NOTIFICATION UNDER ARTICLES 7.2 AND 12.1(C) OF THE AGREEMENT ON SAFEGUARDS ON TAKING A DECISION TO APPLY A SAFEGUARD MEASURE
(EXTENSION OF THE EXISTING MEASURE)

NOTIFICATION PURSUANT TO ARTICLE 9, FOOTNOTE 2
OF THE AGREEMENT ON SAFEGUARDS

Türkiye

Polyester Staple Fibers

Supplement

The following communication, dated and received on 20 September 2024, is being circulated at the request of the delegation of Türkiye.

_______________

We enclose a notification pursuant to Articles 7.2, 12.1(c) and Article 9, footnote 2 of the Agreement on Safeguards, on taking a decision to extend a safeguard measure that is being applied against imports of polyester staple fibers and non-application of the safeguard measure to developing countries. The initial safeguard measure was notified with the document _G/SG/N/8/TUR/19-G/SG/N/10/TUR/19-G/SG/N/11/TUR/26, dated 30 August 2021. The initiation of a review pursuant to Articles 7.2 and 12.1 (A) regarding the extension of a safeguard measure was also notified with the document _G/SG/N/6/TUR/26/Suppl.1, dated 29 April 2024.

Consistent with Article 12.3 of the Agreement on Safeguards, Türkiye is ready to hold consultations with those Members having a substantial interest as exporters of the product concerned.

1  NOTIFICATION UNDER ARTICLES 7.2 AND 12.1(C) OF THE AGREEMENT ON SAFEGUARDS UPON TAKING A DECISION TO EXTEND A SAFEGUARD MEASURE

1.1  Evidence that the safeguard measure continues to be necessary to prevent or remedy serious injury or threat thereof caused by increased imports

The investigation has been conducted by the Turkish Investigating Authority. In order to review the situation of the domestic industry after introduction of the safeguard measure, an evaluation of all relevant factors of an objective and quantifiable nature having a bearing on the situation of the domestic industry was undertaken for the investigation period January 2019-December 2023, and January-March period for the years 2023 and 2024. The data, which was submitted by the applicant and used in this analysis, represents major proportion of the total domestic production of the product involved according to the 2023 figures.

i._          Consumption

During the investigation period, consumption index of the product under investigation increased steadily on annual basis, except for the slight decrease in 2022. Index, which was 100 in 2019, increased to 125 in 2021, decreased to 118 in 2023 and re-increased to 123 points in 2023. Periodically, index decreased by 8 points in the first quarter of 2024 compared to the same period of 2023.

ii._         Production

Domestic production increased between 2019 and 2022, and decreased in 2023 on annual basis. Index, which was 100 in 2019, increased to 198 in 2022, and decreased to 177 points in 2023. Periodical production continued to show a downward trend, and index decreased by 32 points in the first quarter of 2024 compared to the same period of 2023.

iii._        Domestic Sales

Annual domestic sales of the product under investigation increased between 2019 and 2021 and index, which was 100 in 2019, increased to 159 in 2021. Index decreased to 142 in 2022, and increasing by 2 points, showed a moderate recovery in 2023. Periodical production index decreased by 21 points in the first quarter of 2024 compared to the same period of 2023.

iv._        Capacity and Capacity Utilization Ratio (CUR%)

Installed production capacity of the product under investigation increased in 2020, and remained unchanged until 2023. Capacity index, which was 100 in 2019, increased to 151 points in 2020. Index decreased by 20 points in 2023 due to the closure of a small production facility with old technology in the second half of 2023. Related with this, periodical capacity index remained unchanged across the first quarters of 2023 and 2024.

