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Testimony indicates no Turkish market access issues

U.S. Wheat Associates did charge that practices in “clear violation” of a WTO agreement helped establish Turkey as the world’s leading flour exporter.

   An interagency panel hearing on Wednesday featured no testimony indicating direct market access concerns regarding U.S. products sold in Turkey.
   The hearing followed a Trump administration announcement on Aug. 3 that it was starting a Generalized System of Preferences (GSP) eligibility review for Turkey based on market access concerns.
   The market access criterion for GSP beneficiary countries — one of 15 criteria defined by Congress — states that the president must take into account the extent to which countries assure the United States they will provide “equitable and reasonable” access to markets and basic commodity resources, as well as the extent to which they have assured the U.S. they will refrain from engaging in unreasonable export practices.
   The one hearing witness critical of Turkey’s trade practices, U.S. Wheat Associates (USW) Vice President of Policy Ben Conner, said that if Turkey were to remove its existing trade barriers, it would have “probably zero” effect on U.S. wheat’s market access in Turkey.
   But USW in a written submission to the Trump administration noted that the GSP market access eligibility criterion sets forth a standard for export practices, and Conner during the hearing said Turkish wheat flour thrives off subsidies that allow it to be sold globally at very low prices.
   USW’s written statement also stated that until recently, Turkey’s state-owned grain handler sold wheat to exporters at prices well below world market rates and its own procurement price, which USW said is a “clear violation” of World Trade Organization Agriculture Agreement Article 9.1(c). The group said those practices helped establish Turkey’s position as the world’s leading flour exporter.
   But Aytac Yenal, deputy director general of the Turkish Ministry of Trade’s Directorate General of Exports, disputed the notion that Turkey ever provided export subsidies for wheat flour.
   Wheat flour is included in Turkey’s WTO export subsidy commitment schedules, Yenal said. While that allows Turkey to provide subsidies for the commodity, Turkey “practically” gives no export subsidies for wheat flour, as Turkey has notified the WTO Committee on Subsidies and Countervailing Measures, he said.
Later during the hearing, Yenal called USW’s subsidy claims “unacceptable” and said wheat is not overproduced in the country.
   Aside from Conner, the only other industry witness during the hearing, Dan Anthony, vice president of The Trade Partnership consultancy, works for an organization that promotes GSP.
   In their written submissions, Blue Diamond Growers and the California Walnut Commission noted an increase of Turkey’s tariffs on tree nuts from 15 percent to an effective rate of 35 percent for the United States on Aug. 15 in retaliation against U.S. Section 232 tariffs on steel and aluminum.
   The USA Rice Federation in its written submission also noted Aug. 15 retaliatory actions raising Turkey’s tariffs on paddy rice from the United States from 34 percent to 84 percent, husked brown rice from the U.S. from 36 percent to 86 percent and milled rice from the U.S. from 45 percent to 95 percent.
   During the hearing, Erland Herfindahl, deputy assistant U.S. trade representative for GSP and chair of the TPSC GSP Subcommittee, noted that Turkish agricultural trade barriers have been a recurring topic in bilateral trade and investment group discussions in recent years.
   Herfindahl also noted that the Office of the U.S. Trade Representative outlined several of these barriers in its 2018 National Trade Estimate Report.
   Filiz Koseyener, deputy director general of the Turkish Ministry of Trade’s Directorate General of Imports, said Turkey had “no choice” but to react to U.S. safeguard tariffs on steel and aluminum through retaliation, noting that the United States is Turkey’s largest export market for steel.
   She said U.S. and Turkish officials probably would meet for consultations at the WTO on Section 232 duties in early October.
   The United States on March 23 imposed global tariffs of 25 percent on steel and 10 percent on aluminum and doubled the rate on steel imports from Turkey on Aug. 13, amid rising diplomatic tensions between the two nations.
   Several media outlets this week reported that Turkish President Tayyip Erdogan has ordered intelligence operations against Turkish political dissidents living in exile on U.S. soil.
   The U.S. Treasury Department on Aug. 1 sanctioned Turkish Justice Minister Abdulhamit Gul and Interior Minister Suleyman Soylu for their roles in the arrest and ongoing detention of Andrew Brunson, an American pastor arrested in Izmir, Turkey, in October 2016, accused without evidence of aiding armed terrorist organizations and obtaining confidential government information for espionage, according to Treasury.
   Trump also has accused Turkey of intentionally devaluing its currency.
   Anthony said that 68 percent of respondents to a recent survey administered by The Trade Partnership indicated that they would source less products from Turkey if the country were removed from GSP.
   He relayed several anecdotes of specific U.S. companies that utilize GSP and do business with Turkey, including Brooklyn-based Sophia Foods, which imports nonperishable specialty foods from the country. The company laid off two of its 10 workers once GSP temporarily expired in 2011, but expanded its warehouse space and hired four workers when the program went back into effect in 2015, Anthony said.
   Asked by the U.S. panel why Turkey should keep its GSP benefits despite being one of the most developed countries in the program, which primarily covers developing countries, Yenal said that several Turkish small and medium enterprises in sectors such as marbles and jewelry take advantage of the program and want to continue exporting to the United States.
   “As the GSP Subcommittee considers this and other views, it should place great weight on potential negative impacts to U.S. companies and workers of suspended benefits, including harm to … U.S. exports,” Anthony said.

Brian Bradley

Based in Washington, D.C., Brian covers international trade policy for American Shipper and FreightWaves. In the past, he covered nuclear defense, environmental cleanup, crime, sports, and trade at various industry and local publications.

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