Turkey — Rice, Report of the Panel, 21 Sept 2007

Short Title	Full Case Title and Citation
Argentina – Textiles and Apparel	Panel Report, Argentina – Measures Affecting Imports of Footwear, Textiles, Apparel and Other Items, WT/DS56/R, adopted 22 April 1998, modified by Appellate Body Report, WT/DS56/AB/R, DSR 1998:III, 1033
Australia – Salmon	Appellate Body Report, Australia – Measures Affecting Importation of Salmon, WT/DS18/AB/R, adopted 6 November 1998, DSR 1998:VIII, 3327
Canada – Aircraft	Appellate Body Report, Canada – Measures Affecting the Export of Civilian Aircraft, WT/DS70/AB/R, adopted 20 August 1999, DSR 1999:III, 1377
Canada – Autos	Panel Report, Canada – Certain Measures Affecting the Automotive Industry, WT/DS139/R, WT/DS142/R, adopted 19 June 2000, modified by Appellate Body Report, WT/DS139/AB/R, WT/DS142/AB/R, DSR 2000:VII, 3043
Canada – Dairy	Panel Report, Canada – Measures Affecting the Importation of Milk and the Exportation of Dairy Products, WT/DS103/R, WT/DS113/R, adopted 27 October 1999, modified by Appellate Body Report, WT/DS103/AB/R, WT/DS113/AB/R, DSR 1999:VI, 2097
Canada – Dairy (Article 21.5 – New Zealand and US II)	Appellate Body Report, Canada – Measures Affecting the Importation of Milk and the Exportation of Dairy Products – Second Recourse to Article 21.5 of the DSU by New Zealand and the United States, WT/DS103/AB/RW2, WT/DS113/AB/RW2, adopted 17 January 2003, DSR 2003:I, 213
Canada – Wheat Exports and Grain Imports	Panel Report, Canada – Measures Relating to Exports of Wheat and Treatment of Imported Grain, WT/DS276/R, adopted 27 September 2004, upheld by Appellate Body Report, WT/DS276/AB/R, DSR 2004:VI, 2817
Chile – Price Band System	Appellate Body Report, Chile – Price Band System and Safeguard Measures Relating to Certain Agricultural Products, WT/DS207/AB/R, adopted 23 October 2002, DSR 2002:VIII, 3045
Chile – Price Band System	Panel Report, Chile – Price Band System and Safeguard Measures Relating to Certain Agricultural Products, WT/DS207/R, adopted 23 October 2002, modified by Appellate Body Report, WT/DS207AB/R, DSR 2002:VIII, 3127
Dominican Republic – Import and Sale of Cigarettes	Appellate Body Report, Dominican Republic – Measures Affecting the Importation and Internal Sale of Cigarettes, WT/DS302/AB/R, adopted 19 May 2005
Dominican Republic – Import and Sale of Cigarettes	Panel Report, Dominican Republic – Measures Affecting the Importation and Internal Sale of Cigarettes, WT/DS302/R, adopted 19 May 2005, modified by Appellate Body Report, WT/DS302/AB/R
EC – Approval and Marketing of Biotech Products	Panel Report, European Communities – Measures Affecting the Approval and Marketing of Biotech Products, WT/DS291/R, WT/DS292/R, WT/DS293/R, Corr.1 and Add.1, 2, 3, 4, 5, 6, 7, 8 and 9, adopted 21 November 2006
EC – Bananas III	Appellate Body Report, European Communities – Regime for the Importation, Sale and Distribution of Bananas, WT/DS27/AB/R, adopted 25 September 1997, DSR 1997:II, 591
EC – Export Subsidies on Sugar (Australia)	Panel Report, European Communities – Export Subsidies on Sugar, Complaint by Australia, WT/DS265/R, adopted 19 May 2005, modified by Appellate Body Report, WT/DS265/AB/R, WT/DS266/AB/R, WT/DS283/AB/R
EC – Hormones	Appellate Body Report, EC Measures Concerning Meat and Meat Products (Hormones), WT/DS26/AB/R, WT/DS48/AB/R, adopted 13 February 1998, DSR 1998:I, 135
EC – Poultry	Appellate Body Report, European Communities – Measures Affecting the Importation of Certain Poultry Products, WT/DS69/AB/R, adopted 23 July 1998, DSR 1998:V, 2031
Guatemala – Cement I	Appellate Body Report, Guatemala – Anti-Dumping Investigation Regarding Portland Cement from Mexico, WT/DS60/AB/R, adopted 25 November 1998, DSR 1998:IX, 3767
India – Autos	Panel Report, India – Measures Affecting the Automotive Sector, WT/DS146/R, WT/DS175/R and Corr.1, adopted 5 April 2002, DSR 2002:V, 1827
India – Patents (US)	Appellate Body Report, India – Patent Protection for Pharmaceutical and Agricultural Chemical Products, WT/DS50/AB/R, adopted 16 January 1998, DSR 1998:I, 9
Japan – Alcoholic Beverages II	Appellate Body Report, Japan – Taxes on Alcoholic Beverages, WT/DS8/AB/R, WT/DS10/AB/R, WT/DS11/AB/R, adopted 1 November 1996, DSR 1996:I, 97
Japan – Apples	Appellate Body Report, Japan - Measures Affecting the Importation of Apples, WT/DS245/AB/R, adopted 10 December 2003, DSR 2003:IX, 4391
Japan – Film	Panel Report, Japan – Measures Affecting Consumer Photographic Film and Paper, WT/DS44/R, adopted 22 April 1998, DSR 1998:IV, 1179
Korea – Various Measures on Beef	Appellate Body Report, Korea – Measures Affecting Imports of Fresh, Chilled and Frozen Beef, WT/DS161/AB/R, WT/DS169/AB/R, adopted 10 January 2001, DSR 2001:I, 5
Korea – Various Measures on Beef	Panel Report, Korea – Measures Affecting Imports of Fresh, Chilled and Frozen Beef, WT/DS161/R, WT/DS169/R, adopted 10 January 2001, modified by Appellate Body Report, WT/DS161/AB/R, WT/DS169/AB/R, DSR 2001:I, 59
Mexico – Taxes on Soft Drinks	Panel Report, Mexico – Tax Measures on Soft Drinks and Other Beverages, WT/DS308/R, adopted 24 March 2006, modified by Appellate Body Report, WT/DS308/AB/R
Turkey – Textiles	Panel Report, Turkey – Restrictions on Imports of Textile and Clothing Products, WT/DS34/R, adopted 19 November 1999, modified by Appellate Body Report, WT/DS34/AB/R, DSR 1999:VI, 2363
US – Carbon Steel	Appellate Body Report, United States – Countervailing Duties on Certain Corrosion-Resistant Carbon Steel Flat Products from Germany, WT/DS213/AB/R and Corr.1, adopted 19 December 2002, DSR 2002:IX, 3779
US – Certain EC Products	Appellate Body Report, United States – Import Measures on Certain Products from the European Communities, WT/DS165/AB/R, adopted 10 January 2001, DSR 2001:I, 373
US – FSC (Article 21.5 – EC)	Appellate Body Report, United States – Tax Treatment for "Foreign Sales Corporations" – Recourse to Article 21.5 of the DSU by the European Communities, WT/DS108/AB/RW, adopted 29 January 2002, DSR 2002:I, 55
US – Gasoline	Panel Report, United States – Standards for Reformulated and Conventional Gasoline, WT/DS2/R, adopted 20 May 1996, modified by Appellate Body Report, WT/DS2/AB/R, DSR 1996:I, 29
US – Shrimp	Panel Report, United States – Import Prohibition of Certain Shrimp and Shrimp Products, WT/DS58/R and Corr.1, adopted 6 November 1998, modified by Appellate Body Report, WT/DS58/AB/R, DSR 1998:VII, 2821
US – Wheat Gluten	Appellate Body Report, United States – Definitive Safeguard Measures on Imports of Wheat Gluten from the European Communities, WT/DS166/AB/R, adopted 19 January 2001, DSR 2001:II, 717
US – Wool Shirts and Blouses	Appellate Body Report, United States – Measure Affecting Imports of Woven Wool Shirts and Blouses from India, WT/DS33/AB/R and Corr.1, adopted 23 May 1997, DSR 1997:I, 323

1.1.

On 2 November 2005, the United States requested consultations with Turkey pursuant to Articles 1 and 4 of the Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU), Article XXII of the General Agreement on Tariffs and Trade 1994 (GATT 1994), Article 6 of the Agreement on Import Licensing Procedures (Import Licensing Agreement), Article 8 of the Agreement on Trade-Related Investment Measures (TRIMs Agreement), and Article 19 of the Agreement on Agriculture with respect to Turkey's alleged import restrictions on rice from the United States.¹

1.2.

On 16 November 2005, Australia and Thailand requested, pursuant to paragraph 11 of Article 4 of the DSU, to be joined in the consultations requested by the United States with Turkey.²

1.3.

On 6 February 2006, the United States requested the establishment of a panel pursuant to Article 6 of the DSU, Article 6 of the Import Licensing Agreement, Article 8 of the TRIMs Agreement, and Article 19 of the Agreement on Agriculture, concerning Turkey's alleged import restrictions on rice.³

1.4.

At its meeting on 17 March 2006, the Dispute Settlement Body (DSB) established a Panel pursuant to the request of the United States in document WT/DS334/4, in accordance with Article 6 of the DSU.⁴

1.5.

On 20 July 2006, the United States requested the Director-General to determine the composition of the Panel, pursuant to paragraph 7 of Article 8 of the DSU. Accordingly, on 31 July 2006, the Director-General composed the Panel as follows:

Chairperson: Ms Marie-Gabrielle Ineichen-Fleisch

Members: Mr Johann Frederick Kirsten

Mr Yoichi Suzuki⁵

1.6.

The Panel's terms of reference are the following:

"To examine, in the light of the relevant provisions of the covered agreements cited by the United States in document WT/DS334/4, the matter referred to the DSB by the United States in that document, and to make such findings as will assist the DSB in making the recommendations or in giving the rulings provided for in those agreements."⁶

1.7.

Argentina, Australia, China, Egypt, the European Communities, Korea, Pakistan and Thailand reserved their rights to participate in the Panel proceedings as third parties.⁷

1.8.

In accordance with the timetable adopted after consultations with the parties, the Panel received written submissions from the United States and Turkey on 20 September and on 11 October 2006, respectively. The Panel received written rebuttals from the parties on 14 December 2006. The Panel also held two substantive meetings with the parties. The first meeting was held on 8 and 9 November 2006, and the second on 17 and 18 January 2007. The Panel received third-party written submissions from China, Egypt and the European Communities on 18 October 2006. It met with the third parties during a session of the first substantive meeting held on 9 November 2006. The Panel posed questions to the parties after each substantive meeting. Turkey also posed questions to the United States after the second substantive meeting. The Panel received replies from the parties on 30 November 2006 and on 6 February 2007. Parties submitted comments on each other's replies on 20 February 2007. The Panel also posed questions to third parties after the third party session. It received replies from some third parties on 21 November 2006.

1.9.

The descriptive sections of the draft report, including facts and arguments, were circulated to both parties on 13 March 2007. On the same date, third parties were sent the relevant descriptive sections of the draft report, containing their respective arguments. The Panel received comments to the descriptive sections of the draft report from the United States and Turkey on 20 March. On the same date, Korea presented editorial comments on the section containing its arguments.

1.10.

The Panel submitted its interim report to the parties on 3 May 2007. On 18 May, the Panel received written requests for review of precise aspects of the interim report from both parties. On 1 June, the parties submitted written comments on each other's written requests for review.

2.1.

The current dispute concerns claims brought by the United States against Turkey's alleged import restrictions on rice.

2.2.

Rice can be generally defined as:

"The grain of the grass Oryza sativa, a major world cereal."⁸

2.3.

As explained in a fact sheet published by the Food and Agriculture Organization of the United Nations (FAO):

"Rice is the predominant staple food for 17 countries in Asia and the Pacific, nine countries in North and South America and eight countries in Africa. Rice provides 20 per cent of the world's dietary energy supply, while wheat supplies 19 per cent and maize 5 per cent."⁹

2.4.

Under the Harmonized Commodity Description and Coding System (Harmonized System or HS) developed by the World Customs Organization (WCO), rice is classified under tariff item 1006. Within this item, rice is classified according to the three stages of its production process into the following sub-items:¹⁰

(i) HS 1006.10: Rice in the husk, also known as paddy or rough rice, is "rice grain still tightly enveloped by the husk".

(ii) HS 1006.20: Husked rice, also known as brown or cargo rice, has had the husk "removed by mechanical huskers [but] is still enclosed in the pericarp. Husked rice almost always contains a small quantity of paddy."

(iii) HS 1006.30: Semi-milled or wholly-milled rice, whether or not polished or glazed, corresponds to "whole rice grains from which the pericarp has been partly removed" and "whole rice grains from which the pericarp has been removed through special tapering cylinders", respectively. It is otherwise known as white rice.¹¹

2.5.

Turkish paddy rice is grown in various Turkish provinces¹² by farmers holding a permit to plant paddy rice.¹³ The Turkish rice harvest period lasts for several months in the second half of each calendar year. The United States alleges that the harvest period "begins in August and ends in October"¹⁴; while in Turkey's opinion it "begins in mid-September and lasts until the end of November".¹⁵ The marketing year runs from September to August.

2.6.

According to data provided by the United States and not contested by Turkey, the Turkish harvest area increased from 70,000 hectares in the marketing years between September 2001 and August 2004, to around 80,000 hectares in the marketing year between September 2004 and August 2005, and further to 90,000 hectares by the marketing year that commenced in September 2005.¹⁶

2.7.

As maintained by both parties, Turkish rice production has shown a continuous increase over recent years¹⁷, with a steeper increase in production after 2003.¹⁸ This latter trend is underscored by the paddy rice production figures provided by the parties.

TURKISH PADDY RICE PRODUCTION FIGURES PROVIDED BY PARTIES (TONNES)¹⁹
Figures provided by the United States in exhibit US-45	Figures provided by Turkey in exhibit TR-24
Sep 2001 – Aug 2002	360,000	360,000	2001
Sep 2002 – Aug 2003	360,000	360,000	2002
Sep 2003 – Aug 2004	415,000	372,000	2003
Sep 2004 – Aug 2005	500,000	490,000	2004
Sep 2005 – Aug 2006	600,000	550,000	2005
Sep 2006 – Aug 2007	600,000*
* estimate

2.8.

A statement by the Turkish Ministry of Agriculture mentions that "[a]n 87% increase in [paddy rice] productions was recorded in 2006, compared to the year 2002."²⁰

2.9.

Milled rice production figures provided by the parties also show an increase.

TURKISH MILLED RICE PRODUCTION FIGURES PROVIDED BY THE PARTIES (TONNES)
Figures provided by the United States in exhibit US-45	Figures provided by Turkey in exhibit TR-24
Sep 2001 – Aug 2002	234,000	216,000	2001
Sep 2002 – Aug 2003	234,000	216,000	2002
Sep 2003 – Aug 2004	270,000	223,000	2003
Sep 2004 – Aug 2005	300,000	294,000	2004
Sep 2005 – Aug 2006	360,000	330,000	2005
Sep 2006 – Aug 2007	360,000*	390,000**	2006
* estimate	** Turkey's response to question 49(c)

2.10.

Despite the differences in the detailed figures provided by the parties²¹, Turkish milled rice production has risen from around 40 per cent of Turkish rice consumption in the marketing year between September 2002 and August 2003 to around 60 per cent of Turkish rice consumption for the marketing year between September 2005 and August 2006.

2.11.

As for the average price of paddy rice purchased from producers in the Turkish market, the United States provides wholesale prices for different types and origins of rice between 2003 and 2006²², while Turkey considers its own figures on the unit price of domestic paddy purchases made by individual companies in 2005 "a more accurate and reliable source."²³ Despite those differences, parties seem to agree that the average price of paddy rice purchased by individual companies from producers in 2005 was YTL 640 per tonne²⁴, although they disagree whether the actual market price might be influenced by the purchases made by the Turkish Grain Board (TMO).²⁵

2.12.

Domestic paddy rice is processed into brown and milled rice by millers, who purchase paddy rice either directly from farmers or their cooperatives and unions, or through the TMO.

2.13.

As shown in the following table, Turkish rice consumption increased in the past few years, from 550,000 tonnes in 2003 to 570,000 in 2005.²⁶

TURKISH MILLED RICE CONSUMPTION FIGURES PROVIDED BY PARTIES (TONNES)
Figures provided by the United States in exhibit US-45	Figures provided by Turkey in exhibit TR-24
Sep 2001 – Aug 2002	540,000	540,000	2001
Sep 2002 – Aug 2003	545,000	545,000	2002
Sep 2003 – Aug 2004	550,000	550,000	2003
Sep 2004 – Aug 2005	560,000	560,000	2004
Sep 2005 – Aug 2006	570,000	570,000	2005
Sep 2006 – Aug 2007	575,000*
* estimate

2.14.

According to Turkey, "consumption levels do not change considerably on a monthly basis. Therefore, average monthly consumption can be calculated by total consumption divided by 12."²⁷

2.15.

As regards consumer choices, the United States points out that "[n]early all rice consumed in Turkey is milled white rice"²⁸, as "[m]illed rice, and less frequently brown rice, is consumed at the dinner table."²⁹

2.16.

Turkey asserts that "since rice is not a homogeneous product in taste and quality, certain types of rice are preferred by consumers. Moreover, in the Turkish market [the] domestic types of rice are sold at higher prices".³⁰

2.17.

Since the establishment of Turkey's TRQ for rice in 2004, Turkey provided for the importation of rice under the following three arrangements: (i) MFN, or over-quota imports at applied rates of duty of 34, 36 and 45 per cent for paddy, brown and milled rice, respectively³¹; (ii) preferential rates within predetermined tariff rate quotas (TRQs), for some periods between April 2004 and July 2006; and (iii) preferential trade arrangements, such as the free trade agreements with the European Communities and the Former Yugoslav Republic of Macedonia (FYROM)³² for a total of 28,000³³ and 8,000³⁴ tonnes of duty-free rice imports per annum, respectively.³⁵

2.18.

The parties concur that Turkey is a net rice importer³⁶, and their weight-based annual figures on realized imports, i.e, the actual volume of rice imports, according to rice type are rather similar, although not identical in all respects.³⁷

ANNUAL WEIGHT-BASED FIGURES ON REALIZED IMPORTS BY TYPE OF RICE (TONNES)
Period	Party submitting information	Paddy Rice	Brown Rice	Milled Rice	Annual total
2003	United States*	247,723	10,036	213,519	471,997
Turkey**	247,723	10,934	213,528	472,186***
2004	United States*	26,749	26,177	101,188	154,485
Turkey**	35,432	26,176	103,887	165,496***
2005	United States*	102,198	42,193	158,423	302,814
Turkey**	102,197	42,193	158,422	302,813***
2006 Jan-Nov	United States*	91,744	41,704	53,063	186,513
2006 Jan-Sep	Turkey**	102,761	54,430	87,597	244,789***
* Exhibit US-81rev, source: Turkish Statistics Corporation (TUIK) ** Exhibit TR-23, source: UFT. See also exhibit TR-25. *** Based on figures in exhibit TR-23

2.19.

The parties agree that 2003 has seen "the highest level of importation over the last 10 years".³⁸ They disagree, however, on the level of milled rice equivalent imports in 2003, as well as on the level and trend of total annual milled rice equivalent imports since 2004. On the one hand, Turkey argues that "together with the rise in domestic rice production, there has been a rise in [the figure of total annual rice equivalent] imports of rice into Turkey. For instance, in the period between 2004 and 2006, in which the TRQ regime was in force, rice equivalent imports have increased from 146,458 tonnes to 253,436 tonnes."³⁹ The United States, on the other hand, states that:

"Turkey's argument that rice imports have increased from 2004 through 2006 is misleading. First, imports of rice in 2004 fell from 2003 levels... As shown in exhibit US-45, TY (trade, or calendar year) imports were 151,000 metric tons in 2004, as compared to 320,000 metric tons in 2003... [Subsequently, r]ice imports did not rebound to previous levels. While TY imports in 2005 were 298,000 metric tons, they fell again in 2006 to approximately 154,000 metric tons, which is virtually the same quantity of imports as in 2004."⁴⁰

These differences between the milled rice equivalent figures presented by each party could be due to the different methods of converting import figures for paddy and brown rice into the milled rice equivalent.⁴¹ In any event, despite the Panel's questions pointing out the differences⁴², the parties' responses did not provide a completely satisfactory explanation for them.

2.20.

The weight-based annual realized import figures, on which the parties seem to largely agree, appear to confirm a significant fall between 2003 and 2004 in annual total import volumes, as well as in annual imports of milled rice and particularly of paddy rice. Further, the weight-based annual realized import figures provided by the parties show that imported quantities of paddy and milled rice, as well as total rice imports, have rebounded in 2005, although to lower levels than in 2003 – especially as regards paddy rice. This was followed by a significant decrease in the relevant periods of 2006 for total and milled rice imports. Whereas paddy rice imports in 2006 seem to be significantly higher than in 2004, figures for 2006 provided by the parties differ and do not cover the whole year, which makes it difficult to establish whether the total and milled rice import figures for 2006 are significantly higher or lower, respectively, compared to the relevant data for 2004. Finally, weight-based annual figures of realized brown rice imports seem to develop differently from other figures throughout the entire period between 2003 and 2006, in that weight-based realized brown rice imports, while relatively low, tend to continuously increase.

2.21.

Turkey has repeatedly argued that it has imported rice in the past years. In particular, Turkey has stressed that milled rice equivalent imports between January 2004 and August 2006 amounted to 939,013 tonnes.⁴³ However, based on import data from the Turkish Statistics Corporation (TUIK), the United States contends that, if imports under the TRQ as well as duty-free imports realized under Turkey's free trade agreements with the European Communities and the FYROM are disregarded, "[m]onthly non-EU Turkish rice imports are zero or negligible when the TRQ is closed."⁴⁴

2.22.

Both parties have provided figures for total rice imports to Turkey by country of origin. The figures they provided on a milled rice equivalent basis are not comparable. First, as mentioned earlier, the parties use different conversion rates to convert paddy and brown rice imports into milled rice equivalent figures. Second, Turkey provides totals for the period between January 2004 and August 2006⁴⁵, while the United States provides data on an annual basis.⁴⁶ As regards actual import figures, a comparison of the figures and calculated totals in the relevant exhibits of the parties containing data on detailed actual imports⁴⁷ show that the total figures of annual imports per country of origin according to rice type are very similar, with a few exceptions.⁴⁸ Based on the data that is common to the exhibits submitted by both parties, the following observations can be made:

SIGNIFICANT REDUCTION OR LACK OF IMPORTS

2003

RICE Type

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

no imports

paddy

no imports

brown

significantly lower imports

milled

only EC imports

mainly EC imports

only EC imports

2004

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

parties disagree whether any imports

no imports

minimal EC imports

no imports

significantly lower imports

no imports

paddy

no imports

significantly lower imports

no imports

brown

minimal EC imports

no imports

milled

2005

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

no imports

significantly lower imports

paddy

significantly lower imports

no imports

brown

significantly lower imports

milled

only EC imports

2006

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

parties disagree whether any imports

no imports

paddy

parties disagree whether any imports

brown

parties disagree whether any imports

milled

Based on data in exhibits US-81rev, TR-25 and TR-26

2.23.

