Turkey: WTO Accepts Thailand's Request For Establishment Of A Dispute Panel To Rule On Duties Imposed By Turkey On The Import Of Air Conditioners

On April 11, 2019, Thailand's request for the establishment of a dispute panel to rule on Turkey's duties against Thailand was accepted by a meeting of the Dispute Settlement Body ("DSB")[1] of the World Trade Organization ("WTO").

To provide a procedural background, the dispute settlement procedure of the WTO is governed by the Understanding on Rules and Procedures Governing the Settlement of Disputes ("DSU"). The DSU proceeds through three main stages: (i) consultation, (ii) adjudication, and, if necessary, (iii) implementation. Accordingly, the consultation stage is established in order for parties to reach an amicable solution. If the consultation fails to settle the dispute, upon the complainant's request from the DSB, a panel is established. The panel issues reports which lead to an implementation phase in which parties may adopt three positions as per the panel's report: (i) compliance with the recommendations of the panel/the appellate body (implementation), (ii) in case of non- compliance with the recommendations in due time, affected party's request for compensation payment (payment of compensation), and (iii) in case of non-compliance with the recommendations and non-payment of the compensation, affected party's request for authorization to introduce retaliatory measures against the offending country (retaliatory measures).

The dispute panel was launched upon Thailand's request against anti-dumping measures by Turkey on imports of air conditioners which originate from Thailand, with Thailand claiming the duty violates Turkey's obligations under global trade agreements. On November 16, 2016, Thailand imposed provisional anti-dumping duties between 7.09% and 38.52% on imports of non-alloy hot-rolled steel flat products from Turkey, along with further measures imposed on Brazil and Iran, within the course of the expiry review investigation. Consequently with the Thai authorities' finding of material injury to domestic producers as a result of the investigation, definitive anti-dumping duties at a rate of 21% between June 7, 2017 and June 6, 2018, at a rate of 20.87% between June 7, 2018 and June 6, 2019, and at a rate of 20.74% between June 7, 2019 and June 6, 2020 were imposed, according to the information provided by the Turkish Ministry of Trade. Following this decision, Turkey requested compensation pursuant to the Articles 8.1 and 12.3 of the WTO's Agreement on Safeguards, but this request was rejected by Thailand. Thus, Turkey imposed an additional anti-dumping duty of 9.27% on imports of air-conditioners from Thailand as "substantially equivalent concession". In response, Thai authorities resolved to discontinue the anti-dumping duties imposed on imports of non-alloy hot-rolled steel flat products from Turkey until June 6, 2020, being the ending date of the duties.

Thailand presented its first request for a panel stating that the additional duties imposed by Turkey were inconsistent with the obligations under GATT and the Agreement on Safeguards, and the tariffs were imposed in response to Thailand's earlier decision to extend safeguard duties on imports of non-alloy hot-rolled steel flat products for an additional three years.

Thailand expressed that it had engaged in consultations with Turkey but that the two sides could not come to a mutual agreement. Turkey blocked Thailand's first request at the DSB meeting on February 25, 2019 by stating it regretted Thailand's decision to seek a panel and that the request was premature since they have not yet exhausted all possibilities to arrive at a mutually convenient solution, adding that Turkey was ready to continue constructive discussions with Thailand.

Thailand presented its second request for a dispute panel and at the DSB meeting on April 11, 2019, upon which the WTO members agreed to Thailand's request to establish the panel. In other words, consultations between Thailand and Turkey with respect to Turkey's duties on the imports of air conditioners from Thailand have failed to settle the dispute and a panel was established. The panel, by way of hearing written and oral arguments from both parties will issue an interim report followed by the final report, expected within the next nine months. As per Article 12(9) of the DSU, the period from the establishment of the panel to the circulation of the report to the members will not exceed this time period.

This article was first published in Legal Insights Quarterly by ELIG Gürkaynak Attorneys-at-Law in June 2019. A link to the full Legal Insight Quarterly may be found here

[1] World Trade Organization, News and Events accessible from:

https://www.wto.org/english/news_e/newsl9_e/dsb_11apr19_eJitm (last accessed on May 9, 2019)

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