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WTO争端解决案例
  • 印度诉土耳其纺织品服装进口限制的纠纷
  • Turkey — Restrictions on imports of textile and clothing products. (Brought by India)
  • 文书
    Turkey - Restrictions on Imports of Textile and Clothing Products - Report of the Panel
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    相关条款
    (Articles)
  • ATC 02
  • ATC 02.04
  • DSU 06.02
  • DSU 12.08
  • DSU 12.09
  • GATT 1994 XI.01
  • GATT 1994 XIII
  • GATT 1994 XXIV
  • GATT 1994 XXIV.04
  • GATT 1994 XXIV.05.a
  • GATT 1994 XXIV.07
  • GATT 1994 XXIV.08.a
  • 机构
    (Bodies)
  • 争端解决机构 (Dispute Settlement Body)
  • 纺织品监测体系 (Textiles Monitoring Body)
  • Panel WTO : European Communities - Anti-Dumping Duties on Imports of Cotton-Type Bed Linen from India
  • 涉案国家
    (Countries)
  • 欧盟 (European Union)
  • 中国·香港 (Hong Kong, China)
  • 印度 (India)
  • 日本 (Japan)
  • 菲律宾共和国 (Philippines)
  • 泰国 (Thailand)
  • 土耳其 (Turkey)
  • 美国 (United States)
  • 涉案产品
    (Products)
  • 衣服 (clothing)
  • 层压胶布板 (textiles)
  • 主题
    (Subjects)
  • 争端解决 (DISPUTE SETTLEMENT)
  • 进口限制 (IMPORT RESTRICTIONS)
  • 定量限制 (QUANTITATIVE RESTRICTIONS)
  • 专家组 (PANEL)
  • 纺织品 (TEXTILES)
  • 衣服、衣饰 (CLOTHING)
  • 贸易协定 (TRADE AGREEMENTS)
  • 无效或亏损 (NULLIFICATION OR IMPAIRMENT)
  • 地区一体化 (REGIONAL INTEGRATION)
  • 文书类别
    (Types)
  • 专家组报告 (Panel report)
  • 全文

    WORLD TRADE

    ORGANIZATION

    WT/DS34/R

    31 May 1999

    (99-2081)

    Original: English

    TURKEY - RESTRICTIONS ON IMPORTS OF

    TEXTILE AND CLOTHING PRODUCTS

    Report of the Panel

    The report of the Panel on Turkey - Restrictions on Imports of Textile and Clothing Products is being circulated to all Members, pursuant to the DSU. The report is being circulated as an unrestricted document from 31 May 1999, pursuant to the Procedures for the Circulation and Derestriction of WTO Documents (WT/L/160/Rev.1). Members are reminded that in accordance with the DSU only parties to the dispute may appeal a panel report. An appeal shall be limited to issues of law covered in the Panel report and legal interpretations developed by the Panel. There shall be no ex parte communications with the Panel or Appellate Body concerning matters under consideration by the Panel or Appellate Body.

    Note by the Secretariat: This Panel Report shall be adopted by the Dispute Settlement Body (DSB) within 60 days after the date of its circulation unless a party to the dispute decides to appeal or the DSB decides by consensus not to adopt the report. If the Panel Report is appealed to the Appellate Body, it shall not be considered for adoption by the DSB until after the completion of the appeal. Information on the current status of the Panel Report is available from the WTO Secretariat.

    TABLE OF CONTENTS

    I. INTRODUCTION 1

    II. FACTUAL ASPECTS 2

    A. REGIONAL TRADE AGREEMENTS IN THE GATT/WTO FRAMEWORK 2

    B. TURKEY'S TRADE RELATIONS WITH THE EUROPEAN COMMUNITIES 5

    1. Association between Turkey and the European Communities, and the GATT/WTO process 5

    2. Synopsis of recent developments in Turkey-EC trade 7

    C. QUANTITATIVE LIMITS IN RESPECT OF TURKEY'S IMPORTS OF CERTAIN TEXTILE AND CLOTHING PRODUCTS 9

    1. Historical background 9

    2. Recent background 10

    3. Quantitative limits imposed on certain Turkey's imports of textile and clothing products from India 11

    4. Statistical analysis of Turkey's imports of textile and clothing products under restraint 11

    (a) Imports of 61 textile and clothing product categories under restraint 11

    (b) Imports of the 19 textile and clothing product categories under restraint for India 12

    III. PRELIMINARY POINTS 14

    A. ISSUES 14

    B. PRECISION OF THE REQUEST FOR THE ESTABLISHMENT OF THE PANEL 15

    1. Arguments by the parties 15

    2. Arguments by third parties 19

    C. NON-PARTICIPATION OF THE EUROPEAN COMMUNITIES IN THE DISPUTE 20

    1. Arguments by the parties 20

    2. Arguments by third parties 23

    D. CONSULTATION STAGE OF THE DISPUTE SETTLEMENT PROCEDURE WITH RESPECT TO TRADE IN TEXTILE AND CLOTHING PRODUCTS 24

    1. Arguments by the parties 24

    2. Arguments by third parties 26

    IV. ADDITIONAL INFORMATION 26

    V. CLAIMS OF THE PARTIES 30

    VI. MAIN ARGUMENTS BY THE PARTIES 31

    A. INTRODUCTORY POINTS 31

    1. Consultations 31

    2. Offers to settle 33

    B. LEGAL ARGUMENTS 34

    1. Burden of Proof 34

    2. Articles XI:1 and XIII of GATT 35

    3. Article 2 of the ATC 35

    4. Article XXIV of GATT 36

    (a) Relationship between Article XXIV and other GATT provisions 36

    (b) Article XXIV:5(a) 40

    (c) Article XXIV:8(a) 47

    (i) Relationship between Article XXIV:8(a)(ii) and other Article XXIV provisions 47

    (ii) Relationship between Article XXIV:8(a)(ii) of GATT and Article 2.4 of the ATC 49

    (iii) Differences between the formation of a customs union and the enlargement of an already existing one 51

    (iv) Scope of harmonization of the external trade regime in the Turkey-EC regional trade agreement 52

    (v) Other options available 53

    (d) Turkey-EC regional trade agreements in the framework of Article XXIV 56

    (i) Compatibility with Article XXIV provisions 56

    (ii) Type of agreement under Article XXIV 58

    5. Nullification or Impairment 61

    (a) Trade aspects 61

    (b) Arguments 63

    VII. SUMMARY OF ARGUMENTS PRESENTED BY THIRD PARTIES 70

    A. HONG KONG, CHINA 70

    1. General 70

    2. Article 2 of the ATC and Articles XI and XIII of GATT 71

    3. Article XXIV of GATT 72

    4. Alternative solutions and conclusions 73

    B JAPAN 74

    1. General 74

    2. Arguments 74

    C. THE PHILIPPINES 75

    1. General 75

    2. Articles XI and XIII of GATT and Article 2 of the ATC 76

    3. Article XXIV of GATT 77

    (a) Customs unions in context 77

    (b) Article XXIV:4 78

    (c) Article XXIV:5 78

    (d) Article XXIV:8 80

    4. Conclusions 86

    D. THAILAND 86

    1. Arguments 86

    2. Conclusions 93

    E. UNITED STATES 93

    F. COMMENTS BY THE PARTIES 97

    VIII. INTERIM REVIEW 97

    IX. FINDINGS 99

    A. PRELIMINARY RULINGS RECALLED 99

    1. Article 6.2 of the DSU 100

    2. Necessity of Participation of the European Communities 100

    3. The Need to Exhaust TMB Procedures 103

    4. Inadequacy of the Consultations 104

    B. MAIN CLAIMS OF THE PARTIES 106

    C. MEASURES AT ISSUE 107

    1. Identification of the Measures at Issue 107

    2. Attribution to Turkey of the Measures at Issue 108

    3. Conclusion 111

    D. SCOPE OF THE DISPUTE 112

    E. BURDEN OF PROOF 114

    F. CLAIMS UNDER ARTICLES XI AND XIII OF GATT AND ARTICLE 2.4 OF THE ATC 115

    1. Articles XI and XIII of GATT 115

    2. Article 2.4 of the ATC 117

    (a) Regulatory framework of the ATC 117

    (b) Quantitative restrictions permitted under the ATC 118

    (c) The Turkish measures under the ATC - are these new measures? 119

    (d) Jurisdiction of the TMB versus that of the Panel 120

    3. Conclusions on India's claims under Articles XI and XIII of GATT, and Article 2.4 of the ATC 121

    G. TURKEY'S DEFENSE BASED ON ARTICLE XXIV OF GATT 122

    1. General Interpretative Principles 122

    (a) Vienna Convention on the Law of Treaties 122

    (b) WTO rules on conflicts 123

    (c) Principle of effective interpretation 124

    2. Overview of Article XXIV of GATT 125

    3. Article XXIV:5(a) 127

    (a) Arguments of the parties 127

    (b) Analysis of Article XXIV:5(a) 129

    (i) Ordinary meaning of the terms of Article XXIV:5(a) 129

    (ii) The immediate context of Article XXIV:5(a) 131

    (iii) Conclusion based on the ordinary meaning of the terms and their immediate context 133

    4. Article XXIV:8 133

    (a) Arguments of the parties 133

    (b) Analysis of Article XXIV:8(a) 134

    (i) The terms of paragraph 8(a) 134

    (ii) Immediate context 138

    (iii) Conclusion 138

    (c) The wider context of Article XXIV:5 and 8 and the object and purpose of the agreements 138

    (d) GATT/WTO practice 140

    (e) Temporary nature of the Turkish quantitative restrictions 142

    (f) The absence of recommendations pursuant to Article XXIV:7 of GATT 142

    (g) Offer to negotiate 143

    (h) The requirements of the Turkey-EC Customs Union Agreement itself 143

    (i) Further considerations 144

    5. Conclusion 145

    H. THE ABSENCE OF NULLIFICATION AND IMPAIRMENT 147

    I. OUR MAIN FINDINGS RECALLED 150

    X. CONCLUSIONS 151

    ANNEX 152

    I. INTRODUCTION

    1.1 On 21 March 1996, India requested consultations with Turkey pursuant to Article 4.4 of the Understanding on Rules and Procedures Governing the Settlement of Disputes ("DSU") and Article XXIII:1 of the General Agreement on Tariffs and Trade 1994 ("GATT") regarding the unilateral imposition of quantitative restrictions ("QRs") by Turkey on imports of a broad range of textile and clothing products from India as from 1 January 1996 (WT/DS34/1).

    1.2 India and Turkey did not enter into consultations, due to disagreement on the appropriateness of participation of the European Communities in such consultations, and consequently the dispute could not be resolved at that stage. The Dispute Settlement Body ("DSB") was informed accordingly on 24 April 1996.1

    1.3 In a communication dated 2 February 1998, India requested the DSB to establish a panel to examine the matter in the light of GATT and the Agreement on Textiles and Clothing ("ATC"), in accordance with Article 6.2 of the DSU (WT/DS34/2). In its communication, India claimed that the restrictions imposed by Turkey were inconsistent with Turkey's obligations under Articles XI and XIII of GATT and were not justified by Article XXIV of GATT, which did not authorize the imposition of discriminatory QRs, and that the restrictions were inconsistent with Turkey's obligations under Article 2 of the ATC. India also claimed that the restrictions appeared to nullify or impair benefits accruing to it directly or indirectly under GATT and the ATC.

    1.4 On 13 March 1998, the DSB established a panel pursuant to the request of India, with the following standard terms of reference (Article 7.1 of the DSU):2

    "To examine, in the light of the relevant provisions of the covered agreements cited by India in document WT/DS34/2, the matter referred to the DSB by India in that document and to make such findings as will assist the DSB in making recommendations or in giving the rulings provided for in those agreements."

    1.5 On 11 June 1998, the parties to the dispute agreed on the following composition of the Panel (WT/DS34/3):

    Chairman: Ambassador Wade Armstrong

    Members: Dr. Luzius Wasescha

    Prof. Robert Hudec

    1.6 Following the resignation of Prof. Robert Hudec, the parties to the dispute agreed to appoint a new member to the Panel, on 21 July 1998. Accordingly, the composition of the Panel was as follows (WT/DS34/4):

    Chairman: Ambassador Wade Armstrong

    Members: Dr. Luzius Wasescha

    Mr. Johannes Human

    1.7 Hong Kong, China; Japan; the Philippines; Thailand; and the United States reserved their third-party rights in accordance with Article 10 of the DSU.

    1.8 On 14 August 1998, Turkey requested preliminary rulings by the Panel on a number of issues. On 28 August 1998, the Panel invited India, as well as the third parties, to present their views on the points raised by Turkey. India submitted written comments on the issues; Japan, the Philippines and the United States, as third parties, also submitted written communications. The Panel met on 19 September 1998 with Turkey and India on this matter, and issued its ruling on 25 September 1998.

