Spotlight: international trade law in Turkey

Spotlight: international trade law in Turkey

An extract from The International Trade Law Review, 8th Edition

Overview of trade remedies

Turkey ranks among the top World Trade Organization (WTO) members applying anti-dumping measures. Trade remedies continue to be an important policy tool for Turkey, as it is one of the WTO’s main users of safeguard and anti-dumping measures. At the end of 2021, Turkey ranked third from all WTO Members in terms of the number of anti-dumping investigations initiated and anti-dumping measures imposed,2 which mostly concerned imports of plastics and rubber, textiles and base metals. Turkey currently applies 191 anti-dumping and anti-subsidy measures (including anti-circumvention measures), and eight safeguard measures. During 2021 and the first six months of 2022, Turkey initiated seven new anti-dumping investigations, 21 expiry review investigations, two circumvention investigations and four safeguard investigations; decided on the application of six anti-dumping measures and the continuation of 22 anti-dumping measures as a result of the expiry of review investigations; and imposed 14 anti-circumvention measures. The Turkish government foresees that in 2023, there will be 24 safeguard and 31 anti-circumvention measures and that 63 anti-dumping and anti-subsidy investigations will be initiated.3

The Directorate General for Imports (the Directorate General) within the Ministry of Trade (the Ministry) is the competent authority for conducting trade defence investigations.

As regards anti-dumping, anti-subsidy, review and anti-circumvention investigations, the Directorate General (Department of Dumping and Subsidy; Department for Monitoring and Assessment of Import Policies) is empowered to conduct a preliminary examination in response to a complaint or ex officio. If the Directorate General considers that there are reasons warranting the initiation of an investigation, it issues a recommendation to the Board of Evaluation for Unfair Competition in Imports (the Board), which then submits its decision to initiate an investigation to the Minister of Trade (the Minister) for approval. If it is approved, an initiation Communiqué is published in the national Official Gazette.

The Board is empowered to make proposals during an investigation, evaluate the findings made and submit for the Minister’s approval its decisions on the imposition of provisional or definitive measures. The Board can also propose undertakings in an investigation, decide whether to accept a proposed undertaking and take appropriate action when undertakings are violated.

As to safeguard investigations, a similar process applies, but the competent department and board are different (i.e., the Department of Safeguards and the Board for the Evaluation of Safeguard Measures for Imports). If the concerned board resolves that a safeguard measure is justified and the Ministry approves this resolution, a Communiqué to the President proposing the adoption of a measure is published. If the President decides that a measure should be taken, a Presidential Decree announcing the measure is published in the Official Gazette.

The Directorate General may decide to conduct surveillance on receipt of a written application or ex officio.

Legal framework

Owing to the economic contraction and foreign exchange bottleneck of the 1970s, Turkey decided in 1980 to liberalise its economy and adopted an economic policy based on growth through exports. From the 1960s until 1980, Turkey pursued an import-substitution industrialisation policy. To accomplish that shift, Turkey had to open its economy and gradually abandon its restricting policies (authorisation to import and foreign exchange control, among other things). The liberalisation of the Turkish economy has, therefore, been accompanied by the suppression of barriers, with the aim of substituting imports with domestically produced inputs.

While liberalising its economy and facilitating imports, Turkey felt it needed to find a way to protect its domestic producers. In that context, the first legislation providing for trade defence instruments was adopted in 1989. Since then, Turkey has been one of the developing countries that has intensively used trade defence instruments both to protect its domestic industries and to respond to measures taken by other states affecting Turkish exports.

In terms of liberalisation, Turkey went further by forming a customs union with the European Union (EU) in 1995, which meant adopting the EU’s common external tariff and compulsory alignment with the EU’s Common Trade Policy.4

As a Member of the WTO, Turkey is bound by the Agreement Establishing the World Trade Organization and the annexed multilateral agreements, including the General Agreement on Tariffs and Trade (GATT 1994), the Agreement on Subsidies and Countervailing Measures, the Agreement on Implementation of Article VI of GATT 19945 (the Anti-Dumping Agreement) and the Agreement on Safeguards.

i Anti-dumping and anti-subsidy

The main relevant legislation is:

  1. Law No. 3577 on the Prevention of Unfair Competition in Imports;
  2. Regulation No. 23861 on the Prevention of Unfair Competition in Imports;
  3. Decree No. 99/13482 on the Prevention of Unfair Competition in Imports;
  4. Communiqué No. 2008/6 on the Prevention of Unfair Competition in Imports; and
  5. Rules and Principles on the Implementation of Communiqué No. 2008/6 on the Prevention of Unfair Competition in Imports.

ii Safeguard

The Turkish legislation on safeguards is:

  1. Decree No. 2004/7305 on Safeguard Measures in Imports; and
  2. Regulation No. 25486 on Safeguard Measures in Imports (the Safeguard Regulation).

iii Anti-circumvention

Anti-circumvention is regulated by the following provisions:

