I          Background

In September 2014, following an anti-dumping

investigation period, Morocco has imposed an 11 % tax duty against Turkish

hot-rolled steel exporters which has created fuss in Turkish hot-rolled steel

market and exporters.

Upon Morocco's anti-dumping measures on hot-rolled steel,

in October 2016, Turkey has filed a "Request for Consultations" against Morocco

before the World Trade Organization ("WTO")[1]. In

its request for consultations, Turkey alleges that anti-dumping duties imposed

by Morocco in September 2014 on imports of Turkish hot-rolled steel are

inconsistent with a number of procedural and substantive provisions of the

WTO's Anti-Dumping Agreement, the Agreement on Import Licensing Procedures as

well as the General Agreement on Tariffs and Trade 1994.

See at  https://www.wto.org/english/news_e/news16_e/ds513rfc_05oct16_e.htm

II         Basis

of the Consultation Request

- Turkey's Allegations against Morocco's Decision

The Request for Consultations dated October 3rd,

2016 ("Request") is circulated by the delegation of Turkey to the delegation of

Morocco and to the Chairperson of the Dispute Resolution Body under the

WTO.

Turkey's Request is based upon following allegations:

(i) Pursuant to Article 5.10 of the Anti-Dumping

Agreement, investigations shall be concluded in no case more than 18 months,

after their initiation. However, Turkey alleges that the Moroccan authorities have failed to comply with the rule of

18-month deadline for concluding the investigation according to Article 5.10 of

the Anti-Dumping Agreement.[1]

(ii) The Moroccan authorities applied facts available,

alleging that the information on sales to Morocco during the investigation

period provided by the Turkish exporters was incomplete and inconsistent. In

return, Turkey alleges that Moroccan authorities did not provide the Turkish

exporters the opportunity to explain the alleged discrepancies, disregarded

evidence on these discrepancies, and determined the dumping margins of the

Turkish exporters without using "special circumspection". Therefore,

Turkey alleges that this leads to inconsistency in light of Article 6.8 and

paragraphs 1, 3, 5, 6, and 7 of Annex II to the Anti-Dumping Agreement.

Pursuant to Article 6.8 of the Anti-Dumping Agreement,

determinations may be made on the basis of the facts available under limited

circumstances. The application of this possibility is regulated under Annex II

of the Anti-Dumping Agreement. In this regard, the investigating authorities should

specify the details and the method of the information that they request from

the interested parties. Besides, the authorities should also clarify that if

the interested parties do not provide the information in reasonable time, the

investigating authority may determine the case based on the facts available.

Information that is verifiable and submitted timely and appropriately should be

considered during the determinations. Furthermore, if the interested party has

acted to the best of its ability and yet has provided information that is not "ideal

in all respects", the authorities should still regard such information in their

determinations. However, if the authorities would not accept an evidence or

information, the reasons for such rejection should be given to the supplying

party and the supplying party should have the opportunity to provide

explanations within a reasonable period, due account being taken of the

time-limits of the investigation. If the explanations are rejected as well, the

reasons for considering the explanations unsatisfactory should be announced within

the scope of determinations. The authorities should also base their findings

with special circumspection and check independent sources, where practicable.

If, however, an interested party does not cooperate, relatively less favorable

results may be applicable to this party as it withheld relevant information

from the authorities.

(iii) Turkey alleges that the Moroccan authorities did

not disclose essential facts with respect to its decision to use facts

available, in breach of Article 6.9 of the Anti-Dumping Agreement; which

indicates that "The authorities shall,

before a final determination is made, inform all interested parties of the

essential facts under consideration which form the basis for the decision

whether to apply definitive measures. Such disclosure should take place in

sufficient time for the parties to defend their interests."

(iv) Moroccan authorities applied registration/licensing

requirements and failed to issue import licenses following the imposition of

provisional anti-dumping measures. This is considered as an additional "specific action against dumping of exports",

which can be taken only in accordance with the provisions of the General

Agreement on Tariffs and Trade ("GATT") as interpreted by the Anti-Dumping

Agreement and other relevant provisions of GATT, as appropriate, as per Article

18.1 of the Anti-Dumping Agreement.