Indeed, in one of its questions to the parties, the Panel noted that:

"according to the information provided by Turkey in exhibit TR-25, there seems to have been no imports of... paddy rice or brown rice in the months of October in 2003, 2004 and 2005. In addition, the data in exhibit TR-33 suggest that no rice imports whatsoever (paddy, brown or milled) took place in February and March 2004. Further, the data in exhibit TR-33 seem to suggest that there were no rice imports other than EC/Former Yugoslav Republic of Macedonia out-quota rice imports in October – December 2003 and in September – October 2005."⁴⁹

Parties did not contest these observations made by the Panel. In addition, in response to another question by the Panel⁵⁰, the parties pointed out that no imports of milled rice took place in April 2004.⁵¹

2.24.

Turkey has noted that "the major importers of rice into Turkey used to be the millers, although their import share has recently decreased."⁵² As regards imports of rice originating in the United States, the United States specifies that "[t]he main importers... are Torunlar, Akel, and Goze, but they may also import rice from other sources. All three of these companies have a large milling capacity, so they prefer to import US paddy rice."⁵³ The United States adds that these three Turkish importers, together with Mehmetoglu, which the "United States understands... is the major importer of Egyptian rice into Turkey"⁵⁴, "account for approximately 90 per cent of all imported rice into Turkey."⁵⁵ Turkey has submitted data on the quantities and value of rice imports made by Torunlar, Mehmetoglu and ETM, another company referenced by the United States. The data show that Torunlar had an average share of 17 per cent of imports of paddy rice from the United States between 2002 and 2006, and that the three companies had an overall share of general imports of paddy, brown and milled rice, of 16, 1 and 10 per cent, respectively.⁵⁶

2.25.

The United States also points out that, overall "[t]he United States and Egypt are the two largest exporters of rice to Turkey."⁵⁷ In particular, according to the United States in 2003 the most important rice exporters to Turkey in terms of volume were Egypt, the United States, China, and the European Communities, and in 2004 and 2005 Egypt, the United States and the European Communities.⁵⁸ According to figures provided by Turkey, in 2003 the largest exporters of paddy rice to Turkey were the United States, Australia, Ukraine and Italy. The main exporters of milled rice to Turkey in the same year were Egypt, China, Italy, the United States, and Vietnam. The only exporter of brown rice was Egypt.⁵⁹ Figures provided by Turkey show that in 2004 the largest exporters of paddy rice to Turkey were the United States, Italy and Russia. The only exporter of brown rice was Egypt. The main exporters of milled rice to Turkey in the same year were Italy, Egypt, China, Vietnam, Thailand, and the United States.⁶⁰ In 2005, the largest exporters of paddy rice to Turkey were the United States, Russia and Bulgaria. The main exporters of brown rice were Egypt, Bulgaria and Italy. The main exporters of milled rice to Turkey in 2005 were Egypt, Italy, the United States, Vietnam, and China.⁶¹

2.26.

With regard to imports from the United States, the United States stated that, "[g]iven the longer shipping distance, US exporters tend to ship rice less frequently and in larger allotments, typically between 10,000 and 20,000 metric tons."⁶² The Panel notes that, "according to the information provided by Turkey in exhibit TR-25, there seem to have been no imports of... (b) milled rice from the United States during: (i) January – May 2004; (ii) July 2004; (iii) September – November 2004; (iv) July – December 2005; and, (v) January 2006 – onwards; (c) paddy rice from the United States during: (i) October – December 2003; (ii) February – May 2004; and, (iii) September – November 2005."⁶³ Further, the Panel noted in particular that, based on data provided by Turkey, it seems that "no over quota imports of US rice... have actually occurred [between September 2003 and April 2005], with the exception of one shipment of 611 [metric] tons of paddy rice (date of Certificate of Control 15.09.2004; importation date 16.09.2004)."⁶⁴ In its response, Turkey did not appear to contest the substance of that data, although it noted that imports from other sources have taken place in that period.⁶⁵ As regards 2006, the United States pointed out that "Turkey's import data shows that 90,000 metric tons of rice from the United States entered Turkey in 2006. US export statistics record 17,789⁶⁶ metric tons of US rice shipped to Turkey in 2006, and no future sales have been recorded in the USDA Export Sales Report. The United States understands that any additional entries would have come from US rice Turkey finally released from bonded warehouse that had previously been refused entry."⁶⁷ Turkey, on its part, contended that, assuming there was a late release of rice, the reasons behind it could be the importers' "business calculations and decisions", such as keeping stocks until 'the appropriate moment to release it on the Turkish market in order to maximize the economic returns.⁶⁸

2.27.

As regards the price of imported rice, the parties generally dispute each other's figures. Their total monthly average c.i.f. landed prices for different types of imported rice, however, are largely similar⁶⁹, although some differences remain:⁷⁰

MONTHLY AVERAGE LANDED CIF PRICES FOR PADDY RICE (Unit Price per Tonne in US Dollars)
MONTH	2003	2004	2005	2006
United States*	Turkey**	United States*	Turkey**	United States*	Turkey**	United States*	Turkey**
January	222	218	n/a	897	255	262	279	257
February	155	154	n/a	0	967	964	n/a	229
March	241	241	n/a	0	275	273	576	537
April	179	179	721	726	252	254	273	268
May	182	177	n/a	0	230	231	n/a	265
June	461	457	190	191	240	243	266	265
July	156	159	272	273	236	237	257	258
August	211	214	266	268	264	260	263	260
September	181	175	307	305	n/a	0	n/a	0
October	n/a	0	n/a	0	n/a	0
November	n/a	0	888	885	201	200
December	n/a	0	183	503	220	219
* based on exhibit US-55, source: Turkish Statistics Corporation (TUIK) ** based on exhibit TR-28

MONTHLY AVERAGE LANDED CIF PRICES FOR BROWN RICE (Unit Price per Tonne in US Dollars)
MONTH	2003	2004	2005	2006
United States*	Turkey**	United States*	Turkey**	United States*	Turkey**	United States*	Turkey**
January	n/a	0	n/a	0	239	244	286	289
February	n/a	0	n/a	0	230	236	273	358
March	1,498	214	n/a	0	239	238	303	324
April	180	180	n/a	0	242	244	288	289
May	129	131	248	247	242	241	300	301
June	135	136	283	283	244	244	285	291
July	167	165	287	287	238	239	292	321
August	148	151	269	274	n/a	0	n/a	307
September	n/a	0	n/a	0	n/a	0	n/a	342
October	n/a	0	n/a	0	n/a	0
November	n/a	0	n/a	0	270	268
December	n/a	0	240	239	276	278
* based on exhibit US-55, source: Turkish Statistics Corporation (TUIK) ** based on exhibit TR-28

MONTHLY AVERAGE LANDED CIF PRICES FOR MILLED RICE (Unit Price per Tonne in US Dollars)
MONTH	2003	2004	2005	2006
United States*	Turkey**	United States*	Turkey**	United States*	Turkey**	United States*	Turkey**
January	262.51	258	1,670.68	1,643	314.03	319	362.21	365
February	231.42	231	716.27	711	307.82	310	373.86	375
March	224.51	225	n/a	0	311.93	312	409.63	408
April	234.16	233	n/a	0	365.04	368	437.45	441
May	248.62	247	266.26	266	403.71	405	373.68	392
June	356.52	355	287.09	288	376.41	380	383.9	384
July	249.32	249	285.88	285	358.41	358	358.78	382
August	357.35	364	399.42	403	453.41	451	n/a	332
September	703.21	688	536.46	537	600.07	607	n/a	354
October	612.62	607	559.77	561	671.78	671
November	717.56	719	404.03	403	384.04	382
December	473.97	464	403.76	411	405.76	361
* based on exhibit US-55, source: Turkish Statistics Corporation (TUIK) ** based on exhibit TR-28

2.28.

These latter three tables illustrate that average monthly landed c.i.f. prices increased significantly at the beginning of 2004 for paddy and milled rice, and in the middle of 2004 for brown rice. In 2005 and 2006, these prices returned to levels slightly above the 2003 figures. Nevertheless, significant fluctuations in landed c.i.f. prices have occurred from one month to another, at different times of the year. As the Panel noted in one of its questions to the parties:

"[T]he Panel has considered the information provided by Turkey on 'Monthly landed c.i.f. values' in exhibit TR-28, and noted a sharp increase in paddy rice prices in June 2003, January and November 2004, February 2005 and March 2006. Likewise, it has noted a sharp increase in milled rice prices in September 2003, January and August 2004 and September 2005. It has also noted a significant fall in the price for milled rice in December 2003."⁷¹

Parties did not contest these observations made by the Panel.

2.29.

Turkey maintains a registration system for all domestic producers.⁷² Applications to the National Farmer Registration System involve "controls of existence of agricultural production"⁷³ as well as the submission, inter alia, of a farmer registration form, copy of the Turkish identity card, proof of tax identification number, copy of a farmer document and one of the specified documents to prove land ownership.⁷⁴

2.30.

Turkey's bound MFN rate for rice under heading HS 1006 is 45 per cent ad valorem.⁷⁵ However, Turkey's current applied rates for imports of paddy, brown and milled rice are, respectively, 34 per cent ad valorem, 36 per cent ad valorem and 45 per cent ad valorem.⁷⁶

2.31.

According to the evidence on record, Turkey has bilateral arrangements with the European Communities and with FYROM, whereby preferential access into the Turkish market is granted for rice imported from these two origins. Asked by the Panel, Turkey has stated that these are the only preferential trade agreements signed by Turkey covering trade in rice.⁷⁷

2.32.

Under Decision No. 1/98 of the EC-Turkey Association Council of 25 February 1998 on the Trade Regime for Agricultural Products⁷⁸, Turkey committed to open annually a zero per cent duty tariff quota for 28,000 tonnes of semi-milled or wholly-milled rice that originated within the European Communities.⁷⁹

2.33.

Under a bilateral free trade agreement between Turkey and FYROM, Turkey grants an annual zero per cent quota for 8,000 tonnes of rice that originated in FYROM.⁸⁰

2.34.

From the evidence on record, an individual or company wishing to import rice into Turkey at the MFN tariff rate would need to complete the following steps:⁸¹

(a) obtain a Certificate of Control from MARA. The legal basis and the requirements for obtaining a Certificate of Control are explained below.⁸²

(b) submit the Certificate of Control to the customs authorities at the port where the importation is to take place and complete the required customs form. The customs form requires information such as: (a) importer's identification information; (b) code of imported items; (c) description of the product being imported; (d) quantity of the product being imported; (e) country of origin; (f) value of the product being imported; (g) country in which the product was loaded; (h) port.⁸³

(c) submit the approved Certificate of Control with the required attachments, the customs declaration and the phytosanitary certificate, to MARA.

(d) customs authorities conduct a documentation control as well as an identity check between the product actually imported and the product in the declaration.

(e) MARA's and customs officials perform physical inspections.

2.35.

At the time of the establishment of this Panel, the relevant legal basis for the regulation of the Certificates of Control was to be found in Communiqué 2006/05 on Standardization in Foreign Trade, issued by the Foreign Trade Undersecretariat (FTU).⁸⁴

2.36.

In turn, the legal authority for the FTU to issue such communiqués was found in Turkey's Regime for Technical Regulations and Standardization for Foreign Trade, contained in Decree No. 2005/9454.⁸⁵ According to Article 4 of this Regime:

"In the framework of this Decree, the [FTU] is authorized:

d) To harmonize the technical legislation, which is published in the framework of the competencies given by the legislation to the [FTU] and the Ministries and other institutions, with the foreign trade and to lay down the application principles."

2.37.

Pursuant to this authority⁸⁶, and to the similar provision contained in earlier decrees, the FTU has issued a number of Communiqués on Standardization in Foreign Trade.

2.38.

According to Article 1 of Communiqué 2006/05:

"Pursuant to subparagraph (d) of Article 4 of the Decree on Technical Regulations and Standardization for Foreign Trade which came in force with the Council of Ministers' Decree No. 2005/9454 on 7/9/2005, the conformity of the substances which are on the annex lists of this Communiqué and which are subject to the Entry into the Free Circulation Regime, the Internal Process Regime, the Regime on the Process under the Customs Control and the Temporary Import Regime, in respect of human health and safety, animal and plant existence and health shall be determined by the Ministry of Agriculture and Rural Affairs."⁸⁷

2.39.

Article 2 of Communiqué 2006/05 also states that:

"At import stage of the products, which have been included in the annex lists (Annex I, Annex II/A-B, Annex III, Annex IV, Annex V/A-B, Annex VI-A), control certificate approved by the Ministry of Agriculture and Rural Affairs shall be asked for by relevant customs administration. For getting control certificate, it is necessary to apply to the mentioned Ministry or to provincial affiliates (bodies) authorized by the Ministry with control certificate form (Annex VII), pro forma invoice or invoice and other documents which may be asked for, depending on product, by the Ministry..."⁸⁸

2.40.

Article 3 of Communiqué 2006/05 further adds that:

"In case that the compatibility of substances, which are to be imported on the basis of control certificate, with human health and safety, animal and plant existence and health is determined by the Ministry or its authorized units, the importation of these substances is allowed."⁸⁹

2.41.

Rice (not including seeds) is listed in Annex VI-A of Communiqué 2006/05 and, therefore, a Certificate of Control from the Ministry of Agriculture and Rural Affairs (MARA) must be presented by the importer to the Turkish customs authorities as a condition for importation.⁹⁰

2.42.

In turn, Communiqué No. 31 on the Issuance of Control Certification at the Importation of Foodstuffs and Packaging Materials that come into Contact with Foodstuffs and on Control Procedures at Importation Stage⁹¹ contains additional rules regarding the "procedures and principles to be complied with during the approval of control certification procedures at the importation of foodstuffs and packaging materials that come into contact with foodstuffs, and procedures at importation stage".⁹²

2.43.

As noted in Article 2 of Communiqué 2006/05, the form to be used in order to apply for a Certificate of Control is contained in Annex VII of the communiqué.⁹³ This form required information such as: tariff heading applicable to the product being imported; description of the product which would be in the consignment; list or annex in which the product was included (e.g., in the case of rice, Annex VI-A to Communiqué No. 2006/05); information on the importer (e.g., business title, address, telephone number); importer's tax registration number; information on the exporter (e.g., business title, address, telephone number); intended use of the product; quantity of the product being imported; country of origin of the product; country in which the product was to be loaded for transportation into Turkey; customs point of entry of the product into Turkey; information on the firm which would use the imported product (e.g., business title, address, telephone number); and applicable information indicating compliance of the imported product with the relevant Turkish technical regulations or specifications implementing international standards (i.e., European Communities, World Health Organization or FAO Codex) for the specific imported product.⁹⁴

2.44.

In addition to this information, MARA may require other documents and information, to grant a Certificate of Control.⁹⁵ According to Turkey, other documents are required, in general,

"[F]or processed agricultural products and agricultural products which are composed of more than one component. As rice does not involve more than one component, no other document such as 'the component list' is requested".⁹⁶

Other information communiqués issued jointly by MARA and the Ministry of Health have approved particular additional specifications for rice.⁹⁷

2.45.

According to Article 9(c) of Communiqué 2006/05, once issued, the Certificate of Control from MARA is valid for 12 months.⁹⁸

2.46.

According to Article 6.B(a) of Communiqué 31, the application form for a Certificate of Control is to be presented "properly typed or filled out in computer, containing no erasures or abrasions, and... signed and sealed by the authorized person/persons of the company under their name/names and surname/surnames."⁹⁹

2.47.

As clarified by Turkey, even if an importer could demonstrate the fulfilment of the separate requisites that are normally verified through a Certificate of Control, an importation would not be allowed in the absence of a valid Certificate of Control approved by MARA.¹⁰⁰

2.48.

Furthermore, as Turkey has specified, the Certificate of Control does not guarantee that an import will be allowed. In other words, although the Certificate of Control is a prerequisite for importation, it does not guarantee it.

"Turkish customs authorities have the legal authority to reject the importation of a shipment of goods, even if a Certificate of Control has been issued and approved by MARA... If the imports fail to comply with the specifications cited in the Certificate of Control, and if the inspections reveal that the imports are not consistent with SPS requirements, these imports are rejected."¹⁰¹

2.49.

In the course of this Panel's proceedings, in January 2007, a new Communiqué on Standardization in Foreign Trade was published.¹⁰² In response to a question from the Panel, Turkey has stated that, under the new Communiqué 2007/21, "there is no amendment affecting the importation of rice into Turkey".¹⁰³

2.50.

Turkey has stated that a number of Certificates of Control have been authorized for the importation of rice. In its first submission, Turkey stated that 2,223 Certificates of Control for the importation of rice had been authorized between 2003 and September 2006, allowing the importation of 2,264,857 tonnes of paddy, brown and milled rice.¹⁰⁴ That figure was subsequently updated by Turkey to 9 November 2006, to a total of 2,242 Certificates of Control for the importation of rice.¹⁰⁵

2.51.

After the first substantive meeting, the Panel asked Turkey to provide a photocopy of each of the 2,223 Certificates of Control approved between 2003 and September 2006 for the importation of rice.¹⁰⁶ In response, Turkey stated that "photocopies of Certificates of Control [were] available", but that "[t]he relevant Ministries [were] not, however, authorized to provide all the copies to the Panel".¹⁰⁷

2.52.

Turkey submitted that it would "be able to provide to the Panel in strict confidence copies of any individual Certificate of Control listed in Annex TR-33 [containing the list of Certificates of Control for the importation of rice authorized between 2003 and 9 November 2006] upon request from the Panel".¹⁰⁸

2.53.

After the second substantive meeting, the Panel referred to its earlier request to Turkey that it provide a photocopy of each of the 2,223 Certificates of Control approved between 2003 and September 2006. The Panel asked Turkey to elaborate on the legal reasons why, under its domestic legislation, it would not be authorized to provide the copies requested by the Panel.¹⁰⁹ The Panel then asked Turkey, if it could not provide a photocopy of each of the 2,223 Certificates of Control approved between 2003 and September 2006, that it provide at least a photocopy of each of the 56 approved Certificates of Control, which had been characterized as "relevant" by the United States during the second substantive meeting with the Panel.¹¹⁰ The Panel also asked Turkey to indicate how many of the 2,223 Certificates of Control, approved between 2003 and September 2006, were the result of resubmitted applications that had been initially rejected by the Turkish authorities, and to provide a photocopy of each one of these Certificates of Control.¹¹¹ Finally, the Panel proposed that, if Turkey could not provide the full photocopies requested, with the purpose of protecting the privacy of the companies involved, it at least provide those same photocopies after having blacked out the names of the companies.¹¹²

2.54.

In response, Turkey stated that its Statistical Law prevents confidential data acquired, processed and kept for official statistics, to be passed-on to any administrative, judicial or military office, authority or person, to be used except for statistical purposes, or to be used as evidence. According to Turkey's statement, the same law provides that public officials violating these prohibitions would be punished in accordance with the Turkish Criminal Code.¹¹³

2.55.

With regard to the Panel's question asking for the number of the Certificates of Control approved between 2003 and September 2006, which were the result of resubmitted applications that had been initially rejected by the Turkish authorities and requesting a photocopies of these Certificates of Control¹¹⁴, Turkey responded that "this information and documentation [was] not available in the records kept by MARA".¹¹⁵

2.56.

Finally, with respect to the Panel's new request for photocopies of the approved Certificates of Control, Turkey stated that it had provided a consolidation of the relevant information in exhibit TR-33. Regarding the actual Certificates of Control, Turkey stated that:

"Given the strict confidentiality requirements provided by Turkish law... and the well-established communications and information-exchanges between the United States and a number of Turkish rice traders... Turkish officials involved in this Panel proceeding [did] not feel comfortable in risking information leaks and possible criminal accusations of violation of Turkish law on confidentiality."

It added that, while it:

"[stood] firm in relation to the truthfulness, completeness and usefulness of the information that it provided earlier by means of its... consolidation... [it was] not in a position to provide copies of the actual Certificates of Control for circulation."

Turkey concluded that:

"Exceptionally [it] would be willing to provide 'blacked-out' copies of the 56 'relevant' Certificates of Control only to the Panel and after a clear understanding with the Panel and between the parties to this dispute that these documents would not be made available to the United States nor to any other entity beside the Panel and the WTO Secretariat".¹¹⁶

2.57.

The Panel notes that the possibility of the Panel adopting special rules to protect the confidentiality of information submitted by the parties was suggested by the complainant in the course of the substantive meetings with the parties. Turkey did not ask, however, that the Panel adopt any particular measures in order to grant special protection to the confidentiality of the Certificates of Control requested as evidence by the Panel. After a request from the Panel, Turkey offered to submit the Certificates of Control, but with "a clear understanding with the Panel and between the parties... that these documents would not be made available to the United States nor to any other entity beside the Panel and the WTO Secretariat."¹¹⁷

2.58.

The complainant has submitted evidence of the rejection of Certificates of Control for the importation of rice requested by two companies (Torunlar and Mehmetoglu). According to the record, requests filed by Torunlar were rejected in September 2003 and again in November 2003 for reasons respectively cited as "missing items"¹¹⁸ or "spelling errors".¹¹⁹ Turkey did not contest the authenticity of these rejections, but it noted that the application allegedly rejected for "spelling errors" could not be found among the records of MARA.¹²⁰ In 2004, this company filed a motion in a Turkish administrative court against the government's refusal to authorize the importation of rice.¹²¹ In September 2004, after the motion had been filed in the administrative court, MARA rejected a third request for a Certificate of Control filed by the same company for the importation of rice.¹²²

2.59.

In the case of Mehmetoglu, a request made in April 2006 to obtain a Certificate of Control for the importation of milled rice from the United States, was rejected in May 2006. The letter of rejection from MARA states that "it is not possible to prepare a control certificate according to our laws and regulations".¹²³

2.60.

Documents related to procedures before Turkish administrative courts, which are on record in this case, refer to additional instances of rejection of Certificates of Control for the importation of rice.¹²⁴ One such document contains a decision by an administrative court in Ankara to dismiss the petition presented by the importing company Helin. As described in this document, Helin had its application rejected on 15 August 2005, on the grounds that "no [Certificates of Control] for husked rice would be approved until new guidelines are established for such importation, as expressed in the approval… dated July 29, 2005".¹²⁵

2.61.

Also on record are three petitions before the administrative courts, each filed by a different importing company. In these petitions, the companies describe that, after an initial rejection, they resubmitted requests for Certificates of Control for the importation of rice on 18 October 2005. These requests were rejected by MARA through letters dated 28 October 2005, and numbered 112603, 112604 and 112605, respectively, with an identical explanation that MARA was "unable to prepare [Certificates of Control] for rice, until the new application rules are confirmed".¹²⁶

2.62.

An additional petition, filed by another importing company before an administrative court, describes that, after three successive applications, MARA rejected its requests for Certificates of Control for the importation of rice through a letter dated 12 December 2005, and numbered 114092, with the explanation that MARA was "unable to prepare [Certificates of Control] for rice, until the new application rules are confirmed".¹²⁷

2.63.

After the second substantive meeting, the Panel referred to exhibit TR-36 submitted by Turkey, which contains a list prepared by Turkey of the applications for Certificates of Control for the importation of rice which were rejected from 2003 to 21 September 2006, including the reasons for denial. The Panel asked Turkey to provide a photocopy of each of the rejected applications, cited in the list contained in exhibit TR-36, as well as of the corresponding letters by which its authorities had notified the requesting companies of the rejection of a requested Certificate of Control.¹²⁸

2.64.

The Panel proposed that, if Turkey could not provide the full photocopies requested, out of concerns for the privacy of the companies involved, it at least provide those same photocopies after having blacked out the names of the companies.¹²⁹

2.65.