Capacity utilisation rate (CUR) in the production of polyester staple fibers increased steadily on annual basis. Index, which was 100 in 2019 increased to 135 points in 2023. Periodical index for CUR, which was 100 in the quarter of 2023, decreased to 68 points in the same period of 2024.

v._         Employment

Number of persons employed in the production increased between 2018 and 2022, and began to decrease as of 2023. Annual employment index, which was 100 in 2019, increased to 154 in 2022, and decreased to 107 points in 2023. Periodical index decreased by 22 points in the first quarter of 2024 compared to the same period of 2023.

vi._        Productivity

Productivity, which refers to annual production in tons per employee, increased steadily on annual basis, except for the decrease in 2022. Index, which was 100 in 2019, increased to 159 in 2022, decreased to 128 in 2022 and increased to 166 points in 2023. Periodical figures showed a downward trend, and index, decreased by 13 points in the first quarter of 2024 compared to the same period of 2023.

vii._      Stocks

End of period stocks for the product under investigation decreased annually between 2019 and 2021, and increased in 2022 and 2023. Index, which was 100 in 2019, decreased in 2020 and 2021, falling to 15 points in 2021. Index increased to 98 in 2022, and to 119 points in 2023. Periodical index, however, showed a downward trend, and index decreased from 100 in the first quarter of 2023 to 79 points in the same period of 2024.

viii._     Profitability

Profitability, which refers to net profit in total sales fluctuated throughout the investigation period. Annual profitability index, which was -100 in 2019 (which marked loss) increased in 2020 and 2021, reaching to 714 points in 2021. Index showed a sharp decrease in 2022 and 2023, falling to -84 points in 2023 and marking for the second time loss in the period under investigation. Periodical index, which was -100 in 2023 showed a remarkable recovery in the same period of 2024, and increased to 110 points.

ix._       Conclusion

While improvement was observed in domestic production between 2019 and 2022, deteriorations occurred in production indicator as of 2023. Production demonstrated the highest increase in 2020 with the capacity growth made this year. While domestic sales increased between 2019 and 2021 in parallel to the increase in production, it decreased in 2022 and in the first quarter of 2024. Installed capacity indicator remained stable following the capacity growth made in 2020, and the slight decrease in 2023 was brought about by the determined closure of an old-technology facility with high production costs. CUR, which increased between 2019 and 2023, decreased in the first quarter of 2024 in parallel to the decrease in production. On the other hand, the increase in CUR in 2023 emerged due to the decrease in the installed capacity mentioned above in this year.

In parallel to the increase in capacity, employment data also showed a continuous improvement between 2019-2022, whereas deteriorations occurred as of 2023. While productivity per person doubled in 2020 due to the increase in production, it decreased in 2022 due to the increase in employment, which was greater than the increase in production. Recovery in productivity in 2023 was caused by the decrease in employment, a decrease which was greater than the decrease in production. End of stocks, which decreased in 2020 and 2021 due to the increase in total sales, increased in 2022 and 2023 due to the decrease in production and total sales. Profitability data showed a fluctuating path, while it decreased in 2022 and 2023, marking loss in 2023.

1.2  Information on imports in absolute term and relative to domestic production

An analysis of the most recent imports into Türkiye of the product concerned both in absolute and relative terms are given below.

i._          General View of Imports

Annual imports of the product under investigation fluctuated on quantitative basis. Imports, which were at the level of 214,3 thousand tons in 2019, decreased by 14 per cent in 2020, to the level of 184,3 thousand tons. Increasing by 17 per cent, imports reached to 216,5 thousand tons in 2021. Falling by 5 per cent in, imports decreased to the level of 205,3 thousand tons in 2022. Imports increased by 16 per cent in 2023 and reached to the level of 237,2 thousand tons. Imports increased by a total of 11 per cent in 2023 compared to 2019, the beginning of the period under investigation. Periodical figures on total imports on quantitative basis showed a downward trend, and decreasing by 9 per cent, imports fell to 95,7 thousand tons in the first half of 2024.

On value basis, imports which was at the level of 261,7 million US Dollars in 2019, decreased by 30 per cent in 2020, falling to approximately 183.5 million $. In 2021, imports increased by 53 per cent, reaching 280.4 million $, and decreased by 12 per cent compared to 2022 in 2023, falling to 278.5 million $. Periodical figures on total imports on quantitative basis showed a downward trend, and decreasing by 12 per cent, imports fell to 112,1 million $ in the first half of 2024.

