Turkey Cotton Yarn Safeguard Against India Settled, Action to Lapse After One Year

Only months after New Delhi formally complained at the WTO, officials from Ankara have agreed to discard the challenged additional duties placed on cotton yarn from India. According to Indian news sources, the two countries are expected to soon sign a respective memorandum of understanding that would formally end the dispute. It would be the second time that an Indian complaint over Turkish duties on cotton yarn does not proceed to the panel stage.

Turkey and India entered the first phase of WTO dispute settlement on 13 February (DS428), when New Delhi requested consultations with Ankara over the latter’s safeguard measures on cotton yarn imports.

Safeguard rules allow countries to increase duties beyond agreed upon limits when an increase in imports caused by unforeseen events threatens to cause serious injury to domestic producers.

As part of its WTO commitments, Turkey had agreed to limit its cotton yarn duties to five percent. However, the tariffs it applied on Indian cotton yarn in the form of safeguard measures were as high as 15 to 20 percent. Other developing countries are exempt from the high duties, which primarily target prime competitor India.

The announced understanding would eliminate these additional safeguards within one year of the deal’s entry into force, sources reported. In exchange, India will forego its right to have a WTO panel established to hear the case.

Back in February, India also requested consultations under the WTO’s safeguards agreement with Egypt over Cairo’s plans to apply similar measures. This request, however, has not resulted in a formal dispute.

Egypt and Turkey are the fifth and sixth largest export destinations for Indian cotton, respectively. Indian producers have ranked second in the world in total cotton production since 2006 and generated 27 million bales in 2011.