Notice of initiation of an examination procedure concerning obstacles to trade within the meaning of Council Regulation (EC) No 3286/94, consisting of measures imposed and practices followed by the Republic of Turkey affecting trade in pharmaceutical products
Date: 2003-12-20
Institutions: European Commission
Subjects: Türkiye, complaint to the Commission, pharmaceutical industry, pharmaceutical product, restriction on competition, trade restriction

20.12.2003

EN

Official Journal of the European Union

C 311/31

Notice of initiation of an examination procedure concerning obstacles to trade within the meaning
of Council Regulation (EC) No 3286/94, consisting of measures imposed and practices followed by
the Republic of Turkey affecting trade in pharmaceutical products

(2003/C 311/04)

On 9 October 2003, the Commission received a complaint
under Article 4 of Council Regulation (EC) No 3286/94 (1)
(hereinafter ‘the Regulation’).

1. COMPLAINANT

The complaint was lodged by EFPIA (European Federation of
Pharmaceutical
Industries and Associations) on behalf of
Community member firms exporting or wishing to export to
the Republic of Turkey the products covered by the complaint.
EFPIA is a non-profit making association whose functions are
industry and to act for it in
to promote the pharmaceutical
pursuit of
and legal
objectives.

economic

technical,

scientific,

its

(a) Discriminatory application of
the pharmaceutical
import, sales and marketing regime including the regime
for setting of market prices, for the setting of margins and
and
reimbursement,

requirements

production

local

distribution

import,

The complainant alleges that there exists in the Republic of
Turkey discrimination in law and practice in the application of
sales and marketing system,
the pharmaceutical
including pharmaceutical marketing approvals procedures and
distribution and the pricing and reimbursement regimes to the
imported drugs. This leads according to the
detriment of
complainant
imported phar-
to unfavourable treatment of
maceutical products compared to locally produced innovative
and generic products and privileges in the reimbursement
regime reserved for Turkish products.

2. PRODUCTS

The products concerned are pharmaceutical products falling
following Combined Nomenclature headings:
under
2936-2939, 2941 and 3001-3006.

the

However, the examination which the Commission is initiating
may also cover other products, particularly those which
interested parties making themselves known within the time
limits mentioned below (see Section 8), can show are affected
by the alleged practices.

laws

EFPIA claims that these practices are in breach of Article I of
GATT 1994 (MFN principle), Article III.4 of GATT 1994
(National Treatment principle), Article X.1 of GATT 1994
and regulations),
(transparency and publication of
Article X.3(a) of GATT 1994 (uniform and impartial adminis-
tration/application of laws and regulations) and with Articles
2.1 and 2.2 TBT Agreement (application of technical regu-
the
lations).
Turkish trade practices and measures are in violation of
Article XI:1 (prohibition of bans) and Article 2 of the TRIMs
Agreement (prohibition of trade-related investment measures in
violation of GATT Articles III and XI).

Furthermore,

complainant

alleges

that

the

3. SUBJECT

(b) Other alleged obstacles to trade

The complaint concerns obstacles to trade allegedly caused by
Turkish practices and measures involving lack of transparency,
discriminatory application of the pharmaceutical import, sales
and marketing system, including discrimination in pricing and
and
pharmaceutical marketing
distribution channels. The complainant also identifies a lack
of protection of commercially sensitive data submitted as
part of the marketing approval procedure.

procedures

approvals

4. ALLEGATIONS OF OBSTACLES TO TRADE

EFPIA claims that the Turkish practices referred to in Section 3
constitute obstacles to trade within the meaning of Article 2(1)
of the Regulation. These are the following:

(1) Council Regulation (EC) No 3286/94 of 22 December 1994 laying
common
down Community procedures
the
commercial policy in order
Community's rights under international trade rules,
in particular
those established under the auspices of the World Trade Organi-
sation (WTO)
(OJ L 349, 31.12.1994, p. 71). Regulation last
amended by Regulation (EC) No 356/95 (OJ L 41, 23.2.1995, p. 3).

in the
to ensure

field of
the

exercise of

the

The other alleged obstacle to trade involves the lack of
protection for commercially sensitive data submitted as part
of the marketing approvals procedure. EFPIA claims that this
amounts to a clear violation of Article 39.3 of the Agreement
on Trade Related Intellectual Property Rights (TRIPS).

