TURKEY – CERTAIN MEASURES CONCERNING THE PRODUCTION, IMPORTATION AND MARKETING OF PHARMACEUTICAL PRODUCTS NOTIFICATION OF AN APPEAL BY TURKEY UNDER ARTICLE 25 OF THE UNDERSTANDING ON RULES AND PROCEDURES GOVERNING THE SETTLEMENT OF DISPUTES (DSU), UNDER PARAGRAPH 5 OF THE AGREED PROCEDURES FOR ARBITRATION UNDER ARTICLE 25 OF THE DSU (ARBITRATION AGREEMENT), AND UNDER RULE 20 OF THE WORKING PROCEDURES FOR APPELLATE REVIEW
Document: UNDER PARAGRAPH 5 OF THE AGREED PROCEDURES FOR ARBITRATION UNDER ARTICLE 25 OF THE DSU (ARBITRATION AGREEMENT), AND UNDER RULE 20 OF THE WORKING PROCEDURES FOR APPELLATE REVIEW
Date: 28 April 2022
Document codes: WT/DS583/12
Complainant: EU
Respondent: Turkey
Third parties: Brazil, Canada, China, India, Indonesia, Japan, Russia, Switzerland, Ukraine, U.S.
Dispute stage: Panel
Agreements cited: Art. III:4, X:1, XI:1  GATT 1994Art. 3.1(b)  Subsidies and Countervailing Measures (SCM)Art. 2.1  Trade-Related Investment Measures (TRIMs)

TURKEY – CERTAIN MEASURES CONCERNING THE PRODUCTION,
IMPORTATION AND MARKETING OF PHARMACEUTICAL PRODUCTS
NOTIFICATION OF AN APPEAL BY TURKEY UNDER ARTICLE 25 OF THE UNDERSTANDING ON
RULES AND PROCEDURES GOVERNING THE SETTLEMENT OF DISPUTES (DSU),
UNDER PARAGRAPH 5 OF THE AGREED PROCEDURES FOR ARBITRATION
UNDER ARTICLE 25 OF THE DSU (ARBITRATION AGREEMENT),
AND UNDER RULE 20 OF THE WORKING PROCEDURES FOR APPELLATE REVIEW
The following communication, dated 25 April 2022, from the delegation of Turkey, is being circulated
to Members.

Notification of an Appeal by Turkey under Article 25 of the Understanding on Rules and Procedures
Governing the Settlement of Disputes ("DSU"), under paragraph 5 of the Agreed Procedures for
Arbitration under Article 25 of the DSU ("Arbitration Agreement"),1 and under Rule 20 of the
Working Procedures for Appellate Review2

Pursuant to paragraph 5 of the Arbitration Agreement, Turkey hereby notifies the Dispute Settlement
Body of its decision to initiate an arbitration under Article 25 of the DSU to decide an appeal with
regard to certain issues of law and legal interpretation covered in the Panel Report i n the dispute
Turkey – Certain Measures concerning the Production, Importation and Marketing of Pharmaceutical
Products.
Pursuant to paragraph 5 of the Arbitration Agreement and Rule 20 of the Working Procedures for
Appellate Review, Turkey simultaneously files this Notice of Appeal and its Appellant Submission
with the European Union and the third parties in the panel proceedings and with the WTO Secretariat.
The Notice of Appeal includes the final report of the Panel in the working languages of the WTO.
For the reasons further elaborated in its Appellant Submission to the Arbitrators, Turkey appeals and
requests the Arbitrators to reverse the findings, conclusions and recommendations of the Panel, with
respect to the following errors of law and legal interpretation contained in the Panel Report:3
1. The Panel erred in the interpretation and application of Article III:8(a) of the GATT 1994
when finding that the localisation measure does not involve a "purchase" within the meaning
of Article III:8(a), is th us not covered by the government procurement derogation and is
therefore subject to the national treatment obligation in Article III:4 of the GATT 1994 and
Article 2.1 of the TRIMs Agreement. 4 In particular, the Panel erred in interpreting
Article III:8(a) as requiring that the purchase of products procured for governmental

1 WT/DS583/10.
2 Rule 20 of the Working Procedures for Appellate Review applies pursuant to paragraph 11 of the
Arbitration Agreement.
3 Pursuant to Rule 20(2)(d)(iii) of the Working Procedures for Appellate Review, which apply mutatis
mutandis pursuant to paragraph 11 of the Arbitration Agreement, this Notice of Appeal includes an indicative
list of the paragraphs of the Panel Report containing the alleged errors, without prejudice to the ability of
Turkey to refer to other paragraphs of the Panel Report in the context of the arbitration proceedings.
4 Panel Report, paras. 7.104, 7.107 and 8.1(b)(ii).

purposes must be made by a governmental agency 5 and in interpreting the term
"purchased" as requiring the transfer of ownership from the seller to the entity purchasing
the product con cerned.6 Because of these interpretive errors, the Panel erred in its
application of Article III:8(a) of the GATT 1994. First, the Panel erred in finding that Article
III:8(a) does not apply because there is no purchase of medicines included in Annex 4/A by
the Turkish Social Security Institution ("SSI"). Second, the Panel also erred in finding that
there is no purchase by the SSI because the SSI does not acquire the ownership of
medicines included in Annex 4/A. Furthermore, even if the Panel's interpretation of the term
"products purchased" was found to be correct ( quod non), the Panel erred in concluding
that the SSI does not acquire the ownership of medicines included in Annex 4/A.7 The Panel
also failed to consider that, alternatively, retail pharmacie s that purchase medicines that
are dispensed to patients covered by the public healthcare system act on behalf of the SSI
and to that extent act as "governmental agencies", within the meaning of Article III:8(a). 8
In light of the foregoing, Turkey request s the Arbitrators to reverse the relevant Panel 's
findings in paragraphs 7.61-7.107 and 8.1(b)(ii) of the Panel Report, including the Panel 's
conclusion that the localisation measure is not covered by the government procurement
derogation in Article III:8( a) of the GATT 1994 and is therefore subject to the national
treatment obligation in Article III:4 of the GATT 1994 and Article 2.1 of the TRIMs
Agreement.

Turkey requests that consequently the Arbitrators find the Panel 's conclusion that the
localisation requirement is inconsistent with the national treatment obligation in Article III:4
of the GATT 1994 to be moot and of no legal effect.9 If not, Turkey requests the Arbitrators
to complete the analysis under Article III:8(a) of the GATT 1994 and find th at the
localisation measure falls within the scope of the government procurement derogation
provided by that provision. In that case, Turkey further requests the Arbitrators to reverse
the Panel's findings that the localisation measure is inconsistent with Article III:4 of the
GATT 1994 in paragraphs 7.121-7.127 and 8.1(b)(iii) of the Panel Report.

2. The Panel erred in the interpretation and application of Article XX(b) of the GATT 1994 when
finding that the localisation measure is not "designed to" prote ct human, animal, or plant
life or health.10 The Panel erred in defining the legal standard applicable for determining the
design of the measure by requiring that a measure must address a health risk that has "a
substantial degree of probability" of mater ialising for the measure to be "designed to"
protect human, animal, or plant life or health". 11 The Panel also erred by confusing the
"design" and "necessity" steps of the legal test under subparagraph (b), and by relying on
the legal tests under subparag raphs (a) and (j) of Article XX of the GATT 1994 and
Article XIV(a) of the GATS, as interpreted by previous panels. 12 The Panel also erred in
applying Article XX(b) of the GATT 1994 by concluding that the evidence submitted by
Turkey does not indicate tha t the localisation measure is "designed to" protect human life
or health.13 In addition, the Panel failed to make an objective assessment of the matter
before it pursuant to Article 11 of the DSU when addressing Turkey 's claim that the
localisation measure is justified under Article XX(b) of the GATT 1994. The Panel wilfully
disregarded part of the evidence and failed to make a holistic assessment of the evidence
presented by Turkey.14 These errors were material and affected the Panel's finding that the
localisation measure is not "designed to" protect human life or health and th erefore not
justified under Article XX(b) of the GATT 1994. Thus, Turkey requests the Arbitrators to
reverse the Panel's findings in paragraphs 7.157 -7.214, 7.219 and 8.1(b)(iv) of the Panel
Report and requests the Arbitrators to complete the legal analysi s and to find that the
localisation measure is justified under Article XX(b) of the GATT 1994.

5 Panel Report, para. 7.65.
6 Panel Report, paras. 7.74 and 7.81.
7 Panel Report, paras. 7.85-7.88 and 7.90.
8 Panel Report, paras. 7.98 and 7.103.
9 Panel Report, paras. 7.121-7.127 and 8.1(b)(iii).
10 Panel Report, paras. 7.211, 7.219 and 8.1(b)(iv).
11 Panel Report, para. 7.171.
12 Panel Report, paras. 7.167-7.170.
13 See, for example, Panel Report, paras. 7.173, 7.180, 7.199, 7.207, 7.210.
14 See, for example, Panel Report, paras. 7.186-7.200 and 7.210.

3. The Panel erred in the interpretation and application of Article XX(d) of the GATT 1994 when
finding that the localisation measure is not taken to secure compliance with laws requiring
Turkey to ensure accessible, effective and financially sustainable healthcare. 15 By
considering that its analysis of Turkey 's defence under Article XX(b) of the GATT 1994
applies mutatis mutandis to the analysis of Turkey's defence under Article XX(d), the Panel
applied the wrong legal standard and erroneously rejected Turkey 's defence under Article
XX(d) of the GATT 1994. Thus, Turkey requests the Arbitrators to reverse the Panel 's
findings under Article XX(d) of the GATT 1994 set out in paragraphs 7.217 -7.219 and
8.1(b)(iv) of the Panel Report. If the Arbitrators reverse the Panel 's findings under Article
XX(d) of the GATT 1994, Turkey requests the Arbitrators to complete the analysis and find
that the localisation measure is justified under that provision.

Pursuant to Rule 23(2)(c) of the Working Procedures for Appellate Review, the service address,
telephone and facsimile numbers of Turkey are:
Permanent Mission of Turkey to the WTO
Route de Pré-Bois 20, CP: 1837
1215 Geneva 15
Tel: + 41-22-791-70-10
Fax: + 41-22-791-70-20

TURKEY – CERTAIN MEASURES CONCERNING THE PRODUCTION,
IMPORTATION AND MARKETING OF PHARMACEUTICAL PRODUCTS
REPORT OF THE PANEL

LIST OF ANNEXES
ANNEX A
WORKING PROCEDURES AND PRELIMINARY RULING
Contents Page
Annex A-1 Working Procedures of the Panel, as amended 4
Annex A-2 Additional Working Procedures concerning Protection of Business
Confidential Information
11
Annex A-3 Preliminary Ruling of the Panel, dated 10 July 2020 14
ANNEX B
COMMUNICATIONS REGARDING THE IMPACT OF THE COVID-19 PANDEMIC ON THE PROCEEDINGS
Contents Page
Annex B-1 Panel's communication to the parties regarding the postponement of
the first substantive meeting and proposed modifications to the Working
Procedures and timetable, dated 12 August 2020
26
Annex B-2 Panel's communication transmitting the revised Working Procedures
and timetable, dated 25 August 2020
28
Annex B-3 Panel's communication to the parties regarding the possibility of holding
the first substantive meeting in virtual format, dated 3 February 2021
30
Annex B-4 Panel's communication to the parties regarding its decision to conduct
the first substantive meeting in virtual format, dated 17 February 2021
31
Annex B-5 Panel's communication to the parties transmitting proposed revisions to
the Working Procedures and Timetable, and a draft Protocol for
logistical aspects of the virtual hearing, dated 25 February 2021
32
Annex B-6 Panel's communication to the parties transmitting revised Working
Procedures and Timetable, and Protocol for log istical aspects of the
virtual hearing, dated 5 March 2021
34
Annex B-7 Panel's communication to the parties establishing the remaining steps
in the Timetable, dated 3 May 2021
36
ANNEX C
ARGUMENTS OF THE PARTIES
Contents Page
Annex C-1 Integrated executive summary of the arguments of the European Union 39
Annex C-2 Integrated executive summary of the arguments of Turkey 54
ANNEX D
ARGUMENTS OF THE THIRD PARTIES
Contents Page
Annex D-1 Integrated executive summary of the arguments of Canada 73
Annex D-2 Integrated executive summary of the arguments of Japan 77
Annex D-3 Integrated executive summary of the arguments of Switzerland 80
Annex D-4 Integrated executive summary of the arguments of Ukraine 84
Annex D-5 Integrated executive summary of the arguments of the United States 87

CASES CITED IN THIS REPORT
Short title Full case title and citation
Argentina –
Financial Services
Appellate Body Report, Argentina – Measures Relating to Trade in Goods
and Services, WT/DS453/AB/R and Add.1, adopted 9 May 2016, DSR
2016:II, p. 431
Argentina – Import
Measures
Appellate Body Reports, Argentina – Measures Affecting the Importation of
Goods, WT/DS438/AB/R / WT/DS444/AB/R / WT/DS445/AB/R, adopted 26
January 2015, DSR 2015:II, p. 579
Argentina – Textiles
and Apparel
Appellate Body Report, Argentina – Measures Affecting Imports of
Footwear, Textiles, Apparel and Other Items, WT/DS56/AB/R and Corr.1,
adopted 22 April 1998, DSR 1998:III, p. 1003
Brazil – Retreaded
Tyres
Appellate Body Report, Brazil – Measures Affecting Imports of Retreaded
Tyres, WT/DS332/AB/R, adopted 17 December 2007, DSR 2007:IV, p.
1527
Brazil – Retreaded
Tyres
Panel Report, Brazil – Measures Affecting Imports of Retreaded Tyres,
WT/DS332/R, adopted 17 December 2007, as modified by Appellate Body
Report WT/DS332/AB/R, DSR 2007:V, p. 1649
Canada – Aircraft Panel Report, Canada – Measures Affecting the Export of Civilian Aircraft,
WT/DS70/R, adopted 20 August 1999, upheld by Appellate Body Report
WT/DS70/AB/R, DSR 1999:IV, p. 1443
Canada –
Renewable Energy /
Canada – Feed-in
Tariff Program
Appellate Body Reports, Canada – Certain Measures Affecting the
Renewable Energy Generation Sector / Canada – Measures Relating to the
Feed-in Tariff Program, WT/DS412/AB/R / WT/DS426/AB/R, adopted 24
May 2013, DSR 2013:I, p. 7
Canada –
Renewable Energy /
Canada – Feed-in
Tariff Program
Panel Reports, Canada – Certain Measures Affecting the Renewable
Energy Generation Sector / Canada – Measures Relating to the Feed-in
Tariff Program, WT/DS412/R and Add.1 / WT/DS426/R and Add.1,
adopted 24 May 2013, as modified by Appellate Body Reports
WT/DS412/AB/R / WT/DS426/AB/R, DSR 2013:I, p. 237
Canada – Wheat
Exports and Grain
Imports
Panel Report, Canada – Measures Relating to Exports of Wheat and
Treatment of Imported Grain, WT/DS276/R, adopted 27 September 2004,
upheld by Appellate Body Report WT/DS276/AB/R, DSR 2004:VI, p. 2817
China – Auto Parts Appellate Body Reports, China – Measures Affecting Imports of Automobile
Parts, WT/DS339/AB/R / WT/DS340/AB/R / WT/DS342/AB/R, adopted 12
January 2009, DSR 2009:I, p. 3
China – Auto Parts Panel Reports, China – Measures Affecting Imports of Automobile Parts,
WT/DS339/R, Add.1 and Add.2 / WT/DS340/R, Add.1 and Add.2 /
WT/DS342/R, Add.1 and Add.2, adopted 12 January 2009, upheld
(WT/DS339/R) and as modified (WT/DS340/R / WT/DS342/R) by
Appellate Body Reports WT/DS339/AB/R / WT/DS340/AB/R /
WT/DS342/AB/R, DSR 2009:I, p. 119
China – Publications
and Audiovisual
Products
Appellate Body Report, China – Measures Affecting Trading Rights and
Distribution Services for Certain Publications and Audiovisual
Entertainment Products, WT/DS363/AB/R, adopted 19 January 2010, DSR
2010:I, p. 3
China – Publications
and Audiovisual
Products
Panel Report, China – Measures Affecting Trading Rights and Distribution
Services for Certain Publications and Audiovisual Entertainment Products,
WT/DS363/R and Corr.1, adopted 19 January 2010, as modified by
Appellate Body Report WT/DS363/AB/R, DSR 2010:II, p. 261
China – Rare Earths Panel Reports, China – Measures Related to the Exportation of Rare
Earths, Tungsten, and Molybdenum, WT/DS431/R and Add.1 /
WT/DS432/R and Add.1 / WT/DS433/R and Add.1, adopted 29 August
2014, upheld by Appellate Body Reports WT/DS431/AB/R /
WT/DS432/AB/R / WT/DS433/AB/R, DSR 2014:IV, p. 1127

Short title Full case title and citation
China – Raw
Materials
Panel Reports, China – Measures Related to the Exportation of Various
Raw Materials, WT/DS394/R, Add.1 and Corr.1 / WT/DS395/R, Add.1 and
Corr.1 / WT/DS398/R, Add.1 and Corr.1, adopted 22 February 2012, as
modified by Appellate Body Reports WT/DS394/AB/R / WT/DS395/AB/R /
WT/DS398/AB/R, DSR 2012:VII, p. 3501
Colombia – Ports of
Entry
Panel Report, Colombia – Indicative Prices and Restrictions on Ports of
Entry, WT/DS366/R and Corr.1, adopted 20 May 2009, DSR 2009:VI, p.
2535
Colombia – Textiles Appellate Body Report, Colombia – Measures Relating to the Importation
of Textiles, Apparel and Footwear, WT/DS461/AB/R and Add.1, adopted
22 June 2016, DSR 2016:III, p. 1131
Colombia – Textiles Panel Report, Colombia – Measures Relating to the Importation of
Textiles, Apparel and Footwear, WT/DS461/R and Add.1, adopted 22 June
2016, as modified by Appellate Body Report WT/DS461/AB/R, DSR
2016:III, p. 1227
Dominican Republic
– Import and Sale
of Cigarettes
Panel Report, Dominican Republic – Measures Affecting the Importation
and Internal Sale of Cigarettes, WT/DS302/R, adopted 19 May 2005, as
modified by Appellate Body Report WT/DS302/AB/R, DSR 2005:XV, p.
7425
EC – Asbestos Appellate Body Report, European Communities – Measures Affecting
Asbestos and Asbestos-Containing Products, WT/DS135/AB/R, adopted 5
April 2001, DSR 2001:VII, p. 3243
EC – Asbestos Panel Report, European Communities – Measures Affecting Asbestos and
Asbestos-Containing Products, WT/DS135/R and Add.1, adopted 5 April
2001, as modified by Appellate Body Report WT/DS135/AB/R, DSR
2001:VIII, p. 3305
EC – Bananas III Appellate Body Report, European Communities – Regime for the
Importation, Sale and Distribution of Bananas, WT/DS27/AB/R, adopted
25 September 1997, DSR 1997:II, p. 591
EC – Bananas III Panel Reports, European Communities – Regime for the Importation, Sale
and Distribution of Bananas, WT/DS27/R/ECU (Ecuador) /
WT/DS27/R/GTM, WT/DS27/R/HND (Guatemala and Honduras) /
WT/DS27/R/MEX (Mexico) / WT/DS27/R/USA (US), adopted 25 September
1997, as modified by Appellate Body Report WT/DS27/AB/R, DSR 1997:II,
p. 695 to DSR 1997:III, p. 1085
EC – Poultry Appellate Body Report, European Communities – Measures Affecting the
Importation of Certain Poultry Products, WT/DS69/AB/R, adopted 23 July
1998, DSR 1998:V, p. 2031
EC – Seal Products Appellate Body Reports, European Communities – Measures Prohibiting
the Importation and Marketing of Seal Products, WT/DS400/AB/R /
WT/DS401/AB/R, adopted 18 June 2014, DSR 2014:I, p. 7
EC – Seal Products Panel Reports, European Communities – Measures Prohibiting the
Importation and Marketing of Seal Products, WT/DS400/R and Add.1 /
WT/DS401/R and Add.1, adopted 18 June 2014, as modified by Appellate
Body Reports WT/DS400/AB/R / WT/DS401/AB/R, DSR 2014:II, p. 365
EC – Tariff
Preferences
Panel Report, European Communities – Conditions for the Granting of
Tariff Preferences to Developing Countries, WT/DS246/R, adopted 20 April
2004, as modified by Appellate Body Report WT/DS246/AB/R, DSR
2004:III, p. 1009
EC and certain
member States –
Large Civil Aircraft
Appellate Body Report, European Communities and Certain Member States
– Measures Affecting Trade in Large Civil Aircraft, WT/DS316/AB/R,
adopted 1 June 2011, DSR 2011:I, p. 7
EU – Biodiesel
(Argentina)
Appellate Body Report, European Union – Anti-Dumping Measures on
Biodiesel from Argentina, WT/DS473/AB/R and Add.1, adopted 26 October
2016, DSR 2016:VI, p. 2871

Short title Full case title and citation
EU – Energy
Package
Panel Report, European Union and its member States – Certain Measures
Relating to the Energy Sector, WT/DS476/R and Add.1, circulated to WTO
Members 10 August 2018 [appeal/adoption pending]
Guatemala –
Cement I
Appellate Body Report, Guatemala – Anti-Dumping Investigation
Regarding Portland Cement from Mexico, WT/DS60/AB/R, adopted 25
November 1998, DSR 1998:IX, p. 3767
India – Solar Cells Panel Report, India – Certain Measures Relating to Solar Cells and Solar
Modules, WT/DS456/R and Add.1, adopted 14 October 2016, as modified
by Appellate Body Report WT/DS456/AB/R, DSR 2016:IV, p. 1941
Indonesia – Autos Panel Report, Indonesia – Certain Measures Affecting the Automobile
Industry, WT/DS54/R, WT/DS55/R, WT/DS59/R, WT/DS64/R, Corr.1 and
Corr.2, adopted 23 July 1998, and Corr.3 and Corr.4, DSR 1998:VI, p.
2201
Indonesia – Chicken Panel Report, Indonesia – Measures Concerning the Importation of
Chicken Meat and Chicken Products, WT/DS484/R and Add.1, adopted 22
November 2017, DSR 2017:VIII, p. 3769
Indonesia – Chicken
(Article 21.5 –
Brazil)
Panel Report, Indonesia – Measures Concerning the Importation of
Chicken Meat and Chicken Products – Recourse to Article 21.5 of the DSU
by Brazil, WT/DS484/RW and Add.1, circulated to WTO Members 10
November 2020 [adoption/appeal pending]
Indonesia – Import
Licensing Regimes
Panel Report, Indonesia – Importation of Horticultural Products, Animals
and Animal Products, WT/DS477/R, WT/DS478/R, Add.1 and Corr.1,
adopted 22 November 2017, as modified by Appellate Body Report
WT/DS477/AB/R, WT/DS478/AB/R, DSR 2017:VII, p. 3131
Japan – Alcoholic
Beverages II
Appellate Body Report, Japan – Taxes on Alcoholic Beverages,
WT/DS8/AB/R, WT/DS10/AB/R, WT/DS11/AB/R, adopted 1 November
1996, DSR 1996:I, p. 97
Korea – Various
Measures on Beef
Appellate Body Report, Korea – Measures Affecting Imports of Fresh,
Chilled and Frozen Beef, WT/DS161/AB/R, WT/DS169/AB/R, adopted 10
January 2001, DSR 2001:I, p. 5
Mexico – Taxes on
Soft Drinks
Appellate Body Report, Mexico – Tax Measures on Soft Drinks and Other
Beverages, WT/DS308/AB/R, adopted 24 March 2006, DSR 2006:I, p. 3
Peru – Agricultural
Products
Panel Report, Peru – Additional Duty on Imports of Certain Agricultural
Products, WT/DS457/R and Add.1, adopted 31 July 2015, as modified by
Appellate Body Report WT/DS457/AB/R, DSR 2015:VII, p. 3567
Russia – Railway
Equipment
Appellate Body Report, Russia – Measures Affecting the Importation of
Railway Equipment and Parts Thereof, WT/DS499/AB/R and Add.1,
adopted 5 March 2020
Russia – Traffic in
Transit
Panel Report, Russia – Measures Concerning Traffic in Transit,
WT/DS512/R and Add.1, adopted 26 April 2019
Thailand –
Cigarettes
(Philippines)
Appellate Body Report, Thailand – Customs and Fiscal Measures on
Cigarettes from the Philippines, WT/DS371/AB/R, adopted 15 July 2011,
DSR 2011:IV, p. 2203
Turkey – Rice Panel Report, Turkey – Measures Affecting the Importation of Rice,
WT/DS334/R, adopted 22 October 2007, DSR 2007:VI, p. 2151
US – Anti-Dumping
Methodologies
(China)
Appellate Body Report, United States – Certain Methodologies and Their
Application to Anti-Dumping Proceedings Involving China,
WT/DS471/AB/R and Add.1, adopted 22 May 2017, DSR 2017:III, p. 1423
US – Carbon Steel Appellate Body Report, United States – Countervailing Duties on Certain
Corrosion-Resistant Carbon Steel Flat Products from Germany,
WT/DS213/AB/R and Corr.1, adopted 19 December 2002, DSR 2002:IX,
p. 3779

Short title Full case title and citation
US – COOL Appellate Body Reports, United States – Certain Country of Origin
Labelling (COOL) Requirements, WT/DS384/AB/R / WT/DS386/AB/R,
adopted 23 July 2012, DSR 2012:V, p. 2449
US – COOL Panel Reports, United States – Certain Country of Origin Labelling (COOL)
Requirements, WT/DS384/R / WT/DS386/R, adopted 23 July 2012, as
modified by Appellate Body Reports WT/DS384/AB/R / WT/DS386/AB/R,
DSR 2012:VI, p. 2745
US – Corrosion-
Resistant Steel
Sunset Review
Appellate Body Report, United States – Sunset Review of Anti-Dumping
Duties on Corrosion-Resistant Carbon Steel Flat Products from Japan,
WT/DS244/AB/R, adopted 9 January 2004, DSR 2004:I, p. 3
US – Export
Restraints
Panel Report, United States – Measures Treating Exports Restraints as
Subsidies, WT/DS194/R and Corr.2, adopted 23 August 2001, DSR
2001:XI, p. 5767
US – FSC Appellate Body Report, United States – Tax Treatment for "Foreign Sales
Corporations", WT/DS108/AB/R, adopted 20 March 2000, DSR 2000:III,
p. 1619
US – FSC (Article
21.5 – EC)
Appellate Body Report, United States – Tax Treatment for "Foreign Sales
Corporations" – Recourse to Article 21.5 of the DSU by the European
Communities, WT/DS108/AB/RW, adopted 29 January 2002, DSR 2002:I,
p. 55
US – Gambling Appellate Body Report, United States – Measures Affecting the Cross-
Border Supply of Gambling and Betting Services, WT/DS285/AB/R,
adopted 20 April 2005, DSR 2005:XII, p. 5663 (and Corr.1, DSR
2006:XII, p. 5475)
US – Gasoline Appellate Body Report, United States – Standards for Reformulated and
Conventional Gasoline, WT/DS2/AB/R, adopted 20 May 1996, DSR 1996:I,
p. 3
US – Lead and
Bismuth II
Appellate Body Report, United States – Imposition of Countervailing
Duties on Certain Hot-Rolled Lead and Bismuth Carbon Steel Products
Originating in the United Kingdom, WT/DS138/AB/R, adopted 7 June
2000, DSR 2000:V, p. 2595
US – Renewable
Energy
Panel Report, United States – Certain Measures Relating to the Renewable
Energy Sector, WT/DS510/R and Add.1, circulated to WTO Members 27
June 2019 [appeal/adoption pending]
US – Shrimp Appellate Body Report, United States – Import Prohibition of Certain
Shrimp and Shrimp Products, WT/DS58/AB/R, adopted 6 November 1998,
DSR 1998:VII, p. 2755
US – Shrimp
(Ecuador)
Panel Report, United States – Anti-Dumping Measure on Shrimp from
Ecuador, WT/DS335/R, adopted on 20 February 2007, DSR 2007:II, p.
425
US –
Supercalendered
Paper
Appellate Body Report, United States – Countervailing Measures on
Supercalendered Paper from Canada, WT/DS505/AB/R and Add.1,
adopted 5 March 2020
US – Tariff
Measures (China)
Panel Report, United States – Tariff Measures on Certain Goods from
China, WT/DS543/R and Add.1, circulated to WTO Members 15 September
2020 [appeal/adoption pending]
US – Tuna II
(Mexico) (Article
21.5 – Mexico)
Appellate Body Report, United States – Measures Concerning the
Importation, Marketing and Sale of Tuna and Tuna Products – Recourse to
Article 21.5 of the DSU by Mexico, WT/DS381/AB/RW and Add.1, adopted
3 December 2015, DSR 2015:X, p. 5133
US – Underwear Appellate Body Report, United States – Restrictions on Imports of Cotton
and Man-made Fibre Underwear, WT/DS24/AB/R, adopted 25 February
1997, DSR 1997:I, p. 11

Short title Full case title and citation
US – Wheat Gluten Appellate Body Report, United States – Definitive Safeguard Measures on
Imports of Wheat Gluten from the European Communities,
WT/DS166/AB/R, adopted 19 January 2001, DSR 2001:II, p. 717
US – Zeroing (EC) Appellate Body Report, United States – Laws, Regulations and
Methodology for Calculating Dumping Margins ("Zeroing"),
WT/DS294/AB/R, adopted 9 May 2006, and Corr.1, DSR 2006:II, p. 417

EXHIBITS CITED IN THIS REPORT
Exhibit Description/Title
EU-1, TUR-2
Social Insurance and Universal Health Insurance Law No.5510 (31 May
2006), Official Gazette No. 26200 of 16 June 2006 ( "Social Insurance
and UHI Law")
EU-2 Social Security Institution, "Universal Heath Insurance"
EU-3
M. Tatar, "Short PPRI Pharma Profile, Turkey 2017 ", WHO
Collaborating Centre for Pharmaceutical Pricing and Reimbursement
Policy ("Short PPRI Pharma Profile Turkey")
EU-4, TUR-3 Social Security Institution Law No 5502 (16 May 2006), Official Gazette
No. 26173 of 20 May 2006 ("Social Security Institution Law")
EU-5 G. Oner and M. Kecik, "Turkish Medicines and Medical Devices Agency",
presentation at 2014 WHO Technical Briefing Seminar
EU-8, TUR-11
Social Security Institution Regulation on Medicine Reimbursement,
Official Gazette No. 29620 of 10 February 2016 ("Drug Reimbursement
Regulation")
EU-11, EU -95, EU -102,
TUR-10, TUR-10a
Excerpts from the Health Implementation Notification/Comm uniqué
(SUT - Sağlık Uygulama Tebliği), 11 February 2019 ("HIC/SUT")
EU-12
Republic of Turkey, Ministry of Development, Tenth Development Plan
2014-2018 (2014), approved by Decision No. 1041 of the Grand
National Assembly of Turkey of 2 July 2013 ("Tenth Development Plan
2014-2018")
EU-14, TUR-37
Ministry of Health and Ministry of Development, Structural
Transformation Program for Healthcare Industries Action Plan,
November 2014 ( "Structural Transformation Program for Healthcare
Industries Action Plan")
EU-15
Republic of Turkey, Office of the Prime Minister, 2016 Action Plan of
the 64th Government (Implementation and Reforms), 10 December
2015 ("2016 Action Plan of the 64th Government")
EU-16 65th Government Programme, 24 May 2016 ( "65th Government
Programme")
EU-19 A. Yücel, "Foreign investments will be [like] medicine!", Dünya, 30 July
2019
EU-21
Social Security Institution, Rejoinder in court proceedings raised by the
Association of Research -Based Pharmaceutical Companies (AIFD)
before the Turkish State Council, Case 2017/1308, 21 September 2017
("SSI Rejoinder")
EU-23 TMMDA, "Pharmaceutical Localisation Project Work Conducted by the
Ministry of Health", presentation of December 2017
EU-28 EU Commissioner for Trade, Letter to the Turkish Minister of Economy,
5 April 2017
EU-29 Turkish Minister of Economy, Letter to the EU Commissioner for Trade,
19 June 2017
EU-30
Social Security Institution, Defense in court proceedings raised by the
Association of Research -Based Pharma ceutical Companies (AIFD)
before the Turkish State Council, Case 2017/1308, 29 June 2017 ("SSI
Defense")
EU-34
H. Gursoz, President of the TMMDA, "Pharmaceutical Localisation
Project: Transition from Importation to Manufacturing ", presentation
of 6 March 2017
EU-35 HSPC Decision regarding the Localization Process, October 2016
("HSPC Decision")
EU-38, TUR-12
Social Security Institution Regulation on Alternative Reimbursement
for Universal Health Insurance, published in the Official Gazette 29620
on 10 February 2016 ("Alternative Reimbursement Regulation")

Exhibit Description/Title
EU-40
H. Eroğlu, Vice President of the TMMDA, "Local Production ",
presentation at the Symposium on Rational Approach to Current Issues
concerning Medicines, Ankara, 7-9 October 2016
EU-45, TUR-60 Roadmap for the process of localization, setting forth of the principles
for the negotiation, 14 March 2016 ("Localisation roadmap")
EU-46 SSI and TMMDA, Communication, "Local production"
EU-51 Excerpts from Annex 4/A to the HIC/SUT, December 2018
EU-52, TUR-20
Protocol on the procurement of medicines from pharmacies which are
members of the Turkish Pharmacists ' Association (TEB) by persons
covered by the Social Security Institution ("TPA Protocol")
EU-53
Regulation on the p rocedures and principles governing checking of
invoices of healthcare providers and reimbursement of their fees,
Official Gazette No. 30001 of 8 March 2017
EU-62, TUR-58 Social Security Institution, Public Announcement on the Localisation
Process, 19 January 2018
EU-84
Republic of Turkey Ministry of development, Eleventh Development
Plan (2019-2023), Transformation in healthcare industries, Specialised
Committee Report of July 2018 ( "Ministry of development, Eleventh
Development Plan 2019-2023")
EU-87, TUR-35 Ministry of Health, Strategic Plan of TMMDA for 2019 -2023, 31
December 2018
EU-88
Government of Turkey, 11th Development Plan for the period 2019 -
2023 ( "Government of Turkey, Eleventh Development Plan 2019 -
2023")
EU-89
Regulation on the Ma rketing Authorization of Medicinal Products for
Human Use, Official Gazette No. 25705 of 19 January 2005 ("Marketing
Authorization Regulation")
EU-91, TUR-33
Ministry of Trade, Implementing Regulation on Import Control of
certain products inspected by the Ministry of Health, Official Gazette
No. 30991 of 27 December 2019 ("Implementing Regulation on Import
Control")
EU-92 TMMDA, Announcement on import applications for medical products,
31 December 2019
EU-93
Regulation regarding the Varia tions on Medicinal Products for Human
Use with Marketing Authorization or Pending Registration, Official
Gazette No. 25823 of 23 May 2005
EU-95, EU -11, EU -102,
TUR-10, TUR-10a
Implementing Regulation for Healthcare ("HIC/SUT")
EU-96 Annex 4/C to the HIC/SUT
EU-97
TMMDA, Guideline for Working Principles and Procedures of Human
Medicinal Products Priority Assessment Commission ( "Prioritization
Guideline")
EU-99, TUR-36 Ministry of Health, TMMDA, Administrative Activity Report 2016,
February 2017 ("2016 TMMDA Activity Report")
EU-100 R. Yeter, "Watch out with the localization trap ", Yeni Şafak, 24
February 2018
EU-102, EU -11, EU -95,
TUR-10, TUR-10a
Excerpts from the Health Implementation Notification/Communiqué
(SUT - Sağlık Uygulama Tebliği), 5 May 2020 ("HIC/SUT")
EU-109, TUR-7 Social Security Institution, Activity Report 2018
("SSI Activity Report 2018")
EU-111, TUR-78 TMMDA Administrative Operation Report 2019
EU-117 IQVIA, Report on the Turkish healthcare market, September 2020

Exhibit Description/Title
EU-118 Comparison between applications for priority granted for imported and
domestic products
TUR-17
Communiqué on the Pricing of Medicinal Products for Human Use,
Official Gazette No. 30195 of 29 September 2017 ( "Pricing
Communiqué")
TUR-18 Decree on Pricing of Human Medicinal Products No. 2017/9901, Official
Gazette No. 29989 of 24 February 2017 ("Pricing Decree")
TUR-19
Article 26, Regulation on the Marketing Authorization of Medicinal
Products for Human Use, Official Gazette No. 25705 of 19 January
2005, amended on 14 November 2013
TUR-21 Annex 4/A of the HIC/SUT
TUR-27 Law on Turkish Pharmacists Association No. 6643 (25 January 1956),
Official Gazette No. 9223 of 2 February 1956
TUR-30 "Commission aims to bring back medicine production to Europe ",
Euractiv, 22 April 2020
TUR-31 Rym Momtaz, "Macron urges massive increase in local production of
medical equipment", Politico, 31 March 2020
TUR-34 Ministry of Health, Strategic Plan 2019-2023
TUR-38 Ministry of Health, Strategic Plan of TMMDA for 2018-2022
TUR-43 Healthcare Industries Steering Committee, Minutes of the 56th
meeting,13 December 2017
TUR-45 Social Security Institution Decision No. 2015/3 of 1 April 2015 $
TUR-57 Social Security Institution, Public Announcement on the Localisation
Process, 25 April 2017
TUR-64 Table, Reimbursement applications for inclusion in Annex 4/A of Drug
Reimbursement Regulation
TUR-72 UN Human Rights Council, Resolution A/HRC/RES/12/24, 12 October
2009
TUR-77 Ministry of Health, Strategic Plan of TMMDA for 2013 -2017, 12
December 2013
TUR-79 Ministry of Health, TMMDA Administrative Operation Report 2018,
February 2019 ("2018 TMMDA Activity Report")
TUR-80 TMMDA Administrative Operation Report 2017, February 2018 ("2017
TMMDA Activity Report")
TUR-95 Jakob Hanke Vela, "Germany wants to reshore pharma production
from Asia", Politico, 13 March 2020
TUR-96 Jim Brunsden and Michael Peel, "Covid-19 exposes EU 's reliance on
drug imports", Financial Times, 20 April 2020
TUR-97
European Commission, Healt h and Food Safety Directorate -General,
Pharmaceutical Committee, Dependency of the EU pharmaceutical
industry on active pharmaceutical ingredients and chemical raw
materials imported from third countries, 12 March 2020
TUR-98
H. Biskin, "Shortage of supply in medicine to cure breast cancer ",
Duvar, 22 September 2017;
"Local solution for imported medicine used in intestinal diseases ",
Anadolu, 16 January 2017
TUR-99 "Shortage of supply in this medicine", Sağlık Aktüel, 23 August 2012
TUR-100 "Citizens are victims, that drug is still not on the market", Yeniakit, 29
November 2018
TUR-101
Antalya Provincial Health Directorate, Letter to the Ministry of Health
regarding oxtyocine ampoule, 7 March 2016;
Yaşam Hastanesi Life Hospital Antaliya, Lett er to the Pharmacies
Branch of the Provincial Health Directorate, 26 February 2016;
Private Vitale Gynecology and Obstetrics Hospital, Letter to the
Provincial Health Directorate Pharmacies Branch, 25 February 2016;

Exhibit Description/Title
Medical Park Özel Antalya Hastane Kompleksi, Letter to the Provincial
Health Directorate Pharmacies Branch, 24 February 2016;
Private Akdeniz Şifa Hospital, Letter to the Provincial Health
Directorate Pharmaceuticals and Pharmacies Branch, 22 February
2016;
Özel/Private Anadolu Hastanesi Antalya, Letter to the Provincial Health
Directorate Pharmaceuticals and Pharmacies Branch, 1 March 2016
TUR-102 Ministry of Family and Social Policies, Directorate General for Disabled
and Elderly, Letter to the Ministry of Health, 25 March 2016
TUR-106 Table, Applications for priority under the Prioritization Guideline
TUR-112
Social Security Institution, Directorate General for Provision of
Services Healthcare Software Department, "Medula Project "
presentation 2019
TUR-117 Documents relating to a purchase by the SSI from a pharmacy of the
pharmaceutical products dispensed to patients in December 2020
TUR-130
"Pharmacy chambers blame medical firms for drug shortages ", Daily
News (Istanbul, 23 January 2017); C. Caglayan and E. Erkoyun,
"Pharmacy stocks run low as Turkey's drug price policy hits supplies",
Reuters (Istanbul, 6 February 2019); M. Xuequan, "Spotlight: Turkey
faces shortages of medicine due to currency fluctuations ", Xinhuanet
(21 February 2019)
TUR-131
"The rise in the exchange rate also hit the pharmaceutical industry:
alleged supply problems in 'more than 500 medicines'", Medimagazin
(10 October 2018)

ABBREVIATIONS USED IN THIS REPORT
Abbreviation Description
ARC Alternative Reimbursement Commission
BCI Business confidential information
DCR Domestic content requirement
DRC Drug Reimbursement Commission
DSB Dispute Settlement Body
DSU Understanding on Rules and Procedures Governing the Settlement of
Disputes
GATS General Agreement on Trade in Services
GATT 1994 General Agreement on Tariffs and Trade 1994
GMP good manufacturing practices
GPA Agreement on Government Procurement
HISC Healthcare Industries Steering Committee
HSPC Healthcare Services Pricing Commission
LAC Localisation Assessment Commission
PPAs Power purchase agreements
SCM Agreement Agreement on Subsidies and Countervailing Measures
SPDs Solar power developers
SSI Social Security Institution
TBT Agreement Agreement on Technical Barriers to Trade
TMMDA Turkish Medicines and medical Devices Agency
TPA Turkish Pharmacists' Association
TRIMs Agreement Agreement on Trade Related Investment Measures
TRIPS Agreement Agreement on Trade-Related Aspects of Intellectual Property Rights
TRRs Trade-related requirements
UHIS Universal Health Insurance Scheme
UNCTAD United Nations Conference on Trade and Development
UNIDO United Nations Industrial Development Organization
WHO World Health Organization
WIPO World Intellectual Property Organization
WTO World Trade Organization

1 INTRODUCTION
1.1 Complaint by the European Union
1.1. On 2 April 2019, the European Union requested consultations with Turkey pursuant to
Articles 1 and 4 of the Understanding on Rules and Procedures Governing the Settlement of Disputes
(DSU) and Article XXII:1 of the General Agreement on Tariffs and Trade 1994 (GATT 1994), Article 8
of the Agreement on Trade Related Investment Measures (TRIMs Agreement), Article 64 of the
Agreement on Trade -Related Aspects of Intelle ctual Property Rights (TRIPS Agreement), and
Article 4.1 of the Agreement on Subsidies and Countervailing Measures (SCM Agreement) with
respect to the measures and claims set out below.1
1.2. Consultations were held on 9 and 10 May 2019.
1.2 Panel establishment and composition
1.3. On 2 August 2019, the European Union requested the establishment of a panel pursuant to
Articles 4 and 6 of the DSU, Article XXIII of GATT 1994, Article 8 of the TRIMs Agreement, and
Article 4.4 of the SCM Agreement with stand ard terms of reference. 2 At its meeting on
30 September 2019, the Dispute Settlement Body (DSB) established a panel pursuant to the request
of the European Union in document WT/DS583/3, in accordance with Article 6 of the DSU.3
1.4. The Panel's terms of reference are the following:
To examine, in the light of the relevant provisions of the covered agreements cited by
the parties to the dispute, the matter referred to the DSB by the European Union in
document WT/DS583/3 and to make such findings as will assist the DSB in making the
recommendations or in giving the rulings provided for in those agreements.4
1.5. On 4 March 2020 , the European Union requested that the Director -General determine the
composition of the panel, pursuant to Article 8.7 of the DSU. On 17 March 2020, the Director-General
accordingly composed the Panel as follows5:
Chairperson: Mr Gudmundur HELGASON

Members: Ms Beverley PEREIRA
 Ms Paulyne WAIRIMU

1.6. Brazil, Canada, China, India, Indonesia, Japan, the Russian Federation, Switzerland, Ukraine,
and the United States notified their interest in participating in the Panel proceedings as third parties.
1.3 Panel proceedings
1.3.1 General
1.7. After consultation with the parties, the Panel adopted its initial Working Procedures and initial
timetable on 15 April 2020. Both were modified in the course of the proceedings , as elaborated
further below, for reasons related to the COVID-19 pandemic.6

1 See Request for consultations by the European Union, WT/DS583/1, G/L/1305, G/TRIMS/D/44,
IP/D/41 G/SCM/D126/1.
2 Request for the establishment of a panel by the European Union, WT/DS583/3 (European Union's
panel request).
3 See WT/DSB/M/434.
4 WT/DS583/4.
5 WT/DS583/4.
6 See the Panel's Working Procedures in Annex A-1 to this Report. On 15 April 2020, after consultation
with the parties, the Panel also adopted Additional Working Procedures concerning Protection of Business
Confidential Information (BCI) (see Annex A-2 to this Report). Neither party submitted BCI to the Panel in
these proceedings.

1.8. The European Union and Turkey submitted their first written submissions on 19 May 2020 and
20 July 202 0, respectively, and their second written submissions on 30 October 2020 and
29 January 2021, respectively. The Panel sent a first set of questions to the parties and third parties
for written responses by 29 March 2021. The Panel held a substantive meetin g with the parties
during the period 20 -23 April 2021. A session with the third parties took place on 21 April 2021.
Following the meeting, the Panel sent a second set of questions to the parties for written responses
by 28 May 2021 and the parties provide d comments on one another's responses by 18 June 2021.
On 29 June 2021, the Panel issued the descriptive part of its Report to the parties. The Panel issued
its Interim Report to the parties on 30 September 2021 and its Final Report to the parties on
11 November 2021.
1.3.2 Preliminary ruling under Article 6.2 of the DSU
1.9. On 15 May 2020, Turkey requested a preliminary ruling by the Panel that the European Union's
panel request fails to identify the specific measures at issue and, with respect to certain claims, fails
to provide a brief summary of the legal basis of the complaint sufficient to present the problem
clearly.7 Turkey requested that the Panel issue the preliminary ruling before the date on which
Turkey's first written submission was due (22 June 2020).
1.10. On 25 May 2020, the Panel invited the European Union and the third parties to comment on
Turkey's preliminary r uling request. On the same date, the Panel informed the parties and third
parties that it intended to issue its decision on the preliminary ruling request by 6 July 2020. The
Panel then extended the deadline for the submission of Turkey's first written submission, and of the
third parties' written submissions, until after the issuance of its preliminary ruling.
1.11. On 5 June 2020, the Panel received the European Union's comments on Turkey's request for
a preliminary ruling. On 12 June 2020, the Panel received comments from Canada, Ukraine, and the
United States. On 19 June 2020, the Panel received Turkey 's comments on the European Union 's
comments. On 26 June 2020, the Panel received further comments from the European Union. On
3 July 2020, the Panel informed t he parties that to fully consider the issues arising from Turkey 's
preliminary ruling request, it would issue its preliminary ruling on 10 July 2020.
1.12. The Panel issued its preliminary ruling on 10 July 2020 and indicated that it would become an
integral part of the Panel's Final Report, subject to any changes that may be necessary in the light
of comments received from the parties at the interim review stage. The Panel's preliminary ruling is
included in Annex A-3.
1.4 Impact of the COVID-19 pandemic on the proceedings
1.13. For reasons relating to the COVID -19 pandemic, and as elaborated further below, the Panel
modified its initial Working Procedures and timetable as follows: (i) when it became clear that it
would be impossible to proceed with an in -person first subs tantive meeting with the parties in
September 2020, and both parties expressed a preference for the Panel to postpone the meeting
while avoiding undue delay in the proceedings, the Panel proposed that the parties file their first and
second written submissions, and respond to a first set of written questions from the Panel, prior to
the date of the postponed substantive meeting; (ii) when it subsequently became clear that it would
still not be possible to hold an in-person meeting during the March/April 2021 window that the Panel
had envisaged, the Panel decided to hold the meeting in virtual format; and (iii) following further
consultation with the parties at that meeting, the Panel decided that an additional substantive
meeting with the parties was not war ranted in the circumstances of this dispute. The Panel 's
decisions, which are interrelated, are reflected in a series of communications to the parties annexed
to this Report (in Annex B) and summarized below.
1.14. At the time that it adopted the initial Working Procedures for this dispute, the Panel indicated
that, if any change to the proceedings were to become necessary because of the COVID -19
pandemic, the Panel would amend the Working Procedures following consultation with the parties.
In a 10 July 2020 communication to the parties, the Panel noted that the travel restrictions in place
at that time would restrict travel to Geneva by some participants in the proceedings. The Panel
stated that it would continue to monitor developments with respect to travel restrictions with a view

7 Turkey's request for a preliminary ruling, para. 2.

to consulting further with the parties on or confirming, by the middle of August, the timing of the
first substantive meeting initially scheduled for 22-24 September 2020. The Panel invited the parties
to provide their views on how the Panel should proceed if the current restrictions were to remain in
place, and they did so on 17 July 2020.
1.15. In their comments, both parties proposed that if an in -person meeting was impossible in
September, the first substantive meeting should be postpone d to a later date. At the same time,
both parties agreed that the Panel should conduct the proceedings in a manner that avoided undue
delay. The European Union proposed that the Panel should amend its Working Procedures to have
just one substantive meeting with the parties in person, and have the parties file their second written
submissions (and possibly have an exchange of written questions and answers) prior to that meeting.
The European Union suggested that the postponed first substantive meeting could be held on the
dates when the second substantive meeting with the parties had initially been scheduled,
i.e. 12-13 January 2021.
1.16. In a 12 August 2020 communication (Annex B-1), the Panel informed the parties that, based
on the information available at that time, it would not be possible to hold an in -person first
substantive meeting in September 2020, as initially scheduled. The Panel proposed to modify its
Working Procedures to provide that the parties would file their second written submissions prior to
the first substantive meeting, and to provide that the Panel may hold a second substantive meeting
with the parties if so requested by either party. In their comments, neither party objected to the
proposed procedure, but both requested a longer time period to prepare their second written
submissions. Accordingly, in a communication to the parties and third parties on 25 August 2020
(Annex B-2), the Panel adopted and transmitted to the parties and third parties revised Working
Procedures and a new partial tim etable, setting out the dates for the parties ' second written
submissions and a provisional window for the timing of the first substantive meeting (March/April
2021). Pursuant to the revised partial timetable, the European Union submitted its second writte n
submission on 30 October 2020. Turkey submitted its second written submission on 29 January
2021.
1.17. In a 3 February 2021 communication (Annex B-3), the Panel informed the parties that, based
on the information available at that time, it would not be possib le for the participants in the
proceedings to plan to hold an in -person first substantive meeting within the March/April 2021
provisional window for the timing of the rescheduled first substantive meeting. The Panel proposed
holding a first substantive mee ting with the parties (including the third -party session) in virtual
format. The European Union and Turkey provided their comments on the possibility of holding the
first substantive meeting in virtual format on 8 February and 10 February 2021, respectivel y. In a
17 February 2021 communication (Annex B -4), the Panel informed the parties that it had decided
to proceed by holding a first substantive meeting with the parties in virtual format (including a third-
party session) during the week of 19 -23 April 2021. In a 25 February 2021 communication to the
parties (Annex B -5), the Panel set out its proposed approach for conducting the first substantive
meeting, reflected in proposed revisions to the partial timetable, revisions to the Working
Procedures, and a Protocol for logistical aspects of the virtual meeting. On 3 March 2021, the parties
provided their comments on the Panel 's proposed approach as reflected in these proposed
procedures and timetable. In a communication on 5 March 2021 (Annex B-6), the Panel transmitted
to the parties the adopted revised partial timetable, revised Working Procedures and a Protocol for
logistical aspects of the virtual meeting.
1.18. The Panel held a substantive meeting with the parties from 20 to 23 April 2021. At the
substantive mee ting, the parties presented their views on the necessity of holding a second
substantive meeting, on the timing of such a meeting, on the format of such a meeting (i.e. in -
person or virtual again), and on any alternatives to holding a second substantive me eting. Turkey
argued that a second substantive meeting was the usual practice and necessary in this case. The
European Union argued that a second substantive meeting was not required and was unnecessary
in this case. In a 3 May 2021 communication to the pa rties, the Panel informed the parties that it
considered that an additional substantive meeting was not warranted for the reasons set out in that
communication (Annex B-7). Instead of holding an additional substantive meeting, the Panel invited
the parties to provide written comments on one another's responses to the second set of questions
from the Panel, sent to the parties following the first substantive meeting.

1.5 Translation issues
1.19. With its first written submission, the European Union provided, as exhibi ts, its English
translations of various Turkish legal instruments and documents. In its first written submission,
Turkey stated that "with regard to the content of a number of exhibits, the European Union has
provided an erroneous or misleading translation with a view to skew the Panel 's opinion."8 Turkey
referred, in particular, to Exhibits EU -1, EU-4, EU-8, EU-11, EU-38, EU-45, EU-51, EU-52, EU-62,
EU-95 and EU -102.9 Turkey stated that, in its own submission, it "will identify the errors of
translation provided by the European Union and will re -submit new exhibits, as appropriate ".10
Accordingly, Turkey submitted Exhibits TUR-2, TUR-3, TUR-10, TUR-10a, TUR-11, TUR-12, TUR-20,
TUR-21, TUR-33, TUR-37, TUR-57, TUR-58 and TUR-60.
1.20. In its second written submission, the European Union stated that "[w]hile mistakes are always
possible, nothing in the EU's translations supports Turkey's allegation that the EU was attempting to
mislead the Panel. "11 The European Union responded to some of the translation issues raised by
Turkey.12 The European Union also submitted that "Turkey agrees with the main factual elements of
the Localisation Requirement and Turkey 's reimbursement system f or outpatient pharmaceuticals,
as described by the EU."13 In its second written submission, Turkey addressed some of the European
Union's responses and reiterated its position with respect to the translation of certain terms.14
1.21. Neither party directed any r equest to the Panel to take any decision on any of the disputed
translation issues, and the Panel did not consider it necessary to take any further steps in relation
to them. The Panel has taken note of the parties ' disagreement, and of the different trans lations
provided by the parties. Where relevant, the Panel addresses the differences in translation with
respect to certain exhibits when referring to these exhibits.15
2 FACTUAL ASPECTS
2.1. This section provides an overview of the wider factual and regulatory context in which the
measures at issue in this dispute operate, drawing upon common elements from the parties '
submissions. It then identifies the measures at issue, as set out in the European Union's request for
the establishment of a panel (European Union's panel request) and describes the factual aspects of
each of these measures. A more detailed review of the facts, and the Panel's findings on any disputed
factual issues, will be set out as necessary in the Panel's findings in section 7 of this Report.
2.1 Factual background
2.1.1 Turkey's Universal Health Insurance Scheme and relevant governmental entities
2.2. In 2006, Turkey introduced the Universal Health Insurance Scheme (UHIS) 16, which covers
approximately 99% of its population 17 and provides "comprehensive, fair and equitable access to
healthcare services"18, including access to pharmaceutical products, to virtually anyone residing in
Turkey.19 The system is mainly financed by social security premiums based on employer and
employee contributions. Any deficit is covered from public funds.20

8 Turkey's first written submission, para. 17.
9 Turkey's first written submission, fn 8 to para. 17.
10 Turkey's first written submission, para. 17.
11 European Union's second written submission, para. 15.
12 European Union's second written submission, paras. 16-25.
13 European Union's second written submission, para. 33.
14 Turkey's second written submission, paras. 9-15.
15 See footnotes 26, 39, 41, 45, 51, 52, 56, 92, 637, 644, and paragraph 7.91.
16 Social Insurance and Universal Health Insurance Law, Law No. 5510 (31 May 2006), Official Gazette
No. 26200 of 16 June 2006 (Social Insurance and UHI Law) (Exhibits EU-1, TUR-2).
17 M. Tatar, "Short PPRI Pharma Profile, Turkey 2017", WHO Collaborating Centre for Pharmaceutical
Pricing and Reimbursement Policy (Short PPRI Pharma Profile Turkey) (Exhibit EU-3), p. 7. See also Social
Security Institution Activity Report 2018 (SSI Activity Report 2018) (Exhibits EU-109, TUR-7), p. 1.
18 Social Security Institution, "Universal Health Insurance" (Exhibit EU-2).
19 Turkey's first written submission, para. 28.
20 Short PPRI Pharma Profile Turkey (Exhibit EU-3), p. 7.

2.3. The Ministry of Health is the main regulatory body in respect of matters concerning the market
authorisation, pricing, legal classification and inspection of pharmaceutical products. 21 Within the
Ministry of Health, the Turkish Medicines and Medical Devices Agency (TMMDA) is responsible for
the registration, marketing approval and authorization, pricing, legal classification and inspection of
all human medicinal products.22
2.4. The Social Security Institution (SSI), currently affiliated with the Ministry of Family, Labour and
Social Services, is in charge of implementing social security policies. 23 It is responsible, inter alia,
for paying for all healthcare goods and services, including pharmaceuticals. 24 It also leads several
commissions, consisting of members from various governmental entities. These include, in
particular, the Healthcare Services Pricing Commissi on (HSPC)25, which decides on the prices of
healthcare services and determines the reimbursement amounts, and its sub-commissions: the Drug
Reimbursement Commission (DRC)26 and the Alternative Reimbursement Commission (ARC).27
2.1.2 Placing of pharmaceutical products on the Turkish market
2.5. To be placed on the Turkish market, a pharmaceutical product must obtain:
a. a "good manufacturing practices" (GMP) certification28;
b. a marketing authorization29;

21 Short PPRI Pharma Profile Turkey (Exhibit EU-3), p. 13. See also Turkey's first written submission,
para. 39.
22 G. Oner and M. Kecik, "Turkish Medicines and Medical Devices Agency", presentation at 2014 WHO
Technical Briefing Seminar (Exhibit EU-5); Turkey's first written submission, para. 40.
23 Law on Social Security Institution, Law No. 5502 (16 May 2006), Official Gazette No. 26173 of 20 May
2006 (Social Security Institution Law) (Exhibits EU-4, TUR-3), Article 3.
25 The European Union, in its first written submission, refers to this entity as the "Healthcare Services
Pricing Commission". Turkey, in its first written submission, refers interchangeably to the "Healthcare Services
Pricing Commission" and "Healthcare Services Pricing Committee". The Panel notes this difference and refers to
this entity as the "Healthcare Services Pricing Commission" (HSPC).
26 The Drug Reimbursement Commission (DRC) is mainly responsible for deciding which new
pharmaceutical products are included in and excluded from the list of pharmaceuticals reimbursed by the SSI.
(Social Security Institution Regulation on Medicine Reimbursement, Official Gazette No. 29620 of 10 February
2016 (Drug Reimbursement Regulation) (Exhibits EU-8, TUR-11), Article 5(1)(a), (b) and (d).) The Drug
Reimbursement Regulation refers to this entity as the "Medicine Reimbursement Commission" (in the
translation provided by Turkey, Exhibit TUR-11) or the "Drug Reimbursement Committee" (in the translation
provided by the European Union, Exhibit EU-8). The European Union refers in its first written submission
interchangeably to the "Drug Reimbursement Committee" and "Drug Reimbursement Commission". Turkey
uses in its first written submission the term "Drug Reimbursement Commission". The Panel notes this
difference in translation and refers to this entity as the "Drug Reimbursement Commission".
27 The Alternative Reimbursement Commission (ARC) is in charge of drawing up and establishing
alternative reimbursement models for pharmaceutical products reimbursed by the SSI based on their financial
or medical benefits in areas of specific need. (Social Security Institution Regulation on Alternative
Reimbursement for Universal Health Insurance, Official Gazette No. 29620 of 10 February 2016 (Alternative
Reimbursement Regulation) (Exhibits EU-38, TUR-12), Article 6.) Some legal instruments provided by the
parties, as well as the European Union in its first written submission, refer to the ARC as the "Alternative
Reimbursement Committee". The title page of Exhibit TUR-12 explains that the Alternative Reimbursement
Committee and Alternative Reimbursement Commission are the same actor. The Panel refers to this entity as
the "Alternative Reimbursement Commission".
28 A good manufacturing practices (GMP) certification is conducted by the Turkish Medicines and Medical
Devices Agency (TMMDA) on a facility-basis for domestically produced pharmaceutical products and on a
product-basis for imported pharmaceutical products. It is a prerequisite for obtaining a marketing
authorization. (Turkey's first written submission, paras. 42-43.)
29 A marketing authorization is granted by the TMMDA if a product meets all quality standards, and
efficacy and safety conditions. (Regulation on the Marketing Authorization of Medicinal Products for Human
Use, Official Gazette No.25705 of 19 January 2005 (Marketing Authorization Regulation) (Exhibit EU-89),
Article 16).

c. a fixed price, proposed to the TMMDA 30 by the holder of a marketing authorization and
calculated according to specific rules31; and
d. a sales permit.32
2.6. To import some pharmaceutical products into Turkey, the importer is required to also submit
an inspection certificate (or "control certificate"33) when making a cus toms declaration at customs
offices. Inspection certificates are delivered by the Ministry of Health upon application by the
pharmaceutical companies importing the products and on the basis of the relevant marketing
authorization.34 They certify the products' "suitability for human health and safety "35 and are valid
for twelve months.
2.1.3 Reimbursement36 of pharmaceutical products
2.1.3.1 The Annex 4/A list
2.7. Pharmaceutical products are distributed to outpatients37 by retail pharmacies, which are private
entities. The am ounts charged by pharmacies for pharmaceutical products covered by the social
security system are met from payments made by the SSI and out -of-pocket payments by
outpatients. The SSI makes payments to pharmacies based on monthly invoices submitted by the
pharmacies. Regarding inpatient treatment, inpatients receive medicines directly from the hospitals,
through a process different from the system at issue in this dispute.38
2.8. To be reimbursable, a pharmaceutical product must be included in the list in Annex 4/A to the
Health Implementation Communiqué (HIC/SUT). 39 The SSI determines which pharmaceutical

30 Decree on Pricing of Human Medicinal Products No. 2017/9901, Official Gazette No. 29989 of
24 February 2017 (Pricing Decree) (Exhibit TUR 18), Article 4.
31 Communiqué on the Pricing of Medicinal Products for Human Use, Official Gazette No. 30195 of
29 September 2017 (Pricing Communiqué) (Exhibit TUR-17) and Pricing Decree (Exhibit TUR-18).
32 Sales permits are issued by the Ministry of Health on the basis of the marketing authorization and a
price copy of the products, and after evaluation of the accuracy of the information on the patient leaflet,
package and label, as well as price adequacy. (Article 26, Regulation on the Marketing Authorization of
Medicinal Products for Human Use, Official Gazette No. 25705 of 19 January 2005, amended on 14 November
2013 (Exhibit TUR-19).)
33 Turkey's first written submission, para. 586.
34 Turkey's responses to the second set of questions, para. 95. See also Turkey's responses to the first
set of questions, para. 106.
35 Ministry of Trade, Implementing Regulation on Import Control of certain products inspected by the
Ministry of Health, Official Gazette No. 30991 of 27 December 2019 (Implementing Regulation on Import
Control) (Exhibits EU-91, TUR-33), Article 4(1).
36 The parties disagree on the use of the terms "reimbursement" and "reimbursement list". The
European Union uses these terms to describe the process through which the Turkish authorities (in particular
the SSI) cover the costs for pharmaceutical products provided to patients. (See European Union's first written
submission, Section 2.2.1.) Turkey maintains that the term "reimbursement", though occasionally used by
Turkish authorities, does not accurately reflect the SSI's practice concerning payment of medicines (Turkey's
second written submission, para. 12), and that Turkey's healthcare system is implemented through "direct
payments" by the SSI to hospitals and retail pharmacies. (Turkey's first written submission, para. 65.) Instead
of "reimburse" and "reimbursement list", Turkey uses the terms "pay for" and "list of medicines to be paid for".
(Turkey's first written submission, para. 66; second written submission, paras. 11-13.) The European Union
disagrees and presents arguments as to why the facts support its description of the system for outpatient
pharmaceuticals in Turkey as one that involves "reimbursement" rather than "direct provision". (European
Union's second written submission, paras. 42-67.) The Panel takes note of the parties' disagreement
concerning the terms "reimbursement", "reimbursement list", "pay for" or "list of medicines to be paid for". To
the extent that the Panel uses these terms in the descriptive part of the Report, such use does not prejudge
any disputed issue about the proper characterization of the measure before the Panel.
37 Turkey and the European Union both refer to consumers who obtain prescribed pharmaceutical
products from retail pharmacies as "outpatients", as distinguished from "inpatients" who receive
pharmaceutical products in hospitals (Turkey's first written submission, para. 64; European Union's first written
submission, para. 12). The Panel uses the term "outpatients" in the same way in this Report.
38 Turkey's first written submission, paras. 111-114; European Union's second written submission,
para. 33.
39 Social Security Institution Health Implementation Communiqué, Official Gazette No. 28597 of
24 March 2013 (HIC/SUT) (Exhibits EU-11, EU-95, EU-102, TUR-10, TUR-10a). The Panel notes the parties'
disagreement with respect to the translation of the title of this document. The European Union refers to this
document in various ways (Implementing Regulation for Healthcare (IRH), Health Implementation Notification /

products are included in the Annex 4/A list. According to Turkey, close to 90% of the pharmaceutical
products that are actively sold and prescribed in Turk ey are included in the Annex 4/A list. 40 The
Annex 4/A list is revised regularly to reflect the inclusion or exclusion of certain pharmaceutical
products. Any updates to the list are then published on the SSI's website and in the Official Gazette.
2.9. Products in the Annex 4/A list are put in equivalent groups. Products containing the same active
ingredient (substance) that can be used for the same indication are included in the same group of
equivalent pharmaceuticals on the basis of price comparison between s imilar dosage forms.41 The
rationale behind this grouping is related to the use of a reference pricing system (or "equivalent
band practice"42), whereby a single reimbursement price is set for each equivalent group (the lowest
price in the equivalent group increased by 10%).43
2.10. To request the inclusion of products in the Annex 4/A list, pharmaceutical companies apply to
the SSI following one of two pathways: the "regular reimbursement pathway " or the "alternative
reimbursement pathway".
2.11. Following the "regular reimbursement pathway ", pharmaceutical companies submit an
application for inclusion in the Annex 4/A list. This application is reviewed by the Scientific and
Academic Consultation Council (SACC) 44, which issues an opinion that is then discussed by the
Medical and Economic Evaluation Commission (MEEC). 45 The DRC takes the final decision on the
inclusion of a product in the Annex 4/A list.
2.12. Following the "alternative reimbursement pathway ", pharmaceutical companies submit an
alternative reimbursement application to the ARC (which, as noted above, is a sub -commission of
the SSI). The ARC evaluates the application based on the literature and data provided and takes the
final decision about the inclusion of the product in the Annex 4/A list. The "alternative reimbursement
pathway" concerns medicines otherwise unavailable on the Turkish market, i.e. "innovative and
high-tech medicines customized for individual patients"46, and certain groups of medicines which are

