INBOUND ON A PRACTICE IAP; FLT INSTRUCTOR AND STUDENT ABOARD PA28 DEVIATE FROM CLRNC TO AVOID DEPARTING TRAFFIC AT IWA. RESULTING TRACK PUTS THEM IN PATH OF SUBSEQUENT DEP TRAFFIC FROM A PARALLEL RWY.

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I AM A CFII AND MY STUDENT WAS ON A TRAINING MISSION UNDER SIMULATED INST CONDITIONS. WE RECEIVED RADAR VECTORS FOR THE VOR RWY 30C APCH INTO WILLIAMS GATEWAY ARPT (IWA). THE WINDS WERE UNFAVORABLE FOR A STRAIGHT-IN APCH INTO RWY 30C SO TWR TOLD US TO CIRCLE N OF THE ARPT (R TURN) TO LAND ON RWY 12L. TWR ALSO ADVISED US THAT A PILATUS FOLLOWED BY T38 TFC WOULD BE DEPARTING RWY 12R. MY STUDENT DSNDED FROM THE FAF SNOWL DOWN TO CIRCLING ALT AS I KEPT A WATCH OUT FOR TFC. WE HAD THE VOR CTRED WHICH HAD US HEADING STRAIGHT FOR THE VOR THAT IS BTWN RWYS 30C AND 30L (RWY 12C AND 12R). THE VISIBILITY WAS GOOD BUT IT WAS A LITTLE BIT HAZY. WHEN WE WERE ABOUT 1.3 MI FROM THE VOR; I FIRST SAW THE PILATUS. IT WAS TAKING OFF AND CLBING FROM RWY 12R; HOWEVER; THE AIRPLANE WAS DRIFTING L TOWARD OUR POS (THE TFC HAD BEEN CLRED FOR A L TURN NEBOUND BY TWR). A R TURN N TO CIRCLE WOULD HAVE PUT US IN JEOPARDY OF HITTING THE PILATUS; SO I TOOK THE CTLS FROM MY STUDENT AND MADE A SHARP TURN TO THE L. AFTER THE PILATUS TFC PASSED US ABOVE AND TO OUR R; I TURNED US BACK TO THE R IN ORDER TO ABIDE BY ATC'S PREVIOUSLY ISSUED INSTRUCTION TO CIRCLE N. AS SOON AS I INITIATED A BANK TO THE N; ATC TOLD ME TO TURN L TO A W HDG AND THAT I HAD JUST COMMITTED A POSSIBLE PLTDEV. UPON CALLING ATC; THEY INFORMED ME THAT THE DEPARTING T38 ON RWY 12R CAME CLOSE TO COLLIDING WITH MY ACFT SINCE I TURNED TO THE L INITIALLY. I REALLY HAD VERY FEW OPTIONS BECAUSE TURNING R WOULD HAVE CAUSED ME TO COLLIDE WITH THE PILATUS; WHILE TURNING L CONFLICTED WITH THE NEXT DEPARTING ACFT. I DECIDED TO AVOID THE IMMEDIATE DANGER FIRST THEN WORRY ABOUT THE T38. I DEVIATED FROM AN ATC INSTRUCTION MOMENTARILY TO AVOID A TFC CONFLICT. THE ONLY OTHER POSSIBLE OPTION I COULD HAVE DONE WAS DSND AND TURN R TO AVOID THE PILATUS BUT THERE WAS ALSO A CESSNA DEPARTING RWY 12L THAT WOULD HAVE BEEN A TFC CONFLICT IF I WOULD HAVE CHOSE THAT OPTION. IN THE FUTURE; I WILL HAVE MY STUDENT CIRCLE FARTHER AWAY FROM THE MISSED APCH POINT AND AVOID CIRCLING NON-PRECISION APCHS INTO PARALLEL RWYS.