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Breaking the Barrier, how exporters can challenge antidumping duties in Turkey

Breaking the Barrier: How Exporters Can Challenge Antidumping Duties in Turkey

 

Antidumping measures have become a critical tool for Turkey to protect its domestic industries from unfair foreign competition. These measures are imposed when imported goods are sold in Turkey at prices below their normal value, harming local businesses. For foreign exporters, antidumping duties can significantly disrupt market access and profitability, making it essential to understand not only how these measures are implemented but also how to challenge antidumping duties effectively.

In our previous article, we focused on how exporters can defend themselves during the initial antidumping investigation. While defence during the initial investigation stage is important, for many companies, the antidumping battle doesn’t end with the initial investigation. After duties are imposed, it is crucial to know how to initiate a review process to potentially reduce or remove these measures. Therefore, In this follow-up, we delve into the next crucial phase: reviewing antidumping measures that have already been implemented, and offering foreign companies a pathway to mitigate the impact of these duties through legal means.

I. Overview of Antidumping Measures in Turkey

a. How Antidumping Measures Affect Foreign Exporters

Antidumping measures are vital tools used by Turkey to protect its domestic industries from foreign imports sold at unfairly low prices. These measures are imposed when an investigation reveals that products are being “dumped”—sold in Turkey at prices lower than their normal value in the exporter’s home market—causing harm to the local industry. For foreign exporters, this can lead to significant disruptions, including the imposition of additional duties that increase the cost of doing business in Turkey.

Antidumping duties can raise the price of imported goods, often making them less competitive compared to local products. As a result, foreign exporters may face challenges in maintaining their market share, especially in price-sensitive industries. These measures are designed to level the playing field for domestic producers, but for foreign exporters, they create an urgent need to understand how these duties are calculated and how to challenge them effectively.

b. Types of Antidumping Measures: Provisional and Definitive Duties

In Turkey, antidumping measures can take two main forms: provisional measures and definitive antidumping duties.

1. Provisional Measures

Provisional measures are temporary duties imposed during an ongoing antidumping investigation. If authorities make an initial positive determination that dumping has occurred and caused injury to the domestic industry, provisional measures may be introduced to prevent further harm while the investigation continues.

  • Provisional duties: Temporary duties imposed on the imported product.
  • Guarantees: A financial guarantee equivalent to the estimated antidumping duty, which can be a cash deposit or bond, required at customs.
  • Customs value stabilization: Suspension of customs duties based on the estimated antidumping duty amount.

Provisional measures cannot be applied before 60 days from the start of the investigation and typically last up to 4 months, with the possibility of extending them to 6 months if requested by exporters representing a significant portion of the trade. In certain cases, where the authorities are assessing whether a lower duty might address the injury, the measures can last up to 9 months.

For exporters, provisional measures provide a window to respond and adjust their strategy, whether by submitting additional evidence or negotiating a price undertaking to avoid further penalties.

2. Definitive Antidumping Duties

Once an investigation concludes and the authorities confirm that dumping has occurred, definitive antidumping duties are imposed to rectify the situation over the long term. These duties serve as permanent corrective measures to offset the harm caused by dumping.

  • Fixed antidumping duties: A set duty applied to all imports of the affected product, irrespective of individual transaction prices.
  • Transaction-based duties: Duties recalculated for each transaction based on the export price at the time of import (used by countries like the U.S.).

The Turkish system typically applies antidumping duties as fixed duties, aligning with European Union practices. Once in place, these duties remain fixed across all transactions, regardless of price changes. This system contrasts with the transaction-based approach used in other countries, where duties vary depending on the individual import price.

The “Lesser Duty Rule” is also applied in Turkey, ensuring that the antidumping duty is set at the lower of either the dumping margin or the amount necessary to remove the injury to the domestic industry. This rule helps ensure that duties are not unnecessarily punitive while still providing relief to local businesses.

For exporters, understanding how these definitive duties are calculated and applied is critical for preparing a strategy to either avoid or reduce their impact through a review process.

II. How to Challange Antidumping Duties: Types of Review Available to Exporters

Once definitive antidumping duties have been imposed, they can remain in place for years, significantly affecting the ability of foreign exporters to remain competitive in the Turkish market. However, the Turkish antidumping regulations allow for the possibility of initiating a review to reduce or remove these duties. For foreign exporters, this presents a crucial opportunity to challenge the continued imposition of antidumping measures and regain competitiveness.

A review can be requested for several reasons, including chanes in market conditions, improvements in export pricing practices, or the fact that the injury caused to the domestic industry may no longer exist. Initiating a review can result in a reduction or elimination of antidumping duties, directly impacting the exporter’s costs and overall market access in Turkey.

Foreign exporters can request different types of reviews depending on their circumstances:

1. Expiry Review

An expiry review can be requested when the antidumping duties are approaching the end of their five-year term. These duties will be announced in the Official Gazette during the final year of their term. Exporters can initiate this review to argue that the measures are no longer necessary to prevent dumping or injury to the domestic industry.

To initiate an expiry review, local producers must present sufficient evidence showing that dumping and injury will likely continue or recur if the duties are removed. This request must be submitted no later than three months before the expiration of the five-year term. During the review, which typically lasts one year (with a possible extension of six months), authorities will examine whether removing the antidumping duties would likely lead to a recurrence of dumping or injury. If they find that the local industry no longer needs protection, the duties may be terminated.

