This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS SECTION 01 OF 03 ANKARA 000327 
 
SIPDIS 
 
SENSITIVE 
 
STATE FOR EUR/SE, EB/EPD, AND EB/TPP/ABT 
DEPT PLEASE PASS USTR FOR SDonnelly, JWeiss, LErrion 
USDA FOR FAS FOR ITP/Young, Flemings, Leier 
USDOC FOR RUSNAK 
GENEVA FOR FAS/Miller 
 
E.O. 12958: N/A 
TAGS: ETRD EAGR PGOV PREL GR TU
SUBJECT: US and GOT Discuss Bilateral Ag Issues 
 
Sensitive but Unclassified.  Not for Internet 
Distribution. 
 
¶1.  (SBU) Summary.  On January 24, U.S. and Turkish 
officials met on the margins of the Trade and Investment 
Framework Agreement (TIFA) Council Meeting in Ankara to 
discuss bilateral trade issues at the Ministry of 
Agriculture and Rural Affairs (MARA).  Assistant U.S. 
Trade Representative for Europe and the Mediterranean, 
Shaun Donnelly, and MARA Under Secretary, Hasim Ogut, 
discussed the U.S. WTO rice case as well as other 
bilateral trade issues including imports of meat and 
taxes on cola consumption.  End Summary. 
 
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Changes in Turkish Agriculture Strategy 
--------------------------------------- 
 
¶2.  (SBU) Under Secretary of Agriculture, Hasim Ogut, 
welcomed the opportunity to discuss U.S.-Turkish 
bilateral agriculture trade issues.   He noted that 
Turkey had made major revisions in its agriculture 
policies since the early 1980s and that the GOT is 
seeking to further restructure its agriculture sector, 
primarily as part of its EU accession process.   Ogut 
explained that the government's strategic plan included: 
(1) Continued Market Reform based on free market 
principles; (2) Parastatals will be reduced to a 
regulatory role in the agriculture market; (3) Support an 
increase in direct income support programs.  The GOT 
hoped that by making these changes, Turkey could avoid 
any future trade problems. 
 
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2006 - 2010 
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¶3.  (SBU) U/S Ogut outlined the measures the GOT plans to 
structurally change its agriculture sector based on the 
principles of the free market in which the private sector 
and competition will play the dominant role.   He noted 
that this was the first time in Turkey's history that the 
GOT had developed a 5-year plan for agriculture.  Among 
the areas they hoped to address were implementation of 
deficiency payments, support for the livestock sector, 
rural development projects including cold storage and 
some sort of government-supported crop insurance program. 
The U/S told the U.S. delegation that draft legislation 
encompassing these plans had been prepared and had 
already passed through the necessary parliamentary 
committees.  He hoped that the law would be passed in a 
month.  The goal would be to ensure that agriculture 
policies do not interfere with the market.  In addition, 
these new policies will be much more transparent for 
farmers and investors.  He underscored that before 1980, 
Turkey followed an import substitution policy for 
agriculture products but that that will no longer be the 
case. 
 
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WTO Rice Case 
------------- 
 
¶4.  (SBU)  In addressing the proposed U.S. WTO case 
against Turkey on rice, the Under Secretary acknowledged 
that the agriculture ministry understands the process and 
had 2 of their experts attend meetings in Geneva and 
respond to the U.S. questionnaire. 
 
¶5.  (SBU) U/S Ogut stated that there already were limits 
on paddy rice production in Turkey due to constraints on 
the availability of water and competition from 
alternative crops, which were proving more profitable. 
As a result, Turkey would never be able to meet total 
demand in the country.  (Note:  Turkey only produces 
about 60 percent of rice demand.  End note.)  He reported 
that the 2003 rice program had reached its objectives and 
that the country's rice regime was again being modified 
to be more in-line with the country's agricultural 
strategy described above, i.e. more market oriented, more 
direct payments, less parastatal involvement.). 
 
