India has lodged a complaint against Turkey’s policies on imports of cotton yarn, the World Trade Organization (WTO) said. The complaint pertains to Turkey's hiking of import duties to help protect its cotton industry. India has asked for consultations with Turkey as the last step to resolve the disagreement before launching a full-fledged legal dispute. As per government officials, the import duties are affecting Indian exports worth around $600 million per year.
Turkey is a major producer of cotton and recorded a huge surge in imports starting 2005. By 2007, the share of imports of cotton yarn in the Turkish market had gone up to 12.5% against 2.8% in 2004. As a result, although total consumption of cotton yarn rose in the period, Turkish employment in the industry fell steadily and domestic production dropped. Hence to protect its local industry, Turkey brought in the safeguard measures in 2008 for three years. However, instead of the maximum duty of 5% it had agreed with the WTO, it boosted import tariffs to 15-20%.
Also when the three years expired in July 2011, Turkey imposed provisional safeguard measures while it reviewed the case for an extension. It later re-imposed final safeguard measures. Although Turkey has removed the duty on cotton yarn imports from a few countries, who export cotton yarn in small quantities, it has been re-imposed on Indian cotton yarn imports.
Safeguard measures are temporary protectionist tariffs, permitted by WTO rules, to help a specific industry that is threatened by an unexpected surge of imports. India which is one of Turkey’s major suppliers of cotton yarn has argued that Turkey cannot extend the measures after they expired, nor can it impose provisional safeguard measures on a product, which was already subject to final safeguard measures.
India can ask the WTO to set up a dispute panel to adjudicate if consultations do not settle the matter within 60 days. By requesting consultations, India has also opened the door for other WTO members to join in if they are similarly unhappy with Turkey's treatment of cotton yarn imports.
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