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Dianne Wampler  03/01/2007 06:17:59 PM  From  DB/Inbox:  Dianne Wampler

Cable 
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UNCLAS        ISTANBUL 00159

SIPDIS
CX:
    ACTION: ECON
    INFO:   CONS PA RAO FAS MGT PMA FCS POL DCM AMB

DISSEMINATION: ECON /1
CHARGE: PROG

VZCZCAYO906
PP RUEHAK
DE RUEHIT #0159/01 0581300
ZNR UUUUU ZZH
P 271300Z FEB 07
FM AMCONSUL ISTANBUL
TO RUEHDA/AMCONSUL ADANA PRIORITY 2298
RUEHIT/AMCONSUL ISTANBUL PRIORITY
RUEHC/SECSTATE WASHDC PRIORITY 6676
RUEATRS/DEPT OF TREASURY WASHINGTON DC PRIORITY
RHEBAAA/DEPT OF ENERGY WASHINGTON DC PRIORITY
RUEHRC/USDA WASHINGTON DC PRIORITY
RUEHAK/AMEMBASSY ANKARA 6187
RUEHDA/AMCONSUL ADANA 2299
RUEHIT/AMCONSUL ISTANBUL
INFO RUCPDOC/USDOC WASHDC PRIORITY

UNCLAS SECTION 01 OF 02 ISTANBUL 000159 
 
SIPDIS 
 
DEPT PLEASE PASS USTR FOR LERRON 
DEPT PLEASE PASS USTDA FOR DSTEIN 
USDOC FOR 4200/ITA/MAC/EUR/PDYCK/CRUSNAK 
USDOC FOR 3133/ITA/USFCS/OIO/CEEBIC/MCOSTA 
USDA OSEC FOR DUS TERPSTRA 
USDA FAS FOR OCRA FOR CURTIS, FLEMINGS 
 
E.O. 12958: N/A 
TAGS: ECON EINV ETRD TU
SUBJECT: PRIVATE SECTOR MEETINGS INFORM U.S. - TURKEY EPC 
 
¶1. (U) Summary:  The third meeting of the U.S. - Turkey 
Economic Partnership Commission began in Istanbul with a 
full-day session devoted to the private sector.  These 
private sector meetings were designed to inform the 
government-to-government meetings that followed on February 9 
(septel.)  Private sector representatives grappled with ways 
to increase bilateral trade and investment.  Turkish business 
representatives noted that competition for market share in 
the U.S., particularly from China is stiff.  U. S. business 
representatives cited a lack of transparency and excessive 
regulation as deterrents to increased growth and investments, 
but in general expressed optimism about recent economic 
reforms. End Summary. 
 
¶2. (U) Members of the U. S. delegation to the third 
U.S.-Turkey Economic Partnership Commission (EPC) 
participated in a day of private sector meetings in Istanbul 
on February 8,2007.  Business Forum events were organized by 
the Union of Chambers and Commodity Exchanges of Turkey 
(TOBB) and Turkey's Foreign Economic Relations Board (DEIK). 
The U. S. Delegation was led by EEB A/S Daniel Sullivan and 
included representatives of the Departments of Commerce and 
Energy.  Istanbul events included a book release/press 
conference, a luncheon with remarks by A/S Sullivan a 
business forum session and a meeting with the American 
business community organized by AmCham affiliate the American 
Business Forum Turkey (ABFT). 
 
¶3. (U) The day began with a book launch/press conference 
organized by TOBB Chairman Rifat Hisarciklioglu. 
Hisarciklioglu and Athens-based U. S. Chamber of Commerce 
regional representative Kristal Alley announced the release 
of a handbook on Doing Business in the United States jointly 
developed by TOBB and the U. S. Chamber with USAID financing. 
 Alley briefly described the joint business development 
project that led to the publication of the handbook.  A/S 
Sullivan noted that these initiatives have the potential to 
deepen our relationship and that the program Alley described 
is completely private-sector led. 
 