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Livestock and Meat 
------------------ 
¶6.  (SBU) U/S Ogut reported that meat and livestock 
restrictions were directly linked to GOT legislation. 
Ogut noted that the GOT respects OIE guidelines and that, 
according to those guidelines, a country can ban imports 
of meat and livestock from any country, which has a 
single case of BSE.  Given the OIE guidelines and the 2 
cases of BSE in the United States, the U/S felt that 
Turkey was within its rights to ban imports from the 
United States.  Ogut did acknowledge that the BSE 
outbreaks in the United States were minor in nature and 
that most of the country was completely free of BSE. 
Given their negotiations with the European Union on trade 
in livestock and livestock products, it would be 
difficult to lift the bans at this time. 
 
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U.S. Concerns 
------------- 
 
¶7.  (SBU) Ambassador Donnelly stated that U.S. concerns 
with Turkey's rice import regime had been discussed for 
some time and at various levels to no avail.  He noted 
that the U.S. rice industry was very concerned with a 
loss of market share.  Moreover, the U.S. two major 
problems with the current regime.  First, the USG was 
concerned with linking issuance of import licenses with 
domestic purchases, which the U.S. believes was 
inconsistent with WTO obligations.  Second, the GOT 
refused to issue any out-of-quota licenses for rice 
imports.  Any settlement must address these issues. 
 
¶8.  (SBU) Ambassador Donnelly emphasized that the United 
States values its friendship with Turkey and that the GOT 
should not take our concerns regarding rice as a sign 
that this relationship had failed.  He noted that 
countries had agreed to the dispute settlement clause 
specifically as a way to address trade concerns. 
 
¶9.  (SBU) On the livestock and meat issue, Ambassador 
Donnelly stated that the U.S. was very competitive on 
meat products and that many Turkish importers were 
interested in U.S. breeding livestock.  He asked the 
Under Secretary to again look at this issue. 
 
¶10.  (SBU) Finally, Ambassador Donnelly raised the issue 
of Turkish taxes on cola products as well as the GOT's 
sugar policy.   U.S. companies are complaining that the 
cola taxes discriminate against U.S. companies and that 
Turkey's sugar policy limits production of High-Fructose 
Corn Syrup in U.S. plants in Turkey.  He encouraged the 
GOT to examine these issues again. 
 
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Turkish Response 
---------------- 
 
¶11.  (SBU) U/S Ogut again emphasized that Turkey's 
Agriculture Policy is based on its current strategy, 
which is meant to be more market oriented.  Ogut 
committed future agriculture policy to be in line with 
WTO commitments and its agreements with the European 
Union.  U/S asked for patience from the United States 
because changing the current laws in Turkey is very 
difficult and would open the GOT up to law suits by 
domestic companies. 
 
¶12. (SBU) The U/S stated that the current domestic 
purchase requirement for 2005/2006 had been fulfilled and 
that any changes to the requirement would subject the GOT 
to legal action.   The current regulation is due to 
expire on July 31, 2006 and Ogut emphasized that the GOT 
plans to modify the domestic purchase requirement under 
any new regulation.   He hoped that any disagreement 
would be addressed in the consultative process.   The GOT 
is committed to limiting paddy rice production, which 
results in continued rice imports. 
 
¶13.  (SBU) Concerning meat and livestock imports, U/S 
Ogut stated that the GOT is constrained by its 
discussions with the European Union and by an internal 
scientific committee, which reviews all scientific 
information concerning the issue.  Unless this committee 
changes its recommendation regarding imports of meat and 
livestock from the United States, it would be impossible 
for the Ministry of Agriculture to permit such imports. 
 
¶14.  (SBU) U/S Ogut responded that his ministry was 
responsible for sugar beet production while the Ministry 
of Industry and Trade had authority over sugar production 
quotas.  Consumption taxes are strictly the concern of 
the Ministry of Finance. 
 
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Comment: WTO Rice Dispute 
------------------------- 
 
¶15.  (SBU) The meeting concluded with both sides 
expressing the hope that some sort of agreement might be 
reached to resolve the rice issue.  Turkish officials 
seem to genuinely want to resolve the rice dispute 
outside the WTO dispute settlement process, but the 
timeline Ogut described for changing the current 
regulations in a satisfactory manner remains unclear and 
similar to other vague promises to change the system that 
we have heard in the past.  End Comment. 
 
¶16.  (SBU)  AUSTR Donnelly did not clear this message. 
 
Wilson