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

171002Z Apr 06

UNCLAS SECTION 01 OF 04 ANKARA 002069 
 
SIPDIS 
 
SENSITIVE 
 
STATE FOR EUR/SE, EB/EPD, AND EB/TPP/ABT 
DEPT PLEASE PASS USTR FOR LERRION, JWEISS 
USDA FOR FAS FOR FAA/JDEVER,ITP/ MACKE/THOMAS, LEIER 
USDOC FOR DEFALCO 
 
E.O. 12958: N/A 
TAGS: ETRD EAGR PGOV PREL GR TU
SUBJECT: Turkish Agriculture Import Policies 
 
 
Sensitive but Unclassified.  Not for Internet Distribution. 
 
¶1.  (SBU) Summary.  Turkey is a major market for U.S. bulk 
commodities and other raw materials important to the 
domestic processing sectors.  Nonetheless, Turkey continues 
to restrict trade in food and agricultural products with a 
host of tariff and non-tariff barriers. In addition to 
excessively high tariffs, Turkey stifles trade with non- 
tariff barriers including import licensing, import quotas 
and absorption schemes, seasonal bans on imports and the 
implementation of restrictive phytosanitary regulations. 
Systemic government involvement in the agricultural sector 
substantially restricts and distorts the market and denies 
private sector participants the ability to effectively plan 
business and trade decisions.  End Summary. 
--------------------------------------------- 
World Trade Organization Agreement Compliance 
--------------------------------------------- 
 
¶1.  (SBU) TARIFFS: In the current WTO negotiations on 
agriculture, it is fair to say that Turkey's position 
resembles that of other developing countries who insist that 
tariff reductions cannot be granted without large reductions 
in export subsidies and support on behalf of developed 
countries. Tariffs remain extremely high in Turkey. 
Turkey's 2006 Import Tariff Schedule shows no tariff 
reductions and some notable increases.  Of current interest, 
the durum tariff was increased to 100 percent, the milling 
wheat and corn tariffs were increased to 130 percent and the 
soybean meal and sunflower meal tariffs were raised to 13.5 
percent each.  In addition, the GOT announced on March 11, 
2006, that soybean and soybean meal tariff imports increased 
from 0 to 10 percent and 8 to 13.5 percent, respectively, at 
a time when the poultry and feed sector are still trying to 
recover from the effects of avian influenza.  Officially, 
Turkey states that high tariffs are the only means available 
to protect its agricultural sector, and does not support the 
U.S. WTO position on market access. 
 
¶2.  (SBU) TARIFF-RATE QUOTAS: Turkey chose not to establish 
any agricultural tariff-rate quotas under the WTO.  However, 
Turkey does have a number of TRQs in some of its bilateral 
trade agreements.  Turkey has TRQs available to Europe for 
grains, livestock and beef, dairy products, vegetable oils, 
seeds, tomato paste, and others.  (Turkey has refused to 
honor its EU TRQ for slaughter cattle or meat products for 
several years, basing this policy on the discovery of BSE in 
Europe.)  Turkey has also referred to its corn and rice 
import regimes as TRQs, however these import regimes, which 
include domestic absorption requirements and import quota 
application procedures have not been announced to the WTO as 
TRQs. 
 
¶3.  (SBU) SANITARY AND PHYTOSANITARY MEASURES AND OTHER NON- 
TARIFF BARRIERS: Turkey is a signatory to the WTO SPS 
agreement and participates as a member of the Codex 
Alimentarius, the International Plant Protection Convention 
(IPPC), and the OIE.  Turkey recently became a member of 
International Union for the Protection of New Varieties of 
Plants (UPOV).  Turkey's Ministry of Agriculture and Rural 
Affairs (MARA) General Directorate of Protection and Control 
takes a strong interest in implementing Turkish standards 
for the protection and improvement of Turkish agriculture. 
Turkey has begun to gradually adopt EU directives and SPS 
standards, which has resulted in a lack of transparency as 
the Directorate of Protection and Control often implements 
new standards with no written notification or scientific 
basis.  Turkey maintains a cumbersome import licensing 
system to regulate all trade in food and agricultural 
products, including processed products.  Essentially, the 
system is used to restrict imports.  Companies often must 
wait weeks or months for licenses.  One products arrive at 
port, Turkish officials claim that all shipments must be 
tested, despite the fact that testing equipment may not be 
available.  This leads to extra costs and higher demurrage 
costs as goods must wait in port while tests are being 
conducted. 
 