In response, Turkey stated that "this information and documentation [was] not available in the records kept by MARA."¹³⁰

2.66.

After the second substantive meeting, the Panel posed questions to Turkey regarding exhibit US-29, submitted by the complainant as an annex to its first submission.¹³¹ That exhibit contains a photocopy of an application for a Certificate of Control for the importation of rice, filed on 23 October 2003 and which was rejected on 3 November 2003, allegedly "due to spelling errors".¹³² The Panel noted that "spelling errors" had not been listed by Turkey as reasons for denial of Certificates of Control and asked Turkey to confirm whether such errors would be grounds for the rejection of an application for a Certificate of Control. If so, it asked Turkey to identify the legal basis for rejecting applications owing to "spelling errors".

2.67.

In its reply, Turkey submitted that it could not provide an answer to this question, as the application cited by the United States could not be found among the records of MARA.¹³³ It argued, however, that it is not MARA's general policy to systematically deny applications on the basis of minor spelling mistakes. Nevertheless, it noted that, in certain instances, spelling errors may affect crucial elements of the application and the process of importation, which may lead to individual rejections. In Turkey's opinion, this case cited by the complainant is an individual episode that does not "imply or suggest a pattern of systematic rejection of applications for futile reasons".¹³⁴

2.68.

As mentioned above, in 2004, Torunlar filed a motion in a Turkish administrative court against the government's refusal to authorize the importation of rice.¹³⁵ In its response to this motion, filed in November 2004, the counsel for MARA argued before the court that the rejection of the Certificates of Control "was undertaken in observance of the common good and public service keeping in mind the goals of protecting [Turkish] national producer[s], to redress their grievances and to prevent unnecessary stock build up..."¹³⁶ In support of its argument, the counsel for MARA cited letters from MARA's General Directorate of Protection and Control and from the TMO, by which the authorization of Certificates of Control for the importation of rice was suspended over several periods. The counsel for MARA specifically referred to the following letters:

(a) Letter No. 964 from MARA dated 10 September 2003, by which the period for issuing Certificates of Control for the importation of rice would begin on 1 March 2004.¹³⁷

(b) Letter by which the General Directorate of the TMO requested that no Certificates of Control for the importation of rice be issued until 30 June 2004, because existing rice and paddy rice stocks were estimated to be adequate for the nation's needs until the end of June 2004.¹³⁸

(c) Letter No. 107 from MARA dated 23 January 2004, by which the period for issuing Certificates of Control for the importation of rice and paddy rice would begin in July 2004.¹³⁹

(d) Letter No. 689 dated 4 June 2004, from the General Directorate of the TMO, by which "the instruction was given to extend the term for stopping the issuance of [Certificates of Control], from July 01, 2004 to the beginning of January 2005, in order to protect [Turkish] national production, to redress the grievances of the domestic grower, [and] to conserve national currency reserves by avoiding excessive imports".¹⁴⁰

(e) Letter No. 905 from MARA dated 28 June 2004, by which the period for issuing Certificates of Control for the importation of rice and paddy rice was to open on 1 January 2005, with a closing date of 1 August 2005 for rice and 1 September 2005 for paddy rice.¹⁴¹

2.69.

The lawsuit concluded with a decision in favour of MARA.¹⁴² This decision was not appealed by Torunlar¹⁴³, nor by MARA.¹⁴⁴

2.70.

As mentioned above, also on record is a decision by an administrative court in the case of a petition presented by another importing company, Helin, against MARA's rejection of its application for a Certificate of Control for the importation of rice.¹⁴⁵ The court dismissed the petition on the grounds that:

"[I]t is verified that the opening date for the issuance of the Inspection Document [Certificate of Control] was indeed determined as August 1, 2005 by the administration as is evident from the 'approval' document issued by the Office dated 12.30.2004, number 1795; however, as stated by the 'approval' document issued on 7.29.2005, number 1304, the stocks of produced and imported husked rice in 2004 were deemed to be at a level that would meet the needs of the country handily; therefore no Inspection Document [Certificate of Control] would be issued until consumption volume and trade policies are reviewed, and a basis for the new practices is established. Under these circumstances, the court finds no basis for the claim of illegality in the decision not to grant an inspection document until the establishment of new practices, or in the procedure by which the plaintiff's request was declined."¹⁴⁶

2.71.

Decree No. 95/6814 of 30 April 1995 on Surveillance and Safeguard Measures for Imports and Administration of Quotas and Tariff Quotas¹⁴⁷ contains procedures and principles related to, inter alia, "[t]he use of quotas in case tariff quotas are applied for imports in the framework of the bilateral or multilateral preferential trade agreements or unilaterally according to the provisions of the international agreements."¹⁴⁸ Article 3 of this decree grants the FTU the authority:

"(b) To determine the quantities and/or values of quotas and the procedure and principles of distribution... and to issue documents with this objective and to instruct to the relevant institutions and organizations concerning the implementation and necessary permissions.

(c) To determine the procedures and principles for use of the tariff quotas which are opened unilaterally according to international agreements or based on the bilateral or multilateral preferential trade agreements."¹⁴⁹

2.72.

Rules on the matter are also contained in Decree No. 2004/7333 of 10 May 2004 on the Administration of Quotas and Tariff Quotas:¹⁵⁰

"This Decree covers the procedures and principles related to the administration of quotas and tariff quotas that can be applied in the framework of the measures adopted based on the bilateral or multilateral preferential trade agreements or unilaterally by taking the international obligations into consideration."¹⁵¹

2.73.

According to Provisional Article 1 of Decree No. 2004/7333:

"[T]he procedures concerning the quotas and tariff quotas imposed under the Decree on Surveillance and Safeguard Measures for Imports and Administration of Quotas and Tariff Quotas, which was put into force in accordance with the Council of Ministers Decree No. 95/6814 of 30 April 1995 shall carry on under the provisions of this Decree."¹⁵²

2.74.

In turn, Provisional Article 2 of Decree No. 2004/7333 states that:

"References to the Decree on Surveillance and Safeguard Measures for Imports and Administration of Quotas and Tariff Quotas, which was put into force in accordance with the Council of Ministers Decree No. 95/6814 of 30 April 1995 concerning the administration of quotas and tariff quotas, shall be understood as referring to this Decree."¹⁵³

2.75.

Article 3 of Decree No. 2004/7333 maintains the authority of the FTU:

"(a) to determine the procedures and principles of the application, distribution and use of quotas and tariff quotas and to prepare documents in this purpose...

(d) to coordinate and give instructions to the relevant institutions and organizations for the implementation of this Decree;

(e) to prepare Regulations and Communiqués concerning the implementation of this Decree."¹⁵⁴

2.76.

Pursuant to Decree No. 2004/7333¹⁵⁵, a tariff quota regime for the importation of rice was put in place by Decree 2005/9315 of 10 August 2005 on the Application of Tariff Quota for the Importation of Some Species of Paddy Rice and Rice.¹⁵⁶ This tariff quota was in force at the time this Panel was established.

2.77.

Decree 2005/9315 opened a tariff quota for the importation of rice from 1 November 2005 to 31 July 2006.¹⁵⁷ Importers who purchased paddy rice from domestic producers or purchased paddy rice or milled rice from the TMO would be able to benefit from the tariff quotas.¹⁵⁸ These importers could enjoy tariffs of 20 per cent ad valorem for paddy rice (1006.10)¹⁵⁹, 25 per cent ad valorem for husked rice (1006.20), and 43 per cent ad valorem for semi-milled or milled rice (1006.30)¹⁶⁰, instead of paying the rates otherwise set in Turkey's domestic tariff schedule (respectively, 34, 36 and 45 per cent ad valorem).

2.78.

The maximum amount assigned under the quota was equal to 300,000 tonnes of semi-milled or milled rice equivalent (with a conversion factor of 60 per cent for paddy rice and 75 per cent for brown rice). In other words, the quantity of the tariff quota was equal to 500,000 tonnes if wholly allocated to paddy rice (1006.10), 400,000 tonnes if wholly allocated to husked rice (1006.20), and 300,000 tonnes if wholly allocated to semi-milled or milled rice (1006.30).¹⁶¹ In order to import under the tariff quota, importers would need to obtain an import licence from the FTU.¹⁶²

2.79.

An additional tariff quota of 50,000 tonnes of milled rice at a 43 per cent tariff rate, from 1 October 2005 to 31 July 2006, was assigned to the TMO "to be used in need".¹⁶³

2.80.

As noted above, Article 5 of Decree No. 2005/9315 established a domestic purchase requirement, which conditioned the allocation of tariff quotas to the purchase of:

"[P]addy rice from [domestic] paddy producers having permission to plant paddy rice or from their cooperatives and unions [with proof of] this purchase with the certificate issued by Turkish Grain Board and... [to the] purchase of paddy rice or rice from [the] Turkish Grain Board."¹⁶⁴

2.81.

The rules for the implementation of the tariff rate quotas, including the conditions of eligibility, the implementation methods, the application procedures and requirements, the periods for application, the expiration dates, and other relevant details, were provided by means of decrees and FTU communiqués.

2.82.

Accordingly, Communiqué No. 25,943 of the FTU on the Application of Tariff Quota for the Importation of Some Species of Paddy Rice and Rice¹⁶⁵ contained rules on the implementation of the tariff rate quota in force at the time of the establishment of this Panel.

2.83.

Communiqué No. 25,943 conditioned the allocation of tariff quotas under the TRQ opened between November 2005 and July 2006 on the purchase of domestic rice from domestic producers and from the TMO from 1 September 2005 until 31 March 2006, according to the conversion coefficients provided therein.¹⁶⁶ In order to benefit from the tariff quotas, importers were required to purchase the domestic rice from local producers or from the TMO and to submit their form to the FTU, with all necessary documents, by 10 April 2006.¹⁶⁷ The FTU could allocate any portion of the quota that remained unallocated by 11 April 2006.¹⁶⁸ Import licences granted by the FTU would be valid from 1 November 2005 until 31 July 2006 and could not be transferred to third parties.¹⁶⁹

2.84.

The allocation of tariff quotas depended on the type of domestic rice which was purchased, its source and its region of origin. According to Communiqué No. 25,943, the following ratios were applied:

(a) The purchase of 1,000 kg of paddy rice from paddy producers permitted to plant paddy rice or from their cooperatives and unions, from regions other than Balikesir, Bursa, Çanakkale, Edirne, Istanbul, Kirkareli, Sakarya and Tekirdağ, allowed for the import of 800 kg of paddy rice, 640 kg of brown rice, or 480 kg of milled rice.

(b) The purchase of 1,000 kg of paddy rice from paddy producers permitted to plant paddy rice or from their cooperatives and unions located in Balikesir, Bursa, Çanakkale, Edirne, Istanbul, Kirkareli, Sakarya and Tekirdağ, allowed for the import of 600 kg of paddy rice, 480 kg of brown rice, or 360 kg of milled rice.

(c) The purchase of 1,000 kg of paddy rice from the TMO allowed for the import of 500 kg of paddy rice, 400 kg of brown rice, or 300 kg of milled rice.

(d) The purchase of 1,000 kg of milled rice from the TMO allowed for the import of 833 kg of paddy rice, 666 kg of brown rice, or 500 kg of milled rice.¹⁷⁰

2.85.

A similar tariff quota regime had been in place the year before, under Decree 2004/7135 of 20 April 2004 on the Application of Tariff Quota for the Importation of Some Species of Paddy Rice and Rice.¹⁷¹ This decree was issued pursuant to the rules contained in Decree No. 95/6814 of 30 April 1995 on Surveillance and Safeguard Measures for Imports and Administration of Quotas and Tariff Quotas.

2.86.

Decree 2004/7135 opened a tariff quota for the importation of rice from the date of the decree (20 April 2004) until 31 August 2004.¹⁷² Under this regime, importers could enjoy tariffs of 32 per cent ad valorem for paddy rice (1006.10)¹⁷³, 34 per cent ad valorem for husked rice (1006.20), and 43 per cent ad valorem for semi-milled or milled rice (1006.30)¹⁷⁴, instead of paying the rates otherwise set in Turkey's domestic tariff schedule.

2.87.

The maximum amount assigned under the quota was equal to 72,000 tonnes of semi-milled or milled rice equivalent (with a conversion factor of 60 per cent for paddy rice and 75 per cent for brown rice). In other words, the quantity of the tariff quota was equal to 120,000 tonnes if wholly allocated to paddy rice (1006.10), 96,000 tonnes if wholly allocated to husked rice (1006.20), and 72,000 tonnes if wholly allocated to semi-milled or milled rice (1006.30).¹⁷⁵ In order to import under the tariff quota, importers would need to obtain an import licence from the FTU.¹⁷⁶

2.88.

Communiqué No. 25,445 of the FTU on the Application of Tariff Quota for the Importation of Some Species of Paddy Rice and Rice¹⁷⁷conditioned the allocation of tariff quotas under the TRQ opened between 20 April 2004 and 31 August 2004 to the purchase of domestic rice from the 2003/2004 crop season from the TMO since 1 September 2003, according to the conversion coefficients provided therein.¹⁷⁸ Import licences granted by the FTU would be valid until 31 August 2004 and could not be transferred to third parties.¹⁷⁹

2.89.

It does not appear that Communiqué No. 25,445 of the FTU specified the amounts of rice that an importer who purchased 1,000 kg of paddy rice from the TMO would be allowed to import. The communiqué only seems to have indicated that those amounts would be allocated "based on the purchase from TMO".¹⁸⁰ Turkey has informed, however, that the allocation of tariff quotas for the period from 20 April 2004 until 31 August 2004 was carried out according to the following ratios:

(a) The purchase of 1,000 kg of paddy rice from the TMO allowed for the import of 1,000 kg of paddy rice, 800 kg of brown rice, or 600 kg of milled rice.

(b) The purchase of 1,000 kg of milled rice from the TMO allowed for the import of 1,666 kg of paddy rice, 1,333 kg of brown rice, or 1,000 kg of milled rice.¹⁸¹

2.90.

Another tariff quota regime was put in place under Decree 2004/7756 of August 2004 on the Application of Tariff Quota for the Importation of Some Species of Paddy Rice and Rice.¹⁸²

2.91.

Decree 2004/7756 opened a tariff quota for the importation of rice from 1 November 2004 to 31 July 2005.¹⁸³ Importers who purchased paddy rice from domestic producers or purchased paddy rice or rice from the TMO would be able to benefit from the tariff quotas.¹⁸⁴ These importers could enjoy tariffs of 32 per cent ad valorem for paddy rice (1006.10)¹⁸⁵, 34 per cent ad valorem for husked rice (1006.20), and 43 per cent ad valorem for semi-milled or milled rice (1006.30)¹⁸⁶, instead of paying the rates otherwise set in Turkey's domestic tariff schedule.

2.92.

The maximum amount assigned under the quota was equal to 300,000 tonnes of semi-milled or milled rice equivalent (with a conversion factor of 60 per cent for paddy rice and 75 per cent for brown rice). In other words, the quantity of the tariff quota was equal to 500,000 tonnes if wholly allocated to paddy rice (1006.10), 400,000 tonnes if wholly allocated to husked rice (1006.20), and 300,000 tonnes if wholly allocated to semi-milled or milled rice (1006.30).¹⁸⁷ In order to import under the tariff quota, importers would need to obtain an import licence from the FTU.¹⁸⁸

2.93.

An additional tariff quota of 50,000 tonnes of milled rice at a 43 per cent tariff rate, from 1 October 2004 to 31 July 2005, was assigned to the TMO "to be used in need".¹⁸⁹

2.94.

Communiqué No. 25,577 of the FTU on the Application of Tariff Quota for the Importation of Some Species of Paddy Rice and Rice¹⁹⁰conditioned the allocation of tariff quotas under the TRQ opened between November 2004 and July 2005 to the requirement of purchasing domestic rice from domestic producers and from the TMO since 1 September 2004, according with the conversion coefficients provided therein.¹⁹¹ In order to benefit from the tariff quotas, importers were required to submit their form to the FTU, with all the documents necessary, by 31 January 2005.¹⁹² The FTU could extend this date, provided there remained an unallocated portion of the quota by 1 February 2005.¹⁹³ Indeed, the date for filing the forms was twice extended, first to 29 April 2005 and then to 15 June 2005.¹⁹⁴ Import licences granted by the FTU would be valid from 1 November 2004 until 31 July 2005 and could not be transferred to third parties.¹⁹⁵

2.95.

The allocation of tariff quotas depended on the type of domestic rice which was purchased, its source and its region of origin. According to Communiqué No. 25,577, the following ratios were applied:

(a) The purchase of 1,000 kg of paddy rice from paddy producers permitted to plant paddy rice or from their cooperatives and unions, from regions other than Balikesir, Bursa, Çanakkale, Edirne, Kirkareli, Sakarya and Tekirdağ, allowed for the import of 1,000 kg of paddy rice, 800 kg of brown rice, or 600 kg of milled rice.

(b) The purchase of 1,000 kg of paddy rice from paddy producers permitted to plant paddy rice or from their cooperatives and unions located in Balikesir, Bursa, Çanakkale, Edirne, Kirkareli, Sakarya and Tekirdağ, allowed for the import of 700 kg of paddy rice, 560 kg of brown rice, or 420 kg of milled rice.

(c) The purchase of 1,000 kg of paddy rice from the TMO allowed for the import of 500 kg of paddy rice, 400 kg of brown rice, or 300 kg of milled rice.

(d) The purchase of 1,000 kg of milled rice from the TMO allowed for the import of 833 kg of paddy rice, 666 kg of brown rice, or 500 kg of milled rice.¹⁹⁶

2.96.

Under the tariff quota regime for the importation of rice that was in place at the time when this Panel was established, pursuant to Decree 2005/9315 of September 2005¹⁹⁷, importers who wished to benefit from the reduced tariffs needed to obtain an import licence from the FTU. The licence would then have to be presented to the related customs administration on the date in which the customs liability arises.¹⁹⁸

2.97.

Under Communiqué No. 25,943, applications for import licences could be submitted from the day the in which the communiqué entered into force (i.e., 21 September 2005), until 10 April 2006. Applications lacking the complete information or documents required and applications submitted after the depletion of the tariff quota would not be considered.¹⁹⁹

2.98.

Import licences were non-transferable and valid from 1 November 2005 until 31 July 2006.²⁰⁰ During this time, the items had to enter into circulation.²⁰¹ The import licences had to be returned to the FTU's Directorate General for Imports within 10 days of their expiration.²⁰²

2.99.

The Annex of Communiqué No. 25943 of the FTU contained the form that should be completed by applicants and listed the information and documents required. This form required information such as: (a) importer's name, address, telephone and fax number, tax registration number and e-mail address; (b) country of origin and country in which the product was to be loaded for transportation into Turkey; (c) description of the product being imported, item name, as indicated in the HS code, and HS code in 12 digits; (d) quantity and unit of measurement of the product being imported; (e) value of the product being imported; (f) original invoice or proforma invoice; (g) identification of the Directorate of Customs and Customs Enforcement from which importation was to be made; (h) original certificate issued by TMO, which proved the purchase of domestic rice; (i) original invoice of the purchase of domestic rice; and, (j) approved copies that proved the signatory power of the applicant and Trade Records Gazette where the name of the company had been published.²⁰³

2.100.

The Turkish Grain Board is described as a "State Economic Corporation organized under the name Toprak Mahsulleri Ofisi (T.M.O.) A.Ş." by the Turkish Grain Board (Agricultural Products Office, Inc.) Articles of Incorporation²⁰⁴, which is the legal instrument with "all relevant information regarding the nature, functions and composition of the TMO" provided by Turkey.²⁰⁵

2.101.

A recent Trade Policy Review of Turkey conducted by the WTO Secretariat²⁰⁶ only refers to the TMO when describing the changes it was undergoing at the time as part of its restructuring process:

"[O]n the basis of the EU system... [i.e.] limiting TMO's purchases to emergency and supplementary purchases; transferring the existing storage facilities to the private sector, and then leasing such facilities to producers; maintaining TMO as a central institution with a view to facilitating emergency and intervention purchases in the medium term; and guaranteeing that the TMO's purchases are made only through the commodity markets.²⁰⁷"²⁰⁸

No particular reference is made to its participation in the Turkish rice market.

2.102.

The TMO Articles of Incorporation define a state economic corporation as a "state economic enterprise the capital of which is fully held by the state and which is founded to operate in the economy according to commercial practices."²⁰⁹ Article 3, paragraph 4, of the TMO Articles of Incorporation provides that "the Corporation's capital is TL 50 (fifty) billion [Now, TL 330 trillion (YPK resolution no. 985/66 of 8.12.1998)] which is fully held by the State. The Corporation's capital may be changed by a Coordination Board decision upon a proposal by the competent Ministry."²¹⁰ Further, Articles 2 and 20 of the same legal text provide that the TMO's budget is controlled by the state and supervised by the competent Ministry and State Planning Organization.²¹¹

2.103.

The function of the TMO is that of preventing "the falling of grain prices below normal levels in view of the producers and extraordinary increase thereof in view of the interests of the consumers".²¹² One of the ways to achieve market stabilization, would be by buying and selling grains, as well as creating and keeping necessary stocks.²¹³ In Turkey's words, "the TMO acts as an intervention agency."²¹⁴

2.104.

The TMO neither buys nor sells any brown rice.²¹⁵ Both Decree No. 2004/7556 and Decree No. 2005/9315 granted the TMO a tariff quota of 50,000 tonnes of milled rice "to be used in need", in the context of the tariff rate quotas opened from November 2004 to July 2005 and from November 2005 to July 2006.²¹⁶ However, purchases of rice by the TMO have been restricted to paddy rice.²¹⁷

2.105.

Data provided by Turkey regarding the quantities purchased by the TMO between 2003 and 2006 is the following:²¹⁸

TMO PADDY RICE PURCHASES (TONNES)
2003	130,632
2004	14,855
2005	11,899
2006*	12,464
* As of 15 October 2006

2.106.

Based on these figures, Turkey asserts that:

"In the years 2005 and 2006, the Turkish Grain Board (TMO) was not determining market prices, due to the fact that it made purchases of very little quantities of paddy rice (i.e., approximately 14,000 tonnes)".²¹⁹

2.107.

The quantities of rice sold by the TMO from 2003 to 2006, as presented by Turkey, correspond to:²²⁰

	TMO PADDY RICE SALES (TONNES)	TMO MILLED RICE SALES (TONNES)
2003	-	17,789
2004	119,880	14,122
2005	3,228	6,639
2006*	9,575	2,718
* As of 16 November 2006

2.108.

Regarding the prices at which TMO purchases rice, both Turkey and the United States have provided the Panel with the figures presented in the following tables: (a) the first table reflects the information submitted by the United States on paddy and milled rice, with periods corresponding to the Turkish Marketing Years from 2003 to 2007; (b) the second table contains the information submitted by Turkey on paddy rice, with periods corresponding to calendar years from 2004 to 2006; (c) the third table contains the information submitted by Turkey on milled rice, with periods corresponding to calendar years from 2003 to 2006; (d) the fourth table reflects the comparison between the first column of the first and the third tables. All the figures are expressed in new Turkish lira by Tonnes (YTL/T).²²¹

Turkish Grain Board Announced Prices*:²²²

Turkish Marketing Year (Sept/Aug)	Paddy Procurement Prices from Producers for Osmancik	Milled Rice Sales Price for Osmancik
2003/2004	700	1250
2004/2005	756	1500
2005/2006	720	1500
2006/2007	720	1500
*Sources: Turkish Grain Board website 2004/2005, 2005/2006 and 2006/2007. Turkish Rice Millers Association 2003/2004 prices. Paddy prices are for rice with average milling rate.