This type of review is particularly useful for exporters that have adjusted their pricing practices or market strategies and wish to prove that dumping is no longer occurring. However, the existing antidumping duties remain in place until the review is concluded.

2. Interim Review

An interim review can be requested at any time after antidumping duties have been in place for at least one year. Exporters, importers, or domestic producers may request this review if they believe that the conditions which led to the imposition of the antidumping duties have changed. This could involve a change in market conditions, adjustments to export pricing, or shifts in domestic production that reduce the need for continued antidumping measures.

Interim reviews may be partial (focused on specific aspects of the antidumping duty) or complete (examining whether the duty as a whole should be maintained, reduced, or eliminated). For example, if an exporter can demonstrate that their export prices now align with the normal value in the home market, they may successfully argue for a reduction or elimination of the duty.

The review process includes the submission of evidence, similar to the original antidumping investigation, and authorities assess whether the conditions that justified the duties are still in place. Depending on the findings, the duties may be adjusted or removed entirely.

3. New Exporter Review

A new exporter review applies to companies that were not involved in the original antidumping investigation but have since begun exporting the affected product to Turkey. New exporters who can prove that they are not associated with companies subject to the original antidumping duties can request this review to obtain their own dumping margin.

To initiate a new exporter review, the exporter must demonstrate that they have either exported the product to Turkey after the original investigation period or entered into substantial contractual obligations to export the product. Furthermore, they must provide proof that they are not affiliated with any exporter or producer who was subject to the initial antidumping measures.

During the review process, authorities will determine whether the new exporter engages in dumping and whether a specific antidumping duty should be applied to their products. Until the review is completed, new exporters may request that antidumping duties not be applied to their products, although they may need to provide a guarantee at customs. If the final review finds that the new exporter is not dumping, they can be exempted from paying antidumping duties retroactively.

III. Potential Outcomes of the Review

Once a review of antidumping measures is initiated, the final decision made by the authorities can lead to various outcomes. These outcomes will have significant implications for foreign exporters, potentially altering their ability to trade competitively in Turkey. Below are the key potential outcomes of a review and what they mean for exporters.

1. Reduction of Antidumping Duties:

One of the most favorable outcomes for exporters is a reduction in the antidumping duties. This can occur if the review determines that the dumping margin has decreased, or that the domestic industry is no longer suffering as much harm from the imported products. A reduction in duties helps exporters regain competitiveness in the Turkish market by lowering the cost of their goods.

2. Elimination of Antidumping Duties:

In some cases, the review may conclude that dumping is no longer occurring, or that the injury to the domestic industry has ceased. If this is the case, the authorities may decide to eliminate the antidumping duties altogether. This outcome would allow the exporter to trade in Turkey without the added burden of duties, creating an opportunity to re-establish or expand market presence.

3. Continuation or Increase of Duties:

 Not all reviews result in favorable outcomes for exporters. If the authorities determine that dumping is still occurring, or that it continues to harm the domestic industry, the antidumping duties may be continued. In some cases, the review might even result in an increase in the duties if the injury is found to be more severe than originally determined. Additionally, if new evidence emerges showing that the exporter continues to engage in dumping practices, the authorities could impose higher duties to further protect the domestic industry.

IV. Conclusion

 Antidumping measures play a crucial role in protecting Turkey’s domestic industries from unfair competition caused by foreign imports sold at below-market prices. However, these measures can impose significant financial burdens on foreign exporters, making it essential to understand how to challenge them through the antidumping review process.

By initiating a review, foreign exporters have the opportunity to reduce or eliminate these duties, potentially regaining their competitiveness in the Turkish market. The review process offers a structured path for challenging existing antidumping duties based on changes in market conditions, adjustments in pricing practices, or the cessation of injury to the domestic industry.

Ultimately, navigating the antidumping review process requires careful planning, thorough documentation, and compliance with the Ministry of Trade’s legal and procedural requirements. For exporters facing antidumping duties, a successful review can open doors to renewed market access and improved profitability in Turkey.

Breaking the Barrier: How Exporters Can Challenge Antidumping Duties in Turkey

Av. Ali Yurtsever

Contact for consulation

Author Bio
Distribution-4

Trade Fairs in Turkey: Unpacking the Regulatory and Procedural Essentials

Turkey, strategically poised at the crossroads of Europe and Asia, has long been a hub of trade, commerce, and cultural exchange. This unique geographical advantage, combined with its burgeoning economy, has cemented its position as a focal point for global businesses and investors. An integral aspect of this international commerce is its vast trade fair calendar, a testament to Turkey’s expansive production capabilities and diverse markets.

These trade fairs in Turkey, ranging from local exhibitions to grand international expos, not only showcase the country’s industrial prowess but also offer a platform for businesses from across the globe to converge, collaborate, and catalyze new ventures. As Turkey continues its ascent in the global economic landscape, understanding the intricate fabric of its trade fair ecosystem becomes paramount for stakeholders aiming to tap into its vast potential.

