RESTRICTEDWORLD TRADE
ORGANIZATIONWT/REG58/M/2
WT/REG59/M/2WT/REG60/M/2
WT/REG61/M/2
16 June 1999
(99-2442)
Committee on Regional Trade Agreements
Twenty-Second Session
EXAMINATION OF THE AGREEMENTS BETWEEN TURKEY AND HUNGARY;
TURKEY AND ROMANIA;  TURKEY AND ISRAEL;  TURKEY AND LITHUANIA
Note on the Meeting of 4 May 1999
Chairman: Ambassador G. Gonzalez (Argentina)
1. This meeting was convened  in document WTO/AIR/1063.
2. Under Agenda Items D. V-VIII , the Comm ittee on Regional Trade Agreements took up the
examinations of the Free Trade Agreements between Turkey and Hungary, Romania, Israel and
Lithuania, respectively..
3. The Chairman said that, because of the institutional situation in the World Trade Organization
(WTO), some Members had asked that this meeting not take place.  However, following
consultations, it had been agreed that those delegations that had come from  capitals would be allowed
to make their statements and present their documents for circulation among the Members.  Members
would have two weeks to submit questions in writing, after which the Parties to the Agreements
would have two further weeks to submit their replies which could then be considered at the next
formal meeting in July.
4. The representative of Turkey welcomed the op portunity to continue the examination of the
Agreements completed by Turkey with Israel, Romania, Lithuania and Hungary.  The Agreements
had been examined during the meeting of the CRTA on 11 February 1999 and the first round of the
examination, facilitated by the Standard Format of each agreement, had covered nearly all aspects of
these Agreements.  Summary records of these examinations had been distributed as documents
WT/REG58/M/1, WT/REG 59/M/1, WT/REG60/M/1 and WT/REG61/M/1.  Her delegation had
worked together with the other Parties to supply answers to the written questions submitted by the
Members and these questions and replies had been  distributed as document WT/REG/GEN/2.  The
answers to these questions, together with the statistical data on the details of the trade coverage
distributed as a document during the current meeting, would help advance the examination.  Turkey's
preferential Agreements had not overlooked commer cial and economic relations with third countries
not subject to preferential treatment.  Despite the fact that Turkey had negotiated a series ofpreferential trade regimes beginning in 1995, imports from third countries subject to MFN rates had
recorded significant increases.  For example, between 1995 and 1998, Turkey's trade with North
African countries had recorded an expansion of roughly 50 per cent, despite the fact that no
preferential trade agreements existed between Turkey and any of these countries.  During the same
period, imports from the United States, Australia and Japan had increased by 8.5, 71 and 46 per cent,respectively.  As indicated during the first round of examination, Turkey had not introduced any
barriers to the trade of third countries.  However, three of the Agreements under examination had only
entered into force in 1998, and the data may be too recent to allow clear conclusions on the trade
creation and distorting effects of the Agreements, but Turkey's free trade agreements had beenWT/REG58/M/2, WT/REG59/M/2,
WT/REG60/M/2, WT/REG61/M/2
Page 2
negotiated against the background of its far-reaching Uruguay Round market-access commitments;
these narrowed preferential margins and offered increasing trade opportunities to third countries.  The
notification of Agreements completed with Romani a, Lithuania and Hungary had been made promptly
on 16 April 1998, following their entry into force on 1 February, March and April, respectively.Following its entry into force on 1 May 1997, the Israel-Turkey FTA had been notified to the Council
for Trade in Goods on 11 June 1997.  Under the agreements, the Parties had eliminated duties and
other restrictive regulations of commerce on substantially all the trade between them.  The
Agreements covered trade in all industrial produc ts and a vast number of agricultural, processed
agricultural and fishery products.  According to Turkey's 1997 import figures, the coverage ratios of
the Agreements completed with Romania, Lit huania and Hungary were 90, 98 and 94 per cent,
respectively, while the figure for the Agreement with Israel was 97 per cent.  The Parties had grantedeach other preferential market access possibilities for a number of agricultural products as reflected in
positive lists.  An open-ended liberalization of trade in agricultural products was an important
component of each Agreement as the Parties were committed to granting further concessions on these
products.  The view that agricultural products were  not covered by the Agreements was not justified.
The arrangements on the Rules of Origin (ROOs) in the Agreements completed with Romania,Lithuania and Hungary were similar, as all the countries were part of the pan-European system of
cumulation which was based on the principle of diagonal cumulation of origin between participating
countries.  The principles of the system had been notified to the WTO on 20 August 1998 and a report
of discussions on the issue had been dissemin ated in document WT/R EG/GEN/1 on 21 January 1999.