Paddy Rice Selling Prices Declared by the TMO (Yearly Averages)*:²²³

	BALDO	OSMANCIK
2004*	840	743
2005	978	871
2006	970	772
* No data available for the period prior to January 2004

Rice Selling Prices (Wholesale) Declared by TMO (Yearly Averages):²²⁴

	BALDO	OSMANCIK
2003	1,352	1,209
2004	1,543	1,338
2005	1,741	1,469
2006	1,630	1,470

Selling Price by the TMO of Osmancik Milled Rice as Presented by the United States and Turkey:

	United States	TURKEY
2003/2004 (2003)	1,250	1,209
2004/2005 (2004)	1,500	1,338
2005/2006 (2005)	1,500	1,469
2006/2007 (2006)	1,500	1,470

2.109.

The TMO determines the price at which it purchases rice, which Turkey has submitted as the following:²²⁵

PURCHASING PRICES DECLARED BY TMO AND PRICES RECEIVED BY GROWERS FOR LONG GRAIN PADDY RICE(NEW TURKISH LIRAS BY TONNES)
	DECLARED PRICE	RECEIVED PRICE*
2002	600	554
2003	700	628
2004	756	695
2005	720	612
2006	720	639
* The difference between the declared and the received prices is due to quality

2.110.

The record shows that, in a number of cases, MARA's General Directorate of Protection and Control has recommended to the Minister of Agriculture and Rural Affairs that the granting of Certificates of Control be temporarily suspended. These recommendations have been made through documents that have been called "letters of Acceptance" throughout the proceedings of this Panel. Letters of Acceptance were signed by MARA's General Director, and then by the Minister in acceptance of the recommendation.²²⁶

2.111.

As identified below, copies of several letters of acceptance of this type have been submitted as exhibits by the complainant. Their existence has not been rebutted by Turkey.²²⁷ The legal nature of these documents, however, has been contested between the parties. Turkey has also argued that the letters of acceptance "often contain confidential positions".²²⁸

2.112.

The record shows evidence of the following letters of acceptance: (a) letter No. 107, dated 23 January 2004²²⁹; (b) letter No. 905, dated 28 June 2004²³⁰; (c) letter No. 1,795, dated 30 December 2004²³¹; and, (d) letter number unknown, dated 24 March 2006²³².

2.113.

Some of these letters, in turn, make reference to other letters of acceptance of which there is no copy on file. Namely: (a) letter No. 964 of 10 September 2003; and, (b) letter No. 1,304 of 29 July 2005.

2.114.

Letter No. 107 of 23 January 2004. Refers to a letter from the ministerial office No. 964 of 10 September 2003, which determined the period of issuance of Certificates of Control for rice from 1 March 2004 and for paddy rice from 1 August 2004, both ending on 1 September 2004. It then notes that the General Directorate of the TMO has asked that Certificates of Control for rice should not be issued until 30 June 2004, "on the grounds that it became evident through the talks with rice [and] paddy rice growers, as well as the importers, based on estimates, [that] rice stocks [would] be adequate for [Turkey's] needs until... June 30, 2004." The letter concludes by requesting a rescheduling of the opening date for the period of issuance of Certificates of Control to 1 July 2004.²³³

2.115.

Letter No. 905 of 28 June 2004. Refers to a letter from the ministerial office No. 107 of 23 January 2004, which determined the period of issuance of Certificates of Control from 1 July 2004 to 1 August 2004 for rice, and from 1 July 2004 to 1 September 2004 for paddy rice. It then notes that the General Directorate of the TMO has stated that:

"[P]addy rice harvest season would begin as of September; and that even though it is difficult to make an accurate estimate, it is expected to be at the level of the previous year (370,000 tons); and that it would be appropriate to extend the period of [Certificates of Control] issuance which would initially have begun in July 01 2004, until January 2005, in order to protect the national growers, to redress their grievances and to avert building paddy rice and rice stocks needlessly".

The letter concludes by requesting a rescheduling of the opening date for the period of issuance of Certificates of Control to 1 January 2005 for milled rice and paddy rice, with a closing date of 1 August 2005 for milled rice and 1 September 2005 for paddy rice.²³⁴

2.116.

Letter No. 1,795 of 30 December 2004. Refers to a letter from the ministerial office No. 905 of 28 June 2004, which determined the issuance period of Certificates of Control from 1 January 2005, with a closing date of 1 August 2005 for milled rice and 1 September 2005 for paddy rice. It then notes that the General Directorate of the TMO has stated "that the practice of not issuing [Certificates of Control] for the persons and corporations who do not purchase paddy rice from the growers controlled by TMO and directly from TMO is deemed appropriate to be extended until 07.30.2005". The letter concludes by requesting a rescheduling of the opening date for the period of issuance of Certificates of Control to 1 August 2005.²³⁵

2.117.

Letter number unknown of 24 March 2006. Refers to a letter from the ministerial office No. 1,304 of 29 July 2005, which determined that Certificates of Control would not be issued "until a new policy [was] in place". It also refers to the fact that the United States has taken action in the WTO "about our implementations on rice imports". It goes on to note the letters received from the General Directorate of the TMO numbered 531 and 603 of 3 March 2006 and 14 March 2006, respectively.²³⁶ Those letters allegedly state that:

"The applicability of the Tariff Quota System will not be possible in the coming years. Our producers should be supported through paying the price difference to close the gap with world prices, and the system should be operated without leading to international disputes. Meanwhile, the temporary ban of issuance of control certificates during harvest season will be suitable to be kept in place".

The letter concludes by requesting that the dates to issue Certificates of Control to import milled rice and paddy rice be rearranged to begin on 1 April 2006 and close on 1 August 2006. It also recommends that Certificates of Control be issued one at a time, each limited to 10,000 tonnes for milled rice and 15,000 tonnes for paddy rice. New Certificates of Control for the importation of rice would only be authorized after the quota of each previous certificate was fully used.²³⁷

2.118.

The nature of the letters of acceptance has been disputed by the parties. The United States has argued that these letters provide a binding instruction which is relied upon by MARA authorities to deny the issuance of Control Certificates for the importation of rice.²³⁸

2.119.

In turn, Turkey has stated that these documents are:

"[M]ere instruments of internal communication among Turkish administrators and public officials [that] often contain confidential positions and/or political statements which are aimed at developing unofficial policy recommendations."²³⁹

2.120.

On the occasion of the second substantive meeting, the Panel referred to these statements. It then asked Turkey whether the Minister of Agriculture and Rural Affairs could refuse the recommendation made by a Director General of MARA through a letter of acceptance. The Panel asked Turkey to provide documentary evidence in support of its response.²⁴⁰ The Panel also asked Turkey to provide evidence of letters of acceptance containing policy recommendations that the Minister of Agriculture and Rural Affairs had not approved.²⁴¹ In response to these questions, Turkey replied that "the Minister may refuse the recommendation made by a Director General of MARA".²⁴² It did not provide any specific documentary evidence to support this response.²⁴³ Turkey also stated that, "given the privileged nature of the communications internal to the Administration and the confidential nature of the information contained therein", "Turkey [was not] in the position to circulate" any such documents.²⁴⁴

2.121.

Also on the occasion of the second substantive meeting, and in response to a different question from the Panel, Turkey stated that "[n]o Letters of Acceptance relevant to this proceeding were ever circulated within the Administration prior to the ones identified by the United States in its submission".²⁴⁵

2.122.

On 24 March 2006, after this Panel was established, the Minister of State of Turkey sent a letter to the United States Trade Representative, expressing the belief that a mutually agreed solution could be found to the dispute concerning the measures related to the importation of rice into Turkey. In his letter, the Minister of State informed that "Control Certificate will be issued as of April 1, 2006".²⁴⁶

3.1.

In this dispute, the United States has challenged the restrictions allegedly maintained by Turkey on the importation of rice. More specifically, the United States has identified the following measures:

(a) The alleged denial or failure to grant licences to import rice at or below the bound rate of duty;

(b) The alleged requirement that importers must purchase specified quantities of domestic rice, in order to be allowed to import specified quantities of rice at reduced-tariff levels;

(c) Turkey's administration of tariff-rate quotas for reduced tariff duty imports of rice; and,

(d) Turkey's administration of its import regime for rice, more generally.

3.2.

More specifically, in its submissions the United States has articulated the following claims with regard to the provisions of WTO covered agreements:

(a) That Turkey's alleged denial or failure to grant licences to import rice at or below the bound rate of duty is inconsistent with:

(i) Article XI:1 of the GATT 1994, because it is a prohibition or restriction on imports, other than in the form of a duty, tax or other charges;

(ii) Article 4.2 of the Agreement on Agriculture, because it is a measure of the kind that have been required to be converted into ordinary customs duties and which Members may not maintain or resort to;

(iii) Articles 1.4(a) and 1.4(b) of the Import Licensing Agreement and Articles X:1 and X:2 of the GATT 1994, because Turkey has not published such measure and, thus, has neither provided an opportunity for governments and traders to become acquainted with it, nor has it provided Members with the opportunity to provide written comments and to discuss those comments upon request; and

(iv) Articles 3.5(e) and 3.5(f) of the Import Licensing Agreement, because Turkey does not specify a timeframe within which import licence applications that are submitted will be approved or rejected and does not provide applicants with the reasons for rejection.

(b) That Turkey's alleged requirement that importers must purchase domestic rice is inconsistent with:

(i) Article III:4 of the GATT 1994, because Turkey accords imported rice less favourable treatment than that accorded to domestic rice, with respect to a measure that affects its internal sale, offering for sale, purchase, transportation, distribution or use;

(ii) Article XI:1 of the GATT 1994, because it is a restriction on imports other than in the form of duties, taxes, or other charges;

(iii) Article 2.1 and paragraph 1(a) of Annex 1 (sic) of the TRIMs Agreement; and

(iv) Article 4.2 of the Agreement on Agriculture, because it is a measure of the kind that have been required to be converted into ordinary customs duties and which Members may not maintain or resort to.

(c) That Turkey's administration of tariff-rate quotas (TRQs) for reduced tariff duty imports of rice is inconsistent with Article 3.5(h) of the Import Licensing Agreement, because Turkey administers its TRQs in such a way as to discourage the full utilization of quotas.

(d) That Turkey's alleged requirement that importers must purchase domestic rice, in conjunction with its alleged denial or failure to grant licences to import rice at or below the bound rate of duty, is inconsistent with:

(i) Article XI:1 of the GATT 1994, because it is a restriction on imports other than in the form of duties, taxes, or other charges;

(ii) Article 4.2 of the Agreement on Agriculture, because it is a measure of the kind that have been required to be converted into ordinary customs duties and which Members may not maintain or resort to; and

(iii) Article 1.6 of the Import Licensing Agreement, because applicants have to approach more than one administrative body in connection with their applications.²⁴⁷

(e) That Turkey's administration of its import regime for rice is inconsistent with:

(i) Article 3.5(a) of the Import Licensing Agreement, because Turkey has failed to provide, upon the request of the United States, all relevant information concerning the administration of its import licensing regime and the import licences which have been granted over a recent period; and

(ii) Articles 5.1, 5.2(a), (b), (c), (d), (e), (g) and (h), 5.3 and 5.4 of the Import Licensing Agreement, because Turkey has failed to notify its import licensing regime for rice.

3.3.

Turkey has disputed the facts presented by the United States. More specifically, Turkey has argued that:

(a) Throughout the period covered by this dispute, over-quota imports have taken place and Certificates of Control have been issued;²⁴⁸

(b) Certificates of Control are not import licences;²⁴⁹

(c) The tariff-rate quotas (TRQs) regime for reduced-tariff duty imports of rice is no longer in force and the Panel should therefore refrain from making findings on those measures or, if it decided to make these findings, it should abstain from making any recommendation to the Dispute Settlement Body;²⁵⁰

(d) While it was in force, the TRQs regime for reduced-tariff duty imports of rice "was administered on the basis of automatic import licensing procedures and certain legal requirements which were applied in a non-discriminatory, predictable and transparent fashion"; and²⁵¹

(e) The United States has not made a prima facie case to support its own claims and that Turkey's relevant laws, regulations and procedures, both in relation to MFN and to TRQ rice imports, are not inconsistent with Articles III:4, X:1, X:2, and XI:1 of the GATT 1994; Article 4.2 of the Agreement on Agriculture; Articles 1.4(a) and (b), 3.5(a), (e), (f), and (h), 5.1, 5.2(a), (b), (c), (d), (e), (g), and (h), 5.3, and 5.4 of the Agreement on Import Licensing Procedures; nor with Article 2.1 and paragraph 1(a) of Annex 1 of the Agreement on Trade-Related Investment Measures.²⁵²

4.1.

The arguments of the parties and third parties are set out in their written submissions and oral statements to the Panel. Executive summaries of those submissions and statements are appended to this report.

5.1.

The Panel submitted its interim report to the parties on 3 May 2007. On 18 May, the Panel received written requests for review of precise aspects of the interim report from both parties. On 1 June, the parties submitted written comments on each other's written requests for review.

5.2.

Pursuant to Article 15.3 of the DSU, this section of the Panel Report contains the Panel's response to the requests and comments made by the parties in relation to the interim report. The Panel has modified aspects of its report in light of the parties' requests and comments where it considered it appropriate. The Panel has also made certain revisions and editorial corrections for the purposes of clarity and accuracy, as explained below. References to paragraph numbers and footnotes in this Section refer to those in the interim report, except as otherwise noted.

5.3.

In paragraphs 7,109 to 7,118, the Panel had found that Turkey's denial or failure to grant Certificates of Control to import rice outside of the tariff rate quota, from September 2003 and for different periods of time, could be characterized as a quantitative import restriction and, therefore, as a measure of the kind which have been required to be converted into ordinary customs duties under Article 4.2 of the Agreement on Agriculture. Later, in paragraphs 7,119 to 7,131, the Panel found that the same measure could also be characterized as a practice of discretionary import licensing and, likewise, as a measure of the kind which have been required to be converted into ordinary customs duties under Article 4.2 of the Agreement on Agriculture.

5.4.

Turkey requested that the Panel remove paragraphs 7,120 to 7,131 from the report. In Turkey's view, once the Panel found that the challenged measure could be characterized as a quantitative import restriction, it should then exercise judicial economy regarding its consideration of the same measure as a practice of discretionary import licensing.

5.5.

In its comments on Turkey's requests for review, the United States asked the Panel not to exercise judicial economy in the manner requested by Turkey. In the United States' view, this would be a "false" exercise of judicial economy, as the "Panel’s analysis with regard to the U.S. argument on discretionary import licensing is helpful to resolving the dispute". The United States added that nothing in the DSU requires a panel to exercise judicial economy. The United States recalled Articles 3.4 and 3.7 of the DSU to the effect that:

"[A] panel's recommendations and rulings 'shall be aimed at achieving a satisfactory settlement of the matter' [and that] 'the aim of the dispute settlement mechanism is to secure a positive resolution to a dispute'."

5.6.

The United States finally argued that:

"[I]n Chile – Price Bands, a dispute with a closely analogous situation involving the same provision at issue (Article 4.2), the panel made findings that the measure at issue constituted both a variable import levy and a system of minimum import prices within the meaning of footnote 1 of Article 4.2 of the Agreement on Agriculture. The Appellate Body agreed with this approach and upheld the panel's findings."

5.7.

The Panel has reviewed the relevant paragraphs in the light of Turkey's request. As noted by the Appellate Body, a panel has the discretion to exercise judicial economy and, therefore:

"[T]he discretion to determine the claims it must address in order to resolve the dispute between the parties -- provided that those claims are within that panel's terms of reference."²⁵³

5.8.

In our view, the consideration of Turkey's denial or failure to grant Certificates of Control to import rice outside of the tariff rate quota as a quantitative import restriction would be enough to conclude that it is a measure of the kind which have been required to be converted into ordinary customs duties and, therefore, a measure inconsistent with Article 4.2 of the Agreement on Agriculture. In any event, if this measure was not to be considered as a quantitative import restriction, we believe that it can nevertheless be characterized as a practice of discretionary import licensing. The Panel has therefore decided not to exercise judicial economy in the manner requested by Turkey.²⁵⁴

5.9.

The United States requested a change in the language of paragraph 7.57. In its original text, the paragraph stated that:

"In order to assess whether the United States has met its initial burden, the Panel will accordingly consider if the evidence on the record, as submitted by both parties, is sufficient to raise a preliminary presumption that Turkey has engaged in the denial, or failure to grant, licences to import rice outside of the tariff rate quota. Only if the evidence on the record supported such a presumption, would the burden then be shifted unto Turkey to adequately rebut it. If the United States were successful in raising that preliminary presumption, and Turkey failed to rebut it, the Panel would then consider whether the facts so demonstrated can be qualified as constituting a border measure of the kind which has been required to be converted into ordinary customs duties by the Agreement on Agriculture."

5.10.

The United States proposed the following text for the paragraph 7.57:

"In order to assess whether the United States has met its initial burden, the Panel will accordingly consider if the United States has provided evidence and argumentation on the record, sufficient to establish that Turkey has engaged in the denial, or failure to grant, licences to import rice outside of the tariff rate quota. Only if the United States has provided evidence and argumentation on the record sufficient to make out a prima facie case, would the burden then be shifted onto Turkey to adequately rebut the U.S. allegations. If the United States were successful in establishing its prima facie case, and Turkey failed to rebut it, the Panel would then consider whether the United States has established that the facts so demonstrated can be qualified as constituting a border measure of the kind which has been required to be converted into ordinary customs duties by the Agreement on Agriculture."

5.11.

In the United States' opinion, the proposed change in language would:

"[A]void any possible mis-interpretation of the current text as partially relieving the complainant of its burden of making out a prima facie case by placing some of that burden on the respondent. The burden of making out a prima facie case by making argumentation and providing evidence on the record lies solely with the complaining party – in this case, the United States. Once the complainant has made out a prima facie case, a burden which the United States has met, it falls to the responding party to rebut that prima facie case with evidence and arguments of its own."

5.12.

In our view, the duty that a panel has, under Article 11 of the DSU, to "make an objective assessment of the matter before it, including an objective assessment of the facts of the case", implies that the panel is bound to consider all the evidence on record, which includes the evidence submitted by the parties and that procured by the panel itself under its broad authority "to seek information and technical advice from any individual or body which it deems appropriate" in the terms of Article 13.1 of the DSU. As noted by the Appellate Body in US – Wheat Gluten, "under Article 11 of the DSU, a panel must draw inferences on the basis of all of the facts of record relevant to the particular determination to be made."²⁵⁵ A panel's duty to consider all available evidence on record does not relieve the complaining party of its burden to make a prima facie case that a challenged measure is inconsistent with the WTO agreements by putting forward adequate legal arguments and evidence. Indeed, in the lack of adequate legal arguments and evidence to sustain its claim, the panel would have to conclude that the complaining party has failed to make a prima facie case. The aforementioned rule regarding the allocation of the burden of proof was articulated in paragraph 7.56 of the interim report:

"[W]e are of the view that, in this case, the initial burden of proof rests upon the United States, as a complainant, to establish its prima faciecase that the challenged conduct, first, has existed, and then, that it is inconsistent with the invoked provision of the WTO covered agreements, i.e., Article 4.2 of the Agreement on Agriculture. If the United States meets this test, the burden would then be on Turkey to rebut the said claim."

5.13.

Accordingly, the Panel has revised the language of paragraph 7.57, so as to avoid any possible misinterpretation regarding the proper allocation of the burden of proof.

5.14.

The United States requested that the Panel remove the references made to the Panel Report on Argentina – Textiles and Apparel in paragraphs 7.6 and 7.94, regarding the existence of a "rule of collaboration" by which "the adversary is obligated to provide the tribunal with relevant documents which are in its sole possession". In the United States' opinion:

"[T]hese references to a 'rule of collaboration' [should] be deleted, as they are not necessary to resolve the matter, and could be read as going beyond the requirements of the DSU, which does not provide for such a rule."

5.15.

As noted above, panels are under a duty, pursuant to Article 11 of the DSU, to "make an objective assessment of the matter before it, including an objective assessment of the facts of the case". In order to exercise such duty, panels have been given authority "to seek information and technical advice from any individual or body which [they deem] appropriate" by Article 13.1 of the DSU. Article 13.1 also refers explicitly to the Members' obligation to collaborate with panels in the exercise of their duty:

"A Member should respond promptly and fully to any request by a panel for such information as the panel considers necessary and appropriate."

5.16.

The parties' rule of collaboration, therefore, does not go beyond the requirements of the DSU but rather flows explicitly from its text. In Canada – Aircraft, the Appellate Body referred to "the duty of a Member to comply with the request of a panel to provide information", noting that under Article 13.1 of the DSU "Members are [...] under a duty and an obligation to 'respond promptly and fully' to requests made by panels for information".²⁵⁶

5.17.

Despite these considerations, the Panel has revised the language of the first part of section VII.A (on Burden of Proof) in order to avoid any misinterpretation of the applicable rules. In particular, the Panel has inserted an introductory paragraph to that section and made a small adjustment to the language of paragraphs 7.1 and 7.8 of the interim report. It also included two new paragraphs at the end of that section. The Panel has made small adjustments into paragraphs 7.94 and 7.95, mainly to avoid repeating the reference to the Panel Report on Argentina – Textiles and Apparel.

5.18.

The United States requested the Panel to modify the language in the second sentence of paragraph 7,103, replacing the expression "necessary adverse inferences" with "appropriate inferences". In the United States' opinion:

"[W]hile paragraphs 7 and 8 of Annex V of the Agreement on Subsidies and Countervailing Measures specifically provide for 'adverse' inferences, no other covered agreement contains such language. Nevertheless, the 'appropriate' inference to be drawn from Turkey's failure to provide evidence in support of its arguments, either on its own or in response to repeated requests by the Panel, is that 'Turkey has failed to rebut the presumption that, from September 2003 and for different periods of time, it has adopted a decision to deny, or fail to grant, Certificates of Control to import rice outside of the tariff rate quota.'"

5.19.

The United States has also requested that the Panel remove the last part of paragraph 7,103, including the reference to the Appellate Body Report on Canada – Aircraft.

5.20.

In the light of such request, the Panel has revised the language of the paragraph 7,103.

5.21.

The United States requested the Panel to issue a specific recommendation to the DSB regarding the domestic purchase requirement. In the United States' opinion, the Panel could recommend:

"[T]hat Turkey 'bring its domestic purchase requirement into conformity with its obligations under Article III:4 of the GATT 1994, if and to the extent that, that measure has not already ceased to exist.'"

5.22.

The United States argued that such a recommendation would be required by Article 19.1 of the DSU, which states that:

"Where a panel or the Appellate Body concludes that a measure is inconsistent with a covered agreement, it shall recommend that the Member concerned [footnote omitted] bring the measure into conformity with that agreement."

5.23.

As the United States pointed out, such a qualified recommendation would also be similar to the recommendation made by the Panel in EC – Approval and Marketing of Biotech Products.

5.24.

The United States added that "the question of the future behavior of a responding Member whose measure is found to be inconsistent is not a matter for an original panel to consider, but is an issue that could arise, if at all, in the compliance phase based on the actions of a responding party in response to the DSB’s recommendations and rulings" and that it is not "necessary or appropriate for panels to reach definitive judgments on alleged changes to measures which take place after panel establishment". In its view, "[a] qualified recommendation in this dispute with respect to the domestic purchase requirement would... safeguard and preserve the rights and interests of all parties".

5.25.