In this comprehensive guide, we delve deep into the legal and procedural nuances of organizing and participating in Turkish trade fairs, illuminating the path for businesses to navigate this vibrant marketplace

I. Types of Trade Fairs in Turkey: A Diverse Landscape of Opportunities

Organizers have a couple of options to choose from when planning Trade Fairs in Turkey. These fairs, mirroring the country’s multifaceted economy and vibrant cultural diversity, can be broadly bifurcated into general and specialty fairs.

General fairs provide a comprehensive platform, encompassing a vast spectrum of products, services, and sectors. These events tend to attract a vast pool of participants, both from within Turkey and from international shores. Acting as hubs of innovation, these fairs offer a panoramic view of the prevailing market dynamics and trends.

Contrastingly, specialty fairs zero in on specific industries or domains. Whether the spotlight is on textiles, technology, or tourism, these events offer businesses a concentrated and curated platform, ensuring a match between the showcased offerings and the interests of attendees.

One unique facet of Trade Fairs in Turkey lies in the guidelines governing retail sales. While these events are primarily arenas for display and networking, there is provision for direct retail sales, albeit within a regulated framework.

Defense industry trade fairs, given the strategic and sensitive nature of their subject matter, are enveloped in a more stringent set of rules. The onus here is on preserving national security while facilitating business interactions.

The term “international fairs” warrants special mention. These globally recognized events serve as a testament to Turkey’s position on the world stage, drawing participants from all corners of the globe. The regulations for these fairs, naturally, are crafted with a global audience in mind.

II. Regulatory Requirements: Navigating the Complex Landscape

The Turkish government, in its endeavor to ensure fair practices, consumer protection, and the overall integrity of the trade fair ecosystem, has put forth a set of mandates. Comprehending these regulations is not just a matter of legal compliance but is instrumental in leveraging the full potential of these platforms.

a. Authorization Certificates for Trade Fairs in Turkey

Central to organizing or participating in a trade fair is the Authorization Certificate. This document acts as a testament to an entity’s legitimacy and its adherence to the prescribed norms. One of the prerequisites for obtaining this certificate is the establishment of a capital company.

But it’s not just about having a company on paper; there’s a stringent financial requirement attached. The company must boast a paid-up capital of at least TRY 1.000.000. This monetary stipulation ensures that only serious and financially sound entities venture into the realm of trade fairs, thereby preserving the quality and reputation of these events. For guidance in company incorporation in Turkey, please refer to our other articles here.

b. Venues

The physical space where the fair is hosted, the venue, is more than just a backdrop. It plays a pivotal role in determining the success of the event. Consequently, there are specific requirements that venues need to fulfill. From accessibility to safety norms, and from infrastructure to environmental considerations, each aspect of the venue undergoes scrutiny.

c. Licenses

Depending on the nature and scale of the trade fair, there might be a need for additional licenses. These could range from licenses for hosting international participants to permissions related to specific industries or product categories. Each license carries its own set of criteria and is indicative of the fair’s adherence to specific standards. Acquiring the necessary licenses not only ensures compliance but also augments the credibility of the event in the eyes of potential participants and attendees.

d. Taxation and Customs

Navigating the taxation landscape is crucial for any entity participating in or organizing trade fairs. When it comes to importing goods specifically for the fair, it’s imperative to be aware of the prevailing tax implications. Turkey has a structured taxation system, and goods brought into the country, even temporarily for a fair, may attract certain duties or taxes. Additionally, customs regulations play a pivotal role. Ensuring that all goods pass through customs without hitches requires adherence to specific documentation and procedural norms. It’s always advisable to consult with a local tax and customs expert to ensure smooth operations and avoid unforeseen financial burdens.

e. Use of the Term “Trade Fair”

The term “Trade Fair” isn’t just a descriptor; it carries weight and significance in the Turkish context. As such, its use is protected by specific regulations. Only events and trade fairs in Turkey that have secured the necessary permissions and adhere to the set guidelines can officially use the term. Any deviation or unauthorized use can lead to legal consequences. This measure ensures that the term remains a hallmark of quality and authenticity, and that businesses and consumers can trust the events branded as such.

f. Guarantees and Refunds

Ensuring the authenticity and commitment of organizers is crucial. To this end, companies are required to deposit guarantees before organizing trade fairs. These guarantees act as a safety net, ensuring that the companies uphold their end of the bargain and stick to the regulations. If a company fails to meet the prescribed standards or reneges on its commitments, the deposited amount can be forfeited. However, in cases where everything goes as planned, or if certain conditions are met, these guarantees are refundable. Understanding the nuances of this process is vital to ensure financial prudence.

g. Transfer

Trade fairs in Turkey, given their significance, often become assets in themselves. While the transfer of the actual authorization certificate to another entity is restricted, certain aspects related to the fair, such as its history or international stature, can be transferred between organizers. This allows for continuity and preserves the legacy of the event. However, such transfers are regulated, and both the transferring and receiving parties must adhere to specific guidelines to ensure the sanctity of the process.

