Pakistan's textile exports to Turkey have nose-dived after the latter imposed safeguard duties to protect its domestic industry, well informed sources told Business Recorder. The Government of Pakistan, sources said, had raised that issue at the highest level with the Turkish officials but there had been no developments.
The sources said, Pakistan's bilateral trade with Turkey grew at good pace and crossed one billion dollar mark in 2010-11, but it started to decline after the imposition of safeguard duties in August 2011. Bilateral trade decreased from $1.082 billion in 2010-11 to $630.467 million in 2011-12, a 42 percent decrease from last year. Pakistan's exports decreased from $906.58 million in 2010-11 to $455.83 million in 2011-12, which is a 50 percent decrease from last year.
Pakistan's imports from Turkey showed a small decrease from $176.26 million in 2010-11 to $174.63 million in 2011-12 which was only one percent decrease, the sources continued. Major items of exports to Turkey include cotton fabric (woven), chemical material and product, chemical elements and compounds, cotton yarn, leather, rice (all sorts), articles of apparel and cloth knitted crochet and articles of apparel of textile material.
Major import items include machinery and parts, chemicals, road vehicles and their parts, chemical material and product, manufactures of non-ferrous metals, dyeing tanning and colouring material, iron and steel manufacturers thereof and paper and paper board. Turkey announced 18 percent duty in addition to existing 6.4 percent on all types of fabrics and 27 percent duty in addition to existing 9.6 percent on readymade garments on 24th March, 2011. For readymade garments from China, the additional duty is 9.6 percent + 27 percent + three percent. The new duty rates were applicable from 24th July, 2011.
The items covered include cotton, blended fabrics (gray, bleach, dyed and denim fabric and garments etc). The reason cited for the imposition of the safeguard tariff is damage caused to domestic production because of imports with local industry subject to the threat of serious damage. The safeguard measure on PET was announced in the official gazette on September 8, 2011. Duty is eight percent and has become applicable from November 8, 2011.
Both countries are engaged in talks over Preferential Trade Agreement (PTA) and Pakistan is requesting inclusion of exemption clause in trade defence laws. However, Turkey is unwilling to entertain Pakistan's request. Initially, Pakistan had requested Turkey to withdraw the additional duties as Pakistan has a small share of these products in Turkish markets ie 4.54 percent for fabrics and 2.3 percent for garments at that time.
Turkey maintained that since the safeguards were imposed on MFN basis, it was not possible to lift the same on Pakistani exports specifically. Turkey, sources said, argued that the only way Pakistan could be exempted from additional duties was to conclude a PTA with Turkey, which might contain a clause mutually exempting imports originating from either country from 'trade defence measures' like countervailing duty, anti-dumping duty and safeguards.
Turkey further added that due to its arrangement of Customs Union with the EU, Turkey could offer preferential tariff only on three categories of products ie basic agricultural products, processed agricultural products and some iron and steel products. Pakistan stated that it could offer additional products of Turkey's export interest for concessions provided Turkey agreed to mutually exempt trade defence measures in the PTA and offered concessions on additional products of Pakistan's export interest such as rice and citrus fruits.
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