    1.9 The Panel received the first written submissions from the parties on 21 August 1998 (India) and on 18 September 1998 (Turkey). Written submissions were also received from Hong Kong, China; Japan; the Philippines; and Thailand, as third parties.

    1.10 The first substantive meeting of the Panel with the parties took place on 5-6 October 1998 and the Panel met with third parties on 6 October 1998.

    1.11 On 28 October 1998, the Panel addressed a letter to the European Communities, seeking certain relevant factual and legal information under Article 13.2 of the DSU. The European Communities answered in writing the specific questions raised by the Panel on 13 November 1998.

    1.12 On 19 November 1998, the Panel received the second written submissions from the parties, with whom it met again on 25 November 1998.

    1.12 In a communication dated 20 January 1999, the Chairman of the Panel informed the DSB that the Panel would not be able to issue its report within six months. The reasons for that delay are stated in document WT/DS34/5.

    1.13 The Panel issued its interim report to the parties on 3 March 1999. On 12 March 1999, both parties submitted written requests for the Panel to review precise aspects of the interim report; no further meeting with the Panel was requested.

    1.14 The Panel submitted its final report to the parties on 26 March 1999.

    II. FACTUAL ASPECTS

    2.1 This section addresses the factual aspects of the dispute in a sequential order, in which the QRs at issue are described in paragraphs 2.39 to 2.41 below. In view of the nature of the dispute, this section outlines first the factual context in which the dispute is addressed.

    A. REGIONAL TRADE AGREEMENTS IN THE GATT/WTO FRAMEWORK

    2.2 The relationship between the most-favoured-nation ("MFN") principle and Article XXIV of the GATT, which deals with free-trade areas and customs unions, has not always been harmonious. In 1947, their coexistence in the framework of international trade relations had been viewed as ultimately positive, reflecting the perception that genuine customs unions and free-trade areas were congruent with the MFN principle and directed towards the same objective, i.e. multilaterally-agreed trade liberalization.3

    2.3 As a matter of fact, trade liberalization under the GATT paralleled a process of increasing economic integration among contracting parties: from 1948 to end-1994, 107 regional trade agreements ("RTAs") were notified to the GATT under Article XXIV.4

    2.4 Before 1957, the GATT contracting parties dealt with only three such agreements, covering a small fraction of their aggregate trade (see Figure II.1), on which compatibility with Article XXIV was temporarily waived and which were maintained under surveillance.5 Article XXIV provisions confronted their first real applicability test with the notification of the Treaty of Rome in 1957, which concerned the integration of major players in the international scene. From then on, the examination of RTAs notified to the GATT did not lead to clear-cut assessments of full consistency with the rules, except in one instance.6 Frictions between GATT contracting parties arising in the context of the formation of customs unions or free-trade areas were dealt with pragmatically.7

    2.5 The perception that RTAs could contribute to the expansion of world trade was reiterated during the Uruguay Round, when negotiators re-visited certain aspects of Article XXIV, in an endeavour to clarify some of its provisions.8

    Figure II.1 - Number of RTAs notified to the GATT/WTO under Article XXIV

    2.6 During the course of the Uruguay Round, there was an increase in the number of new RTAs notified to the GATT. The conclusion of the Round and the establishment of the WTO did not put to rest the appeal of regional integration. Since 1 January 1995, a further 60 new RTAs have been notified under Article XXIV of GATT, most of which are presently in force.9

    2.7 The WTO General Council established, on 6 February 1996, the Committee on Regional Trade Agreements ("CRTA"),10 with the mandate of, inter alia, examining all RTAs notified to the Council for Trade in Goods ("CTG") under Article XXIV.11 The CRTA is likewise entrusted with the examination of those RTAs notified under the 1979 Decision on Differential and More Favourable Treatment, Reciprocity and Fuller Participation of Developing Countries and under Article V of the General Agreement on Trade in Services ("GATS"),12 and referred to it by the Committee on Trade and Development ("CTD") and the Council for Trade in Services ("CTS"), respectively. The mandate of the CRTA also includes the consideration of "the systemic implications of [RTAs] and regional initiatives for the multilateral trading system and the relationship between them".13

    2.8 Later in 1996, the WTO Membership expressed its views on RTAs and the role of the CRTA in paragraph 7 of the Singapore Ministerial Declaration, as follows:

    "We note that trade relations of WTO Members are being increasingly influenced by regional trade agreements, which have expanded vastly in number, scope and coverage. Such initiatives can promote further liberalization and may assist least-developed, developing and transition economies in integrating into the international trading system. In this context, we note the importance of existing regional arrangements involving developing and least-developed countries. The expansion and extent of regional trade agreements make it important to analyse whether the system of WTO rights and obligations as it relates to regional trade agreements needs to be further clarified. We reaffirm the primacy of the multilateral trading system, which includes a framework for the development of regional trade agreements, and we renew our commitment to ensure that regional trade agreements are complementary to it and consistent with its rules. In this regard, we welcome the establishment and endorse the work of the new Committee on Regional Trade Agreements. We shall continue to work through progressive liberalization in the WTO as we are committed in the WTO Agreement and Decisions adopted at Marrakesh, and in so doing facilitate mutually supportive processes of global and regional trade liberalization."14

    2.9 The CRTA 1998 Report to the General Council is self-explanatory on the results so far achieved in its work.15 Paragraph 6 of the Report, with respect to the examination of the agreements, reads:

    "In 1998, the Committee endeavoured to accelerate the examination of agreements which had already commenced, as well as to handle new agreements referred to it. The Committee has currently under its purview a total of 62 RTAs. To date, the examination of 54 RTAs have been referred to the Committee by the CTG, seven by the CTS and one by the CTD. Draft reports on the examination of 28 agreements are currently under consideration; for 13 other agreements, reports are being drafted or factual examinations are well engaged, while the first round of examination for the remaining 21 RTAs is scheduled for either the Committee's twentieth session or early in 1999 & Thus far, no report has been adopted."

    As concluding remarks, paragraph 15 of the CRTA 1998 Report states as follows:

    "& Despite its heavy workload and delays in the submission of certain relevant material, the Committee also made progress in examining RTAs. The need to move forward in the process of examination pursuant to WTO rules was recognized; however, progress in this regard was slowed, inter alia, by a lack of consensus on the interpretation of certain elements of those rules relating to RTAs. On systemic issues, the Committee held discussions on some important topics and identified different approaches to these subjects; the need to move forward in the discussion of systemic issues was also recognized."

    B. TURKEY'S TRADE RELATIONS WITH THE EUROPEAN COMMUNITIES

    1. Association between Turkey and the European Communities, and the GATT/WTO process16

    2.10 On 12 September 1963, Turkey and the Council and member States of the then European Economic Community ("EEC") signed the Ankara Agreement,17 which entered into force on 1 December 1964. The Ankara Agreement formed the basis of the Association (in the sense of Article 228 of the Treaty of Rome) between Turkey and the European Communities envisaging that its objectives would be reached through a customs union which would be established in three progressive stages: preparatory, transitional and final. Article 28 of the Ankara Agreement also left open "the possibility of the accession" of Turkey to the EEC. The Ankara Agreement itself contained the modalities of the preparatory stage of the Association.

    2.11 The terms and conditions for the implementation of the transitional stage were defined in the 1970 Additional Protocol to the Ankara Agreement and in the 1971 Interim Agreement.18 The provisions of the Interim Agreement entered into force on 1 September 1971 and the Additional Protocol entered into force on 1 January 1973. These texts provided for an extended transitional period running over 22 years and foresaw the establishment of a customs union by the end of 1995. The Additional Protocol provided for an asymmetrical liberalization of intra-trade, because of the disparity in levels of development between the parties: the European Communities were to abolish all duties and QRs on imports of industrial products from Turkey as from September 1971, while Turkey was to do so over the transitional period, according to a timetable.19 The Protocol also contained provisions designed to ensure the alignment of Turkey on EC policies in many areas (commercial policy, standards, competition, state aids, trade in services, etc.).

    2.12 Supplementary Protocols to the Ankara Agreement (and Interim Agreement) were also concluded in 1973 between Turkey and the European Communities, containing adaptation and transition measures following the accession to the European Communities of Denmark, Ireland and the United Kingdom.20

    2.13 Starting in 1973, Turkey embarked in the gradual alignment of its customs duties to the EC Common Customs Tariff ("CCT"), as scheduled. The implementation of Turkey's obligations arising out of its Association with the European Communities was interrupted during a number of years, due inter alia to the crisis in which the Turkish economy was engulfed following the oil shocks of 1973 and 1979. In 1987, when Turkey requested accession to the European Communities, completion of the customs union was seen as part of a package of measures designed to help Turkey prepare for membership. In 1988, Turkey resumed the reduction of its customs duties and alignment on the CCT.

    2.14 The Ankara Agreement and the subsequent instruments concluded in the context of the Association between Turkey and the European Communities during the 1970s were notified to the GATT Contracting Parties under Article XXIV:7 of GATT 1947. The GATT entrusted three separate working parties with the task of examining the different agreements in light of those provisions. Reports of these working parties were adopted by the GATT Council:

    (i)Report of the Working Party on the Ankara Agreement, adopted on 25 March 1965 (BISD 13S/59-64);

    (ii)Report of the Working Party on the Additional Protocol, adopted on 25 October 1972 (BISD 19S/102-109); and

    (iii)Report of the Working Party on the Supplementary Protocols, adopted on 21 October 1974 (BISD 21S/108-112).

    2.15 As agreed at a meeting of the Turkey-EC Association Council ("Association Council") held in November 1992,21 negotiations were initiated between the two parties on the modalities for the completion of the customs union, i.e. for the final phase of the Association. These negotiations were conducted from 1993 to 1995.

    2.16 On 6 March 1995, the Association Council took Decision 1/95, to enter into force on 1 January 1996.22 Decision 1/95 set out the modalities for the final phase of the Association between Turkey and the European Communities. In addition to the elimination of customs duties and alignment on the CCT, it contained provisions for the harmonisation of Turkey's policies and practices in all areas covered by the Association where this was deemed necessary "for the proper functioning of the Customs Union". In accordance with Article 65 of Decision 1/95 the parties were to consider, before entry into force, whether those harmonisation provisions (in particular those contained in Article 12) had been fulfilled. Once this requirement was considered satisfied, at a meeting of the Association Council on 30 October 1995, Decision 1/95 was submitted to the European Parliament for its approval and subsequently formally adopted by the Association Council on 22 December 1995. On 22 December 1995, the Association Council also adopted Decision 2/95, in pursuance of Article 15 of Decision 1/95. Decision 2/95 defined the coverage of products for temporary exception from Turkey's application of the CCT in respect of third countries, and fixed the timetable for their alignment to the CCT (from 1 January 1996 to 1 January 2001).

    2.17 The entry into force of "the final phase of the Customs Union" between Turkey and the European Communities was notified to the WTO on 22 December 1995, under Article XXIV of GATT.23 The texts of Decision 1/95 and Decision 2/95 were distributed to Members on 13 February 1996.24 On 29 January 1996, the CTG adopted standard terms of reference for the examination of the "Customs Union between Turkey and the European Community"25 ("Turkey-EC customs union"), and referred such examination to the CRTA.26

    2.18 Turkey and the European Coal and Steel Community ("ECSC") signed an Agreement on 25 July 1996, which entered into force on 1 August 1996.27 In their joint communication to the WTO, the parties stated that the Agreement was "intended as the complement to the Customs Union in respect of products covered by the European Coal and Steel Community and as a transitional arrangement in respect of such products until & the year 2002".28

    2.19 On 30 October 1996, Turkey and the European Communities submitted preliminary information to the WTO on "the final phase of the Customs Union", in accordance with the Standard Format for Information on Regional Trade Agreements.29 In a joint communication dated 24 November 1997,30 Turkey and the European Communities provided, "[t]o assist Members in the examination of the Customs Union, & details of the quantitative limits applied by Turkey in respect of imports of certain textile and clothing products from certain WTO Members", including the levels of such quantitative limits for 1997.31 The CRTA met twice to examine, in the light of the relevant provisions of GATT, the Turkey-EC customs union: on 23 October 1996 and on 1 October 1997.32 Additional written questions from Members were also replied to by the parties.33 To date, the CRTA has not yet finalized its examination.

