8:04 AM Jan 30, 1996

TURKEY'S TEXTILES QUOTAS ASSAILED

Geneva 29 Jan (Chakravarthi Raghavan) -- Several developing countries at the WTO expressed their concerns over the unilateral quota restrictions on textiles and clothing imports put in place by Turkey following its customs union with the European Union.

The customs union became effective in January.

WTO members criticised the failure of the EU and Turkey to comply with the requirements of Art XXIV of the GATT (governing customs unions) and over the quotas on textiles and clothing imports unilaterally imposed by Turkey contrary to its obligations under Art XXIV and the WTO Agreement on Textiles and Clothing.

With the customs union becoming effective, the EU's restrictive quota regime and quotas on non-EU members appear to have been applied to imports into Turkey which is the second largest exporter of these items to the European Union.

On Monday, at the meeting of the Council on Trade in Goods, the EU advised the Council of the customs union, but said that information on the tariff aspects of the customs union would be notified later.

Turkey also said that the customs union was in full conformity with the WTO and that with this, Turkey was on the road to full integration with the European Union.

However, Canada complained that the WTO membership was still awaiting details of the customs union and integration. Last December, when the customs union was on the anvil, Canada had urged the parties to notify the agreement and make available the documentation so that Canada and those affected could engage in consultations with the EU and Turkey in terms of Art XXIV before the Union became effective.

The notification of the customs union, after it became effective, and without details about the new tariffs and prior renegotiations with others affected, was a repetition of what had happened at the time of the previous enlargement of the EU (by the accession of Austria, Sweden and Finland), Canada complained.

Malaysia, on behalf of the Asean, said they were affected by this development and were concerned by the unilateral measures initiated by Turkey in terms of quotas imposed on textiles and clothing items. This was a serious breach of the WTO's ATC and it was "unfair" that Turkey should enjoy the benefits of the customs union and "transfer" the burdens on to the shoulders of others.

The US said that while it continued to support regional integration in Europe, Art. XXIV clearly provided for prior notifications and for commencing of compensation negotiations before the Customs Union and the new tariffs became effective. This was the second time that the EU was notifying a customs union after it became effective, ignoring its WTO obligations.

Hong Kong drew particular attention to the fact that quantitative restrictions on imports of textiles and clothing products imposed by Turkey on some 25 suppliers (both WTO and non-WTO members appear to be included in this figure) and urged Turkey to rescind these restrictions.

Hong Kong's statement was supported by India which expressed particular concern over the unilateral way the quotas had been imposed. Peru, Australia, Pakistan, Korea, Brazil were among others who echoed these concerns over the restrictions on textiles and clothing imports.

WTO officials were unable to give any data on the extent of trade involved or affected. Both the European Union and Turkey too were rather coy about disclosing these figures.

However, according to UNCTAD's Handbook of International Trade and Development Statistics, in 1993 (the latest year for which the figures are available and published), Turkey exported 6124.17 million dollars worth of textiles and clothing products, and imported 1648.03 million dollars of such products.

According to Russian sources, (in terms of their trade data for the WTO accession negotiations), Turkey exports about a billion dollar's worth of textiles and clothing products to Russia and imports about $300 million.

In the case of the EU expansion with Sweden, Austria and Finland, the WTO came into force on 1 January of 1995 and the expansion also became effective on that date. The EU's more restrictive textiles and clothing regime were extended to the three new members as of that date. In terms of the WTO and its ATC, while the EU's existing textiles and clothing restrictions were automatically carried over on 1 January under the ATC (subject to the initial integration), it is an unresolved issue for e.g. whether in the case of Sweden (where there had been prior to integration no quota restrictions), the new EU wide quota regime was covered or would have to be treated as a new transitionary safeguard action to be covered by the ATC provisions.

In the case of Turkey, there is no such confusion. The WTO and the ATC became effective on 1 January, and the subsequent quotas imposed to comply with the EU customs union and single market has to be justified in terms of the GATT 1994's safeguards or the ATC's special provisions or in terms of Art XXIV (which requires that the trade with outsiders should not become more restrictive).

Another complication of Turkey joining the EU in a customs union is its membership on the Textiles Monitoring Body where it is in a basket with Norway and Switzerland, with Turkey on the TMB for one year and Norway and Switzerland (importers on the other). This resulted in the 10-member TMB having a ratio of 4-1/2 importers and 5-1/2 exporters. With Turkey now an EU custom union member, that balance is upset and this too has to be resolved at the WTO General Council.