B. Main Claims of the Parties

25. India claims that the quantitative restrictions imposed by Turkey on imports of textile and clothing products from India since 1 January 1996 are inconsistent with Articles XI:l and XIII of GATT and with Article 2.4 of the ATC. India also claims that Article XXIV does not constitute a defense to such violations.
26. Turkey, in response, claims that the restrictions it applies on imports of nineteen categories of certain textile and clothing products from India are justified under Article XXIV of GATT, as these measures were adopted pursuant to (and on the occasion of the formation of) its customs union with the European Communities.
27. Turkey considers that Article XXIV of GATT recognizes that WTO Members have a right to form customs unions and that this right provides such a regional trade agreement with a "shield" from all other WTO obligations. In the context of invoking Article XXIV of GATT, Turkey argues that its customs union with the European Communities is consistent with Article XXIV in that 1) the new regime is overall less restrictive than its previous one, 2) the restrictions challenged by India are of a temporary nature, 3) the customs union has liberalized Turkey�s trade with third countries, and 4) the customs union will be deepened further including in the area of trade legislation. In particular with reference to import restrictions, Turkey argues that 1) Article XXIV:5 provides a derogation from other GATT provisions in the case of the formation of a customs union, and 2) GATT does not prohibit all new restrictions which may be required by customs unions.
28. In addition, Turkey argues 1) that these measures constitute a "requirement" (by the European Communities and also of Article XXIV); that it adopt the European Communities� common commercial policy, including the arrangements relating to trade in textiles and clothing; 2) that there is no GATT-consistent alternative to these restrictions if it wants to include textile and clothing products (which constitute 40 per cent of Turkey's exports to the European Communities) in the customs union; and 3) that in this context, the WTO Agreement makes no distinction between the formation of a new customs union and accession to an existing customs union.
29. Turkey argues that, since it has formed a customs union with the European Communities which, under the ATC, is entitled to maintain import restrictions on the same 19 categories of textiles and clothing, Turkey's parallel import restrictions are not new restrictions in the sense of Article 2.4 of the ATC, being justified by Article XXIV. For Turkey, the said measures are therefore not inconsistent with Article 2 of the ATC. Finally, in its second submission, Turkey claims that India has not suffered any nullification of benefits, as its exports to Turkey have generally increased since the entry into force of the customs union.
30. In response to Turkey's argument that the provisions of Article XXIV constitute a derogation or complete defense (possibly as lex specialis) to all claims, India argues that the obligations under Articles XI:1 and XIII of GATT and 2:4 of the ATC are not modified by Article XXIV:5(a) of GATT 1994, which, according to India, requires Members forming a customs union not to raise the general incidence of regulations of commerce imposed on trade with third Members. As to Turkey's arguments that it was required to follow the EC commercial policy in the sector of textiles and clothing and that it had no alternative but to do so, India responds that the prohibitions of Articles XI and XIII of GATT and Article 2.4 of the ATC are not modified by Article XXIV:8(a)(ii) of GATT. For India, pursuant to Article XXIV:8(a)(ii), the European Communities and Turkey could have maintained different external textile policies at least for a certain period since their agreement is only an interim agreement and Turkey has not become a member of the European Communities. Turkey claims that its customs union with the European Communities was complete as of 1 January 1996 and is not an interim agreement or any form of transitional agreement, as defined by Article XXIV.
31. In response to Turkey's argument that the Panel should not substitute itself for the CRTA by examining the WTO compatibility of the Turkey-EC customs union, India agrees that it is not challenging the consistency of the Turkey-EC trade agreement with Article XXIV. Instead India states that it is requesting this Panel to rule that Turkey does not have the right to impose discriminatory restrictions on imports of textiles and clothing from India, irrespective of whether Turkey's agreement with the European Communities is consistent with Article XXIV. In response to Turkey's allegation that India's rights have not been nullified or impaired by its textile and clothing policy, India challenges the accuracy of the statistics submitted by Turkey and argues that, in any case, Article 3.8 of the DSU establishes that any breach of a GATT obligation constitutes prima facie impairment and nullification of benefits, which have been considered to include benefits denied due to changes in competitive opportunities.

