agriculture

23. Having indicated that the Certificates of Control are not import licenses within the meaning of
the Agreement on Import Licensing Procedures, that th ere is clearly no 'denial' of Certificates of
Control, and that there is no de jure or de facto import prohibition or restriction within the meaning of
GATT Article XI:1, Turkey maintains that there cannot be " discretionary import licensing " and/or
"quantitative import restrictions " within the meaning of Article 4.2 of the Agreement on Agriculture
and footnote 1 thereof. Having conclusively dem onstrated that there is no violation of GATT
Article XI, Turkey believes that no further scr utiny should be conducted under the Agreement on

Agriculture. For this reason, the claim by the United States under Article 4.2 of the Agreement on
Agriculture must be rejected.

The Publication and Administration of Turkey's Tr ade Regulations Complies with the Relevant
Obligations under Article X of the GATT 1994

24. Turkey considers that its trade regulations are in full compliance with the transparency
obligations under Article X of the GATT, as all releva nt laws, regulations and administrative rulings
with respect to Turkey's import regime for products, and in particular for rice, were always promptly
published. All requirements connected to the Certif icates of Control, including the accompanying
documentation that must be provided for customs pur poses, have systematically been published as
indicated in the factual background. Incidentally, Turkey believes that the documents referred to by
the United States as 'Letters of Acceptance', do not fall within the letter and the scope of GATT
Article X in that they are mere instruments of internal communication among Turkish administrators
and public officials.

25. Finally, the obligation under GATT Article X:2 does not appear to be pertinent to the case at
issue in that the 'Letters of Acceptance' are not " measures of general application " that need to be
published ahead of enforcement. Again, as indicated by the Appellate Body in EC Poultry , the
transparency obligation of Article X relates to the publication and administration of 'laws,
regulations, judicial decisions and administrative ruli ngs of general application', rather than to the
substantive content of such measures. The 'Letters of Accep tance' are never enforced and, in fact,
cannot be legally enforced by any party (i.e., th e importers, the administration, or the courts).
Therefore, the related claim by the United States must be rejected.

Articles 1.4 and 3.5 of the Agreement on Import Licensing Procedures do not Apply

26. Along the same lines, Turkey reaffirms that the Certificates of Control are not import licenses
within the meaning of the Agreement on Import Licen sing Procedures. Therefore, the claim by the
United States that Turkey has acted inconsistently with the obligations of transparency and due-
process of Articles 1.4(a) and 1.4(b) of the Agreement on Import Licensing Procedures must be
rejected for the inapplicability, in the case at issue, of the Agreement on Import Licensing Procedures.

On the US Claims Relating to Turkey's Tari ff Rate Quotas Regime Requiring Domestic
Purchase

The Domestic Purchase Requirement within Turkey' s TRQ Regime is not Inconsistent with
Article III:4 of the GATT 1994 in That it does not A ccord Imported Rice Treatment Less Favourable
Than Domestic Rice

27. Turkey believes that its domestic purchase requirement (DPR) does not ' affect the internal
sale, offering for sale, purchase (…) or use ' of imported rice. In relevant part, the key issue with
respect to the operation of Turkey's DPR and the allegations made by the United States under GATT
Article III:4 appear to rest on the circumstance that the DPR would ' affect the internal sale, offering
for sale, purchase (…) or use ' of imported rice by "adversely modifying the conditions of competition
between domestic and imported products". The United States has failed to prove this allegation.

28. In particular, it is wrong and misleading to st ate that the fulfilment of the DPR by importers
"provides the only way to import rice into Turkey ". In fact, as widely known and as effectively
evidenced by the trade-flows, any importer is free to import whatever quantity of rice into Turkey
from whatever country at the MFN or applied rate of duty. The regime of importation which was
applied within the TRQ was meant to provide an adva ntage to importers of foreign rice to adequately
supply the Turkish rice market. In fact, it is well known that Turkey is a net importer of rice and that

imports are essential to stabilize the market (both in terms of price and quantities available). Turkey
maintains that the opening itself of its TRQ was a trade policy that, while being necessary to stabilize
the domestic market, resulted in the modification of the conditions of competition between domestic
and imported products in favour of imported products.

29. The success rate in terms of applications for import licenses and volumes of imported rice
within the TRQ clearly indicates that, despite the allegations of the United States, a considerable
degree of appeal and competitive advantage was retained by the TRQ system, albeit " affected by the
DPR system", in the eyes and business determinations of importers of foreign rice, independently of
the country of origin. Had this element of compe titive advantage not been there, the importers could
still have imported rice at the MFN or applied rate of duty. In relation to the eligibility criteria,
Turkish regulations never restricted the issuan ce of import licenses for rice imports under the TRQ
system only to domestic rice producers. In fact, one of the categories eligible to receive import
licenses were " those who make purchase of paddy rice or rice from Turkish Grain Board " (TMO).
The United States maintains in its submission that this category would 'undoubtedly be domestic
producers as well', but fails to argue or prove the validity of this assertion. The United States has also
failed to prove that, '(t)his state of affairs negativ ely affects competitive conditions of imported rice in
the Turkish marketplace'. For all these reasons, the claims by the United States that Turkey has acted
inconsistently with GATT Article III:4 must be rejected.

Turkey has not Acted Inconsistently with Article XI:1 of the GATT 1994 Because its Domestic
Purchase Requirement and the Eligibility Criteria do not Constitute Restrictions on Imports Other
Than in the Form of Duties, Taxes or Other Charges

30. The TRQ regime, and its DPR system, only restricted imports in relation to the TRQ trade
volumes (i.e., those imported at preferential rates) and in a strict non-discriminatory fashion, but never
altered or removed the ability of importers to import unlimited quantities or rice from any origin at the
applied or MFN bound rate. Therefore, it never resulted in a substantial restriction on imports of rice.
Furthermore, the import licensing regime used to administer the TRQ regime was an automatic import
licensing system and, therefore, not falling within the scope of GATT Article XI. There was never
any de jure restriction of rice importation into Turkey since nothing in the relevant laws and
regulations ever diminished the ability to impor t at the applied or MFN bound rates of duty.
Furthermore, the TRQ regime acted to confer an advantage to importers of rice at preferential rates
which available data show to have been largely u sed by importers, independently of the country of
origin and despite the eligibility criteria of the DP R. Therefore, the claim that Turkey has acted
inconsistently with GATT Article XI:1 in relation to the domestic purchase requirement and eligibility
criteria of its TRQ regime must be rejected.

Other Claims

31. Turkey indicated that no violation Article 2.1 of the Agreement on Trade-Related Investment
Measures can be argued given that no violation of GATT Article III:4 was maintained when the TRQ
system was in force. The DPR instituted by Turkey under the TRQ regime did not amount to a
measure in violation of GATT Article III:4 since it did not accord treatment less favourable to
imported products nor did it adversely affect th e conditions of competition to the detriment of
imported products.

32. Turkey also showed that its TRQ regime was not based on discretionary import licensing and
it is not correct to state that non-tariff measures we re maintained through state trading enterprises in a
way which made the DPR inconsistent with Artic le 4.2 of the Agreement on Agriculture. In
particular, Turkey's import licensing system for pur poses of allocating the TRQ to traders has never
been a tool of discretionary import licensing. On the contrary, this system has always been an
automatic import licensing system where approval of import licenses would be granted in all cases,

provided that all application requirements were met by importers. Furthermore, Turkey recalls that
the TMO was only one of the possible providers of domestic rice under the three categories of the
DPR (i.e., paddy producers having permission to plant paddy rice, their cooperatives and unions or the
TMO). Therefore, the United States failed to prove how the TMO could be in a position to operate
non-tariff measures on imports of TRQ rice.

33. For these reasons, all the related claims by the United States that Turkey has acted
inconsistently with its WTO obligations under the covered agreements must be rejected.

US Claims Relating to Turkey's Import Licensing Regime as a Whole

34. Turkey indicated that there is no de jure or de facto 'denial' of approval of Certificates of
Control in breach of GATT Article XI. The Certificates of Control are not 'import licenses' but
administrative forms relevant for " customs purposes", which are aimed at ensuring compliance with
legitimate objectives. Turkey has also provided re levant data and trade statistics clearly indicating
that MFN trade in rice has effectively occurred thro ughout the operation of the TRQ regime. There is
no legal or operational link between the legislativ e framework that provides for the TRQ regime and
the one regulating MFN trade would aim at seriously restricting market access. There is no
prohibition or restriction connected with either the Certificates of Control or Turkey's TRQ regime.
There are no discretionary import licensing procedures. There are no seasonal bans. Therefore, none
of these instruments has ever acted, either individua lly or in combination with one another, to deter
full utilization of the quotas opened within the TRQ re gime or to prohibit or restrict MFN trade.
Turkey also maintained that its system of rice im portation as a whole was never inconsistent with the
Agreement on Agriculture and the Agreement on Import Licensing Procedures.

35. Finally, Turkey emphasized that the legisl ative framework providing for the TRQ regime,
including the domestic purchase requirement, is no longe r in force. The legal validity of all relevant
legislation expired before the commencement of the Panel proceedings. Turkey has not renewed
these measures, neither extending them nor adopting new legislative instruments. Turkey submitted
that certain Panels and the A ppellate Body have found it " inconsistent" to make recommendations on
measures which were no longer in force. In particular, in Dominican Republic – Cigarettes, the Panel
did not find it appropriate to recommend to the Disp ute Settlement Body that it make any request to
the Dominican Republic regarding this measure si nce it was no longer in force. For these reasons,
Turkey respectfully requested the Panel to either refrain from making findings on the measures related
to Turkey's TRQ regime as no longer in force, or, should the Panel consider making these findings
necessary for purposes of securing a positive solution to the dispute, not to make any recommendation
to the Dispute Settlement Body.

Conclusion

36. For all the reasons set out above, Turkey respect fully requested the Panel to reject all claims
made by the United States and find that Turkey's relevant laws, regulations and procedures, both in
relation to MFN and TRQ rice imports, are not inconsistent with Articles III:4, X:1, X:2, and XI:1 of
the GATT 1994; Article 4.2 of the Agriculture Agreemen t; Articles 1.4(a) and (b), 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 Agreement on Import Licensing
Procedures; and Article 2.1 and paragraph 1(a) of Annex 1 of the Agreement on Trade-Related
Investment Measures.

ANNEX A-3

THIRD PARTY WRITTEN SUBMISSION BY CHINA
(18 October 2006)

I. INTRODUCTION
1. The People's Republic of China (hereafter "China") makes this third party submission because
of its systemic interests in the correct interpretation and application of the General Agreement on
Tariffs and Trade 1994 (the "GATT 1994") , and the Agreement on Trade-Related Investment
Measures (the "TRIMs Agreement") in relation to the present dispute.
2. In this written submission, firstly we will discu ss the proper interpretation of Article XI:1 and
Article III:4 of GATT 1994. Then, we will address the question of application of the TRIMs
Agreement and the measures at issue.
II. ARTICLE XI:1 OF GATT 1994
3. The US alleges that, Certificates of Control is an import license, and since September 2003,
the competent authority of Turkey has not issued Cert ificates of Control for rice to be imported at the
bound tariff rates, thereby effectively preventing any out-of-quota imports.
1 However, Turkey
disputes this fact and by claiming that it serves th e purpose of customs, argues that Certificates of
Control is not an import license, and has been approved all the time.2
4. On this point, China is of the view that, th e essence of the issue under GATT Article XI:1 is
that whether the Certificate of Control prohibits or restricts trade of rice in practice. Even assuming,
arguendo, that the Certificate of Control is not an impor t license, if it prohibits or restricts the import
of rice, it may still constitute an "other measure" which is inconsistent with GATT Article XI:1.
5. As to the interpretation of the term "restricti on" in GATT Article XI:1, the panel of the case
India-QRs held that the scope of the term "restriction" in Article XI:1 was also broad, as seen in its
ordinary meaning, which was "a limitation on action, a limiting condition or regulation". 3 Another
panel endorsed this finding and noted that, "[o]n a plai n reading, it is clear that a 'restriction' need not
be a blanket prohibition or a precise numerical limit."4
6. To give a clearer interpretation of restriction or limitation, China considers that the following
elaboration of the panel in India – Quantitative Restrictions is illuminating:
"[After examining several GATT panel reports, the panel stated that] These reports
are consistent with the ordinary mean ing noted above, as discretionary or non-
automatic licensing systems by their very nature operate as limitations on action since
certain imports may not be permitted. Thus, in light of the terms of Article XI:1 and
these adopted panel reports, we conclude that a discretionary or non-automatic import
licensing requirement is a restriction prohibited by Article XI:1."
7. Although this statement was made towards import license, the rationale is applicable to "other
measures" under GATT Article XI:1. In other words, if an "other measure" subject to the discretion of

1 The US first written submission, paras. 59-73.
2 Turkey's first written submission, paras. 47-69.
3 Panel Report, India – Quantitative Restrictions, para. 5.128.

a government agency and may block certain imports , such measure should be deemed to operate as
limitations on imports and is not permitted by Article XI:1. Specific to this case, if the Certificates of
Control has effect of prohibition or limitation on importation of rise, such Certificate probably
constitutes restrictions on imports and violates Article XI:1.
III. ARTICLE III OF GATT 1994
8. With respect to domestic purchase requirement , the US claims that it violates GATT
Article III:4, whereas Turkey denies such claim. Specifically, Turkey argues that with the benefit of
lower tariff rate, the domestic purchase requirement actually altered the conditions of competition in
favour of imported product, and therefore was consistent with Article III:4.
5
9. However, in China's view, such line of reasoni ng seems questionable. Article III deals with
the comparison of treatments between the produc ts imported and national products, and has no
relation to the level of tariff. If domestic purchase requirement alters the competition conditions to the
detriment of imported products and thus violates Arti cle III:4, the violation could not be redressed or
offset by the benefit of lower tariff rate. Accord ingly, Turkey can not invoke the beneficial tariff
under the TRQ as the excuse from violation of Article III:4, if such violation is found by the panel.
IV. THE APPLICATION OF TRIMS AGREEMENT
10. The US claims that Turkey is in breach of Ar ticle 2.1 and Paragraph 1( a) of the Annex 1 of
the TRIMs Agreement. On this point, the United St ates argues that the TRIMs Agreement does not
define what is a "trade-related investment measu re" that would breach Article III:4, and Turkey's
domestic purchase requirement satisfies both of the two elements contained in paragraph 1(a) of
Annex 1 of the TRIMs Agreement; thus, the measure at issue is inconsistent with Article 2.1 and
Paragraph 1(a) of Annex 1 of the TRIMs Agreement.
6
11. Turkey argues that the subject measure is cons istent with GATT Article III:4, and therefore
does not violate Article 2.1 of the TRIMs Agreement.7 It seems that Turkey ignores the fact that the
US fails to define what is a "trade-related i nvestment measure" and prove Turkey's measure
constitutes a TRIM8. China wishes to raise its observation in this regard.
12. Article 2 of the TRIMs Agreement provides:
1. Without prejudice to other rights and obligations under GATT 1994, no
Member shall apply any TRIM that is incons istent with the provisions of Article III
or Article XI of GATT 1994.
2. An illustrative list of TRIMs that ar e inconsistent with the obligation of
national treatment provided for in paragr aph 4 of Article III of GATT 1994 and the
obligation of general elimination of quantitative restrictions provided for in paragraph
1 of Article XI of GATT 1994 is contained in the Annex to this Agreement.
13. Concerning the claim made under Article 2 of the TRIMs Agreement, the panel in
Indonesia – Autos spelt out that "[b]y its terms, Article 2.1 requires two elements to be shown to

5 Turkey's first written submission, paras. 95-99.
6 The US first written submission, paras. 110-112.
7 Turkey's first written submission, paras. 110-113.
8 TRIM is the abbreviation of "trade-related investment measure", note added by China.

establish a violation thereof: first, the existence of a TRIM; second, that TRIM is inconsistent with
Article III or Article XI of GATT. "
9
14. China wishes to stress that th e TRIMs Agreement is a fully fledged treaty with autonomous
legal existence, and it must have its own application scope. In fact, Article 1 of the TRIMs Agreement
which is entitled "Coverage," expressly provides:
This Agreement applies to investment measures related to trade in goods only
(referred to in this Agreement as "TRIMs").
15. Although the TRIMs Agreement does not define what a TRIM is, this term could be
interpreted properly according to the prin ciple set forth in Article 3.2 of the Understanding on Rules
and Procedures Governing the Settlement of Dispute (the "DSU"). In no case it is proper to bring a
measure out of the coverage of TRIMs Agreement under the jurisdiction of it.
16. Furthermore, the chapeau of paragraph 1 of Annex 1 of the TRIMs Agreement states that:
TRIMs that are inconsistent with the obliga tion of national treatment provide for in
paragraph 4 of Article III of GATT 1994 include those […](Emphasis added.)
17. This provision, corresponding with the provision of Article 1, clearly shows that, before the
examination of paragraph 1(a) of Annex 1 of the TRIMs Agreement, a measure must firstly be found
to be a TRIM.
18. According to above-mentioned principles, the United States, as the complaining party, should
establish prima facie cases for the two elements before the Panel proceeds to consider its claim under
Article 2.1 of the TRIMs Agreement, but it failed to do so.
19. If the reasoning put forward by the United States prevailed, a measure could jump over
Article 1 and the chapeau of paragr aph 1 of Annex 1, be considered directly under Paragraph 1(a) of
Annex 1 of the TRIMs Agreement. In such case, Ar ticle 1 and the chapeau of paragraph 1 of Annex
1of the TRIMs Agreement would be turned superfluous and meaningless.
V. THE MEASURES AT ISSUE
20. China notices that claims made by the United States are divided into three groups, namely,
Turkey's denial of import licenses, Turkey's TRQ regime requiring domestic purchase, and Turkey's
import licensing regime as a whole. The United States did not define "Turkey's import licensing
regime as a whole". According to the context of the US's first written submission, this term seems to
refer to the joint operation of Turkey's TRQ regi me and Certificate of Control system, which have
already been challenged separately.
21. Although Turkey does not disagree with the identification and categorization of subject
measures, China is concerned about such kind of approach of challenging a regime "as a whole".
Generally speaking, the scope of the measures challe nged under the title of "regime as a whole" tends
to be vague and can not meet the requirement of sp ecificity in Article 6.2 of the DSU. As to the
present dispute, the "as a whole" claim did not appear in the US's panel's request and should not be
included in the panel's terms of reference.