Communiqué, HIN or in Turkish, Sağlık Uygulama Tebliğ (SUT). (See European Union's first written
submission, para. 26.) Turkey disagrees with the use of the term "regulation" and maintains that the document
is correctly translated as "Social Security Institution Health Implementation Communiqué" (cover page of
Exhibit TUR-10). The Panel refers to this document as HIC/SUT. The Panel also notes that this document has
been submitted by the EU in full (Exhibit EU-95) and as excerpts updated at different points in time (Exhibits
EU-11 and EU-102). The Panel will cite this document as HIC/SUT (Exhibits EU-95, TUR-10) as they contain
the full text of the document, unless otherwise specified.
40 Turkey's responses to the second set of questions, para. 4.
41 HIC/SUT (Exhibits EU-95, TUR-10), Article 4.4.2(1). This provision continues with a reference to
situations where the products are included in different groups. The Panel notes that the translations provided
by the parties differ on this point. According to the translation provided by the European Union (Exhibits EU-11
and EU-95), "products containing an identical active substance that can be used for the same indication are put
in the same group of equivalent medicines on the basis of a price comparison between similar dosage forms or
on the basis of the same price comparison but in separate groups of equivalent medicines when being
substituted in pharmacies" (emphasis added). According to the translation provided by Turkey (Exhibit
TUR-10), "products containing the same active ingredient that can be used for the same indication are included
in the same equivalent groups on the basis of price comparison between similar dosage forms, or in separate
equivalent groups on the basis of the same price comparison but in terms of pharmacy substitution."
(emphasis added).
42 Turkey's first written submission, para. 86.
43 See Turkey's first written submission, para. 87; European Union's first written submission, para. 19.
44 The Scientific and Academic Consultation Council (SACC) consists of academics and experts. It is in
charge of evaluating the applications for inclusion of new pharmaceutical products on the Annex 4/A list
(Article 3(m) of the Drug Reimbursement Regulation (Exhibits EU-8, TUR-11)). The SACC considers "the status
of the product, its therapeutic benefits and alternative therapeutic methods, as well as the 'gold standard' in
the treatment of the disease targeted by the product, the potential patients, the cost/benefit analysis and the
size of the product's packaging". (Turkey's first written submission, para. 74.)
45 The Medical and Economic Evaluation Commission (MEEC) evaluates the literature and data presented
with the application file. (Drug Reimbursement Regulation (Exhibits EU-8, TUR-11), Article 9(a).) Turkey refers
to this entity as the Medical and Economic Evaluation Commission. (Turkey's first written submission,
paras. 74-75.) The European Union refers to this entity as the Medical and Economic Assessment Committee
(MEAC). (European Union's first written submission, para. 21.) The Drug Reimbursement Regulation, in its
translations provided by both parties, also uses the abbreviation "TEDK". (Drug Reimbursement Regulation
(Exhibits EU-8, TUR-11), Article 8.) The Panel notes this difference in translation and refers to the entity as the
"Medical and Economic Evaluation Commission".
46 Turkey's first written submission, para. 92.

not manufactured or not available in Turkey.47 It is an "exceptional mechanism"48 that allows the
inclusion (through "alternative reimbursement models ") of pharmaceutical products in the
Annex 4/A list on the basis of "their financial or medical benefits"49 in areas of specific need.
2.13. Regardless of whether the regular or alternative reimbursement pathway is used, once
approved, the pharmaceutical products are included in the same Annex 4/A lis t.50 Once included in
the Annex 4/A list, products may subsequently be "passivized" (their status in the list changes from
"active" to "passive")51, or excluded from the list. 52 Products are no longer reimbursed if they are
excluded or "passivized".53 In other words, to be reimbursed, products must be both included and
listed as "active" in the Annex 4/A list.54
2.1.3.2 Reimbursement of pharmaceutical products that are active on the Annex 4/A list
2.14. Pharmaceutical products are prescribed to patients by medical doctors and then provided to
outpatients by retail pharmacies. All retail pharmacies are members of the Turkish Pharmacists '
Association (TPA).55 According to a Protocol concluded between the SSI and the TPA 56, individual

47 Turkey's first written submission, para. 93.
48 Turkey's first written submission, para. 96.
49 Alternative Reimbursement Regulation (Exhibits EU-18, TUR-12), Article 1.
50 European Union's first written submission, para. 24.
51 "Passivization" occurs when: (i) a pharmaceutical company does not submit its distribution certificate
within five months after the product's inclusion in the Annex 4/A list (Drug Reimbursement Regulation (Exhibits
EU-8, TUR-11), Article 12(5)(b)); (ii) the product has not been sold on the Turkish market for a year (ibid.
Article 12(5)(ç)); (iii) the price of the product is removed from or indicated as "0" in the list published by the
Ministry of Health (ibid. Article 12(5)(d)); and (iv) according to Turkey, the market share of the product falls
below 1% (Turkey's first written submission, para. 80, referring to Article 12(5)). The parties also appear to
agree that pharmaceutical products may be passivized as a result of the localisation requirement. (Turkey's
first written submission, para. 82; European Union's second written submission, para. 33.) Passivized products
may be "re-activated" upon request of the pharmaceutical company if the conditions for passivization are no
longer valid. (Turkey's first written submission, para. 81; responses to the second set of questions, para. 10;
and European Union's first written submission, para. 34.) The Panel notes that while Turkey uses the term
"passivize", the European Union indicates that the term "de-activate" better conveys the meaning of the
Turkish word in this context but notes that "there does not seem to be a substantive disagreement here."
(European Union's second written submission, para. 24.) The Panel uses the terms "passivize" and
"passivization".
52 Exclusion occurs when: (i) a pharmaceutical company does not submit its distribution certificate
within 10 months (Drug Reimbursement Regulation (Exhibits EU-8, TUR-11), Article 12(5)(b)); (ii) there has
not been a request for re-activation of a passivized product for 10 months (ibid. Article 12(5)(ç)); or (iii) the
price of the product has been removed from or indicated as "0" in the list published by the Ministry of Health
(ibid. Article 12(5)(d)). Excluded products may be "re-included" in the Annex 4/A list only after a period of six
months following the date of their exclusion and are subject to a new application for inclusion in the Annex 4/A
list. (Turkey's first written submission, para. 81; responses to the second set of questions, para. 11; and
European Union's first written submission, para. 34.) The Panel notes that the European Union uses the term
"excluded" interchangeably with the terms "delisted" and "removed". The Drug Reimbursement Regulation
uses the term "remove" (in the translation provided by Turkey, Exhibit TUR-11) or "delist" (in the translation
provided by the European Union, Exhibit EU-8). The Panel uses the terms "exclude" and "exclusion".
53 While both "passivized" products and "excluded" products are no longer reimbursed, the "re-
activation" of a product that has been passivized appears to be a less cumbersome process than its "re-
inclusion" on the list after it has been excluded. If a passivized or an excluded product is prescribed, a
pharmacist may dispense another pharmaceutically equivalent product which is included and active on the
Annex 4/A list. (Protocol on the Provision of Medicines to the Persons Covered by the Social Security Institution
by the Pharmacies which are Members of the Turkish Pharmacists' Association (TPA Protocol) (Exhibit TUR-20),
para. 3.2.12.) "Passivized" and "excluded" products may still be prescribed by doctors and dispensed by
pharmacies, without being reimbursed (Turkey's responses to the first set of questions, para. 4).
54 See Turkey's responses to the second set of questions, para. 40.
55 Law on Turkish Pharmacists Association No. 6643 (25 January 1956), Official Gazette No. 9223 of 2
February 1956 (Exhibit TUR-27), Article 1. The TPA is a public institution under Turkish law, established "to
meet the common needs of pharmacists, to facilitate their professional activities and to ensure the
development of pharmacy in accordance with general interests" (ibid, Article 1). Its Central Committee has the
tasks, inter alia, to "take measures to facilitate the procedures related to professional activities between
private and public institutions and organizations and members" and to "make agreements with all public and
private institutions and organizations that will purchase health services from pharmacies" (ibid., Article 39(g)
and Article 39(j)).
56 TPA Protocol (Exhibit TUR-20); Protocol on the procurement of medicines from pharmacies which are
members of the Turkish Pharmacists' Association (TEB) by persons covered by the Social Security Institution
(TPA Protocol) (Exhibit EU-52). The parties disagree on the translation of the title of this document. The

retail pharmacies sign (and annually renew) standard contracts with the SSI.57 On the basis of these
contracts, pharmacies periodically send to the SSI invoices for all pharmaceutical products included
in the Annex 4/A list that they have provided to outpatients during the relevant period. 58 The SSI
reviews these invoices59, and reimburses the "reimbursement price" as described below.
2.15. The reimbursement price of medicines 60 is lower than their retail price. 61 Pharmaceutical
products included in the Annex 4/A list are assigned a "public price " which results from the
application of "public discounts" at each stage of the supply chain. If the product does not have an
equivalent group in the Annex 4/A list, the SSI pays 100% of its public price. If a product has an
equivalent group, the SSI pays a reimbursement price determined according to the "internal
reference pricing mechanism".62 A single reimbursement price is set for each equivalent group.63 It
is calculated on the basis of the price of the product having the cheapest unit price in the group (and
at least a 1% market share), increased by 10%.
2.16. If the public price of a pharmaceutical product is greater than the maximum reimbursement
price set by the SSI for the relevant equivalent group, outpatients must pay the difference , unless
they decide to opt for an equivalent product the public price of which is not greater than the
maximum reimbursement price set by the SSI for the relevant equivalent group .64 In addition,
outpatients generally also pay two types of fees collected by pharmacies65: (i) a fee calculated as a

European Union refers to it as "Protocol on the procurement of medicines from pharmacies which are members
of the Turkish Pharmacists' Association (TEB) by persons covered by the Social Security Institution". (Exhibit
EU-52, as referenced in European Union's first written submission, para. 17 and fns 10, 13, 34, and 35.)
Turkey considers that the accurate translation of the title should be "Protocol on the Provision of Medicines to
the Persons Covered by the Social Security Institution by the Pharmacies which are Members of the Turkish
Pharmacists' Association". (Exhibit TUR-20, as referenced in Turkey's first written submission, paras. 65 and
107, and fns 54 and 85.) The Panel notes the parties' disagreement on this point and refers forthwith to this
document as "TPA Protocol" (Exhibits EU-52, TUR-20).
57 The legal basis for the TPA Protocol and the individual contracts between the pharmacies and the SSI
is Article 73 of the Social Insurance and UHI Law (Exhibits EU-1, TUR-2). Of the 26,600 retail pharmacies in
Turkey, 25,300 are under contract with the SSI. (Turkey's first written submission, para. 109.) The remaining
1,300 retail pharmacies that have not signed contracts with the SSI, as well as pharmacies whose contract
with the SSI have not been renewed, can still dispense medicines included in the Annex 4/A list but cannot
invoice these medicines to the SSI. (Turkey's responses to the second set of questions, paras. 14 and 19.)
Those pharmacies may be (and, according to the European Union, typically are) bound by contracts with
private insurers, and their sales of medicines included in the Annex 4/A list are covered by reimbursement by
private insurers. (European Union's comments on responses to the second set of questions, para. 11.)
58 TPA Protocol (Exhibits EU-52, TUR-20), paras. 4.1-4.3. See also Turkey's first written submission,
59 The SSI usually reviews invoices and their accompanying documents using a sampling method
(Regulation on the procedures and principles governing checking of invoices of healthcare providers and
reimbursement of their fees, Official Gazette No. 30001 of 8 March 2017 (Exhibit EU-53), Article 6). According
to Turkey, the SSI can refuse to make a payment when the medicines were approved in the Medula system on
the basis of incorrect information and dispensed to patients in breach of the specific medical rules that exist for
those medicines (Turkey's opening statement, para. 32).
60 While the European Union occasionally refers to the term "reimbursement price" (European Union's
first written submission, para. 25), it appears to use interchangeably the terms "reimbursement level",
"reference price" or "reference price for reimbursement". (European Union's first written submission, paras. 19
and 27.) Turkey uses the term "reference price" to reflect the price a product is given (in Euro (EUR)) in the
reference countries. (Turkey's first written submission, para. 53.) The Panel uses the term "reimbursement
price" to refer to the price paid by the SSI to a retail pharmacy for the pharmaceutical product provided to an
outpatient. To the extent that the Panel uses the term "reimbursement price", such use does not prejudge any
disputed issue between the parties. The reimbursement price is determined and paid in Turkish lira. (European
Union's responses to the second set of questions, para. 35.)
61 A "retail price" is the price for pharmaceutical products that are not included in Annex 4/A list, and for
products sold by pharmacies to patients without a prescription or with a prescription provided by a medical
doctor "non contracted" with the SSI. (Turkey's first written submission, para. 59.)
62 Turkey's first written submission, para. 86.
63 See HIC/SUT (Exhibits EU-95, TUR-10), Article 4.4.2.
64 European Union's first written submission, para. 19; Turkey's first written submission, para. 87.
65 Social Insurance and UHI Law (Exhibits EU-1, TUR-2), Article 68; HIC/SUT (Exhibits EUR-95, TUR-
10), Article 1.8.2. The European Union uses the term "co-payments" to refer to these fees (European Union's
first written submission, para. 15). Turkey takes issue with the use of this term. (Turkey's first written
submission, fn 90). To the extent that there appears to be no factual disagreement between the parties with
respect to the existence and operation of these fees (Turkey's first written submission, para. 110; European
Union's second written submission, para. 33), the Panel will use the terms "contribution fee" and "prescription
fee" (collectively "fees").

percentage of the price after public discount of the pharmaceutical product (contribution fee), being
10% for persons who receive income or a pension from the SSI, and also for their dependants, or
20% for all others66; and (ii) a fee of 3 Turkish lira for up to three boxes/items in the presc ription
and 1 Turkish lira for each additional box/item (prescription fee).67
2.17. Retail pharmacies and the SSI use an electronic information system (the Medula system)
which "enables the registration, tracking and invoicing of medicines that are obtained from
pharmacies through a single application".68 Turkey explains that "[a]ll transactions between the SSI
and the healthcare service providers, including the purchase of pharmaceutical products, are carried
out through the Medula system."69
2.2 The measures at issue
2.18. According to the European Union, the measures at issue in these proceedings are:
a. a "localisation requirement " whereby "Turkey requires foreign producers to commit to
localise in Turkey their production of certain pharmaceutical products "70, and "[i]f such
commitments are not given, are not accepted by Turkish authorities, or are not fulfilled,
the pharmaceutical products concerned are excluded from the scheme for the
reimbursement of the pharmaceutical products sold by pharmacies to patients operated
by Turkey's social security system (the 'reimbursement scheme')" 71;
b. an "import ban on localised products " which the European Union describes as follows:
"[w]here the production of a pharmaceutical product has been localised in Turkey in
accordance with the localisation requirement, applied in conjunction with the Turkish rules
for approving the importation and marketing of pharmaceutical products, the importation
of that pharmaceutical product is no longer permitted"72; and
c. a "prioritization measure" whereby "even in certain cases where imported products are
not excluded from the reimbursement scheme by virtue of the localisation requirement,
Turkey gives priority to the review of applications for inclusion of domestic pharmaceutical
products in the list of products covered by the reimbursement scheme, as well as with
respect to any pricing and licensing policies and processes, over the review of the
applications of like imported products."73
2.19. According to the European Union, these measures at issue are "put in place and evidenced
by, and are implemented and administered through" 28 different legal instruments or other types of
documents, "considered alone and in any combination".74

66 HIC/SUT (Exhibits EU-95, TUR-10), Article 1.8.2(1). A contribution fee refers to the amount to be
paid by the universal health insurance holder or the dependents in order to benefit from healthcare services
(ibid, Article 1.8.1). Outpatients do not pay contribution fees for certain pharmaceutical products included in
the List of Drugs Exempt from Patient Contribution Fee (Annex 4/D) (ibid. Article 1.8.2(3)). Turkey explains
that these include products "necessary for the treatment of critical diseases such as cancer or long-standing
chronic diseases" and products that are " used in the treatment of inpatients in both public and private
hospitals" (Turkey's first written submission, fn 90). According to Turkey, in 2019, 34.7% of the total SSI’s
expenditure for medicines was exempt from the payment of the contribution fee (Turkey's first written
submission, fn 90).
67 HIC/SUT (Exhibits EU-95, TUR-10), Article 1.8.2(2).
68 Social Security Institution, Directorate General for Provision of Services Healthcare Software
Department, "Medula Project" presentation, 2019 (Exhibit TUR-112), p. 17.
69 Turkey's second written submission, para. 52.
70 European Union's panel request, p. 5.
71 European Union's panel request, p. 5. Turkey refers to the localisation requirement as the
"localisation measure", because "Turkey understands that the measure that is challenged by the European
Union is not only the 'requirement' allegedly imposed by Turkey on foreign producers to localise their
production of certain pharmaceutical products in Turkey, but also the consequences following from the
commitment or lack of commitment of localisation. In light thereof, Turkey will refer to this measure as the
'localisation measure' rather than as the 'localisation requirement'." (Turkey's first written submission,
para. 117.)
72 European Union's panel request, p. 6.
73 European Union's panel request, p. 6.
74 European Union's panel request, p. 1.

2.2.1 The localisation requirement
2.2.1.1 Overview
2.20. The localisation requi rement relates to Turkey 's policy objective of achieving the gradual
transition from imports to domestic manufacturing of pharmaceuticals. 75 To achieve this policy
objective, Turkey requires foreign producers to commit to localise in Turkey their productio n of
certain pharmaceutical products. 76 If a foreign producer does not make a commitment for a
pharmaceutical product subject to localisation, if the Turkish authorities reject the commitment, or
if the commitment made is not fulfilled, the pharmaceutical product concerned is no longer
reimbursed by the SSI.
2.21. The main authorities within or affiliated with the Ministry of Health and the Ministry of Family,
Labour and Social Services in charge of implementing the localisation requirement are 77: the SSI,
its co mmissions78 and sub -commissions79; the TMMDA 80; the Healthcare Industries Steering
Committee (HISC)81, and the Localisation Assessment Commission (LAC).82
2.22. The parties disagree on whether the European Union has established the existence and precise
content of the "localisation requirement" as a "single and cohesive measure". The Panel addresses
this issue in its findings in section 7 of this Report.

75 The objective is to meet 60% (by value) of domestic pharmaceutical demand through domestic
production. (Republic of Turkey, Ministry of Development, Tenth Development Plan 2014-2018 (2014),
approved by Decision No. 1041 of the Grand National Assembly of Turkey of 2 July 2013 (Tenth Development
Plan 2014-2018) (Exhibit EU-12), point 1.16.) This 60% figure relates to the share of locally produced
medicines in terms of sales value of the total domestic demand for medicines. (Turkey's responses to the
76 Turkey explains that this does not mean that the entire production process needs to take place in
Turkey, but rather that "the bulk production, i.e. the establishment of a finished pharmaceutical form
(granular, tablet, solution) from raw materials (active substances) and excipients (inactive substances), takes
place in Turkey." (Turkey's first written submission, para. 137.)
77 The European Union also refers to the Commission on the Transition from Import to Manufactured
Products (European Union's first written submission, para. 69) and the Localisation Executive Board (European
Union's first written submission, para. 75). Turkey however asserts that neither of these bodies is operational.
(Turkey's first written submission, paras. 143 and 147.)
78 The SSI's HSPC sets out detailed steps and rules for the implementation of the localisation
requirement. In particular, in October 2016, the HSPC adopted a Decision regarding the Localisation Process,
which sets out the process and criteria for implementing the localisation requirement. (HSPC, Decision
regarding the Localisation Process, October 2016 (HSPC Decision) (Exhibit EU-35.) Both the DRC and the ARC
are sub-commissions of the HSPC.
79 The SSI and its sub-commissions update the status of pharmaceutical products included in the
Annex 4/A list and notify pharmaceutical companies about changes in the status of their products. The ARC
plays an important role, in particular with respect to approving the passivization, re-activation and exclusion of
pharmaceutical products from the Annex 4/A list. Turkey explains that the ARC has the authority to set the
status of pharmaceutical products for which no localisation commitment has been offered or for which the
localisation commitments have not been accepted to "passive". (Turkey's first written submission, para. 146.)
According to the European Union it is not clear on which legal basis the ARC assumes this role. (European
Union's first written submission, para. 33.) Turkey refers to Social Security Institution Decision No.2015/3 of
1 April 2015 (Exhibit TUR-45), transferring some of the powers of the HSPC to the ARC. (Turkey's first written
submission, para. 146.)
80 The TMMDA (i) determines which pharmaceutical products will be subject to localisation in each
phase; (ii) examines the pharmaceutical companies' commitments and variation applications; and (iii)
communicates the decisions regarding proposed commitments.
81 The Healthcare Industries Steering Committee (HISC) discusses the overall implementation of the
localisation requirement, assigns relevant tasks to the specific authorities. (Turkey's first written submission,
para. 144.) The HISC also "had an important role in designing the several phases of localisation." (European
Union's first written submission, para. 68.)
82 The Localisation Assessment Commission (LAC) is a working group under the TMMDA created by the
HISC, which reviews requests for exemption (i.e. offers to localise alternative pharmaceutical products) and for
additional time. Based on this assessment, the LAC decides which products should be passivized by the SSI
and which products should be re-assessed. (Turkey's first written submission, para. 145, (referring to
Healthcare Industries Steering Committee, Minutes of the 56th meeting,13 December 2017 (Exhibit TUR-43))).

2.2.1.2 Phases of implementation of the localisation requirement
2.23. The localisation requirement by design has five phases, which progressively target different
products depending on their market share and the existence of equivalent products in the domestic
market.83 The phases are divided as follows:
• Phase 1 covers pharmaceutical products for which the overall market share of domestic
production in the equivalent group is above 50% and there are three or more different
local companies producing locally three or more generic pharmaceutical products.
In January 2018, the SSI announced that a list of 45 pharmaceutical products included in
the scope of Phase 1 would no longer be reimbursed as of 8 February 2018.84
• Phase 2 covers pharmaceutical products for which the overall marke t share of domestic
production in the equivalent group is between 10% and 50% and there are two or more
different local companies producing locally two or more generic pharmaceutical products.
In January 2017, the TMMDA held meetings with pharmaceutical co mpanies producing
Phase 2 products and later assessed the proposed commitments. The authorities
subsequently announced that certain products would no longer be reimbursed as a result
of the implementation of Phase 2.85
• Phase 3 covers pharmaceutical products for which the overall market share of domestic
production in the equivalent group is below 10% and there is one local company producing
locally one generic pharmaceutical product.
• Phase 4 covers pharmaceutical products for which there is no domestic production in the
equivalent group.
• Phase 5 covers pharmaceutical products with no equivalent groups.
2.24. The implementation of the localisation requirement is a dynamic process86: some phases are
operational in parallel87, and the Turkish authorities regularly check to see if there are new products,
or products that have to be moved from one phase to another.88 As indicated above, the authorities
have already identified products that, in the absence of localisation commitments being made by the
producers and accepted by the authorities, will no longer be reimbursed by the SSI as a result of
the implementation of Phases 1 and 2. 89 Meetings have been organized with pharmaceutical
companies producing medicines that fall within the scope of the remaining phases inviting them to

83 See H. Gursoz, President of the TMMDA, "Pharmaceutical Localisation Project: Transition from
Importation to Manufacturing", presentation of 6 March 2017 (Exhibit EU-34), slide 3; TMMDA, "Pharmaceutical
Localisation Project Work Conducted by the Ministry of Health", presentation of December 2017 (Exhibit
EU-23), slide 9.
84 Social Security Institution, Public Announcement on the Localisation Process, 19 January 2018
(Exhibits EU-62, TUR-58). See also European Union's first written submission, para. 125; Turkey's first written
submission, para. 157.
85 TMMDA, "Pharmaceutical Localisation Project Work Conducted by the Ministry of Health", presentation
of December 2017 (Exhibit EU-23), slide 10.
86 Turkey's first written submission, para. 140; European Union's first written submission, para. 82.
87 European Union's first written submission, para. 95.
88 Turkey explains that products are shifted from one phase to another because of changes in their
market situations. (Turkey's second written submission, para. 17.) Turkey gives the example of a
pharmaceutical product initially covered by Phase 3, which could become subject to Phase 2 if its market share
exceeds 10%. (Ibid. para. 17.)
89 The parties appear to agree that the implementation of Phases 1 and 2 has already resulted in the
identification of products that will no longer be reimbursed by the SSI. Turkey asserts that "[o]nly Phase 1 and
Phase 2 have been implemented so far." (Turkey's first written submission, para. 140.) The European Union
submits that "so far, products have been deactivated within the framework of the first and second phase."
(European Union's first written submission, para. 99.) See also Republic of Turkey, Ministry of Development,
Eleventh Development Plan (2019-2023) Transformation in Healthcare Industries, Specialised Committee
Report of July 2018 (Ministry of development, Eleventh Development Plan 2019-2023) (Exhibit EU-84), section
2.3.5: "[t]he first and second phases of this project, which is of key importance for the sector, have been
successfully completed and are continually being updated. Work on the third phase is also under way.
Preparatory work on the fourth and fifth phases has started."

present their views and to offer preliminary commitments, but as of the time of the Panel 's
establishment all products currently in the scope of Phases 3, 4 and 5 remain reimbursable.90
2.2.1.3 Localisation process
2.25. The localisation process starts with the identification of the relevant products by the Turkish
authorities (in particular, the TMMDA). 91 The pharmaceutical companies producing these products
are informed, through periodically published announcements or an individual communication, that
their products are to be included in the scope of the localisation requirement, and are invited to a
meeting at the Ministry of Health.92 The pharmaceutical companies then enter into discussions with
the competent authorities with a view to preparing a "transition plan"93 and submitting commitments
to produce locally. 94 The time schedule for implementing any commitments typically must not
surpass 18 months.95 Pharmaceutical companies may also submit various requests to the TMMDA,
including requests for additional time or for the localisation of an alternative product.96
2.26. Any commitments made by pharmaceutical companies that have been accepted are followed
up through regular progress reports presented by the pharmaceutical companies to the TMMDA. If a
company does not submit a localisation commitment, the relevant products are no longer reimbursed

90 Turkey's first written submission, paras. 161-162; European Union's first written submission,
para. 132. Preliminary commitments have been submitted for some Phase 3 products, resulting in the
amendment of the scope of Phase 2 to also cover Phase 3 products for which preliminary commitments were
submitted. (Turkey's first written submission, para. 160.) The European Union asserts that the Turkish
authorities have taken steps to implement Phases 3 and 4. (European Union's first written submission,
para. 132.) Turkey disagrees and asserts that "[n]o further steps have been taken to implement either Phase 3
or Phase 4" (Turkey's first written submission, para. 162) and that Turkey "may decide not to proceed with
[their] implementation." (Turkey's comments on responses to the second set of questions, para. 2.) The Panel
notes the parties' disagreement on this point. The Panel also notes the European Union's argument that
"[t]here is no doubt that phrases 3-5 exist, because they are part of and are provided for by the Localisation
Requirement, even if they have not been applied yet." (European Union's responses to the second set of
questions, para. 5.)
91 All products that hold a valid marketing authorization and sales permit in Turkey and that are
included in the Annex 4/A list are initially considered within the scope of the localisation requirement. (Turkey's
first written submission, para. 138; European Union's second written submission, para. 33, and comments on
responses to the second set of questions, para. 3.)
92 Turkey uses the terms "meeting" and "consultation meeting" (Turkey's first written submission,
paras. 148-149), while the European Union observes that the parties may disagree on whether the Turkish
term "görüşme" should be translated as "meeting", "discussion" or "negotiation". (European Union's second
written submission, para. 25.) The European Union notes, however, that it is unclear to what extent this is
relevant. (European Union's second written submission, para. 25.)
93 European Union's first written submission, para. 77 (referring to H. Eroğlu, Vice President of the
TMMDA, "Local Production", presentation at the Symposium on Rational Approach to Current Issues concerning
Medicines, Ankara, 7-9 October 2016 (Exhibit EU-40)).
94 As Turkey explains, such commitments "in essence, amount to a declaration whether or not a
pharmaceutical company will relocate within a specified period of time the production of the relevant
pharmaceutical products to Turkey." (Turkey's first written submission, para. 149.)
95 European Union's first written submission, paras. 105 and 114. See Roadmap for the process of
localisation, setting forth of the principles for the negotiation, 14 March 2016 (Localisation roadmap) (Exhibits
EU-45, TUR-60).
96 Turkey's first written submission, para. 151; European Union's second written submission, para. 33.

by the SSI. 97 This is also the case if a company submits a localis ation commitment, but this
commitment is considered not to be "appropriate"98, or if a company does not fulfil its commitment.
2.2.2 The import ban on localised products
2.27. When a pharmaceutical company commits to localise the production of a product and this
commitment is accepted, the company has to submit, within a year, a variation application. This is
a request to modify the marketing authorization for the relevant product from "import" to "local".99
2.28. Pursuant to Article 20(2) of the Marketing Authorization Regulation:
A second local or import marketing authorization shall not be granted for any product
with the same formulation and pharmaceutical form, already authorized by the Ministry,
to the same real person or legal entity, even if the product has a differen t commercial
name.100
2.29. The alleged "import ban on localised products ", as described by the European Union, arises
from the combined operation of the localisation requirement and the Turkish rules for approving the
importation and marketing of pharmaceutical products, and in particular Article 20(2) of the
Marketing Authorization Regulation (Single Authorization rule). 101 The parties hold diverging
positions on the nature, scope, and significance of the restrictions arising from the Single
Authorization rule. They also disagree on whether the localisation requirement and Single
Authorization rule operate together as part of a "single measure " that exists distinct from its
components. The Panel will address these issues, insofar as necessary, in its findings in section 7 of
this Report.

97 The parties disagree as to whether the products are "passivized" or "excluded" from the Annex 4/A
list. The European Union asserts that "the pharmaceutical products concerned are excluded from the scheme
for the reimbursement of the pharmaceutical products sold by pharmacies to patients operated by Turkey's
social security system." (European Union's first written submission, para. 6 (emphasis added); see also
European Union's first written submission para. 141; comments on responses to the second set of questions,
paras. 8 and 9.) Turkey asserts that "imported pharmaceutical products may be 'passivized' if they do not
comply with the localisation measure" (Turkey's first written submission, para. 82 (emphasis added)), that
such products are never "excluded" from the Annex 4/A list, and that they may be re-activated "at any time
should the pharmaceutical company decide to localise their production". (Turkey's comments on responses to
the second set of questions, para. 4.) Turkey also asserts that, unlike in all other circumstances in which
products are "passivized", pharmaceutical products which are passivized as a result of the localisation measure
are not excluded from the Annex 4/A list after 10 months, but instead retain a "passivized" status. (Turkey's
first written submission, para. 82; responses to the second set of questions, para. 12; and comments on
responses to the second set of questions, para. 5.) The European Union considers that Turkey points to no
evidence to substantiate this distinction. (European Union's second written submission, para. 69.) Finally,
Turkey asserts that, before being passivized, these products remain "active" (and, therefore, reimbursable) for
a period of one year, thereby providing the pharmaceutical company with an opportunity for "reconsidering its
position". (Turkey's first written submission, para. 152; responses to the second set of questions, para. 7; and
European Union's second written submission, para. 33.) The European Union notes that in this case, the
products would eventually be localised or passivized. (European Union's comments on responses to the second
set of questions, para. 7.)
98 In this case, the SSI and TMMDA jointly notify the company that the relevant products "shall be
excluded from the reimbursement list one year after the decision for exclusion from the reimbursement list is
taken." (SSI and TMMDA, Communication, "Local Production" (Exhibit EU-46); HSPC Decision (Exhibit EU-35),
para. 4.) Turkey argues that in this situation, the products are passivized and not "removed" from the list
(Turkey's first written submission, para. 153), whereas the European Union asserts that the refusal of
commitments "leads to an exclusion from reimbursement." (European Union's first written submission,
para. 141.)
99 Turkey's first written submission, para. 150; European Union's second written submission, para. 33.
This is mandated by the Regulation regarding the Variations on Medicinal Products for Human Use with
Marketing Authorisation or Pending Registration, Official Gazette No. 25823 of 23 May 2005 (Exhibit EU-93).
The TMMDA delivers, or rejects the delivery of, marketing authorizations for both imported and locally
produced pharmaceutical products.
100 Marketing Authorization Regulation (Exhibit EU-89), Article 20(2).
101 European Union's panel request, p. 6.

2.2.3 The prioritization measure
2.30. The TMMDA's Guideline for Working Principles and Procedures of Human Medicinal Products
Priority Assessment Commission (Prioritization Guideline) 102 provides for the possibility to request
priority assessment, in particular, of applications for GMP certification and marketing authorization,
and of certain requirements relating to pharmaceutical products in specific cases. The Prioritization
Guideline sets out the criteria that determine wheth er a particular product is eligible for priority
assessment, as well as the procedure that must be followed to obtain priority assessment and
treatment. The Prioritization Guideline also establishes a Prioritization Commission which is in charge
of examining applications.103
2.31. "Prioritization" can be requested for ten categories of applications, including applications
relating to transferring the production of imported medicines to Turkey 104, applications for locally
manufactured products for exportation purposes105, and applications relating to products that have
strategic importance in terms of the country's policies.106
2.32. In addition, the Drug Reimbursement Regulation provides for the possibility of according
priority to the applications for inclusion in the Annex 4/A list of some pharmaceutical products.107
2.33. The parties disagree on whether the "prioritization measure", as characterized in the European
Union's panel request and subsequent submissions, is challenged "as such", or concerns ongoing
conduct. The Panel will address that issue, insofar as necessary, in its findings in section 7 of this
Report.
3 PARTIES' REQUESTS FOR FINDINGS AND RECOMMENDATIONS
3.1. The European Union identifies three measures at issue in this dispute, which it refers to as "the
localisation requirement", "the import ban on localised products", and "the prioritization measure".
The European Union makes multiple claims in respect of these three measures, and Turkey presents
multiple grounds on which it requests that the Panel reject all of these claims. Certain of the claims
and defences are made in the alternative. To facilitate an understanding of the specific legal claims
and defences and how they relate to one another, this section presents a breakdown of the claims
and defences on a measure-by-measure basis, drawing on the European Union's panel request and
the parties' submissions.
3.2. Regarding the localisation requirement, the Euro pean Union's panel request and submissions
set out the following claims:
a. the localisation requirement is inconsistent with Article III:4 of the GATT 1994, because,
by excluding from the reimbursement scheme imported pharmaceutical products for which
localisation commitments have not been given, have not been accepted or have not been
fulfilled Turkey accords to imported pharmaceutical products treatment less favourable
than that accorded to like products of national origin covered by that scheme;
b. the locali sation requirement is inconsistent with Article 2.1 of the TRIMs Agreement,
because the localisation requirement is an investment measure related to trade in goods
that is inconsistent with Article III:4 of the GATT 1994;
c. in the alternative to the claims under Article III:4 of the GATT 1994 and Article 2.1 of the
TRIMs Agreement108, the localisation requirement is inconsistent with Article 3.1(b) of the

102 TMMDA, Guideline for Working Principles and Procedures of Human Medicinal Products Priority
Assessment Commission (Prioritization Guideline) (Exhibit EU-97).
103 The Prioritization Commission may put some products on its agenda without application if deemed
necessary (Prioritization Guideline (Exhibit EU-97), Article 8(1)).
104 Prioritization Guideline (Exhibit EU-97), Article 2(ç).
105 Prioritization Guideline (Exhibit EU-97), Article 2(d).
106 Prioritization Guideline (Exhibit EU-97), Article 2(h).
107 Drug Reimbursement Regulation (Exhibits TUR-11, EU-8), Articles 5(1)(g) and 5(1)(ğ).
108 The European Union states that it "submits this claim in the alternative to its claim against the
Localisation Requirement under Article III:4 of the GATT set forth in section 2.3. In other words, the European
Union requests the Panel to rule on this claim only in the event that the Panel were to conclude that the

SCM Agreement, because the reimbursement scheme operated by the Turkish social
security system involves the granting of a subsidy within the meaning of Article 1.1 of the
SCM Agreement, and the localisation requirement makes the granting of that subsidy
contingent upon the use of domestic over imported goods; and
d. the localisation requirement is inconsistent wi th Article X:1 of the GATT 1994, because
Turkey failed to publish certain elements, terms and conditions of general application of
the localisation requirement promptly in such a manner as to enable governments and
traders to become acquainted with them.
3.3. In its submissions, Turkey requests that the Panel reject all the European Union 's claims
regarding the localisation requirement on the grounds that:
a. while the European Union characterizes the localisation requirement as a "single and
cohesive measure", it fails to precisely identify the legal instruments forming part of or
giving effect to the measure, and a fortiori provide evidence of how these components
operate together as part of a single measure, and thereby fails to demonstrate the
existence and prec ise content of the localisation requirement as a "single and cohesive
measure";
b. there is no inconsistency with Article III:4 of the GATT 1994 or Article 2.1 of the TRIMs
Agreement as:
i. the procurement of pharmaceutical products included in the Annex 4/A list by the SSI
constitutes government procurement within the meaning of Article III:8(a) of the GATT
1994 and thus the localisation requirement falls outside the scope of the national
treatment obligation under Article III:4 of the GATT 1994 and Article 2.1 of the TRIMs
Agreement;
ii. the localisation requirement is justified under Article XX(b) of the GATT 1994 because
it is necessary to ensure uninterrupted access to safe, effective and affordable
medicines in Turkey;
iii. in the alternative109, the localisation requirement is justified under Article XX(d) of the
GATT 1994 because it is necessary to secure compliance with laws requiring Turkey to
ensure accessible, effective and financially sustainable healthcare;
c. there is no inconsistency with Article 3.1(b) of the SCM Agreement because:
i. there is no subsidy within the meaning of the SCM Agreement since there is no financial
contribution in the form of direct transfer of funds and no benefit is conferred. More
specifically, any direct benefit to outpatients conferred b y Turkey's reimbursement
scheme falls outside the scope of Article 1.1 of the SCM Agreement, and the European
Union has not established that any indirect benefit is conferred upon producers of the
pharmaceutical products listed in Annex 4/A; and
ii. any alleged subsidy is not contingent upon the use of domestic over imported products
within the meaning of Article 3.1(b) of the SCM Agreement; and
d. the claim under Article X:1 of the GATT 1994 should be dismissed because:
i. the European Union has changed the scope of its claim in a way that raises serious
due process concerns and/or falls outside the Panel's terms of reference; and
ii. the European Union has failed to demonstrate that the relevant measure(s), whether
understood as a single cohesive measure, individual ins truments/documents, or

Localisation Requirement is not in breach of Article III:4 of the GATT 1994, or that such breach is justified
under any other provision of the GATT 1994." (European Union's first written submission, para. 382.)
109 Turkey's first written submission, para. 504.

certain terms and conditions, fall within the scope of the obligation in Article X:1,
and/or were not published promptly and adequately.
3.4. Concerning the "import ban on localised products " which, according to the European Union ,
arises from the localisation requirement "applied in conjunction with" the Turkish rules for approving
the importation and marketing of pharmaceutical products, and in particular the Single Authorization
rule, the European Union requests that the Panel find that this measure is inconsistent with
Article XI:1 of the GATT 1994.
3.5. Turkey requests that the Panel reject the European Union's claim under Article XI:1 of the GATT
1994, on the grounds that:
a. while the European Union characterizes the "import ban measure" as a "single measure",
it fails to show how the different components operate together as part of a "single
measure" distinct from its components, and thereby fails to establish the existence and
precise content of the import ban measure as a "single measure";
b. the measure causing the alleged restriction, i.e. the Single Authorization rule, does not fall
within the scope of Article XI:1 and is an internal measure within the meaning of Article
III:4 of the GATT 1994, and even if Article XI:1 applies there is no "ban" or "prohibition"
on the importation of localised products. This is because, inter alia, the very same product,
in a different form or different dosage, can receive a marketing authorization with a
production site abroad. Turkey draws two conclusions from the fact that there is no "ban"
on pharmaceutical products: (i) the measure which is characterized by the European Union
as an "import ban" does not exist; and (ii) there is no violation of Article XI:1 of the GATT
1994 insofar as it applies to the measure at issue110;
c. the import ban is justified under Article XX(d) of the GATT 1994 because it is necessary to
secure compliance with the localisation requirement.
3.6. As to the prioritization measure, the European Union requests that the Panel find that this
measure is inconsistent with Turkey 's obligations under Article III:4 of the GATT 1994, because
Turkey accords priority to the review of applications for inclusion in the reimbursement scheme, as
well as with respect to any pricing and licensing policies and processes, to pharmaceutical products
of national origin.
3.7. In its submissions, Turkey requests that the Panel re ject the European Union 's claim under
Article III:4 of the GATT 1994 regarding the prioritization measure, on the grounds that:
a. the European Union characterizes the measure as an overarching measure whereby
Turkey "gives priority" to domestic pharmaceutical products, but fails to demonstrate the
existence of ongoing conduct consisting in Turkish authorities granting priority to
domestically produced pharmaceutical products, and thereby fails to demonstrate the
existence of the challenged measure;
b. the European Union has failed to demonstrate that the prioritization measure, understood
as an overarching measure, is a law, regulation or requirement within the scope of
Article III:4 of the GATT 1994, or that the prioritization measure accords "treatment less
favourable" to imported products, given the discretion of the authorities when assessing
priority applications.
3.8. The European Union requests, pursuant to Article 19.1 of the DSU, that the Panel recommend
that Turkey bring its measures into conformity with its WTO obligations.
3.9. Turkey requests that the Panel reject all of the European Union 's claims and confirm that
Turkey's measures are not inconsistent with its WTO obligations under the covered agreements.

110 Turkey's first written submission, paras. 587-593, and 617.

4 ARGUMENTS OF THE PARTIES
4.1. The arguments of the parties are reflected in their executive summaries, provided to the Panel
in accordance with paragraph 23 of the Working Procedures adopted by the Panel (see Annexes C-1
and C-2).
5 ARGUMENTS OF THE THIRD PARTIES
5.1. The arguments of Canada, Japan, Switzerland, Ukraine, and the United States are reflected in
their executive summaries, provided in accordance with paragraph 26 of the Working Procedures
adopted by the Panel (see Annexes D -1, D-2, D-3, D-4 and D-5). Brazil, China, India, Indonesia,
and the Russian Federation did not submit written or oral arguments to the Panel.
6 INTERIM REVIEW
6.1 Introduction
6.1. On 30 September 2021, the Panel issued its Interim Report to the parties. On 14 October 2021,
the European Union and Turkey each submitted written requests for the Panel to review precise
aspects of the Interim Report. On 28 October 2021, the European Union and Turkey submitted
comments on each other's requests for review. Neither party requested an interim review meeting.
6.2. In accordance with Article 15.3 of the DSU, this section of the Report sets out the Panel's
response to the parties' requests made at the interim review stage. The Panel generally addresses
the parties' requests individually and in sequence according to the paragraphs to which such requests
pertain. The Panel addresses related requests together to avoid repetition. To provide context, the
Panel structures its discussion using the subheadings of the Report where the relevant paragraphs
are found.
6.3. In addition to the requests for substantive modifications discussed below, various corrections
or improvements of a typographical or minor editorial nature were made to the Report, including
but not limited to those suggested by the parties.
6.4. The numbering of some of the paragraphs and footnotes in the Final Report has changed from
the numbering in the Interim Report . Except where otherwise indicated, references to footnote
numbering in the discussion below correspond to the numbering in the Final Report.
6.2 General issue
6.5. As a general issue, Turkey states that it regrets that despite its earlier comments on the draft
descriptive part of the Report111, the Panel decided to use the incorrect and misleading terminology
suggested by the European Union and throughout the Report used terms such as "reimbursement"
(to describe the Turkish system of the provision of medicines included in Annex 4/A) and
"consumers" (to describe patients). Turkey states that it does not agree with the use of these terms
and requests the Panel to accurately reflect that in the Final Report. Turkey also requests the Panel
to provide an explanation as to why it decided to use the terminology suggested by the European
Union given that this terminology has been consistently conteste d by Turkey throughout the
proceedings.
6.6. The European Union does not comment.
6.7. The Panel first notes that, contrary to what is suggested by Turkey's request, the Panel has
not used the terminology suggested by the European Union throughout the Report : the Panel has
sought to use neutral formulations. 112 The Panel further notes that, contrary to what is implied by

111 Turkey's comments on the draft descriptive part of the Panel Report, para. 28.
112 For example, instead of referring to the Annex 4/A list as the "reimbursement list" or the "list of
medicines to be paid for", the Panel simply refers to it as the Annex 4/A list. In various other instances, the
Panel uses the terms "reimburses" and "pays for" interchangeably, depending on the context. While the Panel
in several instances refers to Turkey's "pharmaceutical reimbursement system", such terminology is mostly
used as a generic shorthand expression. The Panel's analysis under Article III:8(a) of the GATT 1994 is
generally cast in Turkey's own terminology, including the entirety of the Panel's assessment of Turkey's

Turkey's request, the Panel acknowledges and has already fully reflected, in the Report, that Turkey
does not agree with the European Union's use of terms such as "reimbursement" and "consumer".113
Finally, and again contrary to what might be suggested by Turkey's request, the Panel has already
provided thorough explanations of its approach to disputed terminology. 114 For these reasons, the
Panel rejects the premise underlying Turkey's request that the Panel provide an explanation "as to
why it decided to use the terminology suggested by the European Union given that this terminology
has been consistently contested by Turkey throughout the proceedings".
6.3 Descriptive part of the Report
6.3.1 Translation issues
6.8. Turkey observes that paragraph 1.20 describes its position regarding the translation of
certain terms included in Tu rkish legal instruments and documents. Turkey requests two changes.
First, Turkey notes that the final two sentences suggest that whereas Turkey addressed "some" of
the European Union's comments, it acquiesced to the European Union's broader statement that
Turkey agreed with the European Union's factual description of the "Localisation Requirement and
Turkey's reimbursement system for outpatient pharmaceuticals". Turkey considers that this
characterization i s misleading as it does not reflect Turkey's detai led response to the European
Union's factual description at paragraphs 16 -33 of Turkey's second written submission. Second,
Turkey notes that despite its request for modification in the context of its comments on the draft
descriptive part of the Report115, the Panel did not amend that paragraph as suggested by Turkey.
Turkey reiterates its request to add additional explanation at the end of that paragraph in order to
better reflect Turkey's arguments.116
6.9. The European Union disagrees with Turkey's request to have the Panel reflect that its second
written submission "corrected the errors made by the European Union…" as it would create the
impression of a finding, by the Panel, that the European Union made errors. The remaining

argument that the SSI "purchases" pharmaceutical products by paying for them. Furthermore, contrary to
Turkey's statement that the Panel decided to use the incorrect and misleading terminology suggested by the
European Union and throughout the report used the term "consumers" to describe patients, the Panel has
consistently used the neutral expression "final consumers (i.e. outpatients)".
113 The Panel did so first in the descriptive part of the Report (see footnotes 36 and 56), and then again
in the context of its findings (see in particular paragraph 7.91). The Panel observes that the present discussion
now serves as an additional reflection that Turkey does not agree with the European Union's use of terms such
as "reimbursement" and "consumer".
114 The Panel made clear in the descriptive part that the terminology used in certain instances would not
prejudge any disputed issue about the proper characterization of the measure before the Panel (footnote 36).
The Panel has also made clear in the relevant section of its findings that its conclusions and reasoning are not
based on semantic considerations (see paragraph 7.91). More specifically, the Panel recalled the parties'
disagreement over the correct translation of certain terms used in Turkish instruments and documents, and
their wider disagreements over terminology, and clarified that its conclusion and reasoning are not based on
such semantic considerations and are instead grounded in an objective legal standard arising from its
understanding of the term "product purchased" in the context of Article III:8(a) of the GATT 1994.
115 Turkey's comments on the draft descriptive part of the Panel Report, para. 5.
116 In particular, Turkey requests the Panel to amend paragraph 1.20 as follows:
1.20. In its second written submission, the European Union stated that "[w]hile mistakes are
always possible, nothing in the EU's translations supports Turkey's allegation that the EU was
attempting to mislead the Panel." The European Union responded to some of the translation
issues raised by Turkey. The European Union also submitted that "Turkey agrees with the main
factual elements of the Localisation Requirement and Turkey's reimbursement system for
outpatient pharmaceuticals, as described by the EU." In its second written submission, Turkey
addressed some of the European Union's responses, corrected the errors made by the
European Union with respect to the factual elements and reiterated its position with
respect to the translation of certain terms. In particular, Turkey explained that the SSI
does not "reimburse" an already paid amount, but directly pays the prices of the
dispensed medicines to retail pharmacies instead of the patients. Furthermore, Turkey
explained that the word "temin" in the context of the Protocol concluded between the
SSI and the Turkish Pharmacists' Association corresponds to "the provision" of
medicines by retail pharmacies to patients, rather than "the procurement" of
medicines by patients.

suggestions by Turkey seem unnecessary, and even if considered, should state, for example, "Turkey
argued", instead of "explained", which similarly creates the impression of a Panel finding.
6.10. The Panel observes that section 1.5 of the Report, which is entitled "Translation issues" and
consists of three paragraphs, is meant to serve the limited purpose of recording the fact that disputed
issues of translation arose in the course of the proceedings. Paragraph 1.20 does not aim to
comprehensively set out the parties' positions on those issues. Bearing in mind the context and
limited purpose of paragraph 1.20, the Panel does not consider the changes requested by Turkey to
be necessary and appropriate. First, the Panel does not consider that the current text, read in its
context, implies that Turkey acquiesced to the European Union's broa der statement that Turkey
agreed with the entirety of European Union's factual description of the "Localisation Requirement
and Turkey's reimbursement system for outpatient pharmaceuticals". Nor does the Panel consider it
appropriate to add two additional sentences setting out in further detail Turkey's arguments on the
correct translation of particular terms. Among other things, Turkey's arguments on both of these
points (the term "reimbursement" and the title of the Protocol) are reflected elsewhere in bo th the
descriptive part of the Report and in the Panel's findings.
6.3.2 Factual aspects
6.3.2.1 Turkey's Universal Health Insurance Scheme and relevant governmental entities
6.11. Turkey notes that the second sentence of paragraph 2.4 paraphrases Turkey's description
of the SSI's responsibilities, providing that "[i]t is responsible for paying for all healthcare goods and
services, including pharmaceuticals". However, the part of paragraph 39 of Turkey's first written
submission, which the Panel has paraphrased, lists an additional responsibility of the SSI, namely,
that "[i]t is also the SSI who oversees the distribution of pharmaceutical products to patients".
Turkey notes that this description was included in the draft descriptive part shared by the Panel with
the parties but was deleted from the Interim Report. Turkey considers that the current wording does
not reflect its description of the responsibilities of the SSI and requests that the second sentence of
paragraph 2.4 be modified to reflect the additional responsibility.117
6.12. The European Union disagrees with Turkey's suggestion to the extent that it substitutes
Turkey's own views of the SSI's role for Panel findings. The European Union would not object if the
Panel expanded on its findings on the role of the SSI but disagrees that the SSI "oversees the
distribution of pharmaceutical products to patients". According to the European Union, such a finding
is not borne out by the record.
6.13. The Panel recalls that, in its comments on the draft descriptive part of the Report, the
European Union requested that the Panel amend the second sentence, as initially drafted, to include
the qualification that the SSI "… oversees the distribution of pharmaceutical products to patients in
certain cases." Anticipating a lack of agreement between the parties on how to formulate the SSI's
"oversight" responsibility, the Panel elected to delete this reference in paragr aph 1.20 because it
was not necessary to the focus of this paragraph. However, in the light of Turkey's request to
reintroduce a reference to this responsibility , while taking into account the European Union's
subsequent objection, the Panel has revised paragraph 2.4 to neutrally state that "[i]t is responsible,
inter alia, for paying for all healthcare goods and services, including pharmaceuticals".
6.3.2.2 Reimbursement of pharmaceutical products
6.14. Turkey observes that paragraph 2.7 sets out the process by which pharmaceutical products
included in the Annex 4/A list are provided to patients and describes the role of retail pharmacies in
that process. Turkey notes that the Panel did not amend that paragraph as requested by Turkey in
the context of its comments on the draft descriptive part of the Report. 118 Turkey reiterates its
request to redraft this paragraph in order to accurately explain the system of dispensing
pharmaceutical products to patients in Turkey. In particular, Turkey notes that t he first sentence
provides, at the end, that retail pharmacies "are private entities", but this statement ignores the
"public role" of retail pharmacies as "primary healthcare service providers" under Turkish law. Turkey

117 In particular, Turkey requests the following revision: "It is responsible for paying for all healthcare
goods and services, including pharmaceuticals, and overseeing the distribution of pharmaceutical
products to patients".
118 Turkey's comments on the draft descriptive part of the Panel Report, para. 10.

states that this "public role " of t he retail pharmacies has been described in detail in
paragraphs 104-107 of Turkey's first written submission and paragraphs 27, 30, 48 -49 and 82-85
of Turkey's second written submission. In addition, Turkey considers that the juxtaposition offered
in the second sentence of paragraph 2.7 between the "main" amounts charged by pharmacies met
by the SSI and out-of-pocket payments understates the share of the amounts covered by the SSI.
Turkey proposes the addition of several additional sentences and revisions to paragraph 2.7 to reflect
these points.119
6.15. The European Union disagrees with Turkey's suggestion to the extent that it substitutes
Turkey's own views of the SSI's role for Panel findings. The European Union considers that the
proposed additions are either unnecessary (for example, the discussion of the rules in place pre -
2003) or factually incorrect and not borne out by the record (for example, the references to the
"public" nature of retail pharmacies, their "acting on behalf" of the SSI, or Turkey's understatement
of patients' out-of-pocket payments, which typically range up to 20%).
6.16. The Panel has addressed Turkey's multi-faceted request and proposed textual changes to
paragraph 2.7 as follows:
a. The Panel sees no reason to revise paragraph 2.7 with Turkey's proposed text regarding
the healthcare system as it existed prior to 2003, in part because this is already fully
reflected at paragraph 7.78 of the Panel Report.
b. The Panel also sees no reason to revise paragraph 2.7 with Turkey's proposed additional
description of pharmacies as "primary healthcare providers under Turkish law". The
factual cha racterization of pharmacies as "private entities" relates to the fact that
pharmacies in Turkey are privately owned, as opposed to being publicly owned, entities.
The Panel observes that at paragraph 104 of Turkey's first written submission, Turkey
itself refers to pharmacies as "private entities". While it is not contested that pharmacies
are referred to as "primary healthcare providers under Turkish law", this does not
negate the fact that pharmacies are privately owned entities.
c. The Panel has also made some additional changes to paragraph 2.14, discussed further
below, to accommodate the aspect of Turkey's requests pertaining to the role of the
TPA.
d. The Panel has revised the second sentence to refer to "[t]he amounts charged by
pharmacies for pharmaceutical products covered by the social security system".
e. With respect to the remaining part of Turkey's request related to this sentence, the
Panel observe s that the use of the word "mainly" is not intended to reflect a
juxtaposition between the "main" amounts charged by pharmacies met by the SSI and
out-of-pocket payments, but rather to refer to the two main sources that cover the

119 Turkey therefore requests the Panel to modify paragraph 2.7 as follows (with citations to Turkey 's
second written submission, para. 65):
2.7. Prior to the introduction of the Transformation in Health Program (THP) launched
in 2003, pharmaceutical products were distributed by SSK, the predecessor of the SSI,
which obtained physical control over the medicines, stored them in its own pharmacies
and distributed directly to out-patients. As this system proved to be ineffective in
reaching the entire population, Turkey implemented a different model for dispensing
medicines to out-patients though retail pharmacies. Following that change,
pPharmaceutical products are distributed to outpatients by retail pharmacies. Although retail
pharmacies, which are private entities, they are considered primary healthcare providers
under Turkish law and have a legal duty to assist in the supply of pharmaceutical
products. The Turkish Pharmacists' Association, which is mandated to represent retail
pharmacies, is a public institution under Turkish law and may act on behalf of retail
pharmacies in its relationship with other public institutions, such as the SSI. Almost
the entire The amounts charged by pharmacies for pharmaceutical products, covered by the
social security system, is are met mainly from payments made by the SSI and, while the
remaining share is met by out-of-pocket payments by outpatients. The SSI makes payments
to pharmacies based on monthly invoices submitted by the pharmacies. Regarding inpatient
treatment, inpatients receive medicines directly from the hospitals, through a process different
from the system at issue in this dispute.

amounts charged by pharmac ies. However, to address Turkey's concern with the
formulation of the second sentence, the Panel has deleted the word "mainly".
6.17. Turkey observes that paragraph 2.8 describes which pharmaceutical products used by
Turkish patients are included in the Annex 4/A list and indicates in its first sentence that "[n]ot all
pharmaceutical products distributed to outpatients are reimbursed by the SSI". In a footnote to the
third sentence of paragraph 2.8, the Panel indicates that "[a]ccording to Turkey, close to 90% of
the medicines that are actively sold and prescribed in Turkey are included in the Annex 4/A list."
Turkey considers that the wording of the body text, i.e., "[n]ot all", does not adequately reflect the
uncontested figure provided by Turkey, which indicates that nearly all products distributed to
outpatients are paid for by the S SI. Turkey therefore requests modifying the first sentence of
paragraph 2.8 as follows: " Not all Close to 90% of pharmaceutical products distributed to
outpatients by pharmacies are reimbursed by the SSI."
6.18. The European Union disagrees with Turkey's suggestion to the extent that it substitutes
Turkey's own factual assertions for Panel findings.
6.19. The Panel has adjusted paragraph 2.8 to place more emphasis on the fact that approximately
90% of the pharmaceutical products that are actively sold and prescribed in Turkey are included in
the Annex 4/A list.
6.20. Turkey observes that paragraph 2.13 explains the process of "passivizing" products included
in the Annex 4/A list. Turkey notes that footnotes 51, 52 and 53 to that paragraph explain the
difference between excluded and passivized products, and the process of reactivation or re-inclusion.
Because this distinction is important to Turkey's position on the trade -restrictiveness of the
localisation measure, Turkey asks the Panel to move the explanation included in those footnotes to
the body text.120 Turkey refers in that regard to its comments on the draft descriptive part of the
Report.121
6.21. The European Union does not object but would request that the remaining text currently in
footnotes 52-54 be preserved.
6.22. The Panel declines Turkey's request. The Panel understands that Turkey's request only
concerns the place where the factual information regarding the passivization and the exclusion of
pharmaceutical products is provided (i.e. in the main body of the text rather than in footnotes 51,
52 and 53). The Panel notes that paragraph 2.13 is included in section 2.1.3.1 of the Report, titled
"The Annex 4/A list". Previous paragraphs in this section explain that the SSI pays to pharmacies
the price of certain pharmaceutical products (paragraph 2.7); clarify that to be reimbursable,
pharmaceutical products must be included in the Annex 4/A list (paragraphs 2.8 -2.9); and outline
the pathways through which products are included in this l ist (paragraphs 2.10 -2.12). Therefore,
section 2.1.3.1 of the Report provides a description of the conditions under which a pharmaceutical
product would be reimbursed by the SSI. This description follows chronologically the process that
leads to a product being reimbursed by the SSI, i.e. its inclusion in the Annex 4/A list and its status
in the list as "active". It is within this framework that paragraph 2.13 refers to the possibilities that
a product be "passivized" or "excluded", which both result in the product not being reimbursed. In
this context, the difference between excluded and passivized products with respect to the
possibilities of re -activation or re -inclusion is of a secondary nature. While the Panel understands

120 In particular, Turkey requests that the text be modified as follows:
2.13. Regardless of whether the regular or alternative reimbursement pathway is used, once
approved, the pharmaceutical products are included in the same Annex 4/A list. Once included in
the Annex 4/A list, products may subsequently be "passivized" (their status in the list changes
from "active" to "passive"), or excluded from the list. Products may still be prescribed by
doctors and dispensed by the pharmacies, but are no longer reimbursed if they are
excluded or "passivized". In other words, to be reimbursed, products must be both included and
listed as "active" in the Annex 4/A list. Pharmaceutical products that have been
"passivized" may be re-activated upon request of the pharmaceutical company if the
conditions for setting the product's status to "passive" are no longer valid.
Pharmaceutical products that have been "excluded" from the Annex 4/A list may be
re-included after a period of 6 months following the date of their exclusion and are
subject to a new application for inclusion in the Annex 4/A list.
121 Turkey's comments on the draft descriptive part of the Panel Report, para. 11.

Turkey's comment that this distinction is important to Turkey's position on the trade-restrictiveness
of the localisation measure, the Panel considers that the distinction is sufficiently clearly outlined in
footnotes 51, 52 and 53 (as evidenced by Turkey's request to merely move these descriptions to
the main body of the text without modifying the information provided). The Panel also notes that
the fact that "passivized" and "excluded" products may still be prescribed by doctors and dispensed
by pharmacies, without being reimbursed, is already reflected in the last sentence of footnote 53.
6.23. Turkey observes that paragraph 2.14 explains how pharmaceutical products are provided
to patients and the role of the retail pharmacies and the SSI in that process. Turkey notes that the
Panel did not make all the changes suggested to that paragraph by Turkey in its comments on the
draft descriptive part of the Report.122 Turkey reiterates its request to further redraft this paragraph
in order to provide a more accurate description of the process of providing medicines to patients. In
particular, Turkey states, the payment for medicines invoiced to the SSI is not optional (and refers
to Turkey's opening statement, paragraph 32). Turkey states that while the SSI checks the invoices
it receives from the retail pharmacies, mostly based on sampling, it can only refuse to ma ke the
payment in exceptional circumstances when the medicines were approved in the Medula system on
the basis of incorrect information and dispensed to patients in breach of the specific medical rules
that exist for those medicines. Turkey suggests adding that explanation to footnote 59. Turkey also
suggests the following change to the last sentence of that paragraph: "The SSI reviews these
invoices, and pays reimburses the 'reimbursement price ' based on the public price of the
relevant medicines. (i.e. the balance of the amount remaining after the out -of-pocket
payments by the patients)."
6.24. The European Union disagrees with Turkey's suggestion because it substitutes Tu rkey's own
views of the SSI's role for Panel findings, and because it is not borne out by the record.
6.25. The Panel has addressed Turkey's multi-faceted request and proposed textual changes to
paragraph 2.14 as follows:
a. With respect to Turkey's request to add certain explanations to footnote 59, the Panel
recalls that, to accommodate certain of Turkey's requests presented in its comments on
the draft descriptive part of the Report, the Panel added footnote 59 which explains that
the SSI usually reviews invoices and their accompanying documents using a sampling
method and refers to Article 6 of the Regulation on the procedures and principles
governing checking of invoices of healthcare providers and reimbursement of their fees
(Exhibit EU-53). The Panel considered this addition, including the specific reference to
the relevant legal instrument, to accurately reflect a broader description which Turkey
suggested without providing any reference to the evidence o n record. 123 In its
comments on the Interim Report, Turkey reiterates its request for the addition of a
similarly broad explanation that "the payment for medicines invoiced to the SSI is not
optional" and refers to its opening statement without providing fu rther support for its
statement based on the evidence on record.124 The Panel observes that this is an issue
of some contention between the parties. The parties appear to agree that, in some
circumstances, the SSI can refuse to make a payment for a product even when the
provision of the medicine to the patient was approved in the Medula system. 125 They
disagree, however, as to the relevance, frequency or significance of this possibility –
while Turkey states that the SSI can only refuse to make a payment "in exceptional
circumstances"126, the European Union highlights the "significant risk" that receiving
"approval" in Medula system at the time of the transaction does not necessarily mean
that the product will be reimbursed by the SSI. 127 For these reasons, to accommodate
Turkey's request, the Panel has made an addition to footnote 59 to reflect that,
according to Turkey, the SSI can refuse to make a payment when the medi cines were

122 Turkey's comments on the draft descriptive part of the Panel Report, para. 13.
123 Turkey's comments on the draft descriptive part of the Panel Report, para. 13, referring to Turkey's
opening statement, para. 32.
124 Turkey's comments on the Interim Report, para. 11. Turkey refers to para. 32 of its opening
statement which does not include any reference to the evidence on record.
125 Turkey's comments on the Interim Report, para. 11 and European Union's responses to the first set
of questions, para. 11.
126 Turkey's comments on the Interim Report, para. 11.
127 European Union's responses to the first set of questions, para. 11.

approved in the Medula system on the basis of incorrect information and dispensed to
patients in breach of the specific medical rules that exist for those medicines.
b. With respect to Turkey's suggested change in the last sentence of the paragrap h, the
Panel notes that paragraph 2.16 includes a detailed description of the "reimbursement
price" covered by the SSI. To avoid confusion and to partially accommoda te Turkey's
request, the Panel has made a revision to the last sentence of paragraph 2.14.
c. Finally, to reflect Turkey's explanation of the status of the TPA in the context of its
comments on paragraph 2.7, the Panel has added additional text to footnote 55
(footnote 55 in the Interim Report).
6.26. Paragraph 2.15: Turkey observes that this paragraph talks about the Medula system. Turkey
suggests moving this paragraph to the end of section 2.1 (i.e., after paragraph 2.17) to improve the
flow of the explanation relating to the price of the pharmaceutical products in Turkey, including the
price paid by the SSI.
6.27. The European Union does not comment.
6.28. The Panel has made the change suggested by Turkey.
6.29. Turkey notes that paragraph 2.16 (paragraph 2.17 in the Interim Report) illustrates what
happens if the application of the reference pricing system results in a reimbursable amount which is
lower than the public price of a pharmaceutical product included in the Annex 4/A list. It provides
that "[i]f the public price of a pharmaceutical product is greater than the maximum reimbursement
price set by the SSI for the relevant equivalent group, outpatients must pay the difference". Turkey
states that it has explained at paragraph 1 of its responses to the Panel's first set of questions that
this depiction is incomplete because a patient may opt for an equivalent medicine that is less costly
than that which was prescribed by the medical doctor and is therefore not required to pay the
difference. In addition, Turkey reiterates its previous comments on the draft descriptive part of the
Report128 given that the Panel did not make all the requested changes. In particular, Turkey
considers that it is important to clarify that the fees paid by patients constitute contributions to the
social security sys tem and that in many instances patients do not pay any contribution fee.
Accordingly, Turkey invites the Panel to add additional text to paragraph 2.16 to reflect the se
points.129
6.30. The European Union responds that the first proposed addition is illogical, as the sentence only
speaks of a scenario in which the public price is greater than the maximum reimbursement price.
The second should be rejected because it substitutes Turkey's own views of the SSI's role for Panel
findings, and because it is not borne out by the record. As for the third, the European Union does
not object to a reference to some, or certain, instances where patients are exempt from a
contribution fee, but it should not be qualified by the adjective "many" (which would require a factual

128 Turkey's comments on the draft descriptive part of the Panel Report, para. 16.
129 In particular, Turkey requests that paragraph 2.17 be amended as follows:
2.17. If the public price of a pharmaceutical product is greater than the maximum
reimbursement price set by the SSI for the relevant equivalent group, outpatients must pay the
difference or are provided another equivalent product with a lower public price. In
addition, outpatients generally also pay two types of fees collected by pharmacies, as
contribution to the social security system: (i) a fee calculated as a percentage of the price
after public discount of the pharmaceutical product (contribution fee), being 10% for persons
who receive income or a pension from the SSI, and also for their dependants, or 20% for all
others; and (ii) a fee of 3 Turkish lira for up to three boxes/items in the prescription and 1
Turkish lira for each additional box/item (prescription fee). In many instances, patients do
not pay any contribution fee.[FN]

[FN] Turkey's first written submission, para. 110. Among others, the contribution fee is
waived for pharmaceutical products necessary for the treatment of critical diseases
such as cancer or long-standing chronic diseases. In 2019, 34.7% of the total SSI's
expenditure for medicines was exempt from the payment of the contribution fee.

assessment never undertaken by the Panel). The last sentence of the proposed footnote should also
be rejected, as it would constitute a new factual finding.
6.31. The Panel ha s addressed Turkey's multi-faceted request and proposed textual changes to
paragraph 2.16 as follows:
a. With respect to Turkey's request to modify the first sentence of the paragraph, the Panel
understands Turkey's explanation to mean that an outpatient may decide to opt either
for the pharmaceutical product indicated on a prescription (and pay the difference
between the public price of this product and the maximum reimbursement price set by
the SSI for the relevant equivalent group), or for a cheaper equivalent product (thus
paying a smaller difference between the public price of the selected product and the
maximum reimbursement price set by the SSI for the relevant equ ivalent group, or
paying no such difference if the public price of the product is not greater than the
maximum reimbursement price set by the SSI for the relevant equivalent group).
However, the Panel is of the view that the revision, as suggested by Turke y, and in
particular the use of the conjunction "or", might lead to an erroneous conclusion that if
an outpatient opts for a cheaper equivalent product with a lower price, this necessarily
means that the outpatient will not pay the potential difference between the public price
of this equivalent product and the maximum reimbursement price set by the SSI for the
relevant equivalent group. This statement would only be correct if such difference does
not exist, i.e. if the public price of the equivalent produc t is not greater than the
maximum reimbursement price set by the SSI for the relevant equivalent group. For
that reason, the Panel has revised the first sentence of the paragraph to include a
clarification that outpatients must pay the difference, unless they decide to opt for an
equivalent product the public price of which is not greater than the maximum
reimbursement price set by the SSI for the relevant equivalent group.
b. With respect to Turkey's request to clarify that the fees paid by patients constitute
"contributions to the social security system", the Panel observes that the European
Union does not disagree with this clarification but considers it "irrelevant because it
concerns, at best, the ultimate use to which the money is put". 130 The Panel notes,
however, that the legal instrument to which Turkey refers in its first written submission
in support of the argument that the contribution fee forms part of patients' contribution
to the social security system explains, more narrowly, that the co ntribution fee "refers
to the amount to be paid by the universal health insurance holder or the dependents in
order to benefit from healthcare services". 131 To accommodate Turkey's request and
precisely reflect the text of the relevant legal instrument, the Panel has added a
sentence in footnote 66 (footnote 68 in the Interim Report) stating that a contribution
fee refers to the amount to be paid by the universal healt h insurance holder or the
dependents in order to benefit from healthcare services, along with a reference to the
relevant legal instrument.
c. With respect to Turkey's request to clarify that in many instances patients do not pay
any contribution fee, the P anel observes that, following Turkey's request in its
comments on the draft descriptive part of the Report, the Panel revised footnote 66 to
include this factual in formation. To further accommodate Turkey's request, the Panel
has added a sentence at the end of footnote 66 reflecting that, according to Turkey, in
2019, 34.7% of the total SSI’s expenditure for medicines was exempt from the payment
of the contribution fee. The Panel has added a reference to footnote 90 of Turkey's first
written submission, where this information was initially provided.