III. Navigating the Application Process: Procedures, Timelines, and Evaluations for Trade Fairs in Turkey

Navigating the realm of trade fairs in Turkey is as much about understanding the processes as it is about knowing the market. While the potential for growth and outreach is vast, it’s essential to be mindful of the procedural intricacies to ensure a seamless experience, which requires an understating of the the application and evaluation mechanisms.

a. The Application Process

To initiate the journey, prospective organizers must submit an application to the relevant authorities. This application encapsulates various facets, from the intent of the fair to its logistical details. Essential documents include proof of the company’s financial standing, details about the venue, the nature of the fair, and any other pertinent information that defines the event’s scope and purpose.

b. Timeline

Timing is crucial for all trade fairs in Turkey. Applications must be submitted well in advance of the intended start date of the fair. Specifically, if one aims to be part of the main trade fair calendar, the application should be made post the publication of the primary calendar for that year, but at least three months before the commencement of the event.

c. Fees and Charges

Organizing a trade fair isn’t just a logistical endeavor; it’s a financial commitment. Beyond the operational costs, there are application fees that need to be catered to. These fees vary based on the nature of the fair and other defining parameters. In certain cases, especially when payments are made online, the need for additional documentation might be waived, simplifying the process.

d. Changes and Cancellation

Flexibility is a cornerstone of any significant business operation. Recognizing this, the regulatory framework allows for changes to be made to the initial application. However, these changes are subject to re-evaluation and must adhere to the overarching guidelines. In instances where the organizer wishes to withdraw the application or the event altogether, certain conditions dictate the refund of the application fee. It’s crucial to understand these nuances to avoid financial pitfalls.

e. Evaluation

Once the application, complete with all necessary documentation and fees, is submitted, it undergoes a rigorous evaluation process. This assessment isn’t just a bureaucratic formality; it’s a quality check ensuring that the proposed event aligns with Turkey’s trade fair objectives and standards. Feedback from local chambers of commerce and industry play a vital role in this evaluation, emphasizing the event’s alignment with local business interests and its potential impact on the local economy.

IV. The Pivotal Role of the Main Trade Fair Calendar in Turkey

In the realm of trade fairs in Turkey, the Main Trade Fair Calendar stands as a beacon for both organizers and participants. This calendar, meticulously curated and updated, serves as a comprehensive guide to the myriad trade events taking place across the nation.

The Main Trade Fair Calendar isn’t merely a schedule; it’s an embodiment of the structured and planned approach Turkey adopts for its trade fairs. Its publication offers a comprehensive overview of the year’s events, acting as a vital reference for organizers, participants, and even attendees. Ensuring a place on this calendar not only enhances an event’s credibility but also amplifies its visibility among stakeholders.

Organizers keen on marking their presence on this pivotal calendar must be vigilant about the application timeline. Post the release of the year’s primary calendar, there exists a window leading up to three months before the intended trade fair date for submissions. This timeframe ensures ample preparation for all parties involved.

Applications necessitate a meticulous compilation of details, encompassing aspects we’ve previously touched upon—authorization certificates, venue details, and any incumbent fees. It’s a reflection of an organizer’s commitment to adhering to the established norms and ensuring the event’s success.

It’s also pertinent to acknowledge the fluid nature of trade fairs. Situations might mandate modifications to an event’s date or even its outright cancellation. The framework around the Main Trade Fair Calendar is agile enough to accommodate these shifts, albeit within set parameters and deadlines.

V. Navigating the Key Aspects of Trade Fair Organization

In orchestrating a trade fair in Turkey, thorough preparation and a keen understanding of various aspects are essential. Let’s delve into these critical components:

1. Securing the Necessary Permits and Licenses: Before any tangible steps are taken, the acquisition of the required permits and licenses is imperative. Each type of trade fair has its own set of prerequisites, and it’s crucial to be well-informed and compliant to ensure a smooth operation. Evaluations for each permit and licenses are carried out by relevant authorities, ensuring adherence to Fair Organization Principles.

2. Intellectual Property: Protecting the Core of Exhibitions: Trade fairs often become the launchpad for novel products and groundbreaking innovations. It’s paramount to safeguard these unique ideas. Exhibitors and sponsors should be proactive in understanding and asserting their intellectual property rights.

3. Contractual Foundations: Solid contractual agreements with vendors, exhibitors, sponsors, and service providers form the bedrock of a successful trade fair. These agreements set the expectations, roles, and responsibilities for all parties involved. Ensuring that these contracts are clear and comprehensive can prevent potential disputes and misunderstandings.

4. Ensuring Data Integrity: In the age of information, the data collected during the registration and operation of a trade fair holds significant value. The protection of attendees’ and participants’ personal information should be a top priority, with stringent measures in place to ensure data security.

VI. The Risks of Overlooking Rules: Potential Liabilities & Non-Compliance

Organizing a trade fair in Turkey, like in many parts of the world, is not just about logistics, marketing, and execution. It’s also about ensuring that every aspect of the event adheres to the established regulations. Overlooking or intentionally bypassing these guidelines can lead to severe consequences, both financially and reputationally.