  1. Article 11 of Decree No. 99/13482 on the Prevention of Unfair Competition in Imports; and
  2. Articles 4(4)(j) and 38 of Regulation No. 23861 on the Prevention of Unfair Competition in Imports.

iv Surveillance

The main principles for the surveillance carried out by the Ministry are established in:

  1. Decree No. 25476 on Safeguard Measures for Imports; and
  2. Regulation No. 25486 on Safeguard Measures for Imports.

Surveillance is an instrument by which import trends, import conditions and the effect of imports on the domestic industry may be observed. If the Ministry decides to implement a surveillance, every country will be subject to the measure. This allows the Ministry to monitor and have a better outlook on future imports from the subject countries. In other words, surveillance provides advance warning of the types of products and the number of products that a company plans to export to Turkey from those countries. The companies that do not have the required surveillance documents may be obliged to pay the relevant duties and taxes by considering the respective reference price.

Treaty framework

The conclusion of free trade agreements (FTAs) is part of Turkey’s willingness to conduct a growth policy based on exports to conquer new markets and diversify the products it exports. Turkey’s FTAs are generally characterised by the elimination of tariff and non-tariff barriers between the concerned countries, by the prevention mechanisms that could be used to offset the adverse effects of duty reductions, by the establishment of a joint committee responsible for the proper implementation of the FTA and by regulations on issues such as origin rules or cooperation between administrations. Moreover, the conclusion of FTAs and the establishment of customs unions is often considered to be a potential solution to the foreign trade deficit, which is a long-standing problem for Turkey. As regards trade defence instruments specifically, those FTAs generally contain a provision stating that parties may resort to trade measures in accordance with the WTO agreements and sometimes provide rules not included in the WTO agreements or domestic law.

The FTA concluded with South Korea differing from the others because it provides for substantive rules:

  1. the prohibition of zeroing;
  2. the application of the lesser duty rule;
  3. the obligation of the investigating authority to request from the exporter or producer in the territory of the other party any missing information or clarification concerning the responses to the questionnaire, if necessary; and
  4. the obligation to terminate a review investigation if the dumping margin calculated is less than the de minimis threshold set out in Article 5.8 of the Anti-Dumping Agreement.

Considering these, Turkey first entered into an FTA with the European Free Trade Association countries in 1991,6 and then formed a customs union with the EU. On 22 December 1995, the EC–Turkey Association Council adopted Decision No. 1/95 on implementing the final phase of the customs union, which entered into force on 1 January 1996. Decision No. 1/95 abolishes the imposition of customs duties and charges having equivalent effect on imports of industrial goods between the EU and Turkey. Decision No. 1/95 further provides that Turkey must conclude FTAs only with countries with which the EU has concluded preferential trade agreements and must align its policies with the EU’s Common Trade Policy. The latter requirement means that Turkey must, among other things, implement trade measures substantially like those contained in the EU’s legislation on trade defence on countries other than EU Member States. Moreover, although Decision No. 1/95 does not prevent the imposition of trade defence measures between the EU and Turkey, it provides that both shall endeavour, through exchange of information and consultation, to seek possibilities for coordinating their action in that regard.

FTAs entered into by Turkey recall parties’ interest in reinforcing the implementation of the multilateral trading system established by the WTO and, in that respect, provide that the WTO’s instruments constitute a basis for parties’ trade policies. In that sense, although the main objective of FTAs is to facilitate trade between signatory parties, the need to address distortions in trade flows through trade law instruments is also recognised. The FTAs concluded by Turkey, therefore, do not contain any different provisions about the substantial or procedural rules already applicable to trade defence cases.

The European Commission underlined in its 2021 Country Report for Turkey that although Turkey is generally aligned with the terms of the EU regarding FTAs it has entered into with third countries, it has continued to implement its FTA with Malaysia even though the EU has not yet concluded a similar agreement with Malaysia. It also continued the process of concluding an agreement with Venezuela.7

After the United Kingdom’s departure from the EU, the UK also left the Customs Union established between the EU and Turkey and thus a new preferential trade agreement between the two countries was needed to regulate and maintain the previous trade regime established with the Customs Union. As a result of the Customs Union between the EU and Turkey, Turkey was able to enter into an FTA with the UK only after the EU–UK Trade and Cooperation Agreement had been reached. The FTA between the UK and Turkey includes provisions on: trade in goods (including provisions on preferential tariffs, tariff-rate quotas, rules of origin and sanitary and phytosanitary measures); customs and trade facilitation; intellectual property; government procurement; technical barriers to trade; competition; trade remedies; and dispute settlement. The conclusion of the trade agreement between the UK and Turkey was of crucial importance as the UK is one of the few countries with which Turkey has a trade surplus.

Most recently, in February 2022 after almost 15 years of negotiations Turkey signed an FTA with Ukraine, aiming to improve the bilateral trade to US$10 million between the two countries by establishing a trade bridge in the Black Sea. That said, the FTA has not entered into force, thus the text of the FTA is not publicly available yet.

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