VZCZCXYZ0000
OO RUEHWEB

DE RUEHAK #1182/01 1801418
ZNR UUUUU ZZH
O 281418Z JUN 08
FM AMEMBASSY ANKARA
TO SECSTATE WASHDC IMMEDIATE 6687

UNCLAS ANKARA 001182 
 
SENSITIVE 
SIPDIS 
 
DEPT PLEASE PASS TO USTR 
 
E.O. 12958: N/A 
TAGS: ECON ETRD PREL TU
SUBJECT: TURKEY GSP WAIVER REVIEW 
 
REF: STATE 69109 
 
¶1. (SBU) Summary:  Ambassador carried out reftel instructions 
regarding Turkey's Generalized System of Preferences (GSP) 
eligibility for gold jewelry with MFA U/S Apakan by phone 
June 27 and in person June 28.  Apakan reaffirmed the 
positions stated in Foreign Trade Minister Tuzmen's April 8, 
2008 letter to USTR Ambassador Schwab.  Apakan said that 
removing GSP benefits from Turkish gold jewelry exports would 
undercut improving public perceptions of the US and of 
US-Turkish relations, and would adversely affect jewelry 
producing beneficiaries in Turkey's impoverished southeast. 
End Summary. 
 
¶2. (SBU) Meeting with Apakan on June 28, Ambassador reviewed 
the main points of their telcon the day earlier, and he 
walked Apakan through the facts and arguments contained in 
reftel.  Ambassador highlighted US concern to administer the 
GSP program in a consistent, rules-based way that will 
protect it against any WTO challenge and ensure continued 
Congressional support.  He noted that the recommendations 
being considered in Washington do not envision Turkey's 
removal from the GSP program, as had been discussed in 
2006-07.  In fact, an additional product, copper cables and 
plaited bands, is being approved for a competitive needs 
limitation (CNL) waiver.  We want to protect the overall 
program, and the jewelry CNL revocation being considered was 
a step to do that. 
 
¶3. (SBU) Apakan expressed appreciation for the benefits 
Turkey continues to receive under GSP, for the news about 
copper products, and for the opportunity to comment prior to 
a US decision on the gold jewelry CNL.  He said that Turkey's 
position remains as stated by Foreign Trade Minister Tuzmen 
to USTR Ambassador Schwab in writing on April 4.  He noted 
key points in Tuzmen's letter. 
 
-- Turkey has significantly improved its market access for US 
products and provides some of the lowest tariff rates for US 
industrial goods in comparison with other top ten GSP 
beneficiary countries.  A jewelry waiver revocation would 
likely open the market to such suppliers as China, Hong Kong 
and Italy rather than the least-developed countries the GSP 
program would like to target more. 
 
-- Turkish jewelry products do not compete directly with US 
jewelry products and provide critical inputs for American 
wholesalers, who often re-export Turkish items to other 
countries. 
 
-- While the dollar value of Turkish jewelry exports to the 
US has increased, the volume has actually decreased by 17 
percent over the past three years.  Rising gold prices mask a 
decline in overall sales that should be taken into account. 
 
¶4.  (SBU) Apakan expressed concern about the impact of a 
jewelry CNL revocation on US-Turkish relations.  Our ties and 
the Turkish public's perception of them have been improving. 
While the dollar amount at stake is relatively small, this 
policy change will be viewed negatively by the Turkish 
public.  It will be "counterproductive," and Turkey asks that 
the CNL waiver be continued.  It was also noted that while 
much of gold jewelry exported to the US is produced in 
Istanbul, small-medium size jewelry producers in such cities 
of Turkey's impoverished southeast as Sanlifurfa, 
Kahramanmaras and Gaziantep have gained access to American 
market via GSP.  They will be adversely affected by its 
revocation.  This would contradict the mutually agreed 
interest in stimulating SME development that was discussed in 
the April Economic Partnership Commission meetings in 
Washington and would be unhelpful as the government seeks to 
bolster development and trade in the country's troubled 
southeast.  Turkey asks, Apakan concluded, that the US keep 
GSP as it is, including with regard to Turkish exports of 
gold jewelry. 
 
¶5. (SBU) In post's view, a CNL revocation for Turkish gold 
jewelry will generate substantial negative press for the US 
and undermine the improvements made over the last nine months 
in the abysmal public "approval" rating the US typically 
receives in Turkey.  It will undercut successful work done 
here, and those Turks who have advocated for us, to improve 
US market access -- e.g., for live cattle and certain 
alcoholic beverages -- and to secure better IPR protections. 
We judge that there will be little or no specific impact on 
our collaboration on such foreign policy priorities as Iraq, 
Iran, the Middle East, energy, terrorism, etc., at least as 
long as the present government remains in office, and that 
the broader political-economic impact in Turkey will be 
marginal. 
Visit Ankara's Classified Web Site at 
http://www.intelink.sgov.gov/wiki/Portal:Turk ey 
 
WILSON