WORLD TRADE  
ORGANIZATION  G/SG/N/8/TUR/6 
G/SG/N/10/TUR/6 
G/SG/N/11/TUR/6 
12 July 2006 
 
 (06-3368) 
Committee on Safeguards Original:   English 
 
 
  
NOTIFICATION UNDER ARTICLE 12.1(B) OF THE AGREEMENT 
ON SAFEGUARDS ON FINDING A SERIOUS INJURY OR  
THREAT THEREOF CAUSED BY INCREASED IMPORTS 
 
NOTIFICATION PURSUANT TO ARTICLE 12.1(C) 
OF THE AGREEMENT ON SAFEGUARDS 
 
NOTIFICATION PURSUANT TO ARTICLE 9, FOOTNOTE 2 
OF THE AGREEMENT ON SAFEGUARDS 
 
TURKEY 
 
(Footwear)
 
 
 The following notification, dated 11 July 2006, is being circulation at the request of the 
Delegation of Turkey.  
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 In light of the agreed format for notifications (G/SG/W/1, 23 February 1995), Turkey provides notification to the Committee on Safeguards of  findings of serious injury or threat thereof 
caused by increased imports and notification of proposed safeguard measures.  
 On 5 January 2006, Turkey initiated an inves tigation relating to serious injury or threat 
thereof to domestic producers of products like or di rectly competing with the imported product.  The 
initiation of the investigation has been  notified to the Committee on Safeguards.
1  
  Consistent with Article 12.3 of the Agreement on Safeguards , Turkey is prepared to consult 
with those Members having a substantial inte rest as exporters of the product concerned. 
  
I. EVIDENCE OF SERIOUS INJURY OR THREAT THEREOF CAUSED BY 
INCREASED IMPORTS 
A. E
VIDENCE OF SERIOUS INJURY  
 In order to make a determination of serious in jury to the domestic industry of the like product, 
an evaluation of all relevant factors of an objec tive and quantifiable nature having a bearing on the 
situation of the industry has been undertaken.  Th e petitioners are the producer Associations that 
represent the majority of the domestic production.  Hence, the following evaluation has been based 
upon data provided by the applicant Associations.  
                                                      
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1. Consumption  
 
 
 Consumption index had increased from 2001 until 2003 and started falling steadily from 2003 
onwards.  The index fell from 156 in 2003 to 136 in 2005. 
2. Capacity and capacity utilization  
 2001 2002 2003 2004 2005 
Capacity  
(Quantity index) 100 117 143 141 144 
Capacity utilization (% index) 100 103 100 88 75 
  Capacity index has increased steadily through out the period under investigation, reaching 144 
in 2005.   
Capacity utilization index fell by 12 points in  2004 (2003=100) and 13 points in 2005 (to 75).  
The falls in capacity utilization, from 2002 onw ards reflect the falls in production. 
 
3. Production 
 2001 2002 2003 2004 2005 
Production  
(Quantity index) 100 120 143 124 110 
  Domestic production fell in 2004 by 13 %.  Production fell by a further 11% in 2005. 
  
4. Employment 
 2001 2002 2003 2004 2005 
Employment 
(Quantity index)  100 115 119 106 103 
  As it is shown in the table, the data on empl oyment level in relation to the product concerned 
has started falling from 2003.  The inde x shows a decrease of 13% from 2003 to 2005. 
 
5. Domestic sales volume 
 2001 2002 2003 2004 2005 
Domestic sales  
(Quantity index) 100 122 143 123 114 
  Domestic sales of the product concerned fell by  14% in 2004, reflecting the fall in production 
and the increase in imports in that year.    2001 2002 2003 2004 2005 
Consumption 
(Quantity index) 100 125 156 139 136  G/SG/N/8/TUR/6 
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  6. Market share 
 2001 2002 2003 2004 2005 
Market share       
(% index) 100 99 94 90 85 
  Domestic industry’s market share index fell from 100 to 85 between 2001 and 2005.  The 
substantial falls in the recent period demonstrat e the increasing market share of imports in those 
periods.   
 