------------------------------------- 
Trade Barriers for Livestock Products 
------------------------------------- 
 
¶4.   (SBU) Imports of livestock and most products are 
prohibited.  There have been no imports of poultry meat to 
Turkey since 1993 when the Government requirement that 
poultry meat may only be imported from foreign processing 
facilities that were inspected and authorized for export by 
Turkish Ministry of Agriculture officials.  Poultry meat may 
be transshipped to other countries through the free trade 
zones. 
 
¶5. (SBU) Turkey has not allowed livestock for slaughter or 
meat imports from any country since 1996.  Outbreaks of BSE 
and FMD in Europe strengthened Turkey's resolve to keep 
livestock and meat products out of the country.  Turkey has 
not established any animal or public health requirements for 
the entry of meat.  Since November of 1999, Turkey has 
allowed the import of some breeder cattle, but restrictions 
on who can import, and under what circumstances, still 
constrains imports. The United States is currently not able 
to export breeding livestock to Turkey since the EU placed 
the United States in the 3rd BSE risk category.  Note: 
Despite inclusion of a 19 TMT beef quota in Turkey's 
Custom's Union Agreement with the European Union, the EU has 
never been able sell beef to Turkey.  End note.  Turkey's 
BSE Committee has decided not to import any breeding cattle 
from category 3 countries (based on EU system).  Although 
Turkey does permit imports of semen and embryos, its 
standards restrict trade in those products. 
 
------------------------------------- 
Trade Barriers for Grains and Legumes 
------------------------------------- 
 
¶6. (SBU) Turkey uses various mechanisms to limit imports of 
grains and pulses.   In addition to an import licensing 
system that unnecessarily delays shipments and adds costs, 
the GOT also suspends licenses for may commodities during 
their harvest season without any prior notification.  In 
addition, for some commodities, rice for example, it 
requires purchases of domestic crop in order to receive 
permission to import. For pulses, the GOT requires a minimum 
import price along with financial and economic information 
about the exporter before imports are allowed.   In the end, 
the GOT aims to make the import system so arduous, that 
exporters and importers decide to forego this market. 
 
-------------------------- 
Further Processed Products 
-------------------------- 
 
¶7. (SBU) PET FOOD: The GOT established a new regulation in 
February 2005 requiring dioxin testing on all pet food 
despite the fact that domestically-produced pet food is not 
tested.  In addition, all pet food from the United States 
containing ruminant ingredients other than tallow and hides 
and skins is banned because of BSE. 
 
¶8. (SBU) MARA requires that a Health Certificate or a 
Certificate of Free Sale accompany all imports of processed 
products and packing materials that will be in contact with 
food.  A federal or state agency stating that the product is 
safe for human consumption must issue the certificates. 
Depending on the product, more information and/or testing 
may be required.  As FDA does not issue such certificates, 
and U.S. states do to varying degrees, this issue has been a 
significant challenge to increasing U.S. exports of high- 
valued processed products to Turkey.  For example, the 
burden is on the importer to notify the exporter of this 
requirement, who must locate an appropriate U.S. agency to 
issue such a document.  Again, the documentation 
requirements discourage exporters and importers alike. 
Delays occur as Turkish customs officials often question the 
validity of state-origin certificates. 
 
---------------- 
Export Subsidies 
---------------- 
 
¶9. (SBU) DIRECT EXPORT SUBSIDIES: Annually, Turkey's Export 
Subsidy program is announced in the Official Gazette 
(Turkey's Federal Register).  In its 2006 export subsidy 
program, according to the February 15, 2006 Official Gazette 
announcement, Turkey listed cut flowers, vegetables 
(dehydrated and frozen, excl. potatoes) olive oil, prepared 
or preserved fish, preserves and pastes (incl. tomato), 
frozen fruits, preserves, and concentrated fruit juices, 
poultry meat, natural honey, eggs, chocolate, biscuits, 
waffles and cakes and pastas as receiving subsidies. 
Payments are usually delayed, or come in the form of tax 
offsets.  In the past, and in addition to the notified 
subsidies, Turkey has exported grains and sugar at a loss by 
paying producers prices, which are above the world market, 
and then selling to exporters at whatever prices the market 
offers. 
 