  • The Use of the Term “Fuar” (Trade Fair): Correct usage of the term “Fuar” or its equivalents in foreign languages is important. As per regulations, only events that have obtained the relevant documents or are listed in the official Fair Calendar are entitled to use this term. Any misuse, especially in promotional materials like brochures, advertisements, social media, and websites, can lead to legal consequences.
  • Venue and Date Non-compliance: Organizers must ensure that the trade fair takes place at the declared venue and adheres to the specified dates. Any discrepancies between the declared and actual details can result in the organizer facing penalties and even the potential cancellation of the event.
  • Intellectual Property Violations: Trade fairs often showcase innovative products and ideas. If any exhibitor or sponsor feels their intellectual property rights have been infringed upon, the organizers could face legal challenges, especially if due diligence was not conducted.
  • Violation of Transfer Restrictions: The regulations are clear that the Authorization Certificate cannot be transferred under any circumstances. Failing to adhere to this can lead to the revocation of the certificate by the Union.
  • Non-refundable Application Fees: It’s essential to note that if an application for a trade fair is rejected or withdrawn by the organizer, the application fee will not be refunded. Additionally, if a company fails to complete the guarantee amount within a month of being notified, their authorization certificate can be annulled.
  • Guarantee Deposits and Their Forfeiture: Organizing companies are required to deposit guarantees. If these entities do not adhere to their commitments or breach the stipulated regulations, a part or the entirety of this deposit can be recorded as revenue by the Union.

Being aware of these potential pitfalls and ensuring strict adherence to guidelines is not just a matter of regulatory compliance. It’s about upholding the trust of participants, exhibitors, sponsors, and attendees.

VII. Conclusion

While this article offers a glimpse into the legal aspects of organizing trade fairs in Turkey, the intricacies of regulations and potential liabilities are vast. Consulting legal experts with experience in Turkish event law can provide you with tailored guidance to navigate these complexities effectively.

As a boutique law firm specializing in event law in Turkey, we are committed to supporting your fair organization journey. Our team of legal professionals possesses the knowledge and experience to guide you through the legal landscape, ensuring a successful and compliant fair. Contact us today to schedule a consultation and embark on your journey to an exceptional fair experience in Turkey.

Trade Fairs in Turkey: Unpacking the Regulatory and Procedural Essentials

Av. Ali Yurtsever

Contact for consulation

Author Bio
Distribution-5

Unpacking Distributor Agreements in Turkey: What Every Business Should Know

cargo ship symbolising Distributor Agreements in Turkey

The legal landscape of distributor agreements in Turkey is both fascinating and intricate. Like many jurisdictions worldwide, Turkey does not offer a clear-cut legal definition for distributorship agreements. These agreements, which bridge the gap between producers and the end consumers, have evolved in their scope and importance over the years, creating a need for a deeper understanding and legal insight.

As businesses expand their reach and market dynamics become more complex, distributorship agreements stand as pivotal elements in the supply chain, ensuring that products reach their intended audience. This article, in addition to our previous article on distributorship agreements, delves into the technical aspects of these agreements in Turkey, shedding light on their nuances, intricacies, and the overarching legal framework that governs them.

I. General outline of Distributor Agreements in Turkey

Distributorship agreements play a pivotal role in Turkey’s commercial arena. These agreements serve as the backbone for various industries, connecting manufacturers with retailers, and ensuring products reach consumers efficiently. However, unlike many commercial agreements that have specific regulations, distributorship agreements remain undefined in Turkish legislation. Their scope and dynamics are primarily derived from precedents and interpretations of related legal provisions.

To navigate the complexities of these agreements, one must comprehend their underlying principles, definitions, and the legalities associated with them in the Turkish context. The subsequent sections unravel these aspects in detail, offering insights into the definition, types, rights, obligations, and the intricate balance of consumer protection and anti-competition laws as they relate to distributorship agreements.

II. Definition and types of distributor agreements

The realm of distributor agreements is multifaceted, and their classifications can vary based on several parameters. However, to truly grasp their essence, it’s crucial first to define them.

Definition: A distributor agreement is a contractual arrangement wherein a manufacturer or a primary supplier grants a party the rights to distribute or resell its products within a specified region or to a particular group of customers. Unlike agents, who act on behalf of the principal in a representative capacity, distributors function independently, buying and selling goods on their own behalf and risk.

The core types of distributor agreements prevalent in Turkey are:

  • Exclusive Distributor Agreement: In this arrangement, the distributor enjoys exclusive rights to distribute the manufacturer’s products within a specific territory or to a designated customer group. This exclusivity means that the manufacturer cannot appoint other distributors or directly sell to customers within the stipulated territory or segment.
  • Selective Distributor Agreement: Under this, manufacturers select a group of distributors based on specific criteria. The chosen distributors are the only entities allowed to distribute the products in a particular region. However, the manufacturer retains the right to sell directly to the end customers.
  • Non-exclusive Distributor Agreement: In a non-exclusive setup, the manufacturer can appoint multiple distributors in the same territory, leading to potential competition among them. This type of agreement offers flexibility to manufacturers but might reduce the incentive for distributors to invest heavily in marketing or infrastructure.

The nature of the relationship, the rights and obligations of the parties involved, and the terms and conditions will vary depending on the type of distributorship agreement chosen. The subsequent section delves deeper into these aspects, providing clarity on what each party can expect and is obligated to deliver within the framework of the agreement.

III. Rights and Obligations of the Parties in Distributor Agreements

In any distributorship agreement, defining the rights and obligations of the involved parties is paramount. This clarity not only ensures smooth business operations but also minimizes potential disputes. Here’s a deeper look into the typical rights and obligations of both manufacturers and distributors within the Turkish legal framework:

1. Rights of the Manufacturer:

– Product Standards: The manufacturer retains the right to set and modify the standards and specifications of the products. This ensures that the products maintain a consistent quality and brand identity across different markets.