7. Price of the like product and undercutting 
Due to excessive variety of the footwear produc ts that are classified in the same customs 
code, it is deceptive to make price comparison betw een imported and domestically produced footwear 
on the basis of customs code average.  Therefor e, price comparison was done based on a comparison 
of average prices to wholesalers, according to the data collected by a survey from importers, 
producers and the market.    
 2001 2002 2003 2004 2005 
Price undercutting (%)  20-31 33-48 41-56 44-58 48-60 
 
 The result shows that the ratio of price underc utting has increased regul arly and reached its 
highest level in 2005.  
8. Profitability 
 2001 2002 2003 2004 2005 
Profitability (% index)  100 100 60 40 20 
 
 The profitability of the domestic industry in the domestic market decreased significantly in the last three-year period parallel to the changes in  imports.  The lowest profitability was recorded in 
2005. 
 
9. Productivity 
 2001 2002 2003 2004 2005 
Productivity (Index) 100 130 130 150 150 
 
Productivity in relation to the product concerne d showed a stable trend during the period 
under consideration.  Productivity sharply increased  in 2004 and then kept stable in 2005.  
 
10. Conclusion 
 The data shows negative developments for cap acity utilization, production, domestic sales, 
market share, and profitability especially for the last two years.   G/SG/N/8/TUR/6 
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Imports have increased in the period under i nvestigation from 9,2 million pairs in year 2000 
to 26,7 million pairs in year 2005, which means a 190% increase in the level of imports.  It is 
noteworthy that, as imports increased by 28 % in the year 2005 compared to the year 2004, the 
domestic industry’s sales volume reached its lowest  level in the period under investigation.  
 
 The domestic industry has lost market share,  which reached its lowest level in 2005.   
 
 Taking into account of all of these factors, investigating authority concludes that the domestic 
industry has suffered serious injury.    B. C
AUSATION ANALYSIS  
In order to examine the existence of a causal link between increased imports and the serious 
injury, and in order to ensure that  injury caused by other factors is not attributed to increased imports, 
the investigating authority analyzed the effects of the following factors: 
 
1. Analysis of causation factors 
- Effect of increased imports: 
Imports have increased from 9,2 million pairs in y ear 2000 to 26,7 million pairs in year 2005 
which means a 190% increase in the level of imports .  Additionally imports have grown from 4% in 
2001 to 18% of the domestic production in 2005, indi cating that imports have also increased relative 
to production, at the expense of the domestic indus try.  Over the same period, the market share of 
imports grew from 6% to 20%, whilst the market share of the domestic industry fell from 94% to 
80%.  
 
Based on a comparison of average wholesale prices of domestic and imported products, 
domestic prices were undercut betw een 20% and 60% throughout the 5 year-period examined.  The 
fall in prices taken together with the fall in sal es volume occurred at the same time as the domestic 
industry’s profitability index fell from 100 in 2001 to 20 in 2005. 
 
 For the foregoing reasons, the investigating au thority concludes that there is a correlation 
between the increase in imports at low prices and th e serious injury suffered by the domestic industry, 
and that the increase in imports has had injurious e ffects, particularly in terms of downward pressure 
on prices and a reduction in the volume of sales of the domestic industry in the domestic market. 
 
- Other factors 
 
(a)  Effect of changes in consumption:  Th e product concerned is an essential consumer 
product and therefore the demand for footwear is not subject to any substantial changes.  The 
consumption has increased from 95 million pairs in 2001 to 12 9 million in 2005. 
 
(b)  Effect of competition between the domestic  producers: In parallel with the decrease in 
profitability and production, there are no additional new producers joining to the sector.  Therefore, 
no adverse effect of domestic competition appears.   
(c)  Changes in production technology:  The production technology used by the domestic 
industry is same with the technology used by foreign producers. 
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  (d)  Alternative products and changes in consum er preferences:  There is no substitute good 
for footwear, which could affect the consumer preferences.    
(e)  Lack of production capacity:  The domestic industry has adequate production capacity to 
meet the demand of the domestic market.   
(f)  Changes in financial costs:  The investig ating authority determined that changes in 
financial costs did not contribute to the injury suffered by the domestic industry. 
 