130 European Union's second written submission, para. 107.
131 HIC/SUT (Exhibits EU-95, TUR-10), Article 1.8.1. In the translation provided by the European Union
of this document, Article 1.8.1 reads as follows: "Contribution means the amount payable by persons covered
by universal health insurance and their dependents to be entitled to healthcare."

6.3.3 The measures at issue
6.3.3.1 The localisation requirement
6.32. Turkey strongly disagrees with the description, in paragraph 2.20, of the localisation
requirement as having the "policy obj ective of achieving the gradual transition from imports to
domestic manufacturing of pharmaceuticals". While Turkey does not deny the target of meeting 60%
of domestic pharmaceutical demand through domestic production, mentioned in footnote 75, it
reiterates that the policy objective behind that target relates to social security and public health.
Turkey therefore suggests amending the first sentence of this paragraph.132
6.33. The European Union rejects Turkey's attempt to completely re -qualify its measure, in a way
that goes far beyond the scope of interim review. On the other hand, the European Union notes that
the Panel extensively discusses Turkey's alleged policy obje ctives in the section dealing with
Article XX of the GATT 1994 and would not object to a cross -reference to that discussion in this
paragraph.
6.34. The Panel declines to make Turkey's proposed changes to paragraph 2.20, for the same
reasons that the Panel declined to revise paragraph 2.20 in the light of Turkey's comments on the
draft descriptive part of the Report. In the first sentence of paragraph 2.20, the Panel is simply
indicating that it is not disputed that the challenged measure (i.e. the localisation requirement) is
related to Turkey's wider objective of achieving the gradual transition from imports to domestic
manufacturing of pharmaceuticals. The Panel refers to that objective as "Turkey's policy objective"
in the context of paragraph 2.20 simply to distingu ish it from the challenged measure (i.e. the
localisation requirement). In referring to "Turkey's policy objective" in the first and second sentences
of paragraph 2.20, the Panel is clearly not prejudging the heavily contested issue of whether and if
so how that objective is related to Turkey's social security and public health objectives of securing
uninterrupted access to medicines for all patients in Turkey and guaranteeing the financial
sustainability of the social security system. The parties' respective positions and arguments on that
issue are set out in detail in the section of the Report addressing the general exceptions under
Article XX (see e. g. paragraph 7.165) and do not need to be reiterated in the context of
paragraph 2.20.
6.35. In addition, Turkey, recalling its comments on the draft descriptive part of the Report 133,
states that the reference to "foreign producer(s)" in paragraph 2.20 is incorrect, given that the
European Union's challenge of the measure is not directed at the nationality of producers but rather
the origin of the products themselves. Turkey therefore respec tfully suggests amending paragraph
2.20 so as to replace the words "foreign producers" with "producers of pharmaceutical products".
6.36. The European Union does not comment.
6.37. The Panel understands that the European Union's challenge of the localisation requirement is
not directed at the nationality of producers but rather at the origin of the products themselves.
However, when the Panel refers to a "foreign producer" (or conversely, "local producer"), the Panel
is referring to the location of production, and not to the nationality of the producer. By way of
illustration, an EU-owned enterprise producing pharmaceutical products in Turkey would be referred
to as a "local producer", and a Turkish -owned enterprise producing pharmaceutical products in the
European Union, and importing those products into Turkey, would be referred to as a "foreign
producer". Accordingly, the Panel declines to make the revision sugg ested by Turkey for the same
reason that the Panel declined to change references to "foreign" and "local" producers after receiving
Turkey's comments on the draft descriptive part of the Report.134

132 In particular, Turkey requests that the first sentence be amended as follows:
2.20. The localisation requirement seeks to relates to Turkey's policy objective of
achieveing the gradual transition from imports to domestic manufacturing of pharmaceuticals
which, according to Turkey, relates to social security and public health objectives of
ensuring uninterrupted access to medicines for all patients in Turkey and guaranteeing
financial sustainability of the social security system.
133 Turkey's comments on the draft descriptive part of the Panel Report, para. 18.
134 Turkey's comments on the draft descriptive part of the Panel Report, paras. 18 and 21.

6.3.3.2 The prioritization measure
6.38. Turkey reiterates the request made in its comments on the descriptive part of the Report 135
to complete paragraph 2.31 with additional examples in order to more accurately explain the
circumstances when application may receive priority.136
6.39. The European Union does not comment.
6.40. The Panel notes that the Prioritization Guideline provides for the possibility to request priority
assessment of ten different types of applications.137 To avoid including a list of all the circumstances
when applications may receive priority, and noting that the European Union took issue with only
some of these circumstances 138, the Panel opted for describing only those circumstances that
pertained to the European Union's challenge and that were relevant for the potentia l distinction
between domestically produced pharmaceutical products and pharmaceutical products produced
abroad. The Panel flagged the existence of other circumstances by use of the words " inter alia". In
the Panel's view, the addition suggested by Turkey of only one additional example ("applications
relating to biosimilar and innovative products") would only partially serve the purpose of "more
accurately explain[ing] the circumstances when application may receive priority". For that reason,
to accommodate Turkey's request to the extent possible, the Panel has revised the paragraph to
reflect that prioritization can be requested for ten categories of applications, including those
specifically mentioned in paragraph 2.31.
6.3.4 Parties' requests for findings and recommendations
6.41. Turkey reiterates the request made in its comments on the draft descriptive part of the
Report139 to modify paragraph 3.5 (a) in order to accurately r eflect Turkey's arguments.140 In a
related request on paragraph 7.261 (paragraph 7.259 in the Interim Report) , Turkey reiterates
that its claim that the European Union has failed to establish the existence and precise content of
the "import ban measure" is based, in the first place, on the argument that the European Union
failed to demonstrate the existence of a "ban". Turkey notes that reference is made to that point in
the accompanying footnote but considers that it should be part of point (i) of paragraph 7.261 to
more precisely and accurately reflect the structure of its arguments as included, inter alia , in
paragraphs 590-593 of Turkey's first written submission.141

135 Turkey's comments on the draft descriptive part of the Panel Report, para. 25.
136 In particular, Turkey suggests the following change (with a reference to the Prioritization Guideline
(Exhibit EU-97), Article 2(b) and (c)):
2.31. "Prioritization" can be requested, inter alia, for applications relating to biosimilar and
innovative products, applications relating to transferring the production of imported
medicines to Turkey, applications for locally manufactured products for exportation purpose, and
applications relating to products that have strategic importance in terms of the country's policies.
137 Prioritization Guideline (Exhibit EU-97), Article 2.
138 European Union's first written submission, paras. 339-341.
139 Turkey's comments on the draft descriptive part of the Panel Report, para. 27.
140 In particular, Turkey invites the Panel to make the following changes:
a. the European Union has failed to establish the existence and precise content of
the "import ban measure". In particular, the European Union has failed to demonstrate
the existence of a "ban". while t The European Union also characterizes the "import ban
measure" as a "single measure", it failsed to show how the different components operate
together as part of a "single measure" distinct from its components, and thereby fails to
establish the existence and precise content of the import ban measure as a "single
measure";
141 In particular, Turkey requests the following modification:

7.259. Turkey requests that the Panel reject the European Union's claim under Article XI:1 of the
GATT 1994 on multiple separate grounds. The grounds invoked by Turkey are that: (i) the
European Union fails to establish the existence and precise content of that measure,
first because it failed to demonstrate the existence of a "ban", i.e. a formal prohibition
on the importation of localised pharmaceutical products and second, because while the
European Union characterizes the "import ban measure" as a "single measure", it fails to show
how the different components operate together as part of a "single measure" distinct from its

6.42. The European Union does not comment.
6.43. The Panel considers that these paragraphs and their a ccompanying footnotes clearly and
accurately reflect the structure of Turkey's layered arguments, and it was for that reason that the
Panel did not modify the wording of these paragraphs following Turkey's comments on the draft
descriptive part. It now app ears from Turkey's comments on the Interim Report that Turkey's
concern arises from the fact that reference is made to the argument in question using a footnote,
rather than being reflected in main body text. The Panel notes that it presented the structure of
Turkey's arguments through a combination of main body text and footnotes to reflect that there are
several layers to Turkey's arguments, and not in any way to imply that both of the arguments
referenced in the footnote are secondary. Insofar as that is Turkey's concern, the Panel has sought
to accommodate it by reflecting all of Turkey's arguments in the main body text of these paragraphs.
6.4 The existence and precise content of the localisation requirement as a "single and
cohesive measure"
6.44. Turkey observes that paragraph 7.11 summarizes Turkey's arguments developed in its first
written submission regarding the European Union's identification of the content and existence of the
localisation measure. Turkey requests that the following sentence in that paragraph be modified in
order to reflect the due process dimension of its arguments, with reference in that regard to
paragraph 39 of its second written submission and p aragraph 15 of its responses to the first set of
questions: "According to Turkey, such identification and explanation are essential to establish the
'precise content' of the measure and have important consequences for its ability to develop its
defence against some of the claims."
6.45. The European Union does not object to a more extensive description of Turkey's arguments,
but would ask the Panel to limit this to direct citations of Turkey's submissions, and not to add any
new language or modify the existing language summarising or qualifying those submissions.
6.46. The Panel declines to modify paragraph 7.11 to reflect these subsequent submissions: a s
Turkey itself recognizes, paragraph 7.11 has the purpose of summarizing Turkey's arguments
developed in its first written submission. Furthermore, the above-quoted sentence in paragraph 7.11
as currently drafted corresponds to the cited sentence from Turkey's first written submission, which
does not include the words "its ability to develop its defence against". However, with a view to
accommodating Turkey's desire to have the due process dimension of its arguments reflected more
explicitly in the main body text of the Report, the Panel has revised the first sentence of paragraph
7.30 to read "[f]inally, the Panel observes that Turkey's argument regarding the European Union's
alleged failure to precisely iden tify the components of the localisation requirement and resulting
impact on Turkey's ability to develop its defence , while presented as a general argument
relevant to all of the European Union's claims, seems to be primarily, if not exclusively, relevant t o
the European Union's claim under Article X:1 of the GATT 1994." The Panel notes that the existing
footnote to this sentence already refers to paragraph 39 of Turkey's second written submission and
paragraph 15 of its responses to the first set of questions.
6.5 Article III:8(a) of the GATT 1994
6.47. Turkey observes that paragraph 7.44 describes the European Union's arguments concerning
the burden of proof under Article III:8(a) of the GATT 1994. Although the Panel did not make any
findings on that issue, for the sake of com pleteness, Turkey suggests that the Panel also refer to
Turkey's arguments on that point as reflected in paragraphs 31 -37 of its responses to the second
set of questions.
6.48. The European Union does not object to a more extensive description of Turkey's argum ents,
but would ask the Panel to limit this to direct citations of Turkey's submissions, and not to add any
new language or modify the existing language summarising or qualifying those submissions.

components, and thereby fails to establish the existence and precise content of the
import ban measure as a "single measure"; (ii) …

6.49. The Panel has added the reference as requested by Turkey i n footnote 257 (footnote 217 in
the Interim Report).
6.50. Turkey observes that paragraph 7.46 summarizes Turkey's argument in its first written
submission on the first element of the legal test under Article III:8(a) of the GATT 1994, namely,
that the localisation requirement is a "law, regulation or requirement governing procuremen t".
Turkey requests that the Panel reflect Turkey's references to the Protocol between the TPA and the
SSI and the contracts between individual pharmacies and the SSI. In a related request, Turkey also
suggests modifying the third sentence of paragraph 7.60 to add a reference to the Protocol
between the TPA and the SSI and the contracts between individual pharmacies and the SSI.142
6.51. The European Union does not object to a more extensive description of Turkey's arguments,
but would ask the Panel to limit this to direct citations of Turkey's submissions, and not to add any
new language or modify the existing language summarising or qualifying those submissions.
6.52. The Panel has made the additions requested by Turkey to paragraphs 7.46 and 7.60.
6.53. Turkey requests that the sentence in paragraph 7.60 starting with "Turkey also points to
several facts that, in its opinion, indicate that there is no commercia l transaction between the
patients and retail pharmacies" be corrected to indicate that these points were made to rebut the
European Union's arguments.143
6.54. The European Union does not object to a more extensive description of Turkey's arguments,
but would ask the Panel to limit this to direct citations of Turkey's submissions, and not to add any
new language or modify the existing language summarising or qualifying those submissions

142 In particular, Turkey requests the following changes:
7.46. Turkey submits that the localisation measure is a "law, regulation, or requirement
governing procurement". According to Turkey, the SSI "acquires" the medicines that are
prescribed to patients in Turkey "since it pays for their costs". Turkey explains that the
pharmaceutical products included in the Annex 4/A list "are acquired by the SSI through retail
pharmacies which are members of the TPA", and the "procurement process is governed by the
Protocol concluded between the SSI and the TPA as well as contracts concluded between
the SSI and individual retail pharmacies". Turkey submits that, contrary to what the
European Union argues, the very title of that document, i.e. Protocol on the Provision of
Medicines to the Persons Covered by the Social Security Institution by the Pharmacies
which are Members of the Turkish Pharmacists' Association, makes it clear that it
regulates the "provision" of pharmaceutical products by retail pharmacies, on behalf of the SSI,
to patients.

7.60. […] First, pharmacies do not resell the pharmaceutical products because they rather
dispense them to outpatients on behalf of the SSI, on the basis of the Protocol signed
between the TPA and the SSI and the contracts signed between individual pharmacies
and the SSI.
143 In particular, Turkey suggests the following changes:
7.60. […] Turkey also points out that contrary to what the European Union argues to
several facts that, in its opinion, indicate that there is no commercial transaction
between the patients and retail pharmacies, namely (i) the fact that patients may replace
the brand product from the prescription with an equivalent generic product (or vice versa); (ii)
the fact that patients may decide "whether, when or where" to use their prescription; or (iii) the
fact a patient may chose the pharmacy or even decide not to take his/her prescribed medicine,
do not indicate that there are any commercial transactions between the patients and
retail pharmacies as far as the pharmaceutical products included in Annex 4/A are
concerned. Turkey further maintains that the prescription fee and the contribution fee paid by
patients are not part of the price of the pharmaceutical products but rather "form part of the
patients' contribution to the social security system and aim at preventing abuses of the
healthcare system, including overconsumption of medicines, as well as ensuring its financial
sustainability". Turkey also observes that in many instances, patients are exempted from the
payment of the contribution fee.

6.55. The Panel has reformulated the wording of paragraph 7.60 in the manner requested by
Turkey, to reflect that the argument being summarized is in the nature of a rebuttal argument.
6.56. Turkey notes that the statement in paragraph 7.62 that the panel in India – Solar Cells did
not make any findings on the remaining elements of Article III:8(a) of the GATT 1994, other than
the issue of the nature of "products purchased", is incorrect. Turkey notes that the Panel appears to
recognize this elsewhere in the Interim Report (and refers to paragraph 7.105). Turkey notes that
the panel in that case considered it "useful to proceed with a limited analysis and review" (at
paragraph 7.137) of the remaining elements of Article III:8(a) and examined (i) whether the
measures at issue were "laws, regulations, or requirements governing procurement", (ii) whether
the procurement was made "by governmental agencies", (iii) whether the procurement was of
products purchased "for governmental purposes", and (iv) whether the procurement and purchas e
of products was "not with a view to commercial resale" (at paragraphs 7.139-7.186). Turkey
therefore suggests adding a sentence to paragraph 7.62 to reflect this.144
6.57. The European Union does not comment.
6.58. The Panel has revised the wording of the third sent ence of paragraph 7.62, and elaborated
the text of its accompanying footnote, to express more clearly that while the panel in India – Solar
Cells observed that it was unnecessary to make findings on the remaining elements of Article III:8(a)
given that "the threshold legal element" under this provision was not satisfied, it nonetheless
considered it useful to proceed with a limited analysis and review of certain issue s relating to the
remaining elements of Article III:8(a).
6.59. In a related request, Turkey further requests the Panel to follow the same approach as did
the panel in India – Solar Cells and thus to include in its final report limited analysis and review of
the other elements of Article III:8(a) of the GATT 1994 as well as its factual findings related to those
elements. Turkey notes that this would require redrafting section 7.2.4.5 in the Interim Report. In
that regard, Turkey disagrees with the Panel's stateme nt, in paragraph 7.106, that in the
circumstances of this dispute there are "no compelling reasons to make additional findings or
observations beyond those necessary to resolve the claims and defences at issue". Leaving aside
the fact that the Panel did not further explain its decision not to address the remaining issues under
Article III:8(a), Turkey submits that, as in India – Solar Cells (referring to paragraph 7.137 of the
panel report in that dispute), the additional factual findings of the Panel are necessary in order to
allow a review of the Panel's findings and the completion of the legal analysis under Article III:8(a)
in case of appeal.
6.60. The European Union does not comment.
6.61. The Panel declines Turkey's request that the Panel redraft section 7.2.4.5 of the Report to
include further analysis and review of the other elements of Article III:8(a) of the GATT 1994 as well
as its factual findings related to those elements. The Panel is not persuaded by Turkey's argument
that additional factual findings of the Panel are necess ary in order to allow a review of the Panel's
findings and the completion of the legal analysis under Article III:8(a) in case of appeal. The Panel
notes that the work of the Appellate Body has been suspended for nearly two years and that
Members remain unable to reach consensus on any selection process to fill the vacancies that are
required for the Appellate Body to function. Moreover, the Panel's approach here is in line with the
economical approach taken by the Panel elsewhere in the Report, including the scope of the Panel's
findings on Turkey's defences under Article XX(b) and (d), and the European Union's claims under
Article 3.1(b) of the SCM Agreement, Article 2.1 of the TRIMs Agreement, Article X:1 of the GATT
1994, and Article XI:1 of the GATT 1994.
6.62. The Panel recalls that, as reflected in paragraph 7.64 and the subsections that follow, Turkey
advances three lines of argument in support of its contention that the localisation requirement

144 In particular, Turkey suggests the following change:
7.62. […] That panel ultimately found it unnecessary to make findings on the remaining elements
of Article III:8(a) given that "the threshold legal element" under this provision was not satisfied.
That panel nevertheless decided to proceed with a limited analysis and review of the
remaining elements of Article III:8(a) in order to provide sufficient factual findings
that could be required in case of an appeal.

involves the "purchase" of pharmaceutical products included in the Annex 4/A list by governmental
agencies. As reflected in paragraph 7.64, the Panel's view is that these arguments are properly
characterized as alternative arguments. In the light of the foregoing, the Panel considers it
appropriate to address the following comments together:
a. The European Union suggests that the Panel rem ove the word "alternative" from the
first sentence of paragraph 7.64. It is not the European Union's understanding that
Turkey necessarily frames all of the three lines of argument as alternative, i.e. mutually
exclusive. For the same reasons, the European Union requests that the words "made in
the alternative" be removed from paragraph 7.82. By contrast, the European Union
states that the argument assessed in section 7.2.4.4 ("Pharmacies' purchases of
pharmaceuticals from wholesalers" ) can more clearly be described as alternative in
nature. In its comments on the European Union's request, Turkey asks the Panel to
revise paragraph 7.64 to present the first two lines of argument as a single argument.145
Turkey also requests that the Panel delete the words "second line of argument, made
in the alternative" from paragraph 7.82.
b. Turkey proposes to also refer to paragraphs 71 -73 of its second written submission in
footnote 375 (footnote 335 in the Interim Report) to paragraph 7.64, because those
paragraphs also contain elements of Turkey's position relating to the SSI gaining an
entitlement over pharmaceutical products dispensed on its behalf by retail pharmacies.
The European Union does not object to a more extensive description of Turkey's
arguments, but would ask the Panel to limit this to direct citations of Turkey's
submissions, and not to add any new language or modif y the existing language
summarising or qualifying those submissions
c. Turkey comments on paragraph 7.75, which refers to Turkey's position on the
interpretation of the terms "products purchased" as being that "the SSI must be deemed
to 'purchase' pharmaceutical products because it pays for their cost, even if it does not
acquire ownership of those products". Turkey is of the view that the Panel's summary
oversimplifies Turkey's position and therefore asks the Panel to modify the first sentence

145 In particular, in the context of its comments on the European Union's request that the Panel
remove the word "alternative" from the first sentence of paragraph 7.64, Turkey requests the Panel to
modify paragraph 7.64 as follows (with reference to Turkey 's response to Panel question No. 33(b),
Turkey's first written submission, para. 209; Turkey 's second written submission, paras. 71 -76;
Turkey's responses to Panel questions No. 5(a), paras. 25-26 and No. 6(c), para. 34; Turkey's response
to Panel question No. 33(b), para. 44):
7.64. Turkey's advances three alternative lines of argument in support of its contention that
the localisation requirement involves the "purchase" of pharmaceutical products included in the
Annex 4/A list by governmental agencies is two-fold. First, Turkey argues that the SSI
purchases those medicines from the retail pharmacies which are charged with
dispensing those medicines to patients. In that regard Turkey argues that the concept of
a "purchase" under Article III:8(a) should not be interpreted narrowly as requiring the
acquisition of property rights. Relying on the ordinary meaning of the verb "to
purchase" which means "the action or an act of obtaining something in exchange for
payment in money or an equivalent", Turkey argues that the notion of a "purchase"
involves some kind of payment (usually monetary) in exchange for a good. , and that
the SSI "purchases" pharmaceutical products by paying for them, even if it does not
acquire an entitlement to (or property rights over) the products. Turkey argues that the
SSI's reimbursement of the cost of outpatients' pharmaceuticals involves a "purchase" because it
is "the SSI that pays for the pharmaceutical products and thus is the ultimate buyer (or the
purchaser)".335 Turkey explains that the SSI obtains the pharmaceutical products with
the involvement of retail pharmacies. Second, Turkey further argues that, even under an
"extremely narrow"336 definition of what constitutes a "purchase" requiring the transfer of legal
title over a product, which is an interpretation that Turkey disagrees with337, there is still a
"purchase" by the SSI. This is because, as a matter of fact, the SSI does acquire title to the
pharmaceutical products at the moment a retail pharmacy scans a prescription's QR code and the
Medula system approves the provision of that pharmaceutical product to the patient. Second
Third, Turkey argues that, even if that is incorrect, Article III:8(a) still applies because the
purchase of pharmaceutical products included in the Annex 4/A list by the retail pharmacies from
the wholesalers is made on behalf of the SSI and this means that the retail pharmacies are
themselves "governmental agencies" that "purchase" pharmaceuticals for purpose of Article
III:8(a). The European Union disputes all of Turkey's arguments.

of this paragraph. Indeed, Turkey argues, the fact that the SSI pays for the cost of
pharmaceutical products included in Annex 4/A and dispensed by retail pharmacies to
patients is only one of the elements invoked by Turkey. Turkey suggests that paragraph
7.75 begin with two new sentences to capture Turkey's position more fully. 146 The
European Union considers that Turkey's proposed addition does not fit with the specific
issue discussed by the Panel in that paragraph. It appears that Turkey is attempting to
artificially create a contradiction between the current text and the text Turkey would
wish to add, such that it could invoke that contradiction in a possible appeal. This should
be rejected.
6.63. As set forth in paragraph 7.64, the Panel understands the first two of these three lines of
argument, which are the subject of the European Union's request on paragraph 7.64 (and Turkey's
related comment on paragraph 7.64), to be that (i) the SSI "purchases" pharmaceutical products by
paying for them, even if it does not acquire an entitlement to (or property rights over) the products;
(ii) even under that narrow definition of what constitutes a "purchase", with which Turkey disagrees,
there is still a "purchase" by the SSI because t he SSI does acquire title to the pharmaceutical
products. These arguments rest on mutually exclusive interpretations of the term "p urchase" in
Article III:8(a). As reflected in paragraph 7.64, the Panel's view is that these arguments are properly
characterized as alternative arguments, and the Panel remains of the view that characterizing them
as such contributes to analytical clarity in the subsections that follow. Accordingly, the Panel does
not make any change to the current wording of paragraph 7.64. However, the Panel has reformulated
paragraph 7.82 to clarify that Turkey's second line of argument rests on an alternative interpretation
of the term "products purchased" in Article III:8(a), rather than indicating that it was "made in the
alternative". The Panel recognizes that the formulation "made in the alternative" would be misleading
insofar as it was taken to mean that Turkey itself characterized its argument in this way. The Panel
considers the reformulation of this element of paragraph 7.82 to more clearly convey that the Panel
is referring to the logical relationship between the premises underlying Turkey's arguments, and not
to Turkey's own framing of its position and arguments.
6.64. The Panel has sought to accommodate Turkey's request to add a citation to paragraphs 71-73
of its second written submission, but it appears that Turkey's request relates to the wrong footnote.
Footnote 375 is a footnote accompanying the text referencing the first of the two lines of argument
referred to in paragraph 7.64. However, Turkey's description of the content of the paragraphs 71 -
73 of its second written submission confirms that it rela tes the second line of argument referred to
in paragraph 7.64 (i.e. relating to the SSI gaining an "entitlement" over pharmaceutical products
dispensed on its behalf by retail pharmacies). The Panel has added a reference to Turkey's second
written submission, paragraphs 71-73, to the pertinent sentence of paragraph 7.64.
6.65. The Panel declines Turkey's request to revise the opening sentence of paragraph 7.75. For
the sake of analytical clarity, the Panel has addressed the three alternative lines of argument
presented by Turkey separately and sequentially, in three different subsections. This paragraph is
found in the subsection of the Panel's reasoning that addresses the first line of argument advanced
by Turkey, which, as summarized in paragraph 7.64, is that the SSI "purchases" pharmaceutical
products by paying for them, even if it does not acquire an entitlement to (or property rights over)
the products. It is in this context that the Panel refers to Turkey's position as being that " the SSI
must be deemed to 'purchase' pharmaceutical products because it pays for their cost". For the
purposes of recalling the essence of Turkey's first line of argument, this is not an oversimplification.
It is in the next subsection of the Panel's reasoning that the Panel addresses Turkey's second line of
argument, i.e. that even under the narrow definition of what constitutes a "purchase", with which

146 In particular, Turkey requests the Panel to modify paragraph 7.75 as follows (with a reference to
Turkey's response to Panel question No. 33(a), para. 43):
According to Turkey, the concept of "purchase" is not limited to situations where a
governmental agency obtains legal title or entitlement to a product, meaning property
rights, but covers situations where the governmental agency obtains the right to
dispose of a product according to its own choices. This does not necessarily imply the
existence of a standard sales transaction between a seller and a public purchaser. The
Panel considers that Turkey's interpretation of the term "products purchased", i.e. the SSI must
be deemed to "purchase" pharmaceutical products because it pays for their cost, even if it does
not acquire ownership of those products, is also inconsistent with the two prior disputes in which
Article III:8(a) was interpreted and applied. More specifically, […]

Turkey disagrees, there is still a "purchase" by the SSI because t he SSI does acquire title to the
pharmaceutical products.
6.66. Turkey observes that paragraph 7.73 contains the Panel's analysis of the terms "products
purchased" in light of the object and purpose of the GATT 1994. Turkey notes that the last sentence
of this paragraph provides that "Turkey has not specified on what other basis, if not the acquisition
of ownership, the concept of a 'purchase' by a government could be distinguished from mere
financing of private purchases in circumstances where the relevant products are provided to, an d
consumed by, non-governmental recipients." First, Turkey notes that this comment appears to relate
to an issue that has never been raised by the Panel. Indeed, the Panel never inquired as to what
could distinguish the concept of a "purchase" by a governm ent from a mere financing. Second,
Turkey notes that it has extensively explained why the transactions between the SSI and the retail
pharmacies cannot be considered as "mere financing". In particular, Turkey refers the Panel to
paragraphs 23 and 51 -53 of its second written submission as well as to its response to Panel
Questions Nos. 4 and 6 and paragraph 55 of its response to Panel Question No. 35. Turkey therefore
requests the Panel to modify paragraph 7.73 to reflect Turkey's arguments on this point.147
6.67. While the European Union does not object to more extensive citations of Turkey's submissions
(as long as they do not go beyond the content of the cit ed parts of Turkey's submissions), the
European Union disagrees with Turkey's specific suggestion because it substitutes Turkey's own
views of the SSI's role for Panel findings.
6.68. The Panel wishes to clarify that when it states in paragraph 7.73 that Turkey "has not
specified on what other basis, if not the acquisition of ownership, the concept of a 'purchase' by a
government could be distinguished from mere financing of private purchases in circumstances where
the relevant products are provided to, and consumed by, non -governmental recipients", the Panel
does not mean to suggest that Turkey's submissions reflect a deficit of argumentation about why,
in Turkey's view, the Turkish system and others that are similar to it fall within the scope of Article
III:8(a). The Panel understands that Turkey has identified a series of elements (reflected in its
proposed text to add to paragraph 7.73) that, in Turkey's view, support that conclusion. The point
being made by the Panel in this paragraph is that although Turkey has identified a series of factual
elements that in its view support the conclusion that the Turkish system falls within the scope of
Article III:8(a), these elements do not specify an objective legal standard for distinguishing the
concept of a "purchase" by a government from mere financing of private purchases in circumstances
where the relevant products are provided to, and consumed by, non -governmental recipients. The
Panel has revised the text of paragraph 7.73 to make this clearer and has included a new
accompanying footnote reflecting the summary of Turkey's arguments that Turkey asks the Panel
to reflect in paragraph 7.73.

147 In particular, Turkey suggests the following changes (with reference to Turkey 's second written
submission, para. 52, and Turkey's response to Panel question No. 4(a), para. 18):
7.73. […] The Panel understands that Turkey's position is that the SSI does more than merely
engage in "financing", and that Turkey takes issue with the European Union's attempt to "reduce
the role of the SSI to the mere financing of the purchases of pharmaceutical products by
outpatients". However, even assuming that Turkey is correct in asserting that the SSI
does more than merely engage in financing, Turkey has not specified on what other
basis, if not the acquisition of ownership, the concept of a "purchase" by a government
could be distinguished from mere financing of private purchases in circumstances
where the relevant products are provided to, and consumed by, non-governmental
recipients. Turkey explained that the SSI ensures the provision of medicines to
outpatients and makes all the necessary arrangements for this purpose: it decides
which medicines are listed in Annex 4/A; it sets public prices of those medicines; it
signs contracts with pharmacies for ensuring the availability and distribution of those
medicines throughout the country; it approves the provision of the medicines to be
dispensed to outpatients through the Medula system and pays the invoice it receives
for those medicines from the pharmacies. It is the combination of all the above
elements that makes the Turkish system fall within the scope of Article III:8(a).
Turkey further explained that a universal healthcare system in which public authorities
control all aspects of the purchase and provision of prescribed medicines to
outpatients would generally fall within the scope of Article III:8(a), while this would
not be the case for a system which is voluntary, does not have universal coverage and
is financed through the contributions of the participants.

6.69. Turkey observes that paragraph 7.80 describes arguments made by India before the panel
in India – Solar Cells, which the Panel describes as analogous to the arguments presented by Turkey.
Turkey strongly disagrees with that comp arison and refers the Panel to paragraphs 52 -53 of its
response to Panel Question No. 35, where it addressed India's arguments and distinguished the facts
in India – Solar Cells from the facts in this case. Turkey therefore requests the Panel to reconsider
the content of this paragraph and at the very least to reflect Turkey's arguments differentiating the
present case from India – Solar Cells.
6.70. The European Union does not comment.
6.71. The Panel declines Turkey's request. The Panel's findings under Article III: 8(a) recall at the
outset that this provision was interpreted and applied in Canada – Renewable Energy / Canada –
Feed-in Tariff Program and India – Solar Cells. At the very beginning of its reasoning, the Panel
notes in paragraph 7.63 that this dispute is distinguishable from Canada – Renewable Energy /
Canada – Feed-in Tariff Program and India – Solar Cells to the extent that, unlike the two prior
disputes, the products that are allegedly "purchased" for purposes of Article III:8(a) and the
products that are allegedly being discriminated against for purposes of Article III:4 are the same,
i.e. pharmaceutical products included in the Annex 4/A list. In connection with this point, the Panel
includes a citation to Turkey's responses to the first set of questions, paragraph 29, and also to
Turkey's responses to the second set of questions, paragraphs 51 -53. The Panel sees no reason to
repeat this in the context of paragraph 7.80. Moreover, the Panel fails to see the relevance of this
point to the analogy being drawn by the Pa nel in paragraph 7.80 between Turkey's argument and
an argument raised by the responding party in India – Solar Cells.
6.72. Turkey observes that the last sentence of paragraph 7.84 provides that "it is undisputed
between the parties that pharmacies acquire ownership of medicines when obtaining them from
wholesalers, and that the fina l consumers (i.e. outpatients) subsequently acquire ownership of
pharmaceutical products when obtaining them from retail pharmacies". Turkey submits that to the
extent that the Panel equates the notion of ownership with the concept of a "purchase", this sentence
needs to be modified. Indeed, throughout the Panel proceedings Turkey repeatedly explained that
there is no purchase of medicines included in Annex 4/A by patients. Turkey refers in that regard in
particular to paragraphs 202, 210, 236 of its first written submission and paragraphs 77-79 of its
second written submission.
6.73. The European Union does not comment.
6.74. The Panel understands that Turkey has been consistent in arguing that there is no "purchase"
by patients of pharmaceutical products included in the Annex 4/A list. The Panel does not consider
that paragraph 7.84, as currently drafted, implies that Turkey agrees there is a "purchase" by
patients of pharmaceutical products included in the Annex 4/A list. Turkey's concern appears to be
that, insofar as the Panel equates the notion of ownership with the concept of a "purchase", it follows
that when the Panel states that it is undisputed by Turkey that the final consumers (i.e. outpatients)
acquire ownership of pharmaceutical products when obtaining them from retail pharmacies, this i s
tantamount to saying that it is undisputed by Turkey that the final consumers (i.e. outpatients)
"purchase" pharmaceutical products when obtaining them from retail pharmacies. In the Panel's
view, that is a simple non sequitur. Accordingly, the Panel sees no reason to modify paragraph 7.84.
6.75. Turkey observes that in paragraph 7.86 the Panel states that the absence of a right to take
physical possession of the goods is a strong indicator that the entity paying for these goods has not
acquired any right of ownership over them. The Panel adds that "[t]his is especially so when the
goods in question are in the nature of goods that can freely be transported and stored, such as
pharmaceutical products". Turkey requests the Panel to add a footnote, at the end of that sentence,
explaining Turkey's arguments with respect to the nature of the goods. Turkey refers in that regard
to paragraph 208 of its first written submission and paragraphs 5 and 63 -64 of its second written
submission.
6.76. While the European Union does not object to more extensive citations of Turkey's submissions
(as long as they do not go beyond the content of the cited parts of Turkey's submissions), the
European Union disagrees with Turkey's specific suggestion because it substitutes Turkey's own
views of the SSI's role for Panel findings.

6.77. The Panel understands Turkey's concern with paragraph 7.86 to be the statement that
pharmaceutical products "can freely be transported and stored". However, the point of this sentence
is that pharmaceutical goods are in the nature of goods that can freely be transported and stored in
the sense that there are no physical, logistical or practical limitations on their transportation and
storage of the type that may be encountered in the case of certain other types of goods – for
instance, electricity. The Panel does not mean to suggest that pharmaceutical products are
unregulated products that can be freely bought and sold by anyone, and/or that th ere are no legal
and regulatory limitations on how they are transported and stored. To avoid any misunderstanding
as to the Panel's intended meaning on this point , the Panel has added a footnote for clarifying the
point being made and quoting from paragraph 5 of Turkey's second written submission.
6.78. The European Union proposes to add the word "government" before the word "ownership" in
the last sentence of paragraph 7.96.
6.79. Turkey does not object to that change.
6.80. The Panel has made the revision requested by the European Union.
6.81. Turkey observes that paragraph 7.99 addresses the relevance of the degree of control which
the SSI exercises over retail pharmacies in the dispensing of pharmaceutical products included in
the Annex 4/A list. Turkey considers that the second sentence of this paragraph, which characterizes
Turkey's argument on this issue, unduly restricts the scope of its argument because Turkey has not
only argued that the SSI "instructs" and "directs" what pharmacies must do. Turkey has also pointed
out, in paragraphs 104-107 of its first written submission and paragraphs 27, 30, 48-49 and 82-85
of its second written submission, that retail pharmacies are primary healthcare service providers
under Turkish law and have duties relating to the provi sion of pharmaceutical products. Turkey
therefore requests the Panel to reflect this by adding an additional sentence at the end of paragraph
7.99 indicating that Turkey has stressed that retail pharmacies are primary healthcare service
providers under Turkish law and have duties relating to the provision of pharmaceutical products.148
6.82. The European Union does not object to more extensive citations of Tu rkey's submissions (as
long as they do not go beyond the content of the cited parts of Turkey's submissions). Any addition
should, however, be made to the first part of the paragraph, addressing Turkey's arguments, and
include a reference to the corresponding arguments of the European Union.
6.83. The Panel considers that paragraphs 7.92-7.103 of its Report comprehensively address
Turkey's argument that even if the SSI does not itself "purchase" pharmaceutical products included
in the Annex 4/A list, there is still a "purchase" covered by Article III:8(a) because private retail
pharmacies "act on behalf" of the SSI, and are, to that extent, themselves "governmental agencies"
for purposes of Article III:8(a). In the Panel's view, Turkey has not adequately explained what
purpose is served by adding the sentence in question to paragraph 7.99. As the Panel understands
it, Turkey's concern with paragraph 7.99, as reflected in its comment, is that paragraph 7.99
erroneously reduces the argument that private retail pharmacies "act on behalf" of the SSI with the
proposition that the SSI "instructs" and "directs" what pharmacies must do. In the Panel's view, this

148 In particular, Turkey requests that paragraph 7.99 be amended as follows (with references to Turkey's
first written submission, paras. 104-107; Turkey's second written submission, paras. 27, 30, 48-49 and 82-85):
7.99. The parties have engaged in extensive arguments about the extent to which the SSI
controls the actions of the retail pharmacies. Turkey essentially argues that the SSI controls all
the elements concerning the acquisition and distribution of pharmaceutical products included in
the Annex 4/A list, starting with deciding which pharmaceutical products are listed in the Annex
4/A list, the price of those products at each stage of the supply chain, including the "public price"
charged to the SSI, and how they are dispensed to patients. The European Union disagrees,
arguing that retail pharmacies freely order and purchase their pharmaceutical products from
wholesalers (also private entities) through a private sales contract, hold and manage their
inventory on their own (including holding property rights over it), and bear the risks associated
with their stock, with no SSI involvement. The parties engage in these arguments in relation to
the question whether it is correct to say that the pharmacies "act on behalf" of the SSI. Turkey
also stressed that retail pharmacies are primary healthcare service providers under
Turkish law and have duties relating to the provision of pharmaceutical products.

involves a misreading of paragraphs 7.99 and 7.100, taken in the context of the reasoning developed
in this section. Accordingly, the Panel declines to make the requested revision.
6.6 Article III:4 of the GATT 1994
6.84. Turkey requests that, in order to accurately reflect Turkey's position with respect to the
European Union's claim that the localisation measure is inconsistent with Article III:4 of the GATT
1994, the Panel add additiona l text at the end of paragraph 7.120 elaborating on Turkey's
position.149
6.85. The European Union does not object to more extensive citations of Turkey's submissions (as
long as they do not go beyond the content of the cited parts of Turkey's submissions). However, the
proposed addition is essentially already covered by paragraph 7.119, and, if needed, it should rather
be that paragraph, or footnote 467 (footnote 422 in the Interim Report), that should be amended.
6.86. The Panel has added Turkey's proposed text to the end of paragraph 7.110, in the context of
providing a global overview of the parties' respective positions. In the Panel's view, this elaboration
of Turkey's position is more appropriately presented there, given that paragraph 7.120 (and the
paragraphs immediately preceding it) are limited to summarizing the parties' arguments as set forth
in their written submissions (with additional arguments or elaborations from the parties' oral
statements and responses to questions reflected elsewhere).
6.87. Turkey requests the Panel to make the following change in paragraph 7.124: "The Panel
notes that Turkey agrees that the localisation requirement is a 'requirement' for purposes of Article
III:4 and III:8(a)." Turkey observes that in paragraph 187 of its first written submission, mentioned
in the footnote to that sentence, Turkey only stated that the localisation measure constitutes a
requirement for the purpose of Article III:8(a).
6.88. The European Union does not comment.
6.89. The Panel has qualified the fourth sentence of paragraph 7.124 to state that Turkey "seems
to agree" that the localisation requirement is a "requirement" for purposes of both Article III:4 and
III:8(a) and expanded on the accompanying footnote to elaborate on the Panel's basis for that
assessment. The Panel notes that the accompanying footnote refers to paragraph 187 and
accompanying footnote 199 of Turkey's first written submission. Turkey rightly notes that paragraph
187 states only that the localisation measure constitutes a requirement for the purpose of
Article III:8(a), and the Panel agrees with Turkey that such a statement, taken alone, would not
support the conclusion that Turkey agrees that the localisation requirement is a "requirement" for
purposes of both Article III:4 and Article III:8(a). However, footnote 199 states that "[t]he European
Union appears to agree that the localisation meas ure constitutes a 'requirement'. See European
Union's first written submission, paragraph 160." The Panel notes that paragraph 160 of the
European Union's first written submission is directed at the term "requirement" in the context of
Article III:4. Thus, Turkey's reliance on paragraph 160 of the European Union's submission (arguing
that the localisation requirement is a "requirement" for the purpose of Article III:4) to establish that
the European Union agrees with Turkey that the localisation requirement is likewise a "requirement"
for purposes of Article III:8(a) necessarily implies that Turkey accepts that, if the localisation
requirement is a "requirement" for purposes of either of those provisions, it follows that it is also a

149 In particular, Turkey requests that the Panel amend paragraph 7.120. as follows (with a reference to
paragraph 46 of Turkey's response to Panel Question No. 9):
7.120. In its second written submission, the European Union observes that apart from Turkey's
arguments on Article III:8(a) of the GATT 1994, Turkey "does not dispute that the Localisation
Requirement is inconsistent with Article III:4 of the GATT 1994" and "[t]hus, there is no
disagreement on the main elements of that provision: the domestic and imported products at
issue are like, the Localisation Requirement is a law, regulation or requirement affecting the
internal sale, offering for sale, purchase, transportation, distribution, or use of products, and it
accords less favourable treatment to imported like products." Turkey explains that given that
the obligation set out in Article III:4 does not apply to that measure, there is no need
to examine the different elements of Article III:4, including whether the measure
constitutes 'laws, regulations and requirements affecting internal sale, offering for
sale, purchase, transportation, distribution or use' or whether that measure accords
'less favourable treatment' to imported like products.

"requirement" for purposes of the other. It is for this reason that the Panel understood Turkey to
agree that the localisation requirement is a "requirement" for purposes of both Article III:4 and
III:8(a). In the light of Turkey's comment at the interim review stage, the Panel h as adjusted the
wording of paragraph 7.124 to be more qualified in this respect.
6.7 Turkey's alternative defence under Article XX(d) of the GATT 1994
6.90. Section 7.4.3 : Tu rkey observes that this section, which addresses Turkey's alternative
defence under Article XX(d) of the GATT 1994, is limited to three paragraphs in which the Panel
states, without any underlying analysis, that the arguments presented by Turkey overlap with those
presented under Article XX(b) and thus that the Panel's assessment "under Article XX(b) extends
mutatis mutandis to the analysis of the defence under Article XX(d)". While Turkey disagrees with
the Panel's conclusion, Turkey understands that the interim review stage does not serve the purpose
of rearguing the case. Turkey considers, however, that it would be appropriate for the Panel to at
least summarize the arguments presented by the parties with respect to Article XX(d) as it did for
the claim under Article XX(b) (paragraphs 7.139-7.156 in the Interim Report).
6.91. The European Union does not comment.
6.92. The Panel rejects Turkey's assertion that section 7.4.3 merely states, without any underlying
analysis, that the arguments presented by Turkey overlap with those presented under Article XX(b)
and thus that the Panel's assessment "under Article XX(b) extends mutatis mutandis to the analysis
of the defence under Article XX(d)". As elaborated in greater detail in paragraphs 7.216-7.218
(paragraphs 7.215-7.217 in the Interim Report) , the Panel explains that Turkey's argument under
Article XX(d) "is substantially the same" as its argument under Article XX(b), in particular wit h
respect to what the measure is "designed to" do; and further that, in responding to this argument,
the European Union "reiterates the same arguments" that it makes in the context of the "designed
to" step in Article XX(b) (paragraph 7.217). The brevity of the Panel's analysis in paragraphs 7.216-
7.218 does not reflect a refusal to engage with Turkey's arguments under Article XX(d). Rather, it
reflects the Panel's assessment that the overlap, as explained in paragraphs 7.216-7.218, makes it
self-evident that the Panel's assessment under Article XX(b) logically extends mutatis mutandis to
Turkey's defence under Article XX(d). In these circumstances, the Panel sees no rea son to
summarize the arguments presented by the parties with respect to Article XX(d) in the same manner
as it did for the claim under Article XX(b).
6.8 Article 3.1(b) of the SCM Agreement
6.93. Turkey states that it does not see the relevance of the reference in footnote 692 (footnote
647 in the Interim Report) to paragraph 7.226 to Turkey's responses to the first set of questions,
paragraph 79, and therefore asks the Panel to delete that reference.
6.94. The European Union does not comment.
6.95. The Panel notes that the footnote in question states, in relevant part, that "Turkey does not
dispute that the SSI 'entrusts' or 'directs' pharmacies to perform the function of 'providing good s',
i.e. pharmaceutical products, to outpatients on the terms and conditions set by the SSI" and provides
a reference to Turkey's first written submission, para. 370 and to Turkey's responses to the first set
of questions, para. 79. The Panel recalls that the cited paragraph of Turkey's first written submission
stated, in relevant part, that "it can be considered that pharmacies have been 'entrusted' or 'directed'
by the SSI to dispense pharmaceutical products to out-patients". The Panel recalls that the first set
of questions included a question, directed to Turkey, setting out the Panel's understanding that
"Turkey does not appear to disagree with the European Union's argument that the SSI 'entrusts' or
'directs' pharmacies within the meaning of Article 1.1(a)(1)(iv), to perform the function of 'providing
goods' (i.e. medicines), to out-patients on the terms and conditions set by the SSI." Paragraph 79
of Turkey's responses to the first set of questions sets out Turkey's response to that question. While
Turkey's response does not directly address that aspect of the question, the Panel considered it
sufficiently relevant to include as a citation. The Panel is not persuaded that the footnote should be
deleted.

6.9 Article X:1 of the GATT 1994
6.96. Turkey observes that paragraph 7.250 (paragraph 7.249 in the Interim Report) summarizes
the parties' positions regarding the question whether it would be appropriate for the Panel to make
additional findings under Article X:1 of the GATT 1994 if the Article III:4 claim were to be rejected.
In the final sentence of this paragraph, the Panel characterizes Turkey's position relating to the
European Union's claim that the present case differs from preceding cases in which panels exercised
judicial economy over an Article X:1 claim in similar circumstances. Turkey suggests that it would
be more accurate to include the name of the case which the European Union sought to dist inguish
in the body text.
6.97. The European Union does not comment.
6.98. The Panel agrees that the readability of paragraph 7.250 would be improved by the inclusion
of the na mes of the relevant disputes in its main body text and has revised this paragraph
accordingly.
6.10 Article XI:1 of the GATT 1994
6.99. Turkey observes that paragraph 7.260 (paragraph 7.258 in the Interim Report) introduces
the parties' positions regarding the alleged import ban challenged by the European Union. Turkey
notes that, given that the existence of that measure is disputed by Turkey, the Panel uses the phrase
"alleged import ban" in paragraph 7.266 (paragraph 7.264 in the Interim Report). Turkey asks the
Panel to consistently use the phrase "alleged import ban" when referring to the measure challenged
by the European Union under Article XI:1 of the GATT 1994 throughout the Report.
6.100. The European Union does not comment.
6.101. The Panel does not consider it necessary or appropriate to insert the word "alleged" before
every reference to the "import ban" measure in the Report to signify that the existence of that
measure is disputed by Turkey. Apart from the fact that this would entail adding the word "alleged"
up to 50 times in relation to the "import ban", it would necessitate adding the word "alleged" several
hundred times for every reference to the "localisation requirement" and "prioritization measure" –
given that the existence and precise content of these measures are also disputed by Turkey.
6.11 The prioritization measure
6.102. Turkey observes that footnote 766 (footnote 722 in the Interim Report) to the last sentence
of paragraph 7.285 (paragraph 7.283 in the Interim Report) includes a comment suggesting that
Turkey accepts certain elements of the European Union's position without disputing, as a threshold
issue, whether the European Union has identified the existence and precise content of the measure
it seeks to challenge. In order to accurately reflect Turkey's position, Turkey asks the Panel to add
certain qualifying language to the first sentence of footnote 766.150
6.103. The European Union does not comment.
6.104. The Panel understands the qualification requested by Turkey to already be implicit in the
text as currently drafted. However, to avoid any possible misunderstanding of Turkey's position, the
Panel has revised the text in the manner requested by Turkey.

150 In particular, Turkey requests the Panel amend the footnote to read as follows:
Insofar as the European Union has demonstrated the existence and precise content of
the measure, Turkey does not dispute the European Union's arguments that there can or will be
domestic and imported products that are "like products" affected by the origin-based distinction
in the prioritization measure (European Union's first written submission, paras. 366-369), and
that the measure is one "affecting the internal sale, offering for sale, purchase, transportation,
distribution, or use of products" (European Union's first written submission, paras. 372-375).

7 FINDINGS
7.1 The existence and precise content of the localisation requirement as a "single and
cohesive measure"
7.1.1 Introduction
7.1. The Panel will begin by assessing whether the European Union has established the existence
and precise content of the localisation requirement, based on the European Union's description and
characterization of it as a "single and cohesive measure".
7.2. The European Union challenges a measure it refers to as the "localisation requirement ",
whereby Turkey requires foreign producers to commit to localise in Turkey their production of certain
pharmaceutical products151, which are otherwise "excluded" from Turkey's reimbursement scheme
if commitments are not given, accepted or fulfilled. 152 The European Union argues that the
localisation requirement is a "single and cohesive measure", "[d]espite the diversity of instruments
used" in its implementation, because the individual steps pertaining to the localisation requirement
are taken within the framework of a "single" measure.153 The European Union submits that the
"existence and precise content " of the localisation requirement are "undisputed"; the Turkish
authorities themselves refer to these individual steps as part of a single localisation requirement,
and Turkey agrees with the "main factual elements" of the localisation requirement as described by
the European Union. 154 Moreover, the European Union consid ers that it has "explained [the
localisation requirement] in great detail, based on extensive evidence".155
7.3. Turkey submits that the Panel should reject all of the European Union 's claims concerning the
"localisation measure"156 because the European Union has failed to establish the "precise content"
and/or "existence" of this measure.157 Turkey argues that the European Union, having characterized
the measure as a "single and cohesive measure", "based on… 'plans'… and on 'various instruments
and tools '" implementing a localisation policy in the pharmaceutical sector, challenges a "single
measure which is composed of several different instruments ". For that reason, Turkey asserts that
the European Union was required to identify and explain which instruments and tools are components
of the localisation measure and how they operate together. Having failed to do so, Turkey considers
that the European Union consequently failed to establish the "existence" and "precise content" of
the localisation measure.158 Turkey also submits that it remains "unclear" from the European Union's

151 The parties' submissions refer variously to "pharmaceutical products", "pharmaceuticals",
"medicines", and "drugs". So do the relevant Turkish documents and instruments cited throughout this Report.
While the scope of the "pharmaceutical products" at issue in this dispute is not strictly limited to medicines and
drugs, the Panel sees no issue with respect to the varying terminology and, like the parties, uses these terms
interchangeably. Likewise, the Panel sees no issue with respect to the varying terminology used by the parties
when referring to pharmaceutical products being "locally manufactured", "locally produced", "domestically
manufactured", or "domestically produced".
152 European Union's first written submission, paras. 6-7; European Union's panel request, p. 5.
153 European Union's first written submission, para. 60.
154 European Union's first written submission, paras. 60-66; second written submission, paras. 31-34;
and opening statement, paras. 6 and 8.
155 European Union's second written submission, paras. 27-30 (referring to Appellate Body Reports,
Argentina – Import Measures, para. 5.108); opening statement, paras. 6 and 8.
156 As noted above in the descriptive part of the Report, Turkey refers to the localisation requirement as
the "localisation measure" (see fn 71). The Panel shares Turkey's understanding that "the measure that is
challenged by the European Union is not only the 'requirement' allegedly imposed by Turkey on foreign
producers to localise their production of certain pharmaceutical products in Turkey, but also the consequences
following from the commitment or lack of commitment of localisation." (Turkey's first written submission,
para. 117). There is no issue between the parties in this regard. The Panel also agrees with Turkey that the
measure challenged by the European Union could equally have been referred to as the "localisation measure".
However, the Panel does not consider that referring to the challenged measure as the "localisation
requirement" implies a more restrictive understanding of what the challenged measure is or entails, and
therefore sees no reason to deviate from the terminology used by the European Union.
157 Turkey's first written submission, paras. 116-121.
158 Turkey's first written submission, paras. 119-121; second written submission, paras. 38-39;
responses to the first set of questions, paras. 11 and 14; and responses to the second set of questions, paras.
26 and 29.

description of the localisation measure "what the components which 'form part of' the localisation
measure are".159
7.1.2 Relevant provisions
7.4. While the DSU does n ot define the concept of a "measure"160, it is well established that in
principle, any act or omission attributable to a WTO Member can be a "measure" for the purposes
of dispute settlement proceedings. 161 Therefore, a broad range of measures can be challeng ed in
WTO dispute settlement.162
7.5. In every WTO dispute, complainants are required to prove the existence of the measures at
issue. How a measure is described, characterized, and challenged by a complainant will inform the
kind of evidence a complainant is re quired to submit and the elements that it must prove in order
to establish the existence of the measure challenged. 163 For every measure, a complainant must
establish that the measure is attributable to the respondent, as well as the precise content of the
challenged measure, to the extent that such content is the object of the claims raised. 164 A
complainant may be required to demonstrate other elements, depending on the particular
characteristics or nature of the measure being challenged.165
7.6. In numerous disputes, complainants have challenged "single" measures comprised of multiple
components, elements, or instruments.166 In some of those disputes, panels and the Appellate Body
had to consider whether the challenged measure constituted a "single" measure distinct from its
constituent parts. Aside from being relevant to the question of whether the complainant has
established the existence of the challenged measure, a proper characterization of the measure(s) at
issue (as "single" or distinct measures, or otherwise) enables panels to make findings that assist the
DSB in making "sufficiently precise recommendations and rulings" to ensure the effective resolution
of WTO disputes.167

159 Turkey's responses to the second set of questions, para. 27.
160 Article 3.3 of the DSU refers to the impairment of benefits by "measures" taken by another Member.
Article 6.2 of the DSU requires that a panel request identify the "specific measures at issue". Such
identification is one of two components of the "matter referred to the DSB", which in turn forms the basis for a
panel's terms of reference under Article 7.1 of the DSU. (Appellate Body Report, US – Carbon Steel, para. 125
(referring to Appellate Body Report, Guatemala – Cement I, paras. 69-76).)
161 Appellate Body Reports, US – Anti-Dumping Methodologies (China), para. 5.122 (referring to
Appellate Body Report, US — Corrosion-Resistant Steel Sunset Review, para. 81); Argentina – Import
Measures, para. 5.100.
162 Appellate Body Reports, US – Anti-Dumping Methodologies (China), para. 5.122; Guatemala –
Cement I, fn 47 to para. 69; EC and certain member States – Large Civil Aircraft, para. 794; and Argentina –
Import Measures, paras. 5.108 and 5.110. In this vein, the Appellate Body has referred to the "comprehensive
nature of the right of Members" in Article 3.2 of the DSU, to resort to dispute settlement to preserve their
rights and obligations. (Appellate Body Report, EU – Biodiesel (Argentina), para. 6.228 (referring to Appellate
Body Report, US – Corrosion-Resistant Steel Sunset Review, para. 89).)
163 Appellate Body Reports, US – Anti-Dumping Methodologies (China), para. 5.123; Argentina – Import
Measures, paras. 5.108-5.110.
164 Appellate Body Reports, Argentina – Import Measures, para. 5.104. As to the requirement to
establish the precise content of the challenged measure, a panel's examination is informed by the
complainant's description of the alleged measure, including its "constituent elements" and "defining
characteristics", substantiated through arguments and evidence. (Appellate Body Reports, Argentina – Import
Measures, paras. 5.117-5.118, and 5.124; Russia – Railway Equipment, paras. 5.234 and 5.236.)
165 Appellate Body Reports, Argentina – Import Measures, paras. 5.104 and 5.108; US –
Supercalendered Paper, para. 5.17.
166 See e.g. Panel Reports, US – Export Restraints, paras. 8.82-8.87 and 8.130-8.131; Turkey – Rice,
paras. 7.273 and 7.280-7.281; US – COOL, paras. 7.35 and 7.44-7.61; EC – Seal Products, paras. 7.25-7.27;
Argentina – Import Measures, paras. 6.221-6.231; Indonesia – Chicken, paras. 7.618-7.619, 7.624, and
7.664-7.688; Colombia – Textiles, paras. 7.270-7.274 and 7.343-7.344; Russia – Railway Equipment, paras.
5.229, 5.243, and 5.249; and India – Solar Cells, paras. 7.24-7.28. See also Appellate Body Reports, EC – Seal
Products, para. 1.3; US – Tuna II (Mexico) (Article 21.5 – Mexico), paras. 7.1 and 7.13-7.21; and Argentina –
Import Measures, paras. 5.124 and 5.130-5.131.
167 Panel Report, US – COOL, paras. 7.47-7.48. See also Panel Reports, China – Raw Materials,
paras. 7.59-7.63 and 7.68; China – Rare Earths, paras. 7.41, 7.235, 8.1.a, 8.6.a, and 8.11.a for instances
where panels have considered challenged measures as "single measures" despite that term not being used, in
order to make such findings.

7.7. In cases involving challenges to a "single" measure comprised of multip le components 168,
panels and the Appellate Body have generally considered three main factors169: (i) the complainant's
presentation of its claim(s) in respect of the constituent components 170; (ii) the respondent 's
position171; and (iii) the operation of and relationship between the components to determine whether
they are "autonomous or independent", or more "interdependent" and integrated.172
7.8. In examining the relationship between the various components of a "single" measure, panels
and the Appellate Body have also considered the legal status of these components, the impact their
relationship has on their functioning, any substantive legal links (e.g. implementing legislation,
interpretive guidance or certain practices), and any relationship with or contribution to an
overarching policy or framework where such policy is alleged.173 Indeed, when referring to the three
main factors above, the Appellate Body indicated that "a complainant challenging a single measure
composed of several different instruments will normally need to provide evidence of how the different
components operate together as part of a single measure and how a single measure exists as distinct
from its components".174
7.9. When analysing "single" measures, some panels have considered whether certain instruments
are separate measures, or merely evidence of measures and their components. For example, in
India – Solar Cells , the panel addressed certain domestic content requirement (DCR) measures
requiring solar power developers to purchase or use solar cells or modules of domestic (Indian)
origin in order to enter into and maintain certain power purchase agreements. These DCR measures
were set forth, reproduced or otherwise reflected in a series of documents. The panel therefore had
to decide whether the documents reflecting the DCR measures were themselves distinct
measures.175 In its analysis, the panel referred to the wording of the United States ' panel request,
the parties' submissions throughout the proceedings and the interconnectedness of the documents
underlying each DCR measure. These factors all favoured treating the DCR measure for each of three
"batches" as a measure, reflected or incorporated in the various documents. The underlying
documents and instruments were not treated as distinct measures.176

168 The Panel uses the term "components" to refer to the constituent elements of a "single" measure,
that make up the content of that measure. Some previous panels have used the terms "instruments",
"requirements" or "measures" when referring to the constituent elements of a single measure.
169 See Panel Reports, US – COOL, para. 7.50; Argentina – Import Measures, para. 6.222; Appellate
Body Report, Argentina – Import Measures, fn 541 to para. 5.108.
170 A complainant's characterization of the challenged measure as a "single measure" is usually but not
necessarily the starting point for a panel's analysis. See Panel Reports, China – Rare Earths, paras. 7.41,
7.235, 8.1.a, 8.6.a, and 8.11.a; China – Raw Materials, paras. 7.59-7.63 and 7.68.
171 In some cases, it is undisputed between the parties that multiple components may be analysed as a
"single" measure. For example, in EC – Seal Products, both parties agreed that the "EU Seal Regime" at issue
should be treated as a single measure. (Panel Reports, EC – Seal Products, para. 7.26.)
172 Past panels and the Appellate Body have examined whether components operate in their "own right",
have their own "functional life", do something "independently" to "independently give rise to a WTO violation"
or have "autonomous status". In Indonesia – Chicken, that panel considered that "co-existence in the same
legal instrument" or a "connection between different legal instruments" is not enough to assume that
components operate as a single measure, "particularly" where they "operate in their own right". Rather, a
panel must look at whether components are "inter-dependent in respect of the overall impact assessed". (Panel
Report, Indonesia – Chicken, paras. 7.664-7.688.)
173 For example, in EC – Seal Products, the panel and Appellate Body treated the EU Seal Regime (a
Basic Regulation and an Implementing Regulation implementing the Basic Regulation) as a single measure. The
regulations operated "in conjunction with each other in governing the importation and the placing of seal
products on the EU market". Further, the Implementing Regulation did not "operate on its own", having been
adopted to implement the Basic Regulation. (Panel Reports, EC – Seal Products, para. 7.26.) In Indonesia –
Chicken, the lack of structural interdependence between the component measures, which could each be
terminated without affecting other component measures, was fatal to there being a "single" measure. (Panel
Report, Indonesia – Chicken, paras. 7.664-7.688.) On the relationship between components and policies, see
e.g. Appellate Body Reports, Argentina – Import Measures, paras. 5.126, and 5.129-5.132; US – Tuna II
(Mexico) (Article 21.5 – Mexico), para. 7.16; and Panel Report, Indonesia – Chicken, paras. 7.664-7.688.
174 Appellate Body Reports, Argentina – Import Measures, para. 5.108 and fn 451 to para. 5.108
(referring to Panel Reports, Argentina – Import Measures, para. 6.144; US – COOL, para. 7.50).
175 Panel Report, India – Solar Cells, paras. 7.24-7.28.
176 Panel Report, India – Solar Cells, para. 7.28.

7.1.3 Main arguments of the parties
7.10. In its first written submission, the European Union explains the localisation requirement by
reference to: (i) its general features and objectives; (ii) why it constitutes a "single and cohesive
measure"; (iii) the institutional set -up; (iv) the process and "phases" of localisation; (v) its
implementation in general; (vi) its implementation through various "phases"; and (vii) its application
to individual companies and their products. 177 According to the European Union, the localisation
requirement is "a single and cohesive measure" because "[d]espite the diversity of instruments used,
and despite the fact that much of the detailed implementation of the Localisation Requirement takes
place in bilateral communications between Turkish auth orities and individual pharmaceutical
companies, there is no doubt that all of these st eps are taken within the framework of a single
Localisation Requirement, in order to achieve the objectives described above. "178 The European
Union adds that "many of the relevant legal instruments and documents expressly refer, for example,
to the Tenth Development Plan 2014-2018 or to the Action Plan of the 64th Government", and states
that Turkish authorities "have repeatedly emphasized that the Localisation Requirement is a single,
cohesive measure, and that individual steps such as the announcements on the removal of certain
products from the Reimbursement List are taken within the framework of that measure".179
7.11. Turkey responds that the European Union has failed "to precisely identify the components of
the measure and a fortiori to provide evidence of how those components operate together as part
of a single measure".180 According to Turkey, the European Union claims that the localisation policy
is "based on… 'various instruments and tools'" and therefore challenges a single measure "composed
of several different instruments, including plans and other instruments "181, without, however,
identifying those instruments and tools precisely or explaining which "instruments and tools "
properly consti tute the components of the localisation requirement and how those components
operate together. 182 According to Turkey, such identification and explanation are essential to
establish the "precise content" of the measure and have important consequences for so me of the
claims.183 Turkey submits that it is not for Turkey, as the responding party, to second -guess which
of the elements referred to by the European Union in its first written submission, constitute the
"legal instruments that form part of, or give eff ect to " the localisation measure and, thereby,
constitute components of the measure; rather, it is for the complainant to establish the existence
and precise content of the measure it challenges and therefore for that party to precisely identify
the legal instruments forming part or giving effect to the measure.184 Turkey submits that "by failing
to do so the European Union has failed to demonstrate the existence and precise content of the
measure".185
7.12. In its second written submission, the European Union stat es that it "has explained in great
detail, based on extensive evidence, what the components of the measure are and how they
interrelate", and that it "is unclear from Turkey's submission what sort of explanation Turkey would
like, or what it considers to b e lacking".186 As to the applicable legal standard, the European Union
submits that there "is no requirement for a complainant to separately list or qualify each of the
'components' of a measure, or explain how each of them relates to all of the others", and that Turkey
errs insofar as it reads the Appellate Body report in Argentina – Import Measures as supporting such
a requirement.187 According to the European Union, the issue in that case was whether or not several
"components" are sufficiently related, or operate together, such that they can be described as a
single measure as opposed to several different measures. By contrast, "the issue of explaining how
different components of a measure operate together does not present itself in this case, because …
it is undisputed that the Localisation Requirement exists as a measure in its own right, and that the

177 European Union's first written submission, section 2.2.2.
178 European Union's first written submission, para. 60.
179 European Union's first written submission, para. 60. See also European Union's first written
submission, para. 62.
180 Turkey's first written submission, para. 120. See also Turkey's first written submission, para. 119
(citing Appellate Body Reports, Argentina – Import Measures, para. 5.108).
181 Turkey's first written submission, para. 119 (referring to Appellate Body Reports, Argentina – Import
Measures, para. 5.108).
182 Turkey's first written submission, para. 120.
183 Turkey's first written submission, para. 120.
184 Turkey's first written submission, para. 121.
185 Turkey's first written submission, para. 121.
186 European Union's second written submission, para. 27.
187 European Union's second written submission, para. 28.

various elements cited by the EU form part of it or of its implementation. "188 According to the
European Union, while the parties disagree on a number of fac tual aspects as well as on the legal
characterization of the measure, "the existence and precise content of the Localisation Requirement
are in fact undisputed".189
7.13. In its second written submission, Turkey reiterates that it "takes issue with the fact that the
European Union referred to the localisation measure as a single and cohesive measure which is
based on a number of plans, instruments or tools but that the European Union failed to identify those
instruments and tools precisely ".190 Turkey states that it is not for it to guess "which instruments
constitute the components of the measure that the European Union challenges", and that by failing
to identify them preci sely, "the challenged measure becomes a moving target. "191 According to
Turkey, "this is particularly relevant in the context of the European Union 's claim under Article X:1
of the GATT 1994 where the European Union has submitted that not all legal instruments that form
part, or give effect to the localisation requirement have been published promptly".192 Turkey states
that the European Union "should have identified the specific instruments and tools which, according
to the European Union, form part or give e ffect to the localisation measure", and that, by failing to
do so, "the European Union failed to identify the precise content and scope of the measure it
challenges."193
7.1.4 Assessment by the Panel
7.14. The Panel recalls that how the localisation requirement is desc ribed, characterized and
challenged by the European Union informs the kind of evidence the European Union is required to
submit and the elements that it must prove to establish the existence of the localisation
requirement.194 In assessing whether the local isation requirement is a "single" measure, the Panel
will refer to the European Union 's presentation of its claims (including what the content of the
measure is), Turkey 's position on the issue, and the operation of and relationship between the
various com ponents, including, where relevant, their relationship with an overarching policy or
framework.195 The Panel adopts a holistic approach in analysing these elements, and in addressing
whether the European Union has established the existence and/or precise content of the localisation
requirement as a "single measure".196
7.15. Beginning with how the European Union has characterized and described the content of the
measure that it is challenging, the Panel recalls that the European Union 's panel request identifies
the three measures at issue in this dispute as (i) the localisation requirement; (ii) the import ban on
localised products; and (iii) the prioritization measure. The panel request then lists 28 different legal
instruments or other types of documents, with the preface that the three measures "are put in place
and evidenced by, and are implemented and administered through, inter alia, the following legal and
other instruments, considered alone and in any combination ".197 The panel request is then divided
into three sections, each devoted to one of the measures. These sections in turn contain a sub -
section headed "identification of the specific measure at issue" containing a narrative description of
the relevant challenged measure.198

188 European Union's second written submission, para. 29.
189 European Union's second written submission, para. 31. The European Union lists examples of how it
considers that Turkey explains that the localisation requirement is based on Turkish law, and the main factual
elements of the localisation requirement with which it considers Turkey agrees. (European Union's second
written submission, paras. 32-33.)
190 Turkey's second written submission, para. 38.
191 Turkey's second written submission, para. 39.
192 Turkey's second written submission, para. 39.
193 Turkey's second written submission, para. 39.
194 Appellate Body Reports, US – Anti-Dumping Methodologies (China), para. 5.123; Argentina – Import
Measures, paras. 5.108-5.110.
196 See also the holistic approach taken by the panel and upheld by the Appellate Body concerning the
precise content of the TRRs measure and its operation as a single measure in Argentina – Import Measures.
(Appellate Body Reports, Argentina – Import Measures, paras. 5.133, 5.164 (quoting Panel Reports, Argentina
– Import Measures, para. 6.119.)
197 European Union's panel request, p. 1.
198 See also preliminary ruling by the Panel, para. 3.8.