    2.20 Turkey and the European Communities transmitted copies of their communications to the CRTA, in relation to the quantitative limits applied by Turkey, and to the Textiles Monitoring Body ("TMB"), for information pursuant to Article 3.3 of the ATC.34 The TMB took note of the information supplied at its meetings held on 11-12 December 1997. and 26-27 May 1998.35 To date Turkey has notified to the TMB its lists for the first and second stage of integration and advance integration for a product which will be subject to the third stage of integration.36

    2. Synopsis of recent developments in Turkey-EC trade37

    2.21 The European Communities38 has traditionally constituted the major single market for Turkish goods and Turkey's major supplier, accounting for around 50 per cent of both Turkey's exports and imports. Exports to the European Communities in 1996 and 1997 expanded at a slower rate than those destined to the rest of the world. Imports from the European Communities increased 37 per cent in 1996 but rose by only 7 per cent in the next year; by contrast, Turkey's imports from the rest of the world grew 9 per cent in 1996 and by 16 per cent in 1997. (See Figure II.2.)

    2.22 In 1997, Turkey's total exports, by broad product categories,39 were comprised of agricultural products (17 per cent), textiles (10 percent), clothing (27 per cent) and other industrial products (45 per cent). At a more detailed level, main export groups included: edible fruits and nuts (5 per cent), iron and steel (8 per cent) and electrical machinery and equipment (6 per cent). As much as 95 per cent of Turkish total imports in 1997 were made up of industrial products, including 7 per cent accounted for by imports of textiles and clothing. Major sub-groups among the imported industrial products included: fuels, machinery and chemicals.

    Figure II.2 - Turkey's total exports and imports from the European Communities

    and the rest of the world, 1994-1997

    2.23 By broad product categories, the evolution of Turkey's exports to the European Communities during the period 1994-1997 showed some distinct features, when compared to the corresponding developments in Turkey's exports to non-EC countries. For agricultural products, exports to non-EC countries tended to increase (albeit moderately) over practically the whole period, while exports to the European Communities showed increases only in 1995 and 1997. For textiles and clothing, the growth of exports to the European Communities was steady during the period; exports of these products to non-EC countries rose in 1995 and, after virtually stagnating in 1996, increased again in 1997. Exports of other industrial products to the European Communities, after a sharp increase in 1995, slowed down considerably, while those to non-EC countries were steadily up throughout the period, to a level in 1997 46 per cent higher than in 1994. (See Table II.1.)

    Table II.1: Turkey's exports to the European Communities and to other countries, by broad product categories, 1994-1997

    Exports to the EC

    Exports to other countries

    1994

    1995

    1996

    1997

    1994

    1995

    1996

    1997

    ($ million)

    ($ million)

    Agricultural products

    1,572

    1,841

    1,729

    1,901

    2,060

    2,132

    2,284

    2,643

    Textiles and clothing

    4,150

    5,353

    5,665

    5,933

    2,285

    2,967

    3,031

    3,886

    Other industrial products

    2,913

    3,885

    4,154

    4,413

    5,126

    5,460

    6,360

    7,468

    Total exports

    8,634

    11,078

    11,549

    12,248

    9,471

    10,558

    11,676

    13,997

    (Percentages)

    (Percentages)

    Share of "textiles and clothing" in total exports

    48.1

    48.3

    49.1

    48.4

    24.1

    28.1

    26.0

    27.7

    Source: Government of Turkey.

    2.24 By broad product categories, imports into Turkey of agricultural products from the European Communities declined in both 1996 and 1997, while those from other countries continued to grow, albeit at a slower pace. Imports of textiles and clothing from the European Communities more than trebled between 1994 and 1997; those from other countries recovered from the decline in 1996, to reach in 1997 a level 75 per cent higher than in 1994. (See Table II.2.)

    Table II.2: Turkey's imports from the European Communities and from other countries, by broad product categories, 1994-1997

    Imports from the EC

    Imports from other countries

    1994

    1995

    1996

    1997

    1994

    1995

    1996

    1997

    ($ million)

    ($ million)

    Agricultural products

    457

    1,031

    959

    755

    810

    1,591

    1,903

    1,809

    Textiles and clothing

    501

    828

    1,392

    1,617

    1,136

    1,853

    1,590

    1,994

    Other industrial products

    10,172

    15,216

    21,002

    22,713

    10,409

    15,403

    16,995

    19,912

    Total imports

    10,915

    16,861

    23,138

    24,870

    12,355

    18,847

    20,489

    23,715

    (Percentages)

    (Percentages)

    Share of "textiles and clothing" in total imports

    4.6

    4.9

    6.0

    6.5

    9.2

    9.8

    7.8

    8.4

    Source: Government of Turkey.

    C. QUANTITATIVE LIMITS IN RESPECT OF TURKEY'S IMPORTS OF CERTAIN TEXTILE AND CLOTHING PRODUCTS

    1. Historical background

    2.25 The gradual removal of QRs in major developed countries during the 1950s, in the wake of general liberalization efforts pursued in the GATT, brought about substantial increases in textiles and clothing imports into major developed countries originating in low-cost countries. To alleviate the difficulties caused to their producers, some importing countries convinced exporters of cotton textiles to conclude voluntary export restraint agreements. In an attempt to find a multilateral solution to the problem, in 1960 the GATT CONTRACTING PARTIES recognized the phenomenon of market disruption, thus setting the ground for selective safeguard action in the area of textile and clothing products (as a departure from the requirements of Article XIX of GATT 1947).

    2.26 Thereafter, discriminatory restraints took the form of the 1961 Short-Term Arrangement Regarding International Trade in Cotton Textiles, followed in 1962 by the Long-Term Cotton Textiles Arrangement (1962-1973). The Arrangement Regarding International Trade in Textiles or Multifibre Arrangement ("MFA") entered into force in 1974, extending the coverage of the restrictions on textiles and clothing from cotton products, to include wool and man-made fibre products (and, from 1986, certain vegetable fibre products).40

    2.27 During its 21 years of existence, from 1974 to 1994, the MFA underwent numerous operational changes and adaptations. The restraints under the MFA developed into a complex network of restrictions, bilaterally negotiated (or imposed in the case of unilateral actions) at short intervals, often every year or so. In the last year of its existence, the MFA had 44 participants, six of which (Canada, Norway, the United States and the European Communities, plus Austria and Finland,) applied restraints. Such restraints were used almost exclusively to protect their markets against imports of textiles and clothing from developing countries and, to a lesser extent, from former state-trading countries, also MFA members.

    2.28 After more than three decades of special and increasingly complicated regimes governing international trade in textile and clothing products, seven years of negotiations during the Uruguay Round resulted in the ATC. Through the transitional process embodied in the ATC, by 1 January 2005 the extensive and complex system of bilateral restraints will come to an end and importing countries will no longer be able to discriminate between exporters in applying safeguard measures.

    2.29 Turkey became a member of the MFA, as an exporting country, in 1981. Since 1979, Turkish textile and clothing products were subjected to restraints in the EC market under the provisions of Article 60 of the Additional Protocol to the Ankara Agreement.41

    2.30 On 31 December 1994, one day before the ATC came into force, Turkey did not maintain QRs on imports of textile and clothing products. Its exports of certain textile and clothing products were at that time under restraint in the European Communities and other countries' markets under the MFA.

    2. Recent background

    2.31 In accordance with Article 13 of Decision 1/95, as of 1 January 1996, the customs duties applied by Turkey to the industrial goods imported from third countries were harmonized with the CCT and the previous Mass Housing Fund levy of some 20 per cent, collected from industrial goods, was abolished. With respect to imports of textile and clothing products, the MFN tariffs applied by Turkey were thereby reduced from roughly 10 per cent for textiles and 14 per cent for clothing in 1994 (plus the Mass Housing Fund levy) to 9 per cent in 1996.42

    2.32 Decision 1/95 included specific provisions with respect to trade in textiles and clothing, in particular in Article 12, supplemented by related statements by both parties. Such provisions called for Turkey's adoption of the relevant EC regulations concerning imports of textiles and clothing, in particular Council Regulation 3030/93, which provided for the bilateral agreements with supplier countries to be implemented by a set of EC quantitative limits on certain imports and for a system of import surveillance.

    2.33 Two Decrees issued by Turkey's Council of Ministers laid down the basis for the alignment of Turkish commercial policy in textiles and clothing to that of the European Communities: Decree No. 95/6815 on Surveillance and Safeguard Measures for Imports of Certain Textiles Products, with respect to products from countries with which Turkey concluded bilateral agreements, and Decree No. 95/6816, concerning the Surveillance and Safeguard Measures for Imports of Textile Products Originating in Certain Countries not Covered by Bilateral Agreements, Protocols and other Arrangements, both of which were dated 30 April 1995 and published in the Turkish Official Gazette on 1 June 1995. Both Decrees were published with the respective Regulations for their application, under the authority of the Under-Secretariat for Foreign Trade, the Turkish responsible body for determination and calculation of the quota levels on imports of textile and clothing products.

    2.34 Early in 1995, in its endeavour to complete Decision 1/95 requirements for the "completion of the Customs Union", Turkey sent proposals to the relevant countries (i.e. those whose imports of textiles and clothing were under restraint in the EC market), including India, to reach agreements for the management and distribution of quotas under a double checking system. A standard formula was proposed for calculating the levels of QRs on textile and clothing products to be introduced by Turkey vis-?vis all third countries concerned.

    2.35 On 31 July 1995, Turkey forwarded to the Indian authorities a draft Memorandum of Understanding on trade in the categories of textile and clothing products on which Turkey intended to introduce QRs. India was invited to enter into negotiations with Turkey, with the participation of the European Communities, to conclude, prior to the completion of the Customs Union, an arrangement covering trade in those products which would be similar to the one already existing between India and the European Communities. India maintained that the intended restrictions were in contravention of Turkey's multilateral obligations and declined to enter into discussions on the conditions proposed by Turkey.

    2.36 Agreements providing for restraints similar to those of the European Communities were negotiated by Turkey with 24 countries (WTO Members and non-Members). As provided for in Article 12 of Decision 1/95, the EC Commission cooperated with the Turkish authorities in the preparation of negotiating positions and generally participated in the negotiations themselves. As from 1 January 1996, unilateral restrictions or surveillance regimes were applied to imports originating in another 28 countries (WTO Members and non-Members), including India, with which Turkey could not reach agreement. These restrictions only affected products whose export to the European Communities was also under restraint.

    2.37 The quantitative limits established by Turkey for 1996 were allocated on a quarterly basis, through Communiqu閟 published in the Official Gazette on 19 December 1995, 13 March, 13 June and 25 September 1996. Quantitative limits for 1997 were allocated on a half-year basis, through Communiqu閟 published in the Official Gazette on 7 December 1996 and 12 June 1997. Quantitative limits for the year 1998 were allocated through a Communiqu?published in the Official Gazette on 18 December 1997.

    3. Quantitative limits imposed on certain Turkey's imports of textile and clothing products from India

    2.38 Turkey applies QRs, as of 1 January 1996, on imports from India of 19 categories of textile and clothing products. (See the Annex to this report, Appendix 1, for a list of the categories and description of products.)

    2.39 In the case of India, the formula used by Turkey to fix the level of the QRs corresponded to either (i) the arithmetical average of imports into Turkey from India for the category of products during the period 1992-1994; or (ii) an amount based on total EC imports for the category of products in question multiplied by the percentage of the basket exit threshold laid down in the bilateral agreement between the European Communities and India in force in 1994, multiplied by the percentage share of Turkish GDP in EC-15 total GDP (i.e. 2.5 per cent), whichever was the higher. To this amount the corresponding growth rates in force in quota years 1994 and 1995 had been added to arrive at a level for 1996. The specific criteria retained for the calculation of the quantitative limits on imports of textile and clothing products into Turkey from India were as follows:

    (i) average of Turkish imports in 1992-1994, for calculations on product categories 1, 2, 2a, 3a, and 23; and

    (ii) option based on GDP, for calculations on product categories 6, 9, 20, 24 and 29 (because there were no imports into Turkey during 1992-1994); and on product categories 3, 4, 5, 7, 8, 15, 26, 27 and 39 (because its outcome was higher than the alternative calculation based on imports).

    2.40 Actual quantitative limits established for 1996-1998 on textile and clothing products imported from India can be found in the Annex to this report, Appendix 2.

    4. Statistical analysis of Turkey's imports of textile and clothing products under restraint

    (a) Imports of 61 textile and clothing product categories under restraint

    2.41 Table II.3 below is based on (i) information provided to the CRTA on the QRs applied by Turkey on imports of certain textile and clothing products from 25 WTO Members (WT/REG22/7) and (ii) import statistics made available by Turkey to the Panel. The data shown below therefore correspond to imports into Turkey of textile and clothing products in the 61 categories identified in the Annex to the document cited under (i) above as being restricted by Turkey for at least one WTO Member in 1997.43 The statistics in Table II.3 distinguish imports into Turkey from the EC-15 and those originating in other countries (including India).