(g)  Effects of changes in export performance:  Th e effect of variations in the level of exports 
has also been examined.  The exports have fluctuat ed during the period of investigation, but from the 
year 2003 exports have started to decrease in term s of units.  At the same time, the unit prices of 
exports displayed an increase, which allowed the exporters to acquire even more revenues from 
exports than the previous years.  Hence, there is no link between the changes in exports and the 
injurious effects observed.   
In conclusion, no other factors, which could ha ve contributed to the injury, apart from the 
increase in imports, were identified.    
2. Conclusion on causation 
 After having examined the injurious effects of the other known factors, the investigating 
authority has reached the conclusion that there is  a genuine and substantial link between increased 
imports and serious injury to the domestic industry.  
 
II. INFORMATION ON WHETHER THERE IS AN ABSOLUTE INCREASE IN 
IMPORTS OR AN INCREASE IN IMPORTS RELATIVE TO DOMESTIC PRODUCTION 
The investigation was conducted in accordance w ith the requirements of Turkish Legislation 
on Safeguard Measures and the procedures prescrib ed by the WTO Agreement on Safeguards and 
Article XIX of GATT 1994, i.e. determination of ex istence of unforeseen developments and effect of 
obligations, including tariff concessions, which led to  the increased imports, and resulting injury to 
the domestic producers.   
 Although, these circumstances need not be dem onstrated for the reason that the product 
concerned is not the subject of any tariff concessi on granted by Turkey under the WTO Agreement, 
current investigation was governed by the national legislation and the term s and conditions of the 
Agreement on Safeguards and Article XIX of GATT 1994. 
  The investigating authority found that the va lue of the New Turkish Lira has appreciated 
unexpectedly since 2001. According to the data circ ulated by the Central Bank of the Republic of 
Turkey, the New Turkish Lira appreciated by 47% in  real terms in 2005 compared to year 2001.  The 
real value gain of the New Turkish Lira speeded  up the imports and lessened the competitive power 
and profitability of the domestic  industry.  The increased imports in significant quantities 
consequently eroded the domestic producers’ market share.  
 The high inflation rate in Turkey is anot her factor having adverse effects on domestic 
producers.  Although, the inflation is in a downwar ds trend in the recent years, the average 12% 
inflation rate in the last 3 y ears causes the prices of intermed iate products and end products to G/SG/N/8/TUR/6 
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  appreciate in the domestic market.  This trend causes both the manufacturing costs of domestic 
producers and the prices of consumer goods to incr ease, resulting with adverse changes in wholesaler 
preferences towards domestically produced footwear. 
  
The real appreciation of the New Turkish Lira and adverse effects of inflation during the 
period under examination are the unforeseen de velopments under Article XIX of GATT 1994. 
 1. Volume of imports 
An examination has been undertaken based on da ta for the period 2000 to 2005, focusing on 
imports in the most recent period for which reliabl e data are available, to establish whether the 
product concerned is imported into Turkey in such greatly increased quantities, absolute or relative to 
total domestic production, and/or on su ch terms or conditions as to cause, or threaten to cause, serious 
injury to the domestic industry. 
  
The table below shows the development of footwear imports for the years 2000-2005.    
IMPORTS CHANGE 
YEARS PAIRS US DOLLARS PAIRS US DOLLARS 
2000 9.216.681 76.201.603 -  - 
2001 5.351.115 54.357.925 -42% -29% 
2002 8.741.328 70.814.004 63% 30% 
2003 18.452.821 134.555.069 111% 90% 
2004 20.922.516 237.753.376 13% 77% 
2005 26.726.310 355.374.097 28% 49% 
 