VI. CONCLUSION
22. In the light of the relevant WTO/GATT jurisprudence and the analytical approach with regard
to the measures in question set forth above, China hopes the viewpoints and various issues raised in
this submission may assist the Panel in its decision.

ANNEX A-4

THIRD PARTY WRITTEN SUBMISSION BY EGYPT
(18 October 2006)

I. INTRODUCTION
1. The Arab Republic of Egypt (hereinafter, "Egypt ") welcomes this opportunity to provide the
Panel with its views on the legal claims raised by the United States of America (hereinafter, the
"United States") with respect to the measures set up by Turkey to regulate imports of rice.
2. Egypt has decided to intervene as a third party in this dispute since it is an important producer
of rice and has, traditionally, been amongst the main exporters of rice to Turkey. Also, Egypt has a
systemic interest in the correct interpretation of the WTO Agreements and, in particular, the General
Agreement on Tariff and Trade 1994 (hereinafter, the "GATT 1994"), the Agreement on Agriculture
and the Agreement on Import Licensing Procedures (hereinafter, the "Import Licensing Agreement").
3. Egypt has essentially limited this submission to questions related to the proper interpretation
of Articles III:4 and XI:1 of GATT 1994 and Artic le 4.2 of the Agreement on Agriculture. Its
conclusions are as follows:
 – prohibitions or restrictions on the im portation of rice are inconsistent with
Article XI:1 of the GATT 1994;

 – restrictions on imports of rice are not permitted under Article 4.2 of the Agreement on
Agriculture; and,

– domestic purchase requirements affecting im ports of rice are inconsistent with
Article III:4 of the GATT 1994.
4. Egypt recognizes that many of the issues raised in this dispute are solely or primarily factual
in nature.
5. Given the short period between the deadline for the first written submission of Turkey and the
deadline for the third party submission, Egypt has been unable to incorporate in this submission a
response to all the arguments brought by Turkey. Consequently, Egypt reserves it right to address new
arguments and further develop the arguments set out hereinbelow at the third party session of the first
substantive meeting of the Panel. It will also be av ailable to answer any questions the Panel may have
on this occasion.
II. IMPORT PROHIBITIONS OR RESTRICTIONS OF RICE ARE INCONSISTENT
WITH ARTICLE XI:1 OF THE GATT 1994
1. Any General Denial of Certificates of Control for Imports of Rice is to be Considered as
a Prohibition or Restriction under Article XI:1
6. The United States claims that Turkey's denial to issue Certificates of Control to importers
actually restricts or prohibits the importation of ri ce at the over-quota rate and is thus, inconsistent
with Article XI:I of the GATT 1994. The United Stated argues that the Certificate of Control is an
"import license" or an "other measure" within the m eaning of Article XI:1 because Turkey's Ministry
of Agriculture and Rural Affairs (hereinafter, "MARA ") requires importers to submit an application

for a Certificate and that application must be granted in order for the importation to take place 1. It is
further contended that the Certificates would, in any event, be a prohibition or restriction on
importation for the purposes of Article XI:1.
7. In response to the claims raised by the United St ates, Turkey contends that the Certificates of
Control are not import licenses within the meaning of Article 1.1 of the Import Licensing Agreement
since they are required exclusively for customs purposes and the lack of approval of certain individual
Certificates cannot be considered to amount to a pr ohibition or restriction on rice imports within the
meaning of Article XI:12.
8. Article XI:1 of the GATT 1994 provides:
"No prohibitions or restrictions other than duties, taxes or other charges, whether
made effective through quotas, import or export licenses 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 or on the exportation or sale for export of
any product destined for the territory of any other contracting party."
9. In Dominican Republic – Import and Sale of Cigarettes , the Panel stated that "Article XI:1 of
the GATT covers prohibitions and re strictions, other than duties, taxes or other charges, on the
importation or the expor tation of products"
3. Previously, in India – Quantitative Restrictions, the
Panel had found that "[T]he text of Article XI:1 is very broad in scope, providing for a general ban on
import or export restrictions or pr ohibitions 'other than duties, taxes or other charges'." Referring to
the findings of Japan – Semi-conductors , the Panel then noted that "the wording of Article XI:1 is
comprehensive: it applies 'to all measures institute d or maintained by a [Member] prohibiting or
restricting the importation, exportation, or sale for export of products other than measures that take the
form of duties, taxes or other charges. The scope of the term 'restriction' is also broad, as seen in its
ordinary meaning, which is 'a limitation on action, a limiting condition or regulation'" 4. In India –
Autos, the Panel confirmed that the expression "other me asures" in Article XI implies a "broad scope"
as to the types of measures that are covered. It is the "nature of the measure as a restriction in relation
to importation which is the key factor to consider in determining whether a measure may properly fall
within the scope of Article XI:1"5.
10. Considering the above-mentioned precedents, Egypt submits that regardless of the form that a
quantitative import restriction or prohibition takes, it is inconsistent with Article XI:1. If, as claimed
by the United States, the Certificates of Control actually restricted or prevented the importation of rice
into Turkey they should be considered as measures falling within the scope of Article XI:1.
11. The fact that the Certificates of Control ma y be administrative forms that are required
exclusively for customs purposes, within the me aning of Article 1.1 of the Import Licensing
Agreement, does not confirm the consistency of th e Turkish rice import regime with Article XI:1.
Certificates of Control, if not considered as impor t licenses, must be considered as measures covered
by Article X1:1, since they are not duties, taxes or other charges.
12. As indicated by Turkey, the essential element with respect to the consistency of its system of
Certificates of Control with Article XI:1 is whether it resulted in a quantitative restriction 6. In order

1 First written submission of the United States, paras. 59-63.
2 First written submission of Turkey, paras. 47-69.
3 Dominican Republic – Import and Sale of Cigarettes, para. 7.248.
4 India – Quantitative Restrictions, para. 5.128.
5 India – Autos, para. 7.261.
6 First written submission of Turkey, para. 62.

to determine this element, Egypt submits that all th e elements before the Pane l should be considered.
The fact that the unpublished Letters of Acceptance issued by the Turkish Minister of Agriculture to
MARA to delay the issuance of Certificates of Control may not be considered as "laws, regulations,
judicial decisions or administrative rulings" is ir relevant in determining whether the system of
Certificates of Control is consistent with Article XI:1. In Korea – Various Measures on Beef, in order
to establish that the Korean beef import regime imposed restrictions within the meaning of
Article XI:1, the Panel considered the lack and dela ys of the tendering authority in calling for tenders
and its discharge practices
7. Consequently, to determine whether the alleged denial of Certificates of
Control constitutes a prohibition or restriction under Article XI:1, the Letters of Acceptance issued by
the Minister of Agriculture should be considered, amongst other elements.
2. The Joint Operation of a TRQ Regime and a General Import Regime Restricting or
Preventing Imports of Rice into Turkey is Inconsistent with Article XI:1
13. The United States argues that the eligibility criteria to purchase rice under the TRQ are in
breach of Article XI:1 because they limit the range of entities that may import rice into Turkey and,
therefore constitute a restriction on importation within the meaning of that Article 8. Also, the United
States claims that the TRQ system, operating in conjunction with the failure of MARA to grant
Certificates of Control is inconsistent with Article XI:19.
14. In response to these arguments, Turkey contends that since the TRQ regime, and its domestic
purchase requirement obligation, only cover imports made under the TRQ regime, and the latter does
not prevent importers from importing rice outside the TRQ, the TRQ eligibility criteria do not restrict
the importation of rice into Turkey
10. For the same reason, Turkey argues that the TRQ regime, in
conjunction with the general import regime, i.e., c oncerning imports outside the TRQ, is consistent
with Article XI:111.
15. Egypt considers that in order to determin e whether or not the TRQ eligibility criteria
constitute a restriction to the importation of rice under Article XI:1, the Panel must examine the
general import regime together with the TRQ. I ndeed, both the general import regime and the TRQ
regime actually govern the importation of rice into Turkey.
16. The joint examination of both the TRQ and genera l regime is particularly pertinent if the
Panel was to concur with the United States in finding that the denial to issue Certificates of Control
outside the TRQ regime has forced importers to import under the TRQ regime. If this was the case,
the Panel should determine whether the TRQ eligibility criteria has restricted or prevented imports of
rice into Turkey within the meaning of Article XI :1. In line with the conclusions of the Panel in
India – Quantitative Restrictions 12, if it is found that the TRQ regime is a discretionary or non-
automatic import licensing regime, it should be considered as a restriction prohibited by Article XI:1.
Also, if it is established that no imports of rice were possible during the periods where access to the
TRQ was suspended, the resulting ban should be co nsidered as a prohibition within the meaning of
Article XI:1.

7 Korea – Various Measures on Beef, para. 767.
8 First written submission of the United States, paras. 106-109.
9 First written submission of the United States, paras. 120-124.
10 First written submission of Turkey, paras. 104-109.
11 First written submission of Turkey, paras. 124-128.
12 India – Quantitative Restrictions, paras. 5.130-131.

III. RESTRICTIONS ON IMPORTS OF AGRICULTURAL PRODUCTS ARE NOT
PERMITTED UNDER ARTICLE 4.2 OF THE AGREEMENT ON AGRICULTURE
17. The United States claims that Turkey's denial to issue Certificates of Control to importers of
rice is inconsistent with Article 4.2 of the Agre ement on Agriculture since it constitutes a measure of
the kind required to be converted into ordinary customs duties 13. Also, the United States argues that
the domestic purchase requirement provided for under the TRQ regime, considered independently or
with the denial of Certificates of Control under the general import regime, are breaching Article 4.214.
18. Turkey considers that it has complied with Article 4.2 since its Certificates of Control are not
import licenses, their issuance has not been denied , and there is no prohibition or restriction on
imports of rice within the meaning of Article XI:1 of the GATT 1994 15. With respect to its TRQ
regime, Turkey contends that it is also consistent with Article 4.2 since it rests on an automatic import
licensing system16.
19. Article 4.2 of the Agreement on Agriculture prevents Members from maintaining, resorting to
or reverting "to any measures of the kind which have been required to be converted into ordinary
customs duties, except as otherwise provided for in Article 4.2". Footnote 1 to Article 4.2 provides
that the measures covered include, amongst others: "quantitative import restrictions", "discretionary
import licensing" and "similar border measures other than ordinary customs duties".
20. In Chile – Price Band System , the Appellate Body found that "A rticle 4.2 was drafted in the
present perfect tense to ensure that measures that were required to be converted as a result of the
Uruguay Round -- but were not converted -- could not be maintained, by virtue of that Article, from
the date of the entry into force of the WTO Agreement on 1 January 1995"17. The Appellate Body also
considered that the reference to the residual category of "similar border measures other than
ordinary customs duties", indicates that "the drafters of the Agreement did not seek to identify all
'measures which have been required to be converted' during the Uruguay Round negotiations"18.
21. In the light of the interpretation of Article 4.2 given by the Appellate Body in Chile – Price
Band System , Egypt considers that all measures that s hould have been converted into ordinary
customs duties are inconsistent with this Artic le. These measures include "discretionary import
licensing" regimes but also all measures generally pr eventing or restricting importation of agricultural
products. Consequently, if the Panel was to find that the denial of Certificates of Control and the TRQ
regime, either independently or in conjunction, proh ibit or restrict imports of rice into Turkey, it
should establish a violation of Article 4.2 has occurred. Whether or not the Certificates of Control and
the TRQ regime are a "discretionary import licensi ng systems" or "quantitative import restrictions"
within the meaning of Article 4.2 ,should not limit th e Panel in its analysis of the consistency of the
measures at issue.
22. It should also be noted that panels have found that restrictions on agricultural products that
were found to be inconsistent with Article XI:1 of the GATT 1994 constituted violations of
Article 4.2. In Korea – Various Measures on Beef , the Panel, after having reached the conclusion that
the measures considered were inconsistent with Ar ticle XI, came to the conclusion that the same
measures were necessarily inconsistent with Artic le 4.2 of the Agreement on Agriculture and its

13 First written submission of the United States, paras. 74-78.
14 Paras. 113-115 and 125.
15 First written submission of Turkey, para. 71.
16 Para. 115.
18 Para 210.

footnote referring to non-tariff measures maintained through state-trading
19. Similarly, in India –
Quantitative Restrictions , the Panel, after having found that the measures at issue were violating
Article XI:1, considered that these measures violated Article 4.220.
IV. DOMESTIC PURCHASE REQUIREMENTS AFFECTING ALL IMPORTS OF RICE
ARE INCONSISTENT WITH ARTICLE III:4 OF THE GATT 1994
23. The United States alleges that the domestic purchase requirement imposed under the TRQ
regime is inconsistent with Ar ticle III:4 of the GATT 1994. In suppor t of its allegation, the United
States considers that imported and domestic products are "like produc ts"; that the measures governing
the TRQ regimes are to be considered as laws, regul ations or requirements "affecting their internal
sale, offering for sale, purchase, transportation or use"; and that imported rice is treated less
favourably than domestic rice and that the conditio ns for imported rice in the Turkish market are
being affected21.
24. Turkey expresses the opinion that the domestic purchase requirement of its TRQ regime does
not affect the "internal sale, offering for sale, purchase, transportation or use" of imported rice, neither
does it adversely modify "the conditions of co mpetition between domestic and imported products".
Therefore, Turkey claims that it has not acted inconsistently with Article III:422.
25. Article III:4 of the GATT 1994 provides:
"The products of the territory of any contr acting party imported into the territory of
any other contracting party shall be accord ed treatment no less favourable than that
accorded to like products of national origin in respect of all laws, regulations and
requirements affecting their internal sale, offering for sale, purchase, transportation,
distribution or use. The provisions of this paragraph shall not prevent the application
of differential internal transportation ch arges which are based exclusively on the
economic operation of the means of tran sport and not on the nationality of the
product."
26. In the event that the denial of the Certificates of Control by MARA is established and it is
found that importers had no other option than to import rice under the TRQ regime, the consistency of
this regime with Article III:4 must be consider ed. Indeed, Egypt submits that a violation of
Article III:4 can only be established if importers were deprived of their right to import without any
conditions, regarding the origin of the imported rice or the imported volumes in particular, at the
MFN or applied rates.
27. Since neither the United States nor Turkey di spute that the imported and domestic products
are "like" products and that the measures governi ng the TRQ regime are "laws, regulations or
requirements" within the meaning of Article III:4, one must examine whether these measures affect
the "internal sale, offering for sale, purchase, transp ortation, distribution or use" of imported rice and
whether imported products are treated less favourably then domestic products.
28. In Canada – Autos, the Panel noted that the word "aff ecting" in Article III:4 "has been
interpreted to cover not only laws and regulations which directly govern the conditions of sale or
purchase but also any laws or regulations which might adversely modify the conditions of competition

19 Korea – Various Measures on Beef, para. 768.
20 India – Quantitative Restrictions, paras. 5.238-242.
21 First written submission of the United States, paras. 86-87.
22 First written submission of Turkey, paras. 88-99.

between domestic a nd imported products" 23. In the framework of the US – FSC Article 21.5
proceedings, the Appellate Body interpreted "affecting" as having a "broad scope of application".
Further, in India – Autos , the Panel considered that the term "affecting" "goes beyond laws and
regulations which directly govern the conditions of sale or purchase to cover also any laws or
regulations which might adversely modify the conditions of competition between domestic and
imported products. 24 In the case at hand, Egypt considers that the TRQ regime criteria, and more
particularly the domestic purchase requirement, should be considered as affecting the internal sale,
offering for sale purchase and use of imported rice, since importers must comply with these criteria
when importing rice under the TRQ.
29. The text of the first sentence of Article III:4, in addition to past panel reports, clearly provides
that imported products shall be accorded treatment no less favourable than the like domestic products
once they have been cleared through customs. This is in line with the broader objective of Article III
"to provide equal conditions of competition" 25. The words "treatment no less favourable" call for
"effective equality of opportunities for imported pr oducts in respect of the application of laws,
regulations or requirements affecting the sale, offe ring for sale, purchase, transportation, distribution
or use of products"26. In India – Autos, having noted that the measures at issue requirement generated
"an incentive to purchase and use domestic products and hence creates a disincentive to use like
imported products", the Panel cons idered that they were modifying the conditions of competition in
favour of the domestic products27.
30. If the TRQ regime was the only option available to importers to import rice into Turkey, it is
submitted that the domestic purchase requirement adversely modified the conditions of competition
between imported and domestic rice to the benefit of the latter. Regardless of the eventual unit cost of
rice imported under the TRQ regime compared to domestic rice, the obligation for importers to
purchase domestic rice as a pre-condition for the im portation of rice accords less favourable treatment
to imported rice since domestic producers were not s ubject to a similar requirement and should, thus,
be considered contrary to Article III:4.
V. CONCLUSION
31. Egypt thanks the Panel for providing it with an opportunity to comment on the issues at stake
in these legal proceedings and hopes that's its comments will prove to be useful.