    Table II.3: Turkey's imports of 61 textile and clothing product categories under restraint, from the EC-15 and other countries, 1994-1997

    Origin

    Import values

    Shares

    1994

    1995

    1996

    1997

    1994

    1995

    1996

    1997

    ($ million)

    (Percentages)

    EC-15

    181

    326

    646

    747

    25

    25

    45

    47

    Other countries

    556

    960

    802

    853

    75

    75

    55

    53

    Imports from all origins

    736

    1,286

    1,448

    1,600

    100

    100

    100

    100

    Source: WT/REG22/7 and Government of Turkey.

    2.42 For the 61 categories of textiles and clothing under restraint, Turkey's imports from all non-EC countries (including India) accounted for 4.5 and 5 per cent of its total imports from those countries in 1994 and 1995, respectively, (i.e. prior to the introduction of the restraints) and for less than 4 per cent of the corresponding totals in 1996 and 1997. The share of imports of those same product categories in Turkey's total imports from the EC-15 increased from 1.7 per cent in 1994 to 3 per cent in 1997.44

    (b) Imports of the 19 textile and clothing product categories under restraint for India

    2.43 Statistics provided by India show that the value of its exports to Turkey of the 19 product categories under restriction dropped in 1996 and continued to decline in the following year, albeit less markedly; in 1995, exports under those categories had virtually trebled over their level in 1994. Such fluctuations were mainly due to variations in exports of restricted textile products to Turkey. A different behaviour is observed in India's exports to Turkey of other - unrestricted - products during the period 1994-1997: their share in India's total exports of textiles and clothing to Turkey has increased throughout the period, from 32 per cent in 1994 to 87 per cent in 1997. (See Table II.4, and more detailed statistics in the Annex to this report, Appendix 3a.)

    Table II.4: India's exports of textiles and clothing to Turkey, 1994-1997

    Export values

    Annual change

    1994

    1995

    1996

    1997

    95/94

    96/95

    97/96

    ($ thousand)

    (Percentages)

    Textiles Restricted products

    13,960

    41,840

    21,700

    19,570

    200

    -48

    -10

    Clothing Restricted products

    252

    396

    104

    297

    57

    -74

    186

    Textiles and clothing All products

    20,842

    94,636

    69,022

    147,271

    354

    -27

    113

    Restricted products

    14,212

    42,236

    21,804

    19,867

    197

    -48

    -9

    Other products

    6,630

    52,400

    47,218

    127,404

    690

    -10

    170

    Source: Government of India.

    2.44 Data derived from trade statistics supplied by Turkey on its imports from India of the restricted 19 product categories in 1994 to 1997 differ in magnitude or movement from those provided by India.45 Nevertheless, they point at similar overall trends, both with respect to imports of product categories under restraint and with respect to imports of other textile and clothing products. (See Table II.5, and more detailed statistics in the Annex to this report, Appendix 3b.)

    Table II.5: Turkey's imports of textiles and clothing from India, 1994-1997

    Import values

    Annual change

    1994

    1995

    1996

    1997

    95/94

    96/95

    97/96

    ($ thousand)

    (Percentages)

    Textiles Restricted products

    12,949

    45,530

    31,651

    30,528

    252

    -30

    -4

    Clothing Restricted products

    133

    153

    352

    131

    15

    130

    -63

    Textiles and clothing All products

    32,457

    104,678

    93,992

    137,343

    223

    -10

    46

    Restricted products

    13,082

    45,683

    32,003

    30,659

    249

    -30

    -4

    Other products

    19,375

    58,995

    61,989

    106,684

    204

    5

    72

    Source: Government of Turkey.

    2.45 In Table II.6, based on Turkish statistics, Turkey's imports of the 19 product categories under restraint for India and of other textile and clothing products are broken down by selected origins, for the 1994-1997 period. Imports from all origins into Turkey of the 19 product categories under restraint for India accounted in both 1994 and 1995 for 24 per cent of Turkey's total imports of textiles and clothing, this share declining to 19 per cent in 1997.

    2.46 Turkey's imports of the 19 categories of textiles and clothing under restraint for India from all non-EC countries (including India) accounted for less than 3 per cent of Turkey's imports of all products (including textiles and clothing) from those countries in both 1994 and 1995, and for less than 2 per cent of the corresponding totals in 1996 and 1997. The share of imports of the same 19 product categories in Turkey's imports of all products (including textiles and clothing) from the EC-15 doubled from 0.5 per cent in 1994 to 1.1 per cent in 1997.46

    Table II.6: Turkey's imports of the 19 textile and clothing product categories under restraint for India, by selected origins, 1994-1997

    Origin

    Import values

    Shares

    1994

    1995

    1996

    1997

    1994

    1995

    1996

    1997

    ($ million)

    (Percentages)

    EC-15

    56

    101

    237

    280

    14

    16

    37

    41

    Other countries

    336

    548

    400

    406

    86

    84

    63

    59

    of which: India

    13

    46

    32

    31

    3

    7

    5

    5

    Imports from all origins

    392

    649

    637

    686

    100

    100

    100

    100

    Source: Government of Turkey.

    III. PRELIMINARY POINTS47

    A. ISSUES

    3.1 Following the establishment and composition of the Panel, Turkey submitted on 14 August 1998 that some points needed to be addressed by the Panel ahead of any examination of the substance of the complaint brought by India. Turkey claimed that:

    (i)the request for the establishment of the panel was insufficiently precise in terms of the measures at issue and the product coverage of such measures; by omitting to make clear reference to the measures complained of and their precise product coverage, India had frustrated Turkey's rights of defense;

    (ii)the failure by India to direct the complaint to the European Communities as well as Turkey, because the measures at issue stemmed from the Turkey-EC customs union, meant that the complaint should necessarily fail; and

    (iii)rules concerning the consultation stage of the dispute settlement procedure with respect to trade in textile and clothing products had not been followed by India.

    3.2 In the view of Turkey, the Panel should make a preliminary ruling on these points, rejecting India's complaint.

    3.3 India requested the Panel to rule that Turkey's request for preliminary rulings had factually and legally no basis, on the grounds that:

    (i)the identification of the measures at issue (the restrictions Turkey imposed on textile and clothing products from India as from 1 January 1996, the date when Turkey began to align its restrictions to those of the European Communities) was sufficiently specific to enable Turkey to prepare its defense and the Panel to resolve the dispute;

    (ii)it was not possible to bring a complaint against the European Communities with respect to the measures at issue, since these had not been taken by the European Communities nor were they legally attributable to the European Communities because the territorial scope of its obligations under the WTO Agreement did not extend to the customs territory of Turkey. Also, in the absence of a provision for a co-respondent status in the DSU, the European Communities's participation in the proceedings would not, by itself, oblige it to abide by the Panel's ruling and agree to a modification of the common EC-Turkey regime governing restrictions on imports of textile and clothing products from third countries; and

    (iii)the special dispute settlement procedures of the ATC did not apply to all restrictions imposed on textile and clothing products but only to those for which the provisions of the ATC were invoked. Since Turkey had notified the TMB that its restrictions were not imposed under the provisions of the ATC but in accordance with Article XXIV of the GATT, the normal dispute settlement procedures applied to the restrictions at issue. The TMB, established for the sole purpose of supervising the implementation of the ATC, was obviously not the proper forum for the resolution of a dispute on the relationship between Article XXIV of GATT and the general prohibitions of new textile and clothing restrictions set out in Article XI of GATT and Article 2.4 of the ATC.

    3.4 India also noted that procedural arguments made by Turkey could not be divorced from the facts and substantive arguments Turkey would present to the Panel. For instance, to rule on Turkey's request the Panel would need to know whether Turkey presented any product-specific arguments, whether the measures at issue were taken by the European Communities or Turkey and which provisions of the GATT and/or the ATC Turkey invoked to justify its restrictions. India therefore stated its preference for the Panel to address the procedural points raised by Turkey after its substantive arguments were presented and an opportunity given to India to rebut those arguments.

    3.5 Japan, the Philippines and the United States, as third parties, also submitted their views in this respect Both Japan and the United States considered that, in the absence of any standard working procedures for preliminary rulings, the procedural and organisational issues raised by Turkey should be disposed of by the Panel in limine litis, so that India would have an opportunity to address defects, if any, before the conclusion of the work of the Panel. The Philippines argued that the Panel should not consider Turkey's request for preliminary rulings because (i) the request was an ex parte communication in the sense of Article 18.1 of the DSU, not being required nor contemplated in the Panel's working procedures; (ii) the Panel's findings on the issues of law and fact involved in the request could deprive India and the third parties of their rights under procedural due process; and (iii) the issues raised in the request were inextricably linked with the substance of India's complaint and could not be resolved separately.

    B. PRECISION OF THE REQUEST FOR THE ESTABLISHMENT OF THE PANEL

    1. Arguments by the parties

    3.6 Turkey submitted that it was incumbent upon the Panel to examine the request for its establishment to ensure its compliance with both the letter and the spirit of Article 6.2 of the DSU. It was important that a panel request be sufficiently precise because (i) it often formed the basis of the terms of reference of the panel pursuant to Article 7 of the DSU, and (ii) it informed the defending party and the third parties of the scope and the legal basis of the complaint.48 Since the jurisdiction of a panel was established on its terms of reference, by which it was bound,49 no uncertainty with regard to their scope was permissible, since any such uncertainty would be tantamount to a basic uncertainty concerning the scope of the jurisdiction of that panel.

    3.7 Turkey also considered that, as noted by the Appellate Body in the EC - Regime for the Importation, Sale and Distribution of Bananas case,50 such a fundamental issue concerning the scope of the panel jurisdiction could be decided early in the panel procedure without unfairness to any party or third party, but Turkey did not believe that for this purpose detailed panel working procedures needed to be first established, since panels had regularly addressed preliminary issues of this kind in limine litis.51

    3.8 Turkey recalled that Article 6.2 of the DSU required a request for the establishment of a panel to identify "the specific measures at issue". In its request submitted in the present case, India merely referred to "the unilateral imposition of QRs by Turkey on imports of a broad range of textile and clothing products from India as from 1 January 1996",52 which Turkey considered a clearly insufficient description of the "specific measures at issue". In particular, the measures complained of were not specified by reference to the place of publication, by a clear indication of the date of adoption or promulgation, the issuing authority and the type of measure, nor by a reference to their precise product coverage. In Turkey's view, such a lack of precision was contrary to the letter and the spirit of Article 6.2 of the DSU. The basic right of defense, or due process implicit in the DSU would be impaired if the identification of the specific measures complained of were not clear, so that the party with the better guess would prevail. It was fundamental for a fair process that the party that had allegedly committed a breach of its obligations be fully aware of the case held against it. Turkey considered that, this could only be achieved, in the circumstances of the present case, by a clear reference to the measures complained of and their exact product coverage.

    3.9 India pointed out that Turkey could not claim that it was not adequately informed about the scope of the dispute at the beginning of the panel proceedings. The domestic legal basis and product coverage of Turkey's measures could not have escaped the notice of its own authorities since Turkey had itself notified all details to the WTO. Furthermore, India raised the matter of the restrictions imposed by Turkey on a number of separate occasions.53 On none of these occasions did Turkey indicate that the description of the measure left any uncertainty regarding the scope of the dispute. On the contrary, Turkey made it clear that it was fully aware of the product coverage when it stated before the DSB that "& with regard to Turkey's textile quotas & none of the textiles and clothing categories which were subject to QRs had been fully utilised by any exporting country. In the case of India, textile and clothing quotas had been underutilised in both 1996 and 1997".54 All Members, including Turkey, were thus fully informed of the facts on which Turkey now claimed ignorance.

    3.10 India noted further that one of the purposes of the requirement of prior consultations (Articles XXII and XXIII of GATT and Article 4 of the DSU) was to ensure that Members conducted a detailed exchange of facts and views before resorting to the panel procedure. During consultations the respondent had the opportunity to seek clarifications regarding the scope of the complaint. India recalled in this context that Turkey had refused to consult with India altogether without the presence of the European Communities, although, in India's view, it would have been free to raise in the consultations the issue of European Communities's participation in the proceedings. To buttress its present claims, Turkey had invoked the principle of due process, recognized by the Appellate Body as inherent in the DSU.55 However, India failed to see how could it be consistent with the principle of due process if a Member were permitted to first refuse to hold consultations and then claim ignorance on matters that could have been clarified in those consultations. India therefore considered Turkey's claim that it was insufficiently informed by India about the scope of the dispute as a case of venire contra factum proprium which should, for that reason alone, be rejected by the Panel.

    3.11 India also submitted that its request for the establishment of a panel stated that the measures at issue were the "QRs [imposed unilaterally] by Turkey on imports of a broad range of textile and clothing products from India as from 1 January 1996",56 thus clearly identifying the specific measures at issue. It noted that Turkey was aware of the details of the quantitative limits imposed by it, since these were notified jointly by the European Communities and Turkey to the CRTA and a copy of this notification was also sent to the Chairman of the TMB. There could be no uncertainty for the Turkish authorities regarding such details as the product coverage of these restrictions, the place of publication, the date of adoption or promulgation, the issuing authority or the type of measure. The identification of the specific measures at issue in India's request for a panel, therefore, did not require Turkey to engage in conjectures as to the scope of the dispute.