7.16. The narrative description of the localisation requirement in the panel request refers to the
measure in the singular, and describes the challenged measure as follows:
Turkey requires foreign producers to commit to localise in Turkey their produ ction of
certain pharmaceutical products. If such commitments are not given, are not accepted
by Turkish authorities, or are not fulfilled, the pharmaceutical products concerned are
excluded from the scheme for the reimbursement of the pharmaceutical produ cts sold
by pharmacies to patients operated by Turkey 's social security system (the
"reimbursement scheme").199
7.17. Based on the foregoing, the Panel understands the European Union to define the localisation
requirement as a composite measure, comprising two elements, whereby (i) Turkey requires foreign
producers to commit to localise in Turkey their production of certain pharmaceutical products, and
(ii) where commitments are not given, not accepted or not fulfilled relevant products are no lon ger
reimbursed by the SSI.200 This, in the Panel's view, serves as the description and characterization
of the measure, which identifies the precise content of the measure that must be sufficiently
established through evidence. The European Union's statemen t that this measure is "put in place
and evidenced by, and [is] implemented and administered through" a variety of legal instruments
and documents confirms that the legal instruments and documents are being referred to for the
purpose of evidencing the existence of the measure (as described above) and explaining the means
through which it is put in place. In the Panel's view, this statement, and others like it, do not have
the effect of equating the listed instruments and documents with the content of the m easure itself.
Rather, they serve an evidentiary and explanatory purpose. Thus, the description of the content of
the localisation requirement is entirely independent from the instruments through which that
measure is evidenced and implemented.
7.18. This conclusion is buttressed by the fact that the European Union does not actually refer to
any legal instruments or documents in the narrative description of the localisation requirement in its
panel request. It is further reinforced by how the European Union refers to the measure, and related
instruments, in its submissions. The European Union, in its first written submission, describes the
localisation requirement in the same or similar terms as in its panel request.201 While the European
Union makes several refere nces to "instruments", none of these references blur the distinction
between what the measure at issue is, on the one hand, and how that measure is evidenced,
implemented and/or administered (i.e. through various instruments), on the other hand. To the
contrary, such references reinforce that distinction. For example, the European Union refers to
instruments "implementing" a "localisation policy "202, "outlining" processes and phases of the
localisation requirement203, "governing" the reimbursement system 204, "imposing" the localisation
requirement205, and "giving effect to "206 the localisation requirement. Such statements serve to
distinguish what the measure is, on the one hand, and the legal instruments and documents through
which that measure is evidenced and implemented, on the other hand.
7.19. The Panel now turns more specifically to the question of how the European Union has
presented its arguments on whether the localisation requirement (as described above) can be
examined as a "single measure" for purposes of the Panel's findings. The Panel recalls that in its first
written submission, the European Union refers to the localisation requirement as a "single and
cohesive measure" which is implemented "through various instruments and tools".207 The European
Union repeats its description of the localisation requirement in the same or similar terms as in its
panel request208 before describing in greater detail the localisation requirement 's general features
and objectives, institutional set-up, and the process and phases of its implementation in practice.209
The European Union also explains why, "[d]espite the diversity of instruments used … there is no

199 European Union's panel request, p. 5.
200 European Union's panel request, p. 5.
201 European Union's first written submission, paras. 1 and 6-7.
202 European Union's first written submission, paras. 39, 58, 60, and 256.
203 European Union's first written submission, para. 76.
204 European Union's first written submission, para. 192.
205 European Union's first written submission, para. 231.
206 European Union's first written submission, para. 249.
207 European Union's first written submission, section 2.2.2.2, and in particular para. 58.
208 European Union's first written submission, paras. 1, and 6-7.
209 European Union's first written submission, section 2.2.2.2.

doubt that all of these steps are taken within the framework of a single Localisation Requirement".210
The Panel notes that the European Union also presents the localisation requirement as a "single"
measure in its second written submission and opening statement at the substantive meeting.211
7.20. The European Union submits that the localisation requirement and its individual "steps", such
as the passivization of certain pharmaceutical products in the Annex 4/A list, pursue a localisation
policy, which itself is anchored in broader policies such as the Tenth Development Plan 2014 -2018
or the Action Plan of the 64th Government.212 The European Union further argues that various
evidence, including statements by Turkish ministers and institutions like the SSI, situates local
production, commitments from pharmaceutical companies and treatment of products in the
Annex 4/A list within the framework of the "localisation requirement ". According to the
European Union, such evidence includes213:
a. public and private communications, issued jointly or separately by the TMMDA and the SSI
to pharmaceutical companies importing pharmaceutical products to Turkey, to commit to
localise production of certain products and, failing that, announcing "the removal of certain
products from the Reimbursement List"214;
b. documentation indicating that where the relevant pharmaceutical company does not
submit a commitment, or where a commitment is refused or not fulfilled on time, the
relevant products are "deactivated, and later potentially delisted " from the Annex 4/A
list215;
c. express references in many relevant legal instruments and documents to the Tenth
Development Plan 2014-2018 or the Action Plan of the 64th Government216;
d. statements by Turkish authorities concerning a "localisation policy" carried out as part of
the Tenth Development Plan 2014 -2018 and 64 th Government Action Plan, including by
the Turkish Minister of Economy and the SSI217; and
e. reference to a "process of localisation of imported drugs" as "[o]ne of the most important
steps o f indigenization in healthcare " in a policy document titled "Structural
Transformation Program in Healthcare Industries".218
7.21. The Panel considers that the European Union's description of these elements and the evidence
it relies on, would prima facie support the conclusion that there exists a localisation policy, enacted

210 European Union's first written submission, paras. 60 and 62.
211 Similarly, in its second written submission, the European Union responds to Turkey's arguments as to
why the European Union has failed to establish the existence and precise content of the localisation
requirement as a single and cohesive measure. (European Union's second written submission, section 2.2.3.)
The European Union's opening statement argues along similar lines, also treating the localisation requirement
as a single and cohesive measure. (European Union's opening statement, paras. 5-9.)
212 European Union's first written submission, para. 60.
213 See for example European Union's first written submission, paras. 59-66 (referring to Social Security
Institution, Rejoinder in court proceedings raised by the Association of Research-Based Pharmaceutical
Companies (AIFD) before the Turkish State Council, Case 2017/1308, 21 September 2017 (SSI Rejoinder)
(Exhibit EU-21); EU Commissioner for Trade, Letter to the Turkish Minister of Economy, 5 April 2017 (Exhibit
EU-28); Turkish Minister of Economy, Letter to the EU Commissioner for Trade, 19 June 2017 (Exhibit EU-29);
Social Security Institution, Defense in court proceedings raised by the Association of Research-Based
Pharmaceutical Companies (AIFD) before the Turkish State Council, Case 2017/1308, 29 June 2017 (SSI
Defense) (Exhibit EU-30); and H. Eroğlu, Vice President of the TMMDA, "Local Production", presentation at the
Symposium on Rational Approach to Current Issues concerning Medicines, Ankara, 7-9 October 2016 (Exhibit
EU-40)).
214 European Union's first written submission, paras. 59-60.
215 European Union's first written submission, para. 59 (referring to H. Eroğlu, Vice President of the
TMMDA, "Local Production", presentation at the Symposium on Rational Approach to Current Issues concerning
Medicines, Ankara, 7-9 October 2016 (Exhibit EU-40)).
216 European Union's first written submission, paras. 60 and 66 (referring to SSI Rejoinder (Exhibit EU-
21); EU Commissioner for Trade, Letter to the Turkish Minister of Economy, 5 April 2017 (Exhibit EU-28);
Turkish Minister of Economy, Letter to the EU Commissioner for Trade, 19 June 2017 (Exhibit EU-29); and SSI
Defense (Exhibit EU-30)).
217 Ibid.
218 European Union's first written submission, paras. 64-66.

as part of a broader governmental programme, with its own policy documentation such as the
Structural Transformation Program in Healthcare Industries. The Panel also considers that, in
practice, much of this measure is evidenc ed by and implemented through individual bilateral
communications between Turkish authorities (especially the TMMDA and SSI) and foreign
pharmaceutical companies announcing whether certain products fall within the scope o f the
localisation requirement, the treatment of relevant commitments and any "passivization" or removal
from the reimbursement scheme through the Annex 4/A list. The Panel considers that, in the absence
of any rebuttal arguments from Turkey, the nature of the explanation provided by the European
Union in its first written submission would suffice to establish, prima facie, that the localisation
requirement may be examined as a single measure for the purposes of this dispute.
7.22. While Turkey presents its arguments in terms of the European Union's failure to establish the
"existence" and "precise content" of the localisation requirement 219, the Panel understands that
Turkey does not deny that there is, in fact, one or more measures in place through which foreign
producers of pharmaceutical products are required to submit to Turkish authorities commitments to
localise in Turkey their production of certain products as a condition for those products to remain
included and active in the Annex 4/A list. 220 In this connection, the Panel notes that the European
Union lists221 the following points of agreement between the parties:
• products may be de -activated or "passivized", including as "a result of the localisation
measure";
• pharmacies invoice the SSI for the price of the medicines they supplied to patients as well
as other fees;
• on top of the reimbursed price, patients must pay a "contribution fee" and a "prescription
fee" to pharmacies in order to receive the medicines;
• medicines are provided to inpatients directly, through a system that differs from the one at
issue in this dispute;
• the localisation requirement "derives from" several high-level instruments adopted by the
Turkish government, corresponding to those cited by the European Union;
• the localisation requirement "entails production activities in Turkey";
• the TMMDA selects which imported products will be subject to localisation;
• the measure is implemented in five phases without a set timeline, two of which have already
been implemented, as described by the European Union;
• various Turkish authorities including the TMMDA, the HISC, the LAC and the SSI are
"involved in the implementation of the localisation measure";
• all reimbursable medicines (i.e. all pharmaceutical products with a valid marketing
authorization and sales permit included in the Annex 4/A list) are "subject to localisation";
• the TMMDA identifies the companies whose products are subject to localisation, informs
them of possible de -activation, invites them to submit commitments (i.e. "a declaration
whether or not a pharmaceutical company will relocate within a specified period of time the
production of the relevant pharmaceutical products to Turkey";)
• if those commitments are accepted, variation applications must be submitted;
• companies must submit prog ress reports, and may request additional time, or the
localisation of an alternative product;
• if there is no l ocalisation commitment, a period of one year is accorded to the company to
"reconsider its position"; if it does not, or if its commitment has not been accepted or fulfilled,
the products will be "passivized" or de-activated;
• the status of a product as activated or de-activated may be updated;

219 Turkey's first written submission, section VI.A; second written submission, section III.A.
220 See European Union's second written submission, paras. 32-34 (referring to Turkey's first written
submission, paras. 6, 79, 82, 108, 111-114, 128-142, and 148-163).
221 European Union's second written submission, para. 33.

• the different phases have been implemented according to a timeline, which by and large
corresponds to the evidence set out by the European Union. Turkey disagrees that all phases
should be considered as ongoing, pointing out that Phases 3 and 4 have so far not been
implemented, however, it does accept that there is no set timeline, that products have been
shifted from Phases 3, 4 or 5 to Phases 1 or 2, and presumably also that Phases 3 and
onwards have not been cancelled, such that they continue to exist as parts of the measure.

7.23. Accordingly, the Panel understands Turkey's position to be that there is in fact a localisation
requirement, i.e. one or more measures in place through which foreign producers of pharmaceutical
goods are required to submit to Turkish authorities commitments to localise production if those
products are to be included i n the Annex 4 /A list .222 The Panel understands Turkey 's argument
regarding the European Union 's failure to establish the "existence" and "precise content " of the
measure to be limited to its contention that the European Union was required to specifically an d
exhaustively identify the "various instruments and tools" implementing the localisation requirement
and how they interrelate, because they are component parts of the "single" challenged measure.223
The Panel therefore understands Turkey 's argument to be limited to the question of whether a
precise identification of all of the instruments that in Turkey 's view are "components" of the
localisation requirement is a prerequisite for making findings on the European Union's claims against
the localisation requirement as a "single and cohesive measure". This appears to be Turkey's position
throughout its written submissions, responses to Panel questions and statements at the substantive
meeting.224
7.24. For the reasons given above, the Panel does not agree with the premise of Turkey's argument,
namely, that the European Union has characterized and described the content of the measure at
issue by reference to legal instruments and documents. In the Panel 's view, Tu rkey's argument
conflates the content of the localisation requirement with the instruments through which that
measure is evidenced and implemented. In some cases, a complaining party may describe and define
the content of the challenged measure by referenc e to certain legal instruments and documents,
and in such a way as to equate the content of the measure to one or more legal instruments or
documents, and make them constitutive components of the measure itself. In such cases, it may
well follow that a complaining party is required to specifically and exhaustively identify all such legal
instruments and documents to properly identify the content of the challenged measure. In this case,
however, the European Union has not defined the content of the measure b y reference to, or in
terms of, legal instruments or documents. As already explained above, the precise content of the
localisation requirement, as described and characterized by the European Union in its panel request,
is that Turkey requires foreign producers to commit to localise in Turkey their production of certain
pharmaceutical products, and where commitments are not given, not accepted or not fulfilled
relevant products are no longer reimbursed by the SSI.
7.25. Consequently, the Panel disagrees with Turkey's argument that the European Union fails "to
precisely identify the components of the measure and a fortiori to provide evidence of how those
components operate together as part of a single measure ".225 The Panel also rejects Turkey 's
argument that the European Union was required "to precisely identify the legal instruments forming
part or giving effect to the measure"226, and that "by failing to do so the European Union has failed
to demonstrate the existence and precise content of the measure."227
7.26. The Panel is also compelled to note that Turkey's argument is, to some extent, a reformulation
of the same argument that the Panel has already considered in the context of assessing whether the
European Union's panel request complies with the requirement, in Article 6.2 of the DSU, to identify
the "specific measures at issue". The Panel recalls that in a request for a preliminary ruling, Turkey

222 In this vein, the European Union points to examples whereby Turkey seemingly acknowledges the
localisation requirement. See European Union's second written submission, paras. 32-34 (referring to Turkey's
first written submission, paras. 6, 79, 82, 108, 111-114, 128-142, and 148-163).
223 See Turkey's responses to the first set of questions, paras. 13-14; responses to the second set of
questions, paras. 23-24, 26 and 29.
224 See Turkey's first written submission, paras. 119-121; second written submission, paras. 38-39;
responses to the first set of questions, paras. 11, 14; and responses to the second set of questions, paras. 23,
24, 26, and 29.
225 Turkey's first written submission, para. 120.
226 Turkey's first written submission, para. 121. See also Turkey's second written submission,
paras. 38-39.
227 Turkey's first written submission, para. 121. See also Turkey's second written submission, para. 39.

argued that the European Union failed to identify "the specific measures at issue " pursuant to
Article 6.2 of the DSU. Turkey argued that for each of the three measures, the European Union was
required to specify individually and cumulatively (i) the nature of the measures at issue as written
or unwritten; (ii) the content of the measures, including the products that are the subject of the
measures and the requirement(s) concerned; and (iii) the legal instruments underpinning each of
the measures at issue in its panel request.228
7.27. In its preliminary ruling of 10 July 2020, the Panel found that the panel request satisfies the
requirement, in Article 6.2 of the DSU, to identify the "specific measures at issue ".229 The Panel
found that the European Union adequately identified the "content" of the measures "in terms of the
requirements it was challenging in the narrative descriptions of the measures in the panel
request".230 The Panel did not agree with Turkey 's view that the European Union was required to
specify the legal instruments underpinning each of the measures at issue in its panel request. The
Panel instead conclu ded that "the narrative descriptions of the measures in the European Union 's
panel request are sufficient for purposes of compliance with Article 6.2 of the DSU, particularly in
light of the fact that the European Union provided an illustrative list of rel evant legal instruments
that it contends put in place, evidence, implement, and administer the challenged measures ".231
Similarly, the Panel now concludes that the evidence and arguments before it are sufficient to
establish the precise content of the local isation requirement as outlined in the narrative of the
European Union's panel request.
7.28. Moreover, the Panel does not consider that Turkey's argument finds support in the Appellate
Body's statement, in Argentina – Import Measures , that when dealing with a "single measure
composed of several different instruments ", a complainant will normally need to provide evidence
of "how the different components operate together as part of a single measure and how a single
measure exists as distinct from its components".232 In that case, the complainants established that
Argentina required importers and other economic operators to undertake one or more of five trade-
related requirements (TRRs), as a condition to import goods or to obtain certain benefits, and that
Argentina had imposed one or more of the five TRRs in different combinations.233 The panel agreed
with the complainants that the five TRRs together constituted a "single" measure, and that a
separate conclusion on each TRR would "go against the nature of the measure " and not reflect the
measure's operation in practice or capture some of its main features.234 The Appellate Body upheld
the panel's findings about the operation of the TRRs measure, and that the "components" of the
measure (referenced by the Appellate Body in the above-cited statement) were the five TRRs that,
according to the complainants' own characterization, constituted the content of the measure at issue.
7.29. In this case, Turkey 's reliance on the Appellate Body 's statement in Argentina – Import
Measures, concerning the need for a complaining party to provide evidence of how the different
"components" of a single measure operate together, seems to treat the legal and other instruments,
referenced by the European Union as evidence of the existence of the localisation requirement, as
"components" of that measure.235 However, as elaborated further above, the Panel does not consider
that the European Union has characterized the localisation requirement by reference to any legal
instruments or documents in a way that would make such instruments and documents "components"
of the challenged measure in the same way that the five TRRs were "components" or "the constitutive
elements"236 of the single TRRs measure in Argentina – Import Measures.
7.30. Finally, the Panel observes that Turkey 's argument regarding the European Union 's alleged
failure to precisely identify the components of the localisation r equirement and resulting impact on

228 Preliminary ruling by the Panel, paras. 1.3 and 3.10.
229 See Annex A-3.
230 Preliminary ruling by the Panel, para. 3.13.
231 Preliminary ruling by the Panel, para. 3.14.
232 Appellate Body Reports, Argentina – Import Measures, paras. 5.108 and 5.124.
233 Panel Reports, Argentina – Import Measures, para. 6.221.
234 Panel Reports, Argentina – Import Measures, para. 6.228.
235 For example, Turkey argues that "European Union did not precisely identify the components of the
measure and failed to explain how they interrelate. In particular, taking into account that the European Union
described the 'localisation measure' as being implemented through 'various legal instruments and tools' and
'embodied through […] specific laws and decrees' and that it relied on those instruments to develop its claims,
the European Union should have precisely identified those legal and other instruments." (Turkey's responses to
the second set of questions, para. 26.)
236 Appellate Body Reports, Argentina – Import Measures, para. 5.108.

Turkey's ability to develop its defence, while presented as a general argument relevant to all of the
European Union's claims, seems to be primarily, if not exclusively, relevant to the European Union's
claim under Articl e X:1 of the GATT 1994. 237 However, for reasons given later in this Report, the
Panel exercises judicial economy over the European Union 's claim under Article X:1. 238 Insofar as
Turkey's argument is related to the European Union 's claim under Article X:1 of the GATT 1994, it
has been rendered moot.
7.1.5 Conclusion
7.31. The Panel finds that the European Union has established the existence of the localisation
requirement as a single measure, whereby (i) Turkey requires foreign producers to commit to localise
in Turkey their production of certain pharmaceutical products; and (ii) where commitments are not
given, not accepted or not fulfilled, affected products are no longer reimbursed by the SSI.
7.2 Article III:8(a) of the GATT 1994
7.2.1 Introduction
7.32. The Panel has found that t he European Union has established the existence and precise
content of the localisation requirement as a "single measure". The Panel now addresses Turkey 's
assertion that the localisation requirement falls within the scope of the government procurement
derogation in Article III:8(a) of the GATT 1994 and is, for that reason, not subject to the national
treatment obligation of Article III:4 of the GATT 1994.239
7.33. Turkey submits that the localisation requirement falls within the scope of Article III:8(a),
arguing that it is a "law, regulation or requirement governing procurement " of pharmaceutical
products, that the procurement of pharmaceutical products is done by a "governmental agency" and
entails the "purchase" of those products "for governmental purposes", and is not done "with a view
to commercial resale".240
7.34. The European Union argues that the localisation requirement is not protected by
Article III:8(a), because it is not a "law, regulation or requirement governing procurement ", does
not involve the "purchase" of products by "governmental agencies ", does not involve any

237 According to Turkey, the European Union's failure to precisely identify the components of the
localisation requirement as a "single and cohesive measure" is "particularly relevant" in the context of the
European Union's claim under Article X:1 of the GATT 1994, where the European Union has submitted that not
all legal instruments that form part of, or give effect to the localisation requirement have been published
promptly. (Turkey's second written submission, para. 39.) In its first set of questions to the parties, the Panel
asked Turkey whether the alleged failure to precisely identify the components of the localisation requirement is
exclusively relevant to the claim under Article X:1 and, if not, to please elaborate on how this alleged failure
has affected Turkey's ability to develop its arguments under Articles III:8(a), XX(b) and/or XX(d) of the GATT
1994, and/or under Article 3.1(b) of the SCM Agreement. In its response, Turkey reiterated that "such failure
has important consequences, for instance with regard to the European Union's claim under Article X:1 of the
GATT 1994", and reiterated that "the lack of appropriate identification of the precise content of the measure
affected Turkey's ability to develop its arguments under the Article X:1 GATT claim." Turkey offered no
indication how this alleged failure has affected Turkey's ability to develop its arguments under the other
referenced provisions. (Turkey's responses to the first set of questions, para. 15.)
238 See section 7.5.4.
239 The Panel addresses the government procurement derogation in Article III:8(a) before making any
findings under Article III:4 of the GATT 1994 or Article 2.1 of the TRIMS Agreement, bearing in mind that
measures satisfying the requirements of Article III:8(a) are not subject to the national treatment obligations
set out in other paragraphs of Article III. The Panel does not consider that the nature of Article III:8(a) as a
derogation from the obligations in Article III necessarily mandates this order of analysis in all cases, and notes
that the panel in India – Solar Cells addressed the claims under Article III:4 and Article 2.1 before addressing
the applicability of the Article III:8(a). (Panel Report, India – Solar Cells, para. 7.42.)
240 Turkey's first written submission, paras. 175-241; second written submission, paras. 40-95;
responses to the first set of questions, paras. 16-43; opening statement, paras. 10-70; closing statement,
paras. 9-23; responses to the second set of questions, paras. 31-55; and comments on responses to the
second set of questions, paras. 6-16.

procurement or purchase "for governmental purposes ", and any such procurement and purchase
would be "with a view to commercial resale".241
7.2.2 Relevant provisions
7.35. Article III:8(a) of the GATT 1994 provides:
The provisions of this Article shall not apply to laws, regulations or requirements
governing the procurement by governmental agencies of products purchased for
governmental purposes and not with a view to commercial resale or with a view to use
in the production of goods for commercial sale.
7.36. By its terms, Article III :8(a) is a "derogation limiting the scope of the national treatment
obligation" in Article III of the GATT 1994.242 This means that measures satisfying the requirements
of Article III:8(a) are not subject to the national treatment obligation set out in Article III:4.
7.37. It is clear from the text of Article III:8(a) that a series of elements must be satisfied for a
measure to fall within the scope of the government procurement derogation:
a. the challenged measure must fall within the scope of "laws, regulations, or requirements
governing … procurement";
b. it must involve a "purchase" of products by a "governmental agency";
c. the products must be purchased "for governmental purposes"; and
d. the products must not be purchased "with a view to commercial resale or with a view to
use in the production of goods for commercial sale".
7.38. Article III:8(a) has been interpreted and applied in two prior sets of WTO dispute settlement
proceedings, Canada – Renewable Energy / Canada – Feed-in Tariff Program and India – Solar Cells,
and the panel considers that the Appellate Body and panel reports (as modified on appeal) in those
disputes provide useful guidance on each of these elements.
7.39. With respect to the first element above, the Appellate Body clarified that "the word
'procurement' [in Article III:8(a)] refers to the process pursuant to which a government acquires
products."243 The Appellate Body observed that the ordinary meaning of the word "governing" is
"constitut[ing] a law or rule for"244, and considered that Article III:8(a) thus requires an "articulated
connection" between "the laws, regulations, or requirements" and the "procurement", in the sense
that the act of "procurement" is undertaken "within a b inding structure of laws, regulations, or
requirements".245
7.40. With respect to the second element, the Appellate Body distinguished the concepts of
"procurement" and "purchase". It clarified that they should not be equated as "[n]ot every
procurement needs to be effectuated by way of a purchase, and not every purchase is part of a
process of government procurement. "246 According to the Appellate Body, "procurement" is the
operative word in Article III:8(a) "describing the process and conduct of the governmental agency",

241 European Union's first written submission, paras. 177-227; second written submission, paras. 83-
116; responses to the first set of questions, paras. 5-33; opening statement, paras. 13-32; closing statement,
paras. 5-14; responses to the second set of questions, paras. 8-17; comments on responses to the second set
of questions, paras. 28-45.
242 Appellate Body Report, Canada – Renewable Energy / Canada – Feed-in Tariff Program, para. 5.56.
243 Appellate Body Report, Canada – Renewable Energy / Canada – Feed-in Tariff Program, para. 5.59.
244 Appellate Body Report, Canada – Renewable Energy / Canada – Feed-in Tariff Program, para. 5.58
(referring to Oxford English Dictionary online, <http://www.oed.com/view/Entry/80304>).
245 Appellate Body Report, Canada – Renewable Energy / Canada – Feed-in Tariff Program, para. 5.58.
The panel in India – Solar Cells considered that the domestic content requirement at issue "govern[ed] the
procurement" of electricity, because it "operate[d] to impose compulsory conditions for bidding eligibility and
participation under each of the relevant Batches of the National Solar Mission, and further mandate the use of
domestically manufactured solar cells and modules through enforceable contractual obligations of [solar power
developers]". (Panel Report, India – Solar Cells, para. 7.145.)
246 Appellate Body Report, Canada – Renewable Energy / Canada – Feed-in Tariff Program, para. 5.59.

and the word "purchased" is used "to describe the type of transaction used to put into effect that
procurement".247 In Canada – Renewable Energy / Canada – Feed-in Tariff Program, the Appellate
Body stated that "[t]he precise range of contractual arrangements that are encompassed by the
concept of "purchase" is not a matter we need to decide in this case".248 Regarding the entity making
the purchase, the Appellate Body clarified that the term "governmental agencies" in Article III:8(a)
"refers to those entities acting for or on behalf of government in the public realm within the
competences that have been conferred on them to discharge governmental functions".249 According
to the Appellate Body, whether an entity is a "governmental agency" within the meaning of Article
III:8(a) is "determined by the competences conferred on the entity concerned and by whether that
entity acts for or on behalf of government".250
7.41. With respect to the third element, the Appellate Body stated that the term "governmental
purposes" in Article III:8(a) refers to "purchases of products directed at the government or
purchased for the needs of the government in the discharge of its functions".251 The Appellate Body
further clarified that the phrase "products purchased for governmental purposes" in Article III:8(a)
"refers to what is consumed by the government or what is provided by government to recipients in
the discharge of its public functions", with the scope of such functions determined on a case by case
basis.252
7.42. With respect to the fourth element, the Appellate Body explained that the word "commercial
resale" refers to "a resale of a product at arm's length between a willing seller and a willing buyer".253
Whether a transaction constitutes a "commercial resale" must be assessed having regard to the
entire transaction and looking at the transaction from the perspective of both the seller and the
buyer. In terms of the seller 's perspective, the Appellate Body noted that a profit -orientation is
generally an indication that a resale is made at arm 's length.254 The last clause "not … with a view
to use in the production of goods for commercial sale " signifies that Article III:8(a) does not cover
purchases made by governmental agencies with a view to using the product p urchased in the
production of other goods for sale at arm's length.255
7.2.3 Main arguments of the parties
7.2.3.1 Introduction
7.43. Both parties present their arguments by parsing the text of Article III:8(a) into a series of
elements, and then presenting their arguments und er headings in relation to those elements. The
parties parse the elements of Article III:8(a) in a similar (if not always identical) manner: (i) as the
first element, whether the localisation requirement falls within the scope of "laws, regulations or
requirements governing … procurement "; (ii) as the second element, whether the localisation
requirement involves a "purchase" by "governmental agencies"256; (iii) as the third element, whether
the procurement/purchase is "for governmental purposes"; and (iv) as the fourth element whether
the procurement/purchase is done "with a view to commercial resale ". As elaborated below, there
are one or more points of contention between the parties in relation to each of these elements.

247 Appellate Body Report, Canada – Renewable Energy / Canada – Feed-in Tariff Program, para. 5.59.
248 Appellate Body Report, Canada – Renewable Energy / Canada – Feed-in Tariff Program, para. 5.59.
The panel in India – Solar Cells recalled the Appellate Body's findings above and stated that "this conceptual
distinction" between the concepts of procurement and purchase "informs the cumulative and separate
elements of Article III:8(a)." (Panel Report, India – Solar Cells, para. 7.133.)
249 Appellate Body Report, Canada – Renewable Energy / Canada – Feed-in Tariff Program, para. 5.61.
250 Appellate Body Report, Canada – Renewable Energy / Canada – Feed-in Tariff Program, para. 5.60.
251 Appellate Body Reports, Canada – Renewable Energy / Feed-In Tariff Program, para. 5.67.
252 Appellate Body Reports, Canada – Renewable Energy / Feed-In Tariff Program, para. 5.68.
253 Appellate Body Report, Canada – Renewable Energy / Canada – Feed-in Tariff Program, para. 5.70.
254 Appellate Body Report, Canada – Renewable Energy / Canada – Feed-in Tariff Program, para. 5.71.
255 Appellate Body Report, Canada – Renewable Energy / Canada – Feed-in Tariff Program, paras. 5.72-
5.74.
256 In its first written submission, Turkey addresses the "purchase" element in the context of presenting
its arguments on the first element, which it formulates in terms of whether the localisation measure is a "law,
regulation or requirement governing … procurement". However, in its second written submission Turkey
addresses, as a second element, whether the alleged procurement of pharmaceutical products is "done by a
governmental agency and entails the purchase of those products".

7.44. While the European Union maintains t hat Turkey has the burden of establishing that the
challenged measure is covered by the government procurement derogation in Article III:8(a)257, the
European Union addressed the applicability of Article III:8(a) to the localisation requirement in its
first written submission. In that submission, the European Union, noting Turkey's earlier assertion
that the localisation requirement falls within the scope of Article III:8(a) 258, engaged in this
discussion "in an attempt to be helpful to the Panel and address all possibly relevant legal issues as
early as possible".259
7.2.3.2 "laws, regulations or requirements governing … procurement"
7.45. The European Union submits that the localisation requirement is not a "law, regulation or
requirement governing procurement ".260 According to the European Union, that is "for the simple
reason that no procurement is involved "261 and i t is impossible for a measure to "govern"
procurement if no "procurement" is involved.262 The European Union submits that, according to the
ordinary meaning of the term "procurement" and the prior panel and Appellate Body reports under
Article III:8(a), the derogation only applies where the government, and not another actor or set of
actors, "acquires" or "obtains" products.263 Furthermore, this acquisition must be done on the basis
of a particular legal process, specifically designed for that purpose and binding on governmental
authorities.264 In this case, in the outpatient sector265, pharmaceutical products are never acquired
or obtained, and thus never "procured", by any governmental agencies in Turkey, whether through
the requisite type of legal process or otherwise; instead, they are acquired or obtained by consumers
from pharmacies, and the Turkish government reimburses the pharmacies for (in most instances) a
part of the cost.266 The European Union further argues that this is clear from the legal instruments
governing the reimbursement system, including the very title of the "Protocol on the procurement
of medicines from pharmacies which are members of the Turkish Pharmacists' Association (TEB) by
persons covered by the Social Security Institution".267
7.46. Turkey submits that the localisation measure is a "law, regulation, or requirement governing
procurement".268 According to Turkey, the SSI "acquires" the medicines that are prescribed to
patients in Turkey "since it pays for their costs".269 Turkey explains that the pharmaceutical products
included in the Annex 4/A list "are acquired by the SSI through retail pharmacies which are members
of the TPA", and the "procurement process is governed by the Protocol concluded between the SSI
and the TPA as well as contracts concluded between the SSI and individual retail pharmacies, which

257 European Union's responses to the second set of questions, paras. 8-12; European Union's
comments on responses to the second set of questions, paras. 28-31. For Turkey's arguments on this point,
see Turkey's responses to the first set of questions, paras. 31-37.
258 European Union's first written submission, para. 177 (referring to minutes of the meetings of the
Committee on Trade-Related Investment Measures held on 6 November 2017, 1 June 2018, and 17 October
2018 (respectively G/TRIMS/M/43, G/TRIMS/M/44, and G/TRIMS/M/45)).
259 European Union's comments on responses to the second set of questions, para. 31.
260 European Union's first written submission, paras. 181-195.
261 European Union's first written submission, para. 184.
262 European Union's first written submission, para. 185.
263 European Union's first written submission, paras. 185-187. The European Union adds that this
interpretation is supported by the use of the terms "acquisition" and "adquisición" in place of "procurement" in
the French and Spanish versions of the GATT 1994, and notes that these terms are different, and narrower,
than the terms used in the French and Spanish titles of the Agreement on Government Procurement (Accord
para. 188.)
264 European Union's first written submission, para. 189.
265 According to the European Union, "it is useful to compare the reimbursement system which applies
to out-patient pharmaceuticals with Turkey's treatment of in-patient pharmaceuticals. For in-patients, public
entities – hospitals – procure medicines by acquiring or obtaining them. Furthermore, those entities provide
those pharmaceutical products to patients directly. Moreover, when doing so, public hospitals acquire or obtain
pharmaceuticals on the basis of a tendering process that applies to Turkish government entities more
generally. Thus, the necessary elements of "procurement" seem to be present: the government (including
public hospitals) acquires or obtains products, pursuant to a particular process designed for that purpose. By
contrast, in the out-patient sector, no public entity or governmental agency ever acquires or obtains
pharmaceutical products." (European Union's first written submission, paras. 193-194.)
266 European Union's first written submission, paras. 190-191.
267 European Union's first written submission, para. 192.
268 Turkey's first written submission, paras. 186-204.
269 Turkey's first written submission, para. 189.

essentially reproduce the text of the Protocol".270 Turkey submits that, contrary to what the European
Union argues, the very title of that document , i.e. Protocol on the Provision of Medicines to the
Persons Covered by the Social Security Institution by the Pharmacies which are Members of th e
Turkish Pharmacists' Association, makes it clear that it regulates the "provision" of pharmaceutical
products by retail pharmacies, on behalf of the SSI, to patients. 271 Turkey explains that the text of
that Protocol shows that pharmaceutical products "are procured, that is acquired, by the SSI " and
distributed to patients through retail pharmacies under contract with the SSI.272 According to Turkey,
the fact that the provision of pharmaceutical products is organized differently in the outpatient and
inpatient sectors does not mean, contrary to what the European Union argues, that in the outpatient
sector "no public entity or governmental agency ever acquires or obtains pharmaceutical
products".273 Furthermore, the localisation measure is a "law, regulation or requirement governing"
procurement, as it constitutes a "requirement"274 and "the entire process pursuant to which the SSI
acquires those pharmaceutical products", including the decision about which products are included
in Annex 4/A, their prices and the modalities of their purchase, "is regulated and controlled by the
relevant Turkish authorities".275
7.47. The European Union responds by recalling the Appellate Body 's s tatement that the term
"procurement" refers to "the process pursuant to which a government acquires products" and argues
that, instead of loosening the test, as Turkey suggests, "the requirement of a 'process' pursuant to
which products are acquired (meani ng that the simple act or practice of acquiring a product is not
enough) makes the legal test stricter".276 The European Union rejects Turkey 's argument that the
SSI acquires the medicines because it pays for their cost, and is therefore the "ultimate buyer" of
those products, the pharmacies being just an "agent for the SSI " and the "distribution network of
the SSI". The European Union asserts that, under Turkey's reading, whenever a government finances
or pays for something, even partly, this would constitu te public procurement and would therefore
fall outside the scope of Article III of the GATT 1994 and that this is plainly wrong.277 Furthermore,
none of the provisions of Turkish law or the Protocol between pharmacists and the SSI that Turkey
cites in any w ay suggest that the SSI "acquires" any medicines.278 Finally, the European Union
argues that the localisation requirement itself is not a law, regulation or requirement that governs
procurement because through it, Turkey "actively seeks to obtain localisation commitments from
foreign producers, rather than to simply apply an 'origin rule ' for the 'procured products '".279
According to the European Union, "the Localisation Requirement is not a necessary and usual
component of a procurement system, but rather an industrial policy and economic development
measure that seeks, inter alia, to attract investments in Turkey".280
7.48. In its second written submission, Turkey maintains that the localisation requirement is a "law,
regulation or requirement governing procurement" within the meaning of Article III:8(a) because it
"governs the process through which the Turkish Government acquires pharmaceutical products
included in Annex 4/A".281 According to Turkey, the SSI's role "goes far beyond the mere financing
of the pharmaceutical products included in Annex 4/A to outpatients."282 Rather, the SSI purchases
the pharmaceutical products included in Annex 4/A 283, ensures the provision of these products to
outpatients, and makes all the necessary ar rangements for this purpose. 284 To dispense these

270 Turkey's first written submission, para. 190. (fns omitted)
271 Turkey's first written submission, para. 191.
272 Turkey's first written submission, paras. 191-201.
273 Turkey's first written submission, para. 203. In its second written submission, Turkey explains that
"in both outpatient and inpatient sectors, the medicines are acquired by public entities" and that "the
differences between the provision of pharmaceutical products to inpatients and to outpatients have to do with
the practical aspects of dispensing pharmaceutical products in the most effective way." (Turkey's second
written submission, para. 33).
274 According to Turkey, it is a "requirement" in the sense that compliance with the localisation
requirement determines whether a pharmaceutical product will be covered by the reimbursement scheme.
(Turkey's first written submission, paras. 187, 204.)
275 Turkey's first written submission, para. 189.
276 European Union's second written submission, para. 86. (emphasis original)
277 European Union's second written submission, para. 88.
278 European Union's second written submission, paras. 89-94.
279 European Union's second written submission, para. 96.
280 European Union's second written submission, para. 97.
281 Turkey's second written submission, para. 46.
283 Turkey's second written submission, para. 18.
284 Turkey's second written submission, para. 52.

products to outpatients, it acts through retail pharmacies.285 According to Turkey, retail pharmacies
dispense pharmaceutical products to patients on behalf of the SSI 286, acting "as service providers
for the SSI."287 Turkey submits that this conclusion is supported by the following: (i) the Protocol
and the individual contracts concluded between the SSI and retail pharmacies "establish that the
latter act as a service provider of the SSI by dispensing pharmaceutical products included in Annex
4/A to outpatients"288; (ii) retail pharmacies receive a service fee from the SSI for the service they
provide, "namely the provision of pharmaceutical products to the outpatients "289; (iii) retail
pharmacies collect contribution fees from the outpatients on behalf of the SSI 290; and (iv) retail
pharmacies have the status of primary healthcare service providers which "also collect contribution
fees on behalf of the SSI and provide other public health services ".291 Finally, Turkey also rejects
the European Union 's argument that the localisation requirement does not "govern procurement"
because it goes beyond a simple preference for domestic products. 292 Turkey argues that the
localisation requirement "governs the procurement" of pharmaceutical products by the SSI because
compliance with this requirement is "a necessary prerequisite for the continued inclusion of a
pharmaceutical product subject to localisation in Annex 4/A and thus for the procurement of that
product by the SSI to take place".293
7.2.3.3 "by governmental agencies of products purchased"
7.49. The European Union submits that, even if the Panel finds that the measure at issue is
somehow connected to "procurement", Article III:8(a) would still not apply because the relevant
products are not being "purchased" by "governmental agencies".294 Recalling the prior panel and
Appellate Body reports examining Article III:8(a), the European Union submits that it is clear that
the concept of "purchase" covers only a sub-set of the various types of transactions that can be used
to put into effect a procurement295, that the requirement that there must be a "purchase" is distinct
and additional to the requirement that there must be a "procurement", and that to be covered by
Article III:8(a), government procurement can only be effectuated by means of a purchase, and not
by means of any other contractual arrangement. 296 The European Union notes that the ordinary
meaning of the term "purchase" is "[t]he acquisition of property (esp. land) by any legal means
other than inheritance "297 and observes that this is how the term "purchase" is used in the
Agreement on Government Procurement (GPA) as well. 298 In the outpatient sector no Turkish
"governmental agency " acquires the relevant pharmaceutical produ cts, at any point, whether
through purchase or otherwise; in this connection, the European Union submits that pharmacies,
like individual consumers, are "private entities, not acting for or on behalf of the government".299

285 Turkey's second written submission, para. 48.
286 Turkey's second written submission, paras. 23, 29 and 49.
287 Turkey's second written submission, para. 18. In that sense, Turkey states that "there is a split
between the government-purchaser (the SSI) and the private party provider (the retail pharmacies)", whereby
the SSI is the purchaser of pharmaceutical products provided to outpatients such as to ensure their universal
access, while retail pharmacies take on the role of service provider by dispensing those pharmaceutical
products in a more efficient and timely manner. (Turkey's second written submission, para. 23.)
288 Turkey's second written submission, paras. 27 and 48-49. Turkey also explains that the TPA Protocol
deals with the "provision" or "supply" of pharmaceutical products to patients by the retail pharmacies on behalf
of the SSI, and does not relate to the procurement of pharmaceutical products by patients, because "patients
do not procure pharmaceutical products included in Annex 4/A but are provided with those products." (Ibid.
para. 15.)
289 Turkey's second written submission, para. 27.
290 Turkey's second written submission, para. 27.
291 Turkey's second written submission, para. 30.
292 European Union's second written submission, para. 96.
293 Turkey's second written submission, para. 56.
294 European Union's first written submission, paras. 196-206.
295 The European Union refers to the definition of "procurement" in the Agreement on Government
Procurement (GPA) to explain that a "purchase" is merely one of a number of contractual arrangements
typically used in procurement ("lease, rental or hire purchase, with or without an option to buy"), and that
these other arrangements do not involve the acquisition of property rights over products. (European Union's
first written submission, para. 202.)
296 European Union's first written submission, paras. 198-200.
297 European Union's first written submission, para. 201 (referring to Oxford English Dictionary online,
<https://www.oed.com/view/Entry/154831?rskey=07nKL5&result=1&isAdvanced=false#eid>).
298 European Union's first written submission, para. 202.
299 European Union's first written submission, paras. 204-205.

7.50. Turkey argues that the localisatio n requirement involves the "purchase" of products "by
governmental agencies".300 Turkey submits that even under a narrow interpretation of the term
"purchase"301, in the present case the procurement of pharmaceutical products is effectuated by
means of a "purchase". In Turkey 's view, the fact that this purchase is effectuated with the
involvement of retail pharmacies acting on behalf of the SSI, and that the pharmaceutical products
are not physically with the SSI, does not change the fact that it is the SSI t hat pays for the
pharmaceutical products and thus is the ultimate buyer (or the purchaser).302 Nothing in the text of
Article III:8(a) suggests that the purchase must be necessarily made directly by the governmental
agency itself (in contrast to the "procurement by a governmental agency "), rather than by other
entities acting as an intermediary. 303 Furthermore, patients themselves do not "purchase"
pharmaceutical products included in the Annex 4/A list, as they "do not pay for those medicines
which are provided to them free of charge, the costs being paid by the SSI ".304 With regard to the
second prong of this element of Article III:8(a), Turkey expl ains that it is t he SSI, the governing
authority of the Turkish social security system affiliated to the Ministry of Family, Labor and Social
Services, that constitutes the relevant "governmental agency " within the meaning of
Article III:8(a).305
7.51. In its second written submission, the European Union confirms that it does not dispute that
the SSI is a "governmental agency", but that, in the context of the reimbursement system and the
localisation requirement, neither the SSI nor any other governmental agency e ngages in the
"procurement", let alone "purchase", of any products. 306 The European Union reiterates that the
term "purchase" should be interpreted to mean "acquiring property over" products.307 However, it
argues that even under Turkey 's broader reading of the term as covering "obtaining something in
exchange of payment", the SSI does not "obtain" any products for the reasons already explained at
length in its first written submission.308 The SSI "merely provides financing through reimbursement",
and "[p]roviding financing is different from obtaining, acquiring or purchasing products ".309 Finally,
as for Turkey's alternative argument that the SSI could be said to engage in purchasing because
retail pharmacies, allegedly acting "on behalf of" the SSI, purchase medicines from wholesalers, the
European Union argues that there is no support whatsoever for these assertions: retail pharmacies
are private entities, they freely order and purchase their medicines from wholesalers through a
private sales contract, hold and manage their inventory on their own (including holding property
rights over it), and bear the risks associated with their stock, with no SSI involvement. Thus,
according to the European Union, Turkey 's attempt to portray the retail pharmacies ' purchase of
medicines from wholesalers as a "purchase" by the SSI fails. 310 Finally, the European Union
comments that it has already addressed Turkey 's assertion that patients do not purchase

300 Turkey's first written submission, paras. 205-217. As noted earlier, the parties do not parse the
terms of Article III:8(a) in the same way, with each addressing the "purchase" element under a different
element. In its first written submission, the European Union addresses the issue of "purchase" as part of the
second element, i.e. "purchased by governmental entities"; in contrast, Turkey addresses the "purchase"
element in tandem with the first element, i.e. whether the localisation measure is a "law, regulation or
requirement governing … procurement".
301 Turkey refers to the dictionary definition of "the action or an act of obtaining something in exchange
for payment in money or an equivalent", which in its view "suggests that the notion of a 'purchase' involves
some kind of payment (usually monetary) in exchange for a good." (Turkey's first written submission,
para. 207.) Turkey also doubts the validity and probative value of the European Union's reliance on the GPA to
interpret Article III:8(a) of the GATT 1994. (Turkey's first written submission, fn 219.)
302 Turkey's first written submission, paras. 206-208. Turkey refers to the statement by the panel in
Canada – Renewable Energy / Canada – Feed-in Tariff Program that a "purchase" does not require obtaining
physical possession over the goods that are purchased. (Turkey's first written submission, para. 208, referring
to Panel Report, Canada – Renewable Energy / Canada – Feed-in Tariff Program, para. 7.228.)
303 Turkey's first written submission, para. 209.
304 Turkey's first written submission, para. 210. According to Turkey, "the contribution fee paid by
patients forms part of the patients' contribution to the social security system in general and aims at preventing
abuse of that system. The European Union therefore errs when it argues that part of the price of
pharmaceutical products is borne by patients." (Ibid. para. 210)
305 Turkey's first written submission, paras. 212-217.
306 European Union's second written submission, paras. 98-99.
307 European Union's second written submission, para. 100.
308 European Union's second written submission, para. 101.
309 European Union's second written submission, para. 101.
310 European Union's second written submission, paras. 105-106.

pharmaceutical products but even if it was shown that patients, for whatever reason, do not
"purchase" pharmaceutical products, it would still not follow that the SSI does.311
7.52. In its second written submission, Turkey disagrees with the European Union's argument that
the concept of "purchase" pertains to transactions that involve "physical possession and property"
over a product.312 In this case, Turkey argues that because of the nature of the products at issue,
and the specific features of the Turkish healthcare system, "it would make no economic or practical
sense for the SSI to take physical possession of medicines that are ultimately provided to Turkish
patients".313 Turkey submits that the SSI does not merely finance pharmaceutical products, but
purchases them "at the time they are dispensed to the patients"314, because it acquires the title to
them and instructs the retail pharmacies to dispense them immediately to the patients. 315 According
to Turkey, the "purchase" by the SSI "occurs when a patient presents a prescription for a medicine
included in Annex 4/A in a retail pharmacy and the provision of that medicine to the patient is
approved through the Medula system".316 The SSI then delegates to retail pharmacies the dispensing
of the purchased products to outpatients.317 According to Turkey, since it is the SSI that purchases
the pharmaceutical products included in the Annex 4/A list, the SSI does not "reimburse" patients,
nor retail pharmacies 318, because neither of them "purchases" these products. Retail pharmacies
obtain the products from wholesalers and keep them at their premises until they are dispensed to
patients upon the presentation of a medical prescription. 319 The SSI purchases from and makes
direct payments for those medicines to the retail pharmacies 320, which "receive a service fee in
return for the service they perform on behalf of the SSI, namely, dispensing pharmaceutical products
to patients ".321 Patients receive the products but do not purchase them. 322 They merely pay "a
relatively small contribution fee which is, how ever, not part of the price of the pharmaceutical
products but forms part of the patients ' contribution to the social security system in general and
aims at preventing abuse of that system."323
7.2.3.4 "for governmental purposes"
7.53. The European Union argues that the localisation requirement does not involve procurement
of products purchased "for governmental purposes".324 The European Union accepts that "providing
universal healthcare, ensuring access to medicines and protecting human health are legitimate
governmental objectives."325 However, the European Union notes that it is obvious that the Turkish
government neither uses nor consumes the relevant pharmaceutical products. 326 While the prior
panel and Appellate Body reports confirm that "products purchased for governmental purposes" in
Article III:8(a) may cover not only "what is consumed by the government" but also "what is provided
by government to recipients in the discharge of its public functions", there is no such "provision" in

311 European Union's second written submission, paras. 107-108.
312 Turkey's second written submission, paras. 62-63. Turkey refers to the example given by the panel
in Canada – Renewable Energy / Canada – Feed-in Tariff Program of a book that is bought on the internet by
an entity that directs the seller to deliver it to somebody else as a gift. (Ibid. para. 63 (referring to Panel
Reports, Canada – Renewable Energy / Canada – Feed-in Tariff Program, para. 7.228).
313 Turkey's second written submission, para. 64. Turkey relates that prior to the 2003 reform of its
healthcare system, the SSI did obtain physical control over the medicines it provided to patients and this
system proved to be ineffective (Ibid. para. 65).
314 Turkey's second written submission, para. 76.
315 Turkey's second written submission, paras. 73 and 76. Turkey provides a series of documents
attesting the details of this process in Exhibit TUR-117 (Documents relating to a purchase by the SSI from a
pharmacy of the pharmaceutical products dispensed to patients in December 2020 (Exhibit TUR-117)).
316 Turkey's second written submission, para. 71. See also Turkey's second written submission, para. 72
317 Turkey's second written submission, para. 66. The payment for the pharmaceutical products
purchased by the SSI and dispensed by retail pharmacies to patients is made by the SSI on the basis of
consolidated invoices sent by the retail pharmacies to the SSI at the end of each month (Ibid. para. 74). This
invoice covers the public price of the medicines dispensed to patients and a service fee that the pharmacies
receive "in return for the service they perform on behalf of the SSI, namely, dispensing pharmaceutical
318 Turkey's second written submission, para. 18.
319 Turkey's second written submission, para. 69.
320 Turkey's second written submission, para. 13.
321 Turkey's second written submission, para. 69.
322 Turkey's second written submission, paras. 13, 18, 70 and 72.
323 Turkey's second written submission, para. 77.
324 European Union's first written submission, paras. 207-216.
325 European Union's first written submission, para. 211.
326 European Union's first written submission, para. 213.

this case.327 According to the European Union, "it is clear that the Turkish government does not
provide the relevant pharmaceutical products to recipients. It merely reimburses a part of the cost
of those pharmaceuticals, which are provided to patients (as "recipients", in this context) by
pharmacies."328 This should be contrasted with the scenario in which "a public hospital purchases
pharmaceuticals and provides them to patients."329
7.54. Turkey asserts that the localisation measure involves procurement of products purchased for
"governmental purposes ".330 Specifically, the pharmaceutical products are procured to provide
healthcare services to the Turkish population.331 The fact that the provision of healthcare, including
provision of pharmaceutical products, falls within the scope of a government's public functions is
confirmed both by international instruments and Turkish legislation.332 In response to the European
Union's argument that there is no "direct provision " of pharmaceuticals by the government to
outpatients, Turkey reiterates that the provision of pharmaceutical products in case of outpatient
treatment is, for practical reasons, organized through retail pharmacies (which have the status of
healthcare providers in the Turkish healthcare system and act on behalf of the SSI); and in that
sense, as in the case of inpatient treatment, pharmaceutical products are "provided" by the
government, i.e. the SSI, through retail pharmacies, to patients.333
7.55. In its second written submission, the European Union comments that Turkey is "preaching to
the choir" when it explains, at length, the reasons why healthcare is an important governmental
objective, and recalls that this is not in dispute. 334 The European Union reiterates that being linked
to a government objective is not enough, as the Appellate Body stated that it must be shown that
products are "purchased for the use of government, consumed by government, or provided by
government to recipients in the discharge of its public functions".335 Turkey does not claim that the
products are "purchased for the use of government" or "consumed by government", and it "is clear
that no Turkish governmental agency provides the pharmaceutical products to anyone – pharmacies
do".336
7.56. In its second written submission, Turkey maintains that pharmaceutical products included in
the Annex 4/A list are provided by the SSI to recipients (i.e. outpatients) "in the discharge of its
public function, namely the provision of healthcare services".337 In this process, Turkey explains, the
SSI uses retail pharmacies as a distribution network to dispense the products to patients on its
behalf.338 Thus, according to Turkey, retail pharmacies provide (dispense) the pharmaceutical
products included in the Annex 4/A list to outpatients "on behalf of the SSI ".339 For this service,
Turkey submits, the pharmacies receive a service fee from the SSI.340
7.2.3.5 "not with a view to the commercial resale"
7.57. The European Union contends that if the government "procures" and "purchases"
pharmaceutical products when it reimburses a part of their cost to the pharmacies which ultimately
sell them to consumers, it follows that the government purchases pharmaceutical products "with a
view to the commercial resale " of pharmaceutical products by pharmacies to consumers. 341 The

327 European Union's first written submission, paras. 208, 212.
328 European Union's first written submission, para. 214. (emphasis original)
329 European Union's first written submission, para. 215 (referring to Appellate Body Report, Canada –
Renewable Energy/Feed-in Tariff Program, fn 514.)
330 Turkey's first written submission, paras. 218-231.
331 Turkey's first written submission, para. 219.
332 Turkey's first written submission, paras. 220-229.
333 Turkey's first written submission, para. 231.
334 European Union's second written submission, para. 110.
335 European Union's second written submission, para. 112 (quoting Panel Report, India – Solar Cells,
para. 7.156, summarizing the findings of the Appellate Body in Canada – Renewable Energy / Feed-In Tariff
Program, paras. 5.66–5.68 and 5.74).
336 European Union's second written submission, paras. 112-113. (emphasis original)
337 Turkey's second written submission, para. 81.
338 Turkey's second written submission, para. 83. Turkey submits that "the European Union appears to
agree that pharmacies act on behalf of the SSI when they dispense pharmaceutical products to patients in the
context of its claim under Article 3.1(b) of the SCM Agreement." (Turkey's second written submission, para.
86.)
339 Turkey's second written submission, para. 82. (emphasis original)
340 Turkey's second written submission, paras. 85 and 13.
341 European Union's first written submission, paras. 217-227.

European Union refers to the fact that pharmacies provide the product, in exchange for payment
that is partly borne by the consumer, and asserts that this provision is made within the framework
of a straightforward arms -length sales transaction: pharmacies are profit -seeking, and end -users
are interest-maximizing.342 The European Union submits that Article III:8(a) captures not only direct
resale by the very agency purchasing the products, but also commercial resale 343 through another
actor, such as, in this case, a pharmacy.344
7.58. Turkey responds that the pharmaceutical products are not "resold" on the "commercial"
market but are dispensed by retail pharmacies – on behalf of the SSI – to patients.345 According to
Turkey, the patients – which it says are "curiously referred to" by the European Union as "consumers"
or "end-users"346 – are not "buying" pharmaceutical products of their choice, as they cannot choose
the products or their quantities or discuss their price, and they receive the specific medicine that
was prescribed to them in a specific dose by a medical doctor based on those patients' specific health
needs.347 There is thus no "commercial transaction" between the patient and the medical doctor or
the pharmacy.348 All elements of the "exchange" between the patient and the retail pharmacy are
decided by the Turkish government which determines w hich pharmaceutical products are paid for
by the SSI, what their price is and how they will be dispensed to patients. 349 Turkey also reiterates
that the contribution fee and the prescription fee paid by patients in retail pharmacies are not the
"resale price" of the pharmaceutical product, as the European Union seems to suggest, but form
part of the patients ' contribution to the social security system and aim at preventing abuse. 350
Furthermore, contrary to what the European Union suggests, the retail pharmacy is also not acting
as a regular, profit-seeking "willing seller": the price of a pharmaceutical product provided to patients
and paid by the SSI, as well as the mark-up made by a retail pharmacy, are all set by law.351 Finally,
the SSI does not procure th e pharmaceutical products with a view to using those products in the
production of other goods for commercial sale.352
7.59. In its second written submission, the European Union responds that Turkey, in claiming that
the European Union misrepresents its reimburse ment system as a set of purely commercial
transactions, fails to engage with the European Union 's actual argument. The European Union
reiterates that its argument is that if the Panel were to find that the government purchases
pharmaceutical products when reimbursing their cost to the pharmacies, then it would logically follow
that the government is purchasing those products with a view to their commercial resale by
pharmacies.353 The European Union submits that Turkey provides no direct response to this
argument.354 Furthermore, according to the European Union, Turkey makes a number of "startling
remarks" that "must be corrected", including that patients cannot choose the products (even though
Turkey itself describes a scenario in which they can choose between different products in equivalent
groups); that all elements of the exchange are decided by the government (even though patients
may decide, among other things, which product to purchase); and that pharmacies are not profit -
seeking (even though they are private entities with a commercial interest and receive a mark-up as
well as a service fee).355
7.60. In its second written submission, Turkey argues that the relationship between the retail
pharmacies and patients does not fit the definition of "commercial resale" within the meaning of
Article III:8(a) as "a resale of a product at arm 's length between a willing seller and a willing

342 European Union's first written submission, paras. 224-225.
343 The European Union notes that it is aware that this reading would mean that pharmacies are both
selling the products to the government and reselling the same products to consumers. It argues that "this
oddity … is caused by accepting the argument that, when it engages in reimbursement, the Turkish
government is procuring and purchasing products for governmental purposes." (European Union's first written
submission, para. 227.)
344 European Union's first written submission, para. 226.
345 Turkey's first written submission, paras. 232-240.
346 Turkey's first written submission, para. 236.
347 Turkey's first written submission, para. 236.
348 Turkey's first written submission, para. 236.
349 Turkey's first written submission, para. 236.
350 Turkey's first written submission, para. 236.
351 Turkey's first written submission, para. 237.
352 Turkey's first written submission, para. 239.
353 European Union's second written submission, paras. 114-115.
354 European Union's second written submission, para. 116.
355 European Union's second written submission, para. 116.

buyer".356 According to Turkey, this relationship is not in the nature of a "transaction" because
pharmacies do not "resell" medicines and outpatients do not "buy" them. 357 First, pharmacies do
not resell the pharmaceutical products because they rather dispense them to outpatients on behalf
of the SSI, on the basis of the TPA Protocol and the contracts signed between individual pharmacies
and the SSI.358 The elements of any "transaction" between retail pharmacies and patients are either
set by the SSI or the medical doctor prescribing the pharmaceutical products, and thus "do not have
a commercial character ".359 Second, Turkey disagrees with the European Union 's position that
patients "purchase" pharmaceutical products which would then be reimbursed by the SSI. Turkey
submits that patients "go to retail pharmacies with their prescription and get the prescribed
medicines from the pharmacies, the medicines being paid for by the SS I."360 According to Turkey,
"patients receive the medicines indicated on their prescription and the cost of those medicines is
covered by the SSI who purchases them from the pharmacies ".361 Patients "cannot choose the
pharmaceutical products but obtain the specific medicine prescribed to them in a specific form and
dosage by a medical doctor. "362 If a patient prefers a more expensive product from the same
equivalent group, he or she must pay the difference between the price of that product and the price
paid by the SSI – but according to Turkey this does not mean that patients pay the retail price of
those pharmaceutical products.363 Turkey also points out that, contrary to what the European Union
argues, (i) the fact that patients may replace the brand product from the prescription with an
equivalent generic product (or vice versa)364; (ii) the fact that patients may decide "whether, when
or where" to use their prescription365; and (iii) the fact a patient may choose the pharmacy or even
decide not to take his/her prescribed medicine , do not indicate that there are any commercial
transactions between the patients and retail pharmacies as far as the pharmaceutical products
included in the Annex 4/A list are concerned .366 Turkey further maintains that the presc ription fee
and the contribution fee paid by patients are not part of the price of the pharmaceutical products
but rather "form part of the patients' contribution to the social security system and aim at preventing
abuses of the healthcare system, includin g overconsumption of medicines, as well as ensuring its
financial sustainability".367 Turkey also observes that in many instances, patients are exempted from
the payment of the contribution fee.368
7.2.4 Assessment by the Panel
7.2.4.1 Introduction
7.61. The government procurem ent derogation in Article III:8(a) concerns "the procurement by
governmental agencies of products purchased for governmental purposes ". This provision was
interpreted and applied in Canada – Renewable Energy / Canada – Feed-in Tariff Program and India
– Solar Cells. In both disputes, the measures at issue required entities seeking to sell electricity to
the government at preferential rates to satisfy certain domestic content requirements with respect
to the equipment used to generate that electricity (e.g. solar cells). The conclusion ultimately

356 Turkey's second written submission, para. 89 (referring to Appellate Body Reports, Canada –
Renewable Energy / Canada – Feed-in Tariff Program, para. 5.70).
357 Turkey's second written submission, para. 88.
358 Turkey explains that retail pharmacies are "considered as primary healthcare service providers and
act on behalf of the SSI to carry out its function to provide pharmaceutical products to outpatients in Turkey".
(Turkey's second written submission, para. 92.)
359 Turkey's second written submission, para. 32. According to Turkey, the fact that retail pharmacies
receive a mark-up, does not change this conclusion, because "the pharmacy mark-up forms part of the retail
price of a pharmaceutical product and is set by law." (Ibid. para. 32.) See also Turkey's second written
submission, para. 94.
360 Turkey's second written submission, para. 13.
361 Turkey's second written submission, para. 88.
362 Turkey's second written submission, para. 90.
363 Turkey's second written submission, para. 26.
364 Turkey's second written submission, para. 90.
365 Turkey's second written submission, para. 91.
366 Turkey's second written submission, para. 91. Turkey also submits that "the fact that the price of
pharmaceutical products includes a pharmacy mark-up does not show that pharmacies are regular 'profit-
seeking' sellers." (Turkey's second written submission, para. 94). Turkey explains that the mark-up is paid by
the SSI when it purchases medicines included in Annex 4/A from the pharmacies and "covers, among others,
the prefinancing of the medicines provided by the pharmacies during the period between the moment they pay
the wholesalers and the moment they receive payment from the SSI." (Ibid. para. 94).
367 Turkey's second written submission, paras. 24 and 77.
368 Turkey's second written submission, paras. 24 and 78.

reached was that, for purposes of Article III:8(a), the "product purchased" by the governmental
agencies through the relevant measures was electricity, and not also the electricity generation
equipment subject to the challenged domestic content requirement. On that basis, Article III:8(a)
was found to be inapplicable to the domestic content requirements at issue, because the electricity
generation equipment subject to those requirements was not a "product purchased " within the
meaning of Article III:8(a).
7.62. In both disputes, the examination of the applicability of Article III:8(a) to the measure at
issue started, and ultimately ended, with an assessment of the nature of the "products purchased"
within the meaning of Arti cle III:8(a), without any adopted findings as to whether the measure
qualified as a "law, regulation or requirement governing … procurement ".369 The panel in India –
Solar Cells explained that the assessment of the nature of the "products purchased " was the
"dispositive factor" of the Appellate Body's analysis in Canada – Renewable Energy / Feed-In Tariff
Program370 and characterized this question in terms of a "threshold matter of the applicability of
Article III:8(a) in respect of the 'products purchased'".371 That panel observed that it was therefore
unnecessary to make findings on the remaining elements of Article III:8(a) given that "the threshold
legal elemen t" under this provision was not satisfied. 372 The Appellate Body upheld the panel 's
interpretation and application of the term "products purchased" in Article III:8(a), and made no
findings on what it termed "the remaining elements " of Article III:8(a) (inc luding whether the
challenged measure was a "law, regulation or requirement governing … procurement").373
7.63. This dispute is distinguishable from Canada – Renewable Energy / Canada – Feed-in Tariff
Program and India – Solar Cells to the extent that, unlike the two prior disputes, the products that
are allegedly "purchased" for purposes of Article III:8(a) and the products that are allegedly being
discriminated against for purposes of Article III:4 are the same, i.e. pharmaceutical products
included in the Annex 4/A list.374 However, there are certain parallels between the arguments made
in these disputes, and, like the panels in those two cases, t he Panel will start its assessment by
focusing on the "products purchased" (if any) through the challenged measure, and more specifically
with the question whether the localisation requirement involves the " purchase" of pharmaceutical
products included in the Annex 4/A list by governmental agencies.
7.64. Turkey advances three alternative lines of argument in support of its con tention that the
localisation requirement involves the "purchase" of pharmaceutical products included in the Annex
4/A list by governmental agencies. First, Turkey argues that the concept of a "purchase" under
Article III:8(a) should not be interpreted narrowly, and that the SSI "purchases" pharmaceutical
products by paying for them, even if it does not acquire an entitlement to (or property rights over)
the products. Turkey argues that the SSI 's reimburs ement of the cost of outpatients '
pharmaceuticals involves a "purchase" because it is "the SSI that pays for the pharmaceutical
products and thus is the ultimate buyer (or the purchaser) ".375 Second, Turkey argues that, even
under an "extremely narrow"376 definition of what constitutes a "purchase" requiring the transfer of
legal title over a product, which is an interpretation that Turkey disagrees with 377, there is still a

369 The panel in Canada – Renewable Energy / Feed-In Tariff Program interpreted the terms
"procurement" and "purchase" to mean the same thing, and addressed them together in the context of finding
that the challenged measure qualified as a "law, regulation, or requirement governing the procurement by
governmental agencies of electricity". The panel found that the procurement and purchase of electricity was
undertaken "with a view to commercial resale" and found Article III:8(a) inapplicable on that basis. On appeal,
the Appellate Body stated that the terms "procurement" and "purchase" should not be given the same
meaning, and clarified that the relevant question was whether electricity generation equipment (as distinct
from electricity) was a product being "procured" or "purchased". After finding that it was not, the Appellate
Body ended its analysis at that point.
370 Panel Report, India – Solar Cells, para. 7.106.
371 Panel Report, India – Solar Cells, para. 7.106.
372 Panel Report, India – Solar Cells, para. 7.136. In India – Solar Cells, the panel nonetheless
considered it useful to proceed with a limited analysis and review of certain issues relating to the remaining
elements of Article III:8(a), so that the Appellate Body could have the benefit of its factual findings related to
these issues in case the Appellate Body were to modify or reverse the Panel's interpretation and application of
the nature of the "products purchased". (Panel Report, India – Solar Cells, paras. 7.136-7.138.)
373 Appellate Body Report, India – Solar Cells, paras. 5.42-5.44.
374 Turkey's responses to the first set of questions, para. 29; responses to the second set of questions,
paras. 51-53.
375 Turkey's first written submission, paras. 206-208.
376 Turkey's first written submission, para. 205.
377 Turkey's first written submission, para. 206.

