VZCZCXRO2442
RR RUEHDA
DE RUEHAK #0655/01 0811313
ZNR UUUUU ZZH
R 221313Z MAR 07
FM AMEMBASSY ANKARA
TO RUEHC/SECSTATE WASHDC 1423
INFO RUEHRC/USDA FAS WASHDC
RUCPDOC/USDOC WASHDC
RUEHIT/AMCONSUL ISTANBUL 2377
RUEHDA/AMCONSUL ADANA 1779

UNCLAS SECTION 01 OF 03 ANKARA 000655 
 
SIPDIS 
 
FAS/W FOR ITP 
USDOC FOR ITA/MAC/OEURA/CPD/CRUSNACK 
STATE PLEASE PASS USTR FOR SDONNELLY AND LERRION 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ETRD EAGR KIPR TU
SUBJECT: SETTING THE TONE FOR THE 2007 U.S.-TURKEY TIFA MEETINGS 
 
Ref: A) Ankara 128, B) 06 Ankara 5335 
 
This information is sensitive but unclassified.  Please protect 
accordingly. 
 
¶1. (SBU) Summary:  The fifth U.S. Turkey TIFA discussions in 
Washington provide an opportunity to build on the positive tone set 
in the 2006 meetings to further improve our bilateral trade 
relationship.  Turkey has made significant improvements to its 
investment climate, and FDI is rising considerably, but certain 
market access issues remain important for U.S. companies.  Access 
for agricultural products is the most limited, while IPR is an 
ever-present issue that deserves a broad discussion during the 
talks. The Turkish side will raise recent discussion of new 
investigations into Turkish exports of iron and steel products, 
which they argue could affect approximately one quarter of total 
Turkish exports.  We encourage the early establishment of the U.S. 
delegation in order to pressure the broadest participation possible 
on the Turkish side. End summary. 
 
¶2. (SBU) The fifth U.S.-Turkey Trade and Investment Framework 
Agreement (TIFA) discussions are scheduled for April 12 - 13, 2007, 
in Washington.  The Turkish delegation will be led by Foreign Trade 
(FTU) Deputy Undersecretary Ulker Guzel.  Building on the positive 
dialogue restarted during the 2006 TIFA in Ankara, the 2007 TIFA 
meetings provide an opportunity for a discussion focusing not only 
on our bilateral trade problems but also on ways to improve 
U.S.-Turkish trade relations. 
 
¶3. (SBU) The TIFA is an important part of Secretary Rice and Foreign 
Minister Gul's "Shared Vision and Structured Dialogue" in which they 
specifically call for strengthening Turkey's economy by deepening 
economic cooperation and increasing business exchanges.  This year's 
meetings come at a time when many of the trade disputes that have 
plagued our bilateral trade relationship have been resolved.  Turkey 
has also made significant progress in improving its investment 
climate, and FDI levels continue to rise significantly (ref C). 
 
¶4. (SBU) While there have been considerable improvements, market 
access issues remain.  The sector in which these issues are most 
prominent is access for U.S. agricultural products.  The United 
States is currently pursuing a case at the WTO Dispute Settlement 
Body that challenges Turkey's import restrictions on U.S. rice. 
Turkey also restricts or prevents imports of U.S. beef and poultry 
and other grains, fruits and vegetables.  Turkey has made 
considerable improvement in its IPR protection infrastructure and 
legal framework (ref A), but issues related to pharmaceutical data 
exclusivity and pricing and reimbursement continue to be a major 
concern to U.S. pharmaceutical companies. In addition to 
pharmaceutical IPR, Turkey also needs to continue its law 
enforcement efforts to combat the production and distribution of 
counterfeited goods. 
 
Ag Market Access a Key Topic 
---------------------------- 
 
¶5.  (SBU) Turkey is currently going through the EU accession 
process, which requires harmonization of its laws and regulations 
with the so-called 'acquis communautaire.' While it joined the 
European Customs Union in 1996, the Customs Union is limited to 
industrial goods and does not apply to agricultural trade.  Because 
of this, Turkey has been able to retain a number of barriers to 
agricultural imports that would threaten the viability of local 
production. In 2006, however, USTR filed a case against Turkey in 
the WTO's Dispute Settlement Body (DSB) that challenges the use of 
control certificates to limit imports of rice, and by extension, 
other agricultural products.  Agricultural market access issues 
should compose a large part of the upcoming TIFA discussions. 
 
¶6.  (SBU) Specific agricultural market access issues include 
Turkey's: 
 
--  lack of Sanitary and Phytosanitary Standards(SPS)/Technical 
Barriers to Trade (TBT) Notification; 
--  unscientific SPS measures; 
--  unscientific import documentation requirements; 
--  inordinately high tariffs; 
--  and de facto import restrictions on items such as beef and 
poultry. 
 