In addition, Turkey also alleges that the foregoing measure

imposed by Morocco is inconsistent with Articles I:1, X:1, X:2, X:3(a) and XI:1

of the GATT and Articles 3.2 and 3.3 of the Import Licensing Agreement.

Article I of the GATT regulates the General

Most-Favoured-Nation Treatment, which stipulates that any advantage, favour,

privilege or immunity granted by any contracting party to any product

originating in or destined for any other country shall be accorded immediately

and unconditionally to the like product originating in or destined for the

territories of all other contracting parties. Relevant paragraphs of Article X

stipulate in general that relevant laws, regulations, judicial decisions and

administrative rulings of general application and agreements affecting

international trade policy shall be published in a manner as to enable

governments and traders to become acquainted with them. Relevant measures

including new or more burdensome requirements, restrictions or prohibitions on

imports shall not be enforced before such measure has been officially

published. Publication and administration of trade regulations shall be

administered in a uniform, impartial and reasonable manner. Furthermore, the

referred Article XI:1 of the GATT stipulates that no prohibitions or

restrictions other than duties, taxes or other charges shall be instituted or maintained on imports and

exports of the GATT contracting parties.

Article 3 of the Import Licensing Agreement regulates

the "Non-Automatic Import Licensing" while Articles 3.2 and 3.3 stipulate that

such licensing shall not have trade-restrictive or distortive effects on imports

additional to those caused by the imposition of the restriction (i.e. they

it should not be more administratively burdensome than absolutely necessary to

administer the measure). Licensing requirements for purposes other than the

implementation of quantitative restrictions shall be published with sufficient

information in a manner as to enable other member countries and traders to know

the basis for granting and/or allocating licenses.

(v) Turkey alleges that the Moroccan authorities did

not provide a reasoned and adequate explanation regarding their findings of

injury and causation. In this regard, Turkey alleges that there was

inconsistency with certain paragraphs of the Article 3 of the Anti-Dumping

Agreement (Articles 3.1, 3.2, 3.4, and

3.5).

Article 3 of the Anti-Dumping Agreement regulates the

determination of injury. Accordingly, injury should be determined based on

positive evidence and involve objective examination of the volume and effect of

the dumped imports and their impact on domestic producers. The effect analysis

should evaluate the increase in and price undercutting by the dumped imports

while the impact analysis should consider all relevant economic factors and

indices having a bearing on the state of the industry. In addition, the causal

relationship between the dumped imports and the injury to the domestic industry

should be demonstrated by the investigating authority through examination of

all relevant evidence and disaffiliate factors that are injuring the domestic

industry other than the dumped imports. Among these factors are "the volume and prices of imports not sold at

dumping prices, contraction in demand or changes in the patterns of

consumption, trade restrictive practices of and competition between the foreign

and domestic producers, developments in technology and the export performance

and productivity of the domestic industry".

In light of the foregoing, Turkey indicates that

Morocco's investigation and definitive measures cannot be reconciled with the

Anti-Dumping Agreement as the measure in subject was not initiated and

conducted in accordance with the provisions of the Anti-Dumping Agreement as

stipulated by Article 1 of the Anti-Dumping Agreement and no action against

dumping of exports from Turkey should be taken, as the investigation and

relevant measures are not in accordance with the provisions of GATT as

stipulated by Article 18 of the Anti-Dumping Agreement.

- Current Status of the Consultations

Currently, Turkey's request for consultations with the

respondent is waiting. As published in WTO's webpage[2] no

dispute panel has been established yet and no withdrawal or mutual agreement

been notified.

III       Consultation

Process under WTO

- WTO's Dispute

Settlement Mechanism

The dispute settlement procedure of the WTO is governed

by the Understanding on Rules and Procedures Governing the Settlement of

Disputes ("DSU"). This entered into force on January 1st, 1995 after

the modifications made in the GATT, which was increasingly unable to resolve

major trade conflicts between its member countries. While the DSU retains

diplomatic elements - for example, the goal of the process is to secure a "mutually

agreed solution" and contains provisions that may foster a negotiated outcome -

it sets out a mechanism that is overall more "rule-bound" than the process

developed under the GATT.[3]

Thereby, following its enforcement in 1995, the DSU has gained practical importance

as members have frequently resorted to using this mechanism.