23 Canada – Autos, para. 10.80.
24 India – Autos, para. 7.196.
26 US – Section 337, para. 5.11.
27 India – Autos, paras. 7. 201-202.

ANNEX A-5

THIRD PARTY WRITTEN SUBMISSION
OF THE EUROPEAN COMMUNITIES
(18 October 2006)

I. INTRODUCTION
1. The European Communities (hereafter "the EC") makes this third party submission because of
its systemic interest in the correct inte rpretation of Articles III:4, XI:1 of the GATT 1994, Article 4.2.
of the Agreement on Agriculture, Article 2.1 and Paragraph 1(a) of the Annex 1 of the Agreement on
Trade-Related Investment Measures (TRIMs Agreement), the Agreement on Import Licensing
Procedures and Articles 3.3 and 11 of the Dispute Settlement Understanding (DSU).
2. Many of the issues in dispute involve questions of fact on which the EC does not comment. It
appears that on most if not all aspects of facts US and Turkey have directly opposing views. This
submission will therefore address only a limited number of issues of legal interpretation which are of
particular interest to the EC. The EC reserves its right to comment on other matters in its oral
statement.
3. The EC notes that the US first submission a ppears to include some ambiguities on how the
alleged Turkish system should be examined under the different relevant agreements. In particular, the
US first separates the alleged denial of import licenses from the allegations concerning the Turkish
tariff rate quota ('TRQ') on rice but then in the third part it examines these two issues in conjunction.
However, the US does not clarify whether the separate analysis of the two parts of the alleged system
is its primary position and whether the third part i.e. analysis of the parts of the alleged system in
conjunction is an alternative position.
4. Section II of this written submission addr esses considerations on whether the US first
submission alleges an "as such" finding of the Turkis h measures or rather a series of "as applied"
measures. Section III in turn examines the definitio n of an import licence. Sections IV and V then
examine some issues relating to th e borderline between Article XI GATT and Article 4.2. of the
Agreement on Agriculture and Article III:4 of the GATT respectively. Finally, Section VI contains
some considerations due to the fact that the Tu rkish TRQ regime has ceased to exist. Section VII
summarises the main conclusions.
II. DOES THE US MAKE AN "AS SUCH" OR AN "AS APPLIED" CLAIM?
5. The EC considers that the way in which the clai ms are put forward by the United States raises
systemic issues that the Panel should consider with particular care.
6. In the introduction to its first written submissi on, the United States states that "Turkey has
instituted a non-transparent, discretionary import licensi ng system to restrict an d, at times, eliminate
imports of rice".
1 Although not stated explicitly, the refere nce to a "system" could be understood to
refer to an "as such" claim instead of an "as appl ied" claim. In other words, the US appears to
consider that the Turkish system concerning imports of rice violates the relevant agreements and not
just its application in specific instances.

1 First written submission of the United States, para. 1.

7. Subsequently in its first written submission the United States describes the alleged denial of
import licenses inter alia as "an unofficial ban". 2 It appears that in particular with respect to the
alleged denial of import licenses the US case relies on internal documents of the Turkish
administration and reference is also made to oral instructions given to Turkish officials. In the view of
the EC these arguments appear to make rather an "as applied" claim than an "a s such" claim. In other
words, the US appears to be attacking the way the system is applied in practice.
8. The European Communities would also like to draw the attention of the Panel to the fact that
the United States is claiming that the alleged practice of denial i.e. the omission to grant the
Certificates of Control is a measure that falls within the category of a prohibited measure inter alia
under Article XI:1 of the GATT and Article 4.2. of the Agreement on Agriculture.
9. The EC respectfully submits that before viol ation of these provisions can be established on
the basis of the alleged practice not to grant impor t licenses i.e. an alleged omission, the US has the
burden of making a prima facie case by asserting relevant fact, adducing probative evidence in
support of such assertions of fact, and making and developing relevant legal argument.
10. The EC considers that a useful starting point is the definitions provided by the Appellate
Body in US – Zeroing (EC) . In this case the Appellate Body clarified that any act or omission
attributable to a WTO Member can be a measure of that Member for the purposes of dispute
settlement proceedings, within the meaning of Article 3.3 of the DSU. This includes not only acts
applying a law in a specific situation, but also act s setting forth rules or norms that are intended to
have general and prospective application, irresp ective of how or whether they are applied in a
particular instance.
3 This is so even if such rules or norms are not expressed in the form of a written
instrument.4
11. The Appellate Body has repeatedly emphasised the seriousness of "as such" claims, since they
seek to prevent Members ex ante from engaging in certain conduct. Thus, the implications of such
claims are obviously more far-reaching than "as app lied" claims since "as such" claims potentially
cover all instances of application of the measure and not only the ones identified by the complaint.
Consequently, a panel must not lightly assume the existence of a "rule or norm" constituting a
measure of general and prospective application. If a panel were to do so, it would act inconsistently
with its obligations under Article 11 of the DSU to make an objective assessment of the matter before
it.5
12. When an "as such" challenge is brought against a measure that is expressed in the form of a
written document, such as a law or regulation, there would, in most cases, be no uncertainty as to the
existence or content of the measure that has been challenged. The situatio n is different, however,
when a challenge is brought against an alleged rule or norm that is said not to be expressed in the
form of a written document. In such cases, the very existence of the challenged rule or norm may be
uncertain. Accordingly, particular rigour is require d on the part of a panel to support a conclusion as
to the existence of a rule or norm. A panel must carefully examine all concrete evidence regarding the
existence of the purported rule or norm in order to determine whether or not it can be challenged as
such.6

2 First written submission of the United States, para. 14.
3 Appellate Body Report, US – Zeroing (EC), paras. 187-188.
4 Appellate Body Report, US – Zeroing (EC), paras. 190-193.
5 Appellate Body Report, US – Zeroing (EC), paras. 189 and 196.
6 Appellate Body Report, US – Zeroing (EC), paras. 197-198.

13. There is thus a distinction between the existence of a measure and the content of a measure.
7
An enquiry into whether or not a measure exists should include all the evidence: Obvious matters to
consider are the author, nomenclature, date of a doption, procedure of adoption, place of adoption,
method of record and method of publication of the alleged measure.
14. Without prejudice to the question as to whether there is a violation of the relevant agreements,
the EC is not necessarily convinced that the alle gations of the United States in its first written
submission could lead to an "as such" finding. This is particularly the case with the US argumentation
concerning or relating to the alleged "denial of or failure to grant import licenses" (US claims A, B, C,
and part of K and L). The foundation of these cl aims is an alleged practice of the Turkish
administration not to issue the Certificates of Control. This practice is allegedly proven by the "Letters
of Acceptance", which apparently are not publicly available documents but rather internal documents
of the Turkish administration. Reference is also made to oral instructions given to officials. 8 It would
seem to the EC that on the basis of the facts before the Panel, there may rather be a series of "as
applied" measures (or a practice), which the US is inviting the Panel to construe as a measure and
condemn in "as such" terms.
III. THE DEFINITION OF AN IMPORT LICENSE
15. Article XI:1 of the GATT does not define what is an import license. Neither does the
Agreement on Agriculture define this notion. The EC considers that Turkey rightly draws the attention
of the Panel to Article 1.1 of the Agreement on Import Licensing Procedures , where import licensing
is defined as
administrative procedures 1 used for the operation of import licensing regimes
requiring the submission of an application or other documentation (other than that
required for customs purposes) to the relevant administrative body as a prior
condition for importation into the customs territory of the importing Member.

consider a procedure that involves e.g. product saf ety checks or SPS measures within the notion of
"customs purposes".
18. The EC draws the attention of the Panel to the f act that the US is also claiming violation of
the Agreement on Import Licensing. It is arguable that the Agreement on Import Licensing relates
more specifically to the matte r before this Panel than the GATT and the Agreement on Agriculture .
Therefore in accordance with the Appellate Body report in EC – Bananas9 the EC invites the Panel to
consider whether the alleged violations of the Agreement on Import Licensing should be considered
first before the alleged violations of Article 4.2. of the Agreement on Agriculture and the GATT.
IV. THE RELATIONSHIP BETWEEN ARTICLE XI OF GATT AND ARTICLE 4.2. OF
THE AGREEMENT ON AGRICULTURE
19. Referring to findings of previous panels, the Un ited States submits that where a measure with
respect to agricultural products is in consistent with Article XI:1 of the GATT, it is necessarily
inconsistent with Article 4.2 of the Agreement on Agriculture .10 This argument is advanced under all
three main sections of the US written submission i.e. in relation to the alleged denial of import
licenses, the claims relating to Turkey's tariff rate quota requiring domestic purchase and the two parts
of the alleged system read in conjunction.
20. The EC agrees with the US that there is a general systemic link between the two provisions.
However, the EC would like to point out that, apart from the footnote in Article 4.2 of the Agreement
on Agriculture in which reference is made to quantita tive import restrictions, no automatic link has
been made in the text of these provisions. The EC therefore considers that caution should be exercised
in concluding that the violation of Article XI:1 of the GATT would necessarily and in all
circumstances lead to the violation of Article 4.2. of the Agreement on Agriculture.
21. If the Panel were to conclude that the Turkish Certificate of Control is an import license and
that the matter would consequently be examined first under the Agreement on Import Licensing, there
is a further systemic question on the order of an alysis of the Turkish measures under the relevant
agreements. It is arguable that the Agreement on Agriculture should be considered more specific in
relation to the GATT in a situation where the import of a part icular agricultural product is at stake.
Consequently, in accordance with the Appellate Body report in EC – Bananas III 11 it is arguable that
the alleged violation of Article 4.2. of the Agreement on Agriculture should be considered first before
the alleged violations of the GATT.
V. ARTICLE III:4 VS. ARTICLE XI:1 OF THE GATT
22. In respect of the Turkish TRQ system the US considers that it violates Article III:4 of the
GATT. In the alternative, the US submits that the system violates Article XI:1 of the GATT.
23. Article XI:1 of the GATT 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 or on the exportation or sale for export of
any product destined for the territory of any other contracting party. [emphasis added]

9 Appellate Body Report, EC – Bananas III, paras. 202-204.
10 First written submission of the United States, claims B, I and L.
11 Appellate Body Report, EC – Bananas III, paras. 202-204.

24. Article III:4 of the GATT in turn states that
The products of the territory of any contracting party imported
 into the territory of
any other contracting party shall be accord ed treatment no less favourable than that
accorded to like products of national origin in respect of all laws, regulations and
requirements affecting their internal sale, offering for sale, purchase, transportation,
distribution or use. The provisions of this paragraph shall not prevent the application
of differential internal transportation ch arges which are based exclusively on the
economic operation of the means of tran sport and not on the nationality of the
product. [emphasis added]
25. In principle these two provisions regulate two distinct situations i.e. prohibitions or
restrictions on importation i.e. "border measures" (Article XI:I) on the one hand and, prohibition of
discrimination once the product has been imported into the territory of a WT O member country i.e.
"internal measures" (Article III:4) on the other hand . Therefore, in principle Article III only applies to
internal measures, not border measures and, vice versa, Article XI:1 only applies to border measures
but not internal measures.
26. However, it is not always easy to distinguish an internal measure from a border measure. The
Ad Note to Article III aims at clarifying this borderline:
Any internal tax or other internal charge, or any law, regulation or requirement of the
kind referred to in paragraph 1 which app lies to an imported product and to the like
domestic product and is collected or enfor ced in the case of the imported product at
the time or point of importation, is neverthel ess to be regarded as an internal tax or
other internal charge, or a law, regulation or requirement of the kind referred to in
paragraph 1, and is accordingly subject to the provisions of Article III.
27. Consequently, a prohibition or a restriction of th e import of a given product that fails e.g. to
meet an intended public health or consumer prot ection requirement which also applies to domestic
products is to be examined under Article III, not under Article XI.
28. However, in certain circumstances the same measures can be found to fall within the scope of
both Article III:4 and XI and, therefore, they may be examined as both border measures and internal
measures at the same time depending on which aspects of the measures are emphasised. This is
illustrated by the Panel ruling in India – Autos , where the Panel considered that India had acted
inconsistently with Article III:4 by imposing an obligation on automotive manufacturers to use a
certain proportion of local parts and components in the manufacture of cars and by imposing an
obligation to offset the amount of their purchases of previously imported kits and components, already
on the Indian market, by exports of equivalent valu e. However, the Panel also found a violation of
Article XI:1 due to India imposing an obliga tion on automotive manufacturers to balance their
importation of kits and components wi th exports of equivalent value.
12 Consequently, where a border
measure inconsistent with Article XI:1 is used to favour domestic production, it may also violate
Article III of the GATT.
29. The EC would also like to point out that an illustrative list of trade-related investment
measures (TRIMs) that are inconsistent with the obligation of national treatment provided for in
paragraph 4 of Article III of GATT and the obligation of genera l elimination of quantitative
restrictions provided for in paragraph 1 of Article XI of GATT is contained in the Annex to the TRIMs
Agreement.

30. The EC considers that a priori the domestic purchase requirement of the TRQ system would
seem to fall within the scope of Paragraph 1(a) of Annex 1 of the TRIMs Agreement.
VI. THE ABOLITION OF TURKEY'S TRQ REGIME
31. In its defence Turkey states that the legislative framework providing for the TRQ regime is no
longer in force. Consequently Turkey has made a request that the Panel refrain from making findings
on the measures related to Turkey's TRQ regime as no longer in force. Or, should the Panel consider
making findings necessary for purposes of securing a positiv e solution to the dispute, not to make any
recommendation to the Dispute Settlement Body (DSB).
32. In these circumstances the EC does not consider it necessary to examine more in detail the
expired Turkish TRQ regime. The EC only notes that should the Panel consider it necessary to make
findings on the TRQ regime to secure a positive solu tion to the dispute, the EC agrees with the
Turkish alternative position that there would not be a need to make any recommendation to the DSB.
VII. CONCLUSION
33. In the light of the foregoing considerations, the European Communities invites the Panel to:
• carefully examine the existence of a "rule or norm" constituting a measure of general
and prospective application

• consider the order of analysis of the releva nt agreements in the light of the Appellate
Body Report in EC – Bananas III

• consider that where a border measure is used to favour domestic production, it
violates also Article III of the GATT

• refrain from making any recommendations to the DSB on the Turkish TRQ regime.

34. The European Communities hopes that the preceding observations will prove useful in the
deliberations of the Panel and reserves its right to make further observations in the oral hearing.

