Turkey – certain measures concerning the production,
importation and marketing of pharmaceutical products

Arbitration under Article 25 of the DSU

Award of the Arbitrators

Table of contents

1  INTRODUCTION.. 8

2  MEASURES TAKEN TO STREAMLINE THE PROCEEDINGS. 11

3  MANDATE OF THE ARBITRATORS. 11

4  ARGUMENTS OF THE PARTIES. 12

5  ARGUMENTS OF THE THIRD PARTIES. 12

6  ANALYSIS. 13

6.1  Relevant background information and the localisation requirement 13

6.1.1  Reimbursement of pharmaceutical products active in the Annex 4/A list 13

6.1.2  The localisation requirement 14

6.2  Articles III:4 and III:8(a) of the GATT 1994. 14

6.2.1  Panel findings. 15

6.2.1.1  The Panel's interpretation of the term "products purchased" as requiring a governmental agency to acquire ownership of the products at issue. 15

6.2.1.2  The Panel's finding that the SSI does not purchase pharmaceutical products from retail pharmacies. 16

6.2.1.3  The Panel's finding that retail pharmacies are not governmental agencies purchasing products on behalf of the SSI 17

6.2.1.4  The Panel's conclusion. 18

6.2.2  Whether the Panel erred in its interpretation of Article III:8(a) of the GATT 1994. 18

6.2.2.1  Overview of Article III:8(a) of the GATT 1994. 18

6.2.2.2  Whether the Panel wrongly assumed Article III:8(a) of the GATT 1994 to require a purchase by governmental agencies. 19

6.2.3  Application of Article III:8(a) of the GATT 1994. 24

6.2.3.1  Whether there is procurement by the SSI of pharmaceutical products included in the Annex 4/A list 25

6.2.4  Conclusion. 30

6.3  Article XX(b) of the GATT 1994. 30

6.3.1  Panel findings. 31

6.3.1.1  Order of analysis. 31

6.3.1.2  The declared objective of the measure and its importance. 31

6.3.1.3  The Panel's finding that the measure was not taken to (not designed to) pursue the declared objective. 32

6.3.1.4  The Panel's conclusion. 33

6.3.2  Whether the Panel erred in its interpretation of Article XX(b) of the GATT 1994. 34

6.3.2.1  Whether the Panel erred by confusing the "design" and "necessity" steps of the legal test under Article XX(b) of the GATT 1994. 35

6.3.2.2  Whether the Panel erred by requiring that a measure address a health risk that has "a substantial degree of probability" of materializing for that measure to be "designed to" protect human, animal, or plant life or health. 37

6.3.2.3  Whether the Panel erred by relying on previous panel reports dealing with other provisions. 38

6.3.3  Whether the Panel erred in its application of Article XX(b) of the GATT 1994. 40

6.3.4  Article 11 of the DSU. 41

6.3.5  Conclusion. 43

6.4  Article XX(d) of the GATT 1994. 44

6.4.1  Panel findings. 44

6.4.2  Whether the Panel applied the wrong legal standard in rejecting Türkiye's defence under Article XX(d) of the GATT 1994. 44

6.4.3  Conclusion. 48

7  AWARD. 48

7.1  Articles III:4 and III:8(a) of the GATT 1994. 48

7.2  Article XX(b) of the GATT 1994. 49

7.3  Article XX(d) of the GATT 1994. 49

7.4  Recommendation. 50