Unit prices for imports became at the level of 1,22 $/kg in 2019 and compared to the previous years, unit prices for total imports decreased in 2020, increased in 2020 and 2021, and decreased in 2023 to the level of 1,17 $/kg. On annual basis, unit prices fluctuated between 1,00 $/kg and 1,54 $/kg. Periodic unit prices decreased by 3 per cent in the first quarter of 2024 compared to the same period of 2023, and came to the level of 1.17 $/kg.

ii._         Imports Relative to Domestic Production

During the period under investigation, the ratio of imports to domestic production decreased on an annual basis between 2019-2022 and index, which was 100 in 2019, decreased to 49 points in 2022. Relative imports increased as of 2023, and index increased to 63 points in 2023. Periodical index, increased by 33 points in the first quarter of 2024 compared to the same period of 2023.

iii._        Market Share of Imports

Market share of imports, which is calculated by share of imports in total domestic consumption, increased steadily on annual basis, except for 2020. Index, which was 100 in 2019, decreased to 74 in 2020, and increased continuously in following years, reaching to 90 points in 2023. Periodical index on market share of imports showed only a slight (2 points) decrease in the first quarter of 2024 due to the market contraction in the same period and the coinciding decrease in total imports.

1.3  Precise description of the product involved

The product involved is classified under Customs Code 5503.20.00.00.00 in Turkish Customs Tariff Schedule of 2023.

1.4  Description of any part of the imported product that will no longer be subject to the measure in the extension

Not applicable.

1.5  Precise description of the proposed measure

The safeguard measure is proposed to be extended for 3 years until 22 September 2027 (22 September 2027 is included) in the form of fixed duty which will be implemented as shown in the table below.

1.6  Proposed date of introduction of the measure

The measure will enter into force in 23 September 2024 with the publication of the related Presidential Decree in the Official Gazette.

The related Presidential Decree and the Communiqué are published in the Official Gazette in 20 September 2024.

1.7  Expected duration of the measure

The expected duration of the proposed measure is three years.

1.8  Proposed date for the review

Not applicable.

1.9  Expected timetable for progressive liberalization of the measure

The measure is proposed to be liberalized annually as stated in the Section 1.5.

1.10  If the notification relates only to a finding of serious injury or threat thereof, and does not relate to a decision to apply or extend a safeguard measure:

Not applicable.

1.11  Information relating to the extension of a safeguard measure

i._          Evidence that the safeguard measure continues to be necessary to prevent or remedy serious injury or threat thereof:

Domestic consumption of the product under investigation increased continuously on annual basis, except for the decrease in 2022 due to the simultaneous decrease in imports and domestic sales. Although imports of polyester staple fibers decreased in 2022 with the effect of the safeguard measure put into force in September 2021, it increased in 2023 on quantitative basis. Imports decreased in the first 3 months of 2024 compared to the same period of 2023. Relative imports (imports relative to domestic production) also increased in 2023 and in the first quarter of 2024. Except for 2020, market share of imports increased steadily on annual basis, even in 2022 when imports and total consumption decreased as well. Share of the declared imports, which refers to imports realized out of inward processing regime and which identifies imports subject to the safeguard measure in force, increased in 2023, while it decreased in the first quarter of 2024. Unit prices for imports decreased in 2023 and in the first quarter of 2024.

Deteriorations have occurred in domestic producer's production and employment indicators since 2023, while there also emerged a deterioration in the producer's domestic sales, CUR and productivity indicators in the first quarter of 2024. End-of-period stocks indicator deteriorated in 2022 and 2023. While profitability rate has fluctuated over the investigation periodic, it also deteriorated in 2022 and 2023. Since 2023, unit import prices have remained below the producer's both realized unit domestic sales price and the reasonable sales price which was created by adding a reasonable profit margin to producer's unit production cost. In this sense, unit prices both undercut and suppressed domestic sales' price as of 2023. Consequently, most part of the deterioration in the economic indicators of the domestic producer which coincided and correlated with the previously fluctuating re-increase in imports in 2023, continued into the first quarter of 2024.