 Volume of imports in 2001 decreased by 42% comp ared to level of imports in 2000 due to the 
macro-economic crisis occurred in Turkey in that  year.  In the following two years, the imports 
increased by 63% and %111 and reached 18,4 million pairs.  The rate of increase was 13% in 2004 
and 28% in 2005 and the imports re ached to 26,7 million pairs.  The volume of imports increased 
190% in the period of 2000-2005.  
2001 2002 2003 2004 2005 Ratio of imports to 
domestic production 
(%) 4 5 10 12 18 
 
 Relative to total domestic production, imports  increased regularly from 2001 to 2005.  The 
ratio showed a significant upward trend starting fro m 2003.  Imports increased by 100% in 2003, 20% 
in 2004 and 50% in 2005 relative to domestic production.    
2. Market share of imports 
2001 2002 2003 2004 2005 Market share of 
imports (%) 6 7 12 15 20 
 
 The market share of imports showed an upward trend between 2001 and 2005 and increased 
from 6% to 20% in the mentioned period.     G/SG/N/8/TUR/6 
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  III. PRECISE DESCRIPTION OF THE PRODUCT INVOLVED 
 The product in respect of which the domestic producers had claimed that trends in imports 
appear to call for safeguard measures is footwear .  The products concerned were classified within the 
Turkish Customs Tariff Schedule under 64.02 (Footw ear with outer soles and uppers of rubber or 
plastics), 64.03(Footwear with outer soles of rubbe r, plastics, leather or composition leather and 
uppers of leather), 64.04 (Footwear with outer soles of rubber, plastics, leather or composition leather 
and uppers of textile materials) headings.   
However, some specific footwear classified  under sub-headings 6402.12, 6402.19, 6403.12, 
6403.19, 6404.11 has specific characteristics and co mponents for special sportive use.  These products 
can only be used during the sportive activity for whic h they are designed. Since, no evidence has been 
found that these products causes serious injury to domestic production, they are not considered as like or directly competitive product. Therefore, the im port figures of these products are excluded from the 
evaluation of the total imports of footwear. 
  
IV. DESCRIPTION OF THE PROPOSED MEASURE 
 It is proposed to impose definitive safeguard me asure in the form of fixed duty, which will be 
implemented as follows.   
 Fixed Duty (USD/Pair) 
Customs Code 1. Year  2. Year 3. Year 
64.02 (1) (2) 2,00 1,90 1,80 
64.03 (1) (2) 3,00 2,85 2,70 
64.04 (1) (2) 2,00 1,90 1,80 
 
(1) 6402.12; 6402.19; 6403.12; 6403.19; 6404.11 subheadings are excluded from the measure. 
(2) For the subheadings: 6402.99.50.00.00; 6402.99.91.00.00; 6403.51.11.00.00; 
6403.51.91.00.00; 6403.59.31.00.00; 6403.59.50.00.11; 6403.59.50.00.12; 6403.59.50.00.13; 
6403.59.91.00.00; 6403.91.11.00.11; 6403.91.11.00.12; 6403.91.91.00.11; 6403.91.91.00.12; 6403.99.31.00.11; 6403.99.31.00.12; 6403.99.50.00.11; 6403.99.50.00.12; 6403.99.50.00.13; 6403.99.91.00.11; 6403.99.91.00.12; 6404.19.10.00.11; 6404.19.10.00.12; 6404.19.10.00.13; 6404.19.90.00.13; 6404.20.10.00.11; 6404.20.10.00.12; 6404.20.10.00.13; 6404.20.10.00.14; 
6404.20.10.00.15; 6404.20.10.00.16; 6404.20.90.00.15; 6404.20.90.00.16; 6404.20.90.00.17, 
which are covering baby shoes and slippers, the measure is proposed as 1,50 USD/Pair for first year; 1,40 USD/Pair for second year;  1,30 USD/Pair for third year. 
 
