HANDBOOK ON THE SCHEME OF TURKEY

NOTES

The handbook on the Generalized System of Preferences (GSP) of Turkey has been prepared for the UNCTAD secretariat based on Ministerial Decree No 2014/7064 of 15/12/2014 in order to provide the general explanation of the scheme for officials and users who are in charge of the GSP.

DISCLAIMER

This handbook is not a legal text and has been prepared exclusively for information purposes. This should not be used by any party as a basis for any decisions with legal implications. The exclusive legal basis for the new GSP Rules of Origin is Ministerial Decree No 2014/7064.

TABLE OF CONTENTS

GENERAL INFORMATION ON THE GSP OF TURKEY4

1. Eligible / Beneficiary Countries or Territories5

2. Product coverage5

3. Depth of tariff cuts for GSP products5

4. Graduation mechanism (Country/Sector)6

RULES OF ORIGIN UNDER THE GSP SCHEME OF TURKEY6

Explanatory notes6

ORIGIN CRITERIA7

1. 1. WHOLLY OBTAINED PRODUCTS7

1. 2. PRODUCTS THAT ARE SUFFICIENTLY WORKED OR PROCESSED WITH WHOLLY OR PARTLY IMPORTED MATERIALS8

1.2.1. Allowance for the use of non-originating inputs for products originating in LDCs9

1.2.2. Allowance for the use of non-originating inputs for products originating in developing countries9

1.2.3. Tolerance level9

1.2.4. Use of reference periods in the calculation of non-originating materials10

1.3. OTHER IMPORTANT PROVISIONS FOR THE ORIGIN CRITERIA10

1.3.1. Insufficient working or processing10

1.3.2. Territorial requirements and non-manipulation principle11

1.3.3. Cumulation11

1.3.3.1. Cumulation with the European Union, Norway, Switzerland and Turkey11

1.3.3.2. Regional cumulation12

1.3.3.3. Cumulation between Groups I and III13

1.3.3.4. Extended cumulation13

1.3.4. Derogations14

CONSIGNMENT OF THE PRODUCTS15

2.1. CONSIGNMENT OF THE PRODUCTS15

DOCUMENTARY EVIDENCE15

3.1. DOCUMENTARY EVIDENCE FOR THE ORIGINATED PRODUCTS IMPORTED TURKEY FROM BENEFICIARY COUNTRIES15

3.1.1. Certificate of Origin Form A15

3.1.1.1. Certificate of origin Form A issued retrospectively and duplicated15

3.1.2. Invoice Declaration16

3.2. DOCUMENTARY EVIDENCE FOR THE PRODUCTS EXPORTED FROM TURKEY TO BENEFICIARY COUNTRIES FOR THE PURPOSES OF BILATERAL CUMULATION16

3.3. NON-COMMERCIAL PRODUCTS (PRODUCTS EXEMPTED FROM SUBMISSION OF PROOF OF ORIGIN)16

3.4. VALIDITY OF PROOF OF ORIGIN16

3.5. SUBSEQUENT VERIFICATION16

ADMINISTRATIVE COOPERATION17

OTHER PROVISIONS18

5. Validity18

APPENDIX to THIS HANDBOOK18

PART I:

The Generalized System of Preferences (GSP) aims at contributing to the economic development of developing countries. GSP provides benefits to developing countries by enabling qualified products to enter the markets of preference-giving countries at changing rates from duty free to reductions in the MFN rate.

Turkey applied for association with the European Economic Community (EEC) in 1959, one year after the enforcement of the Treaty of Rome. The Ankara Agreement of 1963 and the Additional Protocol of 1970 are two important documents which identify modalities and calendars ensuring the future customs union and confirm the ultimate aim of full membership.

The customs union covering industrial products and processed agricultural products which came into force on 1 January 1996 with Decision No 1/95 of The Turkey – European Community (EC, ensuing the European Union) Association Council was an outcome of these calendars. Article 16 of Decision No 1/95 of the Association Council states that “With a view to harmonizing its commercial policy with that of the EC, Turkey shall align itself progressively with the preferential customs regime of the EC within five years as from the date of entry into force of this decision. This alignment will concern both autonomous regimes and preferential agreements with third countries.”

Within this context, Turkey initiated a GSP by harmonizing with the European Union (the EU) GSP on 1 January 2002 and extended the system with the view of aiming to align itself fully with the EU’s GSP scheme in the consecutive years. With the 2006 import regime put into force at the beginning of the year, full alignment with the EU’s GSP scheme has been achieved.

Turkey renewed its GSP rules of origin on 1 January 2015 according to the reform of the rules of origin for the European Union Generalized System of Preferences (GSP) went into force on 1 January 2011 and introduced three major changes in the rules for determining origin.

