March 23, 2015 / 2:43 PM / in 3 years

Turkey urged to shun Vestel's bid to protect mobile phone sector

GENEVA (Reuters) - The European Union and Taiwan have said a bid by Turkish appliance manufacturer Vestel to get Ankara to impose emergency import tariffs on mobile phones would probably be illegal if it is approved, according to documents published on Monday.

Turkey notified the World Trade Organization (WTO) in December that Vestel had sought “safeguard” tariffs to protect Turkish phone producers against a surge in imports.

If Turkey accepts the request, it could effectively bar imported phones such as Apple’s iphone and Samsung’s Galaxy by making them prohibitively expensive.

That would help Vestel, which launched a smartphone last September running Google’s Android operating system. Vestel, best known for its fridges, televisions and washing machines, has said it expects to sell 1 million mobile phones in the domestic market in 2015.

Safeguard tariffs are allowed under WTO rules, subject to strict conditions. One condition is that a country considering their use must solicit opinions from interested parties, whose submissions Turkey published on Monday.

In its submission, the 28-nation EU said Vestel’s petition was “very surprising” because it had only just started making phones so it could not demonstrate it had suffered from a surge in imports - and there had been no such surge in any case.

“It is almost impossible in this case to establish any kind of injury (to Turkey’s mobile phone sector),” said the EU, which Turkey aspires to join.

Taiwan said data submitted by Vestel showed the growth of imports had not been “recent, sudden, sharp and significant” as required by the WTO to justify safeguard tariffs.

“Such safeguard measures are completely unnecessary for protecting domestic industry and risk harming R&D investments and consumers’ interests,” Taiwan said, adding that its own exports should be exempt from any tariffs due to its recognized status as a developing country.

If Turkey does impose safeguard tariffs, it would take years for any legal challenge to work its way through the WTO system, giving Vestel’s young product a clear run at a protected market.

Other submissions published by Turkey came from manufacturers ZTE Corporation, Samsung, Nokia, LG Electronics Inc and China’s Huawei Group [HWT.UL], which argued that “none of the conditions” had been met for invoking safeguard tariffs.

Turkey already imposes strict controls on mobile phones imported by individuals, blocking handsets not purchased in the country from using a local Turkish SIM unless they are registered and a tax paid.

Editing by Gareth Jones

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