"purchase" by the SSI. This is because, as a matter of fact, t he SSI does acquire titl e to the
pharmaceutical products at the moment a retail pharmacy scans a prescription 's QR code and the
Medula system approves the provision of that pharmaceutical product to the patient.378 Third, Turkey
argues that, even if that is incorrect , Article III:8(a) still applies because the purchase of
pharmaceutical products included in the Annex 4/A list by the retail pharmacies from the wholesalers
is made on behalf of the SSI and this means t hat the retail pharmacies are themselves
"governmental agencies " that "purchase" pharmaceuticals for purpose of Article III:8(a). The
European Union disputes all of Turkey's arguments.
7.65. In the light of the parties ' arguments, the Panel will first set forth its interpretation of the
term "purchased" in the context of the phrase "products purchased by governmental agencies". The
Panel will then apply that legal standard to assess whether the localisation requirement involves a
"purchase" by the SSI. The Panel will then assess Turkey's argument that, even if the SSI itself does
not "purchase" pharmaceutical products included in the Annex 4/A list, there is still a "purchase"
covered by Article III:8(a) because pharmacies act on behalf of t he SSI, and to that extent, are
themselves "governmental agencies" for purposes of Article III:8(a).
7.2.4.2 Interpretation of the term "products purchased" in Article III:8(a)
7.66. The Panel observes that most cases of governmental procurement involve situations in which
a government obtains products for its own use or consumption, and do not give rise to any
conceptual issues in terms of Article III:8(a). In the classical situation where a government obtains
products for its own use or consumption, it will typically d o so pursuant to tendering procedures
prescribed by domestic laws and regulations governing procurement; the government 's action of
using or consuming the products itself will reflect rights of ownership of the product associated with
a product "purchased" in the narrowest sense of the term; the purchase of a product by a
government for its own use and consumption will fall within the narrowest concept of a product
purchased "for a governmental purpose"; and when the government uses or consumes the product
itself, it will by definition not be "with a view to commercial resale".
7.67. However, the scope of the government procurement derogation in Article III:8(a) is not
limited to the classical situation in which a government acquires products for its own use or
consumption. The Appellate Body interpreted the term "governmental purposes" in Article III:8(a)
as referring more generally to products "purchased for the needs of the government in the discharge
of its functions"379, and clarified that the phrase "products purchased for governmental purposes" in
Article III:8(a) covers not only what is consumed by the government itself, but also "what is provided
by government to recipients in the discharge of its public functions".380 In the present case, neither
of the part ies, nor any of the third parties, has disagreed with this understanding of what may
constitute a "governmental purpose".
7.68. In those situations where a government pays for products that are ultimately used and
consumed by non-governmental third parties, rather than by the government itself, the applicability
of Article III:8(a) may become less straightforward. Among other things, it may become more
difficult in such situations to differentiate a payment constituting a "purchase" of products, which in
principle falls within the scope of the derogation in Article III:8(a), from other forms of payments
which might be labelled as financing, reimbursement or funding, which in principle are not covered
by Article III:8(a). The difficulty of conceptualizing what is m eant by a "product purchased", and
how to differentiate a purchase from other types of transactions, may be compounded where the
end result of different types of arrangements is identical – i.e. the government pays for products
that are ultimately used or consumed by third parties. In such situations, it becomes necessary to
ensure that the application of Article III:8(a) is grounded in an objective legal standard and sound
interpretation of the definition of the term "product purchased".
7.69. The Panel has been presented with opposing interpretations of the term "products purchased"
in Article III:8(a). The European Union argues that the term "purchased" should be interpreted
relatively narrowly, to mean a transaction which results in a government "acquiring property over"381
products. Turkey does not agree with the European Union that government procurement effectuated

378 Turkey's second written submission, paras. 71-73.
379 Appellate Body Reports, Canada – Renewable Energy / Feed-In Tariff Program, para. 5.67.
380 Appellate Body Reports, Canada – Renewable Energy / Feed-In Tariff Program, para. 5.68.
381 European Union's second written submission, para. 100.

through means of a purchase under Ar ticle III:8(a) necessarily requires acquiring an "entitlement"
to or "obtaining property rights over" the products.382 The Panel considers that, in accordance with
Article 31(1) of the Vienna Convention on the Law of Treaties, it must resolve the meaning of the
term "product purchased" in accordance with "the ordinary meaning to be given to the terms of the
treaty in their context and in the light of its object and purpose".
7.70. Beginning with the ordinary meaning of the term "product purchased", the Panel consi ders
that in everyday usage a person or entity is said to purchase a product at the moment that the
person or entity acquires ownership of a product through some kind of payment. Indeed, it is the
acquisition of ownership over a product that constitutes the defining characteristic of what it means
to purchase a product, and it is what distinguishes purchasing a product from renting/leasing that
product. If the word "purchase" is defined in more general and abstract terms as "the action or an
act of obtaining something in exchange for payment in money or an equivalent"383, then when what
is being purchased is a product, the "something" that is obtained for purposes of that general and
abstract definition is the ownership of (i.e. property rights over) the product.
7.71. Turning to the immediate context of the term "purchase" in Article III:8(a), the Panel recalls
that the Appellate Body clarified that the word "procurement" refers to "the process pursuant to
which a government acquires products"384, and that the word "purchased" in Article III:8(a) refers
to "the type of transaction used to put into effect" that acquisition.385 Thus, the concept of "purchase"
covers only a subset of the various types of transactions that can be used to put into effec t a
"procurement".386 Article I:2 of the GPA supports the Appellate Body's understanding, as it refers to
"procurement by any contractual means, including through such methods as purchase or as lease,
rental or hire purchase, with or without an option to buy". The Panel considers that interpreting the
term "purchased" in accordance with its ordinary meaning, i.e. as covering only the type of
transaction through which the government acquires ownership of the products, gives the term
"purchase" a meaning that is distinct from the broader concept of "procurement" which may involve
other types of transactions by which products might be procured (e.g. leasing) . As the European
Union observes, the common element of these other contractual arrangements is that, "while they
may lead to the acquisition of products (for example, in the case of rental, the acquirer takes
possession and has the right to use the product for a certain period of time), they do not lead to the
acquisition of property over products."387
7.72. The Panel considers that the term "products purchased" must also be interpreted taking into
account, as part of the immediate context, the additional requirement that, in order to fall within
the scope of Article III:8(a), the products purchased must be "for a governmental purpose". The
Appellate Body clarified that the phrase "products purchased for governmental purposes" in Article
III:8(a) "refers to what is consumed by the government or what is provided by government to
recipients in the discharge of its public functions".388 The Panel considers that both of those actions
– i.e. a government consuming a product that it has acquired, or providing a product that it has

382 Turkey's responses to the first set of questions, para. 31.
383 Oxford English Dictionary online,
<https://www.oed.com/view/Entry/154831?rskey=07nKL5&result=1&isAdvanced=false#eid>. The Panel notes
that the parties have presented it with alternative dictionary definitions of the word "purchase" to support their
opposing interpretations. Consistent with its view that the acquisition of property over products is a defining
characteristic of a "purchase", the European Union considers that the relevant dictionary definition is "[t]he
acquisition of property (esp. land) by any legal means other than inheritance" (European Union's first written
submission, para. 201). In contrast, Turkey refers to a dictionary definition of the term "purchase" that does
not make reference to property, and defines the term more broadly as "the action or an act of obtaining
something in exchange for payment in money or an equivalent." (Turkey's first written submission, para. 207).
Both parties draw their definitions from the same source, i.e. the Oxford English Dictionary Online.
384 Appellate Body Report, Canada – Renewable Energy / Canada – Feed-in Tariff Program, para. 5.59.
(emphasis added)
385 Appellate Body Report, Canada – Renewable Energy / Canada – Feed-in Tariff Program, para. 5.59.
387 European Union's first written submission, para. 202. (emphasis original). The Panel notes that the
GATT panel in US – Sonar Mapping stated, in the context of a similar provision in a predecessor version of the
GPA in force at the time, that "[w]hereas ownership is not a necessary element of government procurement,
as is clear from the various methods of procurement mentioned in Article I:1(a), transfer of title to the
Government is a strong indication that government procurement is involved." (GATT Panel Report, US – Sonar
Mapping, para. 4.10.) (emphasis added)
388 Appellate Body Reports, Canada – Renewable Energy / Feed-In Tariff Program, para. 5.68.

acquired to other recipients to be consumed by them – presuppose that the government acquires
ownership of the product being consumed.
7.73. Turning to the Panel 's consideration of the object and purpose of the GATT 1994, the Panel
notes that if situations in which a government pays for products used by non -governmental
consumers are treated as "purchases" by the government even though the government never
acquires ownership over those products, simply on the basis that it is the government that "pays for
the pharmaceutical products and thus is the ultimate buyer (or the purchaser) "389, then this would
result in Article III:8(a) covering an open -ended range of protectionist measures. As the European
Union observes, the range of governmental financing measures that might be covered under Article
III:8(a) as "purchases" by a government agency could, on the basis of Turkey's interpretation of the
term, include coupons for food, subsidies for renovating real estate, and tax credits for
environmentally friendly purchases.390 Recalling that Article III:8(a) is a limited derogation from the
national treatment obligation in Article III, the Panel considers that such a result would undermine
the object and purpose of the GATT 1994. The Panel understands that Turkey 's position is that the
SSI does more than merely engage in "financing", and that Turkey takes issue with the European
Union's attempt to "reduce the role of the SSI to the mere financing of the purchases of
pharmaceutical products by outpatients ".391 However, even assuming that Turkey is correct in
asserting that the SSI does more than merely engage in financing, Turkey has not specified on what
other basis, if not the acquisition of ownership, the concept of a "purchase" by a government could
be distinguished from mere financing of private purchases in circumstances where the relevant
products are provided to , and consumed by, non -governmental recipients. In other words, while
Turkey has identified a series of factual elements that, in its view, support the conclusion that the
Turkish system falls within the scope of Article III:8(a)392, these elements do not specify an objective
legal standard for distinguishing the concept of a "purchase" by a government from mere financing
of private purchases in circumstances where the relevant products are provided to, and consumed
by, non-governmental recipients.
7.74. The foregoing analysis leads the Panel to conclude that, in the context of the phrase
"procurement by governmental agencies of products purchased for governmental purposes " in
Article III:8(a), a product is "purchased" by a government only if the government acquires ownership
of that product through some kind of payment. The fact that SSI pays for the products is not
sufficient: for a purchase to occur by the SSI, it would have to be established that the SSI acquires
ownership of the products. As elaborated in the next subsection, the Panel agrees with Turkey that
the range of transactions through which a government may acquire ownership of products may vary,
and the specific features of what constitutes ownership may vary depending on facto rs such as the
nature of the good. However, the Panel considers that in all cases, if there is no acquisition of
ownership of products by the government, then there is no "purchase" of products by the
government and the measure at issue will not fall within the scope of the government procurement
derogation in Article III:8(a). Thus, the Panel does not agree with Turkey 's argument that the SSI
"pays for the pharmaceutical products and thus is the ultimate buyer (or the purchaser)".393
7.75. The Panel considers tha t Turkey's interpretation of the term "products purchased", i.e. the
SSI must be deemed to "purchase" pharmaceutical products because it pays for their cost, even if
it does not acquire ownership of those products, is also inconsistent with the two prior d isputes in
which Article III:8(a) was interpreted and applied. More specifically, in Canada – Renewable Energy
/ Canada – Feed-in Tariff Program, the panel interpreted government "purchases" of goods "to mean

389 Turkey's first written submission, paras. 206-208.
390 European Union's responses to the first set of questions, para. 8.
391 Turkey's second written submission, para. 23.
392 In the context of its comments on the Interim Report, Turkey reiterated that "the SSI ensures the
provision of medicines to outpatients and makes all the necessary arrangements for this purpose: it decides
which medicines are listed in Annex 4/A; it sets public prices of those medicines; it signs contracts with
pharmacies for ensuring the availability and distribution of those medicines throughout the country; it approves
the provision of the medicines to be dispensed to outpatients through the Medula system and pays the invoice
it receives for those medicines from the pharmacies. It is the combination of all the above elements that makes
the Turkish system fall within the scope of Article III:8(a). Turkey further explained that a universal healthcare
system in which public authorities control all aspects of the purchase and provision of prescribed medicines to
outpatients would generally fall within the scope of Article III:8(a), while this would not be the case for a
system which is voluntary, does not have universal coverage and is financed through the contributions of the
participants." (Turkey's comments on the Interim Report, para. 28.)
393 Turkey's first written submission, paras. 206-208.

the action by which a government obtains posses sion (including via obtaining an entitlement) over
goods through some kind of payment (monetary or otherwise) ".394 Although the panel referred to
the concept of possession, which might be understood to mean physical possession395, it made clear
that it did not use the term in this sense, reasoning that "nothing in the ordinary meanings we have
reviewed suggests that a 'purchase' must involve obtaining physical possession over something".396
Instead, the panel used the expression "possession over goods" to refer to the rights acquired by
the government in respect of electricity sold by the generators, namely the right to receive, distribute
and charge for electricity passing through the transmission system. These appear to be rights of
ownership associated with electricity, a product that cannot be stored and that is generated and
consumed almost instantaneously. Indeed, t he panel concluded that "given the specific
characteristics of electricity, it is perhaps best to conceive of a purchase of electricity as involving
the transfer of an entitlement to electricity, rather than the taking of physical possession over
electricity".397
7.76. In India – Solar Cells , the governmental agencies in question purchased electricity from
generators, and India accepted that those agencies did not "purchase" or "directly acquire" the solar
cells and modules used to generate the electricity, which were the subject of the domestic content
requirements at issue. India accepted that this was so because the agencies did not "take title or
custody" of the electricity generation equipment. 398 India nonetheless sought to argue that it was
"effectively procuring" solar cells and modules for purposes of Article III:8(a), because the electricity
generation equipment constituted "integral inputs for the generation system "399 and thus "cannot
be treated as distinct from solar power "400, and because "the tariff for the power purchased under
the [power purchase agreements] incorporated within it the cost for the solar cells and modules".401
However, the panel and the Appellate Body in that dispute were not persuaded by those arguments
and concluded that the only product being "purchased" was electricity.
7.77. Thus, in both of these disputes, the conclusion reached was that, for purposes of Article
III:8(a), the "product purchased" by the governmental agencies through the relevant measures was
only electricity, and not also the electricity generation equipment subject to the challenged domestic
content requirement. This conclusion was reached even though, in both cases, the relevant
governmental agencies paid the electricity generators a price that covered the cost of the equipment
used in generating the electricity that the governments purchased. However, the governmental
agencies involved in purchasing electricity acquired ownershi p of electricity, but did not acquire
ownership of the electricity generation equipment (e.g. solar cells) that was the subject of the
domestic content requirement at issue.
7.78. In this dispute, Turkey explains that in the past, the SSI itself obtained the pha rmaceutical
products from the wholesalers and dispensed them to patients through pharmacies run by the SSI.402
Turkey explains that because that system was not very efficient, it was changed, with the

394 Panel Report, Canada – Renewable Energy / Canada – Feed-in Tariff Program, para. 7.136.
395 The Panel notes that the term "possession" is susceptible to several different meanings and
depending on the context may be used interchangeably with "ownership". For example, the Oxford English
Dictionary Online defines "possess" as "[t]o own, to have or gain ownership of; to have (wealth or material
objects) as one's own; to hold as property." In the US – Sonar Mapping case, the panel appeared to use the
terms "possession" and "ownership" interchangeably. Specifically, the panel stated that while not intending to
offer a definition of government procurement within the meaning of Article I:1(a), it enumerated several
factors that should be considered on the facts of any case, including what it termed "government possession"
(GATT Panel Report, US – Sonar Mapping, para. 4.7). In the context of elaborating on the facts of the case, the
panel stated, apparently in relation to that enumerated factor, that the relevant governmental agency would
"take title to the sonar mapping system as of the time of its delivery" and made the observation that
"[w]hereas ownership is not a necessary element of government procurement, as is clear from the various
methods of procurement mentioned in Article I:1(a), transfer of title to the Government is a strong indication
that government procurement is involved" (para. 4.10). In summing up its assessment of the factors it had
considered, the panel again referred to the government's "ownership" of the sonar mapping system. (Ibid.
para. 4.13).
396 Panel Report, Canada – Renewable Energy / Canada – Feed-in Tariff Program, para. 7.228.
(emphasis original)
397 Panel Reports, Canada – Renewable Energy / Canada – Feed-in Tariff Program, para. 7.229.
(emphasis original)
398 Panel Report, India – Solar Cells, para. 7.114.
399 Panel Report, India – Solar Cells, paras. 7.109 and 7.114.
400 Panel Report, India – Solar Cells, para. 7.128.
401 Panel Report, India – Solar Cells, para. 7.129.
402 Turkey's second written submission, paras. 65-68.

introduction of the Transformation in Health Program in 2003, to a system whereby pharmaceutical
products are dispensed through retail pharmacies. Turkey understands that the European Union
would consider the practice before this reform as amounting to government procurement and in that
sense would agree that t he practice falls under Article III:8(a) just because the pharmaceutical
products were dispensed by the state-owned pharmacies directly to patients. However, according to
Turkey, "the essence of the system after the reform remains unchanged, the only diffe rence being
that part of the tasks previously carried out by the SSI has now been delegated to the retail
pharmacies", and therefore Turkey submits that the European Union 's interpretation of
Article III:8(a) is "overly formalistic and puts form before substance".403
7.79. The Panel is not persuaded by Turkey's argument. First, the Panel notes that Turkey's
argument is formulated in terms that imply that the European Union is arguing that Article III:8(a)
only applies where a government acquires "physical possessi on" of the products purchased. 404
However, the Panel does not understand the European Union's interpretation of Article III:8(a) to
be that "physical possession" of goods is a constitutive element of a "purchase". Rather, the Panel
understands the European Union's interpretation of Article III:8(a) to be essentially the same
interpretation as the one elaborated by the Panel in its reasoning above, namely, that a product is
"purchased" by a government only if the government acquires ownership of the product t hrough
some kind of payment. Thus, Turkey's argument appears to conflate the notion of acquisition of
ownership over a good and the notion of having physical possession of that good. Second, insofar
as Turkey's argument is that treating the acquisition of ownership over a good as a constitutive
element of the concept of a "purchase" of that good is overly formalistic, then the Panel disagrees.
The Panel does not consider it formalistic to interpret Article III:8(a) as being, in principle, applicable
to situ ations in which a governmental agency (e.g. state -owned pharmacy and/or hospital)
purchases pharmaceutical products and then provides them directly to patients, and as being, in
principle, not applicable to other situations where the government pays for th e cost of the
pharmaceutical products consumed by patients without ever acquiring ownership over these
products.405
7.80. The Panel observes that an analogous argument was made by the responding party in
India - Solar Cells, and that it did not persuade the panel or the Appellate Body. In that case, India
argued that under the relatively narrow interpretation of Article III:8(a) advocated by the
complaining party, and ultimately adopted by the panel and the Appellate Body, there would be an
arbitrary result. Specifically, the result would be that Article III:8(a) would in principle apply only if
the government itself purchased solar cells and then provided them to private solar power developers
(SPDs) (or the government itself generated the electricity from them wi thout involving SPDs), but
that Article III:8(a) would in principle not apply if the government paid for their cost (i.e. the tariff
for the power purchased from SPDs incorporated within it the cost for the solar cells and modules
they were required to use) without acquiring ownership. In India's view, both situations involved the
relevant governmental agency "effectively procuring " solar cells and modules for purposes of
Article III:8(a). India considered that it could not have been the intent of the drafters of
Article III:8(a) to treat these situations differently. However, neither the panel nor the Appellate
Body was persuaded by India's argument, and evidently did not consider the distinction drawn to be
formalistic.406
7.81. Based on the foregoing, the Panel concludes that, in the context of the phrase "procurement
by governmental agencies of products purchased for governmental purposes " in Article III:8(a), a
product is "purchased" by a government if the government acquires ownership of that product
through some kind of payment. The Panel considers that the broader interpretation of the term
"products purchased" advanced by Turkey, i.e. that the SSI "pays for the pharmaceutical products
and thus is the ultimate buyer (or the purchaser) "407 regardless of whether the SSI ever acquires
ownership over those products, is difficult to reconcile with the ordinary meaning of the term
"purchased", the immediate context afforded by the other cumulative elements of Article III:8(a),

404 See Turkey's second written submission, paras. 63-64.
405 See Turkey's second written submission, para. 42.
406 See Panel Report, India – Solar Cells, paras. 7.130-7.133; Appellate Body Report, India – Solar Cells,
paras. 5.33-5.34.
407 Turkey's first written submission, paras. 206-208.

the object and purpose of the GATT 1994, and the Appellate Body's findings in Canada – Renewable
Energy / Canada – Feed-in Tariff Program and India – Solar Cells.
7.2.4.3 Whether the SSI purchases pharmaceutical products from retail pharmacies
7.82. Having concluded that a product is a "product purchased " by a government only if the
government acquires ownership of that product, the Panel will now apply this legal standard to
assess whether Turkey's pharmaceutical reimbursement system involves a "purchase" by the SSI.
The Panel recalls that Turkey's second argument which rests on an alternative interpretation of the
term "products purchased" in Article III:8(a), is that even under the "extremely narrow"408 definition
of what constitutes a "purchase" that it disagrees with409, i.e. a transaction requiring the transfer of
legal title over a product, there is still a "purchase" by the SSI because, as a matter of fact, the SSI
does acquire title to pharmaceutical products at the moment a retail pharmacy scans a prescription's
QR code and the Medula system approves the provision of that pharmaceutical product to the
patient. Thus, the Panel must assess whether the SSI acquires ownership of pharmaceutical products
included in the Annex 4/A list, whether at the moment of approval in the Medula system or otherwise.
7.83. The Panel accepts that the range of transactions through which a government may acquire
ownership of products may vary, and that the specific features of what constitutes ownership may
vary depending on factors such as the nature of the good. As elaborated above in the context of
interpreting the term "purchase", the Panel does not consider physical possession of goods to be a
constitutive element of a purchase. In this connection, the Panel agrees wi th both parties that the
Canada – Renewable Energy / Canada – Feed-in Tariff Program panel's approach to the example of
electricity – a product that generally cannot be stored in large quantities, and which in the context
of delivery by public utilities th rough the electricity grid is generated and consumed almost
instantaneously – is instructive. That panel stated that "given the specific characteristics of
electricity, it is perhaps best to conceive of a purchase of electricity as involving the transfer o f an
entitlement to electricity, rather than the taking of physical possession over electricity"410 and found
that there was such a transfer of an "entitlement" to electricity on the basis that the governmental
agencies in question acquired certain legal ri ghts in respect of the products, including the right to
receive, distribute and charge for (i.e. resell) electricity passing through the transmission system.
7.84. Thus, in assessing whether the SSI acquires ownership of pharmaceutical products included
in the Annex 4/A list, the Panel has sought to determine whether the SSI acquires any legal rights
over the products of the type typically associated with ownership of goods. The Panel has also taken
into account the kinds of legal rights over pharmaceutical products that are acquired by other entities
that undisputedly acquire ownership over those products in the context of the Turkish system. These
other entities include private pharmacies that acquire ownership of pharmaceutical products when
they purchase them from wholesalers, and the final consumers (i.e. outpatients) that acquire
ownership of pharmaceutical products when they obtain them from pharmacies. The Panel observes
that it is undisputed between the parties that pharmacies acquire ownership of medicine s when
obtaining them from wholesalers, and that the final consumers (i.e. outpatients) subsequently
acquire ownership of pharmaceutical products when obtaining them from retail pharmacies.411
7.85. The Panel is unable to discern any basis upon which it could conclude that the SSI acquires
any legal rights over the pharmaceutical products it pays for, let alone that it acquires the types of
legal rights that are typically associated with ownership of goods. Generally, there is nothing in the
parties' description of Turkey 's pharmaceutical reimbursement system to suggest that the SSI

408 Turkey's first written submission, para. 205.
409 Turkey's first written submission, para. 206.
410 Panel Reports, Canada – Renewable Energy / Canada – Feed-in Tariff Program, para. 7.229.
(emphasis original)
411 The point of disagreement between the parties is whether the SSI acquires intervening ownership of
the product. The European Union argues that the pharmacy retains ownership and control of their stock, once
purchased from wholesalers, until they are sold to patients, and that when sold to patients, there is "no doubt
that patients obtain those products (including property over them)". (European Union's second written
submission, paras. 106-107.) Turkey argues that the pharmacy retains ownership and control of their stock,
once purchased from wholesalers, and that the SSI acquires the title to medicines listed in Annex 4/A and
prescribed to patients at the moment the provision of such medicines is registered and approved in the Medula
system and that, at that moment, the SSI acquires the right to dispose of those medicines by dispensing them,
through the retail pharmacies, to patients, and "the title to those medicines is then immediately transferred to
patients because the patients have the legal right to those medicines." (Turkey's closing statement, para. 23.)

acquires any right of possession, any right of control, any right of exclusion, any right to derive
income, or any right to freely dispose of the pharmaceutical products that it acquires.
7.86. As an example of the kinds of legal rights typically associated with ownership of goods that
the SSI does not acquire, the Panel notes that it is undisputed that SSI does not ever acquire the
right to take physical possession of the pharmaceutical products that it pays for. For reasons already
given, the Panel does not consider taking physical possession of goods to be a constitutive element
of a "purchase". However, while a purchaser need not necessarily exercise the right to take physical
possession of the purchased goods for the transaction to be considered a purchase, the absence of
any such right to take physical possession of the goods is a strong indicator that the entity paying
for these goods has not acquired any right of ownership over them . This is especially so when the
goods in question are in the nature of goods that can freely be transported and stored, such as
pharmaceutical products.412 The absence of any right for the SSI to take physical possession of the
products it pays for stands in marked contrast to the rights of ownership acquired by retail
pharmacies when purchasing pharmaceutical products from warehouses, and the rights of ownership
acquired by outpatients when receiving those products from the retail pharmacies. In both cases,
these purchasing entities acquire, and exercise, the right to take physical possession of the products
in question.
7.87. In addition, the Panel finds no basis to support Turkey 's assertion that the SSI obtains the
right to dispose of the pharmaceutical products that it pays for according to its own choices. Based
on the parties' description of the process, it seems undisputed that, following approval in the Medula
system, the pharmaceutical product in question must be provided to the individual consumer (i.e.
outpatient) named in the prescri ption. According to the parties ' description of the process, all
relevant decisions and choices associated with the disposition of pharmaceutical products are made
by the prescribing doctor, the pharmacy, and the ultimate consumer (i.e. the outpatient). The Panel
is unable to discern any SSI involvement in choosing who receives and consumes any of the
pharmaceutical products that the SSI pays for. Put differently, all of the pharmaceutical products
paid for by the SSI would be disposed of in exactly the same manner in a counterfactual scenario in
which the SSI did not pay for all or part of the cost of those products. Neither the SSI nor any other
governmental agency plays any role in directing, or redirecting, pharmaceutical products to
recipients of their choosing.
7.88. The Panel is not persuaded by Turkey 's argument, in this connection, that the SSI can be
deemed to acquire title to pharmaceutical products included in the Annex 4/A list and prescribed to
patients at the moment the provision of such pharmaceutical products is registered and approved in
the Medula system. Approval through the Medula system is essentially a confirmation that the patient
is within SSI coverage and that the prescribed pharmaceutical products are on the Annex 4/A list.
That approval confirms, among other things, that the pharmaceutical product may be invoiced by
the pharmacy to the SSI at the previously set price. 413 In the Panel 's view, it would require an
artificial and strained construction of the facts to characterize this confirmat ion as a transaction
through which "the SSI acquires the right to dispose of those medicines by dispensing them, through
the retail pharmacies, to patients", and "the title to those medicines is then immediately transferred
to patients because the patients have the legal right to those medicines."414 If that characterization
of the facts in this case were accepted, then almost any measure through which the government
(provisionally) approves the payment of the cost of a product could also be so characterized . In
addition, the Panel observes that Turkey has not directed the Panel to any reference to the SSI

412 The Panel considers that pharmaceutical products are in the nature of goods that can freely be
transported and stored in the sense that there are no physical, logistical or practical limitations on their
transportation and storage of the type that may be encountered in the case of certain other types of goods –
for instance, electricity. Of course, pharmaceutical products cannot be freely transported and stored in the
sense of being unregulated products that can be freely bought and sold by anyone, and there are a range of
legal and regulatory limitations on how they are transported and stored. As Turkey observes "[t]heir
production and placing on the market are strictly regulated and their consumption is subject to the prescription
by medical doctors. Their provision requires specific conditions and must be carried out by trained
professionals, i.e. pharmacists. Medicines cannot be freely bought by consumers and cannot be treated as
such." (Turkey's second written submission, para. 5.)
413 See Turkey's responses to the first set of questions, para. 26; European Union's responses to the
first set of questions, paras. 10-22, opening statement para. 24.
414 Turkey's second written submission, para. 73; responses to the first set of questions, paras. 32-34;
closing statement, para. 23; and responses to the second set of questions, para. 43.

acquiring "title" to pharmaceutical products in the Protocol signed between the SSI and the Turkish
Pharmacists Association or to any other evidence on record.415
7.89. The Panel notes that none of the third parties that took a position on the applicability of
Article III:8(a) to the localisation requirement consider that the SSI acquires ownership of
pharmaceutical products. Canada notes that in the case of a pharmaceutical reimbursement system
like the one in Turkey, the "governmental agency" does not "purchase" the pharmaceutical products
because it does not "obtain any form of 'property rights' over the pharmaceutical products".416 Japan,
likewise, notes that the SSI "cannot be the purchaser for purposes of Article III:8(a) because it
never gains an entitlement to the products ", in contrast to the pharmacies that acquire an
"entitlement to the products, including the authority to store, ship, or sell the product ".417
Switzerland observes that it would be difficult to consider that there is "procurement by
governmental agencies" or "purchase of products " within the meaning of Article III:8(a) "where
private entities have ownership of the products " and "control their disposition" (and, Switzerland
continues, where they have the right to cancel contracts with wholesalers, bear the risks of unsold
inventories and other commercial risks, do not go through tendering processes to acquire the
products, or are not perceived to be government agencies by wholesalers).418
7.90. Based on the foregoing, the Panel concludes that the SSI does not acquire ownership of
pharmaceutical products included in the Annex 4/A list and therefore the SSI 's reimbursement of
part or all of the cost of those products does not qualify as a "purchase" by the SSI in the context
of the phrase "procurement by governmental agencies of products purchased for governmental
purposes" in Article III:8(a).
7.91. As indicated in the descriptive part of the Report419, the parties use different terminology, at
times supported by alternative translations of relevant Turkish instruments and documents, to
characterize what happens in transactions between retail pharmacies, outpatients, and the SSI. For
the European Union, the SSI "reimburses" retail pharmacies for medicines "sold to" "consumers",
pursuant to the Protocol that, under its translation, refers to pharmaceutical products being
"procured by" those consumers. For Turkey, the pharmaceutical products are "paid for " (not
"reimbursed") by the SSI, the retail pharmacies "dispense" or "provide" (and do not "sell") those
medicines to "outpatients" (not "consumers"), and the correct translation of the Protocol refers to
medicines being "provided to", as opposed to being "procured by", outpatients. In the light of the
parties' disagreement over the correct translation of certain terms used in Turkish instruments and
documents, and their wider disagreements over terminology, the Panel wishes to clarify that its
conclusion and reasoning above are not based on semantic considerations. The Panel 's conclusion
and reasoning are instead grounded in an objective legal standard.
7.2.4.4 Pharmacies' purchases of pharmaceuticals from wholesalers
7.92. The Panel has concluded that the SSI 's payment of part or all of the cost of pharmaceutical
products does not qualify as a "purchase" by the SSI. The Panel will now assess Turkey's alternative
argument that, even if the SSI does not itself "purchase" pharmaceutical products included in the
Annex 4/A list, there is still a "purchase" covered by Article III:8(a) because private retail pharmacies
act on behalf of the SSI, and are, to that extent, themselves "governmental agencies" for purposes
of Article III:8(a).
7.93. The Panel notes at the outset that this alternative argument, i.e. that Article III:8(a) applies
to the localisation requirement because private retail pharmacies are themselves "governmental
agencies", has been unfolded in the course of the proceedings in a manner that is less than clea r
and remains somewhat ambiguous. First, Turkey argues that "the procurement is done by a
governmental agency, namely the SSI "420, and Turkey "confirms that the relevant governmental

415 The Panel considers the lack of such a characterization to be a relevant supplementary consideration,
bearing in mind that the label or characterization given to a transaction under domestic law cannot be
dispositive of the proper characterization under Article III:8(a). (See Appellate Body Reports, Canada –
Renewable Energy / Canada – Feed-in Tariff Program, para. 5.127.)
416 Canada's responses to the Panel's questions to third parties, para. 4.
417 Japan's responses to the Panel's questions to third parties, para. 6.
418 Switzerland's responses to the Panel's questions to third parties, para. 7.
419 See section 1.5 and footnotes 36 and 56.

agency is the SSI".421 In its written submissions, Turkey argued that the r etail pharmacies "act on
behalf" of the SSI in dispensing the pharmaceutical products approved and paid for by the SSI to
outpatients. The Panel understood from Turkey's written submissions that Turkey was arguing that
the SSI purchases pharmaceutical prod ucts from pharmacies, and that the pharmacies "act on
behalf" of the SSI insofar as they perform the service of dispensing pharmaceutical products included
in the Annex 4/A list to outpatients. The Panel has addressed this argument in the previous sub -
section.
7.94. However, in its responses to the first set of questions from the Panel, Turkey stated, in a
footnote, that "[i]n any event, even if the transaction between the SSI and the retail pharmacies
would not be qualified as a 'purchase' (quod non), it is clea r that the retail pharmacies purchase
medicines included in Annex 4/A from the wholesalers acting on behalf of the SSI. "422 In response
to the Panel 's second set of questions, Turkey clarified that its alternative argument in this
connection is that private retail pharmacies are themselves "governmental agencies " for the
purposes of Article III:8(a), because they act on behalf of the SSI when purchasing medicines from
wholesalers.423 Turkey explained that its "argument relating to the purchase of medicines included
in Annex 4/A and dispensed to patients by the SSI is two-fold. In the first place, Turkey argues that
the SSI purchases those pharmaceutical products from the retail pharmacies which are charged with
dispensing those medicines to patient s. Should the Panel find that the SSI does not purchase
medicines from the retail pharmacies, Turkey submits that Article III:8(a) applies in the present
case also because the purchase of medicines included in Annex 4/A by the retail pharmacies from
the wholesalers is made on behalf of the SSI."424
7.95. In its comments on Turkey 's response, the European Union states that Turkey "seems to
propose a novel theory of why Article III:8(a) should apply", and observes that "[u]nder that theory,
it would be wholesale pur chases of pharmaceutical products, and not their government -financed
supply to out -patients, that would constitute 'government procurement ' protected by
Article III:8(a)."425
7.96. The Panel agrees with Turkey that the terms of Article III:8(a) do not necessarily preclude a
governmental agency from purchasing products through an "intermediary".426 However, the Panel
considers that, to fall within the scope of Article III:8(a), a governmental purchase effected through
an intermediary, and/or through the combined act ions of several entities427, must be conducted in
a way that leads to the government acquiring ownership of the product purchased. In a situation in
which a purchasing entity is an organ of the State (whether legislative, executive, or judicial), its
acquisition of ownership over pr oducts entails that the government has acquired ownership over
those products. Likewise, in the case of purchases made by a publicly owned and controlled entity,

421 Turkey's responses to the second set of questions, para. 46.
422 Turkey's responses to the first set of questions, fn 36.
423 Turkey's responses to the second set of questions, paras. 47-49.
424 Turkey's responses to the second set of questions, para. 44.
425 European Union's comments on responses to the second set of questions, para. 39.
426 Turkey's first written submission, para. 209.
427 The Panel considers that where a government acts through several entities that are each/all
"governmental agencies", then responsibilities may be allocated in a manner that necessitates an assessment
of whether their "combined actions" establish the requisite elements of a governmental purchase. In Canada –
Renewable Energy / Canada – Feed-in Tariff Program, one government entity (the OPA) made the payments
for electricity, while a different government entity (Hydro One) received and transmitted electricity delivered
by suppliers. This led Japan to argue that the OPA served as a mere financing entity, not a purchasing entity,
because the OPA itself never took possession of electricity. However, neither the panel nor the Appellate Body
considered that the allocation of responsibilities between different governmental entities undermined the
conclusion that the Government of Ontario "purchased" electricity, because all of the entities involved were
governmental entities. More specifically, the Appellate Body reasoned that "[s]ince in the present case all the
entities involved are public bodies and thus their activities are attributable to the government, it is not relevant
whether the Government of Ontario acts through one or several of these entities." Consequently, the Appellate
Body considered that the fact that "the OPA itself does not take possession over electricity does not undermine
the Panel's finding that the Government of Ontario purchases electricity through the FIT Programme and
Contracts … because Hydro One, which is the entity transmitting electricity, was also found to be a public body,
and the Panel found that the "combined actions" of the OPA, Hydro One, and the IESO demonstrate that the
Government of Ontario purchases electricity." (Appellate Body Reports, Canada – Renewable Energy / Canada
– Feed-in Tariff Program, para. 5.124.) The panel and the Appellate Body's analysis of that issue was made in
the context of interpreting and applying Article 1.1(a)(1)(iii) of the SCM Agreement, but the panel considered
that its findings under Article 1.1(a)(1)(iii) applied equally to Article III:8(a). (See Panel Reports, Canada –
Renewable Energy / Canada – Feed-in Tariff Program, para. 7.136).)

the government 's ownership of the purchasing entity may entail the government also acquiring
ownership over any products purchased by that publicly owned and controlled entity. A government
may also enter into transactions through a private, arms -length third party entity that involve
purchasing products and, insofar as the relevant transactions ar e structured and organized in a
manner that results in the government acquiring ownership, that entity may well qualify as a
"governmental agency" for purposes of Article III:8(a). What is relevant in each of these cases is
that the entity's purchases entail, or result in, government ownership over the products in question.
7.97. To find otherwise would lead to the conclusion that Article III:8(a) would apply to purchases
made by non-governmental, private entities despite the government never acquiring ownership over
the products. This would entirely negate the limitation in Article III:8(a) that a product is "purchased"
by a government if the government acquires ownership of it. For the reasons already given, this
limitation is grounded in the provision's ordinary meaning and context, and in the object and purpose
of the GATT 1994. The concept of a "governmental agency" cannot be interpreted in a manner that
is divorced from the fact that Article III:8(a) is limited to the acquisition of products, through
procurement and "purchase" by the government.
7.98. It is not necessary for the Panel to elaborate further in the abstract on the types of entities
that may constitute "governmental agencies " in the context of Article III:8(a), because in the
circumstances of this case, it is clear that the pharmacies ' purchases of pharmaceutical products
from wholesalers do not entail, or result in, the acquisition of ownership over those products by the
SSI. In this case, the Panel has concluded that the SSI does not acquire ownership of pharmaceutical
products included in the Annex 4/A list and therefore, the SSI's reimbursements of part or all of the
cost of those products do not qualify as a "purchase" by the SSI. Rather, the private pharmacies
acquire ownership of pharmaceutical pro ducts from wholesalers and retain ownership until it is
transferred to the final consumers (i.e. outpatients). Accordingly, this suffices to establish that
private pharmacies do not qualify as "governmental agencies" under Article III:8(a).
7.99. The parties have engaged in extensive arguments about the extent to which the SSI controls
the actions of the retail pharmacies. Turkey essentially argues that the SSI controls all the elements
concerning the acquisition and distribution of pharmaceutical products includ ed in the Annex 4/A
list, starting with deciding which pharmaceutical products are listed in the Annex 4/A list, the price
of those products at each stage of the supply chain, including the "public price" charged to the SSI,
and how they are dispensed to p atients. The European Union disagrees, arguing that retail
pharmacies freely order and purchase their pharmaceutical products from wholesalers (also private
entities) through a private sales contract, hold and manage their inventory on their own (including
holding property rights over it), and bear the risks associated with their stock, with no SSI
involvement. The parties engage in these arguments in relation to the question whether it is correct
to say that the pharmacies "act on behalf" of the SSI.
7.100. In the Panel 's view, these disputed issues do not relate to the question whether the
pharmacies' purchases from wholesalers entail or result in the SSI acquiring ownership over those
products, and therefore are not directly relevant. Even if the Panel were to accept Turkey's assertion
that the SSI controls all the elements concerning the acquisition of pharmaceutical products included
in the Annex 4/A list, to such an extent that it could be said that the SSI instructs and directs
pharmacies what to do, this would not make pharmacies "governmental agencies" for the purposes
of Article III:8(a), or transform their purchases into purchases by the government, so long as the
pharmacies acquire ownership over pharmaceutical products independently of the government.
7.101. To find otherwise would imply that if private parties are instructed or directed by a
government to purchase certain products, the act of instruction or direction would make those
private parties "governmental agencies" with the result that their purchases would then be covered
by Article III:8(a). If that were correct, then it would follow that all domestic content requirements
imposed by governments on private entities would fall within the scope of Article III:8(a) because
the measure imposing the requir ement – be it a general law, regulation or requirement, or an
individual contractual arrangement – would have the effect of turning those entities into
"governmental agencies" for purposes of Article III:8(a).
7.102. Indeed, if it were correct to reason that a pr ivate entity should be deemed to be a
"governmental agency" whenever it is instructed or directed by the government to purchase certain
products, then it would follow, by way of illustrative example, that private electricity generators
subjected to certain domestic content requirements on generation equipment were themselves

"governmental agencies" acting on behalf of the government. This would, of course, stand in direct
contradiction to what the panels and Appellate Body found in previous cases under Arti cle III:8(a).
In India – Solar Cells, the measures expressly stipulated the origin of the goods that were to be
used by SPDs wishing to bid to sell electricity to the government 428; the measures were then
implemented by means of power purchase agreements (PPAs) and the "specific plan" that SPDs had
to submit within 180 days after entering into the PPA, specifying how they would meet the domestic
content requirements429; SPDs entering into a PPA thus became legally bound, by contract, to fulfil
the obligation of using certain solar cells and modules manufactured in India 430; and the tariff for
the power purchased under the PPAs incorporated within it the cost for the solar cells and modules.431
This did not make SPDs governmental agencies.
7.103. Based on the foregoing, and recalling the Panel 's conclusion that the SSI never acquires
ownership over the pharmaceutical products that it pays for, the Panel concludes that the private
retail pharmacies that do acquire and retain ownership over those pharmaceutical p roducts until
they are dispensed to the final consumer (i.e. outpatients) , do not qualify as "governmental
agencies" in the context of the phrase "procurement by governmental agencies of products
purchased for governmental purposes" in Article III:8(a).
7.2.4.5 Remaining elements under Article III:8(a)
7.104. The Panel has found that the localisation requirement does not involve the "purchase" of
pharmaceutical products included in the Annex 4/A list by governmental agencies. Accordingly, the
localisation requirement is n ot covered by the government procurement derogation of
Article III:8(a). This is a threshold legal element that must be satisfied for a measure to be covered
by the derogation in Article III:8(a), and the localisation requirement fails to meet this thresho ld.
Accordingly, it is not necessary for the Panel to conduct any further assessment of the remaining
legal elements of Article III:8(a) to determine the applicability of this derogation.
7.105. In India – Solar Cells, the panel considered it useful to proceed wi th a limited analysis and
review of certain issues relating to the remaining elements of Article III:8(a), including the
requirements that: (i) the measures in question are "laws, regulations or requirements governing …
procurement"; (ii) the procurement i s "by governmental agencies "; (iii) the procurement is of
products purchased "for governmental purposes"; and (iv) the products purchased are not procured
"with a view to commercial resale or with a view to use in the production of goods for commercial
sale".432 That panel's reason for doing so was to ensure that the Appellate Body could have the
benefit of its factual findings related to these issues in case the Appellate Body were to modify or
reverse the Panel's interpretation and application of the nature of the "products purchased".433 The
panel followed a similar approach in respect of certain other issues in that dispute, and made certain
additional findings beyond those strictly necessary to resolve the claims under Article 2.1 of the
TRIMs Agreement a nd Article III:4 of the GATT 1994 434, and to resolve the defences under
Articles XX(j) and (d) of the GATT 1994.435
7.106. In the circumstances of this dispute 436, the Panel sees no compelling reason to make
additional findings or observations beyond those necessar y to resolve the claims and defences at
issue. Accordingly, the Panel makes no findings on the disputed issues that arise in respect of the
remaining elements under Article III:8(a).

428 Panel Report, India – Solar Cells, para. 7.63.
429 Panel Report, India – Solar Cells, para. 7.27.
430 Panel Report, India – Solar Cells, paras 7.85 and 7.88.
431 Panel Report, India – Solar Cells, para. 7.129.
432 Panel Report, India – Solar Cells, paras. 7.136-7.186.
433 Panel Report, India – Solar Cells, paras. 7.136-7.138.
434 Panel Report, India – Solar Cells, paras. 7.74-7.98.
435 Panel Report, India – Solar Cells, paras. 7.334-7.382.
436 The Panel notes that the work of the Appellate Body has been suspended for nearly two years and
that Members remain unable to reach consensus on any selection process to fill the vacancies that are required
for the Appellate Body to function.

7.2.5 Conclusion
7.107. The Panel concludes that the localisation requirement is not c overed by the government
procurement derogation in Article III:8(a) of the GATT 1994, and is therefore subject to the national
treatment obligation in Article III:4 of the GATT 1994 and Article 2.1 of the TRIMs Agreement.
7.3 Article III:4 of the GATT 1994
7.3.1 Introduction
7.108. The Panel, having rejected Turkey 's assertion that the localisation requirement is covered
by the government procurement derogation in Article III:8(a) of the GATT 1994, now proceeds to
address the European Union's claim that the localisation requirement is inconsistent with the national
treatment obligation in Article III:4 of the GATT 1994.
7.109. The European Union claims that the localisation requirement is inconsistent with Article III:4
because, by excluding imported pharmaceutical products from the reimbursement scheme, Turkey
accords imported pharmaceutical products treatment less favourable than that accorded to like
products of national origin that are covered by the reimbursement scheme.437
7.110. Turkey limits its response to the European Union 's claim under Article III:4 to arguing that
this provision is inapplicable to the localisation requirement by virtue of the government procurement
derogation in Article III:8(a) of the GATT 1994, and that any inconsistency with Article III:4 would
be justified by Article XX(b) or XX(d) of the GATT 1994. 438 Turkey explains that, given that the
obligation set out in Article III:4 does not apply to that measure, by virtue of Article III:8(a), there
is no need to examine the different elements of Article III:4, including whether the measure
constitutes 'laws, regulations and requirements affecting internal sale, offering for sale, purchase,
transportation, distribution or use' or whether that measure accords 'less favourable treatment' to
imported like products.439
7.3.2 Relevant provisions
7.111. Article III:4 of the GATT 1994 provides:
The products of the territory of any Member imported into the territory of any other
Member shall be accorded 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.
7.112. Thus, the complaining party has the burden of establishing the following three elements440:
(i) the imported and domestic products at issue are "like produc ts"; (ii) the measure at issue is a
"law, regulation, or requirement a ffecting their internal sale, offering for sale, purchase,
transportation, distribution, or use"; and (iii) the imported products are accorded "less favourable"
treatment than that accorded to like domestic products.
7.113. With respect to the first element, the Appellate Body clarified that a determination of
"likeness" is "fundamentally, a determination about the nature and extent of a competitive
relationship between and among products".441 Likeness must be considered from both a qualitative
and quantitative aspect and necessitates a case -by-case analysis considering the evidence as a

437 European Union's first written submission, paras. 149-176; second written submission, paras. 81-82;
and opening statement, paras. 10-12.
438 Turkey's first written submission, paras. 6, 123, 174, 242, 243-244, and 414; second written
submission, paras. 95 and 158; and responses to the first set of questions, paras. 44-46.
439 Turkey's responses to the first set of questions, para. 46.
440 Appellate Body Report, Korea – Various Measures on Beef, para. 133.
441 Appellate Body Report, EC – Asbestos, para. 99.

whole.442 When origin is the sole criterion for a regulatory distinction between products, the likeness
of the products that are distinguished in this way can be presumed.443
7.114. With respect to the second element, a broad range of governmental actions is covered by
"laws, regulations, or requirements " affecting the internal sale, offering for sale, purchase,
transportation, distribution, or use of like products. Panels have found that where measures are
"embodied, wholly or at least partly, in formal legal instruments such as codes, rules, acts and
statutes", they may qualify as laws or regulations under Article III:4.444 Likewise, where a measure
contains a "statutory" and "regulatory" element, it may be qualified as a law or regulation by virtue
of its "legal form". A "requirement" within the meaning of Article III:4 is not limited to requirements
reflected in "laws" or "regulations", and may encompass both obligations that an enterprise is legally
obliged to carry out, as well as voluntary action in order to obtain an advantage from a
government.445 To fall within the scope of Article III:4, a measure need only "affect", as opposed to
directly govern (or be primarily aimed at regulating), the conditions of sale, purchase,
transportation, distribution, or use of products.446
7.115. Lastly, a complaining party must establish that imported products are treated less favourably
than like domestic products. Treatment no less favourable means "according conditions of
competition" no less favourable to the imported product than the like domestic product.447 Notably,
examination of less favourable treatment need not be based on the actual effects of the measure in
the market place; the "potential effects" of the measure may suffice.448 In assessing the effects of
a measure, the Appellate Body indicated that panels should carefully scrutinize the measure,
including its design, structure and expected operation. This could, but need not, involve assessing
the measure in light of evidence regarding its actual effects. 449 A measure may accord imported
products "less favourable treatment" in various ways, including through the imposition of additional
processes and costs 450, presentation of imported products to final consumers in a less appealing
manner451, or additional administrative burdens for imported products. 452 Even where a measure
may not legally require certain treatment of imported products, it may be found to accord less
favourable treatment insofar as it creates incentives for market participants to behave in certain
ways, with the "practical effect" of treating imported products less favourably.453
7.3.3 Main arguments of the parties
7.116. Regarding the first element under Article III:4, the European Union submits that the
domestic and imported products at issue are like. 454 The European Union recalls that it is well
established in prior panel and Appellate Body reports that measures distinguishing between goods
solely on the basis of national origin satisfy the "like product" requirement.455 In this case, the only

442 Appellate Body Report, EC – Asbestos, paras. 101 and 103. Relevant factors can include: the
properties, nature and quality of the products, end uses of the products, consumers' tastes and habits, and
tariff classification. (Appellate Body Report, EC – Asbestos, para. 101.)
443 See Appellate Body Report, Argentina – Financial Services, para. 6.38; and Panel Reports,
Argentina – Import Measures, para. 6.274; China – Publications and Audiovisual Products, para. 7.1447; and
Canada – Wheat Exports and Grain Imports, para. 6.164.
444 Panel Report, US – Renewable Energy, para. 7.152.
445 Panel Reports, China – Auto Parts, para. 7.240; China – Publications and Audiovisual Products, para.
7.1448.
446 Appellate Body Reports, EC – Bananas III, para. 220 (referring to Panel Report, Italy – Agricultural
447 Appellate Body Report, Korea – Various Measures on Beef, para. 135.
448 Appellate Body Reports, US – FSC (Article 21.5 – EC), para. 215; Thailand – Cigarettes (Philippines),
para. 135.
449 Panel Report, Dominican Republic – Import and Sale of Cigarettes, para. 7.196; Appellate Body
450 Panel Report, Dominican Republic – Import and Sale of Cigarettes, para. 7.196.
451 Panel Report, Dominican Republic – Import and Sale of Cigarettes, para. 7.196.
452 Appellate Body Report, Thailand – Cigarettes (Philippines), para. 130.
453 See Appellate Body Reports, Korea – Various Measures on Beef, paras. 144-145; China – Auto Parts,
454 European Union's first written submission, paras. 151-154.
455 European Union's first written submission, paras. 151-153. Thus, where a Member draws an origin-
based distinction, a comparison of specific products is not required and it is not necessary to examine the
traditional likeness criteria – such as, their physical properties, end-uses and consumers' tastes and habits. It
is sufficient for the purpose of satisfying the "like product" test for a complaining party to demonstrate that
there can or will be domestic and imported products that are "like". (Ibid.)

"factor of distinction" on which the localisation requirement is premised is the country of
production.456 The reimbursement of the products to which the localisation requirement applies is
explicitly conditioned on their production in Turkey, and not on any other cha racteristics of the
products.457
7.117. Regarding the second element under Article III:4, the European Union submits that the
localisation requirement is a "law, regulation, or requirement affecting the internal sale, offering for
sale, purchase, transportation, distribution, or use of products".458 In the European Union's view, as
the localisation requirement is to a significant extent "embodied" through various "specific laws or
decrees" or "formal legal instruments", it should, as a whole, be described as a "law or regulation".459
Alternatively, the European Union submits that it should be characterized as a "requirement"460
because "it is clear that the measure imposes a requirement (localisation) as a condition for obtaining
an advantage (reimbursement). "461 Furthermore, the European Union submits that "when the
purpose of complying with certain requirements is to obtain an advantage, or when they create an
incentive to buy certain products over others, it is clear tha t those requirements affect the sale,
offering for sale or purchase of products ".462 According to the European Union, the localisation
requirement is "designed to confer an advantage on locally produced pharmaceutical products by
encouraging their sale, pur chase and use, to the detriment of like imported products ", and it "is
clearly capable of influencing the choice between like imported and domestic products".463
7.118. Regarding the third element under Article III:4, the European Union submits that the
localisation requirement accords "less favourable treatment" to imported products.464 According to
the European Union, this is so because it "expressly reserves a major advantage – reimbursement,
which covers approximately 90% of the entire Turkish pharmaceuticals ma rket – to domestic like
products to the exclusion of imported like products ".465 The European Union argues that while
imported products caught by the localisation requirement can still be imported and sold, "their
exclusion from reimbursement creates a clea r disincentive on their sales in Turkey " and
"[c]onsumers are unlikely to choose a non-reimbursed product over a like reimbursed product."466
7.119. In its first written submission, Turkey does not present arguments on any of the above
elements of Article III:4 of the GATT 1994. Rather, Turkey limits its response to the European Union's
claim to arguing that Article III:4 is not applicable to the localisation requirement by virtue of the
government procurement derogation in Article III:8(a) of the GATT 1994, and that any inconsistency
with Article III:4 would be justified by Article XX(b) or Article XX(d) of the GATT 1994.467
7.120. In its second written submission, the European Union observes that apart from Turkey 's
arguments on Article III:8(a) of the GATT 1994, Turkey "does not dispute that the Localisation
Requirement is inconsistent with Article III:4 of the GATT 1994 " and "[t]hus, there is no
disagreement on the main elements of that provision: the domestic and imported products at issue
are like, the Localisation Requirement is a law, regulation or requirement affecting the internal sale,
offering for sale, purchase, transportation, distribution, or use of products, and it accords less
favourable treatment to imported like products."468
7.3.4 Assessment by the Panel
7.121. The Panel considers that the fact that Turkey does not present any arguments on the
elements of the claims under Article III:4 of the GATT 1994 is not in and of itself a sufficient basis
for the Panel to summarily conclude that the European Union's claims are well founded. In line with
the approach taken by other panels in similar circumstances, the Panel will consider whether the

456 European Union's first written submission, para. 154.
457 European Union's first written submission, para. 154.
458 European Union's first written submission, paras. 155-168.
459 European Union's first written submission, paras. 156-159.
460 European Union's first written submission, paras. 160-163.
461 European Union's first written submission, para. 163.
462 European Union's first written submission, para. 166.
463 European Union's first written submission, para. 168.
464 European Union's first written submission, paras. 169-176.
465 European Union's first written submission, para. 173.
466 European Union's first written submission, para. 173.
467 Turkey's first written submission, paras. 6, 123, 174, 242, 243-244, and 414.
468 European Union's second written submission, para. 81.

complainant has presented evidence and argument "sufficient to identify the challenged measure
and its basic import, identify the re levant WTO provision and obligation contained therein, and
explain the basis for the claimed inconsistency of the measure with that provision".469
7.122. In section 7.1 of this Report, the Panel concluded that the European Union has established
the existence of th e localisation requirement as a single measure, whereby (i) Turkey requires
foreign producers to commit to localise in Turkey their production of certain pharmaceutical
products; and (ii) where commitments are not given, not accepted, or not fulfilled, affected products
are no longer reimbursed by the SSI. Thus, the Panel has found that the European Union has
identified the challenged measure with sufficient clarity and precision for purposes of enabling the
Panel to make an assessment of whether the elements of Article III:4 of the GATT 1994 are satisfied.
7.123. As regards the first element under Article III:4, the Panel considers that the European Union
has made a prima facie case that domestic pharmaceutical products and imported pharmaceutical
products affecte d by the localisation requirement are "like products ".470 The Panel recalls that
through the localisation requirement: (i) Turkey requires foreign producers to commit to localise in
Turkey their production of certain pharmaceutical products; and (ii) where commitments are not
given, not accepted, or not fulfilled, affected products are no longer reimbursed by the SSI. Thus,
the only "factor of distinction " on which the localisation requirement is premised is the country of
production for the pharmaceutical products affected by the measure. As has been indicated above,
when the country of origin is the sole criterion for a regulatory distinction between products, the
likeness of the products that are distinguished in this way can be presumed.471
7.124. As for the seco nd element under Article III:4, the Panel considers that the localisation
requirement constitutes a "requirement" affecting the internal sale, offering for sale, purchase,
transportation, distribution, or use of pharmaceutical products. The Panel recalls t hat a
"requirement" within the meaning of Article III:4 is not limited to requirements reflected in "laws"
or "regulations", and may encompass both obligations that an enterprise is legally obliged to carry
out, as well as voluntary action in order to obta in an advantage from government. 472 Given the
content of the localisation requirement, referred to above, it follows that the measure imposes a
requirement (localisation) as a condition for obtaining an advantage (reimbursement/payment). The
Panel notes that Turkey seems to agree that the l ocalisation requirement is a "requirement" for
purposes of Article III:4 and III:8(a).473 Recalling that a measure need only "affect" the conditions
of sale, purchase, transportation, distribution, or use of products to fall within the scope of Article
III:4474, the Panel considers that this aspect of the second element under Article III:4 is also
satisfied. As the European Union observes, "when the purpose of complying with certain
requirements is to obtain an advantage, or when they create an incentive to b uy certain products
over others, it is clear that those requirements affect the sale, offering for sale or purchase of
products."475
7.125. Regarding the third element under Article III:4, the Panel recalls that treatment no less
favourable means "according conditions of competition " to the imported product that are no less
favourable than those accorded to the like domestic product.476 The Panel considers it to be axiomatic

469 Panel Report, US – Shrimp (Ecuador), para. 7.11.
470 European Union's first written submission, paras. 151-154.
471 See Appellate Body Report, Argentina – Financial Services, para. 6.38; and Panel Reports,
Argentina – Import Measures, para. 6.274; China – Publications and Audiovisual Products, para. 7.1447; and
Canada – Wheat Exports and Grain Imports, para. 6.164.
472 Panel Reports, China – Auto Parts, para. 7.240; China – Publications and Audiovisual Products, para.
7.1448.
473 Turkey's first written submission, para. 187 and fn 199 (cross-referencing paragraph 160 of the
European Union's first written submission in a manner that implies that Turkey considers the term
"requirement" to have the same meaning in the context of Article III:4 and III:8(a) of the GATT 1994). The
Panel notes that in the context of responding to the European Union's claim under Article X:1 of the GATT 1994
pertaining to the non-publication of certain terms and conditions of the measure, Turkey argues that the
European Union has failed to demonstrate that the localisation requirement as a single measure constitutes a
"law" or "regulation". (Turkey's first written submission, paras. 272-279.) The Panel considers it unnecessary
to make a finding on whether the localisation requirement additionally constitutes a "law" or "regulation" within
the meaning of Article III:4, given that it clearly constitutes a "requirement".
474 Appellate Body Reports, EC – Bananas III, para. 220; US – FSC (Article 21.5 – EC), para. 210
(referring to Panel Report, Italy – Agricultural Machinery, para. 12); China – Auto Parts, para. 194.
475 European Union's first written submission, para. 166.
476 Appellate Body Report, Korea – Various Measures on Beef, para. 135.

that, if a measure is designed to create a financial incentive for consumers (i.e. outpatients in this
case) to select domestically produced pharmaceutical products over imported pharmaceutical
products, it accords "less favourable treatment" to those imported pharmaceutical products. While
Turkey has stressed that outpatients cannot change the active substance, dosage or the duration of
their treatment, it does not dispute that outpatients are free to select among equivalent medicines
based on price.477 Accordingly, the Panel is of the view that the localisation requirement is "designed
to confer an advantage on locally produced pharmaceutical products by encouraging their sale,
purchase and use, to the detriment of like imported products", and it "is clearly capable of influencing
the choice between like imported and domestic products".478
7.126. For the foregoing reasons , the Panel finds that domestic pharmaceutical products and
imported pharmaceutical products affected by the localisation requirement are "like products"; the
localisation requirement constitutes a "requirement" affecting the internal sale, offering for sale,
purchase, transportation, distribution, or use of those pharmaceutical products; and by creating a
price incentive for consumers (i.e. outpatients) to select domestically produced pharmaceutical
products over imported pharmaceutical products, the localisation requirement accords "less
favourable treatment" to those imported pharmaceutical products.
7.3.5 Conclusion
7.127. The Panel concludes that the localisation requirement is inconsistent with the national
treatment obligation in Article III:4 of the GATT 1994.
7.4 Article XX of the GATT 1994
7.4.1 Introduction
7.128. The Panel has found that the localisation requirement is not covered by the government
procurement derogation in Article III:8(a) of the GATT 1994, and that it is inconsistent with the
national treatment obligation in Article III:4 of the GATT 1994. Accordingly, the Panel now proceeds
to address Turkey's invocation of the general exceptions in Articles XX(b) and (d) of the GATT 1994.
7.129. Turkey submits that the localisation measure is covered by the general exception in
Article XX(b) because it is designed to ensure an uninterrupted access to safe, effective and
affordable medicines for all patients in Turkey, is "necessary" to achieve that objective, and satisfies
the requirements of the chapeau of Article XX. 479 Turkey submits that if the Panel finds that the
localisation requirement is not justified under Article XX(b), then, in the alternative, it is justified
under Article XX(d) of the GATT 1994 as a measure necessary to secure compliance with laws and
regulations requiring Turkey to ensure "accessible, effective and financially sustainable
healthcare".480
7.130. The European Union agrees that the declared objective of ensurin g adequate access to
medicines falls within the scope of Article XX(b) and is extremely vital and important, but submits
that the localisation requirement is not designed to achieve the public health objective alleged by
Turkey, and is not "necessary" to achieve that objective. 481 The European Union presents similar
arguments under Article XX(d).

477 More specifically, Turkey confirms that if a prescribed product is not on the Annex 4/A list (i.e. for
which the patient will have to pay), the pharmacist will typically inform the outpatient that there is an
equivalent product that is on the list (i.e. for which the patient will not have to pay), and that the outpatient
may decide to opt for the equivalent medicine, the cost of which will be paid by the SSI. (Turkey's responses to
the first set of questions, paras. 1-4.)
478 European Union's first written submission, para. 168.
479 Turkey's first written submission, paras. 414-503; second written submission, paras. 158-224;
responses to the first set of questions, paras. 47-68; opening statement, paras. 72-86; closing statement,
paras. 36-47; responses to the second set of questions, paras. 56-72; and comments on responses to the
second set of questions, paras. 20-32.
480 Turkey's first written submission, para. 504.
481 European Union's second written submission, paras. 140-199; responses to the first set of questions,
paras. 34-63; opening statement, paras. 33-73; closing statement, paras. 16-21; responses to the second set
of questions, paras. 24-61; and comments on responses to the second set of questions, paras. 46-66.