– Price Setting: While the manufacturer may suggest retail prices, it’s often the distributor’s discretion to set the final selling price unless otherwise agreed.

– Termination: Subject to the terms of the agreement, the manufacturer can terminate the distributorship if certain predefined conditions aren’t met, such as sales targets or compliance with brand guidelines.

2. Obligations of the Manufacturer:

– Supply of Goods: The manufacturer is obligated to supply the agreed quantity and quality of goods to the distributor.

– Support and Training: Often, manufacturers provide training to the distributor’s staff, ensuring they are equipped with the necessary knowledge to market and sell the products effectively.
– Warranty: The manufacturer typically offers warranties for the products, ensuring they are free from defects and meet the agreed specifications.

3. Rights of the Distributor:

– Exclusive Distribution: If the agreement is exclusive, the distributor has the sole right to market and sell the products in a designated territory or to a specific customer group.
– Marketing Discretion: Distributors often have the freedom to decide on marketing strategies, promotional campaigns, and sales tactics for the region they cover.

– Pricing: As previously mentioned, distributors usually have the discretion to set the final retail price unless contractually bound to adhere to manufacturer-suggested pricing.

4. Obligations of the Distributor:

  • Sales Targets: Distributors may be obligated to achieve certain sales targets as stipulated in the agreement.
  • Brand Representation: Distributors are often required to maintain the brand’s reputation, adhering to guidelines on branding, advertising, and customer service.
  • Feedback Loop: A distributor might be obligated to provide regular feedback to the manufacturer about market trends, customer preferences, and competitive products.

It’s imperative to note that while these rights and obligations serve as a general framework, the specifics can vary based on mutual agreement, industry standards, and regional legal stipulations. As such, both manufacturers and distributors should seek legal counsel to ensure their interests are adequately protected and their obligations clearly defined.

IV. Consumer Protection & Anti-Competition in Distributor Agreements

Before the enactment of specific consumer protection laws in Turkey, general provisions were applied in matters related to consumer rights. However, with the introduction of consumer-specific regulations, there has been a significant shift in ensuring the rights of consumers are upheld.

The distributor, being an essential link between the manufacturer and the consumer, plays a pivotal role in upholding consumer rights. Distributors are obligated to ensure that the products they distribute are of standard quality, free from defects, and fit for the intended use.

In cases where consumers encounter issues with products purchased, they have the right to approach the distributor for redressal. The distributor, in turn, collaborates with manufacturers to address these grievances, ensuring consumers receive the due quality and service.

a. Consumer Protection in Distributor Agreements in Turkey

Before the enactment of specific consumer protection laws in Turkey, general provisions were applied in matters related to consumer rights. However, with the introduction of consumer-specific regulations, there has been a significant shift in ensuring the rights of consumers are upheld.

The distributor, being an essential link between the manufacturer and the consumer, plays a pivotal role in upholding consumer rights. Distributors are obligated to ensure that the products they distribute are of standard quality, free from defects, and fit for the intended use.

In cases where consumers encounter issues with products purchased, they have the right to approach the distributor for redressal. The distributor, in turn, collaborates with manufacturers to address these grievances, ensuring consumers receive the due quality and service.

b. Anti-Competition in Distributor Agreements

Distributor agreements can sometimes inadvertently restrict competition, especially when exclusivity clauses are involved. While these agreements are designed to benefit manufacturers and distributors, it’s essential to ensure they don’t stifle competition in the market.

The European Commission has recognized that for distributorship agreements to restrict competition, the businesses involved must possess significant market power. The Turkish Competition Authority mirrors this sentiment, emphasizing the need for a detailed economic analysis to determine the market impact of such agreements.

While distributor agreements can set terms of operation, it’s imperative that they don’t result in anti-competitive practices. This means avoiding agreements that can lead to price fixing, market division, or other practices that can harm the competitive landscape. It’s essential for businesses to be aware of these dynamics and seek legal counsel when drafting or entering into such agreements, ensuring they adhere to the regulatory framework and uphold the spirit of fair competition and consumer protection.

V. Conclusion

Distributor agreements in Turkey, like many facets of commercial law, are imbued with layers of complexity and depth. As businesses and markets evolve, so does the importance of these agreements. They not only define the relationship between manufacturers and distributors but also influence how products reach their intended consumers.

From understanding the very definition and types of distributor agreements to comprehending the rights and obligations of the involved parties, there’s much to consider. Add to this the balancing act between consumer protection and anti-competition, and the importance of legal expertise in this domain becomes evident.

In a rapidly globalizing world, distributorship agreements serve as the lynchpin for businesses expanding their reach across borders. They encapsulate the intricacies of market dynamics, legal frameworks, and commercial relationships.

As we’ve seen, while these agreements play a pivotal role in Turkey’s commercial arena, they remain largely undefined in Turkish legislation. Their nature, dynamics, and the legalities associated with them are primarily derived from precedents and interpretations of related legal provisions.

For businesses operating in Turkey or collaborating with Turkish entities, a deep understanding of distributor agreements is indispensable. Whether it’s ensuring compliance with local laws, navigating the complexities of consumer protection, or fostering a competitive market environment, these agreements stand at the intersection of commerce, law, and strategy.

