Alper ZELVice Chairman of the Executive BoardBucharest, 08.05.2015

International Conference On Fair Competition in Road Transport

Panel Discussion: Challenges & Solutions to Facilitate Fair Transport in Europe(or Deepening of The EU-Turkey Customs Union)

TURKEY & EU BELONG TO A SINGLEVALUE CHAIN

Turkeys exports to EU amounts to 62,3 billion EURTurkey imports 80,8 billion EUR of goods from EU50 % OF EXPORTS BY TURKEYMADE BY EU-CAPITALCOMPANIES

70 % of Turkish exports are imported from EU member statesROAD TRANSPORT HAS STRATEGIC IMPORTANCE FOR TURKISH-EU TRADEShare of Road Transport in Imports to EU : 43 %

50 % OF TURKISH EXPORTS ARE CONDUCTED BY EU-CAPITAL COMPANIESESTABLISHED & MANUFACTRING IN TURKEY

AUSTRIA : EUROPEAN WALL OF CHINA AGAINST TURKISH TRUCKS

INTERNATIONAL ROAD FREIGHT TRANSPORTATION, THE TRUTH ABOUT TURKEYThere are five main routes to from Turkey to Europe, all require permits until destination.Due to the limited number of permits, Turkish transporters are forced to use such routes where permits are available, instead of the most convenient routes.

DiscriminatoryrestrictionsMandatory modal shifts

TRUCKVALUE CHAIN:Restriction for One, Restriction for AllCAN GOODS CIRCULATE THEMSELVES?

April 2014 World Bank report published: Road Transport Quotas, especially transit quotas, restrict free movement of goods

Evaluation of The EU-Turkey Customs UnionThe report launched on 8 April 2014 by the fact that World Bank highlights that although the objective of growth of reciprocal trade in volume and in value has been achieved to a certain extent, however, it also indicates that it has been growing below its full potential because of restrictive measures such as road transport quotas and visas, emphasizing the need for liberization of the transportation of goods in free circulation for the better functioning of the Customs Union.

Evaluation of The EU-Turkey Customs UnionAlthough the Customs Union requires free movement of goods, the reciprocal trade of goods (that are supposed to be in free circulation) has been proved to become more expensive due to certain protective instruments, particularly as a result of transit restrictions imposed within the EU customs territory, thus avoiding expected benefits for the two sides.

Evaluation of The EU-Turkey Customs UnionReport Item 102:Road quotas and notably transit permits create obstacle to the free movement of goods and impede transit traffic thereby hindering the full operation of the Customs Union. In the EU, bilateral road transport agreements including quota negotiation remain a sovereign attribute of the individual EU member states. By limiting the number of Turkish vehicles that can carry goods in their territory, EU member states set limits on Turkish goods that can be transported to the EU by Turkish road transport operators (although they can still be carried by EU road transport operators). This raises costs if the most efficient transport operator can no longer be used.

Mr. JOERN SACKConclusions of the intervention of Mr. Jrn Sack, former legal adviser of the European Commission, responsible for accession negotiations from 2002 to 2005 :..2. On the other hand, the European Court of Justice has ruled that the customs union requires free transit in the common customs territory (Case 266/81, ECR 1983, p. 731), and there is no doubt that the general rules of the Ankara Agreement and its Additional Protocol, in particular the non-discrimination rule of Article 9 of the Ankara Agreement applies to transport.

Without efficient transport and the relevant rules the customs union cannot function properly.

EU Member States impose restrictions on exports goods from Turkey during their transit, including- Transit quotas (quantity restrictions) Transit charges (additional tax) Mandatory modal shift

although the said discriminatory practices are contrary to GATT Article V (on freedom of transit).

Such practices apparently breach the current Turkish-EU law composed of 1963,1973 agreements and the Decision Nr. 1/95 of the Association Council

FREE MOVEMENT OF GOODS BETWEEN TURKEY AND THE EU

3 Main Agreements between Turkey and European UnionAnkara Agreement-1963

Additional Protocal- 1970

Decision Nr. 1/95 of the Turkish- EU Association Council (namely Customs Union)TURKEYIS NOTa THIRD PARTY FOR THE EU.