7.4.2 Article XX(b)
7.4.2.1 Relevant provisions
7.131. Article XX(b) of the GATT 1994 provides:
Subject to the requirement that such measures are not applied in a manner which would
constitute a means of arbitrary or unjustifiable discrimination between countries where
the same conditions prevail, or a disguised restriction on international trade, nothing in
this Agreement shall be construed to prevent the adoption or enfo rcement by any
Member of measures:
…
(b) necessary to protect human, animal or plant life or health;
7.132. Article XX of the GATT 1994 allows Members to justify measures that would otherwise be
inconsistent with the GATT 1994. Article XX sets out a "two-tier test": (i) the measure must fall
under one of the listed exceptions in Article XX such as Article XX(b) (it is then "provisionally
justified"); and (ii) the measure must be applied in a manner that satisfies the requirements of the
chapeau of Article XX.482
7.133. Measures may be provisionally justified under Article XX(b) if they (i) are taken to (i.e. are
designed to) protect human, animal or plant life or health; and (ii) are "necessary" to protect human,
animal or plant life or health.483
7.134. When assessing whether a measure is taken to protect human, animal or plant life or health,
prior panels have often commenced their analysis by determining the existence of the risk to human,
animal or plant life or health (hea lth risk) that the challenged measure aims to reduce. 484 Where
there is no sufficient evidence as to the existence of a health risk, a challenged measure is not
necessary to protect human, animal or plant life or health.485
7.135. Next, if the alleged health risk exists, panels will examine whether the measure at issue was
taken for the purpose of protecting human, animal or plant life or health by reducing that risk486, or
was instead taken for other reasons. To determine whether a challenged measure is "designed to"
protect human, animal or plant life or health, a panel must examine all the evidence before it,
including the text of the relevant legal instruments, the legislative history, and other evidence
regarding the design, structure and expected operation of th e challenged measure. 487 Such an

482 Appellate Body Reports, US – Gasoline, p. 22; Brazil – Retreaded Tyres, para. 139.
484 Panel Reports, EC – Asbestos, para. 8.170; Brazil – Retreaded Tyres, para. 7.42; China – Rare
– Asbestos, the panel determined, as the first step in its analysis, whether chrysotile-asbestos posed a risk to
human life or health. (Panel Report, EC – Asbestos, paras. 8.170, 8.182, and 8.185-8.194.) In Brazil –
Retreaded Tyres, the panel assessed whether the accumulation of waste tyres posed risks to human, animal or
plant life or health. (Panel Report, Brazil – Retreaded Tyres, paras. 7.42, and 7.53-7.93.) In China – Rare
Earths, the panel found that the mining and production of rare earths, tungsten, and molybdenum have caused
grave harm to the environment and to the life and health of humans, animals, and plants in China. (Panel
Reports, China – Rare Earths, paras. 7.149-7.156.) In some other cases, including those where there was no
dispute as to the existence of the risks that the measure allegedly aimed to address, prior panels have
addressed this step of the analysis succinctly. (See Panel Reports, US – Gasoline, para. 6.21; EC – Tariff
Preferences, paras. 7.180 and 7.200.)
485 As the panel in EC – Asbestos observed, "inasmuch as they include the notion of 'protection', the
words 'policies designed to protect human life or health' imply the existence of a health risk." (Panel Report, EC
– Asbestos, para. 8.170.) See also Appellate Body Reports, EC – Seal Products, para. 5.197.
487 See e.g., Panel Reports, Indonesia – Import Licensing Regimes, para. 7.620; Brazil – Taxation, para.
7.884; China – Raw Materials, para. 7.479; China – Rare Earths, para. 7.145; and EC – Tariff Preferences,
para. 7.200 (referring to Appellate Body Reports, Japan – Alcoholic Beverages II, p. 29; Argentina – Textiles
and Apparel, para. 55; and US – Shrimp, para. 137). See also Appellate Body Reports, Colombia – Textiles,
para. 5.69 (referring to Appellate Body Reports, US – Shrimp, paras. 135-142; EC – Seal Products, para.
5.144) and EC – Seal Products, para. 5.144 (referring to Appellate Body Reports, US – Tuna II (Mexico), para.
314 and US – Gambling, para. 304).

enquiry has led some panels to conclude that the challenged measures were not designed to protect
human, animal or plant life or health, and instead pursued other objectives. 488 If this threshold
enquiry reveals that the chal lenged measure is incapable of meeting the stated objective, the
analysis need not go further to determine whether this measure is necessary to protect this
objective.
7.136. If a measure is "designed to" protect human, animal or plant life or health, panels must then
examine whether that measure is "necessary" to protect human, animal or plant life or health. In
doing so, panels will weigh and balance several factors, including the importance of the objec tive,
the contribution of the measure to the achievement of that objective, and the trade -restrictiveness
of the measure. Panels may then compare the challenged measure with possible alternative
measures.489 In assessing the first of these factors, panels and the Appellate Body have focused on
the relative importance of the interests or values furthered by the challenged measure.490 As to the
second factor, a measure contributes to the objective when there is a "genuine relationship of ends
and means between the objective pursued and the measure at issue ".491 In assessing the
contribution of the measure to the achievement of the objective , panels may have regard to
quantitative and qualitative evidence. Whether a contribution is established ultimately depends o n
the nature of the risk, the objective pursued, and the level of protection sought, as well as the
nature, quantity and quality of evidence at the time such assessment is made. 492 The third factor
relates to the trade-restrictiveness of the challenged measure, which can be assessed in a qualitative
or quantitative manner.493 Finally, alternative measures must be more than "merely theoretical in
nature"494, and should allow the responding Member to achieve the same level of protection while
being less trade -restrictive.495 The burden lies on complaining Members to identify possible
alternative measures.496
7.137. The process of weighing and balancing these factors is "a holistic operation that involves
putting all the variables of the equation together and evaluating them in relation to each other after
having examined them individually, in order to reach an overall judgement ".497 The more vital or
important the societal value pursued by a challenged measure498, the greater the contribution of this
measure to the objective pursued499, and the less restrictive its effects 500, the more readily the
measure may be considered to be "necessary".
7.138. If a measure is provisionally justified under Article XX(b), it must also satisfy the
requirements of the chapeau in Article XX. The chapeau requires that a provisionally justified
measure be applied in a manner that does not constitute "arbitrary or unjustifiable discrimination
between countries where the same conditions prevail " or a "disguised restriction on international
trade".

488 See e.g., Panel Report, EC – Tariff Preferences, paras. 7.207 and 210; China – Rare Earths, paras.
7.169- 7.171.
489 Appellate Body Reports, Colombia – Textiles, para. 5.70; India – Solar Cells, para. 5.59; and EC –
Seal Products, para. 5.214 (referring to Appellate Body Reports, US – Gambling, para. 307 and Korea –
490 Appellate Body Report, US – Gambling, para. 306 (citing Appellate Body Report, Korea – Various
7.525.
491 Appellate Body Report, Brazil – Retreaded Tyres, para. 145.
492 Appellate Body Report, Brazil – Retreaded Tyres, paras. 145-146.
493 Appellate Body Report, Korea – Various Measures on Beef, para. 163. See also Panel Reports,
Indonesia – Chicken, para. 7.143.
494 The responding Member must be capable of taking the alternative measure, and it should not impose
an undue burden on the responding Member. (Appellate Body Report, Brazil – Retreaded Tyres, paras. 156,
and 172-175.)
495 Appellate Body Reports, US – Gambling, paras. 307-308; Brazil – Retreaded Tyres, para. 156. See
also Panel Report, EU – Energy Package, para. 7.1209.
496 Appellate Body Report, Brazil – Retreaded Tyres, para. 156.
497 Appellate Body Report, Brazil – Retreaded Tyres, para. 182.
498 Appellate Body Reports, EC – Asbestos, para. 172 and Korea – Various Measures on Beef, para. 162;
499 Appellate Body Report, Korea – Various Measures on Beef, para. 162; Panel Reports, Brazil –
Taxation, para. 7.528.
500 Appellate Body Report, China – Publications and Audiovisual Products, para. 310 (referring to
Appellate Body Reports, Korea – Various Measures on Beef, para. 163; Brazil – Retreaded Tyres, para. 150).

7.4.2.2 Main arguments of the parties
7.4.2.2.1 The risk of a shortage of safe, effective and affordable medicines in Turkey
7.139. Turkey submits that the need for local production of pharmaceutical products has become
evident in the context of the COVID-19 pandemic, and in that context the need for local production
of pharmaceutical products has been officially endorsed by several countries, including some of the
EU member States.501 Turkey submits that even without a pandemic, there are situations when over-
reliance on imported products can lead to dangerous shortage of supply, and provides examples
from the Turkish context.502
7.140. The European Union argues that Turkey has not met its burden of proving that there is a
risk of shortage of supply of the pharmaceutical products within the scope of the localisation
requirement.503 In line with the guidance provided by the Appellate Body in the c ontext of
Article XX(j), the general exception governing products in "short supply ", the European Union
submits that Turkey has the burden of demonstrating, for each category of "equivalent products",
that there is a risk that "the quantity of available su pply from both domestic and international
sources in the relevant geographical market may be insufficient to meet demand", having regard to
all relevant factors affecting supply and demand. 504 According to the European Union, Turkey has
provided no relevant evidence of the existence of a risk of shortage of supply; to the contrary, it
stresses that there is no risk of shortage of supply as regards the products covered by Phase 1 and
Phase 2.505 The European Union submits that in practice, disruptions of suppl y of pharmaceutical
products appear to be occasional and of short duration, and notes that Turkey has identified just
five instances of alleged disruption of supply since 2012. The European Union comments that
Turkey's allegations are based on anecdotal evidence in the form of press articles of limited probative
value and official correspondence between Turkish authorities that provides scant information on
the causes and extent of the disruption.506
7.141. In its second written submission, Turkey responds that it is undisputed that "the lack of
access to medicines poses a very serious threat to human life or health ".507 Turkey clarifies that it
is not arguing that the pharmaceutical products covered by the localisation measure are "in short
supply".508 Rather, Turkey has explained that the objective of the localisation measure is to ensure,
in the long term, that all patients in Turkey have uninterrupted access to safe, effective and
affordable medicines. 509 Turkey maintains that WTO Members "are allowed to take preventive
measures before any actual shortage of supply arises ".510 Based on these considerations, Turkey
submits that it is not required to demonstrate the existence of a risk of shortage of supply and even
less so the existence of such a risk separately for each category of pharmaceutical products subject
to the localisation requirement.511 Turkey submits that, contrary to the arguments of the European
Union, the press articles provided by Turkey provide ample evidence of disruptions in the supply of
pharmaceutical products linked to the over -reliance on imports. 512 Turkey adds that the risk of
shortage of supply due to unilateral decisions of pharmaceutical companies can be also illustrated
by recent decisions of Pfizer and AstraZeneca to cut the supply of the COVID-19 vaccines to certain
EU member States.513 In any event, Turkey reiterates that the localisation requirement "is not meant
to remedy an ad hoc short-term shortage of supply but aims to ensure that in the long -term, all
patients in Turkey are guaranteed stable access to safe, effective and affordable medicines".514

501 Turkey's first written submission, paras. 486-487.
502 Turkey's first written submission, para. 488.
503 European Union's second written submission, paras. 159-173. The European Union observes that
"the notion of 'protection' in Article XX(b) of the GATT 1994 implies the existence of a health risk" (European
Union's second written submission, para. 159 (citing Panel Report, EC – Asbestos, para. 8.170). See also
Appellate Body Reports, EC – Seal Products, para. 5.197.)
504 European Union's second written submission, paras. 162-165.
505 European Union's second written submission, para. 166.
506 European Union's second written submission, paras. 167-173.
507 Turkey's second written submission, para. 179.
508 Turkey's second written submission, para. 181.
509 Turkey's second written submission, para. 181.
510 Turkey's second written submission, para. 181.
511 Turkey's second written submission, paras. 177-182.
512 Turkey's second written submission, paras. 183-188.
513 Turkey's second written submission, fn 236.
514 Turkey's second written submission, para. 189.

7.4.2.2.2 The localisation requirement's objective
7.142. Turkey submits that the localisation measure is designed to ensure "an uninterrupted access
to safe, effective and affordable medicines for all patients in Turkey" which falls within the range of
policies to protect human life and health covered by Article XX(b). 515 Turkey explains that by
requiring that certain pharmaceutical products be produced domestically to be included in the Annex
4/A list, the localisation requirement seeks to ensure that those products are available to patients
in Turkey.516 Turkey submits that it is now widely agreed that the proximity of manufacturing to the
point of use is of major relevance for ensuring an uninter rupted access to safe and effective
medicines, for several reasons.517 According to Turkey, the fact that the localisation requirement is
concerned with ensuring adequate access to medicines and thus pursues an objective of protecting
human life and health, is confirmed by the design and structure of that measure, by the authorities
responsible for its implementation, and by several official documents.518
7.143. The European Union does not dispute that the alleged objective to ensure adequate access
to medicines falls within the scope of Article XX(b)519, but submits that the localisation requirement
is not designed to achieve the public health objective alleged by Turkey. 520 Rather, the localisation
requirement has been designed to promote the economic development and industrial policy
objectives pursued by Turkey in the pharmaceutical sector. 521 Such objectives are confirmed by
several official documents that evidence a preoccupation with the large size of Turkey's trade deficit
in the pharmaceutical sector, together w ith a desire to promote the domestic production of higher
value-added pharmaceutical products with a view to becoming competitive in global markets,
thereby contributing to the development of Turkey 's economy.522 In the European 's Union's view,
these stated objectives are fully consistent with the "structure and design " of the localisation
requirement, which cannot be reconciled with the stated public policy alleged by Turkey in this
dispute. Specifically, and reiterating essentially the same arguments it presents on the "contribution"
step in the "necessity" analysis, the European Union submits that "the Localisation Requirement
does not, and indeed cannot, contribute to the alleged objective of ensuring access to medicines
with regard to any pharmaceutical product within the scope of the Localisation Requirement ".523
According to the European Union, Turkey cannot explain away the manifest inconsistencies between
its alleged public health objective and the structure and design of the measur e "simply by citing
vague and rhetorical political statements included in documents of the Turkish government where
an unsubstantiated link is asserted between access to medicines and the Localisation
Requirement".524
7.144. In its second written submission, Turke y responds by pointing out that WTO dispute
settlement practice recognizes that a measure may pursue multiple objectives, and such multiple
objectives will often be intertwined and may be advanced in a mutually supportive manner.525 In the
present case, the public health objective and the alleged industrial policy objective of the localisation
requirement are both legitimate policy objectives, and they are interrelated, because a strong
domestic pharmaceutical sector contributes to ensuring uninterrupted access to medicines.526 Turkey
submits that numerous documents issued by the Turkish health authorities, referred to in its first
written submission, demonstrate that the localisation requirement clearly pursues a public health
objective. Turkey moreover considers that even the documents referred to by the European Union
confirm that the localisation requirement has a public health objective. 527 In response to the

515 Turkey's first written submission, paras. 441-463.
516 Turkey's first written submission, para. 443.
517 Turkey's first written submission, para. 445. According to Turkey, this is so for three reasons. Local
production of medicines: (i) shortens the supply chain thereby reducing the lead time and minimizing the risk
of shortages; (ii) enables closer regulatory oversight by national regulatory authorities, as excessive reliance
on imports from distant geographies can have a negative impact on the quality assurance of pharmaceutical
products; and (iii) provides opportunities to ensure that pharmaceutical products meet local needs and are fit
for local purposes. (Ibid.)
518 Turkey's first written submission, paras. 451-463.
519 European Union's second written submission, para. 142.
520 European Union's second written submission, paras. 144-157.
521 European Union's second written submission, para. 144.
522 European Union's second written submission, paras. 145-148.
523 European Union's second written submission, para. 156.
524 European Union's second written submission, para. 157.
525 Turkey's second written submission, para. 164.
526 Turkey's second written submission, paras. 166-169.
527 Turkey's second written submission, para. 170.

European Union's arguments regarding the structure and design of the localisation requirement,
Turkey clarifies that this measure serves the "long-term objective " of guaranteeing more stable
access to safe, effective and affordable medicines in Turkey and is "not a tool to remedy any potential
short-term shortage of supply".528
7.4.2.2.3 Contribution to the declared objective
7.145. Turkey submits that the importance of local production for ensuring access to medicines and
improving health security in developing countries has been widely recognized and endorsed by the
World Health Organization (WHO) and other internationa l organizations such as United Nations
Conference on Trade and Development (UNCTAD), United Nations Industrial Development
Organization (UNIDO), and the Office of the United Nations High Commissioner for Human Rights.529
Furthermore, while it is not necessa ry under Article XX(b) to demonstrate that the localisation
requirement has already yielded concrete results, and given that only two of the five phases of the
localisation requirement have been implemented such that any conclusion as to the effectiveness of
that measure would appear premature, the localisation requirement so far has already helped to
resolve problems concerning the availability of certain pharmaceutical products on the Turkish
market.530
7.146. The European Union responds that Turkey's selective (often out-of-context) quotations from
documents of various international organizations, that suggest that a policy of local production of
pharmaceutical products contributes to improving access to medicines, do not meet Turkey's burden
of proving that the localisation requirement contributes to the alleged public health objective.531 The
European Union accepts that in "specific contexts, and subject to certain conditions, local production
may be a useful tool, alongside other policy tools, for improving acce ss to medicines"532, but that
Turkey must demonstrate "how, in the specific context of the Turkish market for each of the
categories of 'equivalent products' covered by the Localisation Requirement, local production would
contribute to improve access to those products by the Turkish citizens, as compared to the situation
preceding the introduction of that measure ".533 According to the European Union, Turkey tel lingly
provides no evidence for its assertion that "the implementation of the localisation measure so far
has helped to resolve problems related to the availability of certain pharmaceutical products on the
Turkish market. "534 The European Union argues that there should be quantifiable effects of the
localisation requirement by now, given that the implementation of Phases 1 and 2 started in 2016
and 2017, respectively.535
7.147. In its second written submission, Turkey submits that the European Union fails to
substantiate its allegation that Turkey 's quotations from the cited documents are "selective" and
"taken out of context", and that the European Union conveniently ignores the statements made by
its own authorities and member States endorsing the need for local p roduction of medicines. 536
Turkey argues that although local production of medicines may have different effects in different
countries, it is recognized by the WHO and other international organisations as an effective tool for
improving access to medicines. 537 Turkey submits that the European Union does not explain why
local production should not be successful in the context of Turkey, and points out that: (i) other
developing countries including Bangladesh, Ethiopia, and Nigeria, have realized the value of l ocal
production of medicines for improving access to health and have pursued or are currently pursuing
similar policies538; (ii) the factors that may jeopardize the successful implementation of a localisation
policy are not present in Turkey (prices of medicines are closely regulated by the relevant authorities,
who ensure the enforcement of high -quality standards, and Turkey does not lack affordable,

528 Turkey's second written submission, paras. 171-174.
529 Turkey's first written submission, paras. 471-485.
530 Turkey's first written submission, paras. 489-491.
531 European Union's second written submission, paras. 174-180.
532 European Union's second written submission, para. 176.
533 European Union's second written submission, para. 178.
534 European Union's second written submission, para. 180.
535 European Union's second written submission, para. 180.
536 Turkey's second written submission, para. 191 (referring to Turkey's first written submission, paras.
484-487).
537 Turkey's second written submission, para. 193.
538 Turkey's second written submission, para. 193.

quality-assured materials or a skilled workforce) 539; and (iii) several empirical case studies, by
UNCTAD and others, found that locally produced medicines improved access to medicines for poor
rural populations, and Turkey has a large rural population.540 Turkey further argues that several EU
documents recognise the fact that local production is an effective tool for ensuring uninterrupted
access to medicines and avoiding shortages.541 In response to the European Union's argument that
there should be quantifiable effects by now, Turkey submits that since the implementation of the
measure is still ongoing, it is too early to accurately evaluate the effects of the measure.542 The fact
that an adequate assessment of the effectiveness of local production can only be made after a certain
period of time is also confirmed by the WHO and other relevant organizations.543
7.4.2.2.4 Trade-restrictiveness
7.148. As regards trade -restrictiveness, Turkey argues that the localisation requirement "is not
trade-restrictive since it does not relate to the conditions under which pharmaceutical products may
be imported and placed on the Turkish market".544 Turkey adds that "the market data show that
pharmaceutical products which did not comply with the localisation measure continue to be sold on
the Turkish market. The data confirms that in 2018-2019, 139 imported medicines from 39 different
pharmaceutical companies were placed on the Turkish market."545
7.149. The European Union responds that the localisation requirement is "extremely trade -
restrictive because, in practice, it has the effect of excluding imports from a very large part of the
Turkish market ".546 The European Union explains that while imported products caught by the
localisation requirement can still be legally imported and sold, imported products excluded from
reimbursement are unable to compete with the reimbursable like domest ic products (i.e. because
consumers are "most unlikely to choose a non -reimbursed product over a like reimbursed
product").547 The European Union states that the reimbursement scheme covers approximately 90%
of all sales of pharmaceutical products in Turkey , hence imported products excluded from
reimbursement are in practice effectively excluded from a very large part of the market.548
7.150. In its second written submission, Turkey reiterates that the localisation requirement does
not affect the access of pharmaceutical products to the Turkish market because products that do not
comply with the localisation requirement may continue to be imported and placed on the Turkish
market without any restrictions. 549 According to Turkey, the European Union 's argument that the
localisation requirement is trade-restrictive because "consumers are […] most unlikely to choose [a]
non-reimbursed product over a like reimbursed product " once again "ignores the fact that patients
do not freely choose the pharmaceutical products which ar e prescribed to them by medical doctors
on the basis of their specific health needs".550 Furthermore, any trade-restrictiveness entailed by the
localisation requirement, "even though unintended", is outweighed by a material contribution which
that measure m akes to the achievement of the invoked public health objective, as explained
above.551 Turkey recalls that a measure that makes a material contribution to a public health

539 Turkey explains that it has a well-established regulatory framework for producing pharmaceutical
products that is generally in line with European Union legislation. Turkey also has a highly qualified workforce
and production facilities that meet all quality standards so as to ensure that no substandard or falsified medical
product is placed on the market. As a result, Turkey has so far not experienced any of the negative effects that
the European Union alludes to. The cost of medicines has not increased, nor has the quality of medicines
decreased. (Turkey's second written submission, paras. 194-195.)
540 Turkey's second written submission, paras. 196-199.
541 Turkey's second written submission, para. 200. Specifically, Turkey refers to the recent
Pharmaceutical Strategy for Europe, which refers to "fostering production and investment in Europe" among
the actions that will be taken by the European Union.
542 Turkey's second written submission, para. 201.
543 Turkey's second written submission, para. 202.
544 Turkey's first written submission, para. 493.
545 Turkey's first written submission, para. 494.
546 European Union's second written submission, para. 181.
547 European Union's second written submission, paras. 182-183.
548 European Union's second written submission, para. 184.
549 Turkey's second written submission, para. 203.
550 Turkey's second written submission, para. 205.
551 Turkey's second written submission, para. 206.

objective may be justified under Article XX(b), even when that measure is considered "trade-
restrictive to the highest degree".552
7.4.2.2.5 Less trade-restrictive alternative measures
7.151. Turkey notes that it is for the European Union to identify "reasonably available alternative
measures" to the localisation requirement, which are less trade restrictive but equally effective in
achieving uninterrupted access to safe, effective and affordable medicines for all patients in
Turkey.553
7.152. The European Union submits that given their multifaceted causes, there is no single response
to medicine shortages. While recognizing that in "specific contexts, and subject to certain conditions,
local production may be a useful tool for improving access to medicines ", the European Union
identifies several alternative measures for ensuring access to medicines that do not involv e local
production: (i) the creation of contingency reserves of medicines at risk of shortage, and in particular
of those previously identified as essential; (ii) the diversification of sources of supply; (iii) the
simplification of supply chains; (iv) the facilitation of imports; (v) the improvement of pricing
mechanisms and procurement procedures; (vi) the harmonization and simplification of regulatory
requirements; and (vii) increased international cooperation. 554 The European Union lists several
strategies recommended by the WHO for forecasting, averting or reducing shortages of medicines
and vaccines, and stresses in particular that "the importance of monitoring medicine supply,
demand, and availability and of alerting responsible departments to possible shortages cannot be
overemphasised".555 Alternatively, "in those cases where local production can be an effective tool ",
there are less trade-restrictive alternative measures which the WHO has identified including (i) direct
support to reduce the cost of manufacture (i.e. subsidies); and (ii) a wide range of other strategies
to indirectly support local production.556 The European Union notes that the strategies listed by the
WHO do "not include any measure resembling Turkey's Localisation Requirement"557, and considers
the recommendation on developing appropriate investment policies and joint ventures to be of
particular relevance.558
7.153. In its second written submission, Turkey responds with three arguments. It asserts first,
that the European Union enumerates certain "general categories of measures" that it suggests may
be "useful for improving access to medicines" but fails to explain how any of these "extremely vague"
measures would contribute to its long-term objective559, achieve the same level of protection, or be
less trade restrictive.560 Second, the European Union 's proposed system of monitoring and import

552 Turkey's second written submission, para. 207.
553 Turkey's first written submission, para. 496.
554 European Union's second written submission, para. 186.
555 European Union's second written submission, paras. 187-188. The strategies listed are: (i) the
implementation of effective notification systems to identify potential shortages; (ii) ensuring best practices for
procurement, distribution and contract management processes to mitigate the risk of shortages; (iii)
developing/strengthening systems capable of monitoring supply, demand, and availability, alerting
procurement departments to possible shortages; (iv) ensuring sound financial management of procurement
systems, to prevent funding shortfalls for medicines; (v) prioritizing, in the case of shortages, the health needs
of the most affected groups; and (vi) advancing regional and international cooperation in support of national
notification systems.
556 European Union's second written submission, para. 190. The strategies listed are: (i) investment in
strengthening regulation; (ii) developing national priority lists; (iii) improving the financing of health services
for expanding the domestic market; (iv) facilitating access to foreign markets; (v) developing regional pooled
procurement mechanisms; (vi) regulatory harmonization; (vii) appropriate pricing policies; (viii) relevant
technology transfer; (ix) incremental innovation and production; (x) appropriate IP regimes; (xi) appropriate
investment policies and joint ventures; and (xii) international cooperation.
557 European Union's second written submission, para. 191.
558 European Union's second written submission, para. 192.
559 Turkey reiterates here that the localisation requirement "serves the long-term objective of ensuring
uninterrupted access to safe, effective and affordable medicines and thus any measures that may remedy an
ad hoc short-term shortage of supply are not alternatives to the localisation measure". (Turkey's second
written submission, para. 212.)
560 Turkey's second written submission, paras. 210-212. According to Turkey, this stands in stark
contrast to the level of detail and explanation provided by complainants identifying alternative measures in
other WTO cases. Turkey indicates that this argument is directed at the following general categories of
alternative measures: contingency reserves of medicines at risk of shortage, diversifying sources of supply,
simplifying supply chains, facilitating imports, improving pricing mechanisms and procurement procedures,
harmonizing and simplifying regulatory requirements, and increasing international cooperation. (Ibid.)

licensing is already in place, and is thus "complementary" and not an alternative measure to the
localisation requirement561; additionally, a monitoring an d licensing system does not address the
localisation requirement's safety and affordability objectives, and would not address scenarios in
which imports are simply shut off or become excessively expensive. 562 Third, in relation to the
several recommendations included in the WHO report cited by the European Union, Turkey submits
that (i) it is unclear whether all of these general recommendations are put forward by the European
Union as alternative measures 563; (ii) the suggestion that Turkey provide grants and subsidies is
difficult to reconcile with the European Union's claim under Article 3.1(b) of the SCM Agreement564;
and (iii) relying on possible "joint-ventures" with "efficiency-seeking foreign investors" is not a viable
strategy for ensuring reliable access to medicines.565 Turkey also notes "the growing consensus that
the COVID -19 pandemic has revealed a need to revise the measures that were , until recently ,
considered sufficient to guarantee access to medicines and medical products", and refers to a recent
European Parliament report in support.566
7.4.2.2.6 Chapeau of Article XX
7.154. Turkey argues that the localisation requirement is applied in accordance with the
requirements of the chapeau as it is not applied in a manner that would constitute "arbitrary or
unjustifiable discrimination between countries where the same conditions prevail " or in a manner
that constitutes "a concealed or unannounced restriction or discrimination in international trade".567
It applies "indistinctly to pharmaceutical products falling within the scope of localisation irrespective
of the country of origin of the products "; the pharmaceutical products subject to localisation are
selected on the basis of objective criteria which aim to avoid any shortage of supply and, ultimately,
lead to better access to medicines in Turkey; and while based on objective criteria, it provides
necessary flexibility for taking into account the circumstances o f specific pharmaceutical
companies.568
7.155. The European Union submits that the localisation requirement is applied in a manner that
cannot be rationally reconciled with the public health objective alleged by Turkey and, as a result,
leads to "arbitrary or unju stifiable discrimination" between domestic and imported products. The
localisation requirement is not calibrated to reflect the difference in health risks that may arise in
relation to different pharmaceutical products, and in principle "applies to all pharmaceutical products
covered by the Reimbursement Scheme, regardless of how essential they are, and regardless of the
degree of risk of shortage of supply of each group of equivalent products ".569 To the extent that
Turkey modulates the application of the localisation requirement, by dividing its implementation into
five phases, "such modulation is at odds with the public health objective allegedly pursued by
Turkey" because Phase 1 and Phase 2, the only ones implemented so far by Turkey, "cover
pharmaceutical products where, by Turkey 's own admission, there is no risk of shortage of supply
and, hence, no health risk".570 In the absence of that risk, the European Union submits, it becomes
clear, that the public health objective invoked by Turkey is an excuse f or promoting the economic
development and industrial policy objectives pursued by Turkey in the pharmaceutical sector.571
7.156. In its second written submission, Turkey responds that the manner in which the localisation
requirement is implemented has "a clear rational connection to its aim "572 and therefore does not
lead to arbitrary or unjustifiable discrimination under the chapeau of Article XX. First, the
implementation of the localisation requirement through five phases follows a discernible logic:
Turkey sought to minimize the risk of a short-term shortage of supply due to the implementation of
the measure by including in the first and second phases only medicines that are already available in
Turkey. This approach "balances long-term supply security with avoiding short-term shortages and

561 Turkey's second written submission, para. 214.
562 Turkey's second written submission, para. 215.
563 Turkey's second written submission, para. 216.
564 Turkey's second written submission, para. 216.
565 Turkey's second written submission, para. 217.
566 Turkey's second written submission, para. 218.
567 Turkey's first written submission, paras. 497-503.
568 Turkey's first written submission, para. 501.
569 European Union's second written submission, para. 197.
570 European Union's second written submission, para. 198.
571 European Union's second written submission, para. 198.
572 Turkey's second written submission, para. 224.

does not give rise to a contradiction "573, contrary to the European Union 's suggestion. Second, in
order to balance the localisation requirement's goals of ensuring long-term access to medicines with
guaranteeing the sustainability of the Turkish healthcare system, "the scope of the measure cannot
be limited to only medicines which are currently at a risk of shortage of supply. "574 Access and
sustainability must be ensured with regard to all pharmaceutical products included in the Annex 4/A
list, "because inadequate access to those products would present a health risk for the patients and
the availability of those medicines entails costs that are expected to rise".575
7.4.2.3 Assessment by the Panel
7.4.2.3.1 Introduction
7.157. The general exceptions in the GATT 1994 and certain other covered agreements provide that
Members may take any measures necessary, inter alia , "to protect human life or health ".576
Article 8.1 of the TRIPS Agreement recognizes that "Members may … adopt measures necessary to
protect public health and nutrition… ", and the preamble to the TBT Agreement affirms that "no
country should be prevented from taking measures necessary … for the protection of human … life
or health ". Panels and the Appellate Body have r epeatedly emphasized that the preservation of
human life and health, which extends to measures protecting people against life -threatening
diseases, is "both vital and important in the highest degree".577
7.158. The more specific objective of ensuring access to pharmaceutical products is also recognized
in the WTO covered agreements. Notably, the 1994 Agreement on Trade in Pharmaceutical Products,
negotiated in the context of the Uruguay Round, committed the signatories to eliminating all tariffs
and other duties and charges on most pharmaceutical products and the substances used to produce
them, permanently binding them at duty-free levels in their Schedules.578 The 2001 Declaration on
the TRIPS Agreement and Public Health reflects WTO Members' shared understanding that the TRIPS
Agreement can and should be interpreted and implemented in a manner supportive of the right of
WTO Members to protect public health "and, in particular, to promote access to medicines for all".579
Article 31bis of the TRIPS Agreement and paragraph 1(b) of the Annex thereto , which entered into
force in 2017, provide that the obligations of an exporting Member under Article 31(f) of the TRIPS
Agreement shall not apply with respect to the grant by it of a compulsor y licence "to the extent
necessary for the purposes of production of a pharmaceutical product(s) and its export to an eligible
importing Member(s)" in circumstances including times of "national emergency " or "extreme
urgency".580
7.159. The more specific objective of ensuring access to pharmaceutical products is also recognized
by various international authorities and through various instruments. For example, a 2009
Resolution of the UN Human Rights Council on "Access to medicine in the context of the right of
everyone to the enjoyment of the highest attainable standard of physical and mental health "
underscores that improving access to medicine could save millions of lives every year. It recognizes
that access to medicine is one of the fundamental elements in achie ving progressively the full
realization of the right of everyone to the enjoyment of the highest attainable standard of physical
and mental health. It also stresses the responsibility of States to ensure access to all, without
discrimination, of medicines, in particular essential medicines, that are affordable, safe, effective
and of good quality.581

573 Turkey's second written submission, para. 222.
574 Turkey's second written submission, para. 223.
575 Turkey's second written submission, para. 223.
576 See also Article XIV(b) of the GATS and Article II:2(b) of the Agreement on Government
Procurement.
577 See e.g. Appellate Body Reports, EC – Asbestos, para. 172; Brazil – Retreaded Tyres, para. 179; and
578 See "Trade in Pharmaceutical Products", GATT Doc. L/7430, 25 March 1994.
579 Ministerial Conference, Declaration on the TRIPS Agreement and Public Health, WT/MIN(01)/DEC/2,
para. 4.
580 See protocol amending the TRIPS Agreement, adopted by the General Council, WT/L/641,
6 December 2005; Article 31bis of the TRIPS Agreement; and paragraph 1(b) of the Annex to the TRIPS
Agreement. The amendment entered into force on 23 January 2017.
581 UN Human Rights Council, Resolution A/HRC/RES/12/24, 12 October 2009 (Exhibit TUR-72), p. 2,
paras. 1 and 2.

7.160. The importance of ensuring access to affordable medicines is also recognized through
multiple initiatives and publications by various international organization s. For example, the WTO,
the World Intellectual Property Organization (WIPO) and the World Health Organization (WHO) have
cooperated as part of increasing international efforts to support innovation in health technologies
and to ensure the availability of affordable, new and more effective medicines for patients in all
countries. A recent joint publication, Promoting Access to Medical Technologies and Innovation, 2nd
edition: Intersections between public health, intellectual property and trade, confirms that access to
medicines and health services is an element of the fulfilment of the right of everyone to the
enjoyment of the highest attainable standard of health; th at furthering access to medicines is also
part of the United Nations Sustainable Development Goals; and that affordable prices are a critical
determinant of access to medicines.582
7.161. While it may go without saying that providing universal healthcare, ensuring access to
pharmaceutical products and protecting human health are legitimate governmental objectives 583,
the Panel considers it useful to stress that this dispute does not involve any challenge to Turkey 's
declared objective of preventi ng a risk of long -term shortage of supply of safe, effective and
affordable pharmaceutical products. The Panel understands there to be no disagreement between
the disputing parties that the lack of access to pharmaceutical products poses a risk to human li fe
and health584; that the objective of ensuring adequate access to pharmaceutical products is thus one
that relates to the protection of "human life or health" under Article XX(b) of the GATT 1994, and is
vital and important585; that WTO Members are free to decide how to organize their social security
and healthcare systems 586; and that governmental policies of covering all or part of the cost of
pharmaceutical products are linked to the objective of providing universal healthcare, ensuring
access to pharmaceutical products and protecting human health.587
7.162. Furthermore, the parties agree that Members may, in the context of Article XX(b), take
measures to address the risk of future shortages of supplies before such shortages actually arise.588
All third parties tha t expressed a view on this issue agree as well. 589 The Panel understands that
while two prior panels ruled that the "short supply" exception in Article XX(j) of the GATT 1994 590
does not cover measures taken to prevent a potential future shortage, both of th ose rulings were
based on the particular wording of the "short supply" exception in Article XX(j). 591 Indeed, both
panels accepted that measures taken to address the risk of future shortages could in principle fall
within the scope of other sub-paragraphs of Article XX of the GATT 1994 or Article XIV of the GATS.592

582 WTO, WIPO, and WHO, Promoting Access to Medical Technologies and Innovation, 2nd edition:
Intersections between public health, intellectual property and trade (2020), p. 17. (available at
https://www.wto.org/english/res_e/publications_e/who-wipo-wto_2020_e.htm)
583 European Union's first written submission, para. 211.
584 Turkey's second written submission, para. 179; European Union's responses to the first set of
questions, para. 45. As Turkey explains, "[m]edicines shortages pose risks for patient health due to
undertreatment, medication errors, and adverse reactions from attempts to substitute unavailable medicines."
(Turkey's first written submission, para. 488.)
585 Turkey's first written submission, para. 470; European Union's second written submission, para. 142.
586 Turkey's first written submission, para. 26; European Union's second written submission, para. 39.
587 European Union's first written submission, para. 211.
588 Turkey's second written submission, para. 181; European Union's responses to the first set of
questions, para. 43.
589 Canada's responses to the Panel's questions to third parties, paras. 10-14; Japan's responses to the
Panel's questions to third parties, paras. 9-13; Switzerland's responses to the Panel's questions to third
parties, paras. 8-11; United States' responses to the Panel's questions to third parties, paras. 10-15.
590 Article XX(j) provides that that Members may take, under certain conditions, measures "essential to
the acquisition or distribution of products in general or local short supply".
591 See Panel Report, India – Solar Cells, para. 7.250. The panel in EU – Energy Package agreed that
"the plain reading of the terms 'products in … short supply' indicates that the products referred to in
Article XX(j) of the GATT 1994 are those products that are presently in short supply". (Panel Report, EU –
Energy Package, para. 7.1348.)
592 The panel in India – Solar Cells found that Article XX(j) only applies to products presently in short
supply, not products at risk of becoming in short supply, but reasoned that insofar as that was incorrect, it
could only apply to products in respect of which there was an "imminent risk". However, it stated that it saw
"no basis for applying the same standard of imminent risk, and therefore [did] not apply this same standard, in
the context of assessing whether the DCR measures are designed to secure compliance with laws or
regulations within the meaning of Article XX(d) of the GATT 1994, or are 'essential' or 'necessary' within the
meaning of Articles XX(j) and XX(d)". (Panel Report, India – Solar Cells, footnote 618.) The panel in EU –
Energy Package agreed that Article XX(j) only applies to products presently in short supply but did not read
this limitation into Article XIV(a) of the GATS, which provides a general exception for measures "necessary to

Other panels have adopted a similar approach in the context of other sub-paragraphs of Article XX.593
Thus, the Panel agrees with Turkey that, in the context of Article XX(b), WTO Members "are allowed
to take preventive measures before any actual shortage of supply arises".594
7.163. Based on the foregoing, the Panel emphasizes that what is in dispute in this case is not the
legitimacy of Turkey 's declared objective of preventing a risk of long -term shortage of supply of
safe, effective and affordable medicines , or whether a measure taken to fulfil that objective would
in principle qualify as a measure "to protect human life or health " within the meaning of Article
XX(b). The question is whether Turkey has discharged its burden of demonstrating that the
localisation requirement is a measure that was taken to prevent a risk of long -term shortage of
supply of safe, effective and affordable medicines , and, if so, whether Turkey has discharged its
burden of demonstrating that the localisation requirement is necessary to fulfil that objective. When
Article XX(b) is invoked, the responding party carries the burden of proof in respect of the elements
of that affirmative defence.595
7.164. Following the traditional analytical approach to the interpretation of A rticle XX(b)596, the
Panel will first assess whether the localisa tion requirement is provisionally justified under Article
XX(b). In this context, the Panel will address the threshold issue of whether the localisation
requirement is a measure taken to protect human life or health . If the Panel finds that this is the
case, it will then proceed to examine the remaining elements of the test under Article XX(b), namely
whether the localisation requirement is necessary to protect human life or health, and thus
provisionally justified under Article XX(b), and whether it has be en applied consistently with the
requirements of the chapeau of Article XX.
7.4.2.3.2 Whether the localisation requirement is a measure taken to protect human life
or health
7.165. Turkey asserts that its over-reliance on imported pharmaceutical products creates a risk of
long-term597 shortage of supply of safe, effective and affordable medicines, and argues that the
localisation requirement, by localising the production of pharmaceutical products, is a measure
designed to address this risk and thus to ensure an uninterrupte d access to safe, effective and
affordable pharmaceutical products for all patients in Turkey. The European Union argues that there
is no relevant evidence of the existence of a risk of shortage of supply of safe, effective and
affordable medicines in Turkey arising from an over-reliance on imported pharmaceutical products,
and that the localisation requirement is designed only to promote Turkey's economic development
and industrial policy objectives in the pharmaceutical sector.
7.166. This is not the first case in which a responding party has argued that a challenged measure
was taken to prevent a risk of supply-side disruptions that could arise from its alleged over-reliance
on imports of essential goods and/or services, to ensure a continuous and affordable supply of those
goods or services. In prior cases, panels and the Appellate Body have consistently required the
responding party to demonstrate, at a minimum, that the asserted risk arising from over -reliance
on imports was more than a merely hypothetical possibility.
7.167. In India – Solar Cells , India argued that the challenged measures, which conditioned
government purchases of electricity from SPDs on those SPDs sourcing certain types of equipment
(e.g. solar cells) domestically, were justified under Articles XX(j) and (d) of the GATT 1994 because

protect public morals or to maintain public order". The footnote to Article XIV(a) of the GATS expressly
indicates that it applies to situations involving a "genuine and sufficiently serious threat" to fundamental
societal interests, and the panel found that "evidence of a threat already having materialized is not a
prerequisite for demonstrating that this threat is genuine, i.e. has the character of a threat and is real and
true." (Panel Report, EU – Energy Package, para. 7.1190.)
593 See e.g. Panel Report, Brazil – Taxation, fn 1001, noting that Brazil's argument regarding the risk of
a shortage of digital TV equipment was based on an invocation of Article XX(a), and not Article XX(j), of the
GATT 1994.
594 Turkey's second written submission, para. 181.
595 See e.g. Appellate Body Report, US – Gasoline, p. 22; Panel Report, EC – Asbestos, paras. 8.177-
8.178.
596 See paras. 7.132 - 7.138 above.
597 In its submissions, Turkey emphasizes that the localisation requirement is "not a tool to remedy any
potential short-term shortages of supply, but aims to ensure a guaranteed stable and long-term access to
medicines". (Turkey's opening statement, para. 73.)

"dependence on imports of foreign solar cells and modules creates a risk of disruption in continuous
and affordable supply of solar cells and modules [and] it is therefore necessary to ensure that there
is an adequate reserve of domestic manufacturing capacity for solar cells and modules in case there
is a disruption in supply of foreign solar cells and modules."598 The panel in that case examined the
individual pieces of evidence provided by India to substantiate it s concerns about the risk of
shortage. The panel noted that "there is always some risk of a future shortage of any product. "599
However, the panel ultimately found that India had failed to provide sufficient evidence of any
imminent risk of a disruption in supply of foreign solar cells and modules to India SPDs.600
7.168. In Brazil – Taxation, Brazil argued that certain challenged tax exemptions and reductions on
digital TV equipment produced domestically were justified under Article XX(a) of the GATT 1994
because t o bridge the digital divide, it needed to ensure the supply of digital TV transmitting
equipment and the capacity to develop and manufacture this equipment in Brazil, since there was
no guarantee that there would be a sufficient quantity of imported produc ts to adequately supply
the market with transmitting equipment compliant with Brazil's standards.601 The panel in that case
examined whether Brazil had presented sufficient evidence in support of its assertions that domestic
producers required protection and that it had taken into account the capacity of foreign producers
to supply the Brazilian market i n order to secure access to digital television equipment, and
concluded that this was not the case. 602 The panel found that Brazil had provided no evidence to
substantiate its assertion that there was a risk that it could not obtain all of the necessary
transmitting equipment from foreign sources, stating that "Brazil has not provided any evidence to
indicate that transmitting equipment would not be made available in the Brazilian market in the
necessary scale"603 and that "Brazil has not undertaken any analy sis, nor presented any evidence
(quantitative or qualitative), in support of its contention that imported products could not supply the
market."604
7.169. In EU – Energy Package, the European Union defended two of the challenged measures on
the grounds that they w ere related to securing an uninterrupted and affordable supply of energy
within the European Union. More specifically, the European Union argued that the third -country
certification measure was justified under Article XIV(a) of the GATS because it was nece ssary to
ensure the European Union's security of energy supply and hence to maintain public order 605; and
that the TEN -E measure was justified under Article XX(j) of the GATT because natural gas was a
product "in general or local short supply" because of the existence of "genuine and serious risks of
disruption of supply of gas. "606 The panel in that case engaged in a review of the evidence and
arguments and found that there was a sufficient factual basis to conclude that certain risks of natural
gas disruptions were not merely hypothetical.607 The panel stated that the European Union made a
"prima facie case that there is a real and true possibility, rather than a merely hypothetical one, of
foreign governments requiring or inducing foreign controlled [transpo rt service operators] to
undermine the European Union's security of energy supply".608
7.170. Thus, in those cases, panels and the Appellate Body required the responding party to
demonstrate, at a minimum, that the asserted risk arising from alleged over -reliance on imports
was more than a merely hypothetical possibility. The Panel considers that i n the context of
Article XX(b), as in the context of the other sub-paragraphs of Article XX, a party invoking a general
exception must identify some degree of probability that the alleged risk exists.609 In this case, Turkey

598 Panel Report, India – Solar Cells, para. 7.189. See also ibid. para. 7.237. India provided evidence on
what the possible supply-side disruptions for solar cells and modules are, and why they could be reasonably
expected. Such evidence included a World Bank study, certain market forecasts, and two press reports. (Ibid.
paras. 7.251-7.254.)
599 Panel Report, India – Solar Cells, para. 7.245.
600 Panel Report, India – Solar Cells, paras. 7.261-7.264.
605 Panel Report, EU – Energy Package, para. 7.1135.
606 Panel Report, EU – Energy Package, para. 7.1326.
607 Panel Report, EU – Energy Package, paras. 7.1194 and 7.1346.
608 Panel Report, EU – Energy Package, paras. 7.1194 and 7.1346.
609 The Panel sees nothing in the text of Article XX(b) that would establish a materially different
evidentiary standard, in this respect, than has been applied in previous cases in the context of Article XX(j) of
the GATT 1994, Article XX(a) of the GATT 1994, and Article XIV(a) of the GATS. In the context of assessing
whether a ban on certain products containing asbestos was taken to protect human life or health, the panel in

asserts that its over -reliance o n imported pharmaceutical products creates a risk of long -term
shortage of supply of safe, effective and affordable pharmaceutical products, and argues that the
localisation requirement, by localising the production of pharmaceutical products, is a measure
designed to address this risk. Contrary to what some of Turkey's arguments suggest610, it therefore
falls on Turkey to demonstrate the existence of a risk of shortage of supply arising from its over -
reliance on imported pharmaceutical products.
7.171. The Panel does not consider that there is any rigid or pre-determined threshold or evidentiary
standard that should be applied in this respect. Insofar as a responding party presents evidence and
arguments demonstrating that there is a substantial degree of probability of a specified risk to human
life or health materializing, it will be easier for the responding party to discharge its burden of proving
that the challenged measure was taken to protect against that risk, thus qualifying as a measure
taken to protect human life or health under Article XX(b). Conversely, insofar as a responding party
asserts the existence of a risk without establishing any substantial degree of probability, such that
the risk appears to be theoretical, abstract or otherwise hypothetical, it will be more difficult for the
responding party to discharge its burden of proving that the challenged measure was taken to protect
against that risk.
7.172. According to Turkey, its over-reliance on imported pharmaceutical products creates a risk of
long-term shortage of supply of safe, effective and affordable pharmaceutical products risk because
of several prevailing economic circumstances relating to the cost of imported pharmaceutical
products in Turkey, including most notably that: (i) the low prices of p harmaceutical products on
the Turkish market create the risk that foreign pharmaceutical producers might decide to supply
other countries where they can receive a higher price for their products, instead of Turkey 611; and
(ii) imported pharmaceutical produc ts may become unaffordable to the SSI if a foreign currency
gains in value or the Turkish lira depreciates.612
7.173. In the Panel's view, the nature of the risk identified by Turkey in this dispute involves the
kind of hypothetical possibility that previous panel s and the Appellate Body have regarded as
insufficient to discharge a responding party's burden under Article XX. Significantly, Turkey has not
identified any instance of shortage of supply of a specific product caused by foreign producers
deciding to stop supplying medicines to Turkey to instead sell in other countries where they can
receive a higher price for their products; or caused by a medicine becoming unaffordable to the SSI
because of a foreign currency gaining in value or the Turkish lira depreciating.
7.174. The Panel has carefully reviewed the examples of shortages of certain pharmaceutical
products offered by Turkey in support of its contention that this is "not merely a hypothetical
situation".613 The evidence provided by Turkey, which consists of press articles over the period 2017-
2019 (and one from 2012), shows that shortages of pharmaceutical products have arisen on more
than one occasion. While the evidence suggests that all such shortages were temporary in nature,
it also shows that a range of different pharmaceutical products were affected. Thus, the Panel agrees
with Turkey that the press articles submitted "provide ample evidence of disruptions in the supply

EC – Asbestos first assessed whether the product at issue (i.e. chrysotile-asbestos in that case) posed a risk to,
in that case, human life or health. (Panel Report, EC – Asbestos, para. 8.170.) Likewise, in the context of
assessing whether the ban on imported retreaded tyres was taken to protect human life or health, the panel in
Brazil – Retreaded Tyres first assessed whether Brazil had demonstrated that risks posed by mosquito-borne
diseases (such as dengue, yellow fever and malaria) to human health and life exist in Brazil in relation to the
accumulation as well as transportation of waste tyres. (Panel Report, Brazil – Retreaded Tyres, para. 7.43.)
610 Turkey's second written submission, paras. 177-182.
611 Turkey's first written submission, paras. 127, 488, and 547; responses to the first set of questions,
para. 58.
612 Turkey's second written submission, para. 244. Turkey explains that, at a certain point, "the costs of
imported medicines become so expensive that a decision must be made to either stop covering the costs of
certain medicines, thereby risking limiting access, or continue paying for those medicines even if this is not
supported by revenue, thereby risking the financial stability of the healthcare system." (Ibid. para. 245.)
613 Turkey's second written submission, para. 245 (referring to "Pharmacy chambers blame medical
firms for drug shortages", Daily News (Istanbul, 23 January 2017); C. Caglayan and E. Erkoyun, "Pharmacy
stocks run low as Turkey's drug price policy hits supplies", Reuters (Istanbul, 6 February 2019); M. Xuequan,
"Spotlight: Turkey faces shortages of medicine due to currency fluctuations", Xinhuanet (21 February 2019)
(together Exhibit TUR-130); "The rise in the exchange rate also hit the pharmaceutical industry: alleged supply
problems in 'more than 500 medicines'", Medimagazin (10 October 2018) (Exhibit TUR-131)).

of pharmaceutical products " in Turkey, and furthermore, that insofar as the products in question
were imported, such shortages were "linked to" imports.614
7.175. The Panel in no way questions the gravity of these situations or the legitimate concerns that
they raise. However, the Panel's review of the articles does not reveal any instance of shortage of
supply of a specific product caused by foreign producers deciding to stop supplying pharmaceutical
products to Turkey to sell instead in other countries where they can receive a higher price for their
products; or shortage of supply caused by a pharm aceutical product becoming unaffordable to the
SSI because of a foreign currency gaining in value or the Turkish lira depreciating:
a. Three press articles submitted by Turkey 615 refer to situations where pharmaceutical
producers, warehouses and/or pharmacies temporarily "hoarded" pharmaceutical products
pending, and to take advantage of, a previously announced increase of the exchange rate
for imported medicines or hikes in prices. The Panel understands that these shortages
arose from the Turkish government's announcement of price increases (operated through
the adjustment of the fixed exchange rate for pharmaceutical products), and that the
products concerned were made available on the market shortly after the prices
increased616, or following an authorizatio n by the Ministry of Health for certain
pharmaceutical products to be sold at prices higher than those set by the fixed exchange
rate.617
b. Another press article submitted by Turkey 618 refers to supply problems concerning 521
pharmaceutical products, including some imported products (e.g. eye drops), but gives
mostly examples of shortages of pharmaceutical products produced in Turkey using
imported raw materials.
c. Three other press articles provided by Turkey relate to temporary shortages of Tamoxifen
(a breast cancer medicine)619, Purinethol (a medicine used to treat leukaemia) 620, and
Salofalk (a medicine used to treat ulcerative colitis). 621 However, none indicates whether
the supply disruptions are the result of reliance on imports, as opposed to other factors:
i. One of the articles on Tamoxifen quotes an official as saying that this pharmaceutical
product is also produced locally. This raises the question of how the temporary
shortage arose from an over-reliance on imports in the manner argued by Turkey.622

614 Turkey's second written submission, paras. 183-188.
615 "Pharmacy chambers blame medical firms for drug shortages", Daily News (Istanbul, 23 January
2017); C. Caglayan and E. Erkoyun, "Pharmacy stocks run low as Turkey's drug price policy hits supplies",
Reuters (Istanbul, 6 February 2019); M. Xuequan, "Spotlight: Turkey faces shortages of medicine due to
currency fluctuations", Xinhuanet (21 February 2019) (Exhibit TUR-130).
616 "Pharmacy chambers blame medical firms for drug shortages", Daily News (Istanbul, 23 January
2017); C. Caglayan and E. Erkoyun, "Pharmacy stocks run low as Turkey's drug price policy hits supplies",
Reuters (Istanbul, 6 February 2019); M. Xuequan, "Spotlight: Turkey faces shortages of medicine due to
currency fluctuations", Xinhuanet (21 February 2019) (Exhibit TUR-130).
617 C. Caglayan and E. Erkoyun, "Pharmacy stocks run low as Turkey's drug price policy hits supplies",
Reuters (Istanbul, 6 February 2019) (Exhibit TUR-130).
618 "The rise in the exchange rate also hit the pharmaceutical industry: alleged supply problems in 'more
than 500 medicines'", Medimagazin (10 October 2018) (Exhibit TUR-131).
619 H. Biskin, "Shortage of supply in medicine to cure breast cancer", Duvar, 22 September 2017; "Local
solution for imported medicine used in intestinal diseases", Anadolu, 16 January 2017 (Exhibit TUR-98).
620 "Shortage of supply in this medicine", Sağlık Aktüel, 23 August 2012 (Exhibit TUR-99).
621 "Citizens are victims, that drug is still not on the market", Yeniakit, 29 November 2018 (Exhibit TUR-
100).
622 "Local solution for imported medicine used in intestinal diseases", Anadolu, 16 January 2017 (Exhibit
TUR-98). The other press article regarding Tamoxifen notes the following explanation provided by H. Gürsöz,
President of the TMMDA: "There is no supply problem for cancer medicines that we have identified at the
moment. Last year, the short-term problem experienced in breast cancer patients' medications was caused by
the firm, which has the highest market share of the drug, [which] wants to close the production line abroad.
We also produced this product locally. There is no procurement problem that reaches us about other cancer
medicines. After this problem has been solved, the normal supply flow has continued." (H. Biskin, "Shortage of
supply in medicine to cure breast cancer", Duvar, 22 September 2017 (Exhibit TUR-98).)

ii. The article on Purinethol relates a statement by the SSI that appears to indicate that
price was not an issue, in that "there is no demand from the importer company,
especially for a price increase".623
iii. The article on Salofalk contains statements suggesting that the shortage of supply may
have been related to a decision by pharmaceutical companies to stop the sale of the
product in Turkey "by claiming that the SSI did not offer desired prices for their
products" but also states that "despite the fact that the Ministry of Health said that the
price was eventually agreed with the pharmaceutical company and that the distribution
would be made, it was noticed that the sale still is not made. "624 It also contains
statements relating the shortages to an unspecified "long" and "official procedure",
and quotes an official 's statement that "pharmaceutical companies have caused
problems in access by turnin g the recent exchange rate fluctuations into an
opportunity". However, it also quotes the official as referring to "alternative
procurement ways, including quick licensing and mandatory license liberalization
method, are put into use, and drugs are procure d at an affordable price to our
country".
iv. In sum, none of these press articles provided by Turkey mentions a situation where
the companies producing Tamoxifen, Purinethol, Salofalk, or any other pharmaceutical
product decided to stop supplying pharmaceutical products to Turkey to sell instead in
other countries where they could receive a higher price for their products; or where
the pharmaceutical product became unaffordable to the SSI because of a foreign
currency gaining in value or the Turkish lira depreciating.
7.176. Turkey also provides as evidence correspondence between Turkish authorities relaying
shortages of medicines containing the active substance Oxytocin (used to treat antenatal contraction
insufficiencies and postnatal atony) 625 and medicines containi ng L -carnitine (used for carnitine
insufficiencies).626 The Panel notes that this correspondence does not specify whether the
pharmaceutical products containing these substances are produced in Turkey or imported. The
correspondence also contains no indicat ion whether or how the supply disruptions are related to
reduced imports.
7.177. The Panel recalls that it is for Turkey, as the party invoking the general exception in
Article XX(b), to substantiate its assertion that its alleged over-reliance on imported pharmaceutical
products creates a risk of long-term shortage of supply of safe, effective and affordable medicines.
As indicated above, the Panel agrees with Turkey that the press articles submitted "provide ample
evidence of disruptions in the supply of pharmaceutical products" in Turkey and further that, insofar
as the products in question were imported, such shortages were "linked to" imports. However, the
Panel's review of these press articles does not reveal any instance of shortage of supply of a specific
product caused by foreign producers deciding to stop supplying medicines to Turkey to sell instead
in other countries where they can receive a higher price for their products; or caused by a medicine
becoming unaffordable to the SSI because of a foreign currency gaining in value or the Turkish lira
depreciating. Thus, the absence of evidence linking these past instances of shortages to Turkey 's
over-reliance on imports further confirms that the risk identified by Turkey – and more specifically,
that the factors that give rise to a risk of future shortages in respect of any and all pharmaceutical
products can only be characterized as hypothetical.

623 "Shortage of supply in this medicine", Sağlık Aktüel, 23 August 2012 (Exhibit TUR-99), p. 1.
624 "Citizens are victims, that drug is still not on the market", Yeniakit, 29 November 2018 (Exhibit TUR-
100), pp. 1-2.
625 Antalya Provincial Health Directorate, Letter to the Ministry of Health regarding oxtyocine ampoule, 7
March 2016; Yaşam Hastanesi Life Hospital Antaliya, Letter to the Pharmacies Branch of the Provincial Health
Directorate, 26 February 2016; Private Vitale Gynecology and Obstetrics Hospital, Letter to the Provincial
Health Directorate Pharmacies Branch, 25 February 2016; Medical Park Özel Antalya Hastane Kompleksi, Letter
to the Provincial Health Directorate Pharmacies Branch, 24 February 2016; Private Akdeniz Şifa Hospital, Letter
to the Provincial Health Directorate Pharmaceuticals and Pharmacies Branch, 22 February 2016; Özel/Private
Anadolu Hastanesi Antalya, Letter to the Provincial Health Directorate Pharmaceuticals and Pharmacies Branch,
1 March 2016 (Exhibit TUR-101).
626 Ministry of Family and Social Policies, Directorate General for Disabled and Elderly, Letter to the
Ministry of Health, 25 March 2016 (Exhibit TUR-102).