Unpacking Distributor Agreements in Turkey: What Every Business Should Know

Av. Ali Yurtsever

Contact for consulation

Author Bio
anti-dumping measures in Turkey

ANTI-DAMPING MEASURES APPLICATION PROCEDURE

 

! 2024 UPDATE !
How to Successfully Defend Against Antidumping Investigations in Turkey: Essential Guide for Exporters
For a comprehensive guide on how exporters can defend themselves during the initial investigation phase of antidumping cases in Turkey, check out our latest article
Breaking the Barrier: How Exporters Can Challenge Antidumping Duties in Turkey
To learn how exporters can challenge existing antidumping duties imposed in Turkey, check here:

 

 

As a member state of the World Trade Organization, Turkey provides the opportunity to take the necessary measures to protect its local markets and industries against unfair competition and therefore “unfair” trade practices of foreign exporters that may harm domestic producers.  Dumping exports is one of these unfair trade practices, and as a means of defense policy against dumped exports, local manufacturers are provided with the opportunity to apply for anti-dumping measures, and in this way, additional dumping tax is imposed on the products imported abroad, thereby reducing the prices that constitute unfair competition in the domestic market to the normal market level.

Dumping practices and related anti-dumping measures are regulated by the Law (Law) on the Prevention of Unfair Competition in Imports (Law) No. 3577 published in the Official Gazette dated 01.07.1989 and numbered 20212, and the Regulation on the Prevention of Unfair Competition in Imports published in the Official Gazette dated 30.10.1999 and numbered 23861. Pursuant to article 2 of the Law, dumping is defined as “the export price of a good to Turkey is below the normal value of a similar good”. 

The domestic production branch claiming to be damaged by dumped imports can submit a duly prepared application to the General Directorate of Imports (Directorate) to take action against the import in question. Upon application, if the necessary conditions are met within the framework of the relevant legislation, an investigation can be opened and as a result of the investigation, dumping

Circumstances Requiring Precautions

Pursuant to Article 3 of the Law, “situations requiring measures; It is defined as the import subject to dumping or subsidy causing material damage in a production branch in Turkey or creating a threat of material damage or physically delaying the establishment of a production branch”. Therefore, in order for anti-dumping measures to be implemented, a good must be dumped and at the same time, this dumped good must cause or threaten material damage to the local production branch or physically delay the establishment of a production branch.

1.Detection of dumping

At this point, it should be noted that it is not possible to determine whether a product/good is dumped by knowing only the export price. Because the concept of dumping is a relative concept, a comparison should be made. This comparison should be made between the export price of a product and the “normal value” (usually the local market price) of the equivalent product in the exporting country. If the export price is less than the normal value, the product is considered dumped. The difference between the two is the “dumping margin”. In this context, the way to evaluate whether a good is dumped or not is determined by the Regulation.

In accordance with Article 5 of the Regulation, normal value is defined as “the comparable price actually paid or payable by independent buyers in the framework of normal commercial transactions for a similar good subject to consumption in the exporting country or country of origin”.

However, if the domestic sales volume in the exporting country’s domestic market is negligible or low, or if there is a special situation in the exporting country’s market, or if the domestic sales in the exporting country are not in “normal business transactions”, the local market price in the exporting country should be used for comparison in the following cases: may not be suitable for In this case, the current export price is compared with the comparable export price of a similar product from the exporting country to a third country, or the “built value” found by adding a profit margin to all costs in the country of origin.

2. Harm and Threat of Harm

Pursuant to Article 16 of the Regulation, damage is defined as “material damage, threat of material damage or physical delay in the establishment of a production branch”. Article 17 determines how the damage will be determined. According to this article 17 “The determination of pecuniary damage should be based on tangible evidence and include an objective examination of the volume of dumped or subsidized imports and the effects of these imports on similar commodity prices in the domestic market and on domestic production. Regarding the volume of dumped imports; It is examined whether there is a significant increase in this import in absolute terms or relative to production or consumption in Turkey. Regarding the effect of dumped or subsidized imports on prices, it is examined whether the prices of dumped or subsidized imports are significantly below the price of similar goods in Turkey or whether these imports have a significant effect on lowering prices or preventing price increases ”.

Actual and potential reduction in losses, profits, production, market share, productivity, investment revenue and capacity utilization; factors affecting domestic prices; the size of the dumping margin; All factors and indicators related to the state of production need to be examined, including actual or potential adverse effects on cash flow, inventories, employment, wages, growth, capital or ability to increase investment.

Threats of pecuniary damage should be based on tangible evidence, not claims, estimates, or remote possibilities. Changes in conditions that would create an environment in which dumped imports would cause harm should be clearly foreseeable and imminent. In this context, the following factors will be taken into account in determining the threat of material damage:

a) A significant increase in dumped or subsidized imports into the domestic market, indicating the possibility of a substantial increase in imports,

b) Considering that there are other export markets that can absorb additional exports; The exporter has a sufficient and freely disposed capacity, or a significant increase in its capacity, which indicates the possibility of a significant increase in dumped or subsidized exports to the Turkish market,

c) Whether the imports are made at prices that will significantly reduce domestic prices or prevent their increase and increase the demand for imports,

d) Stocks of the goods subject to investigation,

e) In subsidy investigations; the nature of the subsidy under investigation and the commercial effects it may have.