    3.12 India submitted further that its complaint was directed against Turkey's restrictive regime for textile and clothing products from India agreed with the European Communities. The dispute between Turkey and India concerned one narrow legal issue, namely, whether Article XXIV of GATT, the only provision invoked by Turkey to justify its restrictions, permitted Turkey to impose new restrictions on imports of textile and clothing products from India that were inconsistent with the provisions of Article XI:1 of GATT and Article 2.4 of the ATC. The manner in which India had identified the measures at issue fully enabled Turkey to prepare its defense on this dispute and the Panel to rule on it. India considered that the identification of the measures at issue was, therefore, sufficiently precise for the purposes of Article 6.2 of the DSU.

    3.13 Turkey recalled the findings of the panel on EEC - QRs against Imports of Certain Products from Hong Kong, which included the following:

    "The Panel considered that just as the terms of reference must be agreed between the parties prior to the commencement of the Panel's examination, similarly the product coverage must be clearly understood and agreed between the parties to the dispute. The Panel considered that to allow the inclusion of an additional product item about which one party had not been formally advised prior to the commencement of the proceedings would be to introduce an element of inequity" (emphasis added).57

    3.14 Turkey noted that, since under the DSU the parties to the dispute needed no longer to agree on the establishment of a panel, it was all the more important that the parties and the third parties be in the clear about the precise scope of the dispute, as the Appellate Body found in the EC - Bananas III case.58 It also noted that, in the EC - Customs Classification of Certain Computer Equipment case, the Appellate Body, taking into account such clear logical and legal necessities, stated that "it may also be necessary to identify the products subject to the measures in dispute",59 in this case rejecting the claim by the European Communities that the United States had violated Article 6.2 of the DSU on the basis that "the complaining parties may have identified [the products at issue] by broader grouping, but not spelled out in sufficient detail".60

    3.15 Turning to the present case, Turkey recalled that, in its request for the establishment of a panel, India had not even indicated a broader grouping of products, but limited itself to a generic reference to "a broad range of textile and clothing products". In Turkey's view, if such generic reference would be deemed to be sufficient to comply with Article 6.2 of the DSU, the word "specifically" in that provision would be inevitably reduced to redundancy or inutility, thus breaching a fundamental principle of interpretation of international public law.61

    3.16 India responded that Article 6.2 of the DSU did not prescribe the manner in which the specific measures at issue were to be identified. Turkey's interpretation was supported neither by GATT/WTO practice nor by Appellate Body rulings. In most requests for the establishment of a panel made under the GATT and the WTO Agreement, the measures at issue were not identified by date and place of publication nor was the product coverage indicated with precision. The WTO EC - Bananas III case, cited by Turkey in support of its position, was no exception. Close to 100 different regulations made up the EC regime for the importation, sale and distribution of bananas, which applied to over a dozen different products. Both the panel and the Appellate Body examined the totality of this regime, irrespective of whether the regulations at issue were identified in the terms of reference in detail, and neither the panel nor the Appellate Body considered the generic description of the products to which this regime applied to be inconsistent with Article 6.2 of the DSU.62

    3.17 In India's view, Article 6.2 of the DSU essentially required that the complainant identify clearly the matter in dispute. Details were in most cases irrelevant to its resolution.63 If Turkey's interpretation were accepted, Members would only be able to bring complaints about elements of a trade regime whose domestic legal basis and product coverage could be identified with precision at a particular point in time, leaving the authorities of the respondent complete freedom to change a detail of the regime and claim that the new regime was no longer the measure ruled upon by the DSB. Requests for the establishment of a panel on defined aspects of a trade regime had frequently been made in the past and the panels and parties had not found an indication of the domestic legal basis and product coverage as necessary to resolve the disputes. India considered that the possibility to bring complaints on the basis of such requests should remain in the future if the DSU was to serve its purpose.

    3.18 India noted further that the GATT and WTO precedents cited by Turkey did not support its position. For instance, Turkey had quoted the GATT Panel Report on EEC - Imports from Hong Kong.64 During the course of proceedings of this panel, Hong Kong had requested a ruling on a product not mentioned at all in its panel request. There was no parallel there with India's complaint because India did not request in its first submission a ruling on products that it had not mentioned in its panel request. The panel on the EC - Computer Equipment case had pointed out that the EEC - Imports from Hong Kong s case had to be distinguished from the case in which the complaining party merely elucidated the product coverage already specified in the request for the establishment of a panel.65 India, just like the United States in the EC - Computer Equipment case, merely provided in its first submission details on the present product coverage of measures already identified in the panel request. Finally, Turkey referred to the Appellate Body Report on the EC - Computer Equipment case, in which the Appellate Body recognized that the complaining party might identify the products subject to the measures at issue "by broader grouping", rejecting the European Communities's claim that each individual product had to be identified with precision.66 However, this Appellate Body ruling supported India's position that the identification of the measures at issue as the restrictions Turkey imposed as from 1 January 1996 on imports of textiles and clothing from India was sufficiently precise.

    3.19 Turkey recalled Article 22.4 of the DSU, which referred to the "level of nullification and impairment", questioning how such level could be established if the precise product coverage of the dispute was unknown.

    3.20 India made reference to Article 22.6 of the DSU, according to which the level of suspension of concessions, in the case of a failure to comply with recommendations or rulings adopted by the DSB under the procedures of Article 22 of the DSU, should be equivalent to the level of the nullification or impairment. India considered that Turkey's argument that such equivalence could only be determined if the product coverage was precisely determined during the panel proceedings had no merit. The level of suspension to which the complainant was entitled to under Article 22.4 of the DSU obviously depended on the level of nullification or impairment at the time when the failure to comply with the DSU recommendations occurred. India's rights under Article 22 of the DSU would in the present case thus depend on the nullification or impairment caused by the Turkish measures when the reasonable period for compliance with the DSB recommendations or rulings would have elapsed. Thus, if Turkey were to remove several items from the coverage of its restrictive regime for Indian textile and clothing products, India's right to suspend concessions or other obligations would be curtailed correspondingly. In India's view, the product coverage at the present time was thus not relevant for the purposes of Article 22 of the DSU. Moreover, any dispute regarding the level of suspension was to be resolved under the separate procedures set out in Article 22.6 of the DSU. There was, therefore, no need to make in the panel proceedings the factual findings that might have to be made in a subsequent Article 22.6 proceeding.

    3.21 Turkey also pointed out that a faulty request for the establishment of a panel could not be "cured" by a complaining party's argumentation in its written submissions to the panel, in accordance with the findings of the Appellate Body in EC - Bananas III.67 The deficiency of India's request for the establishment of a panel was therefore a fatal procedural obstacle to carrying this case any further. Any other decision would amount to a violation of Turkey's essential procedural right as a respondent to be aware of the case held against it which was part of the demands of due process to be preserved by the Panel.68

    3.22 India noted that no issue of a "cure", as implied in Turkey's reference to the Appellate Body ruling in EC - Bananas III, could arise when, as was the case of India's request for a panel and its first submission, the measures at issue in the request for a panel were the same measures that were referred to in the first submission of the complainant.

    3.23 India concluded that the identification of the measures at issue was sufficiently specific to enable Turkey to prepare its defense and the Panel to resolve the dispute, and it, therefore, met the requirements of Article 6.2 of the DSU.

    2. Arguments by third parties

    3.24 Japan referred to the Japan - Measures Affecting Consumer Photographic Film and Paper case as an additional important precedent for the interpretation of Article 6.2 of the DSU. For the identification of the specific measures at issue in that case, the panel found that a measure not explicitly described in a request for the establishment of a panel, to be regarded as being included in the measures at issue, had to be subsidiary or so closely related to the latter that the responding party could reasonably be found to have received adequate notice.69

    3.25 The Philippines submitted that there was no specific standard on the degree of specificity required in the phrase "identify the specific measures at issue" other than the phrase "sufficient to present the problem clearly", in Article 6.2 of the DSU. In the Philippines view, Turkey, by its own acts, had made it sufficiently clear that it understood the problem clearly, or ought to understand it, as a reasonable party acting in good faith in the context of non-contentious proceedings (as pointed out in Article 3.10 of the DSU). The Philippines also rejected Turkey's argument related to the level of nullification and impairment as having no relevance whatsoever to the identification of the specific measures at issue. The Philippines concluded that India was in compliance with Article 6.2 of the DSU.

    C. NON-PARTICIPATION OF THE EUROPEAN COMMUNITIES IN THE DISPUTE

    1. Arguments by the parties

    3.26 Turkey noted that the creation and existence of a customs union was not only a fact which was taken into account by the drafters of the GATT, but was expressly referred to in Article XXIV:4 of GATT as "desirable" because of the economic integration between the countries parties to the customs union. India was well aware that the measures subject of its complaint had not been taken unilaterally by Turkey, but resulted from the completion of the customs union agreed between Turkey and the then EEC in the Ankara Agreement, as specified in more detail in Association Council's Decision No. 1/95 "on implementing the final phase of the Customs Union". Turkey referred to paragraphs 1 and 2 of Article 12 of Decision No. 1/95 as evidence of its lack of autonomy in adopting its external commercial policy concerning imports of textile and clothing products from countries outside the customs union. Turkey recalled that the conclusion of the Turkey-EC customs union, and more particularly the above-mentioned provisions were duly notified to the GATT and to the WTO.

    3.27 India noted that the restrictions imposed by Turkey were acknowledged by both Turkey and the European Communities as having been imposed by Turkey. Thus, Article 12 of Decision 1/95 provided that "Turkey shall, in relation to countries which are not members of the Community, apply provisions and implementing measures which are substantially similar to those of the Community's commercial policy set out in the following Regulations" (emphasis added).70 Furthermore, the joint Turkey-European Communities communication to the CRTA on 8 November 1996 (containing preliminary information on Decision 1/95) reads as follows: "In this framework, Turkey has introduced quantitative restrictions and surveillance measures parallel with the practices of the EC and will similarly align itself with EC liberalisation" (emphasis added).71 In the Turkey-European Communities communication to the CRTA on the details of the QRs imposed, there was again joint and clear acknowledgement that:

    "In order to assist Members in the examination of the customs union, Turkey and the European Communities are pleased to confirm, in the Annex hereto, details of the quantitative limits applied by Turkey in respect of imports of certain textile and clothing products from certain WTO Members, and in conformity with the provisions of Article XXIV of GATT 1994" (emphasis added).72

    In India's opinion, there was therefore no doubt that the measures at issue were restrictions imposed by Turkey and not by the European Communities.

    3.28 Turkey recalled that, according to the Appellate Body in Japan - Taxes on Alcoholic Beverages, Panel and Appellate Body Reports "are not binding, except with respect to resolving the particular dispute between the parties to that dispute"(emphasis added).73 This corresponded to internationally recognized standards: Article 59 of the Statute of the International Court of Justice ("ICJ") contained similar language, as indicated in footnote 30 of the above-mentioned Appellate Body report. Turkey added that Article 63 of the ICJ Statute allowed for all the parties to an international convention to become an intervenient with regard to the interpretation of that convention, it being understood that such an intervenient would then be bound by the judgement of the ICJ.74 Turkey noted that such a provision was absent from the DSU, Article 10 giving third parties only limited rights of participation.

    3.29 India noted that, although the DSU did not provide for the status of co-respondent, the European Communities would have had the right to participate in the present proceedings as a third party (Article 10). As such, it would have had the right to request the Panel to accord it the enhanced third-party status which certain GATT and WTO panels have accorded to third parties with a direct contractual interest in the outcome of a proceeding.75 This would have permitted it to be present at all meetings of the Panel with the parties and to submit its views in all stages in the proceedings. The European Communities deliberately chose not to participate in the proceedings in accordance with the provisions of the DSU. It would amount to an amendment of the DSU by the Panel if the European Communities were accorded rights of participation not foreseen in the DSU and never before granted to a GATT contracting party or WTO Member interested in supporting the respondent.

    3.30 Turkey further submitted that it could not be obliged by a DSB ruling to breach an international agreement that was duly notified and had a recognized status in the WTO by virtue of Article XXIV of GATT. A generally accepted rule of public international law was contained in Article 26 of the Vienna Convention of the Law of Treaties ("VCLT"): pacta sunt servanda. This made it legally impossible for Turkey to act inconsistently with its obligations under the Turkey-EC customs union without the consent of the other party to that agreement. Any other solution would amount to obliging Turkey to breach its international obligations vis-?vis the European Communities and would thereby be contrary to general principles of public international law which, in accordance with Article 3.2 of the DSU, was a source of law within the WTO dispute settlement system.