Finally, the complainant argues that taken together, the impact
of the various arbitrary regulatory processes and procedures
and the lack of transparency amount to a breach of Turkey's
obligations under GATT 1994 Article XXIII:1(b).

the Commission believes that

In light of the factual information available and the evidence
submitted,
there is sufficient
prima facie evidence that the Turkish measures and practices
as above, including in particular the discriminatory application
of the pharmaceutical import, sales and marketing system plus
distribution and pricing measures and margins, discriminate
against
to be
contrary to the above-mentioned Articles.

imported products

and therefore

appear

C 311/32

EN

Official Journal of the European Union

20.12.2003

5. ALLEGATION OF ADVERSE TRADE EFFECTS

EFPIA claims that
its members are suffering adverse trade
effects within the meaning of Article 2(4) of the Regulation
and they are in danger of being more adversely affected in the
near future.

The main evidence of adverse trade effects of
the Turkish
non-transparent, discriminatory and trade restrictive legislation
and practices pertains to sales and revenue losses due mainly to
the discriminatory and opaque operation of pricing and reim-
bursement systems. Furthermore, other effects are attributed to
the local production requirements which entail significant costs
for
and reduced
competitiveness due to its inability to capture economies of
scale. This in turn has significant
implications in terms of
loss of investments, tax revenue and employment due to the
obligatory relocation of production to Turkey.

the European pharmaceutical

industry

Also the evidence submitted on trade losses refers to other
effects of these barriers due to the alleged misappropriation
and misuse by Turkish enterprises of data developed by
Community enterprises which is then used for the production
and marketing approval of copies of innovative products.

This appears therefore to be prima facie evidence of adverse
trade effects within the meaning of Article 2(4) of the Regu-
lation.

6. COMMUNITY INTEREST

The pharmaceutical industry is a major employer in the EU: in
2001 the sector employed around 580 000 people. Exports
represent an important component in the industry's turnover,
around 19 %.

In this respect,
it appears essential
to safeguard the equal
in fast growing third
treatment of EU pharmaceuticals
country markets such as Turkey by removing obstacles to
trade. Furthermore,
it is also important to ensure that the
EU's trade partners fully comply with their obligations under
the WTO Agreements. The Community also has an interest in
ensuring a proper implementation of the EC-Turkey Customs
Union Agreement, which establishes a particularly close
relationship between the EU and Turkey. Many of the issues
raised in this TBR complaint have already been the subject of
discussions within the framework of the EC-Turkey Customs
Union Joint Committee, the EC-Turkey Association Committee

and the EC-Turkey Association Council, although so far no
satisfactory solution has been found.
In the course of this
investigation,
the Commission will continue to explore the
scope for finding a solution to the market access obstacles
through bilateral dialogue, taking also into account the obli-
gations assumed by Turkey under the EC-Turkey Customs
Union Agreement.

In view of the above, it is considered to be in the Community's
interest to initiate a TBR examination procedure.

7. PROCEDURE

evidence

consultation of
established by the Regulation,

the Advisory
Having decided, after due
is
there
that
Committee
an examination
initiating
sufficient
procedure for
the purpose of considering the legal and
factual issues involved, and that this is in the interest of the
Community, the Commission has commenced an examination
in accordance with Article 8 of the Regulation.

to justify

Interested parties may make themselves known and make
known their views in writing on specific issues raised by the
complaint, providing supporting evidence.

Furthermore, the Commission will hear the parties who so
request
in writing when they make themselves known,
provided that they are fundamentally concerned by the result
of the procedure.

This notice is published in accordance with Article 8(1)(a) of
the Regulation.

8. TIME LIMIT

Any information relating to the matter and any request for a
hearing should reach the Commission not later than 30 days
following the date of publication of this notice and should be
sent in writing to:

European Commission
Directorate-General for Trade
Mr. Ignacio García Bercero, DG Trade D.3
CHAR 9/74
B-1049 Brussels
Fax (32-2) 299 32 64