Turkey — Certain Measures concerning the Production, Importation and Marketing of Pharmaceutical Products

 

Short title:	Turkey — Pharmaceutical Products (EU)
Complainant:	European Union
Respondent:	Turkey
Third Parties (original proceedings):	Brazil; Canada; China; India; Indonesia; Japan; Russian Federation; Switzerland; Ukraine; United States
Agreements cited: (as cited in request for consultations)	Art. III:4, X:1, X:2, X:3(a), XI:1  GATT 1994 Art. 2.1  Trade-Related Investment Measures (TRIMs) Art. 3.1, 27.1, 28.2, 39.1, 39.2  Intellectual Property (TRIPS) Art. 1.1, 3.1(b)  Subsidies and Countervailing Measures (SCM)
Agreements cited: (as cited in panel request)	Art. III:4, X:1, XI:1  GATT 1994 Art. 3.1(b)  Subsidies and Countervailing Measures (SCM) Art. 2.1  Trade-Related Investment Measures (TRIMs)
Consultations requested:	2 April 2019
Panel requested:	2 August 2019
Panel established:	30 September 2019
Panel composed:	17 March 2020
Art 25 DSU Arbitration award circulated:	25 July 2022

 

Summary of the dispute to date

 

The summary below was up-to-date at 17 February 2023 

 

Consultations

 

Complaint by the European Union

 

On 2 April 2019, the European Union requested consultations with Turkey regarding various measures concerning the production, importation and marketing of pharmaceutical products. The measures identified by the European Union include the following alleged acts: a localisation requirement, a technology transfer requirement, an import ban on localised products, and a prioritization measure.

 

The European Union claimed that:

 

- The localisation requirement and the prioritization measure appear to be inconsistent with Article III:4 of the GATT 1994.

 

- The localisation requirement, the technology transfer requirement, and the prioritization measure appear to be inconsistent with Articles X:1 and X:3(a) of the GATT 1994.

 

- All four categories of challenged measures appear to be inconsistent with Article X:2 of the GATT 1994.

 

- The import ban on localised products appears to be inconsistent with Article XI:1 of the GATT 1994.

 

- The localisation requirement appears to be inconsistent with Article 2.1 of the TRIMS Agreement and Article 3.1(b) of the SCM Agreement.

 

- The technology transfer requirement appears to be inconsistent with Articles 3.1, 27.1, 28.2, 39.1 and 39.2 of the TRIPS Agreement.

 

The European Union submitted, together with its consultations request, a statement of available evidence pursuant to Article 4.2 of the SCM Agreement.

 

On 18 April 2019, the United States requested to join the consultations.

 

Panel and Appellate Body proceedings

 

On 2 August 2019, the European Union requested the establishment of a Panel. At its meeting on 15 August 2019, the DSB deferred the establishment of a panel.

 

At its meeting on 30 September 2019, the DSB established a panel. Brazil, Canada, China, India, Indonesia, Japan, the Russian Federation, Switzerland, Ukraine and the United States reserved their third-party rights.

 

On 4 March 2020, the European Union requested the Director-General to compose the panel. On 17 March 2020, the Director-General composed the panel.

 

On 15 September 2020, the Chair of the panel informed the DSB that due to the delays caused by the global COVID-19 pandemic, the panel did not expect to issue its final report to the parties before the second half of 2021. The Chair apprised the DSB that the report would be available to the public once it was circulated to the Members in all three official languages, and that the date of circulation depended on completion of translation.

 

The confidential final report was issued to the parties on 11 November 2021, and the panel informed the parties that circulation of the report was expected in mid-January 2022. On 22 December 2021, the Chair of the panel informed the DSB that the panel had granted the European Union's request of 20 December 2021, to which Turkey indicated that it did not object on the same day, that the panel suspend its work pursuant to Article 12.12 of the DSU until and including 21 January 2022. The Chair of the panel informed the DSB on 21 January 2022, 10 February 2022 and 24 February 2022 that the panel had granted the European Union’s subsequent requests for extensions of the suspension of the panel’s work.

 

On 22 March 2022, the parties jointly communicated to the panel and to the DSB that they had agreed on procedures for arbitration under Article 25 of the DSU. Through these agreed procedures, the European Union and Turkey jointly requested the Panel to suspend its work indefinitely pursuant to Article 12.12 of the DSU, except to the extent necessary to effect certain joint requests of the parties. The Panel accepted this request.

 

Moreover, the parties requested the panel to transmit the final report to the parties and third parties, without circulating it, and to allow the parties to disclose the report if they resorted to arbitration under Article 25 in accordance with their agreed procedures. The panel granted the parties' requests. It therefore transmitted its report to the parties and third parties, and agreed that the report would no longer be confidential if the parties resorted to arbitration under Article 25 in accordance with their agreed procedures. 

 

Arbitration under Article 25 of the DSU

 

In the agreed procedures for arbitration under Article 25 of the DSU , the parties indicated that they had mutually agreed pursuant to Article 25.2 of the DSU “to enter into arbitration under Article 25 of the DSU to decide any appeal from any final report as issued to the parties in dispute DS583.”

 

On 25 April 2022, Turkey filed a notice of recourse to Article 25 under those agreed procedures. In their agreed procedures, the parties refer to this notice as a Notice of Appeal. This notice was circulated to the DSB on 28 April 2022. The notice includes the full text of the report transmitted by the panel to the parties, which is thereby made public even though it has not been circulated by the panel for the purposes of Article 16 of the DSU. The following is a summary of the panel report as included in Turkey’s notice of recourse to Article 25:

 

On 28 April 2022, the Arbitrator was composed.

 

On 21 July 2022, the Arbitrators' Award was issued to the parties. On 25 July 2022, in accordance with Article 25.3 of the DSU, the Award was notified to the Dispute Settlement Body, the Council for Trade in Goods, the Committee on Subsidies and Countervailing Measures, and the Committee on Trade-Related Investment Measures.

 

In the agreed procedures for arbitration under Article 25 of the DSU, the parties agreed to “abide by the arbitration award, which shall be final”.

 

Reasonable period of time

 

On 18 August 2022, Türkiye informed the DSB that it intended to implement the recommendations and rulings of the arbitrators and the panel in this dispute in a manner that respects its WTO obligations and that it would need a reasonable period of time to do so.

 

On 14 November 2022, the European Union and Türkiye informed the DSB that in light of ongoing discussions between the parties and in order to allow them sufficient time to discuss a mutually agreed period, they had agreed on a common understanding regarding the deadlines relative to the arbitration procedure provided in Article 21.3(c) of the DSU. On 10 January 2023, the European Union and Türkiye informed the DSB that they had agreed pursuant to Article 21.3(b) of the DSU, that the reasonable period of time for Türkiye to implement the recommendations of the award of the arbitrator would expire on 25 April 2023.