In its comments on the United States' requests for review, Turkey noted that it agrees "with the Panel's decision of not issuing any recommendation on Turkey's expired domestic purchase requirement." In Turkey's view:

"[T]he Panel's decision is supported by the law and is in line with the practice and interpretation of previous panels and of the Appellate Body when dealing with measures that expired in the course of the proceedings."

5.26.

Turkey argued that the Panel's decision is consistent with the language of Article 19.1 of the DSU which provides that:

"Where a panel or the Appellate Body concludes that a measure is inconsistent with a covered agreement, it shall recommend that the Member concerned bring the measure into conformity with that agreement." [Emphasis added, footnotes omitted.]

In Turkey's view, the wording and the use of the present tense in the provision indicate that recommendations are due when a measure is inconsistent with a covered agreement and not when it was inconsistent in the past.

5.27.

Turkey added that the decisions of previous panels and the Appellate Body support its view that:

"[T]here is no requirement for this Panel to issue recommendations to bring into conformity measures which have expired in the course of the proceedings. [I]t would be more correct to state that recommendations are not required in those cases."

5.28.

Turkey finally noted that the parties have not contended that the measure has changed, but rather that it has expired:

"In this context, Turkey does not believe that a qualified recommendation would be appropriate for this case."

5.29.

With regard to this request for review, the Panel starts by noting that the domestic purchase requirement was part of the tariff quota regime for the importation of rice which was in force in Turkey at the time when this Panel was established. As noted in section II of this report (on Factual Aspects), such tariff quota regime was in force until 31 July 2006.²⁵⁷ In the course of the proceedings, Turkey requested the Panel to refrain from making findings on the domestic purchase requirement, since the tariff quota regime was no longer in force, or, if the Panel decided to make those findings, not to make any recommendation to the DSB. In its report, the Panel has noted that the domestic purchase requirement was properly brought before the Panel and was within its terms of reference, but terminated after the Panel was established.²⁵⁸ The Panel has also noted that tariff quotas for the importation of rice had expired and then been reopened by Turkey over the last few years. Furthermore, the legislative framework which has allowed for the establishment of the earlier TRQs remains in force.²⁵⁹ The Panel has finally noted Turkey's statement that it has no intention to reinstate tariff quotas for the importation of rice.²⁶⁰ In the light of such considerations, and in the absence of an agreement by the parties to terminate the proceedings with regard to the domestic purchase requirement, the Panel decided that it would be inappropriate to abstain from making findings with respect to such measure. Indeed, the Panel has found that the domestic purchase requirement was inconsistent with Article III:4 of the GATT 1994. It has considered, however, that there is no need to recommend to the DSB that it make any request to Turkey with respect to the domestic purchase requirement, in view of the fact that it has expired and that Turkey has declared its intention not to reintroduce the measure at issue.

5.30.

In our view, the Panel's decision can already be considered as a "qualified decision", to the extent that the Panel decided not to make a recommendation regarding Turkey's domestic purchase requirement, only after taking into account that the submitted evidence pointed to the expiry of the measure, and Turkey's declared intention not to reintroduce it.

5.31.

We do not see any reason to modify our earlier decision to abstain from making specific recommendations to the DSB regarding Turkey's domestic purchase requirement. In our view, such decision does not jeopardise the rights and interests of the United States, inasmuch as it is already qualified by the analysis which precedes it.

5.32.

The Panel made additional revisions and corrections to paragraphs 1.10, 2,102, 7.47, 7,127 of the interim report. New paragraphs on the consideration of relevant provisions on differential and more-favourable treatment for Turkey, as a developing country Member, were inserted at the end of Section VII. Minor editorial corrections were also made in paragraphs 2.19, 2.20, 2.26, 2.28, 2.44, 2.56, 2.60, 2.61, 2.62, 2.75, 2.80, 2.84, 2.95, 2,101, 2,106, 2,110, 2,115, 2,117, 2,119, 3.2(d), 7.47, 7,116, 7,127, 7,232, 7,270, and footnotes 91, 216 and 373.

6.1.

Argentina, Australia, China, Egypt, the European Communities, Korea and Thailand reserved their rights to participate in the Panel proceedings as third parties, either by announcing their interest in the course of the DSB meeting on 17 March 2006 when the Panel was established or within the ten subsequent days. On 15 August 2006, more than ten days after the establishment of the Panel, and after the Panel had been composed, Pakistan notified its interest in participating as a third party.²⁶¹

6.2.

The Panel raised this third party request by Pakistan with the parties at the organizational meeting, held on 16 August 2006. The complainant favoured Pakistan's request, while the respondent opposed it. Taking into account parties' views on this matter, on 30 August 2006 the Panel informed the parties and third parties in this case that:

"[It had] decided to accept as third parties all Members that have so far expressed that interest, including Pakistan... [and f]urther details regarding the Panel's decision on the matter [would] be included in full in the Panel's Report."²⁶²

6.3.

We start by noting that paragraphs 1 and 2 of Article 10 of the DSU provide that:

"1. The interests of the parties to a dispute and those of other Members under a covered agreement at issue in the dispute shall be fully taken into account during the panel process.

2. Any Member having a substantial interest in a matter before a panel and having notified its interest to the DSB (referred to in this Understanding as a 'third party') shall have an opportunity to be heard by the panel and to make written submissions to the panel. These submissions shall also be given to the parties to the dispute and shall be reflected in the panel report."

6.4.

Article 10 of the DSU is silent on when Members need to notify to the DSB their interest in participating in any specific dispute as third parties. The Panel is aware, however, of the GATT Council Chairman's Statement of June 1994, which provided for a ten-day notification period:

"Delegations in a position to do so, should indicate their intention to participate as a third party in a panel proceeding at the Council session which establishes the panel. Others who wish to indicate a third party interest should do so within the next ten days."²⁶³

6.5.

As noted by the Panel in EC – Export Subsidies on Sugar (Australia):

"[T]he status of that Chairman's Statement [has] been discussed on several occasions at the DSB and the timing of third-party notifications [has been] the subject of proposals in the context of the DSU negotiations."²⁶⁴

6.6.

In the same case, the Panel further noted that:

"[T]he Appellate Body's decision in EC – Hormones... stated that 'the DSU leaves panels a margin of discretion to deal, always in accordance with due process, with specific situations that may arise in a particular case and that are not explicitly regulated.'²⁶⁵"²⁶⁶

6.7.

The Panel in EC – Export Subsidies on Sugar (Australia) additionally noted, with regard to the requests to participate as third parties in that particular dispute, that:

"(a) the selection and composition of the Panel did not appear to have been adversely affected; and

(b) the Panel process had not been hampered."²⁶⁷

6.8.

The relevant third party requests in EC – Export Subsidies on Sugar (Australia) were submitted "before the Director-General was asked by the parties to compose the Panel pursuant to Article 8.7 of the DSU."²⁶⁸ In the present case, Pakistan's third party request was made after this Panel had been composed. Nevertheless, similarly to the relevant third party requests in EC – Export Subsidies on Sugar (Australia), as a result of Pakistan's request, the Panel process has not been hampered. In addition, although the Panel had already been composed when Pakistan formulated its third party request, we see no reason to believe that accepting Pakistan's request would affect the "independence of the members" of this Panel, as stipulated by Article 8.2 of the DSU, nor does it seem to prejudice in any way the manner in which this Panel fulfil its functions specified in Article 11 of the DSU:

"[T]o assist the DSB in discharging its responsibilities under this Understanding and the covered agreements. Accordingly, a panel should make an objective assessment of the matter before it, including an objective assessment of the facts of the case and the applicability of and conformity with the relevant covered agreements, and make such other findings as will assist the DSB in making the recommendations or in giving the rulings provided for in the covered agreements..."

6.9.

In the light of the above, as communicated on 30 August 2006 to the parties and third parties in these proceedings, we decided to accept as third parties all Members that had expressed a third-party interest and saw no reason to treat them differently. Similar to the Panel in EC – Export Subsidies on Sugar (Australia)²⁶⁹, we emphasize that this decision is specific to this dispute and is not intended to offer a legal interpretation of the ten-day notification period referred to in the GATT Council Chairman's Statement of June 1994.

7.1.

Under Article 11 of the DSU, panels have the duty to "make an objective assessment of the matter before [them], including an objective assessment of the facts of the case". In order to exercise such duty, panels have been granted the authority "to seek information and technical advice from any individual or body which [they deem] appropriate" by Article 13.1 of the DSU. Pursuant to Article 13.1 of the DSU, Members have committed to collaborate with panels in the exercise of their duties: "[a] Member should respond promptly and fully to any request by a panel for such information as the panel considers necessary and appropriate."

7.2.

As articulated by the Appellate Body, the general rule in dispute settlement procedures is that the burden of proof rests upon the party, whether complaining or defending, who asserts the affirmative of a particular claim or defence.²⁷⁰ Following this principle, the Appellate Body has explained that the complaining party in any given case should establish a prima faciecase of inconsistency of a measure with a provision of the WTO covered agreements, before the burden of showing consistency with that provision or defending it under an exception is to be undertaken by the defending party.²⁷¹ According to the Appellate Body, a prima facie case is "one which, in the absence of effective refutation by the defending party, requires a panel, as a matter of law, to rule in favour of the complaining party presenting the prima faciecase."²⁷² To establish a prima faciecase, the party asserting a particular claim must adduce evidence sufficient to raise a presumption that what is claimed is true.

7.3.

Regarding the issue of the burden of proof, we recall the words of the Appellate Body:

"[W]e find it difficult... to see how any system of judicial settlement could work if it incorporated the proposition that the mere assertion of a claim might amount to proof. It is, thus, hardly surprising that various international tribunals, including the International Court of Justice, have generally and consistently accepted and applied the rule that the party who asserts a fact, whether the claimant or the respondent, is responsible for providing proof thereof.²⁷³ Also, it is a generally-accepted canon of evidence in civil law, common law and, in fact, most jurisdictions, that the burden of proof rests upon the party, whether complaining or defending, who asserts the affirmative of a particular claim or defence. If that party adduces evidence sufficient to raise a presumption that what is claimed is true, the burden then shifts to the other party, who will fail unless it adduces sufficient evidence to rebut the presumption.²⁷⁴"²⁷⁵

7.4.

And, in the same case:

"[A] party claiming a violation of a provision of the WTO Agreement by another Member must assert and prove its claim."²⁷⁶

7.5.

In another case, the Appellate Body stated further:

"[W]e have consistently held that, as a general matter, the burden of proof rests upon the complaining Member. That Member must make out a prima facie case by presenting sufficient evidence to raise a presumption in favour of its claim. If the complaining Member succeeds, the responding Member may then seek to rebut this presumption. Therefore, under the usual allocation of the burden of proof, a responding Member's measure will be treated as WTO-consistent, until sufficient evidence is presented to prove the contrary. We will not readily find that the usual rules on burden of proof do not apply, as they reflect a 'canon of evidence' accepted and applied in international proceedings."²⁷⁷

7.6.

That said, as noted by the Appellate Body, these statements:

"[D]o not imply that the complaining party is responsible for providing proof of all facts raised in relation to the issue of determining whether a measure is consistent with a given provision of a covered agreement. In other words, although the complaining party bears the burden of proving its case, the responding party must prove the case it seeks to make in response."²⁷⁸

7.7.

Regarding the responding party's role in the proceedings, the Panel on Argentina – Textiles and Apparel stated that:

"Another incidental rule to the burden of proof is the requirement for collaboration of the parties in the presentation of the facts and evidence to the panel and especially the role of the respondent in that process. It is often said that the idea of peaceful settlement of disputes before international tribunals is largely based on the premise of co-operation of the litigating parties. In this context the most important result of the rule of collaboration appears to be that the adversary is obligated to provide the tribunal with relevant documents which are in its sole possession. This obligation does not arise until the claimant has done its best to secure evidence and has actually produced some prima facie evidence in support of its case."²⁷⁹

7.8.

With regard to evidence, the Appellate Body has stated that:

"[P]recisely how much and precisely what kind of evidence will be required to establish such... [presumptions] will necessarily vary from measure to measure, provision to provision, and case to case."²⁸⁰

7.9.

In the present case, the initial burden of proof rests upon the United States, as a complainant, to establish its prima faciecase that the challenged measures at issue are inconsistent with certain provisions of the WTO covered agreements. Were the United States to establish such a case, the burden would then shift to Turkey to rebut that claim.

7.10.

As noted above, Members are under the obligation to respond promptly and fully to requests made by panels for information. In Canada – Aircraft, the Appellate Body referred to "the duty of a Member to comply with the request of a panel to provide information", noting that under Article 13.1 of the DSU "Members are [...] under a duty and an obligation to 'respond promptly and fully' to requests made by panels for information".²⁸¹ In the absence of such collaboration, and pursuant to its duty to make an objective assessment of the facts of the case, a panel is entitled to draw appropriate inferences. In this context, the Appellate Body has stated that:

"Where a party refuses to provide information requested by a panel under Article 13.1 of the DSU, that refusal will be one of the relevant facts of record, and indeed an important fact, to be taken into account in determining the appropriate inference to be drawn."²⁸²

7.11.

Such inferences would then have to be considered by the panel, with all other available evidence on the record, to determine whether the complainant has succeeded in meeting its burden to make its prima facie case and whether the respondent has successfully rebutted such a case.

7.12.

In its request for the establishment of a panel, the United States stated that "Turkey denies or fails to grant licenses to import rice at or below the bound rate of duty without domestic purchase, including at the over-quota rate of duty."²⁸³ This measure was referred to by the United States as the "denial or failure to grant licenses to import rice at or below the bound rate of duty".

7.13.

The United States has argued that, according to relevant Turkish legislation:

"[T]he importation of certain agricultural products is subject to [the] approval [of the Turkish Ministry of Agriculture and Rural Affairs (MARA)]... MARA determines the 'fitness and compatibility' of certain products with respect to human health and safety and other concerns. Rice is listed in [the legislation], which means that rice importers must present a [so-called] Certificate of Control from MARA to Turkish Customs as a condition upon importation."²⁸⁴

7.14.

The United States has stated that the Certificate of Control issued by MARA "is an import license within the definition in Article I of the Import Licensing Agreement."²⁸⁵

7.15.

According to the United States, since September 2003, MARA has not been issuing Certificates of Control at the bound tariff rates, thereby effectively preventing out-of-quota imports.²⁸⁶

7.16.

The United States has made the claim that Turkey's denial, or failure to grant, licences to import rice at or below the bound rate of duty, through MARA's denial of Certificates of Control to importers of rice, is inconsistent with Article XI:1 of the GATT 1994; with Article 4.2 of the Agreement on Agriculture; with Articles 1.4(a) and (b) and 3.5(e) and (f) of the Import Licensing Agreement; and with Articles X:1 and X:2 of the GATT 1994.²⁸⁷

7.17.

Turkey has confirmed that, in order to import rice, importers must obtain a Certificate of Control from MARA:

"In order to facilitate the process of customs clearance, traders must submit at importation a document, known as Certificate of Control, which contains all the information required for customs purposes. This document must be approved by the Ministry of Agriculture and Rural Affairs."²⁸⁸

7.18.

Turkey has argued, however, that the Certificates of Control are "administrative forms that are required exclusively for 'customs purposes'"²⁸⁹ and "[are] not, nor should... be interpreted as, an import license or an instrument of allocation of imports to origins or traders"²⁹⁰ within the meaning of Article 1.1 of the Import Licensing Agreement,²⁹¹ nor under Article XI:1 of the GATT 1994.²⁹² Turkey has stated that there is neither a de jure nor a de facto "prohibition" or "restriction" in relation to the United States' allegation that Turkey denies or fails to grant licences to import rice at or below the bound rate of duty,²⁹³ nor a practice that would constitute "discretionary import licensing" or a "quantitative import restriction" within the meaning of Article 4.2 of the Agreement on Agriculture.²⁹⁴

7.19.

Turkey has also stated that:

"Contrary to what is erroneously claimed by the United States, Certificates of Control have been systematically and regularly approved on a non-discriminatory basis since the entering into force of 'The Regime for Technical Regulations and Standardization for Foreign Trade' in 1996... This has been the case both for rice imports occurring at the 'over-quota' MFN or applied rate level and... within the 'in-quota' volumes established each year since 2004."²⁹⁵

7.20.

In Turkey's opinion:

"Individual instances of administrative delay, rejection, or even domestic litigation in relation to the approval (or non approval) of a particular application for a specific Certificate of Control, cannot be used to claim or imply that Turkey adopted and/or applied this instrument as an intentional barrier to trade."²⁹⁶

7.21.

Turkey has also indicated that the lack of publication of "certain internal unofficial working documents and the information contained therein" would not amount to a violation of Article X of the GATT 1994.²⁹⁷

7.22.

At various moments during the proceedings, the United States stated that Turkey has maintained a "blanket prohibition on the issuance of Control Certificates."²⁹⁸ At times, the United States argued that the "blanket prohibition [covered] all imports of rice",²⁹⁹ that it applied to the issuance "of Control Certificates outside the TRQ"³⁰⁰, or that it applied "to those importers who do not purchase domestic paddy rice".³⁰¹ In terms of the argument that Turkey has maintained a "blanket" prohibition on the issuance of Certificates of Control for the importation of rice, the United States stated in its first submission that "Turkey fails to grant Certificates of Control 100 per cent of the time"³⁰² and that "Turkey never grants Certificates of Control".³⁰³

7.23.

Turkey has argued in response that:

"[T]here is no clarity [regarding the 'measure contested' by the United States]: is it the alleged 'blanket denial', is it the 'Letters of Acceptance', is it the Certificate of Control as such, or is it something else?"³⁰⁴

7.24.

Turkey has added that:

"The United States has merely claimed the existence of an alleged 'blanket denial', but Turkey believes to have satisfactorily proved that no 'blanket denial' was ever in place."³⁰⁵

7.25.

It has also stated that:

"Individual instances of denial of approval in relation to specific applications made by individual importers cannot be used to imply a 'blanket denial'..."³⁰⁶

7.26.

We agree with Turkey that the Panel should begin by identifying the precise measure challenged by the United States, i.e., the measure that should be the object of the Panel's analysis. Indeed, the jurisdiction of a panel with regard to the issues in a particular dispute is limited to the terms of reference that have been approved by the DSB. In turn, those terms of reference are, in accordance with Article 7.1 of the DSU, defined by the "matter" that has been referred to the DSB.³⁰⁷ As stated by the Appellate Body:

"'[T]he matter referred to the DSB' for the purposes of Article 7 of the DSU... must be the 'matter' identified in the request for the establishment of a panel under Article 6.2 of the DSU. That provision requires the complaining Member, in a panel request, to 'identify the specific measures at issue and provide a brief summary of the legal basis of the complaint sufficient to present the problem clearly'... The 'matter referred to the DSB', therefore, consists of two elements: the specific measures at issue and the legal basis of the complaint (or the claims)."³⁰⁸

7.27.

In other words, the Panel needs to determine at the outset and with precision which are the measures that constitute its terms of reference. In determining what measures are before the Panel, we turn to the United States' request for establishment of a panel, which is found in document WT/DS334/4 of 7 February 2006.

7.28.

As noted above, in its request for the establishment of a panel³⁰⁹, the United States referred to the measure under consideration as the "denial or failure to grant licenses to import rice at or below the bound rate of duty".³¹⁰ In that regard, the United States asserted that "Turkey denies or fails to grant licenses to import rice at or below the bound rate of duty without domestic purchase, including at the over-quota rate of duty."³¹¹

7.29.

Regarding what can constitute a measure for WTO dispute settlement proceedings, we recall the words of the Appellate Body:

"In principle, any act or omission attributable to a WTO Member can be a measure of that Member for purposes of dispute settlement proceedings."³¹²

7.30.

Looking at the description of the measure contained in the United States' request for the establishment of a panel, we conclude that the measure before us is Turkey's alleged denial, or failure to grant, licences to import rice outside of the tariff rate quota, and not a so-called "blanket prohibition".

7.31.

For the reasons stated above, and noting the terms of reference contained in the request for establishment of this panel, we conclude that the measure before us is Turkey's alleged denial, or failure to grant, from September 2003 and for periods of time, licences to import rice outside of the tariff rate quota.

7.32.

Regarding the proper order of analysis to be undertaken by the Panel in considering the different claims advanced by the United States in regard to the alleged denial of, or failure to grant, import licences to import rice outside of the tariff rate quota, the Panel will consider whether it should start its analysis under Article XI:1 of the GATT 1994; Article 4.2 of the Agreement on Agriculture; Articles 1.4(a), 1.4(b), 3.5(e) and 3.5(f) of the Import Licensing Agreement; or Articles X:1 and X:2 of the GATT 1994.

7.33.

Article XI:1 of the GATT 1994 provides:

"No prohibitions or restrictions other than duties, taxes or other charges, whether made effective through quotas, import or export licences or other measures, shall be instituted or maintained by any contracting party on the importation of any product of the territory of any other contracting party or on the exportation or sale for export of any product destined for the territory of any other contracting party."

7.34.

In turn, Article 4.2 of the Agreement on Agriculture states that:

"Members shall not maintain, resort to, or revert to any measures of the kind which have been required to be converted into ordinary customs duties1, except as otherwise provided for in Article 5 and Annex 5.

1 These measures include quantitative import restrictions, variable import levies, minimum import prices, discretionary import licensing, non-tariff measures maintained through state-trading enterprises, voluntary export restraints, and similar border measures other than ordinary customs duties, whether or not the measures are maintained under country-specific derogations from the provisions of GATT 1947, but not measures maintained under balance-of-payments provisions or under other general, non-agriculture-specific provisions of GATT 1994 or of the other Multilateral Trade Agreements in Annex 1A to the WTO Agreement."

7.35.

Articles 1.4(a) and (b) of the Import Licensing Agreement stipulate that:

"(a) The rules and all information concerning procedures for the submission of applications, including the eligibility of persons, firms and institutions to make such applications, the administrative body(ies) to be approached, and the lists of products subject to the licensing requirement shall be published, in the sources notified to the Committee on Import Licensing provided for in Article 4 (referred to in this Agreement as "the Committee"), in such a manner as to enable governments³¹³ and traders to become acquainted with them. Such publication shall take place, whenever practicable, 21 days prior to the effective date of the requirement but in all events not later than such effective date. Any exception, derogations or changes in or from the rules concerning licensing procedures or the list of products subject to import licensing shall also be published in the same manner and within the same time periods as specified above. Copies of these publications shall also be made available to the Secretariat.

(b) Members which wish to make comments in writing shall be provided the opportunity to discuss these comments upon request. The concerned Member shall give due consideration to these comments and results of discussion."

7.36.

In turn, Articles 3.5(e) and 3.5(f) of the Import Licensing Agreement provide that:

"(e) any person, firm or institution which fulfils the legal and administrative requirements of the importing Member shall be equally eligible to apply and to be considered for a licence. If the licence application is not approved, the applicant shall, on request, be given the reason therefor and shall have a right of appeal or review in accordance with the domestic legislation or procedures of the importing Member;

(f) the period for processing applications shall, except when not possible for reasons outside the control of the Member, not be longer than 30 days if applications are considered as and when received, i.e. on a first-come first-served basis, and no longer than 60 days if all applications are considered simultaneously. In the latter case, the period for processing applications shall be considered to begin on the day following the closing date of the announced application period".

7.37.