IPR -Systemic Changes and Expectations Should Be Addressed 
--------------------------------------------- 
 
¶7. (SBU) IPR protection is an ever-present topic on our bilateral 
economic agenda, and Turkey currently sits on USTR's Special 301 
 
ANKARA 00000655  002 OF 003 
 
 
Priority Watch List.  Significant improvements have been made to 
Turkey's protection infrastructure (ref A), and they continue to 
make progress on harmonizing Turkey's legal infrastructure with EU 
requirements.  A number of problems, however, still remain.  U.S. 
pharmaceutical companies in Turkey continue to express concern about 
the remaining marketing applications for generic products filed 
prior to January 1, 2005, on which the Ministry of Health has not 
yet made a decision.  Indeed, in our meetings with MOH officials 
they have made it clear that their priority is to process the post 
2005 applications, both for generic and innovative drugs, and that 
many of the files for the generic applications in question have 
never been completed by the companies.  We do not anticipate that 
decisions will be made on these applications. However, U.S. 
companies continue to suffer from the resulting uncertainty. 
 
¶8.  (SBU) The Foreign Trade Undersecretariat eagerly cooperated with 
us to compile the requested information during the Advance Special 
301 review process (ref A).  We encourage USTR and EEB/IPE to 
respond to this information indicating the areas in which progress 
was positive, and areas in which more action is expected.  We 
propose creating an "IPR Action Plan" similar to the one developed 
for Greece that would provide Turkish policy makers with concrete 
indicators of success and a clear plan of what is expected by U.S. 
IPR policy makers.  We hope that the TIFA will provide the two sides 
with an opportunity to have a broader discussion of IPR protection 
that goes beyond pharmaceutical data exclusivity and the generic 
applications still awaiting a decision (ref B). 
 
Distilled Spirits 
----------------- 
 
¶9.  (SBU) Little has been done to rectify the preferential treatment 
given to raki manufacturers in Turkey since our discussion of this 
issue in the 2006 TIFA.  The issue is the same - raki is classified 
differently than other distilled spirits and therefore is taxed and 
priced lower than other alcoholic beverages. In addition, distilled 
spirit importers are required to get separate licenses from two 
unrelated Turkish agencies, a time consuming and frustrating 
process. 
 
Government Procurement 
---------------------- 
 
¶10.  (SBU) We believe that it could be worthwhile to encourage the 
Turkish delegation to move from observer status to full member of 
the WTO Agreement on Government Procurement.  Turkish firms, 
particularly in the construction sector, are anxious to compete for 
other governments' projects, especially those related to 
construction.  At the same time, U.S. companies complain frequently 
to us about the obstacles they face bidding on Turkish government 
contracts. An argument can also be made that gaining access to U.S. 
public tenders could provide an alternative market for Turkey's 
well-established general pharmaceutical manufacturers that have 
traditionally taken advantage of gaps in Turkish IPR protection.  If 
Turkey is not willing to join the WTO Government Procurement 
Agreement because of fears of competition from other non-U.S. 
countries, we may wish to offer to negotiate a bilateral agreement 
on government procurement. 
 
 
Doha Round 
---------- 
 
¶11. (SBU) Turkey does not have a unified position when it comes to 
WTO issues but rather chooses to side with developed countries in 
NAMA discussions and developing countries on agricultural issues. 
For this reason, Turkey has not been a constructive participant in 
WTO negotiations.  USTR may wish to encourage a more flexible 
position on agricultural issues given Turkey's potential as a 
producer of manufactured products.  Turkish officials will 
undoubtedly raise their interest in special safeguard measures in 
the textile sector. 
 
Likely Turkish Issues 
--------------------- 
 
¶12.  (SBU) Iron and Steel:  According to FTU officials, they plan to 
raise iron/steel dumping investigations during the TIFA talks. 
Atilla Bastirmaci, Head of America's Department, said Turkey 
understands that U.S. iron and steel manufacturers have recently 
called for new investigations into past U.S. iron/steel imports 
because these manufacturers believe that investigations conducted 
during the last three to four years were not done in the appropriate 
way.  He added that such new investigations could affect 
approximately one quarter of Turkish exports to the U.S. during this 
 
ANKARA 00000655  003 OF 003 
 
 
time period. 
 
¶13. (SBU) Regional Initiatives:  The U.S. delegation should be 
prepared to discuss the proposed "Joint Production Opportunities" 
concept raised by EEB A/S Sullivan and MFA U/S Apakan during the 
February Economic Partnership Commission (EPC) meeting.  The GOT 
sees this proposal as a replacement for including Turkey in 
Qualified Industrial Zones (QIZs) and thus will need to be apprised 
of what can and cannot be done under such an arrangement. 
 
¶14. (SBU) GSPs:  The Turkish delegation will likely raise Turkey's 
participation in the Generalized System of Preferences (GSPs) and 
request an update following last year's decision to temporarily 
extend the current arrangements. 
 
Meeting Logistics 
----------------- 
 
¶15. (SBU) FTU officials have asked whether Deputy U/S Guzel should 
be prepared to give a detailed presentation on the Turkish economy 
or a more brief introduction that addresses the bilateral trade 
relationship.  In addition, they asked if Deputy U/S Guzel and 
A/USTR Donnelly would participate for the full day or only for a 
morning session. 
 
Comment 
------- 
 
¶15. (SBU) We look forward to the fifth U.S.-Turkey TIFA and stand 
ready to assist with the preparations. Turkish officials, ever 
mindful of protocol, will not begin to develop their delegation 
until they find out the composition of the U.S. delegation and the 
topics for discussion.  In order to encourage broad Turkish 
participation, we should present to FTU officials the U.S. 
delegation as soon as possible so that they can begin urging their 
colleagues from other agencies to attend.  End comment. 
 
MCELDOWNEY