¶4. (U) Following the book lunch, at a lunch organized by DEIK 
and TOBB, A/S Sullivan and MFA Energy Coordinator Mithat 
Balkan described the outlook on regional energy security and 
cooperation from both government's perspectives.  Balkan 
stressed that Turkey's geographic location makes it a 
critical player.  He noted the Baku-Tbilisi-Ceyhan (BTC) 
pipeline is proving to be of great commercial value.  He 
cited U. S. involvement in the BTC pipeline project as proof 
that cooperative efforts to create alternate energy 
distribution projects could succeed.  Both A/S Sullivan and 
Balkan stressed the need to improve trade relations and 
increase energy efficiency, Balkan urged support for a common 
energy policy and sought assistance in reducing the number of 
oil tankers transiting the Bosphorous. 
 
¶5. (U) After lunch, DEIK hosted a "Business Forum" where the 
two delegations listened to ideas and suggestions from the 
business community about how to increase flows of trade and 
investment between Turkey and the U.S.  USDOC DAS Paul Dyck's 
remarks at the forum covered the US-Turkey trade 
relationship, touched on market access issues that impede 
these figures from meeting their potential, and then noted 
some ways in which we could strengthen the bilateral 
commercial relationship including by fostering innovation and 
encouraging private sector partnerships such as the TOBB - 
U.S. Chamber initiative.  Guven Sak, Director of the Economic 
Policy Research Institute, described efforts to increase 
bilateral trade including customs modernization and joint 
production in third countries as well as ways of increasing 
foreign direct investment. 
 
¶6. (U) The business forum also featured presentations by 
representatives from various sectors.  In general, the 
Turkish business community expressed its disappointment with 
the relatively low level of bilateral trade, underscored the 
importance of the GSP program and complained about the threat 
China poses to manufacturers.  Presentations made by U.S. 
company representatives are noted. 
-Construction: Turkish companies are having trouble breaking 
into the U.S. market. 
-Tourism: Although this is the fastest growing sector in 
Turkey, few Americans visit, and most are cruise line 
passengers. 
-Textiles: Exports to the EU are doing fine, but Turkey's 
share of the U.S. market is too low. 
-Insurance (AIG): Recent reforms mean opportunities for U.S. 
companies are growing in this sector. 
-Steel Industry: Difficult to compete with China; U.S. market 
is hard to break into. 
-Jewelry: Stressed the need for continued inclusion in the 
GSP program. 
-Food (ADM): Government involvement in the Turkish market is 
unhelpful.  Supply and demand are out of balance; government 
subsidies distort the market. 
-Natural Stones: Turkey has unrealized potential in this 
sector; GSP is vital for Turkish exporters. 
-Energy (GE): Turkish industry needs more investment in 
research and development as well as better technology. 
-Automotive Spare Parts: Difficult to compete with China; 
U.S. market is hard to break into. 
During the subsequent Q&A session, one participant asked for 
assistance with customs and security-related delays at U.S. 
ports and called for the inclusion of Turkey in the Container 
Security Initiative.  A/S Sullivan agreed to look into the 
matter. 
 
¶7. (U) The final event of the day was a private meeting 
between the U.S. delegation and representatives from the U.S. 
companies.  The mood was generally positive, with several 
executives noting that recent economic reforms had made 
Turkey a much more attractive market.  The main concern 
shared by all was the need for more transparency on the part 
of the Turkish government.  Many pharmaceutical company 
representatives described difficulties in bringing new 
products to the market.  Medicines are being introduced to 
the market two or three years behind the U.S. market due to 
delays on the part of the GOT.  Representatives from other 
sectors described difficulties completing projects due to 
excessive red tape and/or corruption.  One suggested way 
forward was for the GOT to accelerate the rate of EU 
harmonization. 
 
¶8. (U) A/S Sullivan and members of the EPC delegation 
returned to Istanbul on February 10 and 11.  The Consul 
General hosted a dinner on the 10th that provided an 
opportunity for A/S Sullivan to interact with senior business 
leaders, both U.S. and Turkish, in an informal setting. 
During a lively conversation A/S Sullivan described progress 
the delegation made during February 9 Ankara meetings.  In 
response to a question, he noted that Qualified Industrial 
Zones (QIZ), long a topic of great interest in Turkey, 
required legislative action and were thus problematic.  He 
urged the group to think beyond textiles, noting that QIZs 
including textiles were an absolute non-starter for the U.S. 
The conversation quickly turned to Iraq, with one 
representative from an oil company urging the U.S. to 
consider providing payment guarantees and/or bridge loans to 
the Iraqi government in an attempt to regulate payment and 
ensure on time deliveries of fuel. 
 
¶9. (U) A/S Sullivan cleared this message. 
JONES