VZCZCXRO2068
RR RUEHAG RUEHDF RUEHIK RUEHLZ RUEHROV
DE RUEHAK #1017/01 1210647
ZNR UUUUU ZZH
R 010647Z MAY 07
FM AMEMBASSY ANKARA
TO RUEHC/SECSTATE WASHDC 1905
INFO RUEHRC/USDA FAS WASHDC
RUCPDOC/USDOC WASHDC
RUEHIT/AMCONSUL ISTANBUL 2603
RUEHDA/AMCONSUL ADANA 1903
RUCNMEM/EU MEMBER STATES COLLECTIVE

UNCLAS SECTION 01 OF 04 ANKARA 001017 
 
SIPDIS 
 
FAS/W FOR ITP 
USDOC FOR ITA/MAC/OECA/CRUSNACK, JKIMBALL 
STATE PLEASE PASS USTR FOR SDONNELLY AND LERRION 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ETRD EAGR KIPR TU
SUBJECT: TURKEY: FIFTH TIFA TALKS SEE CONSTRUCTIVE DIALOGUE ON 
ISSUES 
 
Ref: A) 06 State 183957 
     B) Ankara 128 
     C) Ankara 655 
 
ANKARA 00001017  001.2 OF 004 
 
 
This information is sensitive but unclassified.  Please protect 
accordingly. 
 
¶1. (SBU) Summary:  The fifth meeting of the U.S.-Turkey Trade and 
Investment Framework Agreement (TIFA) Council meeting convened April 
12 - 13 in Washington, D.C.  The issue-packed agenda included 
substantive discussions on agricultural market access, the Doha 
Round, the Generalized System of Preferences (GSP) program, IPR 
protection, U.S. anti-dumping cases, Technical Barriers to Trade, 
and Joint Production Opportunities.  The delegations agreed to 
reexamine Turkish import requirements for U.S. livestock products if 
the OIE rules that there is no longer a BSE risk and to discuss in 
more detail a recent requirement that all distilled spirits in 
Turkey be registered and strip stamped.  The contacts formed and the 
channels of communication opened through the TIFA will encourage 
continued  dialogue on these issues throughout the coming year.  End 
summary. 
 
¶2. (SBU) The fifth meeting of the U.S.-Turkey Trade and Investment 
Framework Agreement (TIFA) Council convened April 12 - 13 in 
Washington, D.C.  Assistant USTR for Europe and the Middle East 
Shaun Donnelly led the U.S. delegation, which included 
representatives from USTR, the Departments of State, Commerce, and 
Agriculture and the U.S. Patent and Trademark Office, as well as 
Embassy Ankara.  GOT Foreign Trade Deputy Under Secretary Ulker 
Guzel led the Turkish delegation, which included representatives 
from the Undersecretariat for Foreign Trade (FTU), and the 
Ministries of Agriculture, Foreign Affairs, Finance and Culture and 
Tourism.  The meetings convened for a full day on April 12 followed 
by an April 13 morning session for the Turkish delegation to meet 
with U.S. company representatives from the agriculture, 
pharmaceutical, medical devices, distilled spirits, and financial 
services sectors. 
 
Agricultural Market Access 
-------------------------- 
 
¶3. (SBU) During the discussion on market access in Turkey for U.S. 
agricultural products, Robert Curtis from USDA pointed to a recent 
collaborative effort to solve an issue related to Turkish imports of 
U.S. pet food as an example of the cooperation that results with 
each TIFA.  Previous positive developments aside, Curtis argued that 
the Turkish Ministry of Agriculture and Rural Affairs' (MARA) 
continuing lack of transparency for testing and import regulations, 
especially for livestock products, result in a de facto ban on U.S. 
products.  In addition, he argued that Turkey had not fulfilled its 
requirements to notify the WTO Sanitary and Phyto-sanitary (SPS) 
Committee of changes to SPS regulations.  He noted that the costs 
borne by the U.S. exporters to have inspection facilities in the 
U.S. inspected by MARA officials were prohibitive.  He requested a 
list of the import requirements for livestock products and added 
that better communication would aid progress on these issues. 
 