7.178. In addition to being merely hypothetical, the situation described by Turkey in this dispute is
characterized by a level of temporal and sectoral generality that is at odds with the concept of risk
under Article XX(b). The generality of Turkey 's argument is in fact such t hat the risk identified by
Turkey could be present in any sector and concern any market. Indeed, Turkey refers to general
economic circumstances that are not specific to the pharmaceutical sector 627, and not specific to
Turkey (such as exchange rate fluctua tions).628 The generality of Turkey 's underlying argument
would lead to the conclusion that there is a permanent risk of shortage of products concerning each
and every sector of any WTO Member 's economy. Following the logic of Turkey 's argument,
international trade liberalization in products and sectors that are necessary for the protection of
human life or health creates a permanent risk to human life or health under Article XX(b).
7.179. The Panel is also not persuaded that the risk of a shortage of supply of pharmaceuticals, as
described by Turkey, has been proven in the context of the COVID -19 pandemic. 629 The Panel
understands Turkey to argue that the COVID -19 pandemic demonstrates that the risk of shortage
of supply of safe, effective and affordable pharmaceutical products is not merely theoretical, because
an acute emergency such as the pandemic can lead to such shortages. 630 The Panel considers that
what the COVID-19 pandemic demonstrates is simply that an acute emergency in any sector could
potentially trigger a risk of short-term shortage of any products. Any additional parallel between the
COVID-19 pandemic and Turkey 's alleged risk would be precluded by the specific nature of the
shortages related to the COVID -19 pandemic, which involved a novel virus, a glo bal pandemic,
unprecedented global demand for newly developed vaccines, and insufficient worldwide production
to meet that demand. In the Panel's view, the COVID-19 pandemic is relevant for Turkey's argument
only to the extent that it provides a highly publicized example of worldwide short-term shortages of
products (such as vaccines and other pharmaceutical products). The COVID-19 pandemic does not
demonstrate, however, how over-reliance on imports of globally available pharmaceutical products
can lead to long-term risks of shortage of these products, nor how occasional disruptions of supply
of some pharmaceutical products can be indicative of a potential risk of disruption of supply of all
pharmaceutical products.
7.180. In sum, Turkey asserts the existence of a risk without establishing any substantial degree
of probability, such that the risk appears to be theoretical, abstract and hypothetical. In the Panel's
view, the hypothetical and overly general nature of the alleged risk, as asserted by Tur key, casts
serious doubt on Turkey's assertion that the localisation requirement was taken to protect against a
future shortage of supply of safe, effective and affordable pharmaceutical products in Turkey.
7.181. The Panel recalls that to determine whether a cha llenged measure was taken to protect
human, animal or plant life or health, a panel must examine all the evidence before it, which may
include the text of the relevant legal instruments, the legislative history, and other evidence
regarding the design, str ucture and expected operation of the challenged measure. 631 The Panel

627 The Panel notes that, in India – Solar Cells, the responding party likewise referred to currency
fluctuations and the depreciation of the Indian rupee in the context of asserting possible risks of supply-side
disruptions and related risks of overreliance on imported solar cells and modules. (Panel Report, India – Solar
Cells, paras. 7.251-7.252.) In that case, the panel found it "significant that India has not identified any actual
disruptions in imports of solar cells and modules to date, whether stemming from 'the unprecedented
depreciation in [Indian rupee] in 2013' or otherwise". (Ibid. para. 7.262.)
628 As the European Union observes, "[e]xchange rate fluctuations are a common re-adjustment
mechanism in responses to trade and capital imbalances. They affect all currencies, and not only the Turkish
lira." (European Union's responses to the first set of questions, para. 56.)
629 Turkey's first written submission, paras. 486-487; second written submission, fn 236; responses to
the first set of questions, para. 57; and opening statement, para. 76. According to Turkey, the COVID-19
pandemic "confirmed that an acute emergency such as a virus outbreak can quickly lead to dangerous
medicine shortage" and "shows the risks of overreliance on imported pharmaceutical products". (Turkey's first
written submission, para. 486.)
630 The parties appear to agree that the localisation requirement is not similar to the measures imposed
by a number of countries in the context of the COVID-19 pandemic. (See European Union's responses to the
second set of questions, paras. 24-33; Turkey's comments on responses to the second set of questions, para.
21.)
631 See e.g., Panel Reports, Indonesia – Import Licensing Regimes, para. 7.620; Brazil – Taxation, para.
7.884; China – Raw Materials, para. 7.479; China – Rare Earths, para. 7.145; and EC – Tariff Preferences,
para. 7.200 (referring to Appellate Body Reports, Japan – Alcoholic Beverages II, p. 29; Argentina – Textiles
and Apparel, para. 55; and US – Shrimp, para. 137). See also Appellate Body Reports, Colombia – Textiles,
para. 5.69 (referring to Appellate Body Reports, US – Shrimp, paras. 135-142; EC – Seal Products, para.
5.144) and EC – Seal Products, para. 5.144 (referring to Appellate Body Reports, US – Tuna II (Mexico), para.
314 and US – Gambling, para. 304).

further recalls that such an enquiry has led some panels to conclude that the challenged measures
were not designed to protect human, animal or plant life or health, and instead pursued o ther
objectives.
7.182. For example, in EC – Tariff Preferences, the European Communities argued that certain tariff
preferences given to 12 beneficiary countries were justified under Article XX(b) as measures
necessary to protect human life or health, because the tariff preferences supported measures taken
in those countries against the illicit production and trafficking of narcotic drugs, thereby reducing
the supply of those drugs into its territory and protecting the life and health of EC citizens. The panel
found that the tariff preferences were not designed to protect the life and health of EC citizens,
based on, among other things, the fact that there was no mention of the asserted objective
(protecting the life and health of EC citizens) in the text of the relevant instruments.632
7.183. In China – Rare Earths, China argued that its export duties on rare earths, tungsten, and
molybdenum products were justified under Article XX(b), because they were "an integral part of a
comprehensive policy that has the goal to redu ce pollution and protect the health of China 's
population, its animals and plants ".633 The panel found that the export duties were not taken to
protect human, animal or plant life or health, based on, among other things, the fact that the Chinese
instruments imposing the export duties made no link between the duties and any environmental or
health objective.634
7.184. The Panel observes that most of the legal instruments putting into place the localisation
requirement do not refer to a public health objective. To the extent that some of them do, such
references are cast at a general level (as general policy objectives of th e entire Turkish healthcare
system) and are not linked with the localisation requirement or the declared objective of preventing
a shortage of supply of safe, effective and affordable medicines arising from an over -reliance on
imports.
7.185. The main legal instruments serving as a basis for the localisation requirement, as identified
by the parties 635, are the Tenth Development Plan 2014 -2018636, the Structural Transformation
Program for Healthcare Industries Action Plan 637, and the 2016 Action Plan of the
64th Government.638
7.186. The Tenth Development Plan 2014-2018 does not relate the localisation requirement (or the
main assessments and objectives from which the localisation requirement derives) to a public health
objective. The Panel also notes that in the section describing "global trends and their impact on
Turkey" in the Health and Social Security sector, the Tenth Development Plan 2014 -2018 does not
mention the existence of any risk of shortage of supply of safe, effective and affordable
pharmaceuticals in Turkey, but only refers to an expected increase in health expenditures in Turkey
"in parallel with the projected global rise".639
7.187. Among its objectives and policies, the Tenth Development Plan 2014-2018 identifies certain
general "objectives and targets" related to the topic of "Health"640 (in Chapter 2.1, "Qualified People,
Strong Society") and relates them to a series of policies (such as the implementation of a referral

632 Panel Report, EC – Tariff Preferences, para. 7.201.
633 Panel Reports, China – Rare Earths, para. 7.157.
634 Panel Reports, China – Rare Earths, paras. 7.169-7.171.
635 See Turkey's first written submission, paras. 128 and 165; European Union's first written submission,
paras. 37-42.
636 Tenth Development Plan 2014-2018 (Exhibit EU-12).
637 Ministry of Health and Ministry of Development, Structural Transformation Program for Healthcare
Industries Action Plan, November 2014 (Structural Transformation Program for Healthcare Industries Action
Plan) (Exhibits EU-14, TUR-37). Turkey submitted this document as a separate exhibit, arguing that "the
translation provided by the European Union was inadequate". According to the exhibit provided by Turkey, the
document is titled "Action Plan of Structural Transformation Program in Health Industry" (Exhibit TUR-37).
638 Republic of Turkey, Office of the Prime Minister, 2016 Action Plan of the 64th Government
(Implementation and Reforms), 10 December 2015 (2016 Action Plan of the 64th Government) (Exhibit EU-15).
639 Tenth Development Plan 2014-2018 (Exhibit EU-12), para. 52.
640 Tenth Development Plan 2014-2018 (Exhibit EU-12), para. 172. These general objectives and targets
do not refer specifically to a public health objective beyond the general description: "[i]ncreasing the quality of
life and life span of the citizens and ensuring their participation to the economic, social and cultural life in a
conscious, active and healthy manner is the main objective. For this purpose, accessible, qualified, cost-
effective and sustainable health service delivery supported by data and evidence-based policies is essential."

system, increased awareness of health service providers and citizens, control of the quality and use
of pharmaceuticals, clear defining of educational and research activities, determination of standards
in the area of complementary medicine etc.).641 The Panel finds it telling that none of these policies
pertains to the localisation requirement. R ather, a reference to local production of pharmaceutical
products appears in the description of policies related to the topic of "Transformation in the
manufacturing industry" in a different Chapter of the Plan (Chapter 2.2, Innovative Production, High
and Stable Growth).642 This suggests that the premise of the localisation requirement is seen as part
of an industrial policy objective and not as pursuing a public health objective.
7.188. The Tenth Development Plan 2014 -2018 also contains a Healthcare Related Indus tries
Structural Transformation Program (Section 1.16). In setting the "objective and scope of the
program", it clarifies that "[b]y this program, the aim is transforming into a production structure
which is capable to produce high value -added products, offer such products and services to global
markets and meet a higher portion of domestic pharmaceutical and medical device demands. "643
While the Plan thus relates the Healthcare Related Industries Structural Transformation Program to
the objective of meeting a higher portion of domestic pharmaceutical demand through domestic
production, it does not appear to relate this objective to concerns pertaining to public health, such
as improving the safety or affordability of available medicines, or addressing a risk that domestic
pharmaceutical demand may not be met by supply from the international market by imports. The
Plan also identifies program targets, performance indicators and program components, none of
which refer to an objective of ensuring access to safe, effective and affordable pharmaceutical
products.
7.189. The Structural Transformation Program for Healthcare Industries Action Plan further
develops the elements set out in the Tenth Development Plan 2014-2018. In particular, the program
targets performance indicators and program components. The Panel finds it again telling that neither
of these elements, nor the description of the Program, refer to the objective of ensuring access to
safe, effective and affordable pharmaceutical products. Rather, the Structural Transformation
Program for Healthcare Industries Action Plan appears to reproduce and build upon the industrial
policy objective described in the Tenth Development Plan:
In the long haul, it is vital that Turkey becomes a global hub for R&D and production in
medicines and that it reaches a competitive position in medicines and medical devices
sector. The aim of this program is to switch to a production structure that is able to
produce high added -value products; to place products and services to the global
markets; and is capable of meeting a larger portion of domestic need for medicines and
medical devices.644
7.190. The Action Plan of the 64 th Government sets out a series of "reforms to be implemented
within 3 months ", including Action 46: "[t]o improve the reimbursement, pricing and licensing
procedures for medical devices and strategic and domestic medicines " under the responsibility of
the Ministry of Health.645 The description of Action 46 includes "speed[ing] up the evaluation process
for including domestically manufactured healthcare products on the reimbursement list", the prompt
licensing of "medicines for which an application has been lodged for production in Turkey ", and the

641 Tenth Development Plan 2014-2018 (Exhibit EU-12), paras. 173-182.
642 Tenth Development Plan 2014-2018 (Exhibit EU-12), para. 669: "[p]harmaceuticals industry will
attain a more competitive state in which; exports are higher, its internationally competent technology is
integrated with R&D, necessary measures are taken to develop new molecules in the long run, and higher
value added drugs, biotechnology and bio-similar products being the priority, are produced." See also ibid.
para. 675: "[d]omestic capability in manufacturing and exporting will be improved in the medical devices and
supplies industry."
643 Tenth Development Plan 2014-2018 (Exhibit EU-12), p. 180.
644 Structural Transformation Program for Healthcare Industries Action Plan (Exhibits EU-14, TUR-37),
p. 1. In the translation provided by Turkey, this paragraph also does not make any reference to a public health
objective: "[i]t is important for Turkey to be a global pharmaceutical R&D and production center in the field of
pharmaceuticals and medical devices and to reach a competitive position in long term. With this program, it is
aimed to introduce a production structure capable of producing high value-added products, providing products
and services to global markets, and meeting a greater portion of the domestic pharmaceutical and medical
device needs."
645 2016 Action Plan of the 64th Government (Exhibit EU-15), Action 46.

exclusion of imported pharmaceutical products from the Annex 4/A list which "will be defined,
provided that necessary assurance is obtained for provision of the treatment".646
7.191. Thus, the three main legal instruments serving as a basis for the localisation requirement
strongly indicate that the localisation requirement was not conceiv ed to pursue a public health
objective (in particular, that of ensuring uninterrupted access to safe, effective and affordable
medicines for all patients in Turkey) but rather appears to pursue an industrial policy objective. The
few contemporaneous references to public health concerns that may be related to the objective of
ensuring uninterrupted access to safe, effective and affordable medicines in Turkey, are made in the
broader context of describing the general functions of Turkey 's healthcare sector. B y contrast, in
those same documents, the premises and objectives of the localisation requirement appear in the
context of industrial policy objectives.
7.192. Several Strategic Plans of the TMMDA were published at or around the time when the
implementation of the localisation requirement began. The parties refer, in particular, to the
Strategic Plans of the TMMDA for 2013 -2017647, 2018-2022648, and 2019 -2023.649 After a careful
examination of each of these Strategic Plans of the TMMDA, the Panel notes that none of th ese
provides any further indication that the localisation requirement pursues a public health objective
by contemporaneously referring to the objective of ensuring uninterrupted access to safe, effective
and affordable medicines for all patients in Turkey.
7.193. With respect to the Strategic Plan of the TMMDA for 20 13-2017, the Panel takes note of
Turkey's explanation that this plan links, through a correlation matrix, the localisation objectives
included in the Tenth Development Plan 2014 -2018 with the TMMDA 's strategic actions. However,
the Panel notes that: (i) each of the objectives included in the Tenth Development Plan (2014-2018)
appearing in the excerpt provided by Turkey is generally related to one or more of three TMMDA
objectives ( "to provide access to quality, effective and safe products ", "to take the necessary
measures to minimize risks and raise awareness to ensure the correct use of products ", and "to
provide corporate excellence "); and (ii) the policies pertaining to the localisation requirement ar e
linked to all three TMMDA objectives. If the correlation matrix were indicative of the objective
pursued by each measure, this would lead to the conclusion that any measure, whose
implementation involves the TMMDA or the SSI, would necessarily be charact erized as a measure
designed to protect human health within the meaning of Article XX(b) of the GATT 1994 merely
because its implementation involves the TMMDA or the SSI.
7.194. The Strategic Plan of the TMMDA for 2018-2022 refers to the objective of "protecting public
health" which "is possible with the presence of a strong pharmaceutical industry ". This mention is
followed by the statement that "[r]ather than making very important contributions in terms of
economic development, the country should have a pharmace utical sector capable of producing to
meet the medicine needs of the country against factors such as war, epidemic diseases and a
possible embargo."650 The Panel observes that this statement links the development of the domestic
pharmaceutical industry to avoiding shortages, and is thus broadly consistent with Turkey's assertion
that the localisation requirement was adopted to ensure an uninterrupted access to safe, effective
and affordable pharmaceutical products for all patients in Turkey. However, the factors referred to
("war, epidemic diseases and a possible embargo ") do not align to the specific factors that Turkey
refers to as the basis for the asserted risk of over -reliance on imports651, and are generic factors
that could be invoked to support self -sufficiency arguments, and industrial policy measures, in
virtually any sector of the economy. In addition, the Strategic Plan of the TMMDA for 2018 -2022

646 2016 Action Plan of the 64th Government (Exhibit EU-15), Action 46.
647 Ministry of Health, Strategic Plan of TMMDA for 2013-2017, 12 December 2013 (Exhibit TUR-77).
648 Ministry of Health, Strategic Plan of TMMDA for 2018-2022, 11 October 2018 (Exhibit TUR-38).
649 Ministry of Health, Strategic Plan of TMMDA for 2019-2023, 31 December 2018 (Exhibits EU-87,
TUR-35).
650 Ministry of Health, Strategic Plan of TMMDA for 2018-2022, 11 October 2018 (Exhibit TUR-38), pp.
74-76.
651 The Panel recalls that, according to Turkey, its over-reliance on imported pharmaceutical products
creates that risk because of several prevailing economic circumstances relating to the cost of imported
pharmaceutical products in Turkey, including most notably that: (i) the low prices of pharmaceutical products
on the Turkish market create the risk that foreign pharmaceutical producers might decide to supply other
countries where they can receive a higher price for their products, instead of Turkey; and (ii) imported
pharmaceutical products may become unaffordable to the SSI if a foreign currency gains in value or the
Turkish lira depreciates.

refers to the concept of public health in the context of describing a largely industrial policy objective:
"[i]n long term, it is expected that Turkey will be a global pharmaceutical R&D and production center
and reach a competitive position in the field of pharmaceuticals and medical devices."652
7.195. The Strategic Plan of the TMMDA for 2019 -2023 lists three aims, each further elaborated
upon with the addition of "goals" and "performance indicators". The goals and performance indicators
for "Aim 1: providing access to quality, effective, and safe products" do not contain any mention of
the localisation requirement. In fact, localisation appears as a separate component of "Aim 3: priority
evaluation of applications for the public health and country economy, support of R & D and domestic
production in health".653 The Panel considers that this further confirms that the localisation
requirement does not pursue a public health objective but rather an industrial policy objective.
7.196. Turkey also refers to a Strategic Plan 2019-2023 of the Ministry of Health.654 The sixth aim
identified in this plan is "[t]o contribute to the socioeconomic development of our country and global
health; developing national technology and increasing domestic production in healthcare
industries".655 The Panel disagrees with Turkey 's exp lanation that two out of the four main
components of that aim "explicitly refer to the connection between 'ensuring the accessibility, safety
and rational use of medicines, biological products and medical devices ' and the localisation
measure".656 Rather, t he Panel observes that the first of these components refers to a general
objective of "ensuring the accessibility, safety and rational use of medicines, biological products and
medical devices " without reference to localisation, and the second of these com ponents is
"[p]romoting R&D and innovation in health, ensuring nationalization and localization, increasing
exports". Rather than a "connection", as suggested by Turkey, the coexistence of these two
components implies – at most – that both form part of the overarching objective of contributing to
the socioeconomic development of the country and global health. The Panel does not find that this
conclusively shows that the localisation requirement has a "public health objective " as argued by
Turkey.
7.197. In addition to the Strategic Plans of the Ministry of Health and the TMMDA, Turkey refers to
several TMMDA Administrative Operation and Activity Reports. An analysis of these reports confirms
the Panel's initial assessment that the documents pertaining to the implementation of the localisation
requirement do not contain any indication of a public health objective underpinning the localisation
requirement. For instance, the 2016 TMMDA Activity Report refers to the goal of "increasing domestic
production in the field of pharmaceuticals and medical devices with the sustainability of the quality
we achieve in healthcare" and an engagement to "move to a production structure that can produce
high value-added products in pharmaceuticals and medical devices, offer products and services to
global markets, and meet a greater portion of the domestic pharmaceutical and medical device
needs", without any connection to the objective of protecting public health. 657 The Panel disagrees
with Turkey's assessment that the 2018 TMMDA Activity Report 658 and the 2019 TMMDA Activity
Report659 "indicate that the objective of local production of pharmaceutical products lies in its

652 Ministry of Health, Strategic Plan of TMMDA for 2018-2022, 11 October 2018 (Exhibit TUR-38), pp.
74-76.
653 Ministry of Health, Strategic Plan of TMMDA for 2019-2023, 31 December 2018 (Exhibits EU-87,
TUR-35), Aim 3. (emphasis added)
654 Ministry of Health, Strategic Plan 2019-2023 (Exhibit TUR-34).
655 Ministry of Health, Strategic Plan 2019-2023 (Exhibit TUR-34), p. 15.
656 Turkey's first written submission, para. 457.
657 Ministry of Health, TMMDA, Administrative Activity Report 2016, February 2017 (2016 TMMDA
Activity Report) (Exhibits EU-99, TUR-36), pp. 1, 86-87. The 2017 TMMDA Activity Report similarly describes
the localisation requirement as follows: "In the Tenth Development Action Plan, it is envisaged to carry out
actions that will encourage the pharmaceutical and medical device industry to domestic production. With these
actions, domestic production will be encouraged in our country and the domestic producer will have a
competitive structure. Thus, contribution will be made in the pharmaceutical and medical device sectors to
bring the domestic production to a level that meets the country's needs. With the Tenth Development Plan
1.16 within the scope of the Structural Transformation Program in Health Industries, it is envisaged to increase
the efficiency of global value chains by increasing the domestic production capacity in the mid-term, developing
the R&D and enterprise ecosystem, developing a new molecule in the long term, producing higher value added
medicines and medical devices." (Ministry of Health, TMMDA Administrative Operation Report 2017, February
2018 (2017 TMMDA Activity Report) (Exhibit TUR-80), p. 95).
658 Ministry of Health, TMMD Administrative Operation Report 2018, February 2019 (2018 TMMDA
Activity Report) (Exhibit TUR-79).
659 Ministry of Health, TMMDA Administrative Operation Report 2019, February 2020 (2019 TMMDA
Activity Report) (Exhibit TUR-78).

contribution to public health and the country's economy".660 The Panel finds it hard to derive such a
conclusion from the mere fact that, as described above, one of the aims pursued by the TMMDA is
described as "priority evaluation of applications for the public health and country economy, support
of R & D and domestic production in health".
7.198. Having analysed the evidence before it, the Panel concludes that the documents pertaining
to the implementation of the localisation requirement do not contain any contemporaneous
references to a public health objective that could support the argument that the localisation
requirement is a measure taken to protect human health or life. The Panel notes, in particular, that:
(i) some of these documents do not mention a public health objective at all; (ii) some of the
documents that mention a public health objective do not relate this objective to the localisation
requirement, but rather describe the localisation requirement within the context of industrial policy
objectives; (iii) some of the documents that mention a public heal th objective, do so in relation to
broader policy considerations (i.e. pertaining to the general functions of Turkey's healthcare system,
or to health as an element of general societal values), and not in relation to the localisation
requirement; and (iv) some of the documents that mention the potential effects of increased local
production of pharmaceuticals on public health, appear to consider these effects not as an objective
of the localisation requirement, but rather as a potential positive by -product, as a result of the
improved performance of Turkey's domestic pharmaceutical industry.
7.199. In the Panel's view, this demonstrates the Turkish government's ongoing aim to improve the
performance of Turkey's domestic pharmaceutical industry, in particular with respect to its meeting
a higher share of domestic demand for pharmaceutical products. However, beyond the general
assertion that such an improved performance of the domestic pharmaceutical industry could be
beneficial for public health, the documents pertai ning to the implementation of the localisation
requirement do not seem to relate this objective to specific public health concerns such as improving
the safety or affordability of available pharmaceutical products, or addressing a risk that domestic
pharmaceutical demand may not be met by supply from the international market.
7.200. In the Panel 's view, this casts further doubt on Turkey 's assertion that the localisation
requirement was taken to protect against a future shortage of supply of safe, effective and affordable
pharmaceutical products in Turkey.
7.201. The Panel 's view is further reinforced by the fact that the objective of the localisation
requirement, as it appears in several documents, has no rational relationship to the invoked objective
of ensuring a continuous supply of safe, effective and affordable pharmaceutical products.
7.202. The Tenth Development Plan (2014 -2018) sets, as one of the two programme targets for
the Healthcare Industries Structural Transformation Program (Section 1.16), the aim of "meeting
60 percent (by value) of domestic pharmaceutical demand by domestic production ".661 The
Structural Transformation Program for Healthcare Industries Action Plan662, as well as several other
documents related to the implementation of the localisation requirement, reiterate this objective.663
The Panel considers it clear from these documents that the localisation requirement, as one of the
measures put in place to implement the Tenth Development Plan (2014 -2018), also pursues the
objective of meeting 60% of domestic pharmaceutical demand by domestic production.664

660 Turkey's first written submission, para. 461.
661 The other program target is "[m]eeting 20 percent of the domestic medical devices and supplies
demand by domestic production". (Tenth Development Plan 2014-2018) (Exhibit EU-12), p. 180.) It appears
that, as of 2018/2019, approximately 40% of domestic pharmaceutical demand was met by domestic
production (see Ministry of development, Eleventh Development Plan 2019-2023 (Exhibit EU-84), Section
2.3.5; A. Yücel, "Foreign investments will be [like] medicine!", Dünya, 30 July 2019 (Exhibit EU-19), p. 4).
662 Structural Transformation Program for Healthcare Industries Action Plan (Exhibits EU-14, TUR-37),
p. 1.
663 See, for instance, Ministry of Health, Strategic Plan of TMMDA for 2013-2017, 12 December 2013
(Exhibit TUR-77), pp. 91-93. For further reference, see also H. Gursoz, President of the TMMDA,
"Pharmaceutical Localisation Project: Transition from Importation to Manufacturing", presentation of 6 March
2017 (Exhibit EU-34), slide 1; TMMDA, "Pharmaceutical Localisation Project Work Conducted by the Ministry of
Health", presentation of December 2017 (Exhibit EU-23), slide 1.
664 Turkey argues that the 60% target mentioned in the Tenth Development Plan (2014-2018) is "an
overarching objective which does not exclusively relate to the localisation measure" (Turkey's responses to the
second set of questions, para. 72). However, the Panel recalls that Turkey identified the Tenth Development

7.203. The Panel agrees with Turkey that "each WTO Member has the right to set its own objectives
for developing its pharmaceutical sector in order to ensure access to safe, effective and affordable
medicines in line with the sustainable deve lopment goals"665, and understands that Turkey has set
its own objective of meeting 60% of domestic pharmaceutical demand through domestic production.
However, the Panel disagrees with Turkey to the extent that Turkey appears to suggest that any
objective s et by a WTO Member for developing its pharmaceutical sector is automatically or
necessarily set "in order to ensure access to safe, effective and affordable medicines in line with the
sustainable development goals". To the contrary, in the Panel's view, a measure adopted in pursuit
of developing a WTO Member's pharmaceutical sector could only be seen as having a public health
objective if there is a rational relationship between the objective set by that WTO Member for
developing its pharmaceutical sector and the specific public health objective invoked.
7.204. The Panel does not see such a rational relationship between the localisation requirement 's
stated objective of increasing domestic production from meeting 40% to covering 60% of domestic
demand, and the declared objective of ensuring a continuous supply of safe, effective and affordable
pharmaceutical products. This is because: (i) it remains unclear from Turkey 's arguments and the
evidence before the Panel how the target of meeting 60% of domestic demand by domestic
production relates to ensuring continuous supply of safe, effective and affordable pharmaceutical
products; (ii) this target is set simply in terms of the total sales value of the total domestic demand
for medicines; and (iii) the performance indicators for this target do not appear to be related to the
objective of ensuring a continuous supply of safe, effective and affordable pharmaceutical products.
7.205. Turkey has provided no explanation as to why and how the localisation requirement's stated
objective of specifically meeting 60% of domestic demand through domestic production (rather than,
for instance, maintaining the current figure of 40%, or setting a higher target of 100%) relates to
ensuring a continuous supply of safe, effective and affordable pharmaceutical products. 666 The
various legal instruments related to the implementation of the localisation requirement do not
provide further clarity. The Panel observes that the program targets for the Healthcare Industries
Structural Transformation Progr am (Section 1.16) are set in terms of increasing the share of
domestic production similar to those used for other programs that pursue an industrial policy
objective667, whereas the program targets for other programmes are set in terms that have a much
clearer relationship with the objective of improving public health.668

Plan (2014-2018) as one of the "high-level policy documents which paved the way for the localisation
measure" and specified that the localisation requirement "encourages local production and implements the
Tenth Development Plan" (Turkey's first written submission, paras. 165 and 555). The Tenth Development Plan
(2014-2018) refers to the fact of meeting 60% of domestic pharmaceutical demand by domestic production as
a "program target". (Tenth Development Plan 2014-2018 (Exhibit EU-12), p. 180.) Since the localisation
requirement implements the Tenth Development Plan (2014-2018), the Panel finds it logical to conclude that
the localisation requirement pursues the program targets set in the Tenth Development Plan (2014-2018).
Turkey also explains that it has considered it sufficient for domestic production to account for 60% of the
domestic pharmaceutical market, making domestic production a "safety cushion" without eliminating imports of
medicines (i.e. having 100% domestic production). (Turkey's responses to the second set of questions, para.
65.) The European Union disagrees that the 60% target is a "safety cushion" and argues that it is "rather an
objective of Turkey's industrial and economic development policy". (European Union's comments on responses
to the second set of questions, para. 61.) Whether or not the 60% target is a "safety cushion", it is clear from
the evidence, and undisputed by Turkey, that the 60% target is one of the program targets set by the Tenth
Development Plan (2014-2018) and pursued by the localisation requirement.
665 Turkey's responses to the second set of questions, para. 68.
666 Turkey only explains that it has considered "that it is sufficient for the domestic production to
account for 60% of the medicine market" and relates this choice to "a factual assessment of Turkey's chosen
level of protection and the expected operation of the measure at issue". (Turkey's responses to the first set of
667 For instance, the program targets for "Domestic resource based energy production program" (Section
1.13), include "[i]ncreasing the share of domestic resources, including domestic and international oil and
natural gas drillings, in primary energy production to 35 percent at the end of 2018 which was 28 percent at
the end of 2011" and "[i]ncreasing electricity generation from domestic coal sources to 60 billion kWh in 2018
which was approximately 39 billion kWh in 2012" (Tenth Development Plan 2014-2018) (Exhibit EU-12),
p. 174). The "Domestic resource based energy production program" clearly refers to industrial policy and
economic development objectives such as "[t]o establish high and stable growth in Turkish economy, utilization
of all possible domestic resources in energy production". (Ibid. p. 174.)
668 For instance, the program targets for "Healthy life and mobility program" (Section 1.21) include
"[r]educing the rate of deaths from non-communicable diseases" or "[r]educing the ratio of obese people
among 19+ population to 24 percent." (Tenth Development Plan 2014-2018) (Exhibit EU-12), p. 190.)

7.206. The Panel also finds it telling that the 60% figure relates to the share of locally produced
pharmaceutical products in terms of sales value of the total domestic demand for medicines.669 This
reference to sales value rather than to other metrics, such as the range of medicines produced
domestically, or the geographic or demographic coverage of demand in Turkey, suggests that the
localisation requirement's stated objective pert ains exclusively to industrial policy and cannot be
related to the invoked objective of ensuring access to safe, effective and affordable pharmaceutical
products.670
7.207. The Panel's conclusion that the localisation requirement 's stated objective of meeting 60%
of domestic demand through domestic production has no rational relationship to Turkey 's declared
objective of ensuring access to safe, effective and affordable pharmaceutical products is further
confirmed by the performance indicators set in the Tenth Deve lopment Plan (2014-2018) and the
Structural Transformation Program for Healthcare Industries Action Plan. These include, among
other things, indicators such as "ratio of exports to imports ", "number of companies producing
medical devices in Turkey ", "number of employees in the pharmaceutical industry "671 or "capacity
utilization rate "672, and do not include any indicators related to Turkey 's invoked objective of
ensuring a continuous supply of safe, effective and affordable pharmaceutical products. The inclusion
of a performance indicator related to the "ratio of exports to imports " appears particularly at odds
with the pursuit of an objective of ensuring a continuous supply of pharmaceutical products in
Turkey.673 The Panel is not convinced by Turkey 's explanation that "in order to guarantee
uninterrupted access to medicines in Turkey, it is important for the domestic pharmaceutical industry
to be also capable to export medicines to other countries".674 In the Panel's view, there is an inherent
contradiction between the declared objective of ensuring a continuous supply of safe, effective and
affordable products in a particular market and encouraging domestic producers in that market to
increase their export performance.675
7.208. For these reasons, the Panel is of the view that the stated objective of the localisation
requirement, i.e. meeting 60% (by value) of domestic pharmaceutical demand by domestic
production, has no rational relationship to the objective invoked by Tur key in this dispute,
i.e. ensuring a continuous supply of safe, effective and affordable pharmaceutical products. This is
a further indication that the localisation requirement is not a measure taken to protect human life
or health.
7.209. The Panel is aware that the COVID-19 pandemic has prompted many WTO Members to
consider increasing their local production of certain pharmaceutical products to mitigate against risks
of disruptions in global supply chains in respect of essential medicines (including the raw mate rials
needed to produce them). 676 The Panel is also cognizant of the growing consensus within the

669 Turkey's responses to the second set of questions, para. 72.
670 The Panel notes the European Union's argument that "the use of such metric is designed to promote
the localization of relatively more expensive medicines, regardless of their therapeutic uses or availability" and
that "[i]f the Localization Requirement was genuinely designed to secure access to medicines, its 'target' would
rather be defined in other metrics related to the range of medicines produced domestically, and their relative
importance in light of that objective, having regard to relevant factors such as their therapeutic uses,
consumption needs, and their availability on the international markets." (European Union's comments on
responses to the second set of questions, paras. 65-66.)
671 Tenth Development Plan 2014-2018 (Exhibit EU-12), p. 180.
672 Structural Transformation Program for Healthcare Industries Action Plan (Exhibits EU-14, TUR-37),
p. 2.
673 The Panel appreciates Turkey's explanation that "this performance indicator is not designed to
measure the effectiveness of the localization measure with respect to meeting its public health objective"
(Turkey's responses to first set of questions, para. 66), i.e. Turkey's invoked objective in this dispute.
However, this performance indicator is clearly designed to measure the effectiveness of the localisation
requirement with respect to the program target of meeting 60% of domestic pharmaceutical demand by
domestic production, i.e. the localisation requirement's stated objective. For that reason, the Panel finds the
inclusion of this performance indicator indicative of the expected outcomes of the localisation requirement, and
– indirectly – of the potential existence, or lack, of a rational relationship between the stated objective and the
invoked objective.
674 Turkey's responses to the first set of questions, para. 67.
675 According to the Structural Transformation Program for Healthcare Industries Action Plan, the ratio of
exports to imports was expected to increase from 18.2% in 2013 to 29.3% in 2018. (Structural Transformation
Program for Healthcare Industries Action Plan) (Exhibits EU-14, TUR-37), p. 2.)
676 Turkey states that "the need for local production of pharmaceutical products has been officially
endorsed by several countries, including some of the European Union Members States. French President
Emanuel Macron stated that '[t]his crisis teaches us that on some goods, materials, the strategic character

international community that the local production of medicines can provide for greater sustainability
of supply chains, especially in public health emergencies. This growing consensus finds reflection in,
among other things, the May 2021 resolution adopted by the Member States of the WHO on
"Strengthening local production of medicines and other health technologies to improve access ".677
The Panel, taking into acc ount the current context of the COVID -19 pandemic, does not question
that various risks of disruptions in global pharmaceutical supply chains exist; that there is a range
of measures that countries have been encouraged to take to mitigate such risks and, more generally,
to promote the sustainability of supply chains; and that these may include measures to strengthen
the local production of pharmaceuticals.
7.210. However, it does not logically follow from this that any measure taken by a WTO Member to
increase its local production of pharmaceutical products must be deemed to have been taken for the
purpose of protecting human life or health. In this case, the Panel's analysis of the evidence before
it relating to Turkey's localisation requirement, implemented in 2016, leads it to conclude that Turkey
has not discharged its burden of demonstrating that the localisation requirement is a measure taken
to protect against a risk of long-term shortage of supply of safe, effective and affordable
pharmaceutical products in Turkey. First, Turkey has not identified any instance of shortage of supply
of a specific product caused by the factors that it asserts create the alleged risk, namely foreign
producers deciding to stop supplying pharmaceutical products to Turkey and to instead sell in other
countries where they can receive a higher price for their products, or a pharmaceutical product
becoming unaffordable to the SSI because of a foreign currency gaining in value or the Turkish lira
depreciating. Second, the do cuments pertaining to the implementation of the localisation
requirement do not contain any contemporaneous references to the specific risk and objective
invoked by Turkey. Third, there is no rational relationship between the localisation requirement 's
stated objective of meeting 60% (by value) of domestic pharmaceutical demand through domestic
production and the objective of ensuring a continuous supply of safe, effective and affordable
pharmaceutical products.
7.211. For these reasons, the Panel finds that Turke y has not demonstrated that the localisation
requirement is a measure taken to protect human, animal or plant life or health within the meaning
of Article XX(b).
7.4.2.3.3 Remaining elements under Article XX(b)
7.212. The Panel has found that the localisation requirement i s not a measure taken to protect
human, animal or plant life or health. This is a threshold legal element that must be satisfied for a
measure to be covered by the exception of Article XX(b) 678, because there can be no justification
under Article XX(b) for a measure that is not "designed" to protect human, animal or plant life or

imposes having a European sovereignty, produce more on the national territory to reduce our dependence and
equip us over the long run. […] Our priority today is to produce more in France and to produce more in
Europe'. Similarly, the German Economy Minister Peter Altmaier called for an EU-wide initiative to reshore
pharmaceutical production. The same was recognised by the EU Health Commissioner Stella Kyriakides,
according to whom, 'it has become abundantly clear that we need to work towards the need for increasing the
production of medicines and innovation within the EU'. In a similar vein, the Pharmaceutical Committee of the
European Commission's Health and Food Safety Directorate-General stated that it was 'concerned that [the
EU's] dependency on imports of APIs and chemical raw materials will put increasingly at risk the supply of
certain essential medicines and threaten the EU's strategic autonomy. The recent outbreak of COVID-19 shows
that a disruption of supply from India and China in the pharmaceutical value chain could present a major
health security issue'". (Turkey's first written submission, para. 487, referring to Rym Momtaz, "Macron urges
massive increase in local production of medical equipment", Politico, 31 March 2020 (Exhibit TUR-31); Jakob
Hanke Vela, "Germany wants to reshore pharma production from Asia", Politico, 13 March 2020 (Exhibit TUR-
95); "Commission aims to bring back medicine production to Europe", Euractiv, 22 April 2020, (Exhibit TUR-
30); Jim Brunsden and Michael Peel, "Covid-19 exposes EU's reliance on drug imports", Financial Times, 20
April 2020 (Exhibit TUR-96); European Commission, Health and Food Safety Directorate-General,
Pharmaceutical Committee, Dependency of the EU pharmaceutical industry on active pharmaceutical
ingredients and chemical raw materials imported from third countries, 12 March 2020 (Exhibit TUR-97).
677 Seventy-Fourth World Health Assembly, 25 May 2021, A74/A/CONF./1. This resolution was initially
proposed by Ethiopia (on behalf of the African Group) and co-sponsored by the US, EU member States and
many other developing and developed countries.
678 See Appellate Body Report, Colombia – Textiles, para. 5.68.

health.679 The localisation requirement fails to meet this threshold. Accordingly, the Panel need not
assess the remaining legal elements of Article XX(b) to determine the applicability of this exception.
7.213. Since the localisation requirement does not fall under Article XX(b) and is thus not
provisionally justified under this subparagraph, it is also not necessary for the Panel to assess
whether the localisation requirement has been appl ied consistently with the requirements of the
chapeau of Article XX.680
7.214. In the circumstances of this dispute, the Panel also sees no compelling reason to make
additional findings or observations beyond those necessary to resolve the claims and defences at
issue. Accordingly, it is unnecessary to make findings on the disputed issues that arise in respect of
the remaining elements under Article XX(b).
7.4.3 Turkey's alternative defence under Article XX(d) of the GATT 1994
7.215. Article XX(d) of the GATT 1994 provides:
Subject to the requirement that such measures are not applied in a manner which would
constitute a means of arbitrary or unjustifiable discrimination between countries where
the same conditions prevail, or a disguised restriction on international trade, nothing in
this Agreement shall be construed to prevent the adoption or enforcement by any
Member of measures:
…
(d) necessary to secure compliance with laws or regulations which are not inconsistent
with the provisions of this Agreement, including those relating to customs enforcement,
the enforcement of monopolies operated under paragraph 4 of Article II and Article
XVII, the protection of patents, trade marks and copyrights, and the prevention of
deceptive practices;
7.216. Turkey submits that if the Panel finds that the localisation requirement is not justified under
Article XX(b), then, in the alternative, it is justified under Article XX(d) of the GATT 1994 as a
measure necessary to secure compliance with laws and regulations that are not inconsistent with
the GATT 1994. According to Turkey, the localisation requirement is necessary to secure compliance
with the laws and regulations requiring Turkey to ensure "accessible, effective and financially
sustainable healthcare".681
7.217. The Panel notes that Turkey's argument under Article XX(d) is substantially the same as its
argument under Article XX(b). More specifically, Turkey submits that the localisation measure is
designed to secure compliance with the obligation to ensure accessible, effective, and financiall y
sustainable healthcare.682 Turkey states that to meet its obligation to provide adequate healthcare
to its population, Turkey needs to ensure that its healthcare system is sustainable, and to maintain
the broad coverage of that system, Turkey regulates the prices of medicines available on the market.
This, in turn, "leads to a risk of a shortage of supply when the prices are considered by the
pharmaceutical companies as too low".683 The localisation requirement "aims to address that risk by
ensuring the continuous availability of the medicines without undermining the financial balance of

679 See Appellate Body Reports, Colombia – Textiles, para. 5.68; Argentina – Financial Services, para.
6.203, and Mexico – Taxes on Soft Drinks, para. 72.
680 Prior WTO adjudicators have traditionally refrained from assessing for conformity with the chapeau of
Article XX measures that they have found not to be provisionally justified. See e.g. Panel Reports, US – Tariff
Measures (China), para. 7.242; India – Solar Cells, paras. 7.389-7.390; China – Publications and Audiovisual
Products, para. 7.912; and Colombia – Ports of Entry, para. 7.620. See also Appellate Body Reports, India –
Solar Cells, para. 5.155; and China – Publications and Audiovisual Products, fn 614.
681 Turkey's first written submission, para. 504.
682 Turkey's first written submission, paras. 540-548. In its first written submission, Turkey addresses
the "designed to" element of the test as an element of whether the measure is "necessary", and not as a
threshold analytical issue.
683 Turkey's first written submission, para. 547.

the healthcare system".684 In responding to this argument, the European Union reiterates the same
arguments that it makes in the context of the "designed to" step in Article XX(b).685
7.218. While Turkey presents two separate defences for the localisation requirement under
Articles XX(b) and (d) of the GATT 1994, the essence of Turkey's arguments is that the measure is
justified under Article XX(b) because it is necessary to ensure uninterrupted access to safe, effective
and affordable medicines in Turkey; and under Article XX(d) because it is necessary to secure
compliance with laws requiring Turkey to ensure accessible, effective and financially sustainable
healthcare. Given the overlap, the Panel considers that its assessment under Article XX(b) extends
mutatis mutandis to the analysis of the defence under Article XX(d). Thus, even assuming , for the
sake of argument , that Article XX(d) could be interpreted as covering measures taken by a
government to secure its own compliance with its laws or regulations, which is an interpretative
issue the Panel considers unnecessary to resolve 686, it follows from the Panel 's assessment of the
evidence under Article XX(b) that Turkey has failed to demonstrate that the localisation requirement
was taken to secure compliance with laws requiring Turkey to ensure "accessible, effective and
financially sustainable healthcare" for its population.
7.4.4 Conclusion
7.219. The Panel concludes that Turkey has no t established that the localisation requirement is
justified under Article XX(b) or Article XX(d) of the GATT 1994.
7.5 Additional claims relating to the localisation requirement and the "import ban on
localised products"
7.5.1 Introduction
7.220. The Panel has found that (i) the localisation requirement is not covered by the government
procurement derogation in Article III:8(a) of the GATT 1994, (ii) it is inconsistent with the national
treatment obligation in Article III:4 of the GATT 1994, and (iii) Turkey has not establ ished that the
measure is necessary for the protection of human life or health under Article XX(b) of the GATT 1994
or to secure compliance with laws and regulations under Article XX(d) of the GATT 1994. The Panel
now turns to the European Union's additional claims relating to the localisation requirement and the
"import ban on localised products ". While these claims raise distinct issues of fact and legal
interpretation, each claim is the subject of a request, by at least one of the parties, that the Panel
not rule on it for reasons related to considerations of judicial economy.
7.221. First, the European Union claims that the reimbursement scheme operated by the Turkish
social security system involves the granting of a subsidy within the meaning of Article 1.1 of the
SCM Agreement, and that the localisation requirement makes the granting of that subsidy contingent
upon the use of domestic over imported goods, thereby violating Article 3.1(b) of the
SCM Agreement. The European Union presents this as an alternative and conditional claim,
requesting the Panel to rule on this claim only if the Panel were to conclude that the localisation
requirement is not in breach of Article III:4 of the GATT 1994, or that such breach is justified under
any other provision of the GATT 1994.687 Turkey does not comment on the alternative and conditional
nature of the European Union's claim under Article 3.1(b).
7.222. Second, the European Union claims that the localisation requirement, in addition to being
inconsistent with Article III:4 of the GATT 1994, is inconsistent with Article 2.1 of the TRIMs
Agreement because it constitutes an "investment measure related to trade in goods " that is
inconsistent with Article III:4 of GATT 1994. Turkey submits that if the Panel were to uphold the

684 Turkey's first written submission, para. 547.
685 European Union's second written submission, paras. 203-206.
686 The responding party in India – Solar Cells adopted a similar interpretation of the exception in Article
XX(d). The complaining party in that case argued that Article XX(d) does not apply to measures taken to
secure a government's own compliance with its laws and regulations, on the basis that the wording of Article
XX(d), including the terms "secure compliance" and "enforce", "strongly suggest that the actor doing the
enforcing is distinct from the object(s) subject to enforcement". The panel considered it unnecessary to resolve
that issue. (Panel Report, India – Solar Cells, paras. 7.324 and 7.329.)
687 European Union's first written submission, para. 279; second written submission, para. 232.

European Union's claim under Article III:4 of the GATT 1994, then it would not be necessary for the
Panel to also rule on the claim under Article 2.1 of the TRIMs Agreement.688
7.223. Third, the European Union claims that Turkey has acted inconsistently with its obligation s
under Article X:1 of GATT 1994 by failing to publish certain elements, terms and conditions of general
application of the localisation requirement promptly, in such a manner as to enable governments
and traders to become acquainted with them. Turkey argues that if the Panel were to conclude that
the localisation requirement is inconsistent with Article III:4 of the GATT 1994, it would not be
necessary for the Panel to also rule on the European Union 's claim under Article X:1 of the
GATT 1994.689
7.224. Fourth, th e European Union claims that the measure it refers to as "the import ban on
localised products" is inconsistent with Turkey's obligations under Article XI:1 of GATT 1994. Turkey
argues that if the Panel were to conclude that the localisation requirement is inconsistent with
Article III:4 of the GATT 1994, then one of the components of the "import ban" as defined by the
European Union would disappear, such that it would be unnecessary that the Panel additionally rule
on that alleged measure.690
7.5.2 Article 3.1(b) of the SCM Agreement
7.225. Article 1 of the SCM Agreement, entitled "Definition of a Subsidy", provides that a subsidy
shall be deemed to exist if there is a financial contribution by a government or any public body within
the territory of a Member (Artic le 1.1(a)(1)), and a "benefit" is thereby conferred (Article 1.1(b)).
Article 1 sets forth an exhaustive list of what constitutes a "financial contribution". This list provides
that a financial contribution exists, inter alia, where a government practice involves a "direct transfer
of funds" (Article 1.1(a)(1)(i)), where a government "provides goods" (Article 1.1(a)(1)(iii)), and
where a government "entrusts or directs a private body to carry out" those or other functions listed
in Articles 1.1(a)(1)(i), (ii), or (iii) (Article 1.1(a)(1)(iv)).
7.226. Article 3 of the SCM Agreement, entitled "Prohibited Subsidies", establishes two categories
of subsidies that Members are prohibited from granting or maintaining. The first category is subsidies
contingent on export performance (Article 3.1(a)), which is not at issue in this dispute. The second
category is "subsidies contingent, whether solely or as one of several other conditions, upon the use
of domestic over imported goods" (Article 3.1(b)).
7.227. The European Union claims that the reimbursement scheme operated by the Turkish social
security system involves the granting of a subsidy within the meaning of Article 1.1 of the
SCM Agreement, and that the localisation requirement makes the granting of that subsidy contingent
upon the use of domestic over imported goods, thereby violating Article 3.1(b) of the SCM
Agreement.691 Specifically, the European Union argues that: (i) there is a financial contribution in
the form of a "direct transfer of funds ", from the SSI to the pharmacies, within the meaning of
Article 1.1(a)(1)(i)692; (ii) this financial contribution confers a direct "benefit", within the meaning of
Article 1.1(b) of the SCM Agreement to the outpatients who receive the pharmaceutical produc ts
covered by the reimbursement scheme and, as a result, also an indirect benefit to the Turkish

688 Turkey's comments on responses to the second set of questions, para. 17.
689 Turkey's responses to the second set of questions, para. 84.
690 Turkey's responses to the second set of questions, para. 86.
691 European Union's first written submission, paras. 278-299; second written submission, paras. 231-
269; responses to the first set of questions, paras. 64-71; responses to the second set of questions, paras. 62-
82; comments on responses to the second set of questions, paras. 67-79.
692 The Panel notes that the European Union makes an additional and conditional argument, in the
alternative, regarding the existence of a financial contribution in the form of "entrustment" or "direction" under
Article 1.1(a)(1)(iv) of the SCM Agreement. Specifically, the European Union argues that if the Panel were to
agree with Turkey that the SSI does "procure" and "purchase" pharmaceutical products "for governmental
purposes" within the meaning of Article III:8(a) of the GATT 1994, then the European Union submits that the
subsequent provision of those goods by the pharmacies to the outpatients would constitute, by itself, a
financial contribution in the form of an "entrustment" or "direction" of the provision of goods within the scope
of Article 1.1(a)(1)(iv) of the SCM Agreement. Turkey does not dispute that the SSI "entrusts" or "directs"
pharmacies to perform the function of "providing goods", i.e. pharmaceutical products, to outpatients on the
terms and conditions set by the SSI. (Turkey's first written submission, para. 370; Turkey's responses to the
first set of questions, para. 79.) At this juncture of its analysis, however, the Panel has already found that the
SSI does not "purchase" pharmaceutical products within the meaning of Article III:8(a) of the GATT 1994,
which renders moot the European Union's alternative and conditional argument under Article 1.1.(a)(1)(iv).

producers of those pharmaceutical products 693; and (iii) this subsidy is effectively contingent upon
the use by the outpatient of domestic pharmaceutical produc ts over like imported pharmaceutical
products.
7.228. Turkey disputes each of these points694, arguing that (i) the payments made by the SSI to
pharmacies are not a "direct transfer of funds " within the meaning of Article 1.1(a)(1)(i); (ii) any
direct benefit to outpatients conferred by Turkey's reimbursement scheme falls outside the scope of
Article 1.1 of the SCM Agreement, and the European Union has not established that any indirect
benefit is conferred upon producers of the pharmaceutical products listed in Annex 4/A; and (iii) any
alleged subsidy is not contingent upon the use of domestic over imported products within the
meaning of Article 3.1(b) of the SCM Agreement.
7.229. The Panel notes that the European Union's claim under Article 3.1(b) of the SCM Agreement
is expressly conditioned on the Panel rejecting the European Union's claim under Article III:4 of the
GATT 1994. Specifically, the European Union states that it makes its claim under Article 3.1(b) of
the SCM Agreement "in the alternative"695 to its claim concerning the localisation requirement under
Article III:4 of the GATT 1994, and "requests the Panel to rule on this claim only in the event that
the Panel were to conclude that the Localisation Requirement is not in breach of Article III:4 of the
GATT 1994, or that such breach is justified under any other provision of the GATT 1994 ".696 The
Panel has concluded that the localisation requirement does not fall within the scope of the
government procurement derogation in Article III:8(a) of the GATT 1994, that the localisation
requirement is inconsistent with Article III:4 of the GATT 1994, and that Turkey has not established
that the localisation requirement is justified under either of the general exceptions in Article XX(b)
or (d) of the GATT 1994. Thus, the con dition on which the European Union 's claim under
Article 3.1(b) is predicated has not been fulfilled.
7.230. The Panel considers that the alternative and conditional nature of the European Union's claim
under Article 3.1(b) of the SCM Agreement constitutes a suff icient basis for the Panel to decline to
rule on it, and that it is unnecessary to consider this claim further.
7.5.3 Article 2.1 of the TRIMs Agreement
7.231. Article 1 of the TRIMs Agreement states that it applies to "investment measures related to
trade in goods" (i.e. "TRIMs").
7.232. 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 inconsistent with the provisions of Article III or Article XI
of GATT 1994.
2. An illustrative list of TRIMs that are inconsistent with the obligation of national
treatment provided for in paragraph 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.
7.233. That Illustrative List provides in relevant part:

693 In response to Turkey's argument that the direct benefit to outpatients "falls outside the scope of the
SCM Agreement", the European Union clarifies that Turkey is responding to an argument that the European
Union has not made and that it does not argue that any direct benefit conferred to outpatients constitutes, in
and of itself, a subsidy within the scope of the SCM Agreement; rather, the European Union argues that the
financial contributions confer a direct benefit to the outpatients as part of its demonstration that, as a result,
the same financial contributions also confer an indirect benefit to the Turkish producers of pharmaceutical
products. (European Union's second written submission, para. 246; responses to the first set of questions,
paras. 64-65.)
694 Turkey's first written submission, paras. 330-413; second written submission, paras. 118-157;
responses to the first set of questions, paras. 76-97; opening statement, paras. 101-115; closing statement,
paras. 24-35; responses to the second set of questions, paras. 73-81; comments on responses to the second
set of questions, paras. 33-38.
695 European Union's first written submission, para. 279; second written submission, para. 232.
696 European Union's first written submission, para. 279; second written submission, para. 232.

1. TRIMs that are inconsistent with the obligation of national treatment provided for
in paragraph 4 of Article III of GATT 1994 include tho se which are mandatory or
enforceable under domestic law or under administrative rulings, or compliance with
which is necessary to obtain an advantage, and which require:
(a) the purchase or use by an enterprise of products of domestic origin or from any
domestic source, whether specified in terms of particular products, in terms of volume
or value of products, or in terms of a proportion of volume or value of its local
production; or
(b) that an enterprise's purchases or use of imported products be limited to an amount
related to the volume or value of local products that it exports.
7.234. Thus, Article 2 prohibits the application of any TRIM that is inconsistent with Articles III or
XI of the GATT 1994. If a TRIM is one of the two types of TRIMs covered by parag raph 1 of the
Illustrative List annexed to the TRIMs Agreement, then the measure is deemed to be inconsistent
with Article III:4 of the GATT 1994 (and, by extension, Article 2.1 of the TRIMs Agreement) which
obviates the need for any further examination of the elements of Article III:4.697 If the TRIM at issue
is not one of the two types of TRIMs covered by paragraph 1 of the Illustrative list, then a claim
under Article 2.1 of the TRIMs Agreement necessarily entails an examination of whether the elements
of Article III:4 are satisfied.
7.235. The European Union claims that the localisation requirement, in addition to being
inconsistent with Article III:4 of the GATT 1994, is inconsistent with Article 2.1 of the TRIMs
Agreement because it constitutes an "investment measure related to trade in goods " that is
inconsistent with Article III:4 of GATT 1994.698
7.236. Turkey does not present arguments on any of the elements of Article III:4 of the GATT 1994
or Article 2.1 of the TRIMs Agreement, and limits its response to the European Union's claims under
these provisions to arguing that these provisions are inapplicable to the localisation requirement by
virtue of the government procurement derogation in Article III:8(a) of the GATT 1994, and that any
inconsistency with Article III:4 and Article 2.1 would be justified by Article XX(b) or Article XX(d) of
the GATT 1994.699
7.237. The parties have presented opposing views on whether the Panel should, if it finds that the
localisation requirement is inconsistent with Article III:4 of the GATT 1994, make any additional
finding under Article 2.1 of the TRIMs Agreement. In response to a question from the Panel, the
European Union argues that several previous panels in similar cases have made findings under both
provisions700 and states that there is little to gain from exercising judicial economy over the claim
under Article 2.1 because t he only remaining elements to consider (i.e. whether the localisation
requirement is an "investment measure" "related to trade in goods") are uncontested by Turkey.701
Turkey submits that, contrary to what the European Union argues, if the Panel were to uph old the
European Union's claim under Article III:4 of the GATT 1994 then it would not be necessary for the
Panel to also rule on the claim under Article 2.1 of the TRIMs Agreement. 702 Turkey notes that in
several past cases panels have decided to exercise judicial economy on claims under the TRIMs
Agreement after having found violations of Article III:4 of the GATT 1994.703
7.238. In approaching arguments relating to judicial economy, the Pane l considers it useful to
distinguish and consider two separate questions. The first is whether the Panel has the discretion to
decline to rule on a given claim. This is a legal question, and it turns on whether such a ruling would
be superfluous from the p erspective of implementation. If the answer to the first question is yes,
the second question is whether the Panel should exercise that discretion, given that a panel is not

697 Panel Report, India – Solar Cells, para. 7.54.
698 European Union's first written submission, paras. 262-277; second written submission, paras. 227-
230; opening statement, paras. 10-12; responses to the second set of questions, paras. 18-23.
699 Turkey's first written submission, paras. 6, 123, 174, 242, 243-244, and 414.
700 The European Union refers to Panel Reports, Indonesia – Autos, para. 15.1; Canada – Renewable
Energy / Canada – Feed-in Tariff Program, paras. 8.2 and 8.6; and India – Solar Cells, para. 8.2.
701 European Union's responses to the second set of questions, paras. 18-23.
702 Turkey's comments on responses to the second set of questions, para. 17.
703 Turkey refers to Panel Reports, EC – Bananas III, para. 7.186; Turkey – Rice, para. 7.184; India –
Autos, paras. 7.161, 7.324; China – Auto Parts, para. 7.368; US – Renewable Energy, paras. 7.348-7.353.

required to exercise judicial economy in circumstances where it is entitled to do so.704 That
assessment is not as much a legal question as it is a discretionary authority, the exercise of which
is guided by the Panel's judgement of the circumstances of the case.
7.239. It is clear from the terms of the TRIMs Agreement, and confirmed in past dispute settlement
practice, that the relationship between Article 2.1 of the TRIMs Agreement and Article III:4 of the
GATT 1994 is such that, in principle, compliance with a finding of inconsistency with Article III:4
would bring about compliance with the parallel obligation in Article 2.1 of the TRIMs Agreement. 705
Therefore, where a panel has already found a violation of Article III:4 of the GATT 1994, it is in
principle not necessary to make additional findings on the consistency of the same measure(s) under
the parallel obligation in the TRIMs Agreement. The steps taken by the responding Member to bring
the measures at issue into compliance with Article III:4 of the GATT 1994 will also, by definition,
eliminate the alleged non-conformity of the same measur es with obligations under Article 2 of the
TRIMs Agreement (which, as explained above, prohibits TRIMs inconsistent with Article III:4 of the
GATT 1994).
7.240. The foregoing explains why there is a "relatively consistent practice "706 of past panels
exercising judicial economy over claims under the TRIMs Agreement when faced with claims under
Article III:4 of the GATT 1994. As indicated by the panel in a recent case involving parallel claims
under Article III:4 of the GATT 1994 and Article 2.1 of the TRIMs Agreement:
Like the above panels, we do not find it necessary to address India 's claims under the
TRIMs Agreement in order to provide a positive solution to this dispute. Bearing in mind
that Article 2 of the TRIMs Agreement is only concerned with TRIMs that are inconsistent
with Article III (or Article XI) of the GATT 1994 and also in light of the relatively
consistent practice of past panels when faced with claims under Article III:4 of the GATT
1994 and Article 2 of the TRIMs Agreement, we consider that steps taken by the United
States to bring the measures at issue into compliance with Article III:4 of the GATT
1994 will also eliminate the alleged non -conformity of the same measures with
obligations under the TRIMs Agreement.707
7.241. The Panel put a question to the European Union asking whether, if the Panel were to uphold
the European Union's claim under Article III:4 of the GATT 1994, it would still be necessary to rule on
the claim under Article 2.1 of the TRIMS Agreement. In its response, the European Union appears to
accept the premise that, if the claim under Article III:4 is upheld, the Panel would be legally entitled
to exercise judicial economy over the claim under Article 2.1. 708 The only reasons given by the
European Union for a ruling on the claim unde r Article 2.1 are that some panels in previous cases
have ruled on both provisions, and that doing so in this case would be uncomplicated. Even
assuming, for the sake of argument , that these could be valid reasons for a panel to refrain from
exercising judicial economy709, the European Union 's response does not suggest that the Panel is
legally precluded from exercising judicial economy over the claim under Article 2.1.
7.242. Based on the foregoing, the Panel considers that it is legally entitled to exercise judic ial
economy over the claim under Article 2.1 of the TRIMs Agreement given that the Panel has already
found that the localisation requirement is inconsistent with Article III:4 of the GATT 1994, and the
Panel does not understand the European Union to argue otherwise. The disputed question is whether
the Panel should exercise that authority in the circumstances of this case.
7.243. The Panel recalls that it has already followed an economical approach when assessing the
central issues in this dispute. In addressing A rticle III:8(a) and Articles XX(b) and (d), the Panel
indicated that in the circumstances of this dispute, the Panel saw no compelling reason to make

704 Appellate Body Report, US – Lead and Bismuth II, paras. 71 and 73.
705 See e.g. Panel Report, US – Renewable Energy, para. 7.348.
706 Panel Report, US – Renewable Energy, para. 7.353.
707 Panel Report, US – Renewable Energy, para. 7.353.
708 European Union's responses to the second set of questions, paras. 18-23.
709 The Panel acknowledges that there is not a uniform practice, but notes that two of the three cases
referred to by the European Union involved arguments relating to Article 2.2 and the Illustrative List of TRIMs,
which necessarily entailed ruling in tandem on the claims under the GATT 1994 and the TRIMs Agreement.
(See e.g. Panel Reports, Canada – Renewable Energy / Canada – Feed-in Tariff Program, para. 7.167; Panel
Report, India – Solar Cells, para. 7.73.) In this case, the European Union has not presented any arguments
under Article 2.2 and the Illustrative List of TRIMs.

additional findings or observations beyond those necessary to resolve the claims and defences before
it. Thus, the Panel ended its assessment under Article III:8(a) after finding that the localisation
requirement did not involve the "purchase" of pharmaceutical products included in the Annex 4/A
list by governmental agencies. The Panel made no findings on the disputed issues under the three
remaining elements of Article III:8(a), all of which are disputed. 710 The Panel similarly ended its
assessment under Article XX(b) after finding that Turkey had not discharged its burden of
demonstrating that the localisation requirement is a measure taken to prevent a long-term shortage
of supply of safe, effective and affordable pharmaceutical products in Tu rkey. The Panel made no
findings on the heavily contested issue of whether the localisation requirement was "necessary" to
fulfill that objective.711 And having found that its assessment under Article XX(b) extended mutatis
mutandis to the analysis of the d efence under Article XX(d), the Panel disposed of Turkey 's Article
XX(d) defence without making findings on the disputed issues specific to that provision and without
making findings on whether the instruments referenced by Turkey constituted "laws or regulations"
within the meaning of Article XX(d) or the extent to which Article XX(d) covers measures taken by
a government to secure its own compliance with its laws and regulations.712
7.244. The Panel considers that the economical approach it has taken to these issues comports with
the economical approach that the European Union has itself advocated for resolving its claim under
Article 3.1(b) of the SCM Agreement. Notably, as explained in the previous section, the European
Union requested that the Panel rule on its claim under Article 3.1(b) of the SCM Agreement only if
the Panel were to conclude that the localisation requirement is not inconsistent with Article III:4 of
the GATT 1994, or that such inconsistency was justified under any other provision of the GATT
1994.713 In the light of its findings under the relevant provisions of the GATT 1994, the Panel has
followed the economical approach requested by the European Union and accordingly declined to rule
on the European Union's conditional claim under Article 3.1(b ) of the SCM Agreement. As a result,
the Panel has made no findings on the heavily contested issues that arise in the context of that
claim.
7.245. In line with the approach taken by the Panel elsewhere in this Report, the Panel sees no
compelling reason to make additional findings under Article 2.1 of the TRIMs Agreement. In the light
of its findings under the relevant provisions of the GATT 1994, the Panel exercises judicial economy
over this claim.
7.5.4 Article X:1 of the GATT 1994
7.246. Article X:1 of the GATT 1994 provides in relevant part:
Laws, regulations, judicial decisions and administrative rulings of general application,
made effective by any Member, pertaining to the classification or the valuation of
products for customs purposes, or to rates of duty, taxes or other charges, or to
requirements, restrictions or prohibitions on imports or exports or on the transfer of
payments therefore, or affecting their sale, distribution, transportation, insurance,
warehousing inspection, exhibition, processing, mixing or other use, shall be published
promptly in such a manner as to enable governments and traders to become acquainted
with them.
7.247. Article X:1 applies where the instrument challenged (i) is a law, regulation, judicial decision
or administrative ruling; (ii) of gener al application; (iii) made effective; and (iv) pertains to the
range of listed matters affecting imports or exports. If these conditions are satisfied, Article X:1 of
the GATT requires Members to publish such instruments "promptly" (vis-à-vis the time at which the
instruments were made effective) and in such a "manner as to enable governments and traders to
become acquainted with them".
7.248. The European Union claims that Turkey has acted inconsistently with its obligations under
Article X:1 of GATT 1994 by failing to publish certain elements, terms and conditions of general
application of this measure promptly in such a manner as to enable governments and traders to

710 See section 7.2.4.5 (Remaining elements under Article III:8(a)).
711 See section 7.4.2.3.3 (Remaining elements under Article XX(b)).
712 See section 7.4.3 (Turkey's alternative defence under Article XX(d) of the GATT 1994).
713 European Union's first written submission, para. 279; second written submission, para. 232.

become acquainted with them.714 More specifically, the European Union arg ues that the terms and
conditions that Turkey should have published in manner compliant with Article X:1 include the
process and various steps that must be taken as part of localisation; the phases of localisation; the
product categories to which those phases relate; various steps and deadlines for the submission of
commitments, the information that should be included in the commitments or justifications on why
commitments could not be made; the authorities ' criteria for accepting or refusing commitments;
the criteria, phases and deadlines for delisting or deactivating their products (as the case may be);
instructions on the various steps to be followed (including follow up, possible updates or alternative
commitments, variation applications); and instructions for submitting progress reports.715
7.249. Turkey responds that the claim under Article X:1 of the GATT 1994 should be dismissed on
multiple separate grounds.716 The grounds invoked by Turkey can be broadly categorized as follows:
(i) the European Union has changed the scope of its claim in a way that raises serious due process
concerns and/or falls outside the Panel's terms of reference; and (ii) the European Union has failed
to demonstrate that the relevant measure(s), whether understood as a single cohesive me asure,
individual instruments/documents, or certain terms and conditions, fall within the scope of the
obligation in Article X:1, and/or were not published promptly and adequately.
7.250. The parties have presented opposing views on whether the Panel should, if i t finds that the
substantive content of the localisation requirement is inconsistent with Article III:4 of the GATT 1994
(or Article 3.1(b) of the SCM Agreement), make any additional finding under Article X:1 of the GATT
1994 relating to its publication. According to the European Union, the Panel should make additional
findings under Article X:1 relating to the publication of the localisation requirement for the same
reason that the Panel should rule on its claim under Article XI:1 (discussed in the next subsection),
namely, that it is possible that the Appellate Body could reverse the Panel's other findings regarding
the WTO-inconsistency of the localisation requirement. 717 Additionally, in responding to a question
from the Panel asking the parties to comment on two prior cases (Argentina – Import Measures and
Russia – Traffic in Transit ) in which panels refrained from ruling on claims under Article X:1, the
European Union argues that one of those cases (Russia – Traffic in Transit ) is distinguishable.718
Turkey considers that if the European Union's first argument were to be followed this would mean
that panels could hardly ever exercise judicial economy719, whereas several panels have done so in
relation to claims under Article X:1. 720 Furthermore, according to Turkey, the European Union 's
attempt to distinguish the present case from Russia – Traffic in Transit is inapposite and should be
rejected.721
7.251. Article X of the GATT 1994 is entitled "Publication and Administration of Trade Regulations".
The obligations in Article X govern the publication and administration of measures, rather than the
substantive content of measures.722 Thus, where the substantive content of a measure is found to
be inconsistent with one or more substantive obligations i n the GATT 1994, additional findings
relating to the publication and/or administration of that measure – a measure that will cease to exist
(in its current form) insofar as the Member concerned withdraws or modifies it to comply with its
substantive obligations – will in principle be superfluous. The reason is that a finding by a panel
under Article X:1 of the GATT 1994 would not be directed towards any new measures taken by the

714 European Union's first written submission, paras. 228-261; second written submission, paras. 117-
139; responses to the first set of questions, paras. 72-78; opening statement, paras. 99-110; responses to the
second set of questions, paras. 83-95.
715 European Union's responses to the first set of questions, para. 78 (referring to European Union's
second written submission, paras. 130-134).
716 Turkey's first written submission, paras. 245-329; second written submission, paras. 96-117;
responses to the first set of questions, paras. 15; opening statement, paras. 96-100; responses to the second
set of questions, paras. 82-84; comments on responses to the second set of questions, paras. 39-49.
717 European Union's responses to the second set of questions, paras. 83-84.
718 European Union's responses to the second set of questions, paras. 85-87.
719 Turkey's comments on responses to the second set of questions, para. 41. Turkey adds that, in any
case, the Appellate Body has completed the legal analysis where the factual findings of the panel or undisputed
facts on the panel record provided a sufficient factual foundation for doing so. In light of the foregoing, only
factual findings relating to the parties' arguments with respect to Article X:1 of the GATT would be necessary.
(Turkey's comments on responses to the second set of questions, para. 42.)
720 Turkey refers to Panel Report, Argentina – Import Measures, paras. 6.302-6.305; Appellate Body
Report, Argentina – Import Measures, paras. 5.185-5.203; Panel Report, Peru – Agricultural Products,
721 Turkey's comments on responses to the second set of questions, paras. 39-40.
722 Appellate Body Report, EC – Poultry, para. 115.

responding Member; rather, a finding of inconsistency under Article X:1 would l ead only to proper
publication of the existing measure.723
7.252. The foregoing explains why several past panels have exercised judicial economy over claims
under Article X:1 of the GATT 1994 after finding that the substantive content of the measure violated
one or more substantive obligations. In some cases, panels exercised judicial economy over claims
under Article X:1 in such circumstances without further explanation. 724 In other cases, panels and
the Appellate Body have been more explicit in their reasoning. No tably, in Argentina – Import
Measures the Appellate Body upheld the panel 's exercise of judicial economy over a claim under
Article X:1, noting that as Argentina would have to modify or withdraw the measure to comply with
the recommendations under Articles III:4 and XI:1 of the GATT 1994, that the existing measure
would "cease to exist".725 The Appellate Body failed to understand "how the publication of this WTO-
inconsistent measure would contribute to securing a positive solution to this dispute ".726 The
subsequent panel in Russia – Traffic in Transit likewise exercised judicial economy over the claim
under Article X:1 and, referring to the Appellate Body's reasoning, stated that "where a measure is
found to be WTO -inconsistent, findings relating to the publi cation or administration of the same
measure are unlikely to be necessary or useful in resolving the matter."727
7.253. The Panel asked the parties if the Panel were to uphold the European Union 's claim under
Article III:4 of the GATT 1994, would it still be necessary to rule on the claim under Article X:1. In its
response, the European Union appears to accept the premise that, if the claim under Article III:4 is
upheld, the Panel would be legally entitled to exercise judicial economy over the claim under Article
X:1 of the GATT 1994. 728 The only reasons given by the European Union for a ruling on the claim
under Article X:1 are, as already indicated above, that it is possible that the Appellate Body might
reverse the Panel's other findings regarding the localisation requirement729 and that one of the cases
mentioned above is in some respects distinguishable. 730 Leaving aside the circumstance that the
Appellate Body is not currently functioning731, and assuming that the reason given by the European
Union for the Panel to refrain from exercising judicial economy could in principle still be a valid one,
the European Union's response does not suggest that the Panel is legally precluded from exercising
judicial economy over the claim under Article X:1. To construe the Eu ropean Union 's argument
otherwise would imply that panels are legally precluded from exercising judicial economy in respect
of any claim rendered superfluous by its findings on one or more other claims, insofar as those other
claims involve a question of law or legal interpretation that might be modified or reversed on appeal.
7.254. Based on the foregoing, the Panel considers that it is legally entitled to exercise judicial
economy over the claim under Article X:1 given that the Panel has already found that the localisation
requirement is inconsistent with Article III:4 of the GATT 1994, and the Panel does not understand
the European Union to argue otherwise. The disputed question is whether the Panel should exercise
that authority in the circumstances of this case.
7.255. The Panel understands that in some cases, findings on claims under Article X:1 were made
in circumstances where it would have been possible to exercise judicial economy. Moreover, the
Panel accepts that there may be a good reason to make findings on issues relating to the publication
and administration of a measure instead of exercising judicial economy . Notably, a panel may opt
to make findings where there is a genuine possibility that the Member concerned could modify or
reintroduce the challenged measure in such a way that the substantive content of the measure is
brought into conformity with substantive WTO obligations, but without any adjustment to the same

723 Appellate Body Report, Argentina – Import Measures, para. 5.198.
724 See e.g. Panel Report, Indonesia – Autos, para. 14.152, where the panel merely stated that "[w]e
have already found that the measures adopted pursuant to the National Car programme violate the provisions
of Articles I and/or III of GATT. Therefore, we consider that it is not necessary to examine Japan's claims under
Article X of GATT."
725 Appellate Body Report, Argentina – Import Measures, para. 5.200.
726 Appellate Body Report, Argentina – Import Measures, para. 5.200.
727 Panel Report, Russia – Traffic in Transit, paras. 7.200-7.201, citing Panel Reports, Peru – Agricultural
728 European Union's responses to the second set of questions, paras. 83-87.
729 European Union's responses to the second set of questions, paras. 83-84.
730 European Union's responses to the second set of questions, paras. 85-87.
731 The Panel notes that the work of the Appellate Body has been suspended for nearly two years and
that Members remain unable to reach consensus on any selection process to fill the vacancies that are required
for the Appellate Body to function.

alleged shortcomings with respect to the publication and administration of the me asure such that
they are repeated or otherwise carried over into the modified or reintroduced measure. For example,
in China – Raw Materials, the panel recognized the scope for applying judicial economy over the
claims under Article X732, which included a claim under Article X:1, but considered that "in the event
that China were in any instance to impose a quota that was justified pursuant to Article XX, it would
be relevant for the parties to know whether the aspects of China 's system of quota administration
at issue in this dispute comply with the relevant provisions of GATT Article X."733
7.256. In this case, the Panel has found the localisation requirement to be inconsistent as such with
Article III:4 of the GATT 1994. This inconsistency with Article III:4 is inherent to the basic
constitutive elements of the measure. The terms and conditions that the European Union alleges
were not properly published relate to aspects of the measure that are inseparable from the aspects
of the measure that give rise to the violation under Article III:4. It is not the Panel's role to speculate
on the ways in which Turkey might choose to implement the recommendations and rulings of the
DSB.734 However, neither party has suggested that Turkey could modify the localisation requirement
in such a way that the substantive content of the measure is brought into conformity with Turkey 's
substantive WTO obligations, with the same alleged shortcomings with respect to the publication of
the measure being repeated or otherwise carried over into the modified measure.
7.257. The Panel recalls that it has already followed an economical approach in the context of
assessing the central issues in this dispute. As elaborated above, in the context of addressing
Article III:8(a) and Articles XX(b) and(d), the Panel indicated that in the circumstances of this
dispute, the Panel sees no compelling reason to make additional findings or observations beyond
those necessary to resolve the claims and defences at issue. The Panel recalls that the economical
approach it has taken with respect to these issues comports with the economical approach that the
European Union has itself advocated for resolving its claim under Article 3.1(b) of the SCM
Agreement. Recalling the approach taken by the Panel elsewhere in this Report, the Panel has also
exercised judicial economy over the claim under Article 2.1 of the TRIMs Agreement.
7.258. In line with the approach taken by the Panel elsewhere in this Report, the Panel sees no
compelling reason to make additional findings under Article X:1 of the GATT 1994. In the light of its
findings under the relevant provisions of the GATT 1994, the Panel exercises judicial economy over
this claim.
7.5.5 Article XI:1 of the GATT 1994
7.259. 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 licences or other measures, shall be instituted
or maintained by any Member on the importation of any product of the territory of any
other Member or on the exportation or sale for export of any product destined for the
territory of any other Member.
7.260. The European Union claims that the measure it refers to as "the import ban on localised
products" is inconsistent with Turkey's obligations under Article XI:1 of GATT 1994.735 According to
the European Union, "[w]here the production of a pharmaceutical product has been localised in
Turkey in accordance with the localisation requirement, applied in conjunction with the Turkish rules
for approving the importation and marketing of pharmaceutical products, the importation of that
pharmaceutical product is no longer permitted."736 This "import ban", as described by the European
Union, arises from the combined operation of the localisation requirement and the Turkish rules for

732 Panel Reports, China – Raw Materials, para. 7.635.
733 Panel Reports, China – Raw Materials, para. 7.636.
734 Appellate Body Reports, US – FSC, para. 175; and US – Wheat Gluten, para. 185.
735 European Union's first written submission, paras. 300-321 and 351-364; second written submission,
paras. 270-300; responses to the first set of questions, paras. 79-97; opening statement, paras. 111-134;
closing statement, paras. 23-28; responses to the second set of questions, paras. 96-111; and comments on
responses to the second set of questions, paras. 80-90.
736 European Union's panel request, p. 6.

approving the importation and marketing of pharmaceutical products, and in particular the Single
Authorization rule.
7.261. Turkey requests that the Panel reject the European Union 's claim under Article XI:1 of the
GATT 1994 on multiple separate grounds. 737 First, Turkey argues that while the European Union
characterizes the "import ban measure " as a "single measure", it fails to show how the different
components operate together as part of a "single measure " distinct from its components, and
thereby fails to establish the existence and precise content of the import ban measure as a "single
measure". Second, Turkey argues that the measure causing the alleged restriction, i.e. the Single
Authorization rule, does not fall within t he scope of Article XI:1 and is an internal measure within
the meaning of Article III:4 . According to Turkey, even if Article XI:1 applies there is no "ban" or
"prohibition" on the importation of localised products because, inter alia, the very same product, in
a different form or different dosage, can receive a marketing authorization with a production site
abroad. F rom the fact that there is no "ban" on pharmaceutical products , Turkey draws two
conclusions: (i) the measure which is characterized by the European Union as an "import ban" does
not exist; and (ii) there is no violation of Article XI:1 insofar as it applies to the measure at issue .
Third, Turkey argues that the import ban is justified under Article XX(d) of the GATT 1994 because
it is necessary to secure compliance with the localisation requirement.
7.262. The parties have presented opposing views on whether the Panel should, if it finds that the
localisation requirement is inconsistent with Article III:4 of the GATT 1994, make any additional
finding on "the import ban on localised products" under Article XI:1 of the GATT 1994. In response
to a question from the Panel, the European Union requests that the Panel rule on this measure and
claim.738 The European Union argues that if the Appellate Body were to disagree with the Panel 's
view that the localisation re quirement is WTO -inconsistent, then the "import ban" measure, as a
different measure, could still be found to violate Article XI:1.739 Turkey submits that contrary to what
the European Union argues, if the Panel were to uphold the European Union 's claim under Article
III:4 of the GATT 1994, it would not be necessary for the Panel to also rule on the claim under Article
XI:1 of the GATT 1994. In that regard Turkey argues that if the Panel were to conclude that the
localisation requirement is inconsistent with Article III:4 of the GATT 1994, then one of the
components of the "import ban" as defined by the European Union will disappear and it would be
unnecessary that the Panel additionally rule on that alleged measure.740
7.263. The Panel observes that in cases where the same measure is challenged under Article III:4
and Article XI:1, the decision to exercise judicial economy over one or the other of those claims may
be relatively straightforward. For example, in India – Autos, the Panel found the indigenization
condition "in its entirety to be inconsistent with Article III:4", and stated that in these circumstances
it did "not see any need to address in addition whether the same condition is also inconsistent with
Article XI:1" and therefore exercised judicial economy o ver that claim. 741 In Indonesia – Chicken
(Article 21.5 – Brazil) the panel found a violation under Article III:4, and reasoned that even if Brazil
had developed a prima facie case in respect of its claim under Article XI:1, it would have followed
the original panel's approach of applying judicial economy to the Article XI:1 claim after finding a
violation under Article III:4. The panel recognized that the scope and content of the two provisions
were different, but noted that Brazil was unable to point to any potential differences in
implementation, such that Panel saw no reason not to exercise judicial economy.742 Having exercised
such judicial economy, the panel indicated that it would leave open the "systemically important
question" regarding the relationship between Article III:4 and Article XI:1.743
7.264. The Panel recalls that it has found the localisation requirement to be inconsistent as such
with Article III:4 of the GATT 1994. This inconsistency with Article III:4 is inherent to the basic
constitutive e lements of the measure. To that extent, it could be said that the localisation
requirement has been found in its entirety to be inconsistent with Article III:4. Furthermore, in this

737 Turkey's first written submission, paras. 571-646; second written submission, paras. 257-302;
responses to the first set of questions, paras. 98-107; opening statement, paras. 116-118; responses to the
second set of questions, paras. 85-101; and comments on responses to the second set of questions, paras. 50-
60.
738 European Union's responses to the second set of questions, paras. 96-99.
739 European Union's responses to the second set of questions, paras. 96-99.
740 Turkey's responses to the second set of questions, para. 86.
742 Panel Report, Indonesia – Chicken (Article 21.5 – Brazil), para 7.192.
743 Panel Report, Indonesia – Chicken (Article 21.5 – Brazil), para 7.193.

case the arguments of the parties and third parties address the relationsh ip between Article III:4
and Article XI:1. According to Turkey, the measure causing the alleged restriction, i.e. the Single
Authorization rule, does not fall within the scope of Article XI:1 and is an internal measure within
the meaning of Article III:4.
7.265. The Panel notes that in this case the possible exercise of judicial economy over the claim
under Article XI:1 by virtue of the finding that the localisation requirement violates Article III:4 is
not necessarily as straightforward as in some previous cases involving parallel claims under these
provisions, because the European Union identifies the localisation requirement and the import ban
on localised products as two separate measures.744 The European Union challenges the former under
Article III:4 of the GA TT 1994 (and Article 3.1(b) of the SCM Agreement, Article 2.1 of the TRIMs
Agreement, and Article X:1 of the GATT 1994) and the latter under Article XI:1 of the GATT 1994.
Insofar as these measures were distinct from one another, then there would be little scope for the
Panel to consider exercising judicial economy in respect of the claims relating to one measure based
on the rulings on claims relating to the other, distinct measure. That is because in general, if there
are two distinct measures at issue, then a finding concerning one of them would not be expected to
lead to the modification or withdrawal of the other. In those circumstances, there would be no basis
to assume that a finding concerning a claim relating to only one of the measures would make findings
concerning the other measure superfluous from the perspective of implementation.
7.266. In this case, however, the measure that the European Union refers to as "the import ban on
localised products" comprises two components, one of which is the localisati on requirement itself.
As noted further above, this alleged "import ban", as described by the European Union, arises from
the combined operation of the localisation requirement and the Turkish rules for approving the
importation and marketing of pharmaceut ical products, and in particular the Single Authorization
rule. In response to a question from the Panel, the European Union confirmed that the measure it
refers to as "the import ban on localised products " is the localisation requirement as "applied in
conjunction" with the rules for approving the importation and marketing of pharmaceutical
products.745 The European Union further clarified that it "did not challenge the rules for the
importation and marketing of pharmaceutical products on their own ( per se), in the absence of the
Localisation Requirement".746
7.267. Given that the measure that the European Union refers to as "the import ban on localised
products" comprises two components, one of which is the localisation requirement itself (the other
component being the Single Authorization rule), the Panel asked the parties if a finding that the
localisation requirement is WTO-inconsistent would render moot or superfluous any further finding
on "the import ban on localised products ". While the parties presented opposing views on whether
the Panel should make any further finding, both parties ' responses appear to confirm that if the
Panel finds that the localisation requirement is inconsistent with Article III:4 of the GATT 1994, then
it could in principle refrain from making any additional finding on "the import ban on localised
products" under Article XI:1 of the GATT 1994.
7.268. The Panel notes that Turkey's response to this question747 presents reasoning that essentially
mirrors the reasoning adopted by the Panel above in the context of exercising judicial economy over
the publication claim under Article X:1 of the GATT 1994. Turkey responded that in this case where
the European Union has explained that the "import ban on localised products " is the localisation
requirement "as applied in conjunction" with the rules for approving the importation and marketing
of pharmaceutical products, it follows that if the localisation requirement is found to be WTO -
inconsistent, then Turkey will "have to modify or withdraw that measure". It follows from this, Turkey
argues, that "the localisation measure – in its current form and with its current content – will cease
to exist, so that one of the components of the 'import ban' in its current form and with its current
content will disappear". Therefore, Turkey concludes, addressing claims with regard to the "import
ban" would not contribute to securing a positive solution to this dispute.