ANNEX B

ORAL STATEMENTS BY THE PARTIES AND THIRD PARTIES
AT THE FIRST SUBSTANTIVE MEETING

Contents Page
Annex B-1 Executive summary of the opening oral statement by the
United States at the first substantive meeting (17 November 2006)
B-2
Annex B-2 Closing oral statement by th e United States at the first substantive
meeting (9 November 2006)
B-7
Annex B-3 Opening and closing oral statements by Turkey at the first
substantive meeting (8-9 November 2006)
B-9
Annex B-4 Oral statement by Australia at the third party session
(9 November 2006)
B-19
Annex B-5 Oral statement by China at the third party session
(9 November 2006)
B-23
Annex B-6 Oral statement by Egypt at the third party session
(9 November 2006)
B-25
Annex B-7 Oral statement by the European Communities at the third party
session (9 November 2006)
B-27
Annex B-8 Oral statement by Korea at the third party session
(9 November 2006)
B-29
Annex B-9 Oral statement by Thailand at the third party session
(9 November 2006)
B-31

ANNEX B-1

EXECUTIVE SUMMARY OF THE OPENING ORAL STATEMENT
BY THE UNITED STATES AT THE FIRST SUBSTANTIVE MEETING
(17 November 2006)

1. In its first submission, the United States made out a prima facie case that Turkey has breached
several provisions of the GATT 1994 and the WTO Agre ements, including with respect to barriers to
importation as well as to discrimination against im ported rice. For example, the United States
demonstrated that Turkey has maintained a WTO- inconsistent domestic purchase requirement (DPR)
as part of its tariff rate quota (TRQ) system. To import rice under the TRQ and obtain a lower rate of
duty, an importer must purchase substantial quantities of rice from the Turkish Grain Board (TMO) or
Turkish producers and producer associations in or der to obtain an import permit from Turkey's
Foreign Trade Undersecretariat (FTU). And only domestic rice qualifies an importer to obtain this
advantage – imported rice does not receive this advantage. Turkey's domestic purchase requirement
treats imported rice less favorably than domestic rice, thereby breaching Article III:4 of the GATT
1994.

2. Although the DPR makes it very expensive to import rice, importers ha ve no alternative but
to import rice under the TRQ because Turkey's Mini stry of Agriculture and Rural Affairs (MARA)
fails to grant licenses to import rice at the over-quota rates of duty. Through the unpublished "Letters
of Acceptance," Turkey's Minister of Agriculture repeatedly accepts recommendations from his staff
to "delay" the start date of the period in which su ch licenses, or "Certificates of Control," will be
granted, thereby ensuring that rice trade occurs unde r the TRQ. When even the TRQ is closed during
Turkey's annual rice harvest, no rice importation can o ccur. Turkey's denial of Certificates of Control
outside the TRQ regime is a prohibition or restric tion on importation that breaches Article XI:1 of the
GATT 1994.

3. Turkey has denied the US claims but has essentially ignored the extensive factual evidence
presented by the United States and, despite all eviden ce to the contrary, has asserted that Turkey's rice
regime actually provides an advantage to foreign rice producers over Turkish rice producers. Turkey
has failed to rebut the prima facie case made by the United States.

Definition of Import License

4. First, Turkey claims that the Certificate of Control is not an import license and hence is not
subject to the provisions of the Import Licensi ng Agreement and other provisions, because the
Certificate "amount[s] to administrative fo rms that are required exclusively for ' customs purposes'."
In its first submission, Turkey sets forth its propo sed criteria for when a doc ument is exclusively for
customs purposes (and hence should not be considered an import license). Turkey then asserts that,
since the Certificates of Control may be used fo r customs purposes, they are not licenses but rather
official documents for customs purposes.

5. This argument is unpersuasive. The fact th at a document is necessary to clear customs does
not mean it is not an import license. Indeed, impor t licenses will be used for customs purposes – that
is the very nature of an import license since importa tion cannot occur without it. The real question is
what else is the document used for. Here, the Cer tificate of Control is used to control importation –
not just in the customs sense, but in the sense of a restriction or ban on importation. The Certificate of
Control is not even a customs document in the mo st basic sense – it is very revealing that the
Certificate of Control is approved by MARA, not by Turkish Customs.

6. Second, the Certificate of Control is an impor t license even under Turkey's standard. In its
submission, Turkey acknowledges that the impor t permit required by FTU for importation under the
TRQ is an import license. Yet a side-by-side comparison of the elements required by MARA for the
Certificate of Control and those required by FTU fo r the import permit reveal a remarkable degree of
similarity. Accordingly, under Turkey's own lo gic, there would be no reason to exclude the
Certificate of Control from Import Licensing Agreem ent disciplines on the basis that it contains
customs-related information.

7. Third, a Member cannot shield a measure from coverage under the Import Licensing
Agreement or other provisions by including customs-related information in the license application and
then claiming it is no longer an import license. The footnote to the definition of "import licensing" in
the Import Licensing Agreement makes clear that, regardless of how a Member characterizes
particular administrative procedures, such procedur es are still considered "import licensing" if they
satisfy the criteria in Article 1 of the Import Licensing Agreement.

8. The addition of customs-related information in the Certificate of Control does not change the
fact that the Certificate is part of Turkey's requi rement for the submission of an application or other
documentation as a prior condition for importation, and approval constitutes formal permission from
MARA (not Customs) to import rice into Turkey. In other words, the Certificate is an import license
within the definition in Article I of the Import Licensing Agreement.

Over-Quota Imports and the Issuance of Certificates of Control

9, In its first submission, the United States made a prima facie case that Turkey's denial of
import licenses outside the TRQ is in breach of Article XI of the GATT 1994 because Turkey
prohibits or restricts imports at the over-quota rate through the use of import licenses or other
measures. In making its case, the United States presented a large amount of documentary evidence
demonstrating that Turkey does not issue Certificates of Control, which are necessary to import rice
outside the TRQ. The United States presented examples of "Letters of Acceptance" signed by
Turkey's Minister of Agriculture. Through these doc uments, the Minister directs MARA officials not
to grant Certificates to protect the domestic rice industry. The United States presented examples of
correspondence between Turkish importers and MARA, including several letters from MARA
rejecting importer requests for Certificates. In on e letter, dated May 1, 2006, a Turkish government
official admitted
 that the government did not have authorit y under Turkish law to grant Certificates.
And the United States presented Minister Tuzmen's March 24, 2006 letter to USTR Portman, which
was issued just after the DSB established the panel in this dispute and which promised that Turkey
would issue Certificates "as of April 1, 2006." Apparently, MARA was not in agreement with the
contents of Minister Tuzmen's letter, as evidenced by the May 1 rejection letter referenced above.
The rejection letter was completely consistent with the guidance provided in the unpublished Letter of
Acceptance that was operative at the time.

10. As the United States has met its burden to make out a prima facie case that Turkey is in
breach of Article XI:1 of the GATT 1994, it is now up to Turkey to rebut the US case. Turkey has not
done so. Turkey has not contested the authenticity of any
 of the documents submitted by the United
States. Moreover, Turkey has not provided any documentary evidence to rebut their contents.
Instead, Turkey merely asserts, without any substantia tion, that contrary to the express terms of the
Letters of Acceptance, it has been granting Control Ce rtificates at the over-quota rates of duty. In the
US – Wool Shirts and Blouses dispute, the Appellate Body noted it was "difficult, indeed, to see how
any system of judicial settlement could work if it incorporated the proposition that the mere assertion
of a claim might amount to proof."

11. Instead of attempting to rebut the US argumen ts directly, Turkey attempts to dismiss the
Letters of Acceptance as "informal internal docum ents," documents that ar e "never enforced" and

cannot be enforced by the courts, "unreliable evid ence of the real intenti on and trade policies of
Turkey in relation to rice importation", and "inadmis sible evidence" that cannot be reviewed by this
panel. In addition, Turkey dismisses the rejecti on letters sent to importers by MARA and the court
documents as nothing more than "a natural component of the interaction between any WTO Member's
administration and its business community." Wh ile the United States certainly understands why
Turkey would like the Panel to ignore these documents , the fact is they are evidence that cannot be
ignored. And whether they are leaked or internal or enforced by the courts is irrelevant. The simple
fact is they show that Turkey decided not to issue Certificates of Control, thus demonstrating that the
Certificates are discretionary import licenses (and therefore an import restriction as such) and that
Turkey is using them in practice to restrict imports.

12. Turkey's arguments that the Letters of Acceptance are confidential, unenforceable and
disregarded by the judiciary are contradicted by the fact that Turkey tried to use these documents in
Turkish court to justify its denial of Control Cer tificates to an importer and, in fact, relied upon the
documents in court as its sole source of legal author ity for the denial. It is difficult to understand how
the Letters are an unreliable source of the intenti ons of Turkish trade policy when counsel for MARA
argued before the court that MARA did not have au thority under Turkish law to grant Certificates to
the importer under the terms of those Letters, and that the Letters were adopted in order to protect
domestic rice producers against foreign competition.

13. In lieu of documentary evidence, Turkey h as produced a chart which purports to show that
Turkey is granting Certificates of Control outside the TRQ, but which raises additional questions. US
export data and Turkish data on Control Certificates with respect to US rice imports vary
significantly. For example, Turkey claims th at through September 21, 2006, MARA has granted
Certificates covering the importation of over 400,000 t ons of US rice, whereas US trade data puts the
volume of US rice exports to Turkey in 2006 at ju st under 18,000 tons through October 26. Further,
even under Turkey's own chart, at least 96 per cen t of rice approved in 2004 and 90 per cent of rice
approved in 2005 was for entry under the TRQ, for which domestic purchase is required. As it is
much more expensive to import under the TRQ, it is clear that such an overwhelming majority of
importers would only "choose" to import rice under the TRQ if there were severe restrictions or a ban
on importing at the over-quota rates.

14. Turkey also claims that the Letters of Accep tance are not being enforced, as evidenced by the
fact that MARA is granting Certificates of Cont rol to importers who purchase domestic rice under the
TRQ regime. If Turkey is requiring the Certifi cates to import under the TRQ regime, the United
States thanks Turkey for that clarification. However, that information is irrelevant to the question of
whether Turkey is granting the Certificates, and therefore blocking importation, outside the TRQ.
The Letters only purport to suspend the granting of Certificates to importers who want to import at the
over-quota rates without domestic purchase. They do not address whether the Certificates are granted
under the TRQ regime. In addition, this clarifica tion only deepens our concern with respect to the
WTO-inconsistency of the DPR because, if what Turk ey says is correct, an importer that wants to
import rice under the TRQ will have to approach four
 different Turkish government agencies – TMO,
FTU, MARA, and Turkish Customs – and obtain two different import licenses in order to effectuate
the importation.

15. With respect to the ban on the issuance of Cont rol Certificates at the over-quota rates, even if
Turkey could substantiate that it is not enforcing the Letters of Accepta nce, that is not a bar to this
panel making a finding of WTO-inconsistency concerning them. A measure may still be found WTO-
inconsistent even if it is not bei ng enforced, as was the case in the US – 1916 Act dispute.
Furthermore, even if Turkey were issuing some
 Certificates, that would not alter the fact that they
constitute discretionary import licensing and an impor t restriction contrary to Article XI:1 of the
GATT 1994 and Article 4.2 of the Agreement on Agriculture.

Domestic Purchase Requirement

16. With respect to the DPR, Turkey contests th at (1) the DPR is a measure "affecting [the] . . .
internal sale, offering for sale, purchase, transportati on, distribution or use" of domestic and imported
rice, and (2) that the DPR treats imported rice less favor ably than domestic rice. Turkey's rationale is
that importers can freely import rice outside the TRQ and that the TRQ modifies conditions of
competition so that imported products are actually treated more favorably than domestic products.
Turkey has failed to rebut the US prima facie case on both issues.

17. With respect to the first issue, the DPR directly
 affects the conditions of competition between
domestic and imported rice. Only domestic rice satisfies the purchase requirement in order to import
rice into Turkey under the TRQ. Thus, domestic rice has an advantage in the marketplace that
imported rice does not have, and is more attractive as a result. Turkey claims that the United States
has not satisfied the "affecting" standard because importers can import rice into Turkey outside the
TRQ where domestic purchase is not required. Ev en if that were true, it does not erase the
discrimination against imported rice.

18. In this respect, a Member's requiring the sourcing of domestic goods as a condition to receive
a benefit has long been recognized as inconsistent with Article III:4 of the GATT 1994. In 1958, the
GATT panel in Italian Discrimination Against Im ported Agriculture Machinery found an Italian law
that conditioned the receipt of special credit terms for farmers on the purchase of domestic
agricultural machinery to be in breach of Article III:4. And the India – Autos panel found an
Article III:4 breach where India's local content requi rement for automobile manufacturers created an
incentive to purchase and use Indian-origin parts a nd components and, thus, a disincentive to use like
imported parts and components.

19. On the issue of whether the DPR treats im ported rice less favorably than domestic rice,
Turkey argues that the TRQ system actually provide s foreign rice producers with an advantage over
Turkish rice producers in selling their rice in Turkey. However, Turkey completely ignores the costs
stemming from the DPR in its analysis. The large cost from domestic purchase more than offsets any
alleged cost savings resulting from the preferential ra tes of duty realized by importers under the TRQ.
It hardly matters that one ton of US rice will allegedly be a few dollars cheaper than one ton of
Turkish rice if one fails to account for the fact that, in order to import that one ton of US rice into
Turkey, the importer needs to purchase two tons of Turkish rice at a cost of several hundred additional
dollars.

Restrictions on Who May Import Rice Under the TRQ Regime

20. Turkey claims that anyone can import rice under the TRQ. While it is true on the face of the
regulation that this is a theoretical possibility, Letter of Acceptance 1795 confirmed that Turkey only
permits entities that purchase paddy rice to impor t rice under the TRQ. Practically speaking, only
millers or those with milling capacity would purch ase paddy rice. Consumers, wholesalers, retailers,
and other distributors are unlikely to have milling ca pacity and, thus, would not be able to "take
advantage" of being able to import under the TR Q. Even if TMO would allow entities to purchase
milled rice in order to satisfy the DPR, the TRQ re gime would still exclude much, if not all, of the
non-milling community from importing rice under the TRQ, as restaurants and retailers that might be
interested in importing milled rice would be dissuad ed by the high purchase and storage costs. For
these reasons, the eligibility criteria for domestic pur chase under the TRQ also are inconsistent with
Article XI of the GATT 1994.

Measures That Have Allegedly Expired

21. Lastly, Turkey argues that the measures co mprising its TRQ regime are no longer in force
and, thus, the panel should refrain from making findings with respect to that regime or, if it does make
such findings, should not make any recommendations to the DSB regarding those measures. The
United States disagrees that the Panel should re frain from making findings and recommendations and
further disagrees that the measure is no longer in force.

22. The text of the DSU, as clarified by past pane l and Appellate Body reports, makes clear that if
a measure exists at the time of consultations a nd panel establishment, it has not expired for purposes
of WTO dispute settlement. In this dispute, the DSB established this panel with standard terms of
reference to examine the matter raised by the United States on March 17, 2006. The TRQ regime
allegedly "expired" more than four months later. Therefore, the TRQ regime had not "expired" at the
time of consultations and panel establishment, and th e Panel is charged by the terms of reference and
Article 3.3 of the DSU to issue findings with resp ect to the consistency of the measures comprising
Turkey's TRQ regime with the relevant provi sions of the covered agreements and make
recommendations in order to resolve the dispute.

23. The reports cited by Turkey respect the dis tinction between measures that expire prior to
consultations and panel establishment and measures that expire after panel establishment. In US –
Certain EC Products and Chile – Price Band System , the panels declined to make findings on
measures that expired prior to panel establishment. With respect to Dominican Republic – Import and
Sale of Cigarettes, Turkey states that the panel did not find it necessary to make finding with respect
to a measure that expired during the course of panel proceedings, but failed to note that the Appellate
Body disagreed
 with the panel and recommended that the Dominican Republic bring its measure into
conformity with its WTO obligations to the extent that it had not already done so.

24. Further, it is not clear to the United States th at the TRQ regime ceased to exist on July 31, as
Turkey claims, given the number of unpublished documents that Turkey issues with respect to the rice
trade. Moreover, Turkey claimed that the TRQ re gime "expired" in 2003, 2004, and 2005 and yet the
measure resurfaced a few months later. Therefore, the United States believes that it is critical for
achieving a definitive resolution of this matter that, if the Panel were to make adverse findings in this
dispute, it also issue recommendations that Turkey bring its measures into conformity with its WTO
obligations.

ANNEX B-2

CLOSING ORAL STATEMENT BY THE UNITED STATES
AT THE FIRST SUBSTANTIVE MEETING
(9 November 2006)

1. Thank you, Madam Chair, members of the Panel, and members of the Secretariat. We would
like to thank you for your attention and work on this dispute, as demonstrated over the past two days.
As we conclude this first panel me eting, I do not intend to re-state the arguments we made yesterday,
but would like to highlight a few additional points that we observed over the past two days.

2. First, the United States believ es that the discussion has further clarified that the Certificate of
Control is not a document for customs purposes. An importer makes its application for a Certificate
of Control to Turkey's Ministry of Agriculture (MARA), not Turkish Customs. Second, an importer
needs to apply for a Certificate from MARA, and receive approval, well before the shipment is
presented to Turkish Customs. Turkey clarified th at this was the case in paragraph 6 of its oral
statement when it stated that "[o]nce approved, the Certificate of Control is a guarantee for the
importer that all elements and requirements need ed to clear customs are present and will allow
importation ... The importer will then feel confident to conclude all necessary business engagements
for purposes of importation ." In other words, the Certificate of Control is a document that the
importer needs to ensure it can obtain before it finalizes any contracts for the importation of rice.
Third, when an importer has not received MARA's a pproval of a Certificate of Control, the shipment
will not be cleared through Customs. This is appare nt from the experience of Torunlar, a Turkish rice
importer which signed rice purchasing contracts prior to receiving MARA's approval of a Control
Certificate, and had to file suit in Turkish court to force MARA to issue the Certificate so it could
move the rice out of bonded warehouses.