BASIC REFERENCES1963 ASSOCIATION AGREEMENT BETWEEN TURKEY AND EEC

ARTICLE 10The customs union provided for in Article 2 (2) of this Agreement shall cover all trade in goods. The customs union shall involve:the prohibition between member States of the Community and Turkey, of customs duties on imports and exports and of all charges having equivalent effect, quantitative restrictions and all other measures having equivalent effect which are designed to protect national production in a manner contrary to the objectives of this Agreement;

1973 ADDITIONAL PROTOCOL ELIMINATION OF QUANTITATIVE RESTRICTIONS BETWEEN THE CONTRACTING PARTIESARTICLE 21Quantitative restrictions on imports and all measures having equivalent effect shall, without prejudice to the following provisions, be prohibited between the Contracting Parties. ARTICLE 22The Contracting Parties shall refrain from introducing any new quantitative restrictions on imports or measures having equivalent effect. BASIC REFERENCES

DECISION No 1/95 OF THE EC-TURKEY ASSOCIATION COUNCIL

ARTICLE 5Quantitative restrictions on imports and all measures having equivalent effect shall be prohibited between the Parties. ARTICLE 6Quantitative restrictions on exports and all measures having equivalent effect shall be prohibited between the Parties. BASIC REFERENCES

1963 ASSOCIATION AGREEMENT BETWEEN TURKEY AND EECARTICLE 15The rules and conditions for extension to Turkey of the transport provisions contained in the Treaty establishing the Community, and measures adopted in implementation of those provisions shall be laid down with due regard to the geographical situation of Turkey.BASIC REFERENCES

1973 ADDITIONAL PROTOCOLARTICLE 421. The Council of Association shall extend to Turkey, in accordance with the rules which it shall determine, the transport provisions of the Treaty establishing the Community with due regard to the geographical situation of Turkey. In the same way it may extend to Turkey measures taken by the Community in applying those provisions in respect of transport by rail, road and inland waterway.

BASIC REFERENCES

On the other hand, Articles 23 and 41 of the Additional Protocol of Association Agreement stipulate both Turkey and EU, to abide by the principle of stand-still which is one of the most important rules of international law, during their reciprocal provision of trade in goods and services. This means, both sides have committed themselves not to worsen the current conditions or make them more restrictive compared to what is applicable at present.

Samsun-Kavkaz RailferryKars-Tblisi-Baku RailwayKars-Nahjevan-ranMarmarayNorthern AfricaSoutheast AsiaTekirda-MuratlMiddle EastFar East AsiaKurtalan- Nusaybin-IrakCentral and Northern AsiaCHINAEurope Van Lake CrossingTURKEY OFFERS A SECURE AND CONVENIENT TRADE ROUTE BETWEEN EUROPE-MIDDLE EAST-ASIA

CHAPTER 21 WE ARE NEGOTIATING WITH EUON TRANS EUROPEAN TRANSPORT NETWORKSWIDER EUROPE FOR TRANSPORT Transport Cooperation with EU :

Ankara Mersin Syria Jordan Suez Alexandria/East Port Said multimodal connection ( inc. Below links): Sivas Malatya Mersin From Turkey to Iran and Iraq Tartus Homs (towards Iraq) Beirut Damascus, Iraq and Saudi Arabia Haifa Israel border Jordan border Amman, Iraq and Saudi Arabia direction- Damietta Cairo and beyond Nile.

Building Roads, without making Transport on them efficientbrings no welfare

Regional Trade Growth, promises business opportunities for all countries !25% of the global production realized in this region

TRACECA Corridor

CAREC Corridor Network

The Axis of Trade ShiftedProduction has mainly shifted from West to East

New logistic routes are in planning phase

First priority of the governments of the region is to improve transportation connections in the region and facilitate logistics operations to achieve sustainable growth

Last but not Least.We invite all our valuable Associations to our 41th Anniversary to Istanbul on 3 October 2015

=THANK YOU FOR YOUR ATTENTION

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Marmaray, stanbul-Kars-Tiflis-Bak, Kurtalan-Nusaybin-Irak, Kars-Nahivan-ran, Kavkaz-Samsun-Basra, stanbul-Halep-Mekke, stanbul-Halep-Kuzey Afrika tama koridorlar gelitirilerek Trkiyenin demiryollarnn da Avrupa ile Asya arasnda kpr olmas hedeflenmektedir.

lkemiz corafi konumunun salad doal avantaj sayesinde yaklak 75 milyar $ tamaclk hacmi olan bir blgenin tam ortasnda bulunmaktadr. *****