In 2011, Turkey imposed for the first time “additional customs duties.” These are duties as high as 50% imposed on top of normal customs duties on certain goods entering the Turkish territory. These additional customs duties affect goods originating in (i.e., made in) the United States, as well as all countries with which Turkey has no preferential trade agreement (e.g., China and India).
So far, Turkey has imposed additional customs duties on nine product categories, from textile, apparels and footwear products, to white goods (i.e., large electrical goods used domestically such as refrigerators and washing machines, typically white in color). It is expected that more products will be targeted in the future, including possibly medical devices.
Within the trade community, there is widespread agreement that these duties likely breach the customs union between Turkey and the European Union, as well as the World Trade Organization (WTO) Agreement. Under the WTO Agreement (GATT Article II), for example, WTO country members committed, among other things, to subject imports of goods to ordinary customs duties that are no higher than the duty level negotiated with other WTO members, the so-called “bound” rate. WTO members also committed not to impose any new “other duties or charges of any kind.” The imposition of any ordinary customs duty in excess of the bound rate, therefore, would appear to be a breach of the WTO Agreement. Likewise, the imposition of any new other duty or charge would appear to be a breach of the WTO.
Nevertheless, the WTO Agreement permits the suspension by a WTO member of concessions made, if that member faces a rapid surge of imports caused by the obligations incurred under the WTO Agreement. The suspension of concessions is governed by Article GATT Article XIX, and the WTO Agreement on Safeguards. These two texts contain the discipline whereby a WTO member can decide to temporarily suspend concessions made in the WTO, by imposing “safeguards” measures. Safeguard measures can take the form of duties. The WTO Agreement permits also the imposition of anti-dumping duties and of countervailing duties, following investigations complying with the WTO Agreement on Anti-dumping (WTO ADA) and the WTO Agreement on Subsidies and Countervailing Measures (WTO ASCM). Outside anti-dumping, countervailing and safeguard measures, a WTO member cannot impose unilaterally any other duties or charge. In prior cased, the WTO’s Dispute Settlement Body has determined that ordinary customs duties are “customs duty in the strict sense of the term,” and that a duty that is “extraordinary” or “exceptional” is not an ordinary customs duty.
The Turkish additional customs duties, however, do not appear to be ordinary customs duties because: (1) they are adopted under a special ministerial decree procedure, (2) they are described by Turkey itself as not being the “Common Customs Duty” (applicable under the European Union (EU)-Turkey customs union agreement to goods entering the customs union), and (3) they are collected separately from the customs duties levied on imports. These additional customs duties, therefore, appear to be a suspension of a concession, which does not appear to respect the WTO discipline governing the adoption of safeguards. So assuming that this is indeed a breach by Turkey of its commitments under the WTO, affected companies can seek redress from their respective governments. In the European Union, this would be the European Commission, before which a trade barrier regulation complaint can be lodged. And affected companies also have access to Courts in Turkey, which have received a number of challenges recently following the adoption of the latest additional duties.
Below is the list of the Decrees imposing additional customs duties adopted at the time this blog post published:
- Decree 2011/2203 of 15 September 2011 imposed duties of 20% and 30% respectively on a wide range of textiles and clothing. Normal customs duties are 8% and 12% respectively. Via Decree 2015/7606 of 30 May 2015, the minimum USD/KG price of textiles was raised from 1.00 to 1.25 and the maximum from 4.00 to 4.25.
- Decree 2014/6692 of 10 August 2014 imposed duties onfootwear: 10% and 30% for parts, and 30% or $3.00 and 50% or $5.00 (whichever is higher) for footwear. Normal customs duties range from 3% to 17%. Previously, from 2006 until 9 August 2014, safeguard duties of $1.50 for textile and synthetic footwear and $2.35 for leather footwear measures were in place.
- Decree 2015/7241 of 6 February 2015 imposed duties of 25% on imports of all metal hand tools under Chapter 82 (includes cutlery) and wheelbarrows. Normal customs duties range from 1.7% to 3.7% with a few at 8.5%.
- Decree 2015/7252 of 18 February 2015 imposed duties of 45% and 50% on certain carpets and rugs. Normal customs duties are 3.5% and 8.0%.
- Decree 2015/7699 of 23 May 2015 imposed duties of 20% on certain lights (ceiling, wall, table, etc.). Normal customs duties are 2.7%, 3.7% or 4.7%.
- Decree 2015/7712 of 7 June 2015 imposed duties of 25% and 50% on furniture (mainly seats). Normal customs duties range from 0% to 5.6%.
- Decree 2015/7713 of 7 June 2015 imposed duties of 10% and 30% on vacuum cleaners and other electro-domestic appliances. Normal customs duties are 1.7%, 2.2% and 2.7%.
- Decree 2015/7722 of 20 June imposed duties of 30% on all types of leather bags. Normal customs duties range from 2.7% to 9.7%.
- Decree 2015/7749 of 5 July 2015 imposed duties of 25% on iron and steel rods and products such as netting and nails. Normal customs duties are 0% (except rods for soldering (2.7%)).