Determination of Local Production Branch

As stated above, it is not enough for a product to be dumped and the risk of material damage or damage to this dumped product is not sufficient, at the same time, this damage and the danger of damage must affect the domestic production branch. Therefore, it will not be sufficient for the anti-dumping measures to be damaged by the manufacturers representing only the domestic production branch from this dumped product.

According to the 18th article of the regulation, the domestic production branch refers to all the producers of similar goods in Turkey or the producers who realize a significant part of the production of this product in Turkey. However, if the producers are associated with exporters or importers or are importers of the goods claimed to be dumped or subsidized, the domestic production branch may refer to the rest of the producers .

However, at this point, it should be emphasized that, in accordance with Article 20 of the Regulation, in order for a complaint to be deemed to be made by or on behalf of the production branch; the total similar goods production of the producers supporting the complaint shall be more than 50% of the total similar goods production of the producers supporting the complaint and the producers opposing the complaint and not less than 25% of the total similar goods production in Turkey. Complaints that do not meet these requirements will be rejected.

Complaints, Investigation, Investigation and Collection of Information

 Manufacturers, or natural or legal persons acting on behalf of the production branch, claiming that they have suffered material damage or are under the threat of material damage from the imports subject to dumping in accordance with Article 19 of the Regulation, or that such imports physically delay the establishment of a production branch, by applying to the General Directorate in writing. may request measures. The complaint must contain evidence of dumping, damage and a causal relationship between the dumped import and the alleged damage. Applications that are not supported by sufficient evidence will not be accepted.

Following the filing of the complaint to the Directorate, the Directorate will initiate an ex officio investigation for the alleged dumped property and complete this examination within a maximum of 45 days. As a result of the examination, it makes a proposal to the Board for Evaluation of Unfair Competition in Imports (Board) on whether or not to open a dumping investigation. Following this, the Board decides whether to open an investigation and if it is decided to open an investigation, the notification that this investigation has been opened is published in the Official Gazette. An investigation will be deemed to have been opened with the publication of the relevant notification in the Official Gazette.

Pursuant to Article 21 of the Regulation, following the initiation of an investigation, questionnaires are sent to known importers and exporters of the goods under investigation. In subsidy investigations, a questionnaire is also sent to the exporting country. These forms are considered to be received within one week from the date they are sent and are given 30 days to reply. If an application is made within the time limit by stating the reasons, this period may be extended, taking into account the time constraints in the investigation. 

When necessary, the Directorate General may also request additional information and documents regarding the investigation from the relevant parties at any stage of the investigation. In order to verify the information at hand or to provide additional information, examinations can be made by the relevant parties. On-site verification investigation,

In addition, pursuant to Article 24 of the Regulation, during the investigation, the Directorate General provides the opportunity to express their views to the relevant parties and industrial users of the goods under investigation, and to representatives of consumer organizations in cases where the goods are sold at retail level. In this framework, listening meetings may be held in order to express opposing views, upon the written request of the relevant persons or the call of the General Directorate.

At this point, it should be emphasized that, if the exporting companies, which are requested to provide information during the investigation, cooperate and share the information, certain exemptions from possible dumping measures can be granted to the cooperating companies. In this context, pursuant to Article 26 of the Regulation, if one of the parties does not provide the necessary information within the given time limits or refuses to access this information, or if it is understood that it hinders the investigation or gives false or misleading information, the said party is deemed not to cooperate. In this case, provisional or final determinations, positive or negative, can be made based on available data.

Investigations to be opened within this scope are concluded within 1 year, except for special cases, pursuant to Article 30 of the Regulation. However, this 1-year period may be extended by the Board when necessary, not exceeding 6 months.

Measures to be Applied

 As a result of the investigation carried out in accordance with Article 7 of the Law, an anti-dumping tax is collected for the import of the dumped goods equal to the dumping margin amount determined by the Board and approved by the Ministry. However, if it is determined that the compensation of the loss caused by the import subject to dumping is possible by imposing a tax at an amount or rate less than the determined dumping margin amount, this rate or amount of tax is applied.

The principles regarding the retrospective application of these duties for the goods imported before will be determined by the Cabinet Decision for each dumping application. However, the period of retroactive application cannot exceed 90 days from the date of the temporary measures.

 1. Interim Measures

 Temporary measures may be in the form of a temporary tax, a security equivalent to the estimated temporary anti-dumping duty, or a customs fixation provided that the estimated amount of dumping duty determined through the Inquiry is indicated. Interim measures cannot be applied before 60 days from the start of the investigation. Although the implementation period of temporary measures is 4 months at the most, this period may be extended up to 6 months upon the request of exporters representing a significant percentage of the trade in question.

2.Strict Precautions

 Definitive measures are in the form of dumping tax. According to the application and investigation principles, a final dumping tax is imposed for a certain period of time on the relevant product imported from a certain country, and the taxes charged on the export of the relevant product to Turkey are increased, thereby increasing the sales price within the country. In accordance with Article 35 of the Regulation, definitive measures shall cease to be in force 5 years from the date of their entry into force or from the date of conclusion of the last review investigation covering both dumping or subsidy investigation and damage investigation.

ANTI-DAMPING MEASURES APPLICATION PROCEDURE

Av. Ali Yurtsever

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