VZCZCXRO8351
PP RUEHDA
DE RUEHAK #1688 2661418
ZNR UUUUU ZZH
P 221418Z SEP 08
FM AMEMBASSY ANKARA
TO RUEHC/SECSTATE WASHDC 7523
INFO RUCPDOC/USDOC WASHDC PRIORITY
RUEHMO/AMEMBASSY MOSCOW 5640
RUEHIT/AMCONSUL ISTANBUL 4778
RUEHDA/AMCONSUL ADANA 3255

UNCLAS ANKARA 001688 
 
USDOC FOR ITA/MAC/CRUSNAK 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECON ETRD TU
SUBJECT: TURKEY-RUSSIA SIGN CUSTOMS DEAL TO RESOLVE TRADE DISPUTE 
 
Ref: Moscow 2697 
 
1.(SBU) Summary: Turkey and Russia signed a Customs Protocol 
September 18 to resolve a two-month long trade dispute between 
Turkish exporters and Russian Customs (see reftel) that cost Turkish 
exporters USD 500 million.  The protocol would simplify Russian 
customs procedures for those exporters who, on a voluntary basis, 
agree to notify Russian authorities in advance about the content of 
their shipments.  Turkish exporters, however, believe this procedure 
will disadvantage them with Russian importers (who insist on 
under-invoicing) and that the "voluntary" advance declaration will 
become a prerequisite for all shipments. Although both countries 
denied the dispute was political, the timing of the Russian customs 
measures -- starting days before the Georgia invasion -- has left 
many Turks with the impression that this was a warning that Turkey's 
exports can be disrupted whenever Russia wishes.  End Summary. 
¶2. (SBU) The governments of Russia and Turkey signed a "Simplified 
Customs Line Protocol" on September 18to resolve a trade dispute 
that has been ongoing since July.  Turkish exporters had their 
shipments delayed by 20-30 days by detailed inspections at Russian 
ports of entry.  The inspections were first focused on shipments 
directly from Turkey, but then were extended to cover all Turkish 
origin goods.  The tension between the two countries peaked on 
August 28, when Turkish Trade Minister Tuzmen announced that Turkey 
would start red-line inspections on Russian goods, as retaliation, 
but he was overruled by the Council of Ministers.  Instead, the GOT 
brought raised this issue with Russian Foreign Minister Lavrov 
during in his visit to Turkey on September 2.  Lavrov denied Russia 
was discriminating against Turkish goods.  The Head of the Russian 
Federal Customs Service visited Turkey on September 5, and declared 
the two sides were working on a simplified customs procedures system 
to resolve Turkish exporters' problems. 
3.(SBU) Turkish State Minister responsible for Customs Hayati Yazici 
declared on September 19 that Turkey and Russia had signed a 
Simplified Customs Line Protocol, which would provide for "VIP 
treatment" to Turkish exporters who sent prior shipment declarations 
to Russian customs.  Yazici noted that the implementation was 
voluntary but described it as "the best possible deal" that could be 
signed with Russia. .  Commenting on the reasons underlying the 
recent dispute, Yazici said customs duties accounted for a 
significant portion of Russian budget income, and the authorities 
wanted to prevent tax evasion caused by unregistered and improperly 
declared imports. 
¶4. (SBU) The protocol removes six categories of Turkish goods from 
the risk profile, meaning these will be exempt from 100% screening 
at Russian customs: cement, fertilizers, automobile parts, 
non-aluminum metals, paperboard and articles, and toys.  According 
to the protocol, companies providing their transport documents to 
Russian Customs ahead of time will not be subject to physical 
search.  Russian Customs will prioritize those companies providing 
their invoice and tariff details, in addition to the transport 
information.  Such companies will also be able to make use of bank 
guarantees in their foreign trade operations. 
5.(SBU) Turkish exporters were not satisfied with the protocol. 
Their main concern is that the "voluntary" implementation will turn 
into a requirement, and that those not providing their documents to 
Russian Customs in advance will continue to suffer weeks of delay at 
the border.  The exporters also complain that the implementation 
will hurt demand for Turkish goods in Russia, due to increased costs 
with full customs declarations. Turkish exporters claim the Russian 
importers ask them to price their goods at lower values in their 
invoice, in order to avoid the tax burden. Turkish Exporters' 
Association (TIM) responded cautiously to the protocol.  TIM 
President Mehmet Buyukeksi said they would watch the implementation 
to see if it addressed the Turkish exporters' problems.  Buyukeksi 
noted that Russia claimed it would implement the same system with 
all its trade partners, which Turkey would want to see happen to 
avoid having its exports discriminated against for complying. 
6.(SBU) Comment: Turkish authorities estimate the cost to Turkish 
exporters of this two-month trade dispute at approximately USD500 
million.  Although the authorities in both countries denied the 
dispute was political, the timing of the Russian customs measures -- 
starting days before the Georgia invasion -- has left many Turks 
with the impression that this was also a warning that Turkey's 
exports to Russia can be disrupted whenever Russia wishes, at high 
cost to Turkish companies.  End comment. 
 
WILSON