Abstract
AbstractThe commitment to lower import tariffs and to maintain tariffs at low levels entails political‐economic trade‐offs. Empirical work examining the relationship between such commitments and the ‘flexibilities’ that policymakers exercise to get around them is still relatively nascent, especially for emerging economies. This paper provides a rich, empirically based assessment of ways that Turkey exercised trade policy flexibilities during the global economic crisis of 2008–11. First, and despite multilateral and customs union commitments that might limit changes to its applied tariffs, Turkey exercised flexibilities during 2008–11 by making changes to both its applied MFN and preferential tariffs that could affect nearly 9 per cent of its manufacturing imports. Second, Turkey's cumulative application of temporary trade barrier (TTB) policies – that is, anti‐dumping, safeguards and countervailing duties – is estimated to impact an additional 4–6 per cent of Turkey's manufacturing imports by 2011. Other surprising results include Turkey's lengthy extensions to the duration of previously imposed anti‐dumping and safeguards beyond expected removal dates, conversion of product coverage from one TTB policy to another, extensive coverage of upstream and downstream segments of important industries and potential deepening of discriminatory preferences already inherent in existing preferential trade agreements.
Highlights
What value can emerging and developing economies extract from international trade agreements? Trade policy commitments to lower import tariffs and to maintain tariffs at low levels entail short and long run political-economic costs and benefits
The upward overall trend in Turkey’s temporary trade barrier (TTB) use is common to a number of other major emerging economies – including Argentina, Brazil, India and to a lesser extent China – as each has undergone a period during the Great Recession in which there has been an increased share of the imports becoming subject to imposed TTBs (Bown, 2013)
It is worth noting that the seven trading partners which had been part of the previous antidumping case were no longer major Polyethylene Terephthalate (PET) suppliers to the Turkish market; it is likely that trade diversion had resulted in Pakistan and Iran – countries not targeted by the initial antidumping measures – having 75 percent of the Turkish import market by 2011 (WTO 2012b, p. 7)
Summary
What value can emerging and developing economies extract from international trade agreements? Trade policy commitments to lower import tariffs and to maintain tariffs at low levels entail short and long run political-economic costs and benefits. Increases to applied import tariffs in the textiles and steel industry alone during this period could affect nearly 9 percent of Turkey’s manufacturing imports During this same period, Turkey continued intensive use of the relatively formalized TTB policies of antidumping, safeguards and countervailing duties – policies that provide another major class of flexibilities in the multilateral trading system. The frequency of trade policy changes through exercised flexibilities generates substantial additional uncertainty regarding market access which may impede any benefits arising from relationship-specific investment by trading partners’ exporters (Handley and Limão, 2012).1 These same concerns are exacerbated by frequent extensions to the duration of previously imposed antidumping and safeguards well beyond the point at which they were expected to be removed under WTO rules, as well as conversion of product coverage from under one TTB policy to another. Turkey’s Trade Policy Regime Prior to the Crisis, Changes to Macroeconomic Conditions, and Pressure for New Import Restrictions
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