VZCZCXYZ0000
PP RUEHWEB

DE RUEHAK #1166/01 2241408
ZNY CCCCC ZZH
P 121408Z AUG 09
FM AMEMBASSY ANKARA
TO RUEHC/SECSTATE WASHDC PRIORITY 0492
INFO RUEHIT/AMCONSUL ISTANBUL PRIORITY 6152
RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY
RHEHAAA/NSC WASHDC PRIORITY

C O N F I D E N T I A L ANKARA 001166 
 
SIPDIS 
 
FROM AMBASSADOR JEFFREY 
DEPT FOR EEB/FO, EEB/TPP/BTA, EUR/SE 
DEPT PLEASE PASS USTR FOR CHRIS WILSON AND MARK MOWREY 
DEPT PLEASE PASS DEPT OF AGRICULTURE 
COMMERCE FOR CHERIE RUSNAK AND KRISTIN NAJDI 
 
E.O. 12958: DECL: 08/09/2019 
TAGS: ECON ETRD EINV USTR US TR
SUBJECT: U.S.-TURKEY TRADE: NEED FOR HIGHER-LEVEL DIALOGUE 
 
Classified By: Ambassador James Jeffrey for reasons 1.4 (b,d). 
 
¶1. (C) During President Obama's meeting with Turkish 
President Gul in April, the two leaders agreed that we need 
to do more to encourage the two-way flow of bilateral trade 
and investment and President Obama tasked me to make that 
happen (a message that was reinforced during the later 
meetings between Secretary Clinton and Foreign Minister 
Davutoglu in Washington).  Following up on the President's 
directive, we have held a number of meetings with the Turkish 
government and both the U.S. and Turkish private sectors to 
develop ideas that will strengthen the economic leg of our 
Turkish alliance - a summary of those ideas will follow 
septel.  What has become clear in the course of these 
discussions, however, is the need for us to bring our various 
government-to-government mechanisms together under one 
high-level umbrella that can achieve real progress. 
 
¶2. (C) We currently have three main mechanisms for bilateral 
economic talks: 
 
-- The Economic Partnership Commission (EPC), chaired by the 
Assistant Secretary of State for Economic and Energy Affairs 
and the MFA Undersecretary, which looks at the entirety of 
our economic relationship; 
 
-- The Trade and Investment Framework Agreement (TIFA) 
Council, chaired by the Assistant USTR and the Deputy 
Undersecretary for Foreign Trade, which deals with barriers 
to trade and investment; and, 
 
-- The Energy Working Group, chaired by Special Envoy for 
Eurasian Energy Morningstar and MFA Deputy Undersecretary 
Kuneralp, which focuses exclusively on energy issues. 
 
Each of these serves an important purpose in defining the 
list of issues that prevent the economic relationship from 
growing or in identifying areas for cooperation. The problem 
that all of these groups encounter, however, is that the 
Turkish counterparts are hesitant to commit to fixing issues 
or taking real action because they are mainly working at the 
bureaucratic level, a problem to some extent mirrored on our 
own side.  As a result, we end up with months of negotiation 
to agree upon action plans that are never or only partially 
implemented, or that contain nebulous phrasing on future 
cooperation -- not a productive use of our time. 
 
¶3. (C) During a recent meeting with MFA Undersecretary 
Apakan, he made it clear that the Turks expect the 
commitments made by President Obama and Secretary Clinton to 
result in real, tangible action to increase trade, 
specifically saying that "we need to do something big to 
revitalize U.S.-Turkish economic relations."  He recognized 
that this would probably require us to raise the level of 
discussion to include those with the power to effect change 
(i.e. the ministerial or undersecretarial level).  He 
suggested the creation of a task force to set the direction 
of the economic relationship, designing a program of work and 
a political commitment to implement it that could then be 
carried out through the existing bilateral mechanisms. 
 
¶4. (C) For the Turkish side, Apakan suggested that the 
appropriate interlocutor for this high-level group would be 
either Deputy Prime Minister for the Economy Babacan, Foreign 
Minister Davutoglu, or possibly State Minister for Foreign 
Trade Caglayan.  Their side would also include participation 
from, at a minimum, the Undersecretaries and/or Deputy 
Undersecretaries at Foreign Trade, Treasury, and MFA. 
 
¶5. (C) If we can get this sort of high-level Turkish 
attention, we will have a real opportunity to actually solve 
many of the nagging impediments to trade and investment with 
Turkey (it will also provide the Turks with the sort of 
high-level spectacle that they often accept as a surrogate 
for real action, a la Putin's recent visit to Ankara). 
Seizing this opportunity will require us to pony up with an 
equally strong commitment to bring high-level U.S. officials 
to the table.  The logical person to coordinate our side of 
this task force would be the Undersecretary of State for 
Economic, Energy and Agricultural Affairs, with active 
participation at least at the Assistant Secretary level from 
USTR and the Departments of Agriculture, Commerce, Homeland 
Security (Customs and Border Protection), and possibly 
Treasury. 
¶6. (C) The main problem we face is one of timing. 
Undersecretary-Designate Hormats is not likely to be 
confirmed until September at the earliest and by the time he 
is on board, up to speed, and available to meet we will have 
lost several valuable months (and possibly Turkish 
attention).  To remedy this, I am willing to take on the task 
of chairing this task force in the short term and get the 
ball rolling, with the concurrence of the Department and NSC. 
 
¶7. (C) The other problem we will encounter is that the Turks 
still view economics in mercantilistic terms, and they 
neither understand that we cannot simply order our companies 
to do business with Turkey nor truly grasp that preferential 
trade packages require legislative action.  While this limits 
our range of possibilities, we can show the GOT that the 
executive branch is putting a priority on improving trade 
with Turkey and that we will do what we can to facilitate it, 
assuming an equal commitment on their side.  Apakan pointedly 
remarked that the Congress has been willing to pass laws for 
other countries (South Korea, Colombia) and that he did not 
understand why they could not do the same for Turkey.  While 
this is a form of the typical "If you really loved us you 
would do this" argument that frequently comes up in Turkey, 
it is also a valid point.  Turkey is a critical ally of the 
United States in a very troubled region, as well as a major 
emerging market, and there is no reason why we cannot use an 
enhanced trade relationship to complement our already strong 
political one.  To do so, we should act sooner rather than 
later to set up this task force and develop an action plan 
that will provide real results. 
 
¶8. (C) In terms of ideas for the "something big" that we 
could offer to Turkey, I have listed some possibilities 
below.  Some of these have been considered previously and 
rejected, but now may be an opportune time to reconsider them. 
 
-- Tweak the Generalized System of Preferences to help 
Turkey, and where possible ensure that Competitive Needs 
Limitation waivers are granted for Turkish goods to remain in 
the program. 
 
-- Consider Turkey as a privileged partner in the 
Reconstruction Opportunity Zone that we are planning to 
establish in Afghanistan and Pakistan.  Given Turkey's huge 
(proportionally speaking) aid program of over USD 300 million 
for the two countries, the history of Turkish companies 
operating in the region, and their other support for our 
efforts to improve the situation in that area, Turkey is a 
natural candidate to play such a role. 
 
-- Design a CEO/business leader "road show" both in Turkey 
and in the United States as a means to stimulate increased 
two-way trade and investment. 
 
-- Consider some sort of "lite" free trade agreement 
(necessarily restricted in view of Turkey's membership in the 
EU Customs Union) that could be deployed when and if we see 
major political breakthroughs here. 
 
Visit Ankara's Classified Web Site at 
http://www.intelink.sgov.gov/wiki/Portal:Turk ey 
 
Silliman