Textile export subsidies distort normal trade, Turkey tells India

India has to phase out textile export subsidies gradually as it has reached ‘export competitiveness’, says Turkey Trade Minister Nihat Zeybekci. Zeybekci, who was in India recently, spoke to Business Line on the areas of bilateral cooperation between the two countries, a possible Comprehensive Economic Partnership Agreement and how it wants to keep this relationship separate from its stance in multilateral agencies like the World Trade Organisation.

Turkey, along with some other countries, has questioned the sops given to textile exporters in India. Is this a serious issue for the country?

On request of the US in February 2010, the World Trade Organisation (WTO) Secretariat calculated the export competitiveness of textile and apparel products from India. These calculations clearly showed that India has reached export competitiveness on the said products at least in 2007, if not earlier.

Therefore, India has to phase out its export subsidies gradually over a period of eight years starting not later than 2007. In that sense the implementation of new export subsidies programme or the extension of existing programme is disturbing the normal flow of business.

How does it hurt Turkey?

It has a potential to hurt Turkey’s interest both in the domestic and international markets. Export subsidies have the most trade distortive effects. Our textile and apparel producers are competing with Indian textile and apparel exporters in domestic and export markets.

India’s textile and apparel export to Turkey has increased significantly in the last couple of years. Turkey’s textile and apparel exports were around $17 billion in 2013.

This figure shows that Turkey’s textile and apparel producers have to compete with subsidised India textile and apparel producers in the domestic and export markets.

From a wider perspective, our political and economic relations with India are at their best. I am confident we will find an amicable agreement on such issues.

Last year, Turkey had removed safeguard duties on India cotton yarn exports. Is there still discomfort amongst the Turkish industry on the issue?

In order to protect our domestic cotton yarn manufacturers in December 2008 we started implementing safeguard measures for all cotton yarn imports without any discrimination.

We started consultations with India in 2012 in WTO and subsequently decided to eliminate the safeguard measures on cotton yarn imports as of January 1, 2013. Cotton yarn is a crucial component of our textile production and we monitor its production and import very closely. However, we have not received any complaints from our producers since the elimination of the measures.

What are the possible areas where India and Turkey can cooperate?

We have complementary economies. Moreover, as developing countries, we have been dealing with similar problems. Turkey’s strong historical and cultural relations with Central Asia, Caucasia, West Asia and Mediterranean Regions enable us to extent our economic and commercial ties to these regions.

We can make it comfortable for Indian companies to do business in these countries more profitably. India can provide same opportunity to Turkish companies in South Asia.

I met the Indian Commerce and Trade Minister Anand Sharma and we decided to start talks on Comprehensive Economic Partnership Agreement within next the three months and conclude the agreement as soon as possible. Construction sector is an area where Turkish companies can explore opportunities in India.

Turkey needs $130-billion investment in order to meet its high electricity demand. Renewable energy is an area which has gained importance.

Technology transfer from India will be beneficial for manufacture of equipments for solar and wind power plants in Turkey. Another area for cooperation is establishment and rehabilitation of hydropower projects.

There is a need to increase the frequency of flights operated by Turkish Airlines and commencenew destinations by the Airlines, encourage tourist exchanges and cooperation in the field of SMEs, and cooperation in agriculture and education sectors.

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