U.S. cotton industry says little evidence of dumping in Turkish market

U.S. merchants spent months providing information on cotton shipments to Turkey after country's Economic Ministry launched investigation into anti-dumping claim, but Turkey imposed CIF duty anyway. 

Of all the countries in the world that might be expected to launch an anti-dumping investigation of U.S. cotton imports, the Republic of Turkey would be one of the last.

Turkey is a member of NATO (since 1952) and thus has depended on the United States and other North Atlantic Treaty Organization members to help deter the Russian Navy from coming through the Black Sea and taking Istanbul for more than six decades.

But long-term military alliances don’t appear to count for much in the world of international trade these days, and the Turkish government announced on April 16 it was imposing a 3 percent CIF duty on all U.S. cotton fiber imports into the country.

The duty is in response to an investigation by two governmental organizations that found that U.S. cotton was dumped into Turkey, injuring the domestic fiber market – a claim which the National Cotton Council has been challenging since the probe was first announced in October, 2014.

Actually, anti-dumping investigations are not that unusual in Turkey. A report by a Turkish law firm indicates Turkey “has been a frequent user of anti-dumping measures since 1989 when the first piece of anti-dumping legislation was enacted.” And, as is often the case in international trade cases, the latest import duty appears to have little to do with cotton.

Rolled steel investigation

Many trade experts believe the Turkish Economic Ministry began the investigation into U.S. cotton imports in retaliation for a U.S. investigation into dumping of Turkish steel into U.S. markets.

U.S. merchants spent months providing information on cotton shipments to Turkey after country's Economic Ministry launched investigation into anti-dumping claim, but Turkey imposed CIF duty anyway, according to U.S. cotton industry sources. 

In a press release distributed by the National Cotton Council, NCC Chairman Shane Stephens said the Council believes the investigation was clearly in response to several U.S. trade investigations of Turkish steel imports. The Turkish government self-initiated the investigation without any showing of special circumstances as is required under World Trade Organization rules.

“In the first place, the investigation itself lacked transparency regarding information used to justify the investigation,” Stephens said. “In fact, data used in support of a finding of injury to the Turkish domestic cotton market ignored established facts to the contrary.”

The announcement of CIF duties comes at a difficult time for U.S. producers because Turkey has become the second largest import market for U.S. cotton due to the decline in exports to China. Over the last five years, Chinese imports have declined from 43 percent to only 7 to 8 percent of U.S. total cotton exports.

Turkish imports of U.S. cotton, meanwhile have risen to between 1.5 million and 2 million bales per year, a significant share of the 9.5 million the U.S. cotton industry is expected to ship in the 2016-17 marketing year (which ends July 31).

Ample evidence submitted

Stephens said the Council submitted ample evidence showing that Turkey’s cotton market has experienced price declines due to the same factors affecting cotton markets worldwide. He said, for example, government policies in developing countries and competition from manmade fibers have contributed to stagnant global demand, increased stocks and lower cotton prices.

“Unfortunately, the import duties only compound the difficult economic climate facing U.S. cotton growers and merchandisers,” he said. “The Council will continue to actively oppose the imposition of duties and is exploring ways to reverse the decision, such as WTO mechanisms and the Turkish judicial system.”

Members of Congress, including House Agriculture Committee Chairman K. Michael Conaway, R-Texas, have also begun protesting the action by the Turkish government.

“American cotton growers remain under assault, and the problems just keep coming,” said Rep. Conaway, who represents one of the largest cotton-growing districts in the U.S. “Just last week, China announced it will start selling off government-owned stockpiles, a result of their reckless policy that has depressed world cotton prices and that continues to hang over the market.

“Add to that the fact that India’s minimum support price and input subsidies have resulted in India topping China as the world’s largest producer. Now Turkey, the nation’s second largest cotton customer, is slapping U.S. cotton exporters with a 3 percent duty as retaliation against a U.S. investigation into Turkish steel exports. This investigation was blatant retaliation, violated WTO procedure, and was anything but transparent. The findings are baseless and the duties should be dropped immediately.”

To learn more about anti-dumping investigations in Turkey, visit http://bit.ly/1VJAWvz.

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