On the other hand, according to the data from Trade Map, while world exports for polyester staple fibers decreased between 2021 and 2023, exports from China increased steadily between 2019 and 2023, except for 2020, the year when the effect of global pandemic were vivid. Share of Chinese exports in total exports became 40 per cent in 2023 and Türkiye ranked fourth in China's polyester staple fibers exports in 2023. Between 2019 and 2023, China's exports to Türkiye increased continuously, except for 2020, and the increase rate was 96 per cent in 2023. Moreover, it is seen from the data that imports from South Korea, who ranks as second both in world exports and Türkiye's imports, and from Thailand who ranks third in world exports also increased in 2023. In this regard, it is evaluated that polyester staple fibers imports to Türkiye, mainly originating from Far Eastern countries, will likely to further increase, in case the current safeguard measure is not extended at the end of the implementation period.

ii._         Evidence that the industry concerned is adjusting:

It was confirmed during the on-spot verification that the applicant made a capacity growth investment with the most-recent production technology. Production under this facility is planned to begin in the last quarter of 2024, and implementation of the most updated technology is planned to provide the producer advantages in production costs. Moreover, production of a new type of staple fiber of polyester, named "low-melt polyester staple fiber" which aims to provide an environment-friendly production process will also begin under this new facility.

Domestic producer also commenced investment on production of the main raw material of PET chips: PTA (Terephtalic acid) in the period safeguard measure was in force. PTA production is also planned to start in the second half of 2024. During the verification visit, it was seen that the facility was in the control phase, which is the last stage before commissioning, and information obtained showed that all of the electricity needed by the facility would be produced within the facility by utilizing the waste gas resulting from the chemical reaction during PTA production.

The applicant also completed the territory acquisition to establish facilities for production of main petro-chemical raw materials and polymers in Adana province. In an effort to reduce production costs, the installation of Solar Energy System (SPP) was installed in producer's main facilities buildings in Adana which is planned to be put into operation in the third quarter of 2024. In addition, another solar power installation is planned to be put into operation in Gaziantep province in the third quarter of 2024.

As a result, with new investment decisions, new production and product development processes, raw material production to reduce production costs and the implementation of improved production technology in new facilities, the applicant started to increase its competitiveness in the domestic market during the period safeguard measure was implemented. In this regard, it has been determined that there is evidence showing that domestic producers are adapting to market conditions.

iii._        Reference to the WTO document that notified the initial application of the measure:

The introduction of the definitive safeguard measure was notified with the document numbered _G/SG/N/8/TUR/19-G/SG/N/10/TUR/19-G/SG/N/11/TUR/26, dated 30 August 2021.

iv._        Duration of the measure from initial application till the date at which it will be extended:

The safeguard measure was initiated on 23 September 2021 and will be in force till 22 September 2024. Türkiye now intends to extend the safeguard measure until 22 September 2027.

v._         Precise description of the measure in place prior to the date of extension:

The measure in place prior to the date of extension is a specific duty, which was put into force on imports of polyester staple fibers by the Presidential Decision numbered 4412 and published in the Official Gazette dated 24 August 2021, no. 31578. The levels of duty are demonstrated in the table below.

* Stated in accordance with Turkish Customs Tariff Schedule of 2023.

1.12  Information relating to exporting members

i._          The major exporting Members of the product concerned to Türkiye:

In the quantity-based ranking made according to the polyester staple fibers imports to Türkiye in January-June period of 2024, it is seen that the countries with the largest share in imports since 2023 are China, Malaysia and South Korea, respectively.

While imports originated from the China accounted for the 28 per cent of total imports in 2023, share of Malaysia and South Korea in imports were 25 and 14 per cent respectively. Imports from China has increased since 2022, and the share of the said country in Türkiye's imports increased from 18 per cent in 2022 to 32 per cent in the first quarter of 2024. It has been observed that the shares of Malaysia and South Korea have shifted to China in the recent period.

ii._         The exporting Members to which the measure does not apply for any reason other than the application of Article 9.1:

Not applicable.

1.13  Members are encouraged to attach, in an electronic form, publicly available document(s) containing the relevant decision(s) made by the competent authority.

The official documents regarding the investigation and the final decision are available in the link below.

_https://ticaret.gov.tr/ithalat/ticaret-politikasi-savunma-araclari/korunma-onlemleri/yururlukteki-onlemler

2  Notification pursuant to Article 9, Footnote 2 of the Agreement on Safeguards

2.1  The measure

It is proposed to impose safeguard measure as described in Section 1.5.

