Turkey uses rare clause to appeal EU pharmaceuticals case at WTO

  • WTO asks Turkey to conform with trade rules
  • Ankara to use rare appeal method in dispute
  • Trade body's top appeals chamber paralysed
  • Appeal may be start of a trend - trade lawyer

GENEVA, April 28 (Reuters) - Turkey will use a novel method to appeal the outcome of a pharmaceuticals dispute with the European Union at the World Trade Organization, it said on Thursday after the global trade watchdog largely found against Ankara.

In a 147-page statement sent to WTO members, Turkey announced its intention to use a rare appeal method known as Article 25 and disclosed the WTO panel's findings in the EU dispute for the first time.

On the main measure, Turkey's so-called "localisation requirement", the panel rejected Ankara's arguments and recommended it bring its measures on pharmaceuticals into conformity with global trade rules.

Brussels brought the case against Ankara to the WTO in 2019, challenging measures that it said at the time forced foreign pharmaceutical producers to move their production to Turkey.

However, since then, the WTO's top appeals chamber has ceased to function due to a policy of the administration of former U.S. President Donald Trump to block new judge appointments, prompting Turkey to announce on Thursday its plans to use a rare alternative to the ordinary dispute process.

"Turkey hereby notifies the Dispute Settlement Body of its decision to initiate an arbitration under Article 25...," it said in the statement. Such proceedings have only been used once before -- by the EU and the United States -- in the body's 27-year history, the WTO website showed.

"This may be an example that many other WTO members will follow in the future. It is really the beginning of a new era in the WTO," a spokesperson for the EU mission to the WTO said.

"We’ll definitely see more of these ad hoc appeal arrangements," said Alan Yanovich, a partner at Akin Gump in Geneva who advises governments and companies on WTO disputes. "This is a positive development for the system."

The paralysis of the WTO's Appellate Body since Dec. 2019 means that cases are currently being appealed into the void, leaving them in legal limbo. The EU helped set up an alternative system for resolving disputes outside the WTO but it has not yet handled cases and Turkey is not a member of the scheme.

A WTO document showed that three arbitrators would be selected in the EU-Turkey dispute and tasked with making a ruling within 90 days of the appeal.

Reporting by Emma Farge; editing by Thomas Escritt, Gareth Jones and Toby Chopra

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