First, while previously the same rules of origin applied to developing countries and least developed countries (LDCs), the new rules frequently include separate provisions for LDCs to address concerns about their capacity constraints. The origin-determining requirements for developing countries have also been modified.

Second, "the List of Products and Working or Processing Operations which Confer Originating Status" has been simplified to some degree, and the product-specific origin requirements contained in the current List differ from those in the previous List.

Third, important changes have been made in the cumulation provisions that expand the possibility of cumulation.

1. Eligible / Beneficiary Countries or Territories

Turkey grants preferential treatment to selected countries and territories which are classified as developing countries and least developing countries by the World Bank in line with the EU (see Annex I).

Eligible countries which can benefit from Turkey’s GSP Scheme are announced annually in Annex 3 of the Import Regime Decree published by Ministry of Economy of Turkey.

In order to be deemed as a beneficiary of Turkey’s GSP Scheme, eligible country should undertake to comply or ensure compliance with the Turkey’s GSP rules of origin and to provide the administrative cooperation necessary to ensure their correct implementation with regard to the Turkey. This undertaking should be notified to Ministry of Customs and Trade of Turkey (See Article 4 and 31 of the Decision No. 2014/7064).

The eligible countries deemed as beneficiary of Turkey’s GSP Scheme are published by Ministry of Customs and Trade. Please see the Annex I of this Handbook for the list of beneficiary countries or territories as of 2015.

For further information about administrative cooperation in scope of Turkey’s GSP Scheme, see Section 4 of this Handbook.

2. Product coverage

Preferences are granted for all industrial products and certain agricultural products covered by the EU’s GSP scheme.

Least developed countries (LDCs) have duty- and quota-free access to Turkish markets for all industrial products falling under chapters 25-97 (except chapter 93) and for some agricultural products covered by the customs union between Turkey and the EU.

While all customs duties on products covered by Turkey's GSP scheme have been suspended for the countries benefiting from the special incentive arrangements in line with the EU’s GSP scheme, customs duties have been suspended or reduced in accordance with sensitivities of the products covered by the GSP for developing countries.

Turkey has reserved the right to suspend preferential treatment for GSP products under certain circumstances.

3. Depth of tariff cuts for GSP products

Preferences are differentiated according to the sensitivity of the products fully in harmony with the EU’s. It is sufficient to differentiate between two product categories, namely non sensitive and sensitive products. Tariff duties on non-sensitive products are entirely suspended, while duties on sensitive products are subject to tariff reductions.

Finally, Turkey adopted the same tariff duties with the EU, neither higher nor lower, for GSP products.

Turkey has reserved the right to suspend preferential treatment for GSP products under certain circumstances.

4. Graduation mechanism (Country/Sector)

Turkey applied the graduation mechanism for the list concerned in line with the EU’s application.

For Rules of Origin, please see Part 2 of this handbook.

PART II:

Explanatory notes

In the context of the Generalized System of Preferences, Turkey has granted tariff preferences to the beneficiary countries as from 1 January 2002 as a result of the customs union between Turkey and the European Community which is based on Association Council Decision No 1/95 between Turkey and the European Community.

The rules of origin are regulated by the “Decision on Determination of Origin of Goods Benefiting from Preferential Regime for the Purposes of the Generalised System of Preferences No. 2014/7064” (hereinafter referred to as "Decision") which was published in the Turkish Official Gazette no: 29222 on 31 December 2014 amending Decision No. 2001/3485 and its annexes.

The Decision regulates the procedures and principles for determining the origin of goods benefiting from the preferential regime at trade with Turkey for the purposes of the Generalized System of Preferences. The provisions of the Decision are in accordance with the ones laid down in the “Commission Regulation (EU) No. 1063/2010 of 18 November 2010 amending Regulation (EEC) No. 2454/93 laying down provisions for the implementation of Council Regulation (EEC) No. 2913/92 establishing the Community Customs Code.”

For the goods to benefit from preferential treatment under the Turkey’s GSP scheme, the following three main requirements must be fulfilled:

1. The exporting country must be designated as the beneficiary country;

2. The product must be eligible for the GSP treatment; and

3. The product must meet the origin criteria.

Concerning the origin criteria, goods exported from the beneficiary country to Turkey must comply with the requirements of rules of origin if they are to benefit from the preferential tariff treatment, provided that they are under the GSP scheme. Goods not complying with the rules of origin requirements will be denied preferential treatment and the normal duty rate will apply to these goods.

The rules of origin under the Turkish GSP scheme comprise the following elements:

1. Origin Criteria

2. Consignment of the Products

3. Documentary Evidence

SECTION 1