Finally, Articles X:1 and X:2 of the GATT 1994 set out that:

"1. Laws, regulations, judicial decisions and administrative rulings of general application, made effective by any contracting party, pertaining to the classification or the valuation of products for customs purposes, or to rates of duty, taxes or other charges, or to requirements, restrictions or prohibitions on imports or exports or on the transfer of payments therefor, or affecting their sale, distribution, transportation, insurance, warehousing inspection, exhibition, processing, mixing or other use, shall be published promptly in such a manner as to enable governments and traders to become acquainted with them. Agreements affecting international trade policy which are in force between the government or a governmental agency of any contracting party and the government or governmental agency of any other contracting party shall also be published. The provisions of this paragraph shall not require any contracting party to disclose confidential information which would impede law enforcement or otherwise be contrary to the public interest or would prejudice the legitimate commercial interests of particular enterprises, public or private.

2. No measure of general application taken by any contracting party effecting an advance in a rate of duty or other charge on imports under an established and uniform practice, or imposing a new or more burdensome requirement, restriction or prohibition on imports, or on the transfer of payments therefor, shall be enforced before such measure has been officially published."

7.38.

In contrast to Article XI:1 of the GATT 1994 and Article 4.2 of the Agreement on Agriculture, the provisions of the Import Licensing Agreement invoked by the United States and Articles X:1 and X:2 of the GATT 1994 deal with the administration or application of trade measures rather than with the substantive content of such measures per se. In this regard, the Appellate Body found in EC – Poultry that "Article X relates to the publication and administration of 'laws, regulations, judicial decisions and administrative rulings of general application', rather than to the substantive content of such measures."³¹⁴ Likewise, in EC – Bananas III the Appellate Body found that:

"As a matter of fact, none of the provisions of the Licensing Agreement concerns import licensing rules, per se. As is made clear by the title of the Licensing Agreement, it concerns import licensing procedures. The preamble of the Licensing Agreement indicates clearly that this agreement relates to import licensing procedures and their administration, not to import licensing rules. Article 1.1 of the Licensing Agreement defines its scope as the administrative procedures used for the operation of import licensing regimes."³¹⁵

7.39.

The Panel notes, in this context, that the European Communities stated that:

"It is arguable that the Agreement on Import Licensing relates more specifically to the matter before this Panel than the GATT and the Agreement on Agriculture. Therefore in accordance with the Appellate Body report in EC – Bananas³¹⁶ the EC invites the Panel to consider whether the alleged violations of the Agreement on Import Licensing should be considered first before the alleged violations of Article 4.2. of the Agreement on Agriculture and the GATT."³¹⁷

7.40.

The Panel notes, however, that the United States has consistently structured its claims concerning Turkey's alleged denial, or failure to grant, licences to import rice outside of the tariff rate quota by invoking first the provisions that deal with the substantive content of that measure.

7.41.

If the Panel finds that the measure at iss ue is in breach of substantive obligations under either Article XI:1 of the GATT 1994 or Article 4.2 of the Agreement on Agriculture, then the question of how the measure has been administered by Turkey becomes irrelevant. On the contrary, if the Panel finds that the measure in question is not in breach of substantive obligations under either Article XI:1 of the GATT 1994 or Article 4.2 of the Agreement on Agriculture, it would need to additionally consider whether Turkey, by its alleged denial, or failure to grant, licences to import rice outside of the tariff rate quota, has breached the provisions of the Import Licensing Agreement invoked by the United States in this context, or Articles X:1 and X:2 of the GATT 1994.

7.42.

Accordingly, the Panel will begin its analysis with the substantive content of that measure in regard to Article XI:1 of the GATT 1994 or Article 4.2 of the Agreement on Agriculture.

7.43.

In order to carry out its analysis of the substantive content of the measure in question, the Panel turns to the issue of whether it should start its analysis with Article XI:1 of the GATT 1994 or Article 4.2 of the Agreement on Agriculture.

7.44.

The Panel notes that, in this respect, the United States has argued that:

"Other panels have found, in similar circumstances, that where a measure with respect to agricultural products³¹⁸ is inconsistent with Article XI:1 of the GATT 1994, it is necessarily inconsistent with Article 4.2 of the Agriculture Agreement, which provides in footnote 1 that, inter alia, 'quantitative import restrictions' and 'discretionary import licensing' are measures that Members may not maintain, resort to, or revert to.³¹⁹"³²⁰

7.45.

Similarly, Egypt has noted that:

"[P]anels have found that restrictions on agricultural products that were found to be inconsistent with Article XI:1 of the GATT 1994 constituted violations of Article 4.2 [of the Agreement on Agriculture]."³²¹

7.46.

In contrast to those arguments by the United States and Egypt, while "agree[ing] with the US that there is a general systemic link between the two provisions"³²², the European Communities has stated that:

"[A]part from the footnote in Article 4.2 of the Agreement on Agriculture in which reference is made to quantitative import restrictions, no automatic link has been made in the text of these provisions. The EC therefore considers that caution should be exercised in concluding that the violation of Article XI:1 of the GATT would necessarily and in all circumstances lead to the violation of Article 4.2. of the Agreement on Agriculture."³²³

7.47.

Further, the European Communities has pointed out that:

"It is arguable that the Agreement on Agriculture should be considered more specific in relation to the GATT in a situation where the import of a particular agricultural product is at stake. Consequently, in accordance with the Appellate Body report in EC – Bananas³²⁴ it is arguable that the alleged violation of Article 4.2 of the Agreement on Agriculture should be considered first before the alleged violations of the GATT."³²⁵

7.48.

Article XI:1 of the GATT 1994 and Article 4.2 of the Agreement on Agriculture have similar scopes of application as they both apply to border measures. Article XI:1 of the GATT 1994, however, is generally applicable to import prohibitions or restrictions imposed on any product, while Article 4.2 of the Agreement on Agriculture is limited to measures imposed on products that fall within the scope of the Agreement of Agriculture. In other words, the Agreement on Agriculture deals more specifically than the GATT 1994 with the prohibition on maintaining quantitative restrictions or quotas, inasmuch as the Agreement on Agriculture refers to these measures only when applied to products falling within the scope of the Agreement of Agriculture, such as rice. In EC – Bananas III, the Appellate Body indicated that a panel should start by examining the claims presented under the agreement that "deals, specifically, and in detail" with the matter at issue.³²⁶ Following this approach, the Panel will commence by examining the claims presented by the United States under Article 4.2 of the Agreement on Agriculture, since this Agreement may be considered more specific to the border measures imposed on agricultural products. The Panel will turn to Article XI:1 of the GATT 1994 only as a second step.

7.49.

As regards the claims of the United States concerning the administration of the measure in question, the Panel has already noted that it will only consider whether Turkey, by its alleged denial, or failure to grant, licences to import rice outside of the tariff rate quota, has breached the provisions of the Import Licensing Agreement invoked by the United States in this context, or Articles X:1 and X:2 of the GATT 1994, if the Panel were to find that the measure at issue is not in breach of substantive obligations under either Article 4.2 of the Agreement on Agriculture or Article XI:1 of the GATT 1994.³²⁷

7.50.

In order to analyze, if required, the claims made by the United States concerning the administration of the measure at issue, the Panel must determine whether to begin such analysis with Articles X:1 and X:2 of the GATT 1994 or with the provisions of the Import Licensing Agreement invoked by the United States in regard to the measure in question. In order to do so, if needed, the Panel would start by assessing whether the challenged measure falls within the coverage of the Import Licensing Agreement. If the Panel were to find that this is the case, based on the finding of the Appellate Body in EC – Bananas III referenced above³²⁸, it would start with assessing the claims of the United States under the Import Licensing Agreement first, since that agreement deals specifically, and in detail, with the administration of import licensing procedures. In this respect, depending on any findings made under the Import Licensing Agreement, there may be no need for the Panel to make any additional findings under Articles X:1 and X:2 of the GATT 1994.

7.51.

The United States has articulated the claim that Turkey's denial, or failure to grant, licences to import rice outside of the tariff rate quota, is a measure of the kind which have been required to be converted into ordinary customs duties, such as a "quantitative import restriction" or a "discretionary import licensing" practice, and is therefore inconsistent with Article 4.2 of the Agreement on Agriculture.³²⁹

7.52.

In its rebuttal submission, the United States added that:

"[F]or the United States to demonstrate successfully that Turkey is in breach of Article XI:1 of the GATT 1994 and Article 4.2 of the Agreement on Agriculture, the United States is not required to show that no Control Certificates were granted at the MFN rate. The United States has demonstrated that Turkey is restricting at least some trade in rice, and that is sufficient to demonstrate a breach of Article XI:1... Even if Turkey's data had demonstrated that the Letters of Acceptance were not enforced at all, that would not change the conclusion that the Letters breach Article XI:1... [E]ven were the Panel to conclude that the Letters were not enforced at all, the Panel should still find, in line with findings of past panels with respect to non-enforced mandatory measures, that Turkey's restrictions on MFN trade in rice are inconsistent with Article XI:1... Lastly, Turkey's failure to issue Control Certificates for the import of rice at the over-quota rates of duty breaches both Article XI:1 of the GATT 1994 and Article 4.2 of the Agreement on Agriculture because it constitutes discretionary import licensing.... [I]t is certainly clear that Turkey believes it has the discretion not to grant Control Certificates if it wants to, and the United States has provided documentary evidence highlighting instances where Turkey has denied or failed to grant such Certificates."³³⁰

7.53.

Turkey stated that:

"[As] the Certificates of Control are not import licenses within the meaning of the Agreement on Import Licensing Procedures... there is clearly no 'denial' of Certificates of Control, and... there is no de jure or de facto import prohibition or restriction within the meaning of GATT Article XI:1... [, therefore] there cannot be 'discretionary import licensing' and/or 'quantitative import restrictions' within the meaning of Article 4.2 of the Agreement on Agriculture and footnote 1 thereof."³³¹

7.54.

Article 4.2 of the Agreement on Agriculture states that:

"Members shall not maintain, resort to, or revert to any measures of the kind which have been required to be converted into ordinary customs duties1, except as otherwise provided for in Article 5 and Annex 5.

1 These measures include quantitative import restrictions, variable import levies, minimum import prices, discretionary import licensing, non-tariff measures maintained through state-trading enterprises, voluntary export restraints, and similar border measures other than ordinary customs duties, whether or not the measures are maintained under country-specific derogations from the provisions of GATT 1947, but not measures maintained under balance-of-payments provisions or under other general, non-agriculture-specific provisions of GATT 1994 or of the other Multilateral Trade Agreements in Annex 1A to the WTO Agreement."

7.55.

The Appellate Body has highlighted the importance of Article 4 of the Agreement on Agriculture. The Appellate Body has called Article 4 "the main provision of Part III of the Agreement on Agriculture", and has defined it as "the legal vehicle for requiring the conversion into ordinary customs duties of certain market access barriers affecting imports of agricultural products".³³² In the words of the Appellate Body:

"[W]e turn now to Article 4, which is the main provision of Part III of the Agreement on Agriculture. As its title indicates, Article 4 deals with 'Market Access'.³³³ During the course of the Uruguay Round, negotiators identified certain border measures which have in common that they restrict the volume or distort the price of imports of agricultural products. The negotiators decided that these border measures should be converted into ordinary customs duties, with a view to ensuring enhanced market access for such imports. Thus, they envisioned that ordinary customs duties would, in principle, become the only form of border protection. As ordinary customs duties are more transparent and more easily quantifiable than non-tariff barriers, they are also more easily compared between trading partners, and thus the maximum amount of such duties can be more easily reduced in future multilateral trade negotiations. The Uruguay Round negotiators agreed that market access would be improved—both in the short term and in the long term—through bindings and reductions of tariffs and minimum access requirements, which were to be recorded in Members' Schedules.

Thus, Article 4 of the Agreement on Agriculture is appropriately viewed as the legal vehicle for requiring the conversion into ordinary customs duties of certain market access barriers affecting imports of agricultural products …"³³⁴

7.56.

The objectives of the Agreement on Agriculture are described in its preamble: "to establish a fair and market-oriented agricultural trading system", and to initiate a reform process "through the negotiation of commitments on support and protection and through the establishment of strengthened and more operationally effective GATT rules and disciplines".³³⁵ To achieve this objective, the preamble states that it is necessary to provide for reductions in protection, "resulting in correcting and preventing restrictions and distortions in world agricultural markets"³³⁶, through achieving "specific binding commitments"³³⁷, inter alia, in the area of market access.³³⁸

7.57.

As has been noted by the Appellate Body, during the course of the Uruguay Round, negotiators decided that certain border measures, which restricted the volume of trade or distorted the price of imports of agricultural products, had to be converted into ordinary customs duties, with a view to ensuring enhanced market access for such imports. This agreement is reflected in the text of Article 4 of the Agreement on Agriculture which, as its title indicates, deals with "Market Access".³³⁹

7.58.

The issue to be decided by the Panel under this particular claim is whether Turkey's alleged conduct, i.e., its alleged denial, or failure to grant, licences to import rice outside of the tariff rate quota, is inconsistent with Article 4.2 of the Agreement on Agriculture. More specifically, whether this alleged conduct, if proven to have occurred, can be considered to be a border measure "of the kind which have been required to be converted into ordinary customs duties", such as a "quantitative import restriction", a "discretionary import licensing" practice, or another border measure that is sufficiently similar to either of the preceding two.

7.59.

We have already addressed the general rules regarding the burden of proof.³⁴⁰ Considering the above, we are of the view that, in this case, the initial burden of proof rests upon the United States, as a complainant, to establish its prima faciecase that the challenged conduct, first, has existed, and then, that it is inconsistent with the invoked provision of the WTO covered agreements, i.e., Article 4.2 of the Agreement on Agriculture. If the United States meets this test, the burden would then be on Turkey to rebut the said claim.

7.60.

In order to assess whether the United States has met its initial burden, the Panel will accordingly consider if the evidence on the record, as submitted by both parties, is sufficient to raise a preliminary presumption that Turkey has engaged in the denial, or failure to grant, licences to import rice outside of the tariff rate quota. Only if the evidence on the record is sufficient for the Panel to conclude that the United States has made a prima facie case, would the burden then be shifted onto Turkey to adequately rebut the United States' allegations. If the United States were successful in establishing its prima facie case, and Turkey failed to rebut it, the Panel would then consider whether the facts so demonstrated can be qualified as constituting a border measure of the kind which has been required to be converted into ordinary customs duties by the Agreement on Agriculture.

7.61.

As noted above, the first issue for the Panel to determine is whether there is enough evidence on the record that Turkey has denied, or failed to grant, licences to import rice outside of the tariff rate quota.

7.62.

In order to prove this allegation, the United States has submitted the following evidence:

(a) photocopies of rejected applications for Certificates of Control for the importation of rice filed by importing companies in Turkey³⁴¹;

(b) photocopies of motions presented in Turkish administrative courts against the Government's rejection of the authorization to import rice³⁴²;

(c) photocopies of documents related to procedures before Turkish administrative courts, which refer to additional instances of rejection of applications for Certificates of Control for the importation of rice³⁴³;

(d) photocopies of documents containing arguments presented by the counsel for MARA before Turkish administrative courts, justifying the rejection of Certificates of Control for the importation of rice³⁴⁴;

(e) photocopies of internal documents from MARA, in which MARA's General Directorate of Protection and Control recommended temporary suspensions of the granting of Certificates of Control for the importation of rice to the Minister of Agriculture and Rural Affairs, which the Minister apparently approved³⁴⁵;

(f) photocopy of a letter from the General Directorate of the TMO to MARA's General Directorate of Protection and Control, recommending the temporary suspension of the granting of Certificates of Control for the importation of rice³⁴⁶;

(g) photocopy of a letter from the Minister of State of Turkey to the United States Trade Representative, informing that Certificates of Control for the importation of rice would be issued as of 1 April 2006.³⁴⁷

7.63.

Turkey has not disputed the veracity of any of these documents. Turkey has admitted, for instance, that the so-called "letters of acceptance" (i.e, letters in which MARA's General Directorate of Protection and Control recommended to the Minister of Agriculture and Rural Affairs temporary suspensions of the granting of Certificates of Control for the importation of rice), such as those provided to the Panel by the United States, "were written and were in circulation".³⁴⁸

7.64.

Parties differ, however, as to the facts that these documents would prove. In the United States' view, the documents are evidence that Turkey has maintained in place a legal prohibition and a restriction on the importation of rice.³⁴⁹ The evidence also shows, according to the United States, "that the granting of Control Certificates is discretionary".³⁵⁰ The United States has contended that it has "presented a large amount of documentary evidence demonstrating that Turkey does not issue Certificates of Control, which are necessary to import rice outside the TRQ."³⁵¹

7.65.

Turkey has stated that these copies of "letters of acceptance":

"[M]ust be either considered as inadmissible evidence or considered as only partial and unreliable evidence of the real intention and trade policies of Turkey in relation to rice importation."³⁵²

7.66.

While Turkey has admitted that "domestic courts appear to have given effect" to the "letters of acceptance", it argues that these documents are only "policy recommendations, falling outside the very competence of the Minister".³⁵³ In its view, the "letters of acceptance":

"[W]ere internal communications aimed at developing policies. These administrative communications never resulted in the adoption of laws or regulations. They were never used to systematically deny the approval of applications for Certificates of Control. And even if, hypothetically, they had been used to limit the approval of Certificates of Control, which Turkey vehemently denies, this is not evidence that there was a measure prohibiting or restricting imports …. The record shows that, despite the 'Letters of Acceptance', Certificates of Control were approved."³⁵⁴

7.67.

As already noted, Turkey has not disputed the veracity of the documents submitted by the United States regarding rejected applications for Certificates of Control for the importation of rice and related briefs presented before Turkish administrative courts. In Turkey's opinion, however:

"[I]ndividual instances of non-approval by MARA of particular rice importers' applications must be seen as a natural component of the interaction between any WTO Member's administration and its business community and cannot be generalized into a 'denial of Certificates of Control to import rice', particularly when the trade statistics clearly indicate otherwise."³⁵⁵

7.68.

Turkey has referred to the rejections for Certificates of Control for the importation of rice identified by the United States as "individual rejections, perfectly compatible with Turkish legislation and with Turkey's obligations under the WTO".³⁵⁶ With respect to these rejections, Turkey has added that:

"The reasons for rejection of individual importers' applications have always been provided and, in general terms, were most often due to missing or wrong information supplied by the importers such as the introduction of the wrong customs code classification, the lack of indication of the chosen customs points of entry, or the wrong origin information."³⁵⁷

7.69.

The processes before Turkish administrative courts, identified by the United States, regarding the denial of Certificates of Control for the importation of rice, have likewise been characterized by Turkey as:

"[I]ndividual instances of domestic litigation [which] must be objectively seen as a natural component of the interaction between any WTO Member's administration and its business community and cannot be used to prove an instance of systematic trade restriction, let alone a trade prohibition (i.e., the 'blanket denial')."³⁵⁸

7.70.

As noted, Turkey has admitted that "domestic courts appear to have given effect" to "letters of acceptance". In Turkey's view, however, by doing so "the domestic courts appear to have given effect to an ultra vires act of the Minister."³⁵⁹ Consequently, Turkey has argued that "no value should be given to the rulings issued by the Administrative Courts of Ankara by this Panel and for purposes of this proceeding."³⁶⁰

7.71.

Regarding the letter sent by the Turkish Minister of State to the United States Trade Representative, Turkey has stated that:

"The diplomatic Letter … was designed to reassure the United States that, with the phasing-out of the TRQ, traders would likely resume trading on MFN terms. It was not an implicit confirmation of any systematic denial of the approval of Certificates of Control."³⁶¹

7.72.

Turkey has concluded that:

"The United States has not shown that there was a systematic rejection of requests for approval. They have given evidence in relation to five individual cases which have resulted in domestic litigation. This represents 0.2% of the approved Certificates of Control."³⁶²

7.73.

Turkey has argued that it has "systematically and regularly" approved Certificates of Control allowing the importation of rice. Turkey has also indicated that "the only way to determine its actual policy is to look at the evidence provided by trade statistics."³⁶³ In its words:

"Contrary to what is erroneously claimed by the United States, Certificates of Control have been systematically and regularly approved on a non-discriminatory basis since the entering into force of 'The Regime for Technical Regulations and Standardization for Foreign Trade' in 1996 (as promulgated in the Official Gazette dated 1 February 1996 and numbered 22541bis). This has been the case both for rice imports occurring at the 'over-quota' MFN or applied rate level and, most importantly for purposes of the allegations by the United States, within the 'in-quota' volumes established each year since 2004. In particular, from 2003 to date, Turkey has approved a total of 2,223 Certificates of Control, allowing a total importation of 2,264,857 tonnes of foreign rice (paddy, brown and milled). Of the aforementioned quantity, 497,469 tonnes of rice equivalent have been allocated under the TRQ system since January 2004."³⁶⁴

7.74.

In support of this assertion, Turkey has provided statistics on the importation of rice³⁶⁵ and lists of approved and rejected Certificates of Control for the importation of rice.³⁶⁶

7.75.

As noted, Turkey has not contested that there have been cases in which, since September 2003, Turkish authorities have rejected applications for Certificates of Control for the importation of rice outside of the tariff-rate quota. In some cases on the record, the administration notified the applicant, as reasons for the rejection, that the application presented "missing items" or "spelling errors".

7.76.

It is also an uncontested fact that the rejections of Certificates of Control for the importation of rice for which the United States has presented evidence, coincided with a period in which Turkey's Minister of Agriculture had received the recommendation, and allegedly had approved it, to temporarily suspend the granting of Certificates of Control for the importation of rice outside of the tariff-rate quota by MARA's General Directorate of Protection and Control.

7.77.

The Panel is aware that merely because these two facts coincide in time, it does not automatically lead to the conclusion that the rejection of the Certificates of Control was a consequence of the recommendation of MARA's General Directorate of Protection and Control contained in the "letters of acceptance". Nor does such coincidence, in and of itself, necessarily imply that the Turkish government had put in place a general policy, during that period, of suspending the concession of Certificates of Control for the importation of rice outside of the tariff-rate quota.

7.78.

Accordingly, the Panel turns to the other evidence available on the record. We start by noting, as a factual matter, that there are a number of statements and actions by different official Turkish authorities on the record, each of which tends to ascribe more importance to the instructions contained in the "letters of acceptance" than Turkey has granted them during the current proceedings. We refer in this regard to: (i) the explicit reference that some of these "letters of acceptance" make to previous "letters of acceptance"; (ii) the statements made in Turkish domestic courts by the representatives of MARA when defending it against actions brought by rice importers; (iii) the decisions of Turkish domestic courts; and (iv) the statement of Turkey's Minister of State to the United States Trade Representative.³⁶⁷

7.79.

The Appellate Body has cautioned against ascribing too much importance to unilateral statements of Member's domestic authorities when characterizing their measures.³⁶⁸ Given the particular circumstances of the present case, however, we do not feel that the concurrent actions adopted by authorities in different branches of the Turkish government should be totally disregarded and deprived of any value, inasmuch as they point to the existence of a conviction on the part of these authorities that the Ministry of Agriculture had the discretion to suspend the concession of Certificates of Control for the importation of rice.

7.80.

There is evidence that, not only on a single occasion, but repeatedly and periodically, MARA's General Directorate of Protection and Control issued written recommendations to the Minister of Agriculture and Rural Affairs to temporarily suspend the granting of Certificates of Control for the importation of rice. The recommendations that are on the record cover the periods from September 2003 to March 2004³⁶⁹, from January to July 2004³⁷⁰, from July 2004 to January 2005³⁷¹, from January to August 2005³⁷², from July 2005 "until a new policy [was] in place", and from March 2006 to April 2006.³⁷³

7.81.