3. Turkey has argued that anyone can import rice under the TRQ but, until yesterday, ignored
the fact that, as a practical matter, only millers or packers would have the ability or desire to purchase
paddy rice. At yesterday's panel meeting, Turkey conceded that it was unaware of any restaurants or
retailers that would want to purchase paddy rice. We agree with Turkey's assessment. Given that
purchasing paddy rice is a condition for importing under the TRQ, it follows that no restaurant or
retailer would utilize the TRQ. Narrowing the eligibility criterion from purchasing rice to purchasing
paddy rice was thus used by Turkey to limit the class of persons or firms that would be able to import,
thereby demonstrating an additional restriction on importation for purposes of Article XI:1.

4. The United States understands that Turkey inte nds to provide information that it has been
granting Certificates of Control outside the TRQ. In this regard, the United States notes that, under
the terms of a bilateral agreement between the Eu ropean Union and Turkey, the European Union has
an annual quota of 28,000 tons of milled rice. Under the quota, importers are permitted to import
milled rice from the EU, primarily from Italy, on a duty free basis throughout the year without being
subject to any of the prohibitions and restrictions that the United States has raised in this dispute. We
realized that this was the case after discussing this matter with EU rice traders, who were unaware of
the problems that exporters from the United States, Egypt, and other WTO Members were
experiencing in shipping rice to Turkey. The Un ited States is uncertain whether Turkey requires
importers of EU rice to obtain Certificates of Cont rol since EU rice imports are "green-lighted" under
the terms of the bilateral agreement. If Turkey does require importers of EU rice to obtain such
Certificates, this raises further questions about the data presented by Turkey in Annex 20.

5. According to Turkish import data, Turkey im ported approximately 25,000 and 32,000 tons of
rice from the European Union in 2004 and 2005, resp ectively. Yet according to Annex 20, Turkey
only granted Certificates of Control for approximate ly 7,000 tons of out of quota rice in 2004 and

approximately 24,000 tons of out of quota rice in 2005. If Turkey is correct that Certificates of
Control are only valid for one year – so Certifi cates obtained in prior years could not account for
much of this apparent shortfall – this raises the question as to where EU rice imports can be found in
Turkey's chart and, if not, whether importers of EU rice need to obtain Control Certificates. The
United States looks forward to Turkey's clarification of this issue.

6. The United States would conclude by sta ting that, for the reasons above as well as the
arguments the United States has raised in its first s ubmission and at this week's meeting of the panel,
Turkey has not produced evidence and argument to rebut the evidence and argument of the United
States. As clarified by the Appellate Body in its report in US – Wool Shirts and Blouses , Turkey has
therefore failed to rebut the US prima facie case.

7. Madam Chair, this concludes our closing stat ement. Again, we would like to thank you, the
members of the Panel, and the Secretariat for your efforts. We look forward to answering your
questions in writing and seeing you at the next meeting of the panel in January.

ANNEX B-3

OPENING AND CLOSING ORAL STATEMENTS
BY TURKEY AT THE FIRST SUBSTANTIVE MEETING
(8-9 November 2006)

Ms. Chairwoman, distinguished Members of the Panel,

1. Turkey would like to express its gratitude to all three panellists for having accepted to serve
on this Panel and to assist in the resolution of this dispute.

2. Turkey welcomes the opportunity to submit orally its views at this first meeting of the Panel.
Turkey has already provided a comprehensive rebuttal to the claims made by the United States. In
this statement, Turkey wishes merely to outline its legal arguments, its submission on the facts and its
conclusion that the regime for the importation of rice into Turkey is fully compatible with WTO rules.

3. This oral statement addresses a number of f actual and legal considerations related to: the
Certificates of Control; the expired Tariff Rate Quota (TRQ); the TRQ domestic purchase
requirement; and a number of systemic and general considerations related to trade in rice.

4. Turkey's Certificates of Control are not impor t licenses. They have never been applied as an
import licensing instrument. The Certificates of C ontrol have never functione d as import restrictions
or prohibitions in relation to the importation of ri ce whether at the MFN rates, the applied rates of
duty, or within the TRQ.

5. The Certificate of Control is a reference doc ument needed to process the customs clearance of
specific consignments of a variety of goods, including rice. The Certificate of Control allows customs
authorities to verify, on a single document, all re quired customs information, including the product's
compliance with relevant standards and technical regulations.

6. The Certificate of Control acts as an element of trade facilitation. It provides legal certainty
and commercial predictability to im porters engaged in rice importation. In fact, once approved, the
Certificate of Control is a guarantee for the importer that all elements and requirements needed to
clear customs are present and will allow importation (provided, of course, that the consignment
imported corresponds to the information supplied and passes the phytosanitary and food safety
inspections). The importer will then feel confid ent to conclude all necessary business engagements
for purposes of importation. This element of legal certainty must be seen as a tool of trade facilitation.
It provides administrative certainty for importers and avoids possible time consuming and costly
procedures at border control.

7. GATT Article XI:1 does not define the concept of " import license". Neither is this concept
defined by Article 4.2 of the Agreement on Agricu lture or by any previous GATT or WTO panel or
Appellate Body decision. An element of inte rpretative guidance appears to be available under
Article 1.1 of the Agreement on Import Licensing Procedures, where it is clearly indicated that the
submission of an application or other documentation required for " customs purposes" falls outside of
the definition of import licensing.

8. The " customs purposes" of Certificates of Control are evident both de jure and de facto. In
Turkey, as in all WTO Members, the process of import ation and customs clearance is more than just
compliance with the obligation to pay the applicable duty and other charges. Customs clearance also
includes the compliance with all administra tive requirements and the fulfilment of " customs
purposes" such as, inter alia : the 'gathering of relevant administrative information by customs

authorities'; the 'customs valuation determination'; the 'origin determination'; the 'monitoring of trade
and collection of statistics'; the application and cer tification of 'quarantine, sanitation and fumigation
requirements'; and the 'analysis, inspection and certification'.

9. If all the required information is provided by the importers, and it is shown that the goods
comply with all relevant specifications and techni cal regulations, the Certificates of Control are
automatically approved. Individual instances of ad ministrative delay, rejection, or even domestic
litigation in relation to the approval (or non approva l) of a particular application for a specific
Certificate of Control, cannot be used to claim or imply that Turkey adopted and/or applied this
instrument as an intentional barrier to trade.

10. The fact that Certificates of Control are used for both MFN and TRQ rice importation stands
out as a clear testimony that they are exclusively for " customs purposes". In fact, contrary to what the
United States argues, imports under the TRQ can onl y occur if an importer obtains both an import
license and a Certificate of Control.

11. Certificates of Control are not import licenses and, therefore, do not fall within the meaning
and the scope of the Agreement on Import Licensing Procedures.

12. With respect to the claimed violation of GATT Article XI:1, Turkey believes that the
Certificate of Control does not amount to a prohib ition or restriction made effective through, in
relevant part, "import licences" or "other measures". Turkey has shown that the Certificate of Control
is not an import license.

13. Nor are Certificates of Control "other measures". The United States has failed to show on
what grounds Turkey's Certificates of Cont rol can or even should be considered as " other measures"
for purposes of the application of GATT Article XI. The United States has not shown that there is
either de jure or de facto a " prohibition" or " restriction" in relation to the alleged 'denial of
Certificates of Control to import rice'. As there is no " restriction" or "prohibition", the nature of the
"measure" is of no relevance. Measures are only prohibited if they are restrictions or prohibitions.

14. Furthermore, individual rejections in the appr oval of Certificates of Control have never been
instances of restriction (both de jure or de facto ) within the meaning of GATT Article XI:1. The
reasons for rejection of individual importers' applicat ions have always been pr ovided and, in general
terms, were most often due to missing or wrong information supplie d by the importers such as the
introduction of the wrong customs code classification, the lack of indication of the chosen customs
points of entry, or the wrong origin information.

15. Turkey can provide the approval rates of the applications for Certificates of Control made by
rice importers during the period 2003-2006 (for both MFN and TRQ trade volumes). In 2003,
96.73% of the importers' applicati ons were approved. In 2004, th is approval rate was 94.37%, in
2005 it was 98.45%, and in 2006 (to date) the approva l rate stands at 90.80% of the applications
lodged. These figures are clear evidence of the lack of any de facto restriction to rice imports
obtained through the administration of the Certificates of Control system.

16. With respect to the de jure scrutiny, the relevant Turkish law does not impose any 'denial' and
does not aim at imposing directly or indirectly an y import prohibition and/or restriction. The United
States wrongly assumes that the so-called 'Letters of Acceptance' are to be considered as " laws,
regulations, judicial decisions or administrative rulings " of the kind that can prove an instance of de
jure "prohibition" or "restriction".

17. As for the de facto scrutiny, Turkey has shown that, in relation to both MFN and TRQ trade, a
high number of Certificates of Control were a pproved (i.e., 2,223 between 2003 and 2006, which

amounts to 2,264,858 tonnes of paddy, brown a nd milled rice) and large amounts of rice were
imported (i.e., 939,013 tonnes of milled rice equiva lent between 2003 and 2006). This is convincing
and irrefutable evidence that th ere has never been a general de facto 'denial of Certificates of Control
to import rice'. In addition, the claim by the United States that Turkey failed " to grant Certificates of
Control to importers 'at all' for a period of over 2 ½ years and is still not granting them " is not
correct. Turkey has provided clear evidence to the contrary. And, in any event, this de facto scrutiny
cannot be merely quantitative in nature (i.e., carried-out solely on the basis of the number of approved
Certificates of Control). In relation to the data pr ovided, an updated version of Annex 20 to Turkey's
First Submission is provided today. While the total figures do not change, the attention of the Panel is
drawn to the 2005 'In Quota' and 'Out of Quota' data.

18. Certificates of Control are automatically appr oved in all instances when importers show full
compliance with legal requirements established for " customs purposes". Individual instances of non-
approval of particular rice importers' applicati ons must be seen as a natural component of the
interaction between any WTO Member's administration and its business community and cannot be
generalized into a general 'denial of Certificates of Control to import rice ' to show the existence of an
"import restriction".

19. The TRQ is no longer in force. TRQs were opened in 2004 and 2005, not to protect or distort
trade, but rather to achieve the necessary supply of rice into Turkey and to stabilize the domestic
market. Very simply, the TRQ provided a tariff advantage to imported rice up to predetermined
quantities. Any interested importer could apply for a TRQ licence which was granted if there was
compliance with the requirements and conditions set out in relevant Turkish legislation.

20. The TRQ has systematically been allocated on a " first-come-first-served" basis and has never
discriminated on the basis of country of origin of the rice or nationality/affiliation of the importer
applying for a license. The requirements for the application and evaluation procedures of the import
licenses have always been clear, transparent and easy to implement for all importers. Similarly, the
administrative procedures for licensing have always been simple and user-friendly. All documents
required for application have always been published in the relevant legislation. When all application
requirements were met, the import licenses have systematically been issued within 5 days.

21. In addition to the import licenses obtained fo r purposes of in-quota allocation, of course,
importers also had to comply with all other custom s obligations and requirements, in particular the
presentation and approval of the required Certificates of Control. Turkey wishes to emphasize that
there is a clear difference between the TRQ import licence and the Certificate of Control. The first
instrument is used to facilitate the allocation of the TRQ among importers, while the other is to
facilitate customs clearance.

22. The tariff quota system was never meant to act as, and never had, any restrictive or
discriminatory effects on trade and rice imports. Ra ther, the system was voluntary and conferred an
advantage to the importers meeting the requirements stipulated in the legislation. Importers have
always been free to make use of the system or not.

23. Turkey has shown that the high volumes of in -quota imports and the high numbers of licences
which have been issued are testimony to the attractiveness and appeal that the tariff advantage has had
in the business determinations made by individual rice importers. This in-quota advantage has always
existed in parallel to the ability to import at the le ss advantageous MFN rates of duty. Again, Turkey
has shown that MFN trade has never been prohibited or restricted, both de jure and de facto

24. The claim put forward by the United States alleges that the domestic purchase requirement
and the eligibility criteria of Turkey's TRQ system ' affect the internal sale, offering for sale, purchase
(…) or use ' of imported rice by " adversely modifying the conditions of competition between domestic

and imported products " within the meaning of GATT Article III:4. The arguments made by the
United States are somewhat misleading and not supported by convincing evidence.

25. In particular, it is wrong and misleading to st ate that the fulfilment of the domestic purchase
requirement by importers " provides the only way to import rice into Turkey ". Turkey maintains that
any importer has always been free to import whatev er quantity of rice into Turkey from whatever
country at the MFN or applied rate of duty. The regime of importation which was applied within the
TRQ was meant to provide an advantage to importers of foreign rice to adequately supply the Turkish
rice market. In fact, it is well known that Turkey is a net importer of rice and that imports are
essential to stabilize the market (both in terms of price and quantities available).

26. Turkey has shown that the opening of the TR Q always resulted in the modification of the
conditions of competition between domestic and imported products in favour of imported products .
With particular regard to Paragraph 52 of the First Submission by the United States, Turkey maintains
that the scenario set out is flaw ed by the use of the following two wrong assumptions: 1) The cost to
the importer cannot be the FOB price, but rather the CIF price; 2) The figure of US$ 1,654 per tonne
used by the United States does not represent a corre ct benchmark of comparison since it should refer
to three metric tonnes of paddy rice (i.e., two of domestic produce and one of imported rice). In
addition, the TMO price of US$ 650 per tonne cannot represent the actual market price since the share
of total domestic production purchased by TMO amount s only to a mere 2.4%, which corresponds to
a negligible volume and does not allow TMO to in fluence the domestic market price. A simple
review of the average price dynamics of the Turkis h rice market in 2005 shows something completely
different from that claimed by the United States.

27. In particular, the calculations carried-out by Turkey indicate that, in the event that paddy rice
from the United States was imported at the MFN rate of 34% ad valorem (i.e., at the applied rate
already set at a much lower level than the bound MFN rate of 45% ad valorem, in order to attract
imports), its cost amounted to US$ 495 per tonne. If the same type of rice was imported from the
United States at the preferential tariff rate of 20% ad valorem (i.e., the rate offered for rice imports
within the TRQ), it would have cost US$ 444 per t onne. At the same time, the cost of purchase of
domestic rice from local producers (based on the av erage domestic prices for the year 2005) would
have been 640 New Turkish Liras, equivalent to US$ 457 per tonne. Therefore, when an importer
purchased 1 tonne of Turkish rice under the domes tic purchase requirement (on the basis of its
coefficients) in order to be allowed, for purposes of benefiting of the TRQ preferential rates, to import
800 kg of paddy rice from the United States, the average cost per tonne would have equalled
US$ 451. The domestic purchase requirement, in substance, was altering the conditions of
competition between domestic and imported products in favour of imported products . What could
have been bought domestically at US$ 457 per tonne had become, all of a sudden, cheaper to be
purchased through the TRQ regime at a mere US$ 444 per tonne. The competitive advantage for
imported rice would have been US$ 13 per tonne.

28. As a further example to that set out in Tu rkey's First Submission, the data compiled in
relation to milled rice imports during the years 20 04 and 2005 provide an even better and more
compelling overview of the price dynamics. In particular, in 2004, rice imports from the United
States at the MFN rate of duty (i.e., 45%) would ha ve cost importers US$ 1,008 per tonne. The cost
of importation within the TRQ (i.e., at the 43% rate of duty) would have been, in the absence of any
domestic purchase requirements, US$ 994 per tonne. Taking into consideration an average cost of
domestic rice of US$ 822 per tonne, the application of the domestic purchase requirement (taking into
consideration the applicable coefficients) would have resulted in an average cost of US$ 908 per
tonne. This figure is much lower than the average cost of rice imported from the United States at the
MFN rate (i.e., US$ 1,008 per tonne) and, most importa ntly for this case, even lower than the average
cost of the TRQ imports, had they occurred without the application of the domestic purchase
requirement (i.e., US$ 994 per tonne). In 2004, as well as in 2005, it is clear that the shift in the

conditions of competition was totally in favour of imported products and to the detriment of
domestically produced rice. This is a further indica tion that an advantage to imported rice has always
been conferred by the TRQ system and its domes tic purchase requirement. The extent of the
advantage changed due to a number of factors such as US$-Turkish Lira exchange rates, consumers'
preferences and/or foreign countries' competitive po sitions vis-à-vis the various types of imported
rice. However, Turkey's objectiv e has always been that of market stabilization, never a "hidden
agenda" to distort the market in favour of domestic rice.

