Turkey Increases Rate of Anti-Dumping Duty on Chinese-Origin Fan Coils after Expiry Review; Continues Controversial Safeguard Investigation into Mobile Phones

Hong Kong traders with export interests in Turkey may like to know that the anti-dumping measures on fan coils, originating in mainland China, are confirmed as remaining in force, but at a higher rate of duty. This is laid down in Decree No. 2016/2 on the Prevention of Unfair Competition from Imports, published in the Turkish Official Journal, No. 29622, dated 12 February 2016. The original measures had been introduced at the rate of 34.27% of the CIF value by Decree No. 2010/16 on the Prevention of Unfair Competition from Imports, published in the Turkish Official Journal, No. 27597, dated 31 May 2010.

The rate, which has been revised upwards within the framework of new Decree No. 2016/2 for fan coils, is illustrated in the following table. The duty therefore continues to be applicable to imports from mainland China as from 12 February 2016:

Within the framework of the expiry review investigation, which was initiated on 10 May 2015 in order to evaluate the likelihood of recurrence of dumping and injury should the measures be repealed, eight companies resident in mainland China and twenty-three importing companies were invited to cooperate. Despite this, only six importing companies submitted their responses to the Ministry of Economy whereas none of the companies resident in China are said to have cooperated.

The findings of the investigating authority reveal that the Chinese producers’ production capacities as well as their export performance during the investigation period were given particular importance. One of the cooperating companies alone had an annual production capacity of 500,000 units, which was determined to be much above Turkey’s total demand for fan coils. In terms of prices, the Ministry determined that Chinese-origin fan coils continued to be sold at dumped prices and that the export prices of the product concerned to third countries were higher than the export price to Turkey. A new normal value was also established as part of the expiry review.

Upon the completion of the investigation, Turkey’s domestic industry was found to face problems in terms of unit profitability, market share and capacity utilisation levels, despite its positive performance in terms of production, domestic sales and investments. The imports of the product concerned were also found to have increased during the investigation period.

Nevertheless, it was determined that the definitive measures were not sufficient to remove the injury and, consequently, that the Turkish domestic industry did not fully recover. Moreover, as mainland China was found to have reached high production and production capacity rates, and as mainland Chinese producers and exporters are felt to be closely acquainted with the Turkish market, and capable of easily and quickly penetrating distribution levels, the Turkish authority’s concerns were further strengthened. The latter saw these as factors demonstrating that the Chinese mainland’s capacity would be channelled to Turkey at low prices, which would, in turn, it was felt, undercut and depress the Turkish domestic industry’s prices.

Hong Kong traders with export interests in Turkey may also like to know that Turkey’s decision on its much-disputed safeguard investigation into imports of mobile phones is still pending although the legal period for the completion of the case was set to expire on 5 March 2016. The investigation was initiated by Decree No. 2014/10 on the Prevention of Unfair Competition from Imports, published in the Turkish Official Journal, No. 29196, dated 5 December 2014. The complaint was filed by Vestel Elektronik Sanayi Ve Ticaret A.Ş., which had recently initiated its investment programme to bring into light Turkey’s first domestically produced smartphones.

However, the investigation has been subject to fierce criticism from the world’s leading smartphone exporters as Turkey’s act was considered to be capable of closing the Turkish market in order to protect a domestic producer which had recently started its operations. Public hearings were held on 3 March 2015 and written views were submitted by the Ministry of Economic Affairs of Taiwan, Taiwan Electrical and Electronic Manufacturers’ Association, Delegation of the EU to Turkey, ZTE Corporation, Samsung Group, Nokia Komunikasyon A.S., LG Group, Huawei Group, China Chamber of Commerce for Import and Export of Machinery and Electronic Products, Vodafone Telekomunikasyon A.S., and TUBISAD (Turkish Informatics Industry Association).

In June 2015, The Turkish Minister of Economy, Nihat Zeybekçi, held a press conference where he evaluated the performance of the Ministry in the last 18 months. He stated that some protective measures would be taken within one or two months concerning especially some electronic products such as mobile phones and computers. In addition, rumours indicated that a draft Decree proposing the imposition of measures had already been prepared by the Ministry and a measure at the rate of 10% was being considered.

Given its disputed nature, the investigation, which was supposed to be completed by 5 September 2015 (within 9 months following the initiation), has been extended for 6 months as per Article 4.6 of the Regulation on Safeguard Measures on Imports, shifting the deadline to 5 March 2016.

Based on recent unofficial information cited in the press, it would appear that Turkey will not consider imposing safeguard measures against imports of mobile phones. This was also stated during a press interview by the CEO of Vestel, the complainant in the investigation. It would appear from unofficial information that Turkey is considering providing the domestic industry with incentives and subsidy measures rather than imposing safeguard measures. Nevertheless, this information remains unconfirmed since the investigation is still on-going and no definitive conclusion has been drawn yet.