Even assuming ad arguendo that, in themselves these letters were only recommendations and did not produce legal effects, many of these letters make explicit reference in their text to preceding suspensions of the concession of Certificates of Control for the importation of rice, made pursuant to recommendations contained in previous "letters of acceptance". For example, letter No. 107 of January 2004 refers to previous letter No. 964 of September 2003, which had limited the period of issuance of Certificates of Control for the importation of rice from 1 March 2004 and for paddy rice from 1 August 2004, both ending on 1 September 2004. In turn, letter No. 905 of June 2004 refers to the preceding letter (letter No. 107 of January 2004), which apparently limited the period of issuance of Certificates of Control for the importation of rice from 1 July 2004 to 1 August 2004 for rice, and from 1 July 2004 to 1 September 2004 for paddy rice. Thus, in their text, the letters record the existence of periodic suspensions of the issuance of Certificates of Control for the importation of rice.

7.82.

Furthermore, we do not find convincing Turkey's argument that the Minister of Agriculture and Rural Affairs had no authority to order a temporary suspension of the granting of Certificates of Control for the importation of rice, because MARA's General Directorate of Protection and Control and the TMO continued to periodically recommend in writing that the Minister adopt exactly such action, and the Minister repeatedly noted such recommendation, by affixing his signature on the text of the document containing the recommendation. While we can agree with Turkey's characterization that these "letters of acceptance" contain "policy recommendations"³⁷⁴, it remains unconvincing that such recommendations would be repeatedly brought to the attention of the Minister if, as Turkey has argued, they fell "outside the very competence of the Minister".³⁷⁵ We note, in this regard, that Turkey was requested by the Panel to provide evidence of recommendations contained in "letters of acceptance" that the Minister of Agriculture and Rural Affairs had not approved. To this request, Turkey replied that:

"There is no such document that Turkey is in the position to circulate given the privileged nature of the communications internal to the Administration and the confidential nature of the information contained therein."³⁷⁶

7.83.

There is strong indication that, once the Minister had approved the letters, the recommendation effectively became an instruction to temporarily suspend the granting of Certificates of Control for the importation of rice, at least for imports falling outside of the tariff-rate quotas. This indication is confirmed not only by the text of the "letters of acceptance" themselves, many of which, as noted, refer to previous temporary suspensions of the granting of Certificates of Control. It is also confirmed by the statements of MARA's representatives when defending the actions of MARA before Turkish domestic courts³⁷⁷ and by the decision of Turkish domestic courts to uphold the actions of MARA in denying specific requests for Certificates of Control for the importation of rice, based on one of these temporary suspensions as reflected in letters of acceptance.³⁷⁸

7.84.

Turkey has argued that the Panel should give no value to the rulings issued by Turkish domestic courts upholding MARA's actions on the basis of the approved "letters of acceptance".³⁷⁹ In the course of these proceedings, Turkey has argued that these court decisions would be contrary to Turkish domestic legislation and "appear to have given effect to an ultra vires act of the Minister."³⁸⁰ Turkey has added that "[t]his Panel has to decide whether, de jure, there is any provision in the Turkish law on Certificates of Control which gives any administrative authority the discretion to deny their approval."³⁸¹

7.85.

We disagree with this last statement. The Panel does not need to decide whether there is any provision in Turkish domestic legislation which would give the Minister of MARA the discretion to deny the approval of Certificates of Control. Indeed, it would be outside this Panel's jurisdiction to determine whether the refusal to grant Certificates of Control for the importation of rice, made pursuant to recommendations contained in "letters of acceptance", is consistent or not with Turkish domestic legislation. We should presume that the actions of the authorities of a WTO Member are consistent with that Member's domestic legislation, in the absence of proof to the contrary. In any event, other than its statements made in the course of these proceedings, Turkey has not adduced any evidence that those rejections were illegal under Turkish legislation. It is also noteworthy that, before domestic courts, the Turkish government has argued exactly the opposite. In any event, even if the Minister's actions and the court decisions were contrary to Turkish domestic legislation and had given effect to ultra vires acts, there is no reason for the Panel to disregard them, as they constitute an additional indication that the Turkish government had put in place a policy of suspending the concession of Certificates of Control for the importation of rice outside of the tariff-rate quota.

7.86.

Considering all of these elements taken together, we find that the letter sent by the Minister of State of Turkey to the United States Trade Representative on 24 March 2006, informing that Certificates of Control for the importation of rice would be issued as of 1 April 2006³⁸², is additional indication that those Certificates of Control were not being issued at the time.

7.87.

In view of the above, we preliminarily conclude, as a factual matter, that there is sufficient evidence on the record to substantiate a prima facie case that, from September 2003, and for different periods of time³⁸³, Turkey has adopted a decision to deny, or fail to grant, Certificates of Control to import rice outside of the tariff rate quota. In these circumstances, we feel that the burden has been adequately shifted onto Turkey to rebut this presumption.

7.88.

Having preliminarily found that the United States was able, based on the evidence on the record, to make a prima facie case that Turkey, from September 2003 and for different periods of time, has adopted a decision to deny, or fail to grant, Certificates of Control to import rice outside of the tariff rate quota, it is Turkey's burden to rebut such presumption.

7.89.

As noted, Turkey has disputed the facts described by the United States. Turkey has argued that it has "systematically and regularly" approved Certificates of Control allowing the importation of rice. Turkey has also indicated that "the only way to determine its actual policy is to look at the evidence provided by trade statistics."³⁸⁴ In the course of the proceedings, Turkey stated that 2,242 Certificates of Control for the importation of rice had been authorized between 2003 and November 2006.³⁸⁵

7.90.

Noting the statistics provided by Turkey, the Panel repeatedly asked Turkey for evidence regarding approved and rejected Certificates of Control for the importation of rice. After the first substantive meeting, the Panel asked Turkey to provide a photocopy of each of the 2,223 Certificates of Control approved between 2003 and September 2006 for the importation of rice.³⁸⁶ In response, Turkey stated that photocopies of Certificates of Control were available, but that the relevant Ministries were not authorized to provide "all the copies to the Panel".³⁸⁷ Turkey added that, upon request from the Panel, it would "be able to provide to the Panel in strict confidence copies of any individual Certificate of Control" authorized between 2003 and 9 November 2006.³⁸⁸

7.91.

Again, after the second substantive meeting, the Panel asked for evidence regarding approved and rejected Certificates of Control for the importation of rice. Referring to Turkey's previous statement, the Panel asked Turkey, if it could not provide a photocopy of each of the 2,223 Certificates of Control approved between 2003 and September 2006, that it provide at least a photocopy of each of the 56 approved Certificates of Control, which had been identified by the United States during the second substantive meeting with the Panel (as presumably corresponding to imports outside of the tariff rate quota and of preferential trade arrangements).³⁸⁹ The Panel also asked Turkey to provide a photocopy of each one of the Certificates of Control approved between 2003 and September 2006 which were the result of resubmitted applications, initially rejected by the Turkish authorities.³⁹⁰ Finally, the Panel proposed that, if Turkey could not provide the full photocopies requested, with the purpose of protecting the privacy of the companies involved, it at least provide those same photocopies after having blacked out the names of the companies.³⁹¹

7.92.

Regarding the requested photocopies of the 56 approved Certificates of Control identified by the United States during the second substantive meeting with the Panel, Turkey responded that:

"With respect to the actual Certificates of Control, Turkey understands that the documents provided to the Panel would have to be made available also to the United States. Given the strict confidentiality requirements provided by Turkish law … and the well-established communications and information-exchanges between the United States and a number of Turkish rice traders, the Turkish officials involved in this Panel proceeding do not feel comfortable in risking information leaks and possible criminal accusations of violation of Turkish law on confidentiality…

Turkey is not in a position to provide copies of the actual Certificates of Control for circulation. Exceptionally, Turkey would be willing to provide 'blacked-out' copies of the 56 'relevant' Certificates of Control only to the Panel and after a clear understanding with the Panel and between the parties to this dispute that these documents would not be made available to the United States nor to any other entity beside the Panel and the WTO Secretariat."³⁹²

7.93.

Turkey has asserted that Certificates of Control allowing the importation of rice were "systematically and regularly" approved. It has also stated that individual instances of non-approval by MARA of particular rice importers' applications should not be seen as evidence of a general policy. We note, however, that as stated by the Appellate Body, "the mere assertion of a claim [does not] amount to proof".³⁹³ Accordingly, we must determine whether there is enough evidence on the record to allow us to conclude that Turkey has adequately discharged its burden to rebut the presumption that, from September 2003 and for different periods of time, it has adopted a decision to deny, or fail to grant, Certificates of Control to import rice outside of the tariff rate quota.

7.94.

We must note, as a factual matter, that despite repeated requests addressed to Turkey, the Panel was not able to obtain evidence that Turkey had been, as it stated, "systematically and regularly" approving Certificates of Control allowing the importation of rice outside of the tariff rate quota.

7.95.

Turkey has argued that it has provided "ample evidence showing that no de facto 'prohibition' or 'restriction' is to be found in relation to the approval of Certificates of Control.³⁹⁴ Turkey has stated that "2,242 Certificates of Control were approved between 2003 and 9 November 2006"³⁹⁵, i.e., the period "during which the United States allege that a 'blanket denial' was being enforced".³⁹⁶ In addition, Turkey has submitted that, "of those 2,242 approved Certificates of Control, 1,335 (i.e., 59.5%) were approved in relation to out-of-quota trade (i.e., MFN or FTA trade)".³⁹⁷ The figure of 2,242 represented an approval rate of over 95 per cent of all applications lodged by importers for approval of Certificates of Control. According to Turkey:

"[B]etween 2003 and September 2006, a total of 2,324 applications for approval were put forward and resulted in the approval of 2,223 Certificates of Control. Only 102 applications (equal to a mere 4.38%) were rejected for 'non-compliance with the requirements set forth in the relevant legislation'.³⁹⁸ Turkey believes that a rejection rate of less than 5% cannot be quantified or qualified into a de facto import 'restriction'."

7.96.

The only evidence provided by Turkey to support these statements, however, have been copies of Turkish rules and regulations³⁹⁹, copies of forms used for Certificates on Control and for import licences under the tariff rate quotas⁴⁰⁰, as well as estimates, tables and calculations prepared by Turkey for purposes of the present case.⁴⁰¹ Such documents, including the estimates, tables and calculations that Turkey has especially emphasized in its submissions, cannot, in our opinion, be regarded as sufficient evidence to rebut the prima facie case made by the United States in this context.

7.97.

We cannot fail to note, in particular, that the evidence requested by the Panel of Turkey, regarding Certificates of Control approved for the importation of rice, is in Turkey's possession.

7.98.

In this regard, we have already found that the evidence provided by the United States is sufficient to substantiate a prima facie case that, from September 2003 and for different periods of time, Turkey has adopted a decision to deny, or fail to grant, Certificates of Control to import rice outside of the tariff rate quota.

7.99.

In response to the Panel's requests for evidence regarding approved and rejected Certificates of Control for the importation of rice, Turkey cited limitations under its domestic legislation. In the light of the concerns expressed by Turkey, the Panel asked Turkey to elaborate on the legal reasons, under Turkish domestic legislation, which would deny authorization to the Turkish government to provide the documents requested by the Panel.⁴⁰² Turkey replied that:

"According to Article 13 of the Turkish Statistical Law, the confidential data acquired, processed and kept for official statistics cannot be passed-on to any administrative, judicial or military office, authority or person, and cannot be utilized except for statistical purposes or be utilized as a tool for proof. Public officials or other authorities that gather the information have to abide by this rule. Article 53 of the same law provides that public officials violating the prohibitions embodied in Article 13 will be punished in accordance with Article 258 of the Turkish Criminal Code No. 5237."⁴⁰³

7.100.

The Panel was explicit in the documents it req uested from Turkey, both after the first and after the second substantive meeting with the parties.⁴⁰⁴ As noted above, in response to the Panel's requests, Turkey expressed that its "officials involved in this Panel proceeding [did] not feel comfortable in risking information leaks and possible criminal accusations of violation of Turkish law on confidentiality".⁴⁰⁵ Turkey offered to provide "'blacked-out' copies of [some] Certificates of Control only to the Panel and after a clear understanding... that these documents would not be made available to the United States nor to any other entity beside the Panel and the WTO Secretariat".⁴⁰⁶ However, the Panel cannot accept such an offer from Turkey, which is one of the parties to this dispute. Indeed, the evidence requested by the Panel, as well as all submissions under the proceedings at issue, fall under the provision contained in Article 18.1 of the DSU:

"1. There shall be no ex parte communications with the panel or Appellate Body concerning matters under consideration by the panel or Appellate Body."

7.101.

In addition, rule 10 of this Panel's Working Procedures, adopted after consulting the parties to the dispute, provides that:

"In the interest of full transparency, the presentations, rebuttals and statements referred to in paragraphs 5 to 9 of these working procedures [i.e., oral statements made by the parties and third parties during the substantive meetings with the Panel, and parties' and third parties' responses to questions posed by the Panel and the parties during the substantive meetings with the Panel] shall be made in the presence of the parties. Moreover, each party's written submissions, including any comments on the descriptive part of the report, responses to questions put by the Panel and comments on responses made by other parties, shall be made available to the other party."

7.102.

Turkey has explicitly acknowledged that it "understands that the documents provided to the Panel would have to be made available also to the United States."⁴⁰⁷

7.103.

At no point during the Panel's proceedings did Turkey request the adoption of special and additional rules for handling confidential information, nor was such a request made subsequently, even though the complainant raised the possibility of introducing such rules. The issue was brought up orally by the United States during the second substantive meeting with the Panel, and was reflected in its response to Panel's question 116:

"[A]s the United States noted during that meeting, it is not uncommon for WTO panels to adopt procedures for the protection of confidential information submitted by a party. Such procedures, which ensure that only the panelists, the WTO Secretariat, and designated representatives of the other party have access to such information, have generally worked well in the past and could have been employed in this dispute if Turkey had concerns."⁴⁰⁸

7.104.

Turkey, for its part, commented on this response, reiterating its willingness to provide the requested copies of Certificates of Control but "blacked out" and only to the Panel, expressly excluding the United States.⁴⁰⁹ This would suggest ex parte communication, which, as explained above⁴¹⁰, is in direct contravention of Article 18.1 of the DSU.

7.105.

In addition to not being in a position to accept Turkey's offer to submit evidence through what would effectively amount to an ex parte communication of the requested documents, the Panel is not persuaded by Turkey's arguments regarding limitations on its ability to share this information under domestic law. Without adequate knowledge of the full text of the legislation referred to by Turkey⁴¹¹, the Panel fails to comprehend how, for example, its rules would prevent Turkey from sharing the requested information with the United States, but yet allow it to share such information with the Panel.

7.106.

Even if the Panel were to assume as valid Turkey's arguments concerning its limitations under domestic law, that alone would not suffice to discharge Turkey from its evidentiary burden in these proceedings. In the absence of any rebutting evidence provided by Turkey, it is appropriate for this Panel to draw the appropriate inferences⁴¹², as the United States has suggested on several occasions during this dispute.⁴¹³

7.107.

Accordingly, in the absence of the information required by the Panel and, more generally lacking any evidence that would allow us to reach a different conclusion, we conclude that Turkey has failed to rebut the presumption that, from September 2003 and for different periods of time, it has adopted a decision to deny, or fail to grant, Certificates of Control to import rice outside of the tariff rate quota.

7.108.

The Panel will now turn to the issue of whether Turkey's decision, from September 2003 and for different periods of time, to deny, or fail to grant, Certificates of Control to import rice outside of the tariff rate quota, can be considered as a "measure of the kind which have been required to be converted into ordinary customs duties" under Article 4.2 of the Agreement on Agriculture.

7.109.

As noted by the Appellate Body in Chile – Price Band System:

"Footnote 1 [to Article 4.2 of the Agreement on Agriculture] lists six categories of border measures and a residual category of such measures that are included in 'measures of the kind which have been required to be converted into ordinary customs duties' within the meaning of Article 4.2.[Footnote omitted] The list is illustrative, and includes 'quantitative import restrictions, variable import levies, minimum import prices, discretionary import licensing, non-tariff measures maintained through state-trading enterprises, voluntary export restraints, and similar border measures other than ordinary customs duties'. These kinds of measures were identified by the negotiators of the Agreement on Agriculture as measures that had to be converted into ordinary customs duties in order to ensure enhanced market access for imports of agricultural products."⁴¹⁴

7.110.

The United States has argued that Turkey's denial, or failure to grant, Certificates of Control to import rice outside of the tariff rate quota constitutes a "quantitative import restriction" and a practice of "discretionary import licensing".⁴¹⁵

7.111.

As noted, footnote 1 to Article 4.2 of the Agreement on Agriculture lists "quantitative import restrictions" and "discretionary import licensing" among the kind of measures which have been required to be converted into ordinary customs duties. In the words of the Appellate Body:

"The footnote imparts meaning to Article 4.2 by enumerating examples of 'measures of the kind which have been required to be converted', and which Members must not maintain, revert to, or resort to, from the date of the entry into force of the WTO Agreement."⁴¹⁶

7.112.

As mentioned by a previous panel:

"The prohibition on the use of quantitative restrictions forms one of the cornerstones of the GATT system. A basic principle of the GATT system is that tariffs are the preferred and acceptable form of protection... The prohibition against quantitative restrictions is a reflection that tariffs are GATT's border protection 'of choice'. Quantitative restrictions impose absolute limits on imports, while tariffs do not. In contrast to MFN tariffs which permit the most efficient competitor to supply imports, quantitative restrictions usually have a trade distorting effect, their allocation can be problematic and their administration may not be transparent.

Notwithstanding this broad prohibition against quantitative restrictions, GATT contracting parties over many years failed to respect completely this obligation. From early in the GATT, in sectors such as agriculture, quantitative restrictions were maintained and even increased to the extent that the need to restrict their use became central to the Uruguay Round negotiations. In the sector of textiles and clothing, quantitative restrictions were maintained under the Multifibre Agreement... Certain contracting parties were even of the view that quantitative restrictions had gradually been tolerated and accepted as negotiable and that Article XI could not be and had never been considered to be, a provision prohibiting such restrictions irrespective of the circumstances specific to each case. This argument was, however, rejected in an adopted panel report EEC – Imports from Hong Kong.⁴¹⁷

Participants in the Uruguay Round recognized the overall detrimental effects of non-tariff border restrictions (whether applied to imports or exports) and the need to favour more transparent price-based, i.e. tariff-based, measures; to this end they devised mechanisms to phase-out quantitative restrictions in the sectors of agriculture and textiles and clothing. This recognition is reflected in the GATT 1994 Understanding on Balance-of-Payments Provisions⁴¹⁸, the Agreement on Safeguards⁴¹⁹, the Agreement on Agriculture where quantitative restrictions were eliminated⁴²⁰ and the Agreement on Textiles and Clothing... where MFA derived restrictions are to be completely eliminated by 2005."⁴²¹

7.113.

We have already determined that, from September 2003 and for different periods of time, Turkey adopted a decision to deny, or fail to grant, Certificates of Control to import rice outside of the tariff rate quota. We note as an additional factual matter that the decision to temporarily suspend the granting of Certificates of Control for the importation of rice was justified, on several occasions during the period observed, as an instrument to ensure the absorption of local rice production. This is clear in the reasons provided by MARA's General Directorate of Protection and Control, in several letters of acceptance, when recommending to the Minister of Agriculture and Rural Affairs the temporary suspension of the granting of Certificates of Control.⁴²² The justification of the decision to temporarily suspend the granting of Certificates of Control is also present in several letters from the TMO to MARA.⁴²³

7.114.

As noted, in response to the United States' claim that the denial, or failure to grant, Certificates of Control to import rice outside of the tariff rate quota is a "quantitative import restriction", Turkey has argued that Certificates of Control should not be considered as import licences within the meaning of Article 1.1 of the Import Licensing Agreement⁴²⁴, nor under Article XI:1 of the GATT 1994.⁴²⁵

7.115.

Turkey has also stated that there is neither a de jure nor a de facto "prohibition" or "restriction" under Article XI:1 of the GATT 1994⁴²⁶, nor a practice that would constitute a "quantitative import restriction" within the meaning of Article 4.2 of the Agreement on Agriculture.⁴²⁷ Turkey has added that:

"Certificates of Control have been systematically and regularly approved on a non-discriminatory basis... both for rice imports occurring at the 'over-quota' MFN or applied rate level and... within the 'in-quota' volumes established each year since 2004."⁴²⁸

7.116.

In Turkey' view, since:

"[T]he Certificates of Control are not import licenses within the meaning of the Agreement on Import Licensing Procedures... there is clearly no 'denial' of Certificates of Control, and... there is no de jure or de facto import prohibition or restriction within the meaning of GATT Article XI:1... [t]herefore... there cannot be 'discretionary import licensing' and/or 'quantitative import restrictions' within the meaning of Article 4.2 of the Agreement on Agriculture and footnote 1 thereof".⁴²⁹

7.117.

We have already noted that Turkey has not provided evidence of its assertion that a certain number of Certificates of Control were approved between 2003 and 2006 for the importation of rice. Nor has Turkey provided evidence of the alleged high rate of approval of applications for Certificates of Control for the importation of rice. However, even if a number of Certificates of Control had been approved, that would not nullify the fact that a decision was adopted to suspend at times the concession of Certificates of Control to import rice outside of the tariff rate quota. From the statements contained in the different documents from the Turkish authorities related to the adoption of such decision, it is clear to the Panel that the suspension of the concession of Certificates of Control was adopted to limit the amount of rice imports, in order to ensure the absorption of local production.

7.118.

In our view, the factual determination that, from September 2003 and for different periods of time, Turkey has decided to deny, or fail to grant, Certificates of Control to import rice outside of the tariff rate quota in order to ensure the absorption of local production, is enough in itself to conclude that this conduct constitutes a quantitative import restriction, within the meaning of footnote 1 to Article 4.2 of the Agreement on Agriculture.

7.119.

The Panel recalls that in Chile – Price Band System, when referring to "variable import levies" within the meaning of footnote 1 to Article 4.2, the Appellate Body noted some features that are present in such measures:

"These additional features include a lack of transparency and a lack of predictability in the level of duties that will result from such measures. This lack of transparency and this lack of predictability are liable to restrict the volume of imports... [A]n exporter is less likely to ship to a market if that exporter does not know and cannot reasonably predict what the amount of duties will be.[Footnote omitted] This lack of transparency and predictability will also contribute to distorting the prices of imports by impeding the transmission of international prices to the domestic market."⁴³⁰

7.120.

In the present dispute, the challenged measure does not affect the level of duties, but rather the quantities of product that can enter the Turkish market. We find, however, that the features of "lack of transparency and lack of predictability" that result from Turkey's decision to deny or fail to grant Certificates of Control to import rice outside of the tariff rate quota are similar to those observed by the Appellate Body Report in Chile – Price Band System. Even without any systematic intention to restrict the importation of rice at a certain level, the lack of transparency and of predictability of Turkey's issuance of Certificates of Control to import rice is similarly liable to restrict the volume of imports.

7.121.

In conclusion, we consider that there is sufficient evidence regarding the manner in which, from September 2003 and for different periods of time, Turkey has denied or failed to grant Certificates of Control to import rice outside of the tariff rate quota, to characterize this measure as a quantitative import restriction. Through this practice, the Turkish authorities have restricted the importation of rice for periods of time. This conduct can, therefore, be considered as a measure of the kind which have been required to be converted into ordinary customs duties under Article 4.2 of the Agreement on Agriculture.

7.122.