29. In fact, Turkey had to pursue, at the same ti me, two legitimate objectives: the one of greater
market supply (through the TRQ) and that of ma rket stabilization (through the domestic purchase
requirement). It is clear that a TRQ system without the domestic purchase requirement 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.

30. The domestic purchase requirement partly modera ted (or even magnified, as the data for 2004
and 2005 milled rice imports indicate) the advantag eous effects, and not the adverse effects as
claimed by the United States, that the TRQ had conferred to imported rice. The TRQ did confer an
advantage. Its success, in terms of quota utilization, is clear evidence of this. The domestic purchase
requirement did not take away this advantage. The domestic purchase requirement must be seen as a
fundamental of the TRQ system itself, just like the in-quota and the preferential rates of duty. Turkey
maintains that it was fully entitled to decide, in lin e with its economic policies, the characteristics of
the TRQ. For those importers that did not consid er TRQ trade advantageous, MFN always remained
an option. Turkey has shown that, contrary to what is claimed by the United States, TRQ and MFN
rice importation always co-existed.

31. The allegations that the dom estic purchase requirement and the eligibility criteria should, in
the alternative, be considered a restriction on imports of rice within the meaning of GATT
Article XI:1, are legally incorrect and not based on convincing factual evidence. There was never a
de jure restriction of rice importation into Turkey sin ce nothing in the relevant laws and regulations
ever diminished the ability to import at the app lied or MFN bound rates of duty. The TRQ regime,
and its domestic purchase requireme nt, never altered or removed th e ability of importers to import
unlimited quantities of rice from any origin at the applied or MFN bound rates of duty. Furthermore,
the TRQ regime acted to confer an advantage to importers of rice at preferential rates which available
data show to have been largely u sed by importers, independently of the country of origin and despite
the domestic purchase requirement.

32. The United States alleged that certain requireme nts, referred as the eligibility criteria, would
restrict the categories of importers/traders able to purchase domestic rice for the purpose of importing
under the TRQ. Such requirements, according to the United States, constitute an autonomous
violation of GATT Articles III:4 and XI:1. Turkey submits that the allega tion is wrong and largely
based on the erroneous translation and interpretation of Turkey's relevant legislation. Turkey recalls
that there is no eligibility requirement in order to be able to purchase domestic rice. On the contrary,
any restriction of the categories of eligible pur chasers would defeat the purpose and objectives of the
TRQ system in that it would diminish the chances that the entire TRQ be allocated and that the market
be adequately supplied and, consequently, stabilized . Therefore, Turkey wishes to clarify that the
relevant legislation simply provid es that domestic rice may only be purchased from paddy producers
having permission to plant paddy rice, their coope ratives and unions, or from the TMO (as indicated
in Turkey's First Submission at Annex 9, Article 5 and Annex 16, Article 5).

33. Turkey also wishes to emphasize that, contrary to the allegations of the United States, the
TRQ regime was based on an automatic import licensing system and, therefore, does not fall within

the scope of GATT Article XI. In addition, Turkey maintains that, in the context of an automatic
import licensing regime, legal requirements such as th e eligibility criteria of the TRQ system must be
deemed not to have trade-restrictive effects so long as any person, firm, or institution which fulfils
them is equally eligible to apply for and to obtain an import license. This has always been the case in
Turkey during the existence of the TRQ system.

34. Turkey turns now to the claims made by the United States in relation to a number of general
and systemic considerations related to trade in rice.

35. First, Turkey wishes to recall that, in orde r to establish the existence of a violation of the
TRIMs Agreement, a measure must be inconsiste nt with the provisions of GATT Article III (or
GATT Article XI). The United States has not established that the domestic purchase requirement is
inconsistent with GATT Article III:4. Therefore, ev en if the domestic purchase requirement were to
be considered an investment measure related to trade in goods within the meaning of the TRIMs
Agreement, the United States has not established th at the domestic purchase requirement is, as such,
inconsistent with Article 2.1 of the TRIMs Agreement.

36. Second, Turkey rejects the claim that a le gal or operational link between the legislative
framework for the TRQ regime and MFN trade could aim at seriously restricting market access or
even at imposing a seasonal ban and therefore constitute, autonomously, a violation of GATT
Article XI:1. The United States bases its argumen t on the assumption that both the Certificate of
Control requirement and the TRQ regime individua lly breached the obligations set forth in GATT
Article XI. However, Turkey has already provided legal arguments and factual evidence showing that
there is no de jure or de facto prohibition or restriction connected with either the Certificates of
Control or Turkey's expired TRQ regime. Turkey submits that none of these instruments has ever
acted, either individually or in combination with one another, to deter full utilization of the quotas
opened within the TRQ regime or to prohibit or restrict MFN trade. In fact, Turkey has shown that,
rather than being "economically irrational", the TRQ system generated a s ubstantial advantage to
importers of rice, even of rice of US origin and in spite of the domestic purchase requirement.

37. Third, Turkey considers that the United Stat es has failed to properly establish a violation of
Article 4.2 of the Agreement on Agriculture. In pa rticular, Turkey has shown that the Certificates of
Control are not 'import licenses' within the meaning of the Agreement on Import Licensing
Procedures, and that there has never been any 'denial' of 'import licenses' or any de jure or de facto
import prohibition or restriction within the meani ng of GATT Article XI:1. Turkey has also shown
that its TRQ regime was not based on discretionary im port licensing and that it is not correct to claim
that non-tariff measures were maintained through stat e trading enterprises. Turkey therefore believes
that the claim put forward by th e United States under Article 4.2 of the Agreement on Agriculture
should be rejected, both in relation to the individu al instruments and in their joint operation. In
addition, Turkey wishes to recall that it is well aware of the objectives of Article 4.2 of the Agreement
on Agriculture and of the special relation betwee n this article and GATT Article XI:1. However,
Turkey does not consider that any automatic link between the two provisions has yet been established.
A violation of GATT Article XI:1 does not constitute automatically a violation of Article 4.2 unless it
is positively established that the measure at stake fall s within and is inconsistent with footnote 1 of
Article 4.2 of the Agreement on Agriculture.

38. Fourth, in relation to the alleged violations of certain provisions of the Import Licensing
Agreement, Turkey again notes that the United States has based its claims on the incorrect
assumptions that (i) the Certificates of Control are, or function as, import licenses and that (ii) the
TRQ regime is based on a non-automatic import licensing system. Turkey has shown that the
Certificates of Control are not 'import licenses' a nd the TRQ licences were automatic while the TRQs
were in force. These claims should be rejected entirely.

39. Finally, Turkey wishes to draw the attention to the fact that the legi slative framework for the
TRQ regime, including the domestic purchase requirement, is no longer in force. The measures under
consideration were of short legal validity and have expired. In this respect, Turkey notes that it has
been previous Panels' and Appellate Body's practic e to either refrain from making findings or, when a
finding was considered necessary for the positive r esolution of a dispute, to refrain from making
recommendations on expired measures. On the basis of, inter alia, the consideration that Turkey has
not renewed the measures in question and has no inte ntion to do so, Turkey considers that further
examination of the TRQ regime is not necessary for the successful resolution of the dispute. Turkey
recognizes this Panel's full discretion to decide on th e specific matter at stake. However, should this
Panel consider it necessary to make a finding, Turkey respectfully requests the Panel not to make any
recommendation.

40. In conclusion, the United States has not shown eith er in law or in fact that the regime for the
import of rice into Turkey is incompatible with Turkey's obligations under the WTO Agreements.

41. As a result of the discussions entertained duri ng the oral hearing, it has become clear that a
greater amount of evidence is needed to adequate ly understand the various issues at stake. Turkey
believes that the further documents which it will su bmit will clearly show to the Panel and the United
States that there has been no distortion of rice impor ts through the Certificates of Control or through
the operation of the domestic purchase requirement in the TRQ.

42. Turkey has shown that Certificates of C ontrol have been approved regularly by MARA
during the whole 2003-2006 period (i.e., the period during which the United States claims that no
Certificates of Control were approved because of the "Letters of Acceptance"). These Certificates
have been approved for both in-quota and over-quota volumes of trade and even to the benefit of the
individual trader (Torunlar) who took legal action ag ainst MARA and referred to by the United States
in its Submission at paragraphs 28 to 31.

43. Turkey also believes that the oral hearing h as been able to address misunderstandings on the
duration of validity of approved Certificates of C ontrol as well as the possibility for the multiple use
of a single Certificate of Control up to the full amount for which it was approved. The law clearly
shows that the length of validity of an approved Cer tificate of Control for rice imports is, and always
has been, 12 months from the date of approval. The law also shows that, for rice importation,
multiple uses of a single approved Certificate of Control are allowed.

44. This fundamental misundersta nding of Turkish law underlies much of the claim by the United
States. If a Certificate of Control is valid for 12 months from the date of approval, the issue before
this Panel is not a question of when the Certificates of Control were approved. As they can be used
anytime within the 12 month period, at any one time there is an abundance of Certificates of Control
available to importers. So the core claim made by the United States, that only a limited number of
Certificates of Control was approved in any one period and that the Certificates of Control were
import licenses, is not relevant. The real issue is how many valid Certificates of Control were in
circulation at any one time as, if there were plenty available, they could not have acted as an import
restraint.

45. In any event, the United States has not proved to Turkey or to this Panel that there were
periods where applications for approval of Certif icates of Control were not approved. The United
States has merely referred to three specific cases wh ere Certificates of Control were not approved.
This is not evidence of a systematic denial of a pprovals let alone evidence of an import prohibition or
even of an import restriction. In fact, the United States has not even made a prima facie case.

46. Turkey, on the other hand, has already show n and will further clarify that the volumes for
which Certificates of Control were approved far ex ceeded actual trade. This means that traders

maintained in their possession valid Certificates of Control for larger volumes that they needed for use
at anytime during the 12 month period of their validity.

47. The Certificates of Control are not import licenses. They are documents used for trade
facilitation and customs purposes. To the extent that they are agricultural products, they are approved
by MARA. The information provided on the Certific ate of Control is customary information which is
required by MARA to fulfil its domestic obligatio ns. However, MARA does work closely with
customs authorities for purposes of administering the process of inspection and customs clearance at
point of entry.

48. The scope of the information requested by MA RA for approval of the Certificate of Control
does not change an administrative document used for customs purposes into an import license, as the
United States argues. If we were to follow the lin e of argument put forward by the United States, any
document used in relation to importation would be an import license. This is patently not the case.
For example: SPS certificates are not import licenses; Certificates of origin are not import licenses;
Certificates of compliance with technical regulations are not import licenses. The bringing together of
all these individual 'non-import-licenses' into a sing le document does not suddenly turn that single
document into an import license. The United States has not shown which element of the Certificate of
Control turns this administrative doc ument into an import license. It has merely asserted that it is an
import license. The United States has not made a prima facie case and it certainly has not brought
any proof before this Panel.

49. The fact that there are similarities in the in formation required on both Certificates of Control
and TRQ Import Licenses is not proof that the Cer tificate of Control is an import license. An
examination of Exhibit 51 of the United States, wh ich lists the similarities, shows nothing sinister.
The similarities cited include: a requirement that th e customs classification code must be provided,
that the product must be described, that the impor ter must be named, that the importer's tax number
must be provided, that the quantity is to be filled in, that the country of origin must be cited, that an
indication of where the product was loaded is needed, and finally that the point of entry into Turkey
must be indicated. The requesting of this type of information in relation to two different documents
for two different purposes is perfectly normal. It even shows that the documents were separate and
served different purposes. If they served the same purpose, why repeat all information on both?

50. The United States relies heavily, and ultima tely only, on the so-called "Letters of
Acceptance". Turkey accepts that "Letters of Acceptance" were wr itten and were in circulation.
However, these letters were internal communi cations aimed at developing policies. These
administrative communications never resulted in the adoption of laws or regulations. They were
never used to systematically deny the approval of a pplications for Certificates of Control. And even
if, hypothetically, they had been used to limit the approval of Certificates of Control, which Turkey
vehemently denies, this is not evidence that there was a measure prohibiting or restricting imports.
The same traders had other certificates of control for volumes greater than th ey needed usable over a
12 month period.

51. The record shows that, despite the "Letters of Acceptance", Certificates of Control were
approved. And not only that, Certificates of Control were approved for Torunlar, the domestic litigant
relied upon by the United States to show that the Letters did operate as a general restriction. They did
not operate as a general restriction. They did not operate as a systematic scheme of import prohibition
or restriction, whatever the text of this intern al administrative communication actually states. The
import statistics clearly confirm this and this will be specifically addressed in Turkey's next
submission.

52. The fact that these "Letters of Acceptance" have been used in open court proceedings by
MARA in their defence in relation to an individual rejection of an application for a specific Certificate

of Control cannot be considered as evidence of a systemic denial of approval of Certificates of
Control or, more importantly, for the purposes of the case by the United States in WTO law, a
systemic prohibition or restriction on imports under GATT Article XI.

53. In the course of the oral hearing, the United States has tried to suggest that import licenses for
the TRQ were only being issued, in fact, to a limit ed number of specific traders. The United States
has shown no evidence of this, nor has it shown th at the alleged limited group of importers that
benefited from the TRQ had any specific characteris tics. Turkey does not understand the purpose of
these suggestions. If, however, the United States is trying to hint at, or suggest, some sort of
discrimination on the basis of nationality, Turkey strongly rejects this allegation.

54. As Turkey has stated, a substantial number of traders benefited from the TRQ and were
allocated part of the quota. Furthermore, Turkey notes that this allegation is not an allegation in
relation to the GATT. It is an allegation in rela tion to services, namely distribution services, and the
United States has not pleaded the GAT S in this case. Again, the ex act details will be provided in
further submissions.

55. The United States has shown figures according to which the cost of import of a single tonne
of rice within the TRQ amounts to US$ 1,654. This calculation beggars belief. The fact is that the
amount of US$ 1,654 must be divided by three since the importer now holds three tonnes of rice. In
addition, Turkey asks the Panel to review in some detail the prices that the United States has
submitted to you. For example, in its First Submi ssion, the United States claims that the FOB price
for paddy rice is US$ 295 per tonne. In its oral statement, the United States claimed that the CIF price
for paddy rice is US$ 260 per tonne. Turkey has not had time to fully examine this issue, but the
figures obviously seem to be, at best, inconsistent and, at worst, randomly chosen. As a general point,
Turkey observes that the United States is only us ing extreme examples and does not build its case on
general trade statistics, policies or laws.

56. The United States has argued that the deadlines and the re-openings of the TRQ are in and of
themselves breaches of GATT Article XI. Turkey fail s to understand this argument. Time limits are
an inherent part of the management of any TRQ. If time limits are a breach of GATT Article XI, then
all TRQs administered by all WTO Members would be incompatible with WTO law.

57. In addition, the very fact that the deadlines of the TRQ were re-opened or extended cannot be
a breach of GATT Article XI. Turkey is under the obligation to ensure full utilization of TRQs, if and
when it chooses to open them. In any event, the United States has not shown how the extension of the
TRQ could have inhibited full utilization. It is a mere assertion not backed up by fact or by law. This
leads to the issue of the domestic purchase requirement.

58. The United States again misunderstands the do mestic purchase requirements for eligibility to
benefit from the TRQ. Turkish law provides that an applicant for a TRQ import license must show
that it has purchased a specific quantity of domestic ri ce. Any operator, domestic or foreign, that has
a tax registration number, is entitled to purchase domestic rice from three categories of domestic
sellers. These are the paddy producers, the unions and cooperatives of paddy producers, and the
TMO. If the operator chooses to purchase from the TMO, the quantity is different from the quantity
required if the purchase is from the other two categories. These quantities are clearly set out in the
law in a transparent fashion.

59. Once an operator has purchased the required qua ntity of domestic rice, that operator becomes
eligible to apply for an import license under the TR Q. Contrary to what has been alleged by the
United States, there are no eligibility criteria in re lation to who can be an operator for the purposes of
purchasing domestic rice. And thus benefit from the TRQ advantages.

60. Turkey would now like to ask the United States what concerns it has arising from the fact that
restaurants and individual consumers are not acting as operators for the purposes of importation of
rice into Turkey (who, by the way, were perfectly entitled to purchase domestic rice and, therefore,
import within the TRQ). The approach being take n by the United States, and the arguments being
used in relation to individual consumers and restau rants, raise questions for Turkey as to the ultimate
objective of the United States in making this complaint. Is the complaint designed to cut out a normal
and regular part of the value chain in relation to the production, processing and sale of rice? The
United States seems to think that the fact that operators are mainly traders and millers is evidence of a
breach of WTO law. This is patently not the case.

