According to Reuters, documents released on the official WTO website on March 11, 2009 showed that India has resorted to the WTO for safeguard measures against imported cotton yarn in Turkey, its second largest textile export market.
India’s request to negotiate with Turkey on this dispute comes at a time when countries around the world are taking measures to protect their exporters and domestic industries in response to the global economic slowdown. The dispute also shows that developing countries are in fierce competition for textiles, which have historically been a source of tension between rich and poor countries, as cheap imports from Asia threaten U.S. and European Union clothing manufacturers.
Of course, international trade rules allow countries that have been hit by a surge in imported products to adopt temporary tariff measures to buy time for their domestic industries to adjust. However, they must consider the exporting countries affected by the measure and strive to maintain substantially equivalent levels of concessions or other obligations, including providing appropriate trade compensation.
As a major cotton producer, Turkey began to apply safeguard measures in the summer of 2008 after the growth rate of cotton yarn imports broke the record in 2005. According to documents provided by Turkey, Turkey’s cotton yarn imports increased by 63.6% year-on-year in 2005, 46.9% in 2006, 119.7% in 2007, and 32.1% in the first five months of 2008. Although Turkey’s cotton yarn consumption increased during the same period, the employment rate and domestic production in the industry showed a downward trend, and the market share of imported cotton yarn increased from 2.8% in 2004 to 12.5% in 2007.
Turkey responded by imposing a three-year temporary import tariff on imported cotton yarn. At that time, Turkey waived temporary import tariffs on developing countries with small cotton yarn supplies, but was not included in this because India is one of its largest suppliers. In January 2009, Egypt, another major textile producer, also implemented similar measures. Egypt is India’s fifth largest textile export market, and India has also expressed concern about Egypt’s measures.