Once found that Turkey's decision to deny or fail to grant Certificates of Control to import rice outside of the tariff rate quota may be characterized as a quantitative import restriction, in principle the Panel need not proceed to consider further whether it may also be considered as a practice of discretionary import licensing. We will nevertheless analyze this issue since, throughout the Panel's proceedings, the United States articulated its claim against Turkey's decision to deny or fail to grant Certificates of Control to import rice outside of the tariff rate quota, under Article 4.2 of the Agreement on Agriculture, both as a quantitative import restriction and as a practice of discretionary import licensing.⁴³¹

7.123.

In examining the ordinary meaning of the term "discretionary import licensing" as it appears in footnote 1 to Article 4.2, we note that a "licence" can be defined as a:

"Formal, usu[ally] printed or written, permission from an authority to do something... or to own something...; a document giving such permission; a permit".⁴³²

7.124.

Parties have engaged in an extensive discussion regarding the appropriate interpretation of the terms "import licences" and "import licensing". In particular, they have discussed at length whether Certificates of Control may be characterized as "import licences". Turkey has stated that the purpose of the Certificates of Control is "to facilitate the process of customs clearance, [through the submission] at importation [of a single] document... which contains all the information required for customs purposes".⁴³³

7.125.

We do not feel that, for the resolution of the present dispute, we need to articulate a general definition of what constitutes an "import licence". Neither the Agreement on Agriculture, nor any of the other WTO covered agreements, contain a general definition of "import licence".

7.126.

Article 1.1 of the Import Licensing Agreement, however, contains a particular definition of "import licensing," provided for the purpose of that agreement:

"For the purpose of this Agreement, import licensing is defined as administrative procedures⁴³⁴ used for the operation of import licensing regimes requiring the submission of an application or other documentation (other than that required for customs purposes) to the relevant administrative body as a prior condition for importation into the customs territory of the importing Member."

7.127.

Having referred to the ordinary meaning of the term "licence", we note that not all documents giving the permission to import may be necessarily considered to be "import licences". As noted by the parties, the importation process is often a complex procedure during which a number of steps must be completed in order to obtain the permission to import certain products. Throughout this process, governments may require that written documents be obtained and then produced to certify the completion of certain steps and thus the compliance with certain legal requirements, in order to allow the importation of goods and their final entry into the importing market. Each of these steps and documents may serve particular objectives. Strictly speaking, these special documents, when used for purposes such as sanitary and phytosanitary control, customs clearance, payment of taxes or duties, are not to be considered as "import licences".

7.128.

In turn, not all practices of "import licensing" would be "discretionary import licensing". "Discretionary" is defined as "pertaining to discretion [or] left to discretion".⁴³⁵ "Discretion" can be characterized in turn as the "[f]reedom to decide or act as one thinks fit, absolutely or within limits; having one's own judgement as the sole arbiter".⁴³⁶

7.129.

In considering whether a measure may be characterized as an "import licence" or a conduct as an "import licensing" practice, the proclaimed objectives of a particular document or requirement are not the main issue to consider in this dispute. Based on our earlier analysis, we have concluded that there is sufficient evidence on the record to demonstrate that, regardless of the purported objectives of the Certificates of Control, the decision to stop granting such documents for periods of time has served as an instrument for administering trade.

7.130.

Considering the immediate context of the term "discretionary import licensing", we note that it appears as one of the measures in the indicative list of "measures of the kind which have been required to be converted into ordinary customs duties". The object and purpose of Article 4 of the Agreement on Agriculture, "to achieve improved market access conditions for imports of agricultural products by permitting only the application of ordinary customs duties"⁴³⁷, would be undermined if Members could decide, at their discretion, whether or not to grant permission for the importation of a good, or if they could decide, at their discretion, whether or not to grant a document that is indispensable for such importation.

7.131.

This interpretation is consistent with the definition agreed by WTO Members in the context of the Import Licensing Agreement. Article 1.1 of the Import Licensing Agreement and its footnote, when defining import licensing, refer to licensing and "other similar administrative procedures". We note in this regard that the footnote to the Annual Questionnaire on import licensing procedures, adopted by the WTO Committee on Import Licensing,⁴³⁸ indicates that "similar procedures":

"[A]re understood to include technical visas, surveillance systems, minimum price arrangements, and other administrative reviews effected as a prior condition for entry of imports."⁴³⁹

7.132.

When considering the decision to deny or fail to grant Certificates of Control to import rice as a "quantitative import restriction", we noted that the challenged measure does not affect the level of duties, but rather whether or not the product can enter the Turkish market. We also noted that the features of "lack of transparency and lack of predictability" that result from Turkey's decision to deny or fail to grant Certificates of Control to import rice outside of the tariff rate quota are similar to those observed by the Appellate Body Report in the Chile – Price Band System case. Such lack of transparency and of predictability of Turkey's issuance of Certificates of Control to import rice is similarly liable to restrict the volume of imports.

7.133.

In the light of the above, without necessarily having to articulate a general definition of what constitutes an "import licence" or a practice of "import licensing", we find that the discretionary use by authorities in an importing country of the concession, or refusal to grant, a particular document which is necessary for the importation of a good, as an instrument to administer trade, in this case can be safely characterized as a practice of "discretionary import licensing" under footnote 1 to Article 4.2 of the Agreement on Agriculture.

7.134.

In conclusion, we consider that there is sufficient evidence regarding the manner in which, from September 2003 and for different periods of time, Turkey has denied or failed to grant Certificates of Control to import rice outside of the tariff rate quota, to characterize this measure as a discretionary practice by the Turkish authorities to decide whether or not to grant permission to import a particular good. Through this discretionary practice, the Turkish authorities have suspended the concession of Certificates of Control in regard to rice imports for periods of time. Given the fact that importers must produce a Certificate of Control in order to be able to import rice even if they fulfil the criteria required to be certified therein (as confirmed by Turkey⁴⁴⁰), this practice effectively has served as a way to administer trade. This conduct can be considered as a practice of "discretionary import licensing" and, therefore, as a measure of the kind which have been required to be converted into ordinary customs duties under Article 4.2 of the Agreement on Agriculture.

7.135.

We have concluded that, from September 2003 and for different periods of time, Turkey has denied or failed to grant Certificates of Control to import rice outside of the tariff rate quota, which can be characterized as a "quantitative import restriction" and as a practice of "discretionary import licensing". In any event, we note that, as clarified by the Appellate Body, the "list of measures [in footnote 1 to Article 4.2 of the Agreement on Agriculture] is illustrative, not exhaustive".⁴⁴¹ Indeed:

"Footnote 1 also refers to a residual category of 'similarborder measures other than ordinary customs duties', which indicates that the drafters of the Agreement did not seek to identify all 'measures which have been required to be converted' during the Uruguay Round negotiations."⁴⁴²

7.136.

Even if it were not to be considered as a "quantitative import restriction" or as a practice of "discretionary import licensing", we consider that, due to its recognized impact on the administration of rice imports, Turkey's decision to deny or fail to grant Certificates of Control to import rice outside of the tariff rate quota would at least qualify as a measure that has sufficient likeness or resemblance, so as to be similar to quantitative import restrictions or to practices of discretionary import licensing and, therefore, as a measure of the kind which have been required to be converted into ordinary customs duties under Article 4.2 of the Agreement on Agriculture.

7.137.

We are aware that a measure enumerated in the list provided in footnote 1 to Article 4.2 of the Agreement on Agriculture may nevertheless not be considered to be a measure "of the kind which have been required to be converted into ordinary customs duties" if it falls under the exceptions contained in the same footnote (i.e., if it is a measure maintained under balance-of-payments provisions or under any other general, non-agriculture-specific, provision of GATT 1994 or of the other Multilateral Trade Agreements in Annex 1A to the WTO Agreement) or if it falls under the exceptions contained in Article 5 and Annex 5 of the Agreement on Agriculture. None of the parties, however, has argued that Turkey's decision to deny or fail to grant Certificates of Control to import rice outside of the tariff rate quota was adopted or maintained under any general, non-agriculture-specific, provision of any of the WTO Multilateral Trade Agreements on Trade in Goods, nor that it was adopted or maintained through the Special Safeguard Provisions in Article 5 of the Agreement on Agriculture or under the provisions on Special Treatment contained in Annex 5 of the Agreement on Agriculture.

7.138.

For the reasons indicated above, the Panel concludes that Turkey's decision, from September 2003 and for different periods of time, to deny, or fail to grant, Certificates of Control to import rice outside of the tariff rate quota, constitutes a quantitative import restriction, as well as a practice of discretionary import licensing, within the meaning of footnote 1 to Article 4.2 of the Agreement on Agriculture. Accordingly, it is a measure of the kind which have been required to be converted into ordinary customs duties and is therefore inconsistent with Article 4.2 of the Agreement on Agriculture.

7.139.

The United States has raised the claim that Turkey's denial, or failure to grant, licences to import rice outside of the tariff rate quota, "is inconsistent with Article XI:1 of the GATT 1994 because it prohibits or restricts imports at the over-quota rate".⁴⁴³ In the United States' view:

"Turkey's denial of import licenses outside the TRQ is in breach of Article XI of the GATT 1994 because Turkey prohibits or restricts imports at the over-quota rate through the use of import licenses or other measures."⁴⁴⁴

7.140.

Turkey has responded that Certificates of Control are not import licences, but rather "administrative forms that are required exclusively for 'customs purposes'".⁴⁴⁵ Turkey has added that "no 'restriction' or 'prohibition' of rice importation... was instituted or maintained... by means of a measure (i.e., the alleged 'denial of Certificates of Control to import rice') which would amount to an 'other measure' within the meaning of GATT Article XI:1".⁴⁴⁶

7.141.

The Panel has already found that Turkey's decision, from September 2003 and for different periods of time, to deny or fail to grant Certificates of Control to import rice outside of the tariff rate quota is inconsistent with Article 4.2 of the Agreement on Agriculture. We do not believe that, having found that this measure is inconsistent with Article 4.2 of the Agreement on Agriculture, an additional finding regarding the same measure under Article XI:1 of the GATT 1994 would be necessary to resolve the matter at issue.

7.142.

Accordingly, under the guidance of the principle of judicial economy, the Panel considers it unnecessary for the resolution of this dispute to address the United States' claim that Turkey's decision, from September 2003 and for different periods of time, to deny or fail to grant Certificates of Control to import rice outside of the tariff rate quota is inconsistent with Article XI:1 of the GATT 1994. Therefore, the Panel refrains from making any findings with respect to this particular claim.

7.143.

The United States has raised the claim that Turkey's failure to publish its decision to deny or fail to grant Certificates of Control to import rice outside of the tariff rate quota is inconsistent with Articles X:1 and X:2 of the GATT 1994. In its view:

"The Letters of Acceptance, which apply to all importers seeking a Certificate of Control from MARA in order to import rice, are Ministerial Decisions taken by the Turkish Minister of Agriculture and are binding under Turkish law... Turkey does not publish the Letters of Acceptance in the Official Gazette. This obscures from importers and other WTO Members that MARA is not issuing Certificates of Control, thereby blocking all imports of rice outside the TRQ regime. Turkey's failure to issue Certificates of Control is inconsistent with Articles X:1 and X:2 of the GATT 1994."⁴⁴⁷

7.144.

The United States has further made the claim that, for the same reason, this measure is likewise inconsistent with Articles 1.4(a) and 1.4(b) of the Import Licensing Agreement. In its words:

"Because Turkey does not publish the Letters of Acceptance, it also necessarily breaches Articles 1.4(a) and 1.4(b) of the Import Licensing Agreement."⁴⁴⁸

7.145.

The United States has finally claimed that:

"Turkey also has acted inconsistently with Articles 3.5(e) and (f) of the Import Licensing Agreement [because] Turkey has decided not to process Certificate of Control applications within the periods specified in subparagraph (f) [i.e., no more than 30 days, except when not possible for reasons outside the control of the Member, and no longer than 60 days if all applications are considered simultaneously]... Nor has Turkey ever asserted that it is 'not possible for reasons outside [its] control' to process applications within the periods set out in Article 3.5(f)... Further, although Turkey does not approve any license applications, it does not provide the applicant 'the reason therefor' – that is... that Turkey has decided not to approve any license applications."⁴⁴⁹

7.146.

Turkey has rejected these claims as, in its opinion, Articles 1.4 and 3.5 of the Import Licensing Agreement do not apply to this dispute. In Turkey's view:

"[T]he United States bases its allegations and legal conclusions on the wrong assumption that Certificates of Control are (or function as) import licenses. On the basis of the legal arguments and factual evidence provided, Turkey reaffirms that the Certificates of Control are not import licenses within the meaning of the Agreement on Import Licensing Procedures. Therefore, the claim by the United States that Turkey has acted inconsistently with these obligations of transparency and due-process must be rejected for the inapplicability, in the case at issue, of the Agreement on Import Licensing Procedures."⁴⁵⁰

7.147.

The Panel has already found that Turkey's decision, from September 2003 and for different periods of time, to deny or fail to grant Certificates of Control to import rice outside of the tariff rate quota is a border measure inconsistent with Article 4.2 of the Agreement on Agriculture. In the light of this finding, the question of how this measure has been administered by Turkey becomes irrelevant for the resolution of this dispute.

7.148.

Accordingly, the Panel refrains from making any findings with respect to these particular claims.

7.149.

In its request for the establishment of a panel, the United States stated that:

"Turkey operate[d] tariff-rate quotas ('TRQs') for rice imports requiring that, in order to import specified quantities of rice at reduced tariff levels, importers... purchase specified quantities of domestic rice, including from the Turkish Grain Board ('TMO'), Turkish producers, or producer associations."⁴⁵¹

7.150.

The United States referred to this particular measure as the "domestic purchase requirement". In its view, the domestic purchase requirement is inconsistent with Article 2.1 and paragraph 1(a) of the Annex to the TRIMs Agreement; with Article III:4 of the GATT 1994; with Article XI:1 of the GATT 1994; and with Article 4.2 of the Agreement on Agriculture.⁴⁵² Initially, the United States presented each of these as an independent claim. Later in the proceedings, however, the United States suggested that, "if the Panel [found] that Turkey [had] breached Article III:4 of the GATT 1994 by instituting a domestic purchase requirement, it need not make a finding under Article 2.1 and paragraph 1(a) of Annex 1 of the TRIMs Agreement".⁴⁵³

7.151.

Turkey has confirmed that the importation of rice under the tariff rate quota (TRQ) system was subject to a domestic purchase requirement.⁴⁵⁴ Turkey has argued, however, that its domestic purchase requirement was not a measure which affected the internal sale, offering for sale, purchase or use of imported rice, and that it did not accord less favourable treatment to rice imported from the United States by adversely affecting the conditions of competition in favour of domestic rice.⁴⁵⁵ Turkey added that the TRQ regime, and its domestic purchase requirement "never resulted in a substantial restriction on imports of rice".⁴⁵⁶ Turkey also stated that its TRQ regime was administered through "an automatic import licensing system"⁴⁵⁷ and could not be considered as a "non-tariff measure maintained through state trading enterprises".⁴⁵⁸

7.152.

Turkey has further added that "the legislative framework providing for the TRQ regime, including the domestic purchase requirement, is no longer in force".⁴⁵⁹ Therefore, it has requested the Panel "to either refrain from making findings on the measures related to Turkey's TRQ regime as [it is] no longer in force, or, should the Panel consider making these findings necessary for purposes of securing a positive solution to the dispute, not to make any recommendation to the Dispute Settlement Body".⁴⁶⁰

7.153.

Before the Panel can consider the United States' claims regarding the so-called domestic purchase requirement, we believe that the Panel must first address Turkey's request that it should refrain from making findings on the measures related to Turkey's TRQ regime, including the domestic purchase requirement, because such measures have expired. In other words, we believe that the Panel must start by verifying at the outset whether it should issue findings on the claims advanced by the United States regarding the domestic purchase requirement.

7.154.

As noted above, Turkey has stated that "the legislative framework providing for the TRQ regime, including the domestic purchase requirement, is no longer in force".⁴⁶¹ It has therefore requested the Panel "to either refrain from making findings on the measures related to Turkey's TRQ regime as [it is] no longer in force, or, should the Panel consider making these findings necessary for purposes of securing a positive solution to the dispute, not to make any recommendation to the Dispute Settlement Body".⁴⁶² Turkey has added that "it has no intention to renew these measures, neither extending them nor adopting new legislative instruments".⁴⁶³

7.155.

In support of its request, Turkey recalled the Appellate Body's finding in US – Certain EC Products that:

"[T]here is an obvious inconsistency between the finding of the Panel that '[a specific] Measure is no longer in existence' and the subsequent recommendation of the Panel that the DSB request that the United States bring [that] Measure into conformity with its WTO obligations. The Panel erred in recommending that the DSB request the United States to bring into conformity with its WTO obligations a measure which the Panel has found no longer exists."⁴⁶⁴

7.156.

Turkey has also cited cases in which, based on the Appellate Body's reasoning, subsequent panels issued findings on specific measures that had expired, but abstained from recommending to the DSB that it ask the Member concerned to bring its measure into conformity with the WTO agreements.⁴⁶⁵ Additionally, Turkey quoted the statement of the Panel on EC – Approval and Marketing of Biotech Products to the effect that:

"[A] panel is not necessarily required to make use of its authority to make findings in respect of measures which were no longer in existence on the date of establishment of [the] panel [and] that in determining whether to make findings on a measure no longer in existence on the date of establishment of a panel, panels should notably take account of the object and purpose of the dispute settlement system [which is, p]ursuant to Article 3.7 of the DSU... 'to secure a positive solution to a dispute'."⁴⁶⁶

7.157.

Turkey has further quoted a statement by the same Panel on EC – Approval and Marketing of Biotech Products regarding the issue of whether it should recommend, as requested by one of the parties, that the Member concerned bring its measure into conformity with the WTO agreements. In that case, one of the complainants had argued that, when a panel finds that a measure is WTO-inconsistent, it must recommend pursuant to Article 19.1 of the DSU that the responding party bring that measure into conformity with its WTO obligations, regardless of whether the measure has ceased to exist after the panel was established. The complainant had gone on to note the Appellate Body's statement in US – Certain EC Products quoted above and emphasized that the measure in that case had been terminated shortly before the Panel was established. The Panel on EC – Approval and Marketing of Biotech Products, found that this reasoning was correct, but added that "the Appellate Body nowhere suggested that the situation could be different in a case where a measure ceased to exist in the course of panel proceedings⁴⁶⁷".⁴⁶⁸

7.158.

Turkey has also quoted the EC – Approval and Marketing of Biotech Products Panel as citing another panel report, that of Dominican Republic – Import and Sale of Cigarettes, "in support of the view that panels are to avoid making recommendations which would apply to measures that are no longer in existence⁴⁶⁹ both in relation to measures expired before or after the commencement of the panel proceedings".⁴⁷⁰

7.159.

The United States has rejected these arguments. It has stated that the "TRQ regime allegedly 'expired' on July 31, 2006", after consultations had taken place and the Panel had been established.⁴⁷¹ It pointed out that the legislative framework that has provided for the establishment of tariff quotas, namely, Decree No. 95/6814 of 30 April 1995 on Surveillance and Safeguard Measures for Imports and Administration of Quotas and Tariff Quotas and Decree No. 2004/7333 of 10 May 2004 on the Administration of Quotas and Tariff Quotas, is still in force.⁴⁷² The United States added that, "given the number of unpublished documents that the Government of Turkey issues with respect to the rice trade"⁴⁷³ and the fact that the TRQs have expired before and then been reopened on previous occasions⁴⁷⁴, in its view it is "critical for achieving a definitive resolution of this matter", not only that the Panel make findings with regard to the measure, but "that it also issue recommendations that Turkey bring its measures into conformity with its WTO obligations".⁴⁷⁵

Marie-Gabrielle Ineichen-Fleisch	President
Johann Frederick Kirsten	Member
Yoichi Suzuki	Member

Turkey — Rice

Documents of the case

Lawyers, other representatives, expert(s), tribunal’s secretary

Report of the Panel

TABLE OF WTO CASES CITED IN THIS REPORT

I. INTRODUCTION

II. FACTUAL ASPECTS

A. PRODUCT DESCRIPTION

B. TURKEY'S RICE MARKET

1. Turkey's rice production

2. Rice consumption in Turkey

3. Turkey's imports of rice

4. Domestic rice producers

C. GENERAL IMPORT REGIME

1. Tariff rates

2. Preferential agreements for the importation of rice

3. General procedure for the importation of rice

D. CERTIFICATES OF CONTROL

1. Legal basis

(a) Situation at the time of the establishment of this Panel

(b) New legislation after the establishment of this Panel

2. Approved Certificates of Control

(a) Statement by Turkey

(b) Request for evidence from Turkey

(c) New request for evidence from Turkey

3. Rejection of Certificates of Control

(a) Rejection of Certificates of Control

(b) Request for evidence from Turkey

(c) New request for evidence from Turkey

4. Procedures in Turkish administrative courts

(a) Arguments by MARA before an administrative court

5. Decision by a Turkish administrative court

E. THE TARIFF RATE QUOTA SYSTEM

1. Situation at the time of the establishment of this Panel

(a) Decree No. 95/6814 of 30 April 1995

(b) Decree No. 2004/7333 of 10 May 2004

(c) Decree 2005/9315 of September 2005

(d) Communiqué No. 25,943 of the FTU

2. Earlier tariff quota regimes

(a) Decree 2004/7135 of 20 April 2004 (from 20 April 2004 to 31 August 2004)

(b) Decree 2004/7756 of August 2004 (from 1 November 2004 to 31 July 2005)

3. Import licences

F. THE TURKISH GRAIN BOARD

G. LETTERS OF ACCEPTANCE

1. The so-called "letters of acceptance"

2. Evidence of letters of acceptance

3. Content of letters of acceptance

4. Nature of letters of acceptance

H. LETTER FROM THE MINISTER OF STATE OF TURKEY

III. PARTIES' REQUESTS FOR FINDINGS AND RECOMMENDATIONS

IV. ARGUMENTS OF THE PARTIES AND THIRD PARTIES

V. INTERIM REVIEW

A. REQUESTS FOR REVIEW OF PRECISE ASPECTS OF THE INTERIM REPORT

B. REQUEST FOR JUDICIAL ECONOMY

C. BURDEN OF PROOF

D. PARTIES' DUTY TO COLLABORATE

E. APPROPRIATE INFERENCES

F. PANEL'S RECOMMENDATIONS

G. ADDITIONAL REVISIONS AND CORRECTIONS

VI. PRELIMINARY RULING BY THE PANEL ON THIRD PARTY RIGHTS

VII. FINDINGS

A. BURDEN OF PROOF

B. THE DENIAL OR FAILURE TO GRANT LICENCES TO IMPORT RICE AT OR BELOW THE BOUND RATE OF DUTY

1. The United States' claims

2. Turkey's response

3. The challenged measure

(a) The so-called "blanket prohibition"

(b) The measure at issue

(c) Conclusion

4. Order of analysis

5. Claim under Article 4.2 of the Agreement on Agriculture

(a) Arguments of the parties

(b) Article 4.2 of the Agreement on Agriculture

(c) The Panel's analysis

(i) Importance of Article 4.2 of the Agreement on Agriculture

(ii) Issues for the Panel's consideration

(iii) Has the United States produced evidence of the challenged measure?

(iv) Has Turkey produced evidence to rebut the presumption?

(v) Is Turkey's decision to deny, or fail to grant, Certificates of Control to import rice outside of the tariff rate quota a "measure of the kind which have been required to be converted into ordinary customs duties"?

The Panel's Analysis