VZCZCXRO3632
RR RUEHAG RUEHAST RUEHDA RUEHDF RUEHFL RUEHIK RUEHKW RUEHLA RUEHLN
RUEHLZ RUEHNP RUEHPOD RUEHROV RUEHSK RUEHSR RUEHVK RUEHYG
DE RUEHAK #0117/01 0231337
ZNR UUUUU ZZH
R 231337Z JAN 09
FM AMEMBASSY ANKARA
TO RUEHC/SECSTATE WASHDC 8553
INFO RUEHRC/USDA FAS WASHDC
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEHIT/AMCONSUL ISTANBUL 5274
RUEHDA/AMCONSUL ADANA 3550
RUEHZL/EUROPEAN POLITICAL COLLECTIVE

UNCLAS SECTION 01 OF 06 ANKARA 000117 
 
FAS FOR MICHAEL SMITH 
COMMERCE FOR ITA/MAC CRUSNAK AND KNAJDI 
DEPT PLEASE PASS USTR FOR CWILSON, MMOWREY, AND 
RWENTZEL 
DEPT FOR EUR/SE DMARSH, EEB/TPP DCITRON, JSHANNON AND 
JURBAN 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ETRD EAGR ECON KIPR TU
SUBJECT: SIXTH TIFA ADVANCES TRADE DIALOGUE WITH 
TURKEY 
 
Ref: A) ISTANBUL 32, B) 08 ANKARA 1471, C) 08 ANKARA 
2175, D) 08 ANKARA 2191, E) ANKARA 48 
 
ANKARA 00000117  001.2 OF 006 
 
 
This information is sensitive but unclassified. 
Please protect accordingly. 
 
¶1. (SBU) Summary:  The sixth meeting of the U.S.- 
Turkey Trade and Investment Framework Agreement 
(TIFA) Council held January 13 in Ankara was an 
opportunity for the U.S. and Turkey to discuss ways 
to further advance the bilateral trade relationship 
and to enhance cooperation in regional efforts.  The 
delegations examined various IPR issues and 
agricultural and commercial market access concerns, 
but also spent time exploring possibilities for 
cooperation in third countries and at the WTO.  Both 
sides left with a greater understanding of the 
other's views and a renewed interest in cooperating 
on trade and investment issues.  End summary. 
 
¶2. (SBU) The sixth meeting of the US-Turkey Trade and 
Investment Framework Agreement (TIFA) Council 
convened January 13 in Ankara, following a meeting 
with the U.S. business community in Istanbul on 
January 12 (Ref A).  Assistant USTR Christopher 
Wilson led the U.S. delegation, which included 
representatives from USTR and the Departments of 
State, Commerce and Agriculture.  GOT Foreign Trade 
Deputy Undersecretary Ulker Guzel led the Turkish 
delegation, which included representatives of the 
Ministries of Health, Culture and Tourism, Justice, 
Finance, Agriculture and Foreign Affairs, the Turkish 
Patent Institute (TPI), and the Union of Chambers and 
Commodity Exchanges of Turkey (TOBB). 
 
¶3. (SBU) Guzel opened the meeting with a discussion 
of how Turkey has moved from a relatively closed 
economy to one led by export growth in a range of 
diversified products and markets, with total trade 
now at USD 330 billion per year (of which 16.2 
billion is with the United States).  She also noted 
the recent shift in trade with the U.S., with exports 
to the U.S. on the decline and imports shooting up 
sharply.  Explaining this as mostly a function of the 
dollar-lira rate, she worried that the global crisis 
would offset the export gains that Turkey would 
normally expect from the now weaker lira.  She noted 
that Turkey's chief concerns for the bilateral trade 
relationship involve continuation of Turkey's 
participation in the Generalized System of 
Preferences (GSP), the implementation of the 
Container Security Initiative (CSI) and/or the Secure 
Freight Initiative (SFI), and the eventual removal of 
Turkey from the Special 301 Watch List. 
 
¶4. (SBU) Noting that the U.S.-Turkey TIFA was now in 
its tenth year, Wilson congratulated Turkey on the 
impressive improvements in its regulatory environment 
over that period.  He also described the timing of 
the meeting as opportune, taking place just one week 
before the transition to a new U.S. administration. 
He noted that the ten-year mark is also a good time 
to think about how to move the TIFA talks from being 
a meeting focused on trade complaints to a strategic 
discussion about how to deepen the trade 
relationship. 
 
---------------------------- 
Effects of the Global Crisis 
---------------------------- 
 
¶5. (SBU) Both sides discussed how the crisis is 
impacting their domestic economies.  Yuksel Akca, DDG 
of Agreements at the Foreign Trade Undersecretariat 
(FTU), observed that while Turkey was initially 
shielded from the crisis by the banking reforms it 
undertook in 2002, the crisis' effects began to show 
in the fourth quarter 2008.  Exports decreased 14.7 
percent in Q4 2008, while imports fell 21.6 percent 
(partially as a result of lower energy prices).  The 
 
ANKARA 00000117  002.2 OF 006 
 
 
automotive sector (35.4 percent decrease), textile 
sector (25.4 percent), and hazelnut exporters (38.3 
percent) were especially hard hit.  After years of 
steady growth, expectations are that growth will be 
flat at best in 2009. 
 