¶10. (SBU) DOMESTIC SUPPORT: Turkey claimed Special and 
Differential Treatment relating to domestic support, 
notifying the WTO that its product-specific support was well 
within the 10 percent de minimis level, as was the Aggregate 
Measure of Support (AMS) calculation.  As a result, none of 
Turkey's domestic support is subject to reduction.  Turkey's 
domestic support is limited, however, according to letters 
of intent signed with the IMF as part of the overall 
Economic Reform Program and by domestic fiscal constraints. 
Domestic support payments are announced all year-round 
through the newspapers so the numbers are constantly 
changing.  Information indicates that the 2006 programmed 
domestic support budget is 4 billion YTL, or approximately 
USD $3.1 billion.  Turkey's 2005 domestic support budget is 
reported as 3.8 billion YTL, or approximately USD $2.4 
billion.  Of this total, about half is for direct income 
support (paid per dekar); about 20 percent (USD $625 
million) is for commodity specific premium payments; and the 
rest is divided up between the Livestock Development 
Program, tea production support services, diesel support, 
VAT reduction for fertilizer, and agriculture credits and 
alternative crop production support.  For the last three 
years, the GOT announced direct price premiums for five 
commodities: soybeans, canola, olive oil, sunflower seed 
(for oil production) and cotton.  In 2004, corn also became 
eligible for premium payments. 
 
--------------------------- 
Agricultural Reform Program 
--------------------------- 
 
¶11. (SBU) Six years ago, the World Bank and Turkey signed a 
$600 million Agriculture Reform Implementation Loan.  There 
were three basic components to the program; establishment of 
Direct Income Support, restructuring of Agricultural Sales 
Cooperative Unions (ASCUs), and transition out of surplus 
crop production.  The World Bank is helping to set up the 
infrastructure to facilitate farmer registration and 
payments. While the overall goal of agricultural reform is 
to replace crop-linked subsidy supports with direct income 
support, the two components are still independent and 
farmers who receive direct income support payments remain 
eligible to receive supported price premiums.  Direct income 
payments, according to MARA, have increased from $900 
million in 2001 to about $2 billion in 2005. 
 
¶12. (SBU) The ASCU's are subject to restructuring and are 
not expected to continue to offer support prices above 
market prices.  They are likely to announce procurement 
prices, but due to a lack of funds and pressure from the 
Treasury, will not be able to operate at a loss, i.e., 
procure above the market price. ASCU's - especially those 
that currently have debt - are encouraged to liquidate 
assets such as processing facilities and other activities. 
Additionally, agricultural support prices, agricultural 
credit, and fertilizer subsidies will be phased out. The 
ASCU's will no longer be receiving subsidized loans. 
Irrigation waterworks will also be privatized and handed 
over to private water use associations.  While many ASCUs 
have limited their procurements in recent years, that has 
been primarily due to market conditions that provided 
farmers other alternatives. 
 
--------------------------------------------- 
U.S. Exports to Turkey in 2005 
--------------------------------------------- 
 
¶13. (SBU) Despite significant barriers, U.S. food and 
agricultural exports to Turkey reached another record, 
surpassing $1 billion in 2005.  A portion of these exports, 
however, especially meat, poultry and high-value items were 
transshipped to other destinations, including Iraq, via 
Turkey's free trade zones (approximately USD $100 million). 
U.S. exports to the Mersin Free Trade Zone in Turkey are 
expected to rise about 10 percent in 2006.  U.S. exports of 
soybeans, cotton, vegetable oils (excluding soybean oil), 
feed and fodder, fruit and vegetable juices, tree nuts, pet 
foods, and hardwood lumber to Turkey all reached record 
levels in 2005. 
 
--------------------- 
Comment: 
---------------------------- 
 
¶14.  (SBU) Despite claims to the contrary, the GOT remains 
heavily involved in Turkish agriculture often intervening in 
the market through various means mainly to increase domestic 
prices.  Unfortunately, the GOT invariably intervenes at the 
most inopportune times leading to excessive purchases and 
higher governmental stocks.  Often times the GOT is forced 
to sell these excessive stocks on international markets at 
prices below the initial purchase prices.  At the same time, 
the government tries to placate the large numbers of Turks 
involved in agriculture for which alternative employment is 
very limited.  The implications for long-term EU 
negotiations could be critical since the transition in the 
rural community will be much more difficult. 
 
WILSON