Cone Mills, the exclusive supplier of denim for Levi's 501 jeans, has formed a joint venture with Turkish denim producer Isko in order to supply denim to Levi's European division without having to pay tariffs.

Details of the venture, called "IsKone Denim," were revealed in a quarterly report filed with the Securities and Exchange Commission this week.

Cone, which will own a 51 per cent stake in the new company, will provide technical support and market and develop the denim, while Isko will hold a 49 per cent share and will produce the fabric at a denim factory in Turkey.

In contrast with American-made denim, which faces an 8 per cent tariff when imported to Europe, Turkish goods imported to Europe are tariff free.