¶4. (SBU) Turkish embassy Agriculture Counselor Mehmet Cagil 
responded by asserting that Turkey does not import U.S. beef because 
of the instances of BSE found in U.S. cattle several years ago.  He 
added, however, that MARA is awaiting OIE's May 20 - 25 meeting, 
during which they anticipate OIE will make a ruling about the 
current risk of U.S. products.  He suggested that, if the OIE 
guidelines permit, MARA would begin issuing import licenses for U.S. 
products.  He added that Turkey continues to have concerns about 
incidences of Avian Influenza in U.S. poultry and must review import 
regulations further.  Jim Butterworth, a USDA SPS expert, noted that 
Turkey's restrictions on U.S. products appear more stringent than 
OIE regulations require and added that the EU is importing U.S. 
products. 
 
¶5. (SBU) Curtis also raised Turkey's recent increase in soybean 
import tariffs from 0 - 10%.  Turkish FTU DDG for Multilateral 
Affairs, Hasan Yalcin, observed that the increase is within Turkey's 
bound tariff rates in the WTO and defended tariff increases as 
Turkey's only means of assisting its agriculture sector since it 
cannot afford to provide domestic subsidies.  AUSTR Donnelly 
observed that the goal in the Doha Round is tariff reduction and an 
overall restructuring of international agricultural trade policy. 
The Turkish side requested assistance in moving Turkey up as an 
APHIS priority so that it can be approved to export more fruits and 
vegetables to the U.S.  The USDA representatives agreed to discuss 
this with APHIS. 
 
ANKARA 00001017  002.2 OF 004 
 
 
 
Doha/NAMA Textiles Proposal 
--------------------------- 
 
¶6. (SBU) AUSTR Donnelly stated that Doha is the highest trade 
priority of the U.S. and that USTR Schwab encourages the full 
participation of developing countries.  Doha is vitally important to 
the future of world trade.  Yalcin encouraged U.S. support for 
Turkey's textile proposal put forward during the NAMA discussions. 
Turkey believes  the proposal provides a balanced approach for the 
participation and preservation of textile markets in developing and 
developed countries.  USTR Chief Textile Negotiator Scott 
Quesenberry explained the constraints of Trade Promotion Authority, 
which is set to expire on June 30, and some of the sectoral 
requirements contained therein, including a provision that the U.S. 
seek reciprocal textile market access as part of any agreement.  He 
applauded Turkey's constructive role to achieve an equitable textile 
sectoral and said that that USTR is currently considering several 
proposals regarding textiles.  A resolution on agriculture at Doha 
could mean more progress on NAMA issues such as textiles. 
 
Generalized System of Preferences 
--------------------------------- 
 
¶7. (SBU) USTR's director of the GSP program, Marideth Sandler, 
described the discussions among U.S. policymakers which preceded the 
most recent renewal of the GSP program and described the program's 
importance for both foreign and domestic industries.   The two sides 
discussed the outlook for the competitive need limit waiver (CNL) 
that Turkey currently has for gold jewelry and the strong likelihood 
that it will be revoked in 2 years.  The Turkish delegation was 
provided with a one-page overview of the program designed to educate 
exporters who may not already be taking advantage of the benefits 
and encouraged to work with exporters to find new products within 
the GSP-qualified categories that Turkey could export to the U.S. 
 
Intellectual Property Rights 
---------------------------- 
 
¶8. (SBU) USTR director for Intellectual Property, Jennifer Choe 
Groves, noted the Turkish government's improvements in enforcement 
and data protection for pharmaceuticals.  She added that USTR 
sincerely wants to see Turkey's position on the Special 301 Priority 
Watch List improve and believes that this is in Turkey's control to 
achieve.  She reiterated points previously delivered during the 
Advance Special 301 review (refs A and B), including U.S. interest 
in the outcome of the generic drug applications filed prior to the 
January 1, 2005 start of Turkey's new data exclusivity law, the need 
for a stronger patent linkage system to prevent copies of 
pharmaceutical products with valid patents from receiving marketing 
approval, enforcement and prosecution of book piracy, and the use of 
certified software by Turkish government agencies. 
 