    3.31 India considered that, although it might be true that Turkey faced conflicting obligations in the WTO and in its bilateral agreement with the European Communities, this issue was not germane to the task of the Panel, whose mandate according to Article 7.1 of the DSU was to examine exclusively Turkey's obligations under the WTO agreements cited by the parties to the dispute, not any other treaties accepted by Turkey. This was not the first case in GATT/WTO history in which a panel had examined GATT-inconsistent measures taken by the defendant as a result of a bilateral agreement with another State. So far, all panels faced with that situation had simply ignored it and left it to the defendant to decide how to resolve its conflict of international obligations.76 Turkey's potential conflict of international obligations was, therefore, irrelevant in the current proceedings.

    3.32 India noted that it was undisputed in international law that a treaty between two States does not create either obligations or rights for a third State without its consent.77 The agreement reached between Turkey and the European Communities, therefore, could not modify the rights which India asserted before this Panel. Contrary to Turkey's defense based on the recognized status of a customs union under Article XXIV of the GATT, India argued that nothing in Article XXIV could possibly be interpreted as authorizing WTO Members forming a customs union to restrict imports from third WTO Members. Article XXIV provisions could not be understood as an expression of the consent of third WTO Members to bear the consequences of whatever restrictions might be imposed on their trade under an agreement between WTO Members forming a customs union.

    3.33 Turkey also maintained that India's claim could not succeed as long as India was unwilling to direct its complaint against both the European Communities and Turkey. If the European Communities was not fully involved in the present dispute, it would not be bound by its outcome and would therefore be under no obligation to agree to apply the agreement in a way that would satisfy India's pretensions. Turkey considered that India's claim should be rejected on the basis that, in order to pursue its claims properly, India should have cited both parties to the Turkey-EC customs union as respondents. In Turkey's view, the present case was comparable to a situation where the complainant directed its complaint against country A for a measure taken by country B; in such situation, the complaint would have to be turned down for lack of standing due to the obvious absence of international liability. The same rule should therefore apply in the present case, since there was no basis, in fact or in law, for the assumption that Turkey was alone internationally answerable and individually responsible for acts collectively taken by the parties to the Turkey-EC customs union through its institutions.

    3.34 In that context, Turkey viewed India's ultimate aim as that of being able to increase its trade in textile and clothing products with the Turkey-EC customs union, and not with Turkey alone. However, the "level of nullification or impairment" (Article 22.4 of the DSU) of QRs applied by the Turkey-EC customs union with regard to such trade with a final destination in Turkey would in fact be nil, while such trade impairment was potentially measurable with regard to the trade in these products with a final destination in European Communities. India's choice of the respondent therefore amounted to a circumvention of the essential rights of defense of the European Communities as the party in the Turkey-EC customs union which would have to bear the trade consequences of any change in the existing import regime for textile and clothing products in Turkey as a constituent territory of the Turkey-EC customs union.

    3.35 India noted that Turkey was not an EC Member State. Hence, the territorial scope of the European Communities's obligations under the WTO Agreement did not comprise the Turkish customs territory and the Turkish government was not an authority for whose acts the European Communities had assumed any responsibility under the WTO Agreement. The import restrictions adopted by Turkey within its customs territory were measures neither adopted by, nor legally attributable to the European Communities.78 In the absence of any EC restrictions that India could possibly challenge under the WTO agreements, India could not reasonably be expected to initiate proceedings against the European Communities under the DSU.

    3.36 Finally, in India's view, according to Article 19.1 of the DSU, the DSB could request the European Communities to modify their agreement with Turkey only if EC participation in that agreement, by itself, constituted a measure inconsistent with a WTO agreement covered by the DSU. This was, however, not the case. Moreover, a Member participating as a third party in the normal panel procedures is not bound by the outcome of the proceedings merely by virtue of its participation. As confirmed by the Appellate Body, the results of a panel proceeding bound only the complainant and the defendant in the proceedings.79 There was no obligation for third parties participating in panel proceedings corresponding to that contained in the arbitration procedures of Article 25 of the DSU.80

    3.37 India could therefore not see how a mere change in the status of the European Communities in the proceedings of the Panel could entail a change in India's rights towards the European Communities under the WTO agreements and oblige the European Communities to agree to a modification of the common EC-Turkey regime for imports of textile and clothing products from India. Under general international law, such an obligation could result only from an agreement between India and the European Communities according to which these would commit themselves to abide by the Panel ruling if it were permitted to participate in the Panel proceedings. India noted that the European Communities had not offered to assume that obligation.

    2. Arguments by third parties

    3.38 Japan submitted that the Panel had been established in accordance with the provisions of the DSU, since India questioned Turkey's obligations under the WTO Agreements (not Turkey's obligations vis-?vis the European Communities under the Ankara Agreement). Japan further noted that there was no obligation under the DSU for India to complain against the European Communities in this particular case and that any general issue of mandatory co-respondents should be addressed in another context.

    3.39 The Philippines submitted that the European Communities were not an indispensable party to the dispute and that the resolution of India's claims against Turkey was not precluded without the participation of the European Communities. The Philippines observed, in particular, the following:

    (i)Turkey's invocation of the pacta sunt servanda principle contained in Article 26 of the VCLT was not relevant in this context, since the terms and conditions of any agreement between Turkey and the European Communities, as between themselves, was not the subject of the dispute. Rather, a necessary consequence of Articles 26 and 34 of the VCLT was that, in the WTO, as between Turkey and India, Turkey could not invoke whatever conflicting obligations it might have under a Turkey-EC agreement.

    (ii)Even assuming that Turkey had acted in performance of an obligation imposed by a Turkey-EC agreement, the operative act from which India's cause of action arose (the promulgation of a law applicable in Turkish territory) was the exclusive and sovereign act of Turkey.

    (iii)The Panel, or the Appellate Body, had no choice but to apply the WTO Agreement, since the Turkey-EC agreements were not "covered agreements". Moreover, in accordance with paragraph 4 of Article 30 of the VCLT,81 the WTO Agreement was exclusively applicable as between Turkey and India in the context of this dispute.

    (iv)It was irrelevant and immaterial that the European Communities be bound by the results of this dispute, since India did not seek any remedy from the European Communities.

    3.40 The United States also argued in support of India's views, noting the following:

    (i)The text of Article 10 of the DSU drew a balance between the rights of the parties to a dispute and the rights of other Members, a point made clear in the EC - Bananas III case, when the panel granted part but not all of a request for additional participatory rights for third parties.82 In the present dispute, the European Communities had however not chosen to avail themselves of the rights afforded to it by the provisions of Articles 10.1-10.3 of the DSU.

    (ii)Turkey's claim that it was not individually responsible under the WTO Agreement for the measures at issue because of Turkey's entry into the Ankara Agreement could not be accepted. The existence of the Ankara Agreement could not by itself limit the rights of India under the WTO Agreement with respect to those measures. This principle of customary international law, pacta tertiis nec nocent nec prosunt, was expressed in Article 34 of the VCLT: "A treaty does not create either obligations or rights for a third State without its consent."

    (iii)Turkey's citation of the principle of pacta sunt servanda was inapposite, as the text of Article 26 of the VCLT made it clear that "Every treaty in force is binding upon the parties to it and must be performed by them in good faith" (emphasis added). This Article did not have an effect on Turkey's obligations to India, or India's rights vis-?vis Turkey, as India was not a party to the Ankara Agreement.

    (iv)The measures in question were not acts adopted by institutions of the Ankara Agreement but were of Turkey's responsibility, as clearly stated by the European Communities at the DSB meeting on 13 February 1998: the "basic policy on Turkey's future textiles regime [including the measures in question] had been agreed by the Communities and Turkish Ministers& ".83

    (v)In the EC - Bananas III case, the Appellate Body had already endorsed the examination under the DSU of measures adopted by one Member even when those measures were related to that Member's other international agreements and that the other parties to such agreements were not parties in the WTO dispute settlement proceeding.

    D. CONSULTATION STAGE OF THE DISPUTE SETTLEMENT PROCEDURE WITH RESPECT TO TRADE IN TEXTILE AND CLOTHING PRODUCTS

    1. Arguments by the parties

    3.41 Turkey submitted that India had violated cogent rules of procedure which were applicable in the present case and which took precedence over the ordinary rules under the DSU. In Turkey's view, the Panel had thus not been regularly established with respect to matters which were covered by the ATC and should decide, therefore, in limine litis that all the alleged violations of the ATC were not correctly before it and that it could not rule upon them.

    3.42 Turkey claimed that, though alleging inconsistency of the Turkish measures with Article 2 of the ATC, India had disregarded the requirements of the special and additional procedural rules under Article 8, paragraphs 5 and 10, of the ATC (in the context of Article 1.2 and Appendix 2 of the DSU). In particular, India had not requested the TMB to review promptly the particular matter that it considered detrimental to its interests under the ATC. By so doing, it did not allow the TMB to make the appropriate recommendations. However, pursuant to Article 8.10 of the ATC, a matter might be brought before the DSB under Article XXIII:2 of GATT and the relevant provisions of the DSU only after the TMB had made recommendations and these could not be implemented. Thus, according to Article 1.2 of the DSU, the ordinary DSU rules did not apply in this case with respect to the alleged violation of the ATC: in particular it was not possible to request the DSB to establish a panel on this aspect of India's complaint in the absence of a TMB recommendation.

    3.43 Turkey recalled that as from 1 January 1995, two dispute settlement procedures concerning textile and clothing products had undergone the complete panel and Appellate Body procedure.84 In both cases, the TMB was requested to make recommendations before the request for the establishment of the panel was filed to the DSB.85 In the Panel Report on United States - Restrictions Affecting Imports of Woven Wool Shirts and Blouses, in which India was the complaining party, the following could be read:

    "India noted that the matter had remained unresolved in spite of bilateral consultations between India and the United States held under Article 6.7 of the ATC& ; the examination of the matter by the Textile Monitoring Body (TMB) under Article 6.10 of the ATC& ; the communication sent to the TMB under Article 8.10 of the ATC, within one month of the TMB recommendations; and the review of the matter by the TMB under Article 8.10 of the ATC& Consequently, India considered that it had met all requirements in Article 8.10 of the ATC for the direct recourse to Article XXIII.2 of GATT 1994."86

    3.44 In Turkey's view, India did not meet in the present case, unlike in the above-mentioned precedent, all requirements in Article 8.10 of the ATC, since it did not allow the TMB to make recommendations, it denied Turkey the opportunity to make its views known to the TMB before such recommendations were made and it disregarded the special and additional procedural rules under Appendix 2 of the DSU.

    3.45 India submitted that Turkey's argumentation was based on the notion that the special dispute settlement procedures of the ATC applied to all restrictions on textile and clothing products whatever their legal basis. This, however, was clearly not the case. Pursuant to Article 2.4 of the ATC, new restrictions on textile and clothing products might be justified by invoking either a provision of the ATC or a provision of the GATT. If a Member invoked a provision of the ATC, the matter might be examined by the TMB, since Article 8.1 of the ATC gave to the TMB the mandate "to examine all measures taken under this Agreement and their conformity therewith" (emphasis added). If a Member invoked a GATT provision, such as Articles XII, XVIII or XIX, as the legal basis for its restrictions on textile and clothing products, the TMB would have to leave the matter to the WTO body competent to examine measures taken under the GATT provision, for instance the Committee on Balance-of-Payments Restrictions or the Committee on Safeguards. This followed not only from the definition of the TMB's mandate in Article 8:1 of the ATC but also from Article 3:3, which stipulated that "& Members shall provide to the TMB, for its information, notifications & " (emphasis added).

    3.46 India noted that Article 2.4 of the ATC prohibited in principle all new restrictions on textile and clothing products except those justified by ATC or GATT provisions. If a restriction on such products was introduced under the provisions of the ATC, the TMB was competent and the special dispute settlement provisions of the ATC applied. This was not relevant to the present dispute, since Turkey had neither notified, pursuant to Article 2.1 of the ATC, QRs maintained under the MFA, not had it based its restrictions on the specific transitional safeguard mechanism of Article 6 of the ATC.

    3.47 India argued further that, if a new restriction on textile and clothing products was introduced under the provisions of the GATT, the TMB was merely informed of the matter and the normal dispute settlement procedures applied. Article XXIV of GATT was so far the only provision Turkey had invoked to justify its introduction of new QRs on imports from India of certain textile and clothing products as from 1 January 1996.87 In accordance with Article 3.3 of the ATC, Turkey provided to the TMB, for its information, on two occasions the notifications which were submitted to the CRTA for the measures at issue.88 Consistently with its limited mandate, the TMB had merely taken note of the information provided.89

    3.48 India noted that it was contradictory for Turkey to invoke a GATT provision as the legal basis for its new restrictions while claiming before this Panel that procedures of the ATC should be used by India to address the question of whether that GATT provision in fact provided the required legal basis. The TMB, established for the sole purpose of supervising the implementation of the ATC, was obviously not the proper forum for the resolution of a dispute on the relationship between Article XXIV of GATT and the general prohibitions of new textile and clothing restrictions set out in Article XI of GATT and Article 2.4 of the ATC.