61. Or is the objective of the United States to get the benefit of the TRQ's lower duty rates
without the burden of the domestic purchase require ment? The TRQ is, as Turkey has emphasised, a
market stabilization mechanism and the domestic purchase requirement is an integral part of it. The
TRQ was a concession which Turkey granted in addition to its bound commitments under its GATT
Article II Country Schedule. Turkey has shown that, despite the domestic purchase requirement, the
advantage conferred by the TRQ was considerable. It has been quantified in Turkey's pleadings. In
fact, evidence shows that traders chose to import th rough the TRQ system rather than at the MFN or
applied rates while both remained available.

62. There is a wide range of other issues that have been raised during this hearing. Turkey will
address them in its subsequent pleadings. Turkey looks forward to the written questions from the
Panel and thanks the Panel for its contribution to th e clarification of the law and the facts underlying
this case.

ANNEX B-4

ORAL STATEMENT BY AUSTRALIA
AT THE THIRD PARTY SESSION
(9 November 2006)

Introduction

1. In this statement, Australia will canvass a number of issues of legal interpretation.
2. First, the Panel should address the arguments rela ting to the correct order of analysis before
considering whether, for reasons of judicial econo my, it is no longer necessary to address some or all
of the claims raised.
3. Second, Australia submits that Turkey's alle ged denial of Certificates of Control, if
established, is inconsistent with the prohibition on non-tariff measures in Article 4.2 of the Agreement
on Agriculture.
4. Third, Australia will make submissions on the term 'import licence' used in the Agreement on
Import Licensing Procedures (Import Licensing Agreement) and Article XI:1 of GATT 1994.
5. Fourth, if Turkey's Tariff Rate Quota (TRQ) is no longer in existence and there are no
continuing measures being applied, the Panel shoul d consider whether it is necessary to make a
finding in respect of the claims relating to the TRQ in order to resolve the dispute. Should the Panel
decide to make findings on the TRQ, Australia argues that the domestic purchasing requirement is
inconsistent with Article III:4 of GATT 1994.
6. Fifth, if the Panel finds that Turkey has adopted a practice of denying Certificates of Control
altogether, this would constitute a 'measure of general application' for the purposes of Article X:2 of
GATT 1994 and a failure to publish this measure would be inconsistent with Article X:2.
7. Sixth, in relation to Turkey's arguments about the admissibility of certa in evidence, Australia
notes that all evidence is admissible, but it is for the Panel to determine the weight it is to be given.
Order of Analysis

8. The Appellate Body in EC – Bananas III found that the Panel should have applied Article 1.3
of the Import Licensing Agreement before considering Article X:3(a) of GATT 1994 since the Import
Licensing Agreement deals specifically, and in detail, with the administration of import licensing
procedures. The Appellate Body noted that if the Panel had adopted this order of analysis, there would
have been no need for it to address the alleged inconsistency with Article X:3(a).1
9. Australia agrees that, as a general principle, provisions of a more specific agreement should
be considered before provisions of a more general agreement where, as in EC – Bananas III , the
provisions are, "for all practical purposes, interchang eable", being identical in coverage and effect. It
is for the Panel to determine whether these criteria are met and, if they are, whether to exercise
judicial economy with respect to claims made unde r the more general agreem ent. Where claims are
based on provisions which are not identical in covera ge and effect, each claim should, in principle, be
considered.

1 Appellate Body Report, EC – Bananas III, paras. 202-204.

Inconsistency of Turkish measure with Article 4.2 of the Agreement on Agriculture

10. Australia submits that Article 4.2 of the Agreement on Agriculture and Article XI of
GATT 1994 are not identical in coverage and effect , so claims made pursuant to these provisions
should be analysed separately.
11. Australia agrees with the EC that, apart from the footnote to Article 4.2 of the Agreement on
Agriculture, there is no automatic link between the texts of Article 4.2 and Article XI of GATT 1994.
2
12. Having expressed this caution, Australia consider s that under a separate analysis pursuant to
Article 4.2 of the Agreement on Agriculture , it would be open to the Panel to find that Turkey's
alleged denial of the Certificates of Control, if est ablished by the facts, prevents or restricts imports
outside the TRQ.
13. Australia agrees with the US 3 that if Turkey has refused to gr ant Certificates of Control, that
would constitute a quantitative import restriction or discretionary import licensing, or fall within the
broad category of 'similar border measures other than ordinary customs duties' in footnote 1 to
Article 4.2 of the Agreement on Agriculture . The measure is therefore 'of the kind' that Turkey may
not maintain, resort to, or revert to, and is inc onsistent with the prohibition on non-tariff measures in
Article 4.2.
Article XI:1 of GATT 1994 – import licence/other measure

14. Australia considers that the Panel should clarif y the term 'import licence' under Article XI:1
of GATT 1994, considering its ordinary meaning and in the context of the Import Licensing
Agreement.
15. Neither Article 1.1 of the Import Licensing Agreement nor GATT 1994 defines the term
'import licence'. However, Article 1.1 of the Import Licensing Agreement identifies the scope of the
Agreement as being concerned with the administrati ve procedures that are used to implement import
licensing. The phrase 'prior condition for importation' in Article 1.1 provides guidance on the meaning
of the term 'import licence'. It indicates that the term covers the control of imports.
16. The footnote to Article 1.1 also provides guida nce in considering the meaning of 'import
licence'. As stated by the Panel in EC – Bananas III , the footnote "further defines 'administrative
procedures' to include 'those procedures referred to as "licensing" as well as other similar procedures'.
Accordingly, irrespective of whether the term ' licensing' is used … administrative procedures are
covered by the Licensing Agreement provided that they have a purpose similar to licensing."4
17. Turkey's submission5 that its Certificates of Control deal solely with customs matters - and so
are not import licences – gives too great a scope to the carve out for 'customs purposes' and restricts
the meaning of 'import licences' beyond that intended by either Article XI of GATT 1994 or the
Import Licensing Agreement. Australia considers that it would be difficult to consider a procedure that
involves product safety checks or SPS measures within the concept of 'customs purposes' under
Article 1.1 of the Import Licensing Agreement or GATT 1994. The fact that there are elements of a
regime which are required for customs purposes does not mean, in and of itself, that the regime falls
outside the term 'import licence'. The structure a nd operation of the regime in practice need to be
examined to determine if it has a 'purpose similar to licensing'.

2 Third Party Written Submission by the European Communities, 18 October 2006, para. 20.
3 First Submission of the United States, 20 September 2006, paras. 76-78.
4 Panel Report, EC – Bananas III, para. 7.147.
5 First Submission by Turkey, 11 October 2006, paras. 47-54.

18. Australia further contends that if the Panel fi nds that the Certificate of Control is not an
'import licence', as referred to in the WTO Agreements, the Panel should consider whether either the
Certificate of Control or Turkey's alleged denial of the Certificates is an 'other measure' within the
meaning of Article XI of GATT 1994. Such a findi ng will depend on the Panel's view as to whether
the evidence supports the US submissi on that Turkey has, through use of its Certificates of Control,
either acted to prohibit or restrict the entry of rice into Turkey.
Domestic support under Turkey's TRQ

19. Turkey argues that it is not necessary to examine the expired Turkish TRQ regime.6
20. Australia notes that the Panel has authority to make findings on measures which are properly
within its terms of reference, even wh ere those measures have ceased to exist. 7 However, it is
established jurisprudence that a panel only needs to address those claims which must be addressed to
resolve the matter in issue in the dispute.8
21. Where a measure has been withdrawn, it may often be unnecessary to make a finding on the
measure's consistency with the WTO Agreements , and panels in the past have generally found it
inappropriate to make recommendations on measures which no longer exist. 9 If the TRQ regime has
indeed expired, the Panel should consider whether, based on the particular facts of the case, it is
necessary to make findings or recommendations on the measure in order to resolve the dispute.
22. If the Panel concludes that elements of the TR Q continue to exist or otherwise decides to
make findings on the TRQ, Australia submits th at Turkey's imposition of a domestic purchasing
requirement under its TRQ regime is inconsistent with Article III:4 of GATT 1994. The only issue
between the parties in this regard is whether im ported rice is accorded less favourable treatment than
domestic rice.
23. Australia notes that WT O jurisprudence supports the view that the imposition of an
'additional requirement' or an 'extra hurdle' on imported products, when compared to like domestic
products, constitutes less favourable treatment. 10 In Canada – Wheat Exports and Grain Imports , the
Panel considered that these 'extra hurdles' need not be onerous in commercial and/or practical terms to
be inconsistent with Article III:4 of GATT 1994.11
24. Under Turkey's TRQ regime, imported rice cannot be sold in the domestic market unless that
importer first purchases a specified quantity of domes tic rice. Domestic rice producers are not subject
to any such additional requirement. Australia argues th at this is an 'extra hurdle' which alters the
conditions of competition in favour of domestic rice, and constitutes less favourable treatment for
imported products.

6 First Submission by Turkey, 11 October 2006, paras. 137-139; Third Party Written Submission by
8 Appellate Body Report, US – Wool Shirts and Blouses , page 19; Appellate Body Report, US – Lead
and Bismuth II, para. 71.
9 For example, Appellate Body Report, US – Certain EC Products , para. 81; Panel Report, Chile –
Price Band System, para. 7.112.
10 Panel Report, Canada – Wheat Exports and Grain Imports, para. 6.185.
11 Panel Report, Canada – Wheat Exports and Grain Imports, para. 6.190.

Interpretation of "measures of general application" under Article X:2 of GATT 1994

25. Turkey argues that Article X:2 of GATT 1994 does not apply to the dispute as the Letters of
Acceptance are not 'measures of general application' and, because they cannot be enforced, they are
not subject to the publication requirement under Article X:2.
12
26. As the US submission makes clear, the measure at issue is Turkey's alleged blanket denial of
Certificates of Control. 13 In Australia's view, this is the 'mea sure of general application' which is
allegedly being enforced, and which, if found to exist, constitutes a 'restriction or prohibition on
imports' under Article X:2.
27. If the Panel finds that Turkey has in fact adopted a practice of denying Certificates of Control
altogether, Australia argues this could constitute a 'm easure of general application' for the purposes of
Article X:2, whether or not the Letters of Acceptan ce themselves can be enforced. Turkey's failure to
publish its denial of the Certificates, whether th rough publication of the Letters of Acceptance or
some other instrument, would be inconsistent with Article X:2.
Evidentiary Status of the Letters of Acceptance

28. Turkey submits that the Letters of Acceptanc e are inadmissible or partial and unreliable
evidence of Turkey's intention and trade policies.14
29. The Dispute Settlement Understanding contains no rules on the admissibility of evidence. As
clarified in the Panel report in EC – Bed Linen, WTO panels "are generally free to admit and evaluate
evidence of every kind and to ascribe to it the weight that they see fit."15
30. Australia therefore contends that the Letters of Acceptance are admissible and it is for the
Panel to determine the weight to be accorded to such evidence.
Conclusion

31. In conclusion, Australia thanks the Panel for its consideration of the points we have raised.

12 First Submission by Turkey, 11 October 2006, para. 84.
13 First Submission of the United States, 20 September 2006, paras. 79-80.
14 First Submission by Turkey, 11 October 2006, para. 81.
15 Panel Report, EC – Bed Linen, para. 6.34.

ANNEX B-5

ORAL STATEMENT BY CHINA
AT THE THIRD PARTY SESSION
(9 November 2006)

1. Madam Chair, distinguished members of the Pa nel, thank you for providing China with the
opportunity to make a statement at this meeting. In this statement, I will focus on three issues.
I. ARTICLE XI:1 OF GATT 1994
2. From the first submissions of the US and Turk ey, it's apparent that they have different
viewpoints concerning whether Turkey's Certificates of Control is an import license. On this point,
China is of the view that, even assu ming that the Certificate of Control is not an import license, if it
prohibits or restricts the import of rice in practice, it may still constitute an "other measure" which is
inconsistent with GATT Article XI:1. Based on the in terpretations developed by the panel of the case
India – Quantitative Restrictions ,
1 if an "other measure" subject to the discretion of a government
agency and may block certain imports, such measur e should be deemed to operate as limitations on
imports and is not permitted by Article XI:1.
II. ARTICLE III OF GATT 1994
3. With respect to domestic purchase requirement , the US claims that it violates GATT
Article III:4, whereas Turkey denies such claim. Specifically, Turkey argues that with the benefit of
lower tariff rate, the domestic purchase requirement actually altered the conditions of competition in
favour of imported product, and theref ore was consistent with Article III:4. 2 However, in China's
view, such line of reasoning seems questionable. Ar ticle III deals with the comparison of treatments
between the products imported and na tional products, and has no relati on to the level of tariff. If
domestic purchase requirement alters the competition conditions to the detriment of imported
products and thus violates Article III:4, the violation c ould not be redressed or offset by the benefit of
lower tariff rate.
III. THE APPLICATION OF TRIMS AGREEMENT
4. The US claims that Turkey is in breach of Ar ticle 2.1 and Paragraph 1( a) of the Annex 1 of
the TRIMs Agreement. Turkey argues that the subject measure is consistent with GATT Article III:4,
and therefore does not violate Article 2.1 of the TRIMs Agreement.3 It seems that Turkey ignores the
fact that the US fails to define what a "trade-rela ted investment measure" is and to prove Turkey's
measure constitutes a TRIM4.
5. China wishes to raise its obser vation in this regard. The TRIM s Agreement is a fully fledged
treaty with autonomous legal existence, and it mu st have its own appli cation scope. Although the
TRIMs Agreement does not define what a TRIM is, this term could be inte rpreted properly according

1 Panel Report, India – Quantitative Restrictions, para. 5.129.
2 Turkey's first written submission, paras. 95-99.
3 Turkey's first written submission, paras. 110-113.
4 TRIM is the abbreviation of "trade-related investment measure", note added by China.

to the principle set forth in Article 3.2 of the DSU. In no case it is proper to bring a measure out of the
coverage of TRIMs Agreement under the jurisdiction of it.
IV. CONCLUSION
6. This concludes my presentation. I thank you for your patience.

ANNEX B-6

ORAL STATEMENT BY EGYPT
AT THE THIRD PARTY SESSION
(9 November 2006)

Mrs. Chairperson, members of the Panel,

1. I am pleased to appear before you today to present the views of the Arab Republic of Egypt as
a third party to this proceeding.
2. As an important producer and exporter of rice, Egypt has a substantial interest in this
proceeding. Also, as stated in its third party subm ission, Egypt is particularly concerned with the
interpretation of Article III:4 and XI:1 of the GA TT 1994 and of Article 4.2 of the Agreement on
Agriculture.
3. In today's statement, Egypt will elaborate on some of the elements raised in its third party
submission and discuss certain of the issues raised by other third parties to this proceeding.
Measures at issue

4. In its third party submission, the People's Re public of China submits that the measures
challenged by the United States (US) under the title of "regime as a whole" are too broad to meet the
specificity requirement of Article 6.2 of the Understanding on Rules and Procedures Governing the
Settlement of Disputes (DSU).
5. Egypt notes that in its request for the establishm ent of a panel, the US, after having identified
the measures at issue and having referred separately to the denial of, or failure to grant import licenses
and domestic purchase requirements, submits claims concerning Turkey's domestic purchase
requirements, in conjunction with its denial of, or failure to grant import licenses. Also, in its first
written submission, under claims K, L and M, the US re fers to the denial of Certificates of Control
and the domestic purchase requirements imposed unde r Turkey's TRQ regime. Under claim L, in
particular, the US indicates that Turkey's import licensing regime comprises the TRQ requiring
domestic purchase for under-quota imports and the deni al of import licenses for any imports at the
rate of duty set out in Turkey's domestic schedule.
Measures within the meaning of Article XI:1

6. The US, in its first submission, primarily considers that Certificates of Control are import
licenses within the meaning of Article XI:1 of the GATT 1994 even though it also states that they
may be considered as "other measures" under this Article. Arguing that Certificates of Control are
exclusively used for customs purposes, Turkey cont ends that they cannot be considered as import
licences within the meaning of Article 1.1 of the Agreement on Import Licensing Procedures.
7. Since Article XI:1 does not define the notion of import license, Egypt considers that Turkey is
right to refer to the definition set forth in Article 1.1 of the Agreement on Import Licensing
Procedures when examining if Certificates of C ontrol should be considered as import licenses under
Article XI:1. Egypt is of the opinion that one of the central questions that must be addressed with
respect to this issue is whether or not Certificat es of Control amount to administrative forms that are
required exclusively for customs purposes. In line w ith the considerations invoked by the European
Communities (EC) in its third party submission, E gypt believes that the requirements that must be

satisfied by importers in order to obtain Certificat es of Control cannot be considered as exclusively
for customs purposes.
8. In the event that Certificates of Control wh ere found not to be import licenses within the
meaning of Article XI:1, Egypt considers that it shoul d be examined whether they can be classified as
"other measures". Egypt wishes to recall that, in previous dispute settlement proceedings concerning
Article XI:1, panels have considered that its r each is very wide and that the expression "other
measures" implies a broad scope as to the types of measures that are covered.
"As such" or "as applied" claim

9. The EC, in its third party submission, raises the question of whether the US has raised an "as
such" or an "as applied" claim. In light of the findings of the Appellate Body in US – Zeroing (EC) ,
the EC considers that "on the basis of the facts before the Panel, ther e may be a series of "as applied"
measures (or a practice), which the US is inviting th e Panel to construe as a measure and condemn in
"as such" terms.
10. Egypt wishes to indicate that the distincti on between "as such" and "as applied" claims
referred to by the EC in its third party submissi on all concern the Agreement on Implementation of
Article VI of the GATT 1994 (Anti-Dumping Agreem ent). While the findings of the Appellate Body
and panels rendered within the framework of pr oceedings concerning the Anti-Dumping Agreement
in relation to "as such" and "as applied" cases may be considered by the Panel in this proceeding,
Egypt submits that the wording and nature of th e provisions referred to by the US in the present
proceeding should be borne in mind.
11. Egypt respectfully submits that if the Panel wa s to determine whether the US claims concern
measures within the meaning of Article 3.3 of the DSU, it should examine how they are classified
under the Articles referred to in support of their clai ms by the US. For example, with respect to US
claim A, the Panel should determine whether the Ce rtificates of Control are import licenses or other
measures within the meaning of Article XI:1.
Expiry of the TRQ regime

12. In its first submission, Turkey indicates that the legislative framework providing for the TRQ
regime expired and requested the Panel to refrain from making findings on the measures related to its
TRQ regime or, should the Panel consider it necessary to make findings necessary for the purpose of a
positive solution to the dispute, not to make any recommendation to the Dispute Settlement Body
(DSB). In its third party submission, the EC stat es that it does not consider it necessary to examine
more in detail the TRQ regime.
13. Considering the claims raised by the US with respect to the joint operation of the TRQ regime
and the general import regime, Egypt considers it impor tant for the Panel to take into consideration
the TRQ regime for its findings to secure a positive solution to the dispute. However, if the TRQ
regime is no longer in force, Egypt also consid ers that no recommendation should be made to the
DSB with respect to it.
14. Mrs. Chairperson, members of the Panel, this concludes the third party statement of Egypt.
Thank you for your attention.