¶9. (SBU) On the pharmaceutical issue, Turkish FTU representatives 
argued that there are 12-15 generic applications filed prior to 
January 1, 2005, which are still pending before the Turkish Ministry 
of Health (MOH) and which are reportedly completed.  They explained 
that the remainder of the applications have not been completed by 
the generics companies and therefore cannot be acted upon at this 
time.  Turkish law does not have a time limit by which pending 
applications must be completed and reviewed so these applications 
could be pending indefinitely. 
 
¶10. (SBU) On the issue of patent linkage, there are presently no 
plans to change the existing legislation to create a different 
patent linkage system.  Turkish representatives argued that, because 
such a system is not an international or EU requirement, they do not 
see a compelling reason to add linkage to their current system.  In 
the Turkish system, a company applying for marketing approval of a 
pharmaceutical product must prove as part of the application process 
that there are no existing patents and Turkish judges have the 
ability to immediately stop the sales of a disputed product.  USTR 
responded that the U.S. would prefer a system that publicized the 
applications in the national gazette, thus making it more 
transparent, and provided the patent-holder with recourse prior to 
the issuance of marketing approval. 
 
¶11. (SBU) Addressing the enforcement and prosecution of book piracy, 
Turkish Ministry of Culture and Tourism (MOCT) Director General 
Selahattin Ertas provided statistics (reported in ref B) showing a 
dramatic decrease in street sales.  He acknowledged that court 
proceedings were too long but noted that the number of specialized 
IPR courts, judges and prosecutors has increased, and these judges 
 
ANKARA 00001017  003.2 OF 004 
 
 
and prosecutors as well as Ministry officials are participating in a 
number of twinning projects with the EU to train judges, prosecutors 
and law enforcement officials.  A database for published goods 
should be completed by the end of 2007, which will require 
registration of goods by rights holders, a point that concerned USTR 
and EEB/IPE representatives. 
 
¶12. (SBU) Regarding government use of pirated software in Turkey, 
the Turkish delegation regretted not having statistics available. 
Each agency is responsible for enforcing the Prime Ministerial 
decree prohibiting such use, which is still in force.  They added 
that Microsoft is active in the Turkish market and recently began a 
new certification program.  To the delegation's knowledge, the use 
of pirated software by the GOT is not a significant problem. 
 
Iron and Steel Anti-Dumping 
--------------------------- 
 
¶13. (SBU) The Turkish delegation reiterated the views of Foreign 
Trade Minister Tuzmen in his letter to Commerce Secretary Gutierrez 
hoping that the U.S. will not take into consideration as part of its 
anti-dumping case against Turkey a finding of the Turkish 
Competition Authority on a domestic anti-trust suit.  Katja 
Kravetsky, Special Assistant to the Commerce Deputy Assistant 
Secretary for AD/CVC Operations,  responded that they are still 
 
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conducting this investigation and must look at this report to ensure 
the reliability of the Turkish respondents, whose responses were due 
by April 11.  Kravetsky said they would be looking into the issue 
and the companies' responses provided to the questionnaire on the 
issue when the investigators visit the Turkish companies.  Turkish 
officials added that the anti-trust finding was for the period 2000 
- 2004 while the anti-dumping case covers the period from 2005 - 
¶2006.  According to Turkish officials, the Turkish Competition 
Authority issued another report in 2006, finding no collusion in the 
iron and steel sector.  Kravetsky replied that the Turkish companies 
should make sure that this information is submitted on the 
administrative record of the proceeding. 
 
Distilled Spirits 
----------------- 
 
¶14. (SBU) Commerce's Director for Central and Southeastern Europe, 
Jonathan Kimball, raised discriminatory taxation of imported whiskey 
in comparison to domestically produced Turkish raki, which Commerce 
believes is a direct substitute, a practice that may violate GATT 
Article 3, Paragraph 2.  Mehmet Erkan from the Turkish Ministry of 
Finance explained Turkey's distilled spirit taxation system, which 
allows for the imposition of two types of taxes - a special 
consumption tax or a minimum specific tax rate per liter of alcohol. 
 Kimball noted that U.S. industry's concern is that the minimum 
specific tax - which is lower for Turkish raki than for whiskey, 
rum, vodka etc. - is the tax most often levied on distilled spirits. 
 Kimball also encouraged passage of the draft legislation that would 
shorten the timeframe for obtaining a distilled spirit import 
license and increase the transparency of the process. 
 