C. Measures at Issue

1. Identification of the Measures at Issue

32. India claims that the import restrictions in place since 1 January 1996 on 19 categories of textile and clothing products violate the provisions of Articles XI and XIII of GATT and Article 2.4 of the ATC. ²⁶⁰ We invited Turkey to confirm that the quantitative restrictions at issue are those listed in India's first submission and to provide us with the Official Gazette which published the establishment of such quantitative restrictions for the years 1996, 1997 and 1998. In response to a question from the Panel at the second substantive meeting, Turkey acknowledged that the quantitative restrictions in place correspond to the measures referred to by India in its first submission. Turkey noted that those quantitative restrictions had been notified to the WTO, i.e. to the CRTA and to the TMB. We conclude that the parties agree that the quantitative restrictions at issue are those listed by Turkey in its responses to the Panel's various questions on this issue and annexed to the present findings (see Annex to this report, Appendix 1).

2. Attribution to Turkey of the Measures at Issue

33. Although Turkey does not deny the existence of such quantitative restrictions on imports, it argues that since it duly notified its various trade agreements with the European Communities to the appropriate bodies of the GATT 1947 and of the WTO, it cannot be held individually liable for these quantitative restrictions as they result from the implementation of its customs union with the European Communities. Turkey argues that India has directed its complaint against Turkey concerning a measure taken by another entity (the Turkey-EC customs union or the European Communities). In Turkey�s view, it is not individually responsible for acts that were collectively taken by the members of the Turkey-EC customs union through the institutions created by the agreement.
34. Turkey submits that the "nationality" of the measures at issue also relates to a fundamental aspect of the nature of a customs union. For Turkey, when two Members enter into a customs union, there is a fundamental change in the relationship between them and in their relationship with other WTO Members.
35. We comment briefly below on the issue of the responsibility of parties to a customs union vis-�-vis third countries. As to the question of "whose measures these import quantitative restrictions are?", three answers are possible: they are either Turkey's measures, the European Communities' measures, or the Turkey-EC customs union's measures.
36. As to whether the measures at issue are Turkish measures, we note that the measures were implemented through formal action by Turkey and that the measures were published by Turkey in its Official Gazette. The first Turkey-EC joint notification to the TMB refers to "details of certain quantitative limits introduced by Turkey" ²⁶¹ and the second one to "details of changes in respect of quantitative limits applied by Turkey" ²⁶² and both notifications list the measures at issue, i.e. restrictions imposed on 19 categories of textile and clothing products. In other words, the measures under examination were enacted, implemented and are now applied, by the Turkish government and do not impose any obligation on any other national or supranational authorities. Thus, on their face, the measures at issue appear to be measures taken by Turkey and enforceable on Turkish territory only.
37. We also note that the measures are applied by Turkey and that they are mandatory, i.e. they leave no discretion to Turkish authorities but to enforce the measure. It is customary practice of GATT/WTO dispute settlement procedures to address applied measures. In addition, previous adopted GATT panels have always considered that mandatory legislation of a Member, even if not yet in force or not applied, ²⁶³ can be challenged by another WTO Member.
38. However, in view of Turkey's contention that these import restrictions are measures of another entity, ²⁶⁴ we proceed to address the issue of whether such measures can be those of the European Communities or of the Turkey-EC customs union.
39. While the European Communities also maintains restrictions against imports from India on the same 19 categories at issue, it does so pursuant to its "Council Regulation (EEC) 3030/93 on common rules for imports of certain textile products from third countries", adopted by the Council of the European Communities on 12 October 1993. ²⁶⁵ This regulation applies only to the European Communities' customs territory. ²⁶⁶ It is not enforceable in Turkey as an EC measure as such. On 7 January 1997 the European Communities notified the second stage of its integration programme to take effect by 1 January 1998; such notifications were made only with reference to the European Communities' quota levels (based on their previous 1990 level). ²⁶⁷ Thus, the measures at issue cannot be considered to be EC measures. Moreover, the European Communities itself stated that the measures had been adopted by Turkey, that Turkey itself was ensuring the surveillance of such quotas at its borders, and that the European Communities and Turkey have their respective systems of border control. ²⁶⁸
40. As to the issue of whether the measures at issue should be considered to be measures of the Turkey-EC customs union as such, we note that according to the Permanent Court of International Justice, ²⁶⁹ the assessment whether any customs union (or another legal entity) has a legal personality distinct from that of its constituent countries is to be based on an examination of the treaty forming such customs union and the relevant circumstances. Such determination will therefore always be made on a case by case basis. We note that the Turkey-EC customs union agreement does not have any legislative body which would have the constitutional authority to enact laws and regulations that would be, as such, applicable to the territory of the customs union. Under the Turkey-EC customs union, the only institutional body with legislative features is the Association Council, the powers of which were first defined in the Ankara Agreement. ²⁷⁰ Paragraph 1 of Article 22 of the Ankara Agreement states that the Association Council shall have the power to take decisions. Although each of the two parties are "bound to take the steps involved in the execution of the decisions adopted", these decisions "shall be taken unanimously" (Article 23 of the Ankara Agreement) and there is no further enforcement process. The Turkey-EC Customs Union Joint Committee can only "carry out exchange of views and information, formulate recommendations to the Association Council and deliver opinions with a view to ensuring the proper functioning of the Customs Union" (Article 52 of the Decision 1/95 of the Turkey-EC customs union). ²⁷¹ Article 55 imposes on Turkey and the European Communities the obligation to notify each other of the adoption of any new legislation that may affect each other or the functioning of the customs union. Article 58 also envisages the situation of "discrepancies between Community and Turkish legislation". This is a recognition that each party to the customs union may adopt measures, to some extent different, and which may not be fully consistent with one another; it provides confirmation of the ability of the parties to act independently and that Turkey maintains that sovereign right. ²⁷² Since the actions of the Association Council require independent implementation by the parties to the customs union without any enforcement process either individually or jointly; since the Association Council cannot force the parties to act; ²⁷³ and since there is no other provision that would lead us to conclude that either of the two parties, or some collective entity on behalf of them, could enact legislation applicable to both of them; we consider the measures at issue taken, implemented and enforced by the Turkish government itself, applied on Turkish territory only, can only be Turkish measures.
41. Importantly, we note that the WTO dispute settlement system is based on Member's rights; is accessible to Members only; and is enforced and monitored by Members only. ²⁷⁴ The Turkey-EC customs union is not a WTO Member, and in that respect does not have any autonomous legal standing for the purpose of WTO law and therefore its dispute settlement procedures. Moreover, the European Communities' import restrictions appear a priori to be WTO compatible and could not be the object of any panel recommendation that the European Communities brings its measure into conformity with the WTO Agreement, as required by Article 19 of the DSU.
42. Finally, we note that in public international law, in the absence of any contrary treaty provision, Turkey could reasonably be held responsible for the measures taken by the Turkey-EC customs union. In the Nauru case one of the conclusions of Judge Shahabuddeen's separate opinion was:

"� the [International Law Commission] considered, that where States act through a common organ, each State is separately answerable for the wrongful act of the common organ. That view, it seems to me, runs in the direction of supporting Nauru's contention that each of the three States in this case is jointly and severally responsible for the way Nauru was administered on their behalf by Australia, whether or not Australia may be regarded as technically as a common organ. �". ²⁷⁵ (Emphasis added.)

43. The International Law Commission (ILC) had stated in its commentaries to its adopted report:

"A similar conclusion is called for in cases of parallel attribution of single course of conduct to several States, as when the conduct in question has been adopted by an organ common to a number of States. According to the principles on which the articles of chapter II of the draft are based, the conduct of the common organ cannot be considered otherwise than as an act of each of the States whose common organ it is. If that conduct is not in conformity with an international obligation, then the two or more States will concurrently have committed separate, although identical, internationally wrongful acts. It is self-evident that the parallel commission of identical offences by two or more States is altogether different from participation by one of those States in an internationally wrongful act committed by the other." ²⁷⁶ (Emphasis added.)

3. Conclusion

44. In light of the foregoing, we conclude that the measures at issue are quantitative restrictions adopted by the Turkish government in 1996, 1997 and 1998 (and listed in the Annex to this report, Appendix 2) against 19 categories of textile and clothing products imported from India. Even if these measures are taken in the ambit of a customs union, they are implemented, applied and monitored by Turkey, for application in the Turkish territory only. Therefore they are Turkish measures.

To continue with Scope of the Dispute

²⁶⁰ Turkey, in its in limine litis preliminary request, claimed that the product coverage of India's request was not sufficiently detailed and precise. In our preliminary ruling of 25 September 1998 we rejected this claim by Turkey as further detailed in paras. 9.2 and 9.3 above.

²⁶¹ G/TMB/N/308. In the notification to the WTO the terms used are "details of the quantitative limits applied by Turkey in respect of imports of certain�", WT/REG22/7.

²⁶² G/TMB/N/326. In the notification to the WTO the terms used are "details of the quantitative limits applied by Turkey in respect of imports of certain�"; WT/REG22/8.

²⁶³ See for instance the Panel Report on United States � Taxes on Petroleum and Certain Imported Substances, adopted on 17 June 1987, BISD 34S/136 ("US - Superfund"), paras. 5.2.1-5.2.2; Panel Report on EEC � Regulation on Imports of Parts and Components, adopted on 16 May 1990, BISD 37S/132, paras. 5.25-5.26; Panel Report on United States � Measures Affecting Alcoholic and Malt Beverages, adopted 19 June 1992, BISD 39S/206, para 5.39.

²⁶⁴ See paras. 3.33 and 8.3 above.

²⁶⁵ That regulation was adopted in the context of the MFA; this regulation was later amended in 1995, Regulation (EC) No. 1616/95 (OJ No. L154, 5.7.1995, p.3) to take into account Council regulation (EC) No 3036/94 establishing economic outward processing arrangements applicable to certain textiles and clothing products reimported into the Community after working or processing in certain third countries. See footnote 14 of Decision 1/95 (see WT/REG22/1).

²⁶⁶ See documents G/TMB/N/60, notified on 28 February 1995.

²⁶⁷ In its notification (G/TMB/N/207), the European Communities consistently refers to categories of product that represent 17.99 per cent of 1990 EC imports (by volume) and therefore does not include any quantity covering the territory of Turkey. We note that the letter from European Communities Permanent Representative stated that "The European Community and Turkey form a customs union and have consulted prior to notifying their second stages of integration". This appears to refer to the consultation process under the Turkey-EC customs union prior to the identification of which products are to be integrated. It is also a recognition that each party to the customs union must adopt its own measures. (The European Communities' first integration process stage was notified as G/TMB/N/1.)

²⁶⁸ See para. 4.3 above, third response of the European Communities to the Panel's questions: "There is thus no specific EC border control in respect of goods for which Turkey has quantitative restrictions, the Turkish authorities having effected such control on entry of the goods into free circulation in Turkey" (emphasis added). To the Panel's fourth question, the European Communities answered: "Turkey has adopted all the European Communities' relevant regulations concerning imports of textiles � Thus the basic administrative principles are the same in both parts of the customs union. � Thus, there is no administration or control of the overall EC/India and Turkey/India textile and clothing quotas at the EC/Turkey's borders. Once goods enter the customs union pursuant to the parties' respective systems, they are in free circulation� "(emphasis added). Since Turkey has its own specific quotas and so does the European Communities, Turkey and the European Communities must control their own import restrictions. This is to say that Indian textile and clothing products are not imported into Turkey on the basis of the European Communities' quantitative restrictions on Indian products, but rather only on the basis of the Turkish quantitative restrictions on Indian products (through the issuance of export licenses by India and import licenses by Turkey against the Turkish quota levels). Once entered into the customs union, say at the India/Turkey border, the products are described as being able to move freely into the EC, the same as Turkish products.

²⁶⁹ Customs Regime between Germany and Austria, PCIJ, Series A/B, No. 41, at 49.

²⁷⁰ Paragraph 1 of Article 22 of the Ankara Agreement reads as follows: "For the achievement of the aims laid down in the agreement and in the cases covered by the latter, the Association Council shall have the power to take decisions. Each of the two parties shall be bound to take the steps involved in the execution of the decisions adopted. The Association Council may also formulate any necessary recommendations" (GATT document L/2155/Add.1, p. 13). Article 23 of the Ankara Agreement specifies that both parties are represented in the Association Council and that its decisions "shall be taken unanimously".

²⁷¹ See WT/REG22/1.

²⁷² The Permanent Court of International Justice (PCIJ) concluded in the Customs Regime between Germany and Austria, that the wording of the customs union was determinant as to whether a member lost its sovereignty. An example of a customs union where member states appear to have retained full sovereignty and independence vis-�-vis third countries is the customs union between the Czech Republic and the Slovak Republic. It can be noted that in such a customs union, the parties have not created any autonomous institution capable of enacting legislation or providing for the legal personality of the customs union, independent and autonomous from that of each member state. Consequently, to take one example, when the Czech Republic and the Slovak Republic wanted to enter into a free trade agreement with Slovenia, Poland, Hungary and Romania, each of them (the Czech Republic and the Slovak Republic) signed individually and independently the so-called CEFTA. It is not the Czech-Slovak customs union, as an entity, which did so. The same is also true for the recent free trade agreement between Turkey and Lithuania, which is parallel to the EC-Lithuania free trade agreement. Again it is not the Turkey-EC customs union which concluded one single free trade agreement with Lithuania, but the EC and Turkey, individually, signed separate agreements. As far as the Turkey-EC custom union treaty is concerned, we have already concluded above, that the institutions existing in the context of the customs union do not have the legal capacity to legislate (there is only a provision that any legislation or measure adopted by either party (the EC or Turkey) must be notified to the other party and consulted upon.) The terms of the Turkey-EC customs union agreement provide no indication of a transfer of sovereignty of the member states either to an institution established under the customs union, nor to the EC. In WTO terms, unless a customs union is provided with distinct rights and obligations (and therefore some WTO legal personality, such as the European Communities) each party to the customs union remains accountable for measures it adopts for application on its specific territory. See also Jennings, R., Watts, A., Oppenheim's International Law (1996), 9^th ed., Vol. 1 (Peace), Introduction and Part 1, p. 255.

²⁷³ In the Reparations for Injuries case, the ICJ stated that, where a group of states claims to be a legal entity distinct from its members, the test is whether it was in "such a position that it possesses, in regard to its Members, rights which it is entitled to ask them to respect."(See ICJ Rep (1949), p. 178 and also Western Sahara case (1975), p. 63; see Jennings, R., Watts, A., Oppenheim's International Law (1996), Op.cit., p. 119.)

²⁷⁴ See Appellate Body Report on United States � Import Prohibition of Certain Shrimp and Shrimp Products, adopted on 6 November 1998, WT/DS58/AB/R ("US � Shrimp"), para. 101.

²⁷⁵ Nauru case, Separate Opinion of Judge Shahabuddeen, at 284. Clark, R., Book review of Nauru: Environmental Damage Under International Trusteeship (C. Weeramantry), The International Lawyer Vol. 28, No. 1, at 186.

²⁷⁶ See the Yearbook of the International Law Commission, 1978, Vol.II, Part Two, at 99. These commentaries were adopted by the Commission in its session of 8 May to 28 July 1978. Article 27 on state responsibility to which these commentaries refer was adopted at the ILC session of 6 May to 26 July 1996. These commentaries and the report were submitted in the same years to the United Nations General Assembly for its consideration.