    3.49 India, therefore, concluded that it was entitled to pursue its claim that Turkey's restrictions violated Article 2.4 of the ATC under the normal dispute settlement procedures of the DSU.

    2. Arguments by third parties

    3.50 The Philippines submitted that India's claims under the ATC were within the Panel's jurisdiction, on the following grounds:

    (i)It was not mandatory on Members, in the context of Article 8.5 of the ATC, to refer a matter to the TMB, but only mandatory on the TMB to act on a matter brought before it.

    (ii)Article 8.10 of the ATC applied to a situation where a matter had been referred to the TMB; it did not establish exclusive jurisdiction in favor of the TMB to the exclusion of the DSB.

    (iii)With reference to Turkey's invocation of Article 1.2 of the DSU, there was no difference between the special or additional rules and procedures set forth in the ATC and those under the DSU. Even if such difference existed, Article 1.2 of the DSU provided for a solution aiming at keeping the integrity of the claim intact: "the rules and procedures set out in [the DSU] should be used to the extent necessary to avoid the conflict".

    IV. ADDITIONAL INFORMATION

    4.1 Pursuant to Article 13.2 of the DSU, the Panel sought from the European Communities certain relevant factual and legal information regarding the matters at issue. The Chairman of the Panel therefore addressed the following letter, dated 28 October 1998, to the Permanent Representative of the European Communities in Geneva:

    "I am writing with regard to the Panel on Turkey - Restrictions on Imports of Textiles and Clothing Products, Request by India (document WT/DS34). In this context, the Panel has had a first meeting with the parties and has asked them a series of questions in order to help clarify the facts of this dispute and the parties' related legal arguments. As you may be aware, parties in that dispute have invoked and raised arguments that relate to the Agreement between Turkey and the European Communities which these Members have notified to the WTO (document WT/REG22/1).

    In order to ensure that the Panel has the fullest possible understanding of this case, and pursuant to Article 13.2 of the DSU, the Panel would like to ask the European Communities for factual or legal information relevant to this case that they would wish to provide (for your information the full list of questions posed to Turkey is attached). In particular, the Panel would invite the European Communities to submit written responses to the following questions:

    1. Can you provide the Panel with information with regard to negotiations which resulted in what was notified to the WTO under WT/REG22/1? Article 12 of Decision 1/95 provides that "From the date of entry into force of this Decision, Turkey shall, in relation to countries which are not members of the Community, apply provisions and implementing measures which are substantially similar to those of the Community's commercial policy set out in the following Regulations: (& )" Can the EC provide us with a description of all the alternatives that the EC and Turkey considered in trying to identify textile and clothing policies that would have been "substantially similar" to those of the EC. Was there any effort to look at alternative means of securing the same effect other than adopting exactly the same policy as that of the EC? Did parties consider using rules of origin to ensure that only Turkish exports of textile and clothing products to the EC would benefit from the preferential market access treatment to the EC market as envisaged in the customs union? Was any consideration given to the use of a provisions similar to that of Article 115 of the EC Treaty which has effectively been used amongst EC member states for many years before the completion of the EC single market?

    2. How do you explain that the initial agreement between Turkey and the EC was signed in 1963 and that the transition period until now has lasted some 35 years? How would you qualify the nature of the Agreement notified as WT/REG22/1? Is it an interim agreement that should lead to a customs union by 2005 or would you qualify this agreement implementing a completed customs union?

    3. Do all textile and clothing products circulate freely between EC territory and Turkey's territory? If so, since when? What about other industrial and agricultural goods? What legal means are used to ensure an effective EC border control of these goods under restrictions vis-?vis Turkey?

    4. How does the EC administer and control the respect of the overall EC/India and Turkey/India textile and clothing quotas at EC-Turkey's borders?

    5. The agreement between the EC and Turkey provides that the parties maintain antidumping, countervailing and safeguard regimes applicable to imports of textile and clothing products from each other? Have parties used such measures against imports from each other?"

    4.2 The EC Representative in Geneva replied substantively as follows:

    "In reply to your letter of 28 October 1998, I would like to answer the questions that the Panel has asked of the European Communities pursuant to Article 13.2 of the Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU).

    Before doing so, I would like to clarify that it is not our intention to participate in any other way in this procedure, since India has chosen to direct its complain exclusively against Turkey in spite of the fact that it was clearly indicated to India that the measures at issue were taken in the framework of the formation of the EC/Turkey customs union. The European Communities has taken good note of this deliberate choice of India and our contribution to the debate before this Panel should therefore not be treated as that of a party or a third party to its proceedings.

    We are of course pleased to answer the specific questions raised by the Panel under Article 13.2 DSU, but we do not believe it would be appropriate for us, under this provision, to enter into a broader discussion of the factual or legal elements that may be relevant for the resolution of this dispute since this could be confused with the pleading of a case before the Panel. We will therefore stick to the specific questions asked by the Panel and provide the requested factual information to the Panel as objectively as we can."

    4.3 The Annex to the EC letter contained replies to the specific questions asked by the Panel, as follows:

    Reply to question 1

    "The objective from the outset of the negotiations was to include textile and clothing products within the customs union. Turkish exports to the European Union of textiles and clothing amounted to approximately 40 per cent of all Turkish industrial exports to the European Union and it was therefore considered essential that these products formed part of the customs union and hence be in free circulation within the customs union.

    The use of rules of origin benefiting only Turkish exports would have been an exception to the principle of free circulation within the customs union and would have required the maintenance of customs and border checks within the customs union designed to ensure that Turkey would not become a transit point of goods in circumvention of the Community's quota system arising from Turkey's adoption of the Community's rates of tariffs, etc.

    Article 115 of the EC Treaty lost a considerable degree of relevance following the completion of the EC single market. As such, no serious consideration was given to the use of provisions akin to those of Article 115 of the EC Treaty but it appears very doubtful whether such measures would have been workable or proportionate within the customs union."

    Reply to question 2

    "The core of the Ankara Agreement signed in 1963 is the establishment of a Customs Union in three stages. The Additional Protocol signed in 1970 and which entered into force in 1973 defined the modalities for implementing the transitional stage which was supposed to end after 22 years (in 1995). In accordance with the planned calendar, the final stage of the Customs Union entered into force on 31 December 1995 (with the adoption of Decision 1/95 of the EC-Turkey Association Council). Decision 1/95 defines the rules which ensure the proper functioning of the Customs Union. Despite the fact that Turkey benefits from certain adaptation periods (until 2001), in some areas such as preferential commercial policy, protection of the intellectual property rights etc, we consider that the customs union has already reached its final phase with regard to the requirement of Article XXIV:8(a) of the GATT 1994. Precise data concerning the trade coverage and other details concerning the functioning of the customs union were submitted to the WTO Committee for Regional Trade Agreements and were also discussed in the recent Trade Policy Review of Turkey. It is worth noting that many provisions in the Customs Union Decision go beyond the definition of a Customs Union under Article XXIV of the GATT 1994."

    Reply to question 3

    "Industrial products including textiles products have been in free circulation between the EU and Turkey since the entry into force of the customs union on 31 December 1995. Shipment of textiles and clothing requires an ATR document indicating that the goods are in free circulation. No indication of origin is required for goods in free circulation. There is thus no specific EC border control in respect of goods for which Turkey has quantitative restrictions, the Turkish authorities having effected such control on entry of the goods into free circulation in Turkey.

    Agricultural products will be included in the customs union following an adaptation period and for the time being enjoy preferential treatment subject to proof of origin including EUR-1 certificates and invoice declarations to enable the identification of the products."

    Reply to question 4

    "Turkey has adopted all the European Communities's relevant regulations concerning imports of textiles (e.g. Regulation EEC/3030/93, Regulation EEC/517/94 and Regulation EEC/3951/92). Thus the basic administrative principles are the same in both parts of the customs union. The Turkish authorities have observer status in the "management" committee chaired by the Commission set up under the relevant regulations. In addition, the Turkish authorities maintain an inter-departmental committee in order to take any necessary measures to ensure consistency between the EU and Turkey. So far as the management by the Community's integrated system of licensing is concerned, the Turkish authorities have full access to the European Community's computerised licensing system (Syst鑝e Integr?de Gestion de Licences or SIGL) and there is a regular exchange of information at administrative level. Thus, there is no administration or control of the overall EC/India and Turkey/India textile and clothing quotas at the EC/Turkey's borders. Once goods enter the customs union pursuant to the parties' respective systems, they are in free circulation and no further controls are necessary."

    Reply to question 5

    "The Customs Union Decision maintains the possibility for each party to apply trade defense instruments, including anti-dumping measures to the products originating from the other party. The Community imposed definitive anti-dumping measures on imports of polyester fibres from Turkey in June 1996. Provisional anti-dumping duties were imposed on imports of unbleached cotton fabrics from Turkey in April 1998. However, these expired in October without the imposition of definitive measures."

    V. CLAIMS OF THE PARTIES

    5.1 India requested the Panel to rule that the import restrictions which Turkey had imposed since 1 January 1996 in the context of its trade agreement with the European Communities on textiles and clothing products from India:

    (i)were inconsistent with Articles XI and XIII of GATT and Article 2.4 of the ATC and were not justified by Article XXIV of GATT, and;

    (ii)impaired benefits accruing to India under Articles XI and XIII of GATT and Article 2.4 of ATC.

    5.2 India requested the Panel to recommend that Turkey bring its restrictions into conformity with its obligations under GATT and the ATC, basing its rulings and recommendations on the following findings:

    (i)Article XXIV:5 of GATT did not permit Members forming a customs union to impose QRs on imports from third Members;

    (ii)to the extent that there was a conflict between the provisions of Article 2.4 of the ATC (which permitted the European Communities but not Turkey to impose restrictions on imports of textiles and clothing products from India) and the provisions of Article XXIV:8 of GATT (which required Members forming a customs union to apply substantially the same restrictions on imports from third Members), the provisions of Article 2.4 of the ATC prevailed; and

    (iii)Turkey had not rebutted the presumption that its restrictions on imports of textiles and clothing impaired benefits accruing to India under Articles XI and XIII of GATT and Article 2.4 of the ATC.

    5.3 Subsidiarily, if the Panel were to accept the argument by Turkey that Article XXIV of GATT provided a waiver from the obligations under Articles XI and XIII of GATT and Article 2.4 of the ATC for measures necessary for the purposes of a customs union meeting the standards of Article XXIV, India requested the Panel to base its rulings on the following findings:

    (i)for the purposes of the EC-Turkey trade agreement, an immediate harmonization of import restrictions on textiles and clothing products was unnecessary, because (a) the European Communities and Turkey were applying different import duties and regulations in respect of many sectors, policy instruments and trading partners and (b) in all areas in which their import duties or regulations differ, the European Communities and Turkey were able to implement border controls ensuring that only products originating in the territories of the European Communities and Turkey benefit from the preferential treatment under the EC-Turkey trade agreement; and

    (ii)the type of agreement concluded between the European Communities and Turkey, that is an agreement providing for the establishment of a customs union at a future date, was not governed by the provisions of Article XXIV of GATT on completed customs unions and Turkey could therefore not invoke those provisions as justification for the restrictions.

    5.4 Turkey requested the Panel to find that:

    (i)India had not sufficiently exhausted the avenues of Article XXII of GATT, Article 4 of the DSU and Article XXIV of GATT in order to bring about an amicable settlement and adjustment;

    (ii)India had not complied with the procedural requirements of the ATC;

    (iii)the Panel could not substitute itself for the CRTA which had not yet completed its examination of the Turkey-EC customs union;

    (iv)since Turkey argued that the measures forming the object of the complaint were a requirement of the Turkey-EC customs union, the Panel could not rule on their legality in the absence of agreed conclusions on the consistency of the Turkey-EC customs union with the obligations of Turkey and the European Communities under GATT;

    (v)Turkey had not acted inconsistently with its rights and obligations under GATT and the ATC; and

    (vi)as required under Article 3.6 of the DSU, the parties to the dispute should seek a negotiated solution to the matter, taking into account India's commercial interests and Turkey's obligations arising from the Turkey-EC customs union.

    VI. MAIN ARGUMENTS BY THE PARTIES

    A. INTRODUCTORY POINTS

    1. Consultations

    6.1Turkey submitted that India had failed to comply with the principle of procedural economy and the spirit of the WTO dispute settlement mechanism which required that the panel procedure was to be considered as ultima ratio means to solve conflicts between Members, when unable to find a negotiated solution.90 India had refused to enter into bilateral negotiations offered by Turkey, including the European Communities, and had also refused to deal with the issues in consultations under Article XXII of GATT.