¶15. (SBU) Kimball raised a new issue concerning a March 15 notice 
from the Ministry of Finance that as of June 19, 2007, all distilled 
spirits in Turkey will require a registered strip stamp, ostensibly 
to combat counterfeits (dangerous to the public's health) from 
entering the market.  Erkan explained that the GOT considers this a 
service rather than taxation because the government will not receive 
any payment from the strip stamps, which a private contractor will 
apply to imported spirits.  Turkish companies producing spirits will 
apply the stamps at their factories.  Kimball noted, however, that 
the new system appears to violate GATT Article 3, Paragraph 3, 
requiring national treatment because importers are required to pay 
six times as much as domestic producers for their stamps.  Erkan 
replied that the cost was necessary to offset the costs of building 
and operating the private facilities in which imported spirits will 
be stamped.  Kimball asked if the Ministry of Finance would be 
willing to discuss the effect of the system directly with U.S. 
distilled spirits exporters and cautioned that trade could be 
disrupted before the problems are resolved.  Erkan agreed to meet 
with interested U.S. companies when he returns to Ankara.  Deputy 
U/S Guzel promised a speedy response to the letter about strip 
stamps signed by A/USTR Donnelly and Commerce A/S Bohigian and to 
discuss this issue at greater length internally. 
 
"Joint Production Opportunities" 
-------------------------------- 
 
¶16. (SBU) The Joint Production Opportunities (JPO) agenda item, a 
 
ANKARA 00001017  004.2 OF 004 
 
 
concept theorized by EEB A/S Sullivan and Turkish officials during 
the recent Economic Partnership Commission (EPC) meeting, elicited 
curiosity from the Turkish officials.  FTU Representatives argued 
that any such initiative should be private sector driven and opined 
that the concept was being championed by TOBB because of its 
lingering interest in the QIZ concept, which the GOT is no longer 
pushing.  USTR's Director for Middle East Affairs Ned Saums 
described the QIZ program and discussed both why it is not feasible 
to consider expanding it to include Turkey and why it is not 
applicable to the Erez industrial zone in Gaza where Turkish 
companies have established production.  There was some general 
discussion of how U.S. and Turkish firms should cooperate more on 
agriculture by using U.S. technology and expertise to process food 
in Turkey for sale in Turkey and the region.  AUSTR Donnelly closed 
by observing that any discussions related to Turkish firms' desire 
for preferences should be treated very carefully given the political 
sensitivity of these issues. 
 
WTO Rice Case 
------------- 
 
¶17. (SBU) FTU DDG Hasan Yalcin raised the ongoing case challenging 
Turkey's rice import procedures that the U.S. brought before the WTO 
Dispute Settlement Body (DSB).  He expressed the Turkish view that 
they had done what was requested by the U.S. to rectify the problems 
faced by U.S. exporters and, therefore, they believe there is no 
need to continue with the case at the DSB.  AUSTR Donnelly responded 
that the U.S. does not believe that the GOT has been ready to enter 
into an agreement that would lay to rest the concerns of U.S. 
producers and warrant the dropping of the case.  He noted that the 
interim DSB report is due to be released to the two sides on May 3 - 
4, but promised to communicate Turkey's concerns to U.S. officials 
involved in the case for consideration. 
 
Dialogue Deepens Understanding 
------------------------------ 
 
¶18. (SBU) Comment:  Both sides praised the government and private 
sector meetings for their level of detail and constructive tone. 
Each side came well-prepared to discuss several long-standing issues 
of concern.  While no substantive solutions were found, contacts 
were made and the lines of communication were opened in such a way 
that less formal discussion can continue throughout the coming year, 
helping lead to positive results.  End comment. 
 
WILSON