2.2  The product subject to the measure

The measure is applied to the product described in Section 1.3.

2.3  Developing countries to which the measure is not applied under article 9.1 of the Agreement on Safeguards.

The developing countries which are excluded from the measure as they export in quantities less than 3 per cent of imports to Türkiye are listed below.

Islamic Republic of Afghanistan, Republic of Angola, Antigua and Barbuda, Argentine Republic, Republic of Albania, Republic of Azerbaijan, People's Republic of Bangladesh, Barbados, Republic of Belarus, Belize, Republic of Benin, Plurinational State of Bolivia, Bosnia and Herzegovina, Republic of Botswana, Federative Republic of Brazil, Burkina Faso, Republic of Burundi, Kingdom of Bhutan, People's Democratic Republic of Algeria, Republic of Djibouti, Cook Islands, Republic of Chad, Democratic Republic of the Congo, Dominican Republic, Commonwealth of Dominica, Republic of Ecuador, Republic of Equatorial Guinea, Republic of El Salvador, Republic of Indonesia, State of Eritrea, Federal Democratic Republic of Ethiopia, Kingdom of Morocco, Republic of Fiji, Republic of Côte d'Ivoire, Republic of the Philippines, State of Palestine, French Polynesia, Gabonese Republic, Gambia, Republic of Ghana, Republic of Guinea, Republic of Guinea-Bissau, Grenada, Republic of Guatemala, Co-operative Republic of Guyana, Republic of South Africa, Republic of South Sudan, Republic of Georgia, Republic of Haiti, Republic of Honduras, Republic of Iraq, Islamic Republic of Iran, Jamaica, Kingdom of Cambodia, Republic of Cameroon, Republic of Cabo Verde, Montenegro, Republic of Kazakhstan, Republic of Kenya, Kyrgyz Republic, Republic of Kiribati, Republic of Colombia, Federal Islamic Republic of the Comoros, Republic of the Congo, Republic of Kosovo, Republic of Costa Rica, Democratic People's Republic of Korea, Republic of Cuba, Lao People's Democratic Republic, Kingdom of Lesotho, Republic of Liberia, State of Libya, Lebanese Republic, The Republic of Madagascar, Republic of North Macedonia, Republic of Malawi, Republic of Maldives, Republic of Mali, Republic of the Marshall Islands, Republic of Mozambique, United Mexican States, Federated States of Micronesia, People's Republic of Mongolia, Republic of Moldova, Montserrat, Islamic Republic of Mauritania, Republic of Mauritius, Republic of the Union of Myanmar, Republic of Namibia, Republic of Nauru, Federal Democratic Republic of Nepal, Republic of Niger, Federal Republic of Nigeria, Republic of Nicaragua, Niue, Central African Republic, Republic of Uzbekistan, Islamic Republic of Pakistan, Republic of Palau, Republic of Panama, Independent State of Papua New Guinea, The Republic of Paraguay, Republic of Peru, Republic of Rwanda, Russian Federation, Independent State of Samoa, Democratic Republic of Sao Tomé and Principe, Republic of Senegal, Republic of Seychelles, Republic of Serbia, Republic of Sierra Leone, The Solomon Islands, The Federal Republic of Somalia, Democratic Socialist Republic of Sri Lanka, Federation of Saint Christopher and Nevis, Saint Lucia, Saint Vincent and the Grenadines, Republic of the Sudan, The Republic of Suriname, Kingdom of Eswatini, Republic of Chile, Republic of Tajikistan, United Republic of Tanzania, Democratic Republic of Timor-Leste, Togolese Republic, Kingdom of Tonga, Republic of Trinidad and Tobago, Republic of Tunisia, Tuvalu, Turkmenistan, Republic of Uganda, Ukraine, Sultanate of Oman, Eastern Republic of Uruguay, Hashemite Kingdom of Jordan, Republic of Vanuatu, Bolivarian Republic of Venezuela, Republic of Yemen, Republic of Zambia, Republic of Zimbabwe.

__________