India has moved the World Trade Organisation's (WTO) Dispute Settlement Body against Turkey over the latter's safeguard measures on cotton yarn imports.

According to the WTO Web site, “On February 13, India requested consultations with Turkey under the dispute settlement system concerning” the issue.

Explaining the procedure the WTO said, “The request for consultations formally initiates a dispute in the WTO.”

“Consultations give the parties an opportunity to discuss the matter and to find a satisfactory solution without proceeding further with litigation. After 60 days, if consultations have failed to resolve the dispute, the complainant may request adjudication by a panel,” it added.

Confirming the development, Commerce Ministry sources told Business Line that Turkey's safeguard measures have ‘adversely affected' India's cotton yarn shipments to that country since July 2008.

Safeguard measures, allowed under the WTO norms, are duties imposed temporarily by a country to protect the local industry from a sudden import surge.

But India claims that Turkey's measures are ‘inconsistent' with WTO's safeguard norms. Turkey also “failed to respond to India's earlier requests to withdraw these measures,” the sources said.

Turkey had initially imposed the safeguard measures on cotton yarn imports for a three-year period from July 15, 2008.

India's cotton yarn exports to Turkey then fell from $197 million in 2007 to $141 million in 2008 and further to $47 million in 2009. Though it rose to $125 million in 2010, it is much lesser than the 2007 level, the sources said.

Owing to the safeguard measures expiring in July 2011, Turkey initiated a review on June 11, 2011, to consider extending its period.

The sources said Turkey then chose to impose provisional safeguard measures on the item on August 4, 2011, with retrospective effect from July 15, 2011, “without making a proper determination as required by the WTO norms”.

India claims that it is not permissible to impose provisional measures while undertaking a review for extension, adding that imposition of such provisional measures during an original investigation is allowed only in ‘critical circumstances'.

Following the review, Turkey decided on January 28, 2012, to extend the safeguard measure for three years till July 14, 2014, they said.

Also, these measures were applied retrospectively from July 15, 2011, they said, adding that the WTO norms on safeguards do not allow such measures to be applied retrospectively.

The Ministries of Commerce and Textiles as well as the cotton textiles export promotion body ‘TEXPROCIL' had in August 2011 informed Turkey about the “legal inconsistencies” of their safeguard measures, the sources said.

While imposing the safeguard duty, Turkey had cited a fall in employment in the local industry and an increase in the market share of such imports in the country. Later, Turkey had waived the safeguard duty for some developing countries as they had not exported as much as India did to that country.

arun.s@thehindu.co.in

(This article was published on February 15, 2012)
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