744 The Panel recalls that, as set forth in the descriptive part of this Report, the European Union
identifies the three measures at issue in this dispute which it refers to as (i) the localisation requirement; (ii)
the import ban on localised products; and (iii) the prioritization measure.
745 European Union's responses to the first set of questions, para. 79.
746 European Union's responses to the first set of questions, para. 81.
747 Turkey's responses to the second set of questions, para. 86; comments on responses to the second
set of questions, para. 50.

7.269. The Panel further notes that the European Union 's response to this question does not
contradict Turkey's reasoning. The only reason given by the European Union for a ruling on "the
import ban on localised products" is that if the Appellate Body were to disagree with the Panel's view
that the localisation requirement is WTO-inconsistent, then the "import ban" measure, as a different
measure, could still be found to violate Article XI:1. 748 The European Union 's argument therefore
implies that, in the absence of the possibility of the Appellate Body reversing the Panel's findings on
the localisation requirement, there would be no need to rule on its separate claim under Article XI:1
relating to "the import ban on localised products". Indeed, the European Union refrained from making
any comment on Turkey's argument that it would be unnecessary for the Panel to additionally rule
on whether the import ban is consistent with Article XI:1 of the GATT 1994 if the Panel upholds the
claims against the localisation requirement because pursuant to the European Union's description of
the measure at issue, such a measure is partly composed of the "localisation requirement".749
7.270. Based on the foregoing, the Panel considers that it is legally entitled to exercise judicial
economy over the claim under Article XI:1 given that the Panel has already found that the localisation
requirement is inconsistent with Article III:4 of the GATT 1994, and the Panel does not understand
the European Union to argue otherwise. As elaborated above, the Panel's findings on the localisation
requirement require Turkey to modify or withdraw that measure. It follows that not only the
localisation requirement, but also th e "import ban on localised products ", will cease to exist in its
current form. As already explained above, this is because the European Union has defined the
"import ban on localised products " as the localisation requirement applied in conjunction with the
Single Authorization rule. Thus, the only disputed question is whether the Panel should exercise
judicial economy in the circumstances of this case.
7.271. The Panel is conscious of the possibility that Turkey could withdraw the localisation
requirement, and to that extent the "import ban on localised products" as defined by the European
Union would cease to exist, but that without any adjustment to the Single Authorization rule the
problem could be repeated or otherwise carried over into the new legal framework governing the
manufacture of pharmaceuticals in Turkey. The Single Authorization rule exists independently of
(and predates) the localisation requirement and the European Union argues that it prohibits the
importation of all pharmaceutical products that ar e manufactured domestically, not only of the
products that are localised pursuant to the localisation requirement. 750 The Panel understands the
European Union's arguments concerning the Single Authorization rule to imply that, even without
the localisation requirement, the Single Authorization rule would continue to have the kind of limiting
effect on importation, for any pharmaceutical product that is manufactured domestically, that the
European Union regards as a "prohibition" or "restriction" giving rise to a violation of Article XI:1.
7.272. However, the Panel can only recall that the European Union has clarified that it is not
challenging the Single Authorization rule separately, on its own, or per se. In other words, the
European Union has not challenged the Single Authorization rule "as such", and the European Union
has made clear that it is not challenging the Single Authorization as a measure distinct from the
localisation requirement. Thus, insofar as the Single Authorization rule and its alleged limiting effect
on importation would remain in place in the absence of the localisation requirement, that would not
be a consequence that would be attributable to the Panel exercising judicial economy in respect of
the "import ban on localised products " measure. It would simply be a consequence of the manner
in which the European Union has described and challenged the measures at issue in this dispute,
and the resulting limitations on the Panel's terms of reference.
7.273. Having made these observations, it bears repeating that the European Union has not argued
that the Panel should refrain from exercising judicial economy over the "import ban on localised
products" on that basis. To the contrary, and as indicated above, the European Union 's argument
on the issue of judicial economy implies that, in the absence of the possibility of the Appellate Body
reversing the Panel's findings on the localisation requirement, there would be no need to rule on its
separate claim under Article XI:1 relating to "the import ban on localised products".
7.274. The Panel recalls that it has already followed an economical approach in the context of
assessing the central issues in this dispute. As elaborated above, in the context of addressing

748 European Union's responses to the second set of questions, paras. 96-99.
749 See Turkey's responses to the second set of questions, para. 86; European Union's comments on
responses to the second set of questions, at Question 48.
750 See e.g. European Union's second written submission, para. 290.

Article III:8(a) and Articles XX(b) and(d), the Panel indica ted that in the circumstances of this
dispute, the Panel also sees no compelling reason to make additional findings or observations beyond
those necessary to resolve the claims and defences at issue. The Panel recalls that this economical
approach it has t aken to these issues comports with the economical approach that the European
Union has itself advocated for resolving its claim under Article 3.1(b) of the SCM Agreement.
Recalling the approach taken by the Panel elsewhere in this Report, the Panel has als o exercised
judicial economy over the claim under Article 2.1 of the TRIMs Agreement, and over the claim under
Article X:1 of the GATT 1994.
7.275. In line with the approach taken by the Panel elsewhere in this Report, the Panel sees no
compelling reason to make additional findings on "the import ban on localised products " under
Article XI:1 of the GATT 1994. In the light of its findings under the relevant provisions of the GATT
1994, the Panel exercises judicial economy over this claim.
7.6 The prioritization measure
7.6.1 Introduction
7.276. Having addressed the parties ' claims and defences relating to the localisation requirement
and the so-called "import ban on localised products", the Panel now addresses the third measure at
issue in this dispute, which the European Union refers to as the "prioritization measure".
7.277. The European Union submits that in certain cases, where imported products are not excluded
from the Annex 4/A list by virtue of the localisation requirement, Turkey gives priority to the review
of applications for inclusion of domestic pharmaceutical products in the list of products covered by
the reimbursement scheme, as well as with respect to any pricing and licensing policies and
processes (in particular, GMP and marketing authorization applic ations), over the review of the
applications of like imported products (the "prioritization measure").751 The European Union claims
that the prioritization measure is inconsistent "as such" with Article III:4 of GATT 1994. Specifically,
the European Union c ontends that the prioritization measure is a law, regulation or requirement,
which de jure gives priority to pharmaceutical products of national origin in the review of applications
for inclusion in the Annex 4/A list and under other pricing and licensing policies and processes. On
that basis, the European Union considers that Turkey accords to imported pharmaceutical products
treatment less favourable than that accorded to like products of national origin.752
7.278. Turkey responds that the European Union fails to establish the existence of the prioritization
measure, because the European Union has not shown any ongoing conduct or practice by the Turkish
authorities actually granting priority to domestically produced pharmaceutical products. Turkey
further responds that the European Union has not shown that the prioritization measure as an
"overarching" measure is a "law, regulation or requirement " under Article III:4 of the GATT 1994.
Moreover, Turkey argues that European Union has not demonstrated that the prioritization measure
accords less favourable treatment to imported products than to like domestic products given the
discretion of the authorities when assessing priority applications, and presents figures showing no
significant difference between the treatment of domestically manufactured and imported products.753
7.6.2 Relevant provisions
7.279. Article III:4 of the GATT 1994 provides:
The products of the territory of any Member imported into the territory of any other
Member shall be accorded treatment no less favourable t han 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.

751 European Union's panel request, p. 6; first written submission, para. 322.
752 European Union's panel request, p. 6; first written submission, paras. 322-350, and 365-381; second
written submission, paras. 301-318; responses to the first set of questions, paras. 98-105; and responses to
the second set of questions, paras. 112-123.
753 Turkey's first written submission, paras. 647-697; second written submission, paras. 303-320;
opening statement, paras. 119-125; and comments on responses to the second set of questions, paras. 61-63.

7.280. The Panel has already elaborated on the applicable l egal standard under Article III:4 in
addressing the localisation requirement.754
7.281. The Panel recalls that a complainant is required to prove the existence of the measure at
issue, and that it is the complainant's description and characterization of the measure that informs
the kind of evidence it is required to submit and the elements that it must prove to establish the
measure's existence.755 For every measure, a complainant must show the measure is attributable to
the respondent, and establish the precise content of that measure, to the extent that such content
is the object of the claims raised. A complainant may be required to demonstrate other elements,
depending on the particular characteristics or nature of the measure being challenged.
7.282. Panels have frequently examined measures consisting not only of particular acts applied
exclusively to a specific situation ("as applied" claims), but also of acts setting forth rules or norms
that are intended to have general and prospective application ("as such" claims); in other words, an
instrument of a Member containing a rule or norm may constitute the challenged measure, without
evidence of how it is applied in a particular instance or in practice. 756 When a complaining party
challenges rules or norms set forth in laws, regulations, or other instruments "as such ", it will
typically be necessary to show that the terms of the relevant provision(s) mandate one or more acts
or omissions inconsistent with W TO obligations.757 Thus, when a measure is challenged "as such",
the starting point for an analysis must be the measure on its face. If the meaning and content of
the measure are clear on its face, then the WTO-consistency of the measure as such can be assessed
on that basis alone.758
7.283. When challenging a rule or norm of general and prospective application (i.e. making an "as
such" challenge), a complainant must show that the measure has both general and prospective
application.759 Challenges to measures "as such" typically have as their object (written) legislation,
which "prescribes" such norms or rules. 760 A rule or norm has "general application" to the extent
that it affects an unidentified number of economic operators. 761 A rule or norm has "prospective
application" to the extent that it applies in the future. A complainant is not required to show with
"certainty" that a given measure will apply in future situations. 762 Rather, prospective application
may be demonstrated through several factors, such as the exis tence of an underlying policy
implemented by the measure; the measure's design, architecture, and structure; the extent to which
the measure provides administrative guidance for future conduct; and the expectations the measure
creates among economic operators that it will be applied in the future.763
7.284. When challenging specific instances of application (i.e. making an "as applied" challenge), a
complainant will need to provide evidence of those instances of application that it challenges. When
challenging "ongoing conduct", a complainant must establish that the conduct has been repeatedly
applied, and that it is likely to continue to be applied in the future.764

754 See section 7.3.2 of this Report.
755 See paragraph 7.5 of this Report.
756 Appellate Body Report, US – Corrosion-Resistant Steel Sunset Review, para. 82.
757 The mere fact that the application of the rule could in some circumstances lead to WTO-inconsistency
will typically not be sufficient to discharge the complaining party's burden to make a prima facie case that the
rule is inconsistent "as such" with WTO obligations. (See e.g. Appellate Body Report, EU – Biodiesel
(Argentina), paras. 6.282; Panel Report, Canada – Aircraft, para. 9.124.)
758 Appellate Body Report, US – Corrosion-Resistant Steel Sunset Review, para. 168.
759 Appellate Body Reports, US – Anti-Dumping Methodologies (China), para. 5.127; US – Zeroing (EC),
para. 198.
760 Appellate Body Report, Argentina – Import Measures, para. 5.103.
761 Appellate Body Report, US – Anti-Dumping Methodologies (China), paras. 5.130 (referring to
Appellate Body Reports, US – Underwear; EC – Poultry), 5.152, and 5.155-5.156.
762 Appellate Body Report, US – Anti-Dumping Methodologies (China), para. 5.132.
763 Appellate Body Report, US – Anti-Dumping Methodologies (China), paras. 5.132-5.133.
764 Appellate Body Reports, Argentina – Import Measures, para. 5.108; US – Supercalendered Paper,
para. 5.17.

7.6.3 Main arguments of the parties
7.6.3.1 Introduction
7.285. The parties disagree on several issues, including: (i) the nature of the measure challenged
by the European Union (an "as such " challenge or a challenge to "ongoing conduct/practice " of
"general application"765); (ii) whether the prioritization measure, as characterized by the European
Union, is a "law, regulation or requirement" under Article III:4 of the GATT 1994; and (iii) whether
the prioritization measure gives rise to any "less favourable treatment" to imported pharmaceuticals
under Article III:4 of the GATT 1994.766
7.6.3.2 Whether the prioritization measure is challenged "as such " or as "ongoing
conduct"/practice
7.286. In its panel request, the European Union states that Turkey "gives priority to the review of
applications for inclusion of domestic pharmaceutical products in the list of products covered by the
reimbursement scheme, as well as with respect to any pricing and licensing policies and processes,
over the review of the applications of like imported products", and refers to this as the "prioritization
measure".767 The European Union also states that the three measures at issue in this dispute are
"put in place and evidenced by, and are implemented and administered through, inter alia" a series
of listed "legal and other instruments", "considered alone and in any combination".768
7.287. In its first written submission, the European Union states that "[b]y this measure", Turkey
"gives priority to the review of applications for inclusion of domestic pharmaceutical products in the
list of products covered by the reimburs ement system, as well as with respect to some licensing
policies and processes, over the review of the applications of like imported products ".769 The
European Union submits that several "action plans and programmes " "confirm the existence and
content of an overarching Prioritization Measure with respect to locally manufactured pharmaceutical
products".770 The European Union then reviews in detail these action plans and programmes, as well
as the provisions of a series of legal instruments and other documents.771 In the context of arguing
that the measure is a "law" or "regulation" within the meaning of Article III:4 of the GATT 1994, the
European Union states that the prioritization measure is "imposed through a number of legal
instruments, namely the SSI Regulation on Drug Reimbursement … and the Priority Assessment
Guideline".772
7.288. Turkey submits that the Eur opean Union does not demonstrate the existence of the
prioritization measure as it was described by the European Union.773 Specifically, Turkey argues that
the European Union describes the measure in its panel request and first written submission as an
"overarching measure" whereby Turkey "gives priority" to domestic pharmaceutical products, but
fails to demonstrate the existence of "ongoing conduct" consisting of Turkish authorities granting
priority to domestically produced pharmaceutical products as a mea sure of general application. 774
In Turkey's view, by describing the measure as an "overarching measure" whereby Turkey "gives
priority" to domestic pharmaceutical products with regard to review of applications for inclusion in
the Annex 4/A list and with re spect to some licensing policies and processes, the European Union
must provide evidence "of that conduct/practice and prove its general character ".775 Accordingly,
Turkey submits that the European Union "must show that Turkey effectively gives priority to

765 The Panel notes that following the preliminary ruling stage of this dispute, Turkey no longer asserts
that the European Union makes an "as applied" claim with respect to the prioritization measure.
766 Turkey does not dispute that, insofar as the European Union has demonstrated the existence and
precise content of the measure, there can or will be domestic and imported products that are "like products"
affected by the origin-based distinction in the prioritization measure (European Union's first written submission,
paras. 366-369), and the measure is one "affecting the internal sale, offering for sale, purchase,
transportation, distribution, or use of products" (European Union's first written submission, paras. 372-375).
767 European Union's panel request, p. 6.
768 European Union's panel request, p. 1.
769 European Union's first written submission, para. 322.
770 European Union's first written submission, para. 323.
771 European Union's first written submission, paras. 324-350.
772 European Union's first written submission, para. 371.
773 Turkey's first written submission, paras. 662-677.
774 Turkey's first written submission, paras. 667-668.
775 Turkey's first written submission, para. 669.

domestic pharmaceutical products over imported products ", and that "merely claiming that the
possibility exists in certain legal instruments is not enough " to demonstrate that Turkey "gives
priority to domestic pharmaceutical products", in particular in light of the discretion granted to the
relevant bodies involved. 776 Turkey notes that figures show that there is no significant difference
between the number of applications for priority and the number of grants of priority across
domestically manufactured and imported products.777
7.289. The European Union responds that the relevant instruments mandate giving priority to locally
manufactured products.778 According to the European Union, Turkey's action plans and programmes
further confirm that domestic ally produced medicines are granted priority, and recent reports
continue to refer to priority given to domestically manufactured products.779 With respect to Turkey's
submission that while the action plan sets out the "objective" to evaluate with priority reimbursement
applications filed for domestically produced products it does not prejudge whether priority will be
granted in each case, the European Union argues that Turkey actually concedes that, in certain
cases, applications filed for domestically produced products will be granted priority.780 The European
Union notes that even if applications for prioritization are not granted in every case, a measure need
not give rise to less favourable treatment in every case, for there to be "less favourable treatment"
under Article III:4 of the GATT 1994. 781 In this vein, the European Union notes that Article III:4
"does not require proof of actual effects " because it seeks to protect equality of opportunities.
Moreover, the fact that, overall, the number of imported and domestic products that were granted
priority is similar does not inform how frequently domestic products get priority because they are
manufactured domestically.782 In this connection, the European Union recalls that prior panel and
Appellate Body reports examining Article III have rejected offsetting "less favourable treatment" of
some imported products with more favourable treatment of other imported products. 783 On that
basis, the European Union submits that Turkey 's argument that the European Union m ust
demonstrate that the authority "effectively gives priority " to domestic pharmaceutical products is
unfounded.784
7.290. In its second written submission, Turkey notes that the European Union does not dispute
Turkey's description of the prioritization measure a s "an ongoing conduct or practice of general
application", but still fails to provide any evidence that Turkey "effectively gives priority" to domestic
pharmaceutical products over imported products. 785 In Turkey's view, the fact that certain legal
instruments or documents refer to the possibility for authorities to give priority does not establish
that there is "conduct" or a "practice" of the Turkish authorities giving priority to domestic
pharmaceutical products "and that such a practice is of general application ".786 Concerning the
Annex 4/A list, Turkey emphasizes that the chair of the DRC has discretion to call an extraordinary
meeting to examine applications of domestically manufactured products and that decisions at such
meetings are taken at the DRC's discretion.787 As to the Prioritization Guideline, Turkey emphasizes
that scoring certain applications for priority review on the bas is of criteria including whether a
medicine is locally produced does not imply that granting priority to those medicines is mandatory;
although such scores "inform" the decision of the Priority Assessment Commission members, those

776 Turkey's first written submission, para. 672.
777 Turkey's first written submission, para. 675.
778 European Union's second written submission, paras. 302-303. Concerning the Annex 4/A list, the
European Union states that Turkish legislation "mandates" listing pharmaceutical products manufactured in
Turkey on the agenda of the MEEC and DRC as "prioritized topics for review" to be included in the Annex 4/A
list, and that extraordinary meetings are held for that purpose. With respect to GMP and marketing
authorization applications, the European Union states that the Priority Assessment Guideline "enables giving
priority… to applications regarding pharmaceutical products manufactured in Turkey", including through a
coefficient score of 0.15 for priority applications where local production is involved. (Ibid.)
779 European Union's second written submission, para. 304 (referring to Government of Turkey, 11th
Development Plan for the period 2019-2023 (Government of Turkey, Eleventh Development Plan 2019-2023)
(Exhibit EU-88); SSI Activity Report 2018 (Exhibit EU-109, TUR-7); and IQVIA, Report on the Turkish
healthcare market, September 2020 (Exhibit EU-117)).
780 European Union's second written submission, para. 305.
781 European Union's second written submission, paras. 306-307.
782 European Union's second written submission, para. 309 (referring to Table, Applications for priority
under the Prioritization Guideline (Exhibit TUR-106)).
783 European Union's second written submission, para. 310.
784 European Union's second written submission, para. 308.
785 Turkey's second written submission, paras. 303-304.
786 Turkey's second written submission, paras. 304.
787 Turkey's second written submission, para. 306 (referring to Exhibit TUR-11).

members must still decide by absolute majority. On that basis, Turkey argues that the Prioritization
Guideline does not "mandate" or "require" the giving of priority to applications regarding medicines
manufactured in Turkey. 788 Turkey next reiterates that references to an objectiv e of prioritization
"do[] not show that there is an ongoing practice or conduct of general application ", and thus those
documents "do not show that Turkey effectively gives priority to domestic pharmaceutical products
over imported products".789 In response to the European Union's argument that Article III:4 of the
GATT 1994 does not require the complainant to show that like imported products are accorded less
favourable treatment in every case, Turkey submits that the European Union confuses the issue of
demonstrating the "existence and precise content " of the measure it challenges with the legal
standard under Article III:4.790
7.6.3.3 "law, regulation or requirement"
7.291. The European Union notes that "the terms 'all laws, regulations and requirements' have been
interpreted as encompassing a broad range of governmental actions ", and states that the
"Prioritization Measure could be considered as a 'law' or 'regulation'", because it is imposed through
a number of legal instruments, namely the Drug Reimbursement Regulation (with respect to priority
applications for reimbursement) and the Prioritization Guideline (with respect to priority applications
for GMP and marketing authorization).791
7.292. Turkey responds that the European Union "fails to substantiate how or why the prioritization
measure as an overarching measure is a "law" or "regulation" by merely referring to two legal
instruments that are components of, or elements through which the measure is implemented, but
do not constitute the measure at iss ue".792 According to Turkey, the mere observation that "laws,
regulations and requirements" covers a broad range of measures does not discharge a complainant
from substantiating its claim that a given measure falls within the scope of the provision under which
that measure is challenged.793
7.293. The European Union replies that "the Prioritization Measure is embodied, wholly or at least
partly, as shown above and in the first written submission, in formal legal instruments such as laws
and guidelines ", and these instruments "clearly qualify as 'laws' or 'regulations' resulting from
'governmental action'" and set out "rules with which compliance is necessary to obtain an advantage
from a government".794 The European Union submits that in any case, the legal instruments in this
dispute qualify at least as "requirements" within the meaning of Article III:4 o f the GATT 1994,
because they set out the "conditions and procedures that need to be followed to benefit from the
priority for reimbursement, pricing policies and licensing procedures and they are issued by public
authorities responsible for these matters ".795 The European Union further submits that the
governmental action plans and programmes presenting the prioritization measure as a policy of the
Turkish government also qualify as "requirements".796
7.294. In its second written submission, Turkey responds that th e European Union does not show
that the "prioritization measure " as a "single measure " constitutes a "law, regulation or
requirement".797 Turkey states that the European Union once again mixes the measure at issue with
the legal instruments allegedly embodying the measure, when stating that because some of those
instruments "clearly qualify as 'laws' or 'regulations'", it follows that the prioritization measure is a
law or regulation, or when stating that in any case those legal instruments qualify at least as
"requirements".798 In Turkey's view, what the European Union needs to show is that "what it has
described as the prioritization measur e, i.e. the fact that Turkey gives priority to domestic

788 Turkey's second written submission, paras. 307-309 (referring to Prioritization Guideline (Exhibit EU-
97)).
789 Turkey's second written submission, para. 311.
790 Turkey's second written submission, paras. 312-314.
791 European Union's first written submission, paras. 370-371.
792 Turkey's first written submission, para. 688.
793 Turkey's first written submission, para. 688.
794 European Union's second written submission, para. 312 (fn omitted).
795 European Union's second written submission, para. 313.
796 European Union's second written submission, para. 314 (referring to Panel Reports, Argentina –
Import Measures).
797 Turkey's second written submission, para. 316.
798 Turkey's second written submission, para. 316.

pharmaceutical products", is a "law, regulation or requirement ".799 Finally, Turkey disagrees with
the European Union's argument that the prioritization measure constitutes a "requirement" because
it lays down a "condition to obtain an advantage, i.e. priority ". According to Turkey, even if the
product fulfils the condition (domestic production), it is not necessarily granted priority; therefore,
"the discretion left to the authorities prevents from qualifying the measure as a 'requirement'."800
7.6.3.4 "less favourable treatment"
7.295. The European Union argues that the prioritization measure accords imported pharmaceutical
products "less favourable treatment ".801 According to the European Union, the implications of th e
prioritization measure for the equality of competitive conditions are discernible from its design,
structure, and expected operation.802 As a de jure discriminatory measure that by its nature accords
less favourable treatment to imports, the European Union submits that there is no need to analyse
the actual market impact or other consequences of the measure further. 803 The European Union
explains that the "priority review" granted by the Turkish authorities to products of domestic origin
means that these products are likely to be placed on the market faster than imported products,
thereby providing them with an advantage over the imported products, and thus takes away the
ability of imported products to compete on the basis of an "effective equality of opportunities ".804
The European Union notes that the fact that imported products are not entirely excluded from the
marketplace is no defence; prior reports indicate that there may be "less favourable treatment" even
where the measure "will not give rise to less favourable treatment for like imported products in each
and every case", or "where the coverage of the measure is only partial".805
7.296. Turkey responds that the European Unio n does not show that the prioritization measure
accords "treatment less favourable" to imported products than to domestic like products, as (i) the
authorities have discretion when assessing priority applications; and (ii) figures show no significant
difference between the treatment of domestically manufactured and imported products. 806 Turkey
points out that under the Drug Reimbursement Regulation and Prioritization Guideline, both
domestically produced and imported pharmaceutical products may be "granted priority with respect
to the procedures covered under those instruments and subject to the criteria stipulated therein".807
Turkey reiterates that the figures demonstrate no significant difference between the number of
priority applications and grants of pri ority across domestically manufactured and imported
products.808
7.297. In response to Turkey 's assertion, the European Union argues that the legal instruments
underpinning the prioritization measure do not confer unfettered discretion on the responsible
bodies: t he Drug Reimbursement Regulation and Prioritization Guideline "actually mandate as a
favourable criterion in assessing priority the local manufacture of pharmaceutical products ".809 The
European Union further responds that the fact that imported products ma y be granted priority for
other reasons is not sufficient to refute the existence of domestic manufacturing as a criterion for
priority, and that without such a criterion, it is likely that fewer domestically manufactured products
would get priority review and in turn, would not be placed on the market as fast. 810 Lastly, while
Turkey provides a table showing the number of applications the DRC included in the Annex 4/A list
with a breakdown between domestic and imported products, the European Union submits t hat the
data actually shows that domestic products are included faster in the Annex 4/A list than imported
products: 24% to 92% of domestic applications were already granted by the DRC within the first

799 Turkey's second written submission, para. 316.
800 Turkey's second written submission, para. 317.
801 European Union's first written submission, paras. 376-381.
802 European Union's first written submission, paras. 378.
803 European Union's first written submission, paras. 379.
804 European Union's first written submission, para. 378.
805 European Union's first written submission, para. 380 (referring to Appellate Body Report, US – FSC
(Article 21.5), para. 221; Panel Report, India – Solar Cells, para. 7.95). The European Union provides an
example of partial coverage, noting that the prioritization measure does not cover imported pharmaceutical
products listed on the "Foreign Price List of Medicinal Products" (ibid.).
806 Turkey's first written submission, paras. 690-697.
807 Turkey's first written submission, paras. 694-696.
808 Turkey's first written submission, para. 695.
809 European Union's second written submission, paras. 315-316.
810 European Union's second written submission, para. 317.

year following application, while only 8% to 58% of im port applications were granted within the
same period of time.811
7.298. In its second written submission, Turkey reiterates that the authorities have discretion to
assess applications for prioritization, such that the status of a pharmaceutical product as a "domestic
product" does not guarantee that such product will be treated with priority. 812 With respect to the
European Union's argument that the data submitted by Turkey regarding the relative rate of priority
review accorded to imported and locally manufactured medicines is not instructive because it does
not show how frequently domestic products are accorded priority because they are manufactured
domestically, Turkey responds that the data it submitted support the conclusion that the European
Union fails to mak e a prima facie case that imported medicines are treated less favourably than
domestically manufactured medicines.813
7.6.4 Assessment by the Panel
7.6.4.1 Introduction
7.299. The Panel will first examine whether the European Union has established the existence of
the prioritization measure and then address the substance of the European Union 's claim under
Article III:4 of the GATT 1994, in particular, whether the prioritization measure is a "law, regulation,
or requirement" that accords "less favourable treatment" to imported pharmaceutical products.
7.6.4.2 The existence of the measure
7.300. The European Union is required to establish the existence of the prioritization measure. How
the prioritization measure is described, characterized and challenged by the European Union informs
the kind of evidence the European Union is required to submit and the elements that it must prove
to establish the existence of the prioritization measure. 814 Before assessing whether the European
Union has established the existence of the prioritization measure, in light of the points of contention
between the parties, the Panel will examine what it is the European Union contends the prioritization
measure to be, and the nature of its challenge (being "as such", or to "ongoing conduct" of "general
application").
7.301. The European Union 's panel request identifies the "prioritization measure ", inter alia ,
through a narrative description, which reads:
Lastly, even in certain cases where imported products are not excluded from the
reimbursement scheme by virtue of the localisation requirement, Turkey gives priority
to the review of applications for inclusion of domestic pharmaceutical products in the
list of products covered by the reimbursement scheme, as well as with respect to any
pricing and licensing policies and processes, over the review of the applications of like
imported products (the "prioritization measure").815
7.302. In its first written submission, the European Union repeats this formulation of the measure,
before referring to several "action plans and programmes ", as well as the Drug Reimbursement
Regulation and Prioritization Guideline as confirming the existence and content of an "overarching
Prioritization Measure".816
7.303. The Panel understands that the European Union's reference to the "reimbursement scheme"
concerns inclusion in the Annex 4/A list pursuant to the Drug Reimbursement Regulation817, whereas

811 European Union's second written submission, para. 318.
812 Turkey's second written submission, para. 318.
813 Turkey's second written submission, para. 320.
814 Appellate Body Reports, US – Anti-Dumping Methodologies (China), para. 5.123; Argentina – Import
Measures, paras. 5.108-5.110.
815 European Union's panel request, p.6.
816 European Union's first written submission, paras. 322-350, and 371.
817 The panel request defines "reimbursement scheme" in the narrative description of the localisation
requirement as "the scheme for the reimbursement of the pharmaceutical products sold by pharmacies to
patients operated by Turkey's social security system". Pharmaceutical products subject to the localisation
requirement are "excluded" from this scheme if their production is not localised in line with the localisation

"pricing and licensing policies and processes" refers to GMP and marketing authorization applications
under the Prioritization Guideline.818 The Panel understands that there is no disagreement between
the parties that the relevant reimbursement scheme refers to the reimbursement scheme under the
Annex 4/A list, and that "pricing and licensing policies and processes" refers to GMP and marketing
authorization applications only. This is reflected by the fact the parties ' submissions almost
exclusively concern provisions under the Drug Reimbursement Regulation and Prioritization
Guideline.819
7.304. By "overarching", the Panel understands the European Unio n to locate the prioritization
measure (i.e. giving priority to applications for inclusion in the Annex 4/A list and for GMP and
marketing authorization under the Prioritization Guideline) within the broader Turkish policy context
contained and evidenced i n the cited action plans and programmes, as well as other reports from
Turkish governmental authorities, namely:
a. the Structural Transformation Program for Healthcare Industries Action Plan 2014
(implementing the Healthcare Related Industries Structural Tra nsformation Program),
which refers to an "objective of prioritizing medicines and medical devices produced in
Turkey in reimbursement and pricing policies and licensing processes", "accelerat[ing] the
evaluation process " for the inclusion of domestically m anufactured products in the
Annex 4/A list, and supporting research and development activities in Turkey through
"pricing and reimbursement practices", through the SSI, MOH and TMMDA820;
b. the 2016 Action Plan of the 64 th Government, which talks of improving "reimbursement,
pricing and licensing processes for… domestic medicines", whereby the SSI will "speed up
the evaluation process for including domestically manufactured healthcare products " on
the Annex 4/A list821;
c. the 65 th Government Program of 2016, which states that "[w]hen it comes to
reimbursement and pricing policies and licensing procedures, we will give priority to
domestically produced medicines and medical devices"822;
d. the Turkish healthcare market report from September 2020, which refers to MOH
"initiatives to improve review times " and a "priority evaluation " "points-based" system
whereby "products receive a priority review if they meet a number of conditions" including
"[t]echnology transfer to Turkey"823;

requirement. (European Union's panel request, p.5.) See also Panel Report, section 2.1.3.1. The Panel notes
that the Annex 4/A list concerns reimbursement by the regular reimbursement pathway (through the DRC) as
distinct from reimbursement by the alternative reimbursement pathway (through the ARC); products under the
latter path are "unavailable on the Turkish market" and therefore have no like domestic counterparts. (Panel
Report, paras. 2.10-2.12.) This is in keeping with the European Union's first written submission, which
explicitly excludes reimbursement under the "Foreign Price List of Medicinal Products" (also known as the
Annex 4/C list), which concerns products not available in Turkey, from the scope of this measure, as there are
no like domestic counterparts for these products. (European Union's first written submission, paras. 335 and
369.) Turkey also takes note of the European Union's statement that products under the Annex 4/C list fall
outside the scope of the prioritization measure (Turkey's first written submission, fn 621 to para. 659).
818 See e.g. European Union's first written submission, paras. 371, 374, 378, and 381. Each of these
paragraphs refers to the reimbursement scheme (being the Annex 4/A list), and review of GMP and marketing
authorization applications. They no longer mention "pricing and licensing policies and processes".
819 See e.g. European Union's first written submission, paras. 330-349; second written submission,
paras. 302-303; Turkey's first written submission, paras. 650-661; second written submission, paras. 306-308.
820 European Union's first written submission, paras. 324-326 (referring to Structural Transformation
Program for Healthcare Industries Action Plan (Exhibit EU-14)); TMMDA, Announcement on import applications
for medical products, 31 December 2019 (Exhibit EU-92). See in particular Structural Transformation Program
for Healthcare Industries Action Plan (Exhibit EU-14), Component 1 Policy 5 Action 2, and Component 3 Policy
1 Action 2.
821 European Union's first written submission, paras. 327-328 (referring to 2016 Action Plan of the 64th
Government (Exhibit EU-15)). See in particular 2016 Action Plan of the 64th Government (Exhibit EU-15),
Action 46.
822 European Union's first written submission, para. 329 (referring to 65th Government Programme, 24
May 2016 (65th Government Programme) (Exhibit EU-16), p. 81.)
823 European Union's second written submission, para. 304 (referring to IQVIA, Report on the Turkish
healthcare market, September 2020 (Exhibit EU-117), p. 76).

e. the SSI's 2018 Report, indicating that "[i]n reimbursement and pricing policies and in
licensing procedures, the requisite arrangements and applications are to be put in place
for priority assessment of medicines and medical devices produced in Turkey"824; and
f. the TMMDA 's Administrative Operation Report 2019, which includes the objective to
"prioritise assessment of applications " and to "support domestic [yerli, which can also
mean local] production".825
7.305. The Panel notes that Turkey does not dispute the objective of prioritization that is exemplified
in these instruments, but instead limits its arguments to stating that evidence of an objective is not
equal to evidence of actual conduct.826
7.306. Next, the Panel recalls that the parties have different understandings of wheth er Turkish
authorities "give priority" in circumstances where those authorities have discretion, e.g. to call for
an extraordinary meeting or take certain decisions. At this stage, the Panel limits its analysis to the
significance of these arguments for establishing the existence of the prioritization measure, i.e. with
respect to what the measure is and the nature of the European Union's challenge (being "as such"
or to "ongoing conduct/practice" of "general application").
7.307. In this regard, the Panel observes that "gives priority" is used in a sentence in the European
Union's panel request which reads: "Turkey gives priority to the review of applications for inclusion
of domestic pharmaceutical products in the [Annex 4/A list], as well as with respect to [GMP and
marketing authorization applications]".827
7.308. In its first written submission, the European Union refers to action plans and programmes
which talk of "prioritizing medicines", "accelerat[ing]" and "speed[ing] up" the evaluation process
for inclusion in th e Annex 4/A list, "facilitation" and "improve[ment]" of price and reimbursement
practices, and states that it "will give priority" in reimbursement and pricing policies and licensing
procedures.828
7.309. With respect to the Annex 4/A list, the European Union submits that domestically
manufactured products are listed in the DRC and MEEC agendas as "prioritized topics for review ",
whereby the relevant commissions hold extraordinary meetings for that purpose. 829 The European
Union refers to several provisions of the Drug Reimbursement Regulation in support of its
argument830:
a. Article 5(1)(g), which states that the DRC 's duties include "[h]olding extraordinary
sessions, when necessary, to assess applications for locally-manufactured medicinal
products requesting to be listed, without waiting for conclusion of other applications made
during the same period";
b. Article 6(1)(ç), which states that the DRC chair's duties include "[r]eviewing assessments
by [MEEC] related to applications for locally -manufactured products, that a decision be

824 European Union's second written submission, para. 304 (referring to SSI Activity Report 2018
(Exhibits EU-109, TUR-7), p. 29).
825 European Union's second written submission, para. 304 (referring to TMMDA Administrative
Operation Report 2019 (Exhibit EU-111), pp. 200-201.) As reflected in Exhibit EU-111, the Turkish word "yerli"
can be translated as "domestic" or "local". Excerpts from this instrument are also found in Exhibit TUR-78.
826 See e.g. Turkey's first written submission, para. 675; second written submission, para. 311. The
Panel notes that in Turkey's first written submission, it argues that Turkey did not retain its prioritization
objectives, evidenced by the document, Government of Turkey, Eleventh Development Plan 2019-2023
(Exhibit EU-88) (Turkey's first written submission, para. 676). In response to this the European Union referred
to further documentation in its second written submission which refers to Turkey's prioritization objectives and
post-dates Government of Turkey, Eleventh Development Plan 2019-2023 (Exhibit EU-88). With respect to
these more "recent" documents, Turkey makes its argument that the fact they "refer to an objective of
prioritization" does not show there is "ongoing practice or conduct of general application" (Turkey's second
written submission, paras. 310-311).
827 European Union's panel request, p. 6. (emphasis added)
828 European Union's first written submission, paras. 325-329.
829 European Union's first written submission, para. 337.
830 European Union's first written submission, paras. 331, 332, and 336.

taken at an extraordinary meeting of the [DRC], and calling an extraordinary meeting of
the [DRC] if necessary"; and
c. Article 9(1)(c), which states that the MEEC 's duties include "[p]rioritizing the review of
applications involving locally manufactured medicinal products requesting listing for
reimbursement… and referring them to the [DRC] Chair for publication, without waiting
for conclusion of the other applications that were submitted during the same period,
issuing an opinion that these should be given consideration during an extraordinary
meeting of the DRC".
7.310. Similarly, the European Union submits that, read as a whole, the Prioritization Guideline
gives priority for review to applications concerning all locally manufactured products, in the context
of GMP and marketing authorization applications.831 The European Union refers to several provisions
of the Prioritization Guideline in support of its arguments, including832:
a. Articles 2(1)(ç) and (d), which indicate that the Prioritization Guideline covers the "analysis
and finalization of the requests about prioritization " i.e. "[a]pplications relating to
transferring the production of imported medicines to our country " and "[a]pplications for
locally manufactured products for exportation purposes";
b. Article 4(1)(ç), which indicates that the assessment process of applications for GMP and
marketing authorization spans from "pre-assessment" to "placing on the market" affected
pharmaceutical products;
c. Article 4(1)(h), which defines "prioritization" as the "assessment of applications within the
determined criteria" and putting them "forward" in the "assessment process" by giving
them priority;
d. Article 6(1), which indicates that the Priority Assessmen t Commission 's duties include
"[a]ssessing and finalizing prioritization requests"833;
e. Annex 3, which contains assessment criteria and a scoring chart, that attribute a coefficient
of 0.15 to applications concerning "local production" (as well as a coefficient of 0.15 to
applications concerning a "local active substance" and a coefficient of 0.3 to applications
involving "bioequivalence studies in Turkey").
7.311. The European Union then refers to further evidence that local manufacture is among the
criteria governing assessment of the prioritization process for pharmaceutical products, and that
where a product has "no priority" its "licensing period" is 210 days, if it has "priority" its licensing
period is 180 days, and if it has "high priority" its licensing period is 150 days.834
7.312. In its second written submission, the European Union reiterates that Turkish legislation
"mandates" listing domestic pharmaceutical products on the MEEC and DRC agendas as "prioritized
topics for review" and that extraordinary meetings are held for that purpose.835 With respect to the
Prioritization Guideline, the European Union reiterates that it "enables" giving priority to applications
for domestic pharmaceutical products and that no such possibility exists for like imported products,
and that the assessment criteria for priority actually "mandate[]" giving priority to locally

831 European Union's first written submission, paras. 338 and 349.
832 European Union's first written submission, paras. 338-339, and 343-349.
833 The European Union also notes that the Priority Assessment Commission was established to
implement Policy 5 Component 1 Action 2 of the 2014 Action Plan, which is described above. (European Union's
first written submission, para. 345 (referring to 2016 TMMDA Activity Report (Exhibit EU-99)).
834 European Union's first written submission, para. 350 (referring to R. Yeter, "Watch out with the
localization trap", Yeni Şafak, 24 February 2018 (Exhibit EU-100)). See also Turkey's first written submission,
para. 656 (referring to Prioritization Guideline (Exhibit EU-97), Articles 11(2) and 11(3)). The Panel notes that
Turkey refers to "the registration process" instead of a "licensing period". The Panel understands the parties to
refer, by this terminology, to the time period it takes for the relevant application process to be completed
(such that the product can be placed on the market).
835 European Union's second written submission, para. 302; responses to the second set of questions,
paras. 119-120.

manufactured products by virtue of the coefficient for "local production".836 The European Union also
points to the "priority matter of locally manufactured product applications relating to the transferring
of production of imported medicines " in Article 10(2)(ğ) as evidence of loc al manufacture as a
"mandatory criterion " in the priority assessment process. 837 The European Union identifies
documentation that refers to products receiving "priority review" under a "points-based system" if
they meet conditions like "[t]echnology transfer to Turkey", "priority assessment of medicines and
medical devices produced in Turkey" and "priorit[zing] assessment of applications … and to support
domestic [yerli, which can also mean local] production".838
7.313. In the light of the European Union 's panel request and written submissions, the Panel
understands the European Union to challenge a prioritization measure whereby:
a. Turkish authorities "give priority" to applications for inclusion in the Annex 4/A list by
placing those applications as a priori ty on the agenda for DRC and MEEC meetings
including extraordinary meetings or in MEEC 's case, priority consideration at its own
meetings and referral for consideration at a DRC extraordinary meeting. The Panel also
notes the wording in Article 5(1)(g) of the Drug Reimbursement Regulation, referred to by
both parties, which essentially gives the DRC the green light to consider applications for
locally manufactured products "without waiting" for other applications made during the
same period to be "concluded". In other words, the Panel understands Article 5(1)(g) to
provide both a forum and "queue-jumping" mechanism for applications for inclusion in the
Annex 4/A list where the relevant products are locally produced. The Panel notes that this
is significant, given that regular DRC meetings are held twice yearly and extraordinary
meetings can be convened at any time. 839 The Panel further notes that Article 9(1)(c)
contains similar wording with respect to MEEC meetings.
b. With respect to GMP and marketing authorization applications, the Panel understands the
European Union's challenge to the prioritization measure to refer specifically to the scoring
system used by the Priority Assessment Commission in determining whether an application
should receive priority (and therefore a shorter licensing period before a product is able
to be placed on the market), whereby points are attributed for local production.840
7.314. The Panel observes that the provisions of the Drug Reimbursement Regulation (as mentioned
above) and Prioritization Guideline are in keeping with the underlying action plans, programmes and
other documentation, which both refer to prioritization as a desired outcome and a process of
decision-making.
7.315. On that basis, the Panel does not understand the European Union to be arguing that in each
and every case domestic pharmaceutical goods are granted "priority" in the sense that applications
concerning those products are always processed fastest, but rather that their assessment within
these approval processes for reimbur sement, GMP and marketing authorization is prioritized by
virtue of criteria attaching to a product 's status as a locally manufactured pharmaceutical product.
The Panel understands the European Union 's claim to be that it is the inclusion of assessment
opportunities (e.g. being placed on the DRC or MEEC agenda, role of extraordinary meetings) and
criteria (e.g. the "local production" coefficient) in these approval processes, rather than the outcome
for applications per se, that gives rise to the inconsisten cy with Article III:4 of the GATT 1994,
because they result in a higher chance of actual priority being granted, (i.e. faster inclusion in the
Annex 4/A list or shorter processing times with respect to GMP and marketing authorization
applications).841

836 European Union's second written submission, paras. 302-303 (referring to Prioritization Guideline
(Exhibit EU-97), Article 10(2)(d)); responses to the second set of questions, paras. 119, and 121-122.
837 European Union's second written submission, para. 303 (referring to Exhibit EU-97).
838 European Union's second written submission, para. 304. As reflected in Exhibit EU-111, the Turkish
word "yerli" can be translated as "domestic" or "local". Excerpts from this instrument are also found in Exhibit
TUR-78.
839 Turkey's first written submission, para 659 (referring to Exhibit TUR-11, Articles 5(1)(g) and (ğ)).
The Panel notes that Exhibit TUR-11 is the Drug Reimbursement Regulation also found in Exhibit EU-8.
840 See e.g. European Union's first written submission, paras. 341, and 347-349; second written
submission, para. 303.
841 See European Union's responses to the second set of questions, paras. 119-123.

7.316. The Panel finds nothing in Turkey's arguments or evidence that contradicts the existence of
such a measure. Indeed, Turkey (i) does not dispute the objective of prioritization outlined by the
European Union, with respect to both the Annex 4/A list and GMP and m arketing authorization;
(ii) notes that both the Drug Reimbursement Regulation and Prioritization Guideline "create the
possibility of granting priority " to locally manufactured products 842; and (iii) provides the same
evidence concerning the scoring of applications under the Prioritization Guideline.843
7.317. The Panel notes that Turkey 's arguments about the non -existence of the prioritization
measure instead focus on the fact that imported products may also receive priority assessment in
certain instances, and th at the local manufacture criterion does not determine the outcome of an
application. For the reasons given above, the Panel does not agree with Turkey that these factors
impact the existence of the prioritization measure as characterized by the European Union, which is
concerned at a minimum with in-built opportunities for prioritization within the relevant application
processes. The Panel also notes that, with respect to certain other opportunities for "prioritization"
of imported products referred to by Turkey, these opportunities only cover products for which there
will be, by definition, no "like" domestic product.844
7.318. In the light of the Panel 's conclusion as to how the European Union has characterized and
described the prioritization measure in its panel request and first written submission, in particular ,
what is meant by "giving priority" in the context of the decision -making processes concerning the
Annex 4/A list and GMP and marketing authorization, the Panel also understands the European Union
to be challenging the prioritization measure "as such".
7.319. The Panel does not share Turkey 's understanding that the European Union is challenging
what Turkey refers to as an "ongoing conduct/practice" of general application. Indeed, the Panel is
compelled to recall that it already clarified its understanding of the panel request in the context of a
preliminary ruling. 845 The Panel ruled that this measure did not concern specific instances of
application (which, the Panel observes, would necessarily form part of the definition of an "ongoing
conduct" measure).846 The Panel also found that the European Union did not need to explicitly
identify its challenge to the prioritization measure as being "as such" or "as applied", and that the
reference to "certain cases" in the panel request covers "all instances where imported products are
still eligible under the reimbursement scheme", as distinct from specific instances of application.847
Moreover, the European Union clarified in response to Turkey 's preliminary ruling re quest, which
pre-dates Turkey's first written submission, that it challenges this measure "as such". Following such
clarification by the European Union and the Panel 's own ruling, the Panel sees no basis to construe
words such as "gives priority" to imply that the European Union is in fact challenging an "ongoing
conduct" measure (and doing so without providing any evidence of the kind needed to substantiate
that type of claim).
7.320. Having concluded that the European Union 's panel request, as clarified through its
subsequent submissions, identifies an "as such" challenge to the prioritization measure as defined
further above, the Panel now turns to consider whether the European Union has established the

842 See e.g. Turkey's first written submission, paras. 649-651.
843 Turkey's first written submission, paras. 655-656.
844 See e.g. European Union's first written submission, para. 369.
845 In its request for a preliminary ruling, Turkey argued that it was unclear whether this measure was
challenged as a "measure of general application" or "specific instances of application", such that the European
Union had failed to identify the specific measure at issue under Article 6.2 of the DSU. At that stage of
proceedings, Turkey submitted that the reference to "certain cases" in the narrative description of the measure
indicated that the European Union was challenging specific instances of application (Turkey's request for a
preliminary ruling, paras. 39 and 46). In response, the European Union clarified that its panel request identifies
an "as such" challenge and that the full wording of the narrative description indicated that "certain cases" did
not refer to instances of application, but the scope of the prioritization measure, being imported products that
still have the benefit of the reimbursement scheme (European Union's responses to Turkey's request for a
preliminary ruling, paras. 68-73).
846 The Panel recalls that when establishing the existence of an ongoing conduct measure, a complainant
is required to provide evidence of how that conduct has been repeatedly applied (i.e. several instances of
application) and likelihood of its continued application (which may also be evidenced by instances of
application). (Appellate Body Reports, Argentina – Import Measures, para. 5.108; US – Supercalendered Paper,
para. 5.17).
847 Preliminary ruling, paras. 3.17-3.18.

existence of an overarching, mandatory prioritization measu re as a rule or norm of general and
prospective application.
7.321. The Panel finds that the European Union has established the existence of an "overarching"
measure whereby Turkish authorities give priority to the review of applications for inclusion in the
Annex 4/A list and to GMP and marketing authorization applications concerning domestic
pharmaceutical products over like imported products. The Panel , moreover, notes its conclusion
above, that the prioritization measure mandates giving priority to the review of applications based
on criteria attaching to local production and recalls that rules or norms that mandate certain action
may be challenged "as such" in WTO dispute settlement.848
7.322. Given that the prioritization measure is a rule or norm which is expressly set out in writing
in the provisions of the Drug Reimbursement Regulation and Prioritization Guideline, it is not clear
that there is any need for the Panel to further assess whether this measure exhibits general and
prospective application, typically considered in the context of unwritten measures. Assuming, for the
sake of argument, that such further consideration is necessary, the Panel considers that this measure
has general application; it is not limited in application to specific economic operators but applies
across the board to imported pharmaceutical products not yet subject to the localisation
requirement. Moreover, the Panel considers that the prioritization measure has prospective
application, on the basis that it is reflected in legal instruments with continuing and prospective
effect (i.e. the Drug Reimbursement Regulation and Prioritization Guideline) and implements an
underlying current policy of prioritization.
7.323. Having found that the European Union challenges the prioritization measure "as such", the
European Union is not required to prove any specific instances of application of this measure, that
would otherwise have had relevance for evidencing repeated application and likelihood of continued
application in establishing an "ongoing conduct " measure. The Panel therefore disagrees with
Turkey's argument that the European Union was required to show that Turkish authorities
"effectively" give priority to applications concerning domestically manufactured pharmaceutical
products by evidencing specifi c instances of application, for the purposes of establishing the
existence of the prioritization measure.
7.6.4.3 Article III:4 of the GATT 1994
7.324. The Panel now considers whether the prioritization measure is consistent with Article III:4
of the GATT 1994. In this section, the Panel considers the requisite elements in turn.
7.325. Concerning the first element under Article III:4, the Panel considers the European Union has
made a prima facie case that domestic pharmaceutical products and imported pharmaceutical
products affected by the prioritization measure are "like products"849 and Turkey has not presented
any counterarguments in relation to this element of Article III:4.
7.326. The European Union indicates in its first written submission that "domestic pharmaceutical
products" refers to "all pharmaceutical products manufactured in Turkey", and "imported products"
refers to "all imported pharmaceutical products with the same characteristics ".850 The European
Union further clarifies that the category of imported products excludes pharmaceutical products,
such as those in the "Foreign Price List of Medicinal Products " (also known as the Annex 4/C List),
which are not available on the Turkish market .851 The Panel notes that Turkey is aware that the
European Union does not contend that such products are caught by the prioritization measure. 852
The Panel therefore understands the European Union to exclude – by definition – from the
prioritization measure, imported products for which there are no domestic counterparts.
7.327. The Panel also recalls that the European Union had indicated in its response to Turkey 's
request for a preliminary ruling, that "imported products" refers to those that "benefit from the
reimbursement scheme (for example, because they fall outside of the localisation requirement or

848 See paragraph 7.282.
849 European Union's first written submission, paras. 366-369.
850 European Union's first written submission, para. 368.
851 European Union's first written submission, para. 369.
852 Turkey's first written submission, fn 621 to para. 659.

localisation commitments were offered) ".853 This is in keeping with the Panel 's finding in its
preliminary ruling, that "imported products" covers "all instances where imported products are still
eligible under the reimbursement scheme ", i.e. may be included in the Annex 4/A list for
reimbursement.854 The Panel therefore considers that the scope of the prioritization measure affects
domestically manufactured products that are reimbursable under Annex 4/A and their imported
counterparts.
7.328. When origin is the sole criterion for a regulatory distinction between products, the likeness
of the products that are distinguished in this way can be presumed. 855 The Panel agrees with the
European Union that the country of production for the pharmaceutical products affected by this
measure is the sole distinguishing criterion between relevant products falling within the scope of this
measure.856
7.329. Regarding the second element under Article III:4, the Panel considers that the prioritization
measure constitutes a "requirement" affecting the internal sale, offering for sale, purchase,
transportation, distribution, or use of pharmaceutical products. The Panel recalls that a
"requirement" within the meaning of Article III:4 is not limited to requirements reflected in "laws"
or "regulations", and may encompass both obligations that an enterprise is legally obliged to carry
out, as well as voluntary action in order to obtain an advantage from government.857 As the European
Union observes, the measure imposes "at least" a "requirement" (i.e. local production) as a condition
for obtaining an advantage (i.e. priority review for inclusion in the Annex 4/A list, and in the context
of GMP and marketing authorization applications).858
7.330. In the light of the Panel 's understanding of the prioritization measure as challenged by the
European Union, the Panel does not accept Turkey's argument that the "discretion" left to Turkish
authorities prevents this measure from qualifying it as a "requirement".859 As the Panel understands
this measure, it is only domestically manufactured pharmaceutical products that can benefit from
priority assessment (e.g. listing and review by the DRC and/or MEEC for inclusion in the Annex 4/A
list) and criteria (e.g. the "local production" coefficient) attaching to a product 's status as locally
produced. Therefore, in the context of both the Annex 4/A list and GMP and marketing authorization
procedures, the advantage attaches to a domestic production criterion.
7.331. Recalling that a measure need only "affect" the conditions of sale, purchase, transportation,
distribution, or use of products860, the Panel considers that this aspect of the second element under
Article III:4 is also satisfied. As the European Union observes, "this measure affects the internal sale
or offering for sale because it affects the conditions of competition of the imported products on the
domestic market as it covers the priority of applications for inclusion in the [Annex 4/A list] and the
review of GMP and marketing authorisation applications" (without which a product cannot be placed
on the Turkish market).861
7.332. Regarding the third element under Article III:4, the Panel recalls that treatment no less
favourable means "according conditions of competition" no less favourable to the imported product
than to the like domestic product 862. In the Panel 's view, as discussed in the context of the
localisation requirement, access to reimbursement for the costs of a domestic product but not for
the costs of an imported like product obviously grants a competitive advantage to the domestic
product.863 Similarly, having faster access to inclusion on the Annex 4/A list (i.e. "reimbursable"
status) grants a competitive advantage to those products with faster access, namely domestic

853 European Union's responses to Turkey's request for a preliminary ruling, para. 73.
854 Preliminary ruling of the Panel, para. 3.18.
855 See Appellate Body Report, Argentina – Financial Services, para. 6.38; and e.g. Panel Reports,
Argentina – Import Measures, para. 6.274; China – Publications and Audiovisual Products, para. 7.1447; and
Canada – Wheat Exports and Grain Imports, para. 6.164.
856 European Union's first written submission, paras. 366-369.
857 Panel Reports, China – Auto Parts, para. 7.240; China – Publications and Audiovisual Products,
para. 7.1448.
858 European Union's second written submission, para. 313.
859 Turkey's second written submission, para. 317.
860 Appellate Body Reports, EC – Bananas III, para. 220; US – FSC (Article 21.5 – EC), para. 210
(referring to Panel Report, Italy – Agricultural Machinery, para. 12); and China – Auto Parts, para. 194.
861 European Union's first written submission, paras. 373-375.
862 Appellate Body Report, Korea – Various Measures on Beef, para. 135.
863 See paragraph 7.125 of this Report.

products within the scope of the prioritization me asure. With respect to GMP and marketing
authorization applications, the Panel notes that increased likelihood of access to priority licensing
process times by virtue of a local production criterion means that locally manufactured products are
available on the Turkish market faster. 864 The Panel considers that such products benefiting from
the prioritization mechanisms that attach to local production status therefore also have a competitive
advantage over their like imported counterparts. The Panel agrees with the European Union that the
prioritization measure affects the equality of competitive conditions between domestic and like
imported products that fall within the scope of this measure, and that this is discernible from the
design, structure and expected operation of this measure.865
7.333. The Panel rejects Turkey 's argument that elements of "discretion" within the relevant
approval procedures precludes any "less favourable treatment " arising from the prioritization
measure.866 In this regard, the Panel recalls its understanding of the prioritization measure, as
defined by the European Union, as comprising the in -built "prioritization" opportunities (as distinct
from automatic outcomes) for locally manufactured products vis -à-vis their like imported
counterparts, with respect to the Annex 4/A list and GMP and marketing authorization applications.
As the Panel has found above, like imported products cannot benefit from any equivalent
opportunities. The Panel notes that this is suf ficient for a finding of inconsistency with Article III:4
of the GATT 1994.867
7.6.5 Conclusion
7.334. The Panel finds that the European Union has established the existence of an overarching
measure whereby Turkish authorities give priority to the review of applications for inclusion in the
Annex 4/A list and to GMP and marketing authorization applications concerning domestic
pharmaceutical products over like imported products. The Panel concludes that the prioritization
measure is inconsistent with Article III:4 of the GATT 1994.
8 CONCLUSIONS AND RECOMMENDATION
8.1. For the reasons set forth in this Report, the Panel concludes as follows:
a. With respect to Turkey's request for a preliminary ruling:
i. Turkey's request for a preliminary ruling was not untimely;
ii. the localisation requ irement, the import ban on localised products, and the
prioritization measure were identified with sufficient specificity to comply with
Article 6.2 of the DSU when reading the panel request on its face, as a whole, and in
light of the attendant circumstances; and
iii. the European Union provided a brief summary of the legal basis of the complaint
sufficient to present the problem clearly with respect to its claims under Article X:1 of
the GATT 1994 and Article 3.1(b) of the SCM Agreement. Both claims, therefore, are
properly within the Panel's terms of reference.
b. With respect to the localisation requirement:
i. the European Union has established the existence of the localisation requirement as a
"single measure", whereby (i) Turkey requires foreign producers to commit to localise
in Turkey their production of certain pharmaceutical products; and (ii) where

864 Furthermore, the Panel notes that with respect to both the Annex 4/A list and GMP and marketing
authorization applications, other regulatory benefits may flow from priority access to a market, such as market
history data, that may be used when submitting applications to another market.
865 European Union's first written submission, paras. 378-379; second written submission, paras. 316-
317.
866 Turkey's first written submission, paras. 693-697; second written submission, paras. 317-319.
867 Appellate Body Report, US – FSC (Article 21.5), para. 221; and Panel Reports, India – Solar Cells,

commitments are not given, not accepted or not fulfilled , affected products are no
longer reimbursed by the SSI;
ii. the localisation requirement is not covered by the government procurement derogation
in Article III:8(a) of the GATT 1994, and is therefore subject to the national treatment
obligation in Article III:4 of the GATT 1994 and Article 2.1 of the TRIMs Agreement;
iii. the localisation requirement is inconsistent w ith the national treatment obligation in
Article III:4 of the GATT 1994;
iv. Turkey has not established that the localisation requirement is justified under
Article XX(b) or Article XX(d) of the GATT 1994; and
v. in the light of these findings, the Panel declines to rule on the European Union 's
alternative and conditional claim under Article 3.1(b) of the SCM Agreement and
exercises judicial economy over the European Union 's additional claims under
Article 2.1 of the TRIMs Agreement and Article X:1 of the GATT 1994.
c. In the light of these findings, the Panel exercises judicial economy over the European
Union's claim that the localisation requirement applied in conjunction with the Turkish
rules for approving the importation and marketing of pharmaceutical products (referred to
by the European Union as the "import ban on localised products ") is inconsistent with
Article XI:1 of the GATT 1994.
d. With respect to the prioritization measure:
i. the European Union has established the existence of an overarching measure whereby
Turkish authorities give priority to the review of applications for inclusion in the
Annex 4/A list and to GMP and marketing authorization applications concerning
domestic pharmaceutical products over like imported products; and
ii. the prioritization measure is inconsistent with Article III:4 of the GATT 1994.
8.2. Under Article 3.8 of the DSU, in cases where there is an infringement of the obligations
assumed under a covered agreement, the action is considered prima facie to constitute a case of
nullification or impairment. The Panel concludes that, to the extent that the measures at issue are
inconsistent with the GATT 1994, they have nullified or impaired benefits accruing to the European
Union under that agreement.
8.3. Pursuant to Article 19.1 of the DSU, the Panel recommends that Turkey bring its measures into
conformity with its obligations under the GATT 1994.