Below is the list of Developing Countries, exclude d from the measures as they export less than 
3% of imports to Turkey (Article 9.1 of the Agreement on Safeguards ) 
 
 United Arab Emirates; Afghanistan; Antigua and Barbuda; Angola; Argentina; American 
Samoa; Anguilla; Antarctica; Aruba; Azerbaijan; Barbados; Bangladesh; Burkina Faso; Bahrain; 
Burundi; Benin; Belarus; Bolivarian Republic of Venezuela; Brunei Darussalam; Bolivia; Brazil; G/SG/N/8/TUR/6 
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  Bahamas; Bhutan; Botswana; Belize; Bermuda; Bouve t Island; British Virgin Islands; British Indian 
Ocean Territory; Democratic Republic of Congo; Central African Republic; Congo; Côte d'Ivoire; 
Cameroon; Chad; Colombia; Costa Rica; Cuba; Ca pe Verde; Cayman Islands; Chile; Christmas 
Islands; Cocos Islands; Cook Islands;  Djibouti;  Dominica;  Dominican Republic;  Algeria;  Ecuador;  
Egypt;  Eritrea;  Ethiopia;  Fiji;  Federated States of Micronesia;  Falkland Islands;  French Polynesia;  
French Southern Territories;  Gabon; Grenada;  Ghana;  Gambia; Georgia; Greenland; Guinea;  
Equatorial Guinea;  Guatemala;  Guinea-Bissau;  Guyana;  Gibraltar;  Guam;  Honduras; Haiti;  Heard 
Island and McDonald Islands;  India;  Iraq;  Iran;  Jamaica;  Jordan; Kazakhstan; Kenya, Cambodia, 
Kiribati, Comoros, St Kitts and Nevis, Kuwait, Kyrg yzstan; Laos;  Lebanon;  St Lucia;  Sri Lanka;  
Liberia;  Lesotho;  Libyan Arab Jamahiriya;  Morocco;  Madagascar;  Marshall Islands; Mali; Moldova; Mongolia; Mauritania; Mauritius;  Maldives; Malawi;  Mozambique; Macao ; Mayotte; 
Mexico; Montserrat; Namibia; Niger; Nigeria;  Ni caragua;  Nepal;  Nauru;  Netherlands Antilles;  
New Caledonia;  Niue Island;  Norfolk Island;  No rthern Mariana Islands;  Oman;  Panama;  Peru;  
Papua New Guinea;  Philippines;  Pakistan;  Palau;  Paraguay;  Pitcairn;  Qatar; Russian Federation; 
Rwanda;  Samoa;  Saudi Arabia;  Solomon Islands;  Seychelles;  Suda n;  Sierra Leone;  Senegal;  
Somalia;  Suriname;  Sao Tomé and Principe;  El  Salvador;  Syrian Arab Republic;  Swaziland;  
South Georgia and South Sandwich Is lands;  St Helena and dependenci es;  St Pierre and Miquelon;  
Tajikistan; Thailand; Togo;  Tunisia;  Tonga;  E ast Timor;  Trinidad and Tobago; Turkmenistan; 
Tuvalu;  Tanzania;  Tokelau;  Turks and Caicos  Islands;  Ukraine; United States Minor outlying 
islands;  Uganda;  Uruguay; Uzbekhistan; St Vincen t; Vanuatu;  Virgin Islands of USA;  Wallis and 
Futuna Islands;  Yemen;  South Africa;  Zambia and Zimbabwe.  
V. PROPOSED DATE OF INTRODUCTION OF THE MEASURE 
The date of introduction of the pr oposed measure is 10 August 2006. 
 
VI. EXPECTED DURATION OF THE MEASURE 
 The expected duration of the proposed measure is three years. 
 
VII. PROPOSED DATE FOR THE REVIEW  
 Not applicable. 
 
VIII.  EXPECTED TIMETABLE FOR PROGRESSIVE LIBERALIZATION OF THE 
MEASURE 
 In order to induce adjustment, the proposed measure will be subject to liberalization on a 
regular basis following its imposition, thereby ensuri ng that there is a strong incentive for domestic 
producers to undertake progressively the necessary restructuring and adjustment.  The proposed 
measure is to be progressively libera lized as indicated in item IV above. 
 
IX. INFORMATION RELATING TO THE EXTENSION OF A SAFEGUARD MEASURE 
 Not applicable. 
 
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