    6.2Turkey said that it had accepted the request by India for consultations under Article XXIII of GATT on the measures it applied, on condition that representatives of the European Communities participate. Their participation was deemed essential, given that the application of the restrictions which constituted the object of India's complaint derived from the alignment of Turkey's commercial policy on that of the European Communities. Consultations scheduled to be held in Geneva on 18-19 April 1996 did not occur owing to India's refusal to accept the participation of EC officials. Turkey continued to offer to find a negotiated solution to India's complaint, and the subject was raised in discussions held in both capitals at different times and at a meeting between both countries' Trade Ministers in Geneva in May 1998. However, and despite the fact that the measures in question had never formed the subject of a consultation between Turkey and India under Articles XXII and XXIII of GATT, India requested the DSB to establish a panel regarding the imposition by Turkey of QRs on imports of certain textiles and clothing products.

    6.3India submitted that Turkey had violated Articles 3 and 4 of the DSU, since it had not entered within the 30-day period into the bilateral consultations requested by India, with a view to reaching a mutually satisfactory solution. India submitted that Turkey had in particular contravened the provisions of Article 3.10 of the DSU. India considered that its recourse to the provisions of GATT and the DSU as regards consultations was frustrated in a most unprecedented manner, and the dispute remained unresolved.91

    6.4India explained that its request for consultations, pursuant to Article 4 of the DSU and Article XXIII:1 of GATT,92 had been accepted by Turkey on 1 April 1996. While confirming its agreement to enter into consultations "on textiles and clothing restrictions applied by Turkey" at a mutually acceptable time and venue, Turkey considered that "the European Communities as our partner in the customs union should also be represented in the consultations". On 4 April 1996, India proposed the venue (Geneva) and dates (18-19 April 1996) for such consultations while clearly stating that it could not accept that the European Communities should participate in the consultations since, under the GATT and WTO practices, consultations under Article XXIII:1 of GATT were bilateral in nature; India asked for confirmation by Turkey of the date and venue of the bilateral consultations. On 16 April 1996, Turkey scheduled a meeting with its Indian counterparts for 18 April 1996 (3.30 to 6 p.m.), while stating its "understanding that representatives of the European Communities would also be participating". India stated that, despite that very short notice, it ensured the presence of its delegation at the consultations, but the delegation of Turkey did not attend the scheduled meeting nor did it provide an explanation for its absence. India submitted that it sent another communication to Turkey on 18 April 1996, proposing to enter into bilateral consultations on 19 April 1996. When India endeavoured to confirm with Turkey the date and venue of these consultations, it was informed that the latter was not in a position to enter into these consultations without the participation of the European Communities, and that this would be conveyed to India in writing by close-of-business on 19 April 1996. India submitted that the communication from Turkey, dated 19 April 1996, was received on 22 April 1996.

    6.5Turkey responded that it had refused consultations on the ground that such consultations did not involve the European Communities. It had good and proper reasons not to engage in formal consultations in which the European Communities would not be involved, namely that the measures complained of were a direct consequence of the Turkey-EC customs union and could not be modified without the consent of the European Communities. This did not mean that Turkey was not prepared to examine with India how to adjust the measures challenged and to bring about an amicable settlement. Turkey recalled the various steps it took and the latest attempts made as recently as 28 September 1998.

    6.6Turkey submitted that the issue it raised in its request for a preliminary ruling, with respect to EC participation in the dispute had also a substantive aspect.93 It considered that in this case findings and recommendations, if any, of the Panel directed against the measures challenged by India and the resulting recommendations and rulings of the DSB, if any, could hardly be addressed to Turkey alone, as Turkey was only one of the parties to the Turkey-EC customs union.

    6.7India believed that Turkey's claim that, given its obligations towards the European Communities under the EC-Turkey trade agreement, it could not remove the restrictions on imports of textiles and clothing products from India without the consent of the European Communities, had no basis in international law. According to the relevant part of Article 41.1 of VCLT, "[t]wo or more parties to a multilateral treaty may conclude an agreement to modify the treaty as between themselves alone if ... the modifications in question ... do[es] not affect the enjoyment by the other parties of their rights under the treaty & " (emphasis added).

    6.8India stated that the European Communities and Turkey were both party to a multilateral treaty, the WTO Agreement. In their trade agreement they had committed themselves to harmonize their textiles and clothing policies towards third countries without regard to Turkey's obligations under the WTO Agreement. They had thus concluded between them a treaty which modified the WTO Agreement as between them in a manner that affected the enjoyment of India's and other WTO Members' rights under the WTO Agreement. According to Article 41 of the VCLT, Turkey was therefore not bound by the EC-Turkey trade agreement to the extent that it entailed a violation of Turkey's obligations under the WTO Agreement towards third WTO Members.

    6.9India feared that, if the DSB were to rule in India's favour, Turkey would use its obligations under the EC-Turkey trade agreement as a pretext for not implementing the ruling. The European Communities's decision not to participate in the Panel's proceedings as third party suggested that it might lend its hand in such an approach. This would set an extremely harmful precedent for the multilateral trading system because it would imply that the obligations under a bilateral trade agreement could provide a justification for a failure to implement the obligations under the WTO Agreement. India therefore requested that the Panel make use of its power under the second sentence of Article 19.1 of the DSU and suggest that Turkey, when bringing itself into conformity with its obligations under the GATT and the ATC, took into account the principles set out in Article 41 of the VCLT.

    6.10India also noted later that, following its arguments on Article 41.1 of the VCLT, Turkey had conceded that two or more parties to a multilateral treaty that concluded an agreement amongst themselves could not make modifications to the multilateral treaty that affected the rights of other parties under the multilateral treaty. To Turkey's argument that remedy for the situation did not lie with Turkey alone, India reiterated that since in this case, the measure in question was taken by Turkey alone, India could bring a dispute against Turkey only.

    2. Offers to settle

    6.11Turkey claimed that India, through its refusal to negotiate in a bilateral constellation, including the European Communities, had to assume responsibility for neglecting the avenue of a mutually satisfactory compensatory arrangement. In order to ensure that trade diversion into EC territory did not occur after the completion of the Turkey-EC customs union, Turkey had to impose, in accordance with its obligations under Decision 1/95,94 restrictions on imports from India of those products already subject to quantitative limits when exported to the European Communities.

    6.12Turkey argued that a parallel could be drawn between the renegotiation of bound duties through the procedures established in Article XXIV:6 of GATT and the negotiation of compensatory adjustments or other equivalent means of compensation for the QRs required by the Turkey-EC customs union, which should be considered as "other regulations of commerce" in the meaning of Article XXIV:5(a) and XXIV:8(a) of GATT. Therefore, all the countries whose exports of textiles and clothing products were subject to EC restrictions were offered the possibility to negotiate with Turkey arrangements consistent with those that they had concluded with the European Communities. Such arrangements, in the negotiation of which the European Communities took an active part, were reached with 24 countries in the period which preceded and immediately followed the completion of the Turkey-EC customs union.95 Turkey also noted that there were 28 other countries, including India, with which it was not possible to reach agreement and to which it accordingly applied unilateral restrictions or surveillance regimes. These restrictions only affected products whose export to the European Communities was also under restraint.

    6.13Turkey explained that a draft Memorandum of Understanding covering trade in certain textiles and clothing products had been sent to the Indian Embassy in Ankara on 31 July 1995 and that India had been invited to negotiate with Turkey, prior to the completion of the Turkey-EC customs union, an arrangement similar to the already existing India-EC arrangement covering trade in those products. The request was repeated in December 1995. Turkey claimed that it could not modify the restrictions unilaterally and accordingly insisted on the participation of EC officials in the bilateral negotiations. India refused negotiations with Turkey on the grounds that EC representatives would be present.

    6.14India recalled that it had all along stated clearly that the unilateral imposition of QRs by Turkey on imports of textile and clothing products from India was inconsistent with Turkey's obligations under GATT and the ATC, and were not authorised by Article XXIV of GATT. India also recalled that Turkey did not enter into consultations requested by India under the DSU. In bilateral discussions outside the framework of the DSU, India had requested the removal of the quotas at issue but Turkey merely offered to marginally increase their size. Neither the European Communities nor Turkey submitted offers of compensation to India.

    6.15Turkey also noted that it had made a fresh attempt to reach a negotiated solution with India to the problem which formed the object of India's complaint. In response to a suggestion made by its President to the President of India during the latter's state visit to Turkey on 17-20 September 1998, negotiations were held with the Indian counterparts in New Delhi on 28 September 1998. In the course of those negotiations, Turkey offered to increase by an average of 200 per cent - but in some categories by much more than that - the quotas made available for Indian exports of textiles and clothing to Turkey. It claimed that India refused to examine this offer and claimed instead that it was only prepared to discuss the complete elimination of quotas. Nevertheless, through a Note addressed on 12 October 1998 by the Turkish Embassy in New Delhi to the Indian Ministry of External Affairs, Turkey reiterated its call for a bilateral solution to be explored and invited India to attend further negotiations in Ankara, in the course of October 1998. According to Turkey, no response to this Note had yet been received from India.

    6.16In this respect, India pointed out that it was for India to assess the best means by which it could protect its interests, noting that the dispute was then clearly in the final stages of argumentation before the Panel.

    B. LEGAL ARGUMENTS

    1. Burden of Proof

    6.17India submitted that it was for Turkey to invoke an exception from the prohibition of discriminatory QRs set out in Article XI:1 of GATT and Article 2.4 of the ATC.

    6.18India argued that the current state of WTO case law in the area of burden of proof was summarized in the recent panel on Argentina - Certain Measures Affecting Imports of Footwear, Textiles, Apparel and Other Items as follows:

    "Concerning the issue of what one may call the "burden of proof", the Appellate Body has confirmed the GATT practice whereby

    (a) it is for the complaining party to establish the violation it alleges;

    (b) it is for the party invoking an exception or an affirmative defense to prove that the conditions contained therein are met; and

    (c) it is for the party asserting a fact to prove it."96

    6.19In India's view, the wording of Article 2.4 of the ATC, whereby it prohibited the introduction of new restrictions after 31 December 1994 "except under the provisions of this Agreement or relevant GATT 1994 provisions" (emphasis added) made it clear that the specific transitional safeguard mechanism in the ATC or any GATT provision that might justify the introduction of new discriminatory restrictions constituted an exception in terms of Article 2.4 of the ATC. It was thus for Turkey to invoke an exception to Article 2.4 of the ATC and to prove that the conditions contained under the relevant provisions were met.

    6.20Reacting to Turkey's statement that Articles XI and XIII of GATT and Article 2 of the ATC were not relevant, India referred to the ruling of the panel on the Australia - Measures Affecting the Importation of Salmon case.97 In India's view, Turkey had not presented any arguments or facts to refute India's claim of inconsistency; therefore, it was correct to state that the violation of Articles XI and XIII of GATT and Article 2.4 of the ATC had not been disputed by Turkey. India believed that the legal relevance of these provisions was another matter.

    2. Articles XI:1 and XIII of GATT

    6.21India submitted that Article XI:1 of GATT constituted a general prohibition on the imposition of QRs on imports. The QRs imposed by Turkey on imports of textiles and clothing were clearly inconsistent with this general prohibition and were not saved by any of the exceptions to this provision contained in GATT.

    6.22India submitted further that, to the extent that Turkey's QRs were discriminatory in nature, they were also inconsistent with the prohibition on discriminatory QRs in Article XIII:1 of GATT.

    6.23Turkey reiterated that its restrictions on imports of textiles and clothing from a number of third countries were consistent with Article 2 of the ATC on the basis of the provisions of Article 2:4. Once a measure was justified under Article 2.4 of the ATC, the debate about its consistency with the obligations arising from Articles XI and XIII of GATT became redundant, since the ATC provided an exception to the rules contained in those Articles.98

    3. Article 2 of the ATC

    6.24India submitted that Article 2 of the ATC permitted WTO Members to continue to apply, during the transition period provided for, restrictions on textile and clothing products that were in force on the day before the entry into force of the Agreement (i.e. 31 December 1994) under the MFA. According to Article 2.1 of the ATC, such restrictions were to be notified in detail to the WTO by the Members maintaining them within 60 days following the entry into force of the WTO Agreement. As stated in Article 2.4 of the ATC, the restrictions so notified were "deemed to constitute the totality of such restrictions applied by the respective Members on the day before the entry into force" of the ATC. Turkey had not maintained restrictions on imports of textile and clothing products from India on 31 December 1994. The restrictions on textiles and clothing products from India were imposed by Turkey on 1 January 1996 and were consequently not in force on the day before the entry into force of the WTO Agreement.

    6.25India also noted that Article 2.4 of the ATC also provided that "[n]o new restrictions in terms of products o

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