The DSU proceeds through three main stages: (i) consultation;

(ii) adjudication; and, if necessary, (iii) implementation.

- Consultations

Process

As the first prerequisite step to be taken before the adjudication

stage, consultations process starts with filing of a "Request for

Consultations". This process is set out for reaching an amicable solution

between parties.

Following the receipt date of complainant's request, unless

otherwise mutually agreed, the respondent should reply to the request within ten

days and, in any case, collaborate in good faith within a period of maximum thirty

days. Non-collaboration of the respondent in due time (i.e. not responding to the request in ten days or not collaborating in thirty

days, unless otherwise agreed) would give the complainant the right to

directly proceed to the adjudication stage and request establishment of a panel[4].

If the dispute is not resolved within sixty days after

the date of receipt of the request for consultations, the complainant may

request the establishment of a panel. The complainant may request a panel

during the sixty-day period, if the consulting parties jointly consider that

consultations have failed to settle the dispute.[5]

- What Happens

After the Consultations?

If the consultations fail to settle the dispute, upon

the complainant's request from the Dispute Settlement Body, a panel is

established within forty five days. The panel, by way of hearing written and

oral arguments from both parties, issues an interim report which will be

followed by the final report. In no case should the period from the

establishment of the panel to the circulation of the report to the members

exceed nine months.[6]

This settlement procedure, from establishment of the

panel until adaptation of the report, lasts usually up to nine - twelve months,

depending on parties' calling for the appeal procedure.

Following the litigation process, parties may adopt 3

positions accordingly with 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), (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).

IV       Former Turkey Specific WTO Complaints

Since the DSU' enforcement in 1995, while 513

complaint have been filed to the DSU, not all of them have resulted in panels.

To date, 96 of the cases have been finalized with withdrawal or mutual

agreement by parties before establishment of a panel.

Whether as the complainant or the respondent, Turkey

has participated to 12 cases in total. While Turkey has made 3 applications to

the DSU for consultations, there are 9 complaints filed against Turkey thus

far.[7]

V         Conclusion

WTO plays a substantial role in preserving the growing

international trade worldwide. Therefore, in order to assure a reliable and

foreseeable international trade environment for the member countries, a developing

dispute settlement mechanism has significant pertinence. In the wake of WTO's praiseworthy

yet still improving settlement system, outcome of the dispute between Turkey

and Morocco remains as an object of curiosity for Turkish market players.

The

content of this article is intended to provide a general guide to the subject

matter. Specialist advice should be sought about your specific circumstances.

Authors:  Gönenç

Gürkaynak, Esq., Ceren Yıldız , Sinem Uğur and Ecem Elver, ELIG,

Attorneys-at-Law.

First published in

Mondaq on November 18,  2016.

[1]

According to the statements of the President of the Turkish Steel Exporters

Association, the investigation has been concluded on August 12th

instead of July 21st. See http://ticaretgazetesi.com.tr/fastan-celik-ihracatcilarina-anti-damping-vergisi

(latest access on November 17th, 2016)

[2]

See at  https://www.wto.org/english/tratop_e/dispu_e/cases_e/ds513_e.htm

(latest access on November 17th, 2016)

[3]

Daniel T. Shedd, Brandon J. Murrill, Jane M. Smith, "Dispute Settlement in the

World Trade Organization (WTO): An Overview" see https://www.fas.org/sgp/crs/misc/RS20088.pdf

[4]

Article 4(3) of the Understanding on Rules and Procedures Governing the

Settlement of Disputes

[5]

Article 4(7) of the Understanding on Rules and Procedures Governing the

Settlement of Disputes

[6]

Article 12(9) of the Understanding on Rules and Procedures Governing the

Settlement of Disputes

[7]

Lists of WTO panel and Appellate Body reports are available at WTO's website at

https://www.wto.org/english/tratop_e/dispu_e/dispu_current_status_e.htm