¶6. (SBU) Wilson described the U.S. policy response to 
the economic crisis to date and stressed that pains 
were taken to ensure that stimulus and bailout 
programs did not violate WTO commitments.  He urged 
Turkey to continue in its commitment to the G20 
declaration on avoiding new protectionist measures in 
this time of crisis.  The Turkish side was especially 
concerned about the automaker bailout, and noted that 
they would be following it carefully to ensure that 
it complied with the WTO.  While they acknowledged 
that Turkish auto exports and imports to/from the 
U.S. are negligible, they pointed out that Turkish 
products compete with U.S. goods in third countries, 
and that the bailout could negatively impact their 
trade in those markets. 
 
--------------------------------- 
Intellectual Property Rights (IPR) 
--------------------------------- 
 
¶7. (SBU) Representatives from the Ministry of 
Justice, Ministry of Culture and Tourism, Customs 
Undersecretariat, and the Turkish Patent Institute 
(TPI) gave presentations on improvements in the IPR 
regime, most of which were reported in Refs B and C. 
 
¶8. (SBU) Hulya Erbay, Customs Department Head, noted 
that three months after the new Customs Law is 
approved the GOT will enable a central, electronic 
database for rights holders to register their 
products (Note: The infrastructure is already in 
place pending approval of the law).  Registration 
will only need to be done once per year, and 
application can be made online or on paper to Customs 
HQ in Ankara.  Customs officers around Turkey will be 
able to access the database online, easing the 
identification of violations.  The data collected 
will also be analyzed to help target enforcement 
efforts. 
 
¶9. (SBU) Serkan Ozkan, Patent Expert at TPI, provided 
highlights of the new Patent Law, which is still 
pending.  When passed, it will: provide clarification 
on biotech patents, eliminate the non-examined patent 
system, move to an after-grant opposition system, 
improve the ability to conduct novelty search 
reports, and make allowances for re-establishment of 
rights lost due to missed due dates.  Wilson welcomed 
these developments and urged passage of the law at 
the earliest opportunity, but expressed concern about 
provisions in the patent law that would restrict 
patent rights in free trade zones, make compulsory 
licensing easier, and reduce some penalties for 
infringement.  The Turkish side responded that the 
lighter penalties would be applied to sellers, but 
that penalties would be increased for producers of 
infringing goods, reflecting a philosophical change 
in their enforcement focus. 
 
¶10. (SBU) With regard to the cancellation of 
trademark cases reported in Refs D and E, Judge Hulya 
Cetin from the Ministry of Justice clarified that 
both previously adjudicated cases and the 9000 
pending cases will be considered under the "unfair 
competition" provision of the commercial code.  The 
new amendment to re-criminalize trademark violations 
was passed during the week following the TIFA. 
 
¶11. (SBU) Wilson inquired about a pending regulatory 
change proposed by the Ministry of Health that would 
remove data exclusivity protection for combination 
pharmaceutical products (products involving more than 
one drug) and reduce the testing requirements for 
these products.  Mahmut Tokac of the Ministry of 
 
ANKARA 00000117  003.2 OF 006 
 
 
Health denied that any change had been proposed, 
stated that European Union rules on combination 
products are unclear and that they are still awaiting 
a response from the EU.  He then followed this 
assertion by stating that the new regulation (which 
he had just denied existed) would "clarify" 
protections by limiting them just to "molecules" 
rather than the ill-defined "products."  Comment: 
Tokac's denial is bizarre, given that Post has a copy 
of the proposed regulation that was formally 
circulated to the pharmaceutical sector.  His 
statement on the EU position on combination products 
is also strange, as the European Commission sent a 
letter on December 17, 2008 explicitly stating that 
combination products are covered under EU Directives. 
Post will follow up for clarification, possibly in 
conjunction with the EC delegation in Ankara.  End 
comment. 
 
¶12. (SBU) Wilson noted that while Turkey's IPR regime 
has improved markedly, issues remain with book and 
software piracy as well as data exclusivity.  He 
offered to arrange videoconferences between USTR and 
Turkish IPR experts to look at issues of concern. 
 
--------------------------- 
Other Pharmaceutical Issues 
--------------------------- 
 
¶13. (SBU) In response to a U.S. concern about delays 
in the reimbursement of pharmaceutical products, the 
GOT noted that new legislation passed in October 2008 
should reduce administrative delays, but that the 
Social Security Administration is still implementing 
the changes.  Wilson urged the GOT to make the 
reimbursement procedure as transparent as possible. 
Wilson also requested clarification of a new rule 
requiring that labels on medical devices be written 
in Turkish as of January 1, 2009.  The GOT promised 
to send more information to USTR. 
 
------------------------- 
Cooperative Opportunities 
------------------------- 
 
¶14. (SBU) In line with Wilson's call for the TIFA to 
look beyond just the bilateral relationship, the two 
delegations looked at various opportunities for 
cooperation, especially at the WTO.  Hasan Yalcin, 
DDG of Agreements at FTU, noted that Turkey is 
preparing a summary of world literature on the impