EU wins arbitration in pharmaceutical trade dispute with Turkey

Brussels took the case against Ankara to the WTO in 2019, challenging Turkey’s “localization requirement”. The EU said this forced foreign pharmaceutical producers to move their production to Turkey so that Turkish consumers could receive reimbursement when buying their products from pharmacies.

A WTO panel has previously rejected Ankara’s arguments and recommended that it align its measures with global trade rules. This prompted a call from Turkey in April, although the call must have gone down an untested path.

The WTO Appellate Body, which would normally hear such appeals, has been unable to issue a ruling since 2020 after former US President Donald Trump blocked new appointments, a policy that the current US administration has not overthrown.

The paralysis of the Appellate Body means that disputes enter a legal vacuum. To resolve this issue, the European Union and Turkey agreed to refer the case to non-WTO arbitrators and to abide by their findings.

This is the first time that an appeal in a WTO dispute has taken this route.

The arbitrators backed some of Turkey’s arguments, but backed the WTO panel’s earlier finding that the whereabouts requirement violated global trade rules and advised Turkey to adjust its measure accordingly.

(Reporting by Philip Blenkinsop Editing by William Maclean and Mark Potter)

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