ANNEX B-7

ORAL STATEMENT BY THE EUROPEAN COMMUNITIES
AT THE THIRD PARTY SESSION
(9 November 2006)

Ms. Chairperson, distinguished members of the Panel,

1. The European Communities thanks the Panel for this opportunity to present its views today.
2. In its written submission, the EC invited the Panel to conclude on four points of law:
• carefully examine the existence of a "rule or norm" constituting a measure of general
and prospective application

• consider the order of analysis of the releva nt agreements in the light of the Appellate
Body Report in EC – Bananas III

• consider that where an import restriction that falls foul of Article XI has a
simultaneous element of favouring the internal sale of domestic, rather than imported,
products, it violates also Article III of the GATT

• refrain from making any recommendations to the DSB on the Turkish TRQ regime.

3. In this third party session, we will not devel op these arguments much further. However, for
the sake of clarity, we will highlight again our main points.
4. This is a very fact intensive case where the par ties appear to disagree on many of the facts at
stake. The EC does not wish to add to this complication by building any theories based on assumptions
of facts. What seems to be clear is that Turk ey's TRQ regime has ceased to exist. Under these
circumstances, the EC does not consider it necessar y to examine more in detail the expired Turkish
TRQ regime.
5. The measures still in force, that is, the allege d import licensing system brings forward a very
important systemic issue in the light of the argume nts presented by the United States. The US in its
first written submission refers to th e Turkish measures as "an unofficial ban". It appears also that the
US case relies at least partially on internal documen ts of the Turkish admini stration and reference is
also made to oral instructions given to Turkish o fficials. Egypt in its third party submission considers
it irrelevant that the unpublished Letters of Acce ptance may not be "laws, regulations, judicial
decisions or administrative rulings" within the meani ng of Article XI:1 of the GATT. The EC is of the
view that the issue is more subtle than as expr essed by Egypt as it is important to establish whether a
measure exists in the first place. In this respect th e fact that a given document has not been published
is relevant.
6. As the EC has made clear in its written submissi on, this is a familiar systemic issue on which
the Panel should be particularly vigilant: Is it truly so that there is a system or a regime that is in place
or could it be that the system as it stands has possibly been applied in a certain way in certain
instances? This subtle but fundamentally important question may make a significant difference.
7. There is also another systemic issue before the Panel, namely the order of analysis of
overlapping pleas in law under different provisions of different relevant ag reements. The Appellate
Body has considered this question in EC – Bananas III , where it stated that the agreement more
specific to the matter at stake should be examined first.

8. It is of course often a question of judgement as to which agreement might be more specific in
each case as that may depend on the emphasis of argument and the context of the measure. However,
it would seem to the EC that due to the importance of the US argument on import licensing, the
arguments relating to the import licensing agreement s hould be considered first. It would also seem
correct to follow with the analysis under Artic le 4.2 of the Agreement on Agriculture as the case
concerns a specific agricultural product. It is only afte r these agreements that the more general rules of
the GATT should be examined although one coul d also put forward an argument that the
TRIMs Agreement should be examined before the provi sions of the GATT. In view of the very close
link between the latter agreements this choice is pe rhaps more a matter of presentation than genuine
specificity.
9. In this respect the EC would like to note that the third party intervention of China does not
appear to take account of the systemic link betw een Articles III:4 and XI:1 of the GATT on the one
hand and the TRIMs Agreement on the other hand. Although it is true that the TRIMs Agreement does
not define exhaustively the notion of a trade relate d investment measure, it is clear that through the
annex to the TRIMs Agreement certa in specific TRIMs are considered ipso jure inconsistent with
these provisions of the GATT. The EC also consider s that as illustrated by the General Interpretative
Note to Annex 1A of the WTO Agreement, and underlined by the Appellate Body in Brazil –
Desiccated Coconut, the authors of the WTO regime intended to put an end to the fragmentation that
had characterised the previous system.
10. Finally, should the Panel consider it necessary to examine in detail the TRQ system, the EC
would like to point to the possibility that both Artic le III:4 and Article XI of the GATT might need to
be examined at the same time. Some arguments presented in the written submissions suggest that
depending on the emphasis of argument, the same measures might be considered both as border
measures and internal measures.
Ms. Chairperson, distinguished members of the Panel,

11. In view of the disagreement on the facts of the case between the parties, the EC does not wish
to make further observations on the matter before us today. However, since the Turkish TRQ system
has been abolished, we feel that in any event th ere would not be a need to issue recommendations to
the DSB on that side of the alleged Turkish measures.

ANNEX B-8

ORAL STATEMENT BY KOREA
AT THE THIRD PARTY SESSION
(9 November 2006)

Madame Chair and members of the Panel,

 Thank for inviting Korea to present its views on this case. Korea would like to comment on
the following four issues:

 (i) whether there has been either a prohibition or a restriction on the import of rice in
Turkey during the period of September 2003 to July 2006;

 (ii) if the import of rice was either prohibited or restricted by the operation of a system of
certificates of control, whether such certificates constitute import licenses;

 (iii) whether imported rice has been less favourably treated by the requirement of
domestic rice purchases; and

 (iv) whether the requirement of domestic rice purchases constitutes a trade related
investment measure.

 First, before deciding whether the certificate of control is discretionary import license or not,
Korea believes that the panel should decide whether importation of rice has been really prohibited or
restricted. As Turkey pointed out, if there is no " restriction" or " prohibition", the nature of the
"measure" is of no relevance.
1 If the statistics provided by Turkey in its annexes 8 and 20 are true, the
US may be wrong in arguing that Turkey institutes or maintains a prohibition on imports through its
failure to issue Certificates of Control
2, and that Turkey did not grant them at all for a period of over
2 1/2 years.3 However, it seems imperative that the panel critically analyze this statistical information
in order to decide whether the out-quota import of rice has been at least restricted or hampered by the
way of managing the certificates of control. With respect to annex 8 which shows that out-quota
imports amounted to 71,181 tons between Janua ry 2004 and August 2006, this annex does not
demonstrate the out-quota imports were made each year, since the data in the Annex only shows the
total imports throughout the above period, not a year by year picture. Korea believes that Turkey
should be requested to provide yearly data on out-quota imports in order to prove their claim that out-
quota import has never been restricted. With rega rd to annex 20, the disproportionate number of
certificates for out-quota imports should be explained by Turkey in order to avoid the suspicion that
the issuance of out-quota certificates have been deliber ately controlled. Since Turkey argued that the
Certificates are issued automatically within a matter of days, it needs to be confirmed that similar
approval rates and processing times have been a pplied equally on both in-quota and out-quota
certificate applications. Korea notices that the proportion of out-quota certificates to in-quota
certificates in 2006 is much higher than it is for the years 2004 and 2005. An explanation for this
should be sought so as to avoid the assumption that Tu rkey loosened its grip on out-quota certificates
only after having been challenged in the WTO. With all those critical queries, the panel should decide
whether out-quota imports have been de facto restricted, if not totally prohibited.

1 Turkey submission para. 69.
2 US submission para. 58
3 US submission para. 71

 Second, on the question of whether certificates of control could be import licenses, Korea is
of the view that a licensing requirement should be distinguished from a license itself. As the US
rightly defined, a license is a formal, usually prin ted or written, permission from an authority to do
something.
4 Korea believes that all licenses, as long as they carry the word "license", must have
explicit permission of acts to be licensed. On the bottom of the certificate of control form submitted
by Turkey as annex 4, it is written that the [i]mpor tation of the related Comm odity has been found to
be proper, provided that said commodity is found to be proper and satisfactory in terms of human
health and safety, etc. It is also mentioned that [t]he present Certificate of Control has been issued …
for presentation to the relevant customs office. Ko rea is sceptical that such an expression could be
interpreted as a formal permission of importation. It seems more appropriate to view the certificate as
one of the licensing requirements, rather than a license itself. It should also be noted that an import
license is issued separat ely in the in-quota importation of rice in Turkey after reviewing the
certificates, whereas no license is granted in the case of an out-quota importation which also requests
the certificates. The mere absence of a license does not convert a li cense requirement into a license
itself. However, Korea recognizes th e possibility that rice importation in Turkey could be effectively
restricted by manipulation of the Certificates of control. If the panel found that the importation has
been so restricted by Turkey, the way of managing the Certificates has to be condemned as a violation
of Article XI:1 of GATT.

 Third, when it comes to the issue of less fa vorable treatment caused by the domestic purchase
requirement, Korea simply does not understand Turkey's logic that the import price of rice per ton
was lower due to the domestic purchase requirement than it otherwise would have been in the absence
of such a requirement. No matter how much the co st of buying domestic rice was lowered by virtue
of the so called domestic purchase requirement, it can not be denied that importers had to resource
additional funds to purchase domestic rice, and fore ign rice could be imported more if such funds
were not forced to be used to buy domestic rice. The main focus in this issue is not the price of
domestic rice but the additional obligation imposed on the importers.

 Fourth, Korea believes that the measure at issu e has to be a trade related investment measure
in order for the TRIMs Agreement to be applied. Even though there is no legal definition for trade
related investment measures, it seems clear that th e measure ought to have at least two elements, one
is trade and the other is an investment element. The domestic purchase requirement at hand clearly
possesses a trade aspect because the requirement is imposed on the importation of foreign rice.
However, there does not appear to be an investment element. As mentioned in the preamble of the
TRIMs Agreement, WTO members desire to facilitate investment across international frontiers and to
take into account the financial needs of developing country members. In this regard, the financial
movement across the border can be understood as an essential element of any investment measure. If
there is no investment aspect in the domestic purchase requirement of Turkey, it can not be an
investment measure, therefore the TRIMs Agreement could not be applied.

Madame Chair

 These are the comments that Korea wishes to be c onsidered in your deliberation of the case at
hand.

Thank you very much.

4 US submission para. 60

ANNEX B-9

ORAL STATEMENT BY THAILAND
AT THE THIRD PARTY SESSION
(9 November 2006)

1. Madame Chair and Members of the Panel: Thailand appreciates the opportunity to participate
in this proceeding and to present its views on this matter to the Panel today.
2. Thailand reserved its right to participate as a third party in this proceeding under Article 10.2
of the Dispute Settlement Understanding due to our systemic interest as one of the top global
exporters of rice.
3. In general, Thailand recognizes the concerns set forth by the United States in its first written
submission regarding the inconsiste ncy of Turkey's rice tariff rate quota (TRQ) regime and domestic
purchase requirement with its obligations under the GATT 1994, the Agreement on Import Licensing
Procedures, the Agreement on Agriculture, and the Agreement on Trade-Related Investment Measures
(TRIMs).
1
4. We view in particular that Turkey's domestic purchase requirement is inconsistent with its
obligations under Article III of the GATT 1994 and the TRIMs Agreement. However, we will not
make specific comments on these concerns today.
5. Instead, Thailand would like to raise an issue not discussed by the parties and other third
parties to date, that is, the inconsistency of Tu rkey's rice TRQ regime with its obligations under
Article II of the GATT 1994 with respect to its Schedule of Concessions. Specifically, Article II:1(a)
requires all WTO Members to accord to the commerce of other Members "treatment no less
favourable" than that provided for in the relevant part of their annexed Schedules. In this proceeding,
Turkey does not dispute that it has bound its MFN duty on rice imports at 45 per cent ad valorem in
its Schedule, without an y quantitative limitations.
2 However, according to the factual evidence
submitted by the United States, the treatment actua lly accorded by Turkey under its TRQ regime is
"less favourable" than that provided for in its Schedule. In fact, Turkey does not provide the
treatment it has provided in its Schedule to all Member s. Rather, Turkey restricts rice imports so that
they may enter only in limited and unpredictable qua ntities (albeit at a tariff rate lower than 45 per
cent), under a non-automatic import licensing regime, and only when coupled with the purchase of
domestic rice quantitatively greater than the intended import amount.
3 Thailand therefore considers
Turkey's TRQ regime to be incons istent with its obligations under GATT Article II, in addition to its
domestic purchase requirement being inconsistent with GATT Article III and the TRIMs Agreement.
6. In its defense, Turkey states that the measu res relating to its TRQ regime, including the
legislative framework and the domestic pur chase requirement, are no longer in force. 4 As a result,
Turkey has requested the Panel to refrain from maki ng findings on these measures, or alternatively, if
the Panel considers making such findings necessary, to not make recommendations to the Dispute
Settlement Body (DSB). 5 In support of its request, Turkey re fers to the Appellate Body Report in
United States – Import Measures on Certain Products from the European Communities , which states

1 First Written Submission of the United States, 20 September 2006.
2 First Written Submission of Turkey, 11 October 2006.
3 First Written Submission of the United States, paras. 41, 45 and 49.
4 First Written Submission of Turkey, para. 136.
5 Ibid. para. 139.

that the Panel erred in making recommendations to the DSB on a measure that the Panel had found to
"no longer exist."
6
7. Thailand considers that the Panel must examin e the measures challenged by the United States
in its request for the establishment of this Panel. There is consistent WTO jurisprudence stating that
the relevant time to assess whether a measure is w ithin a panel's terms of reference is the time at
which the panel is established, which in this case is 17 March 2006.7
8. While Thailand welcomes Turkey's statement that the TRQ regime and coupled domestic
purchase requirement are no longer in force, Thaila nd notes that the relevant measures may be re-
introduced at any time in the future. As the United States has shown, Turkey has in the past instituted
seasonal import bans, 8 and more recently, opened or applie d the TRQ regime with the domestic
purchase requirement intermittently throughout a span of one year. 9 Therefore, to preclude the
possibility that Turkey may re-instig ate these measures, Thailand is of the view that this Panel should
make findings with respect to the inconsistency of Turkey's rice TRQ regime and domestic purchase
requirement with its WTO obligations. The Panel in European Communities – Measures Affecting the
Approval and Marketing of Biotech Products considered that making a finding to prevent a WTO-
inconsistent measure from being re-introduced would help secure a positive solution to the dispute.10
9. Thailand hopes that these views will assist the Pa nel in considering the issues that have been
brought before it. Again, we thank you for this opportunity to appear before you today.

6 Ibid. para. 138.
7 Panel Report, India – Measures Affecting the Automotive Sector , WT/DS146/R, WT/DS175/R and
Corr.1, adopted 5 April 2002, para. 7.26, and Panel Report, Argentina – Measures Affecting Imports of
Footwear, Textiles, Apparel and Other Items, WT/DS56/R, adopted 22 April 1998, paras. 6.7 and 6.11.
8 First Written Submission of the United States, paras. 14 and 15.
9 Ibid. para. 38.
10 Panel Report, European Communities – Measures Affecting the Approval and Marketing of Biotech
Products, WT/DS291/R, WT/DS292/R, and WT/DS293/R, circulated 29 September 2006, para. 7.1311.