ROOs did not create new restriction to the trade of third countries since they were not intended todeprive these countries of their MFN rights; furthermore, these provisions were flexible with respect
to the import materials of third country origin, and, therefore, served the interest of global trade
liberalization.  Regarding the application of safeguard measures, she noted that the provisions of the
Agreements were in full conformity with GATT Article XIX and the WTO Agreement on Safeguards,
with measures being applied on a non-discriminatory basis between Parties and non-Parties.  EachAgreement contained transition periods for sensitive products and the process of establishing free-
trade areas would be completed by the year 2000 with Israel, 2001 with Lithuania and Hungary and
2002 with Romania.  Complete liberalization betwee n the Parties would be achieved within three
years at the maximum.  She considered the Agreements to be in full compliance with principles of the
WTO multilateral trading system.
5. The representative of Hungary said that his delegation had received written questions after the
first round of examination and provided answ ers which he hoped that the Members would find
satisfactory.  He wanted to highlight some figures concerning the treatment of Hungary's imports from
Turkey.  Documents distributed during the meeting demonstrated that 81.4 per cent of total imports
from Turkey in 1995 benefited from a zero rate of duty, 10.6 per cent of imports received less than the
MFN rate but above a zero rate, and 8 per cent received MFN rates.  The corresponding figures
for 1996 were: 77.6 per cent for imports receiving zero duty rates; 10.4 per cent receiving below MFNbut above zero duty rates; and 12 per cent receiving MFN duty rates.  The 1997 figures were: 76.2 per
cent for imports receiving zero duty rates; 9.8 per cent receiving rates below MFN but above zero
duty rates; and 14 per cent receiving MFN duty rates.  The trade coverage of imports by the
Agreement was thus:   92 per cent in 1995, of which, 88 per cent received zero duty rates and 12 per
cent received below MFN but above zero rates; for 1996, 83.5 per cent received zero duty rates and16.5 per cent received above below MFN but above zero duty rates; for 1997, 89 per cent received
zero rates and 11 per cent received below MFN but above zero duty rates.  Similarly, 85 per cent of
total imports from Israel in 1995 received zero duty rates, 9 per cent received below MFN but above
zero duty rates, 6 per cent received MFN duty rates; in 1996, 89 per cent received zero customs duty
rates, 7 per cent received below MFN but above zero duty rates and 4 per cent received MFN dutyrates; in 1997 87 per cent received zero customs duty rates, 8 per cent received below MFN but above
zero duty rates and 5 per cent received the MFN duty rates.  In terms of the trade covered by the free
trade Agreement with Israel: in 1995 total coverage of imports was 94 per cent, of which 90.5 per centWT/REG58/M/2, WT/REG59/M/2,
WT/REG60/M/2, WT/REG61/M/2
Page 3
received zero duties and 9.5 per cent received below MFN duty rates; in 1996 total coverage was
96 per cent, of which, 91.6 per cent received zero duties and 8.4 per cent received below MFN but
above zero duty rates; in 1997 total coverage was 95 per cent, of which, 91.4 per cent received zero
duty rates and 8.6 per cent received below MFN but above zero duty rates.
6. The representative of Israel introduced a correction to an answer submitted by his delegation
in response to the first question posed by the Ja panese delegation in the document WT/REG/GEN/2.
In order to correct the misprint, the two words "most of" should be added to the beginning of the first
sentence.  The corrected sentence read: "Most of the Parties to the Agreements can notify their
respective their respective agreements to the WTO only after having completed the notification
procedures.".  A written corrigendum notice would soon be submitted to the Secretariat to that affect.
7. The Chairman thanked the representative of Israel for the comment and said that the
Secretariat would make the necessary changes.  He  suggested that the Committee continue with the
procedure agreed to earlier and take note of the intervention and to authorise the Members with
further question to submit the questions within two weeks and that the Parties to the Agreements to
reply within the two weeks following.
8. The representative of the European Communities stated that in order not be discriminate
against the other Agreements under examination that day, he supported the view that the afternoon
session follow the same procedure agreed to for the morning session.
9. The representative of Israel said that, having consulted with the Parties to the Agreements to
be examined during the next session, he offered to follow the suggestion by the representative of the
EC.
10. The Director of the Development Division said that on the Committee's Agenda were the
examinations of: the three Agreements between Israel and Hungary the Czech Republic and the
Slovak Republic, respectively; the examination of the Central European Free Trade Agreement on the
accession of Bulgaria; and the three Agreements between Slovenia and Estonia, Latvia, Lithuania,
respectively.  Normally, the examination of the Israel Agreements would be chaired byAmbassador Chul-Ki Ju  and the examination of the other agreements would be chaired by Mr. Stoler.
Since Ambassador Ju was not present at the current meeting, he suggested that the Committee
undertaken the examination  of the next set of agreements during the next (afternoon) session.
11. The Chairman suggested the Committee follow the advice of the Director of the Development
Division.  He indicated that the format of the next session would need to be left to the Chairman of
that session.
12. The Committee took note of the comments made.
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