Thursday, February 16, 2012

India takes on Turkey over cotton

The WTO website carried an announcement recently that India has requested for consultations under the dispute settlement mechanism concerning the safeguard measures undertaken by Turkey against the import of cotton yarn from India.

India launches WTO cotton complaint against Turkey

The media in India itself have not extensively covered this dispute. The Economic Times carried this piece in 2011,
"India will soon file a complaint with the World Trade Organization against "illegal" duties imposed by Turkey on cotton yarn imports. The commerce and industry ministry is consulting lawyers to file a case before WTO's Dispute Settlement Body, a senior official said.

India says Turkey has randomly extended safeguard, or additional, import duties of 12%-17% on cotton yarn, making Indian textiles uncompetitive in their sixth largest export market.

"India may approach the dispute settlement board soon," a government official said. "Consultations are on with lawyers on the validity of the extended safeguard duties." Turkey had imposed a safeguard duty on cotton yarn imports in July 2008.

As a result, the import levy on yarn in the country had risen 13%-20% from 5%, which was the bound import duty rate or its commitment to WTO. Under the WTO norms, a safeguard duty could be imposed only for three years.

A country seeking to extend this duty beyond this period has to establish through a review that it still needs to protect domestic producers against a surge in imports."
Another report here gives the bare details. International Law Curry carried this piece.

Unfortunately, not much information about the genesis of this dispute is in the public domain. It would be interesting to see how India puts forth it's claims in the dispute settlement forum. Is India alleging that Turkey has violated Article 2 of the Agreement on Safeguards which stipulate the conditions under which a safeguard measure may be applied?

India has not been an active participant lately in the dispute settlement forum as compared to other developing countries, especially China, which is gradually recognising the importance of the rule-based dispute settlement mechanism. This lack of participation could  be attributed  to either a lack of instances of WTO violation against India by its trading partners or a lack of engaging in the dispute settlement mechanism.

The initiation of this case is a positive indication of the willingness of India to engage with the multilateral forum to seek one's rights. Whether the case would finally succeed would depend on the merits of the case. However, the mere willingness to use the multilateral dispute settlement system to protect one's domestic interests is a good sign. After all the dispute settlement mechanism is a transparent, rule based system not based on the power relations between trading partners but on a judicial interpretation of existing treaty obligations. And of course, it is the cornerstone of the WTO system.


Tiru said...

Pretty unfortunate that such issues are not discussed and debated in papers or other forums in India. We seriously need some debates on such issues.
On a side note, Turkey-India trade is a very small. Turkey's share in Indian exports is around 0.8%. Cotton yarn products sale is also insignificant. However, the issue is profound as it involves livelihood issues.
We need to get involved more.

Srikar said...

Irrespective of the issue of volume of trade in cotton yarn, the larger issue is of the limitations under which safeguard duties can be imposed under the AoS. It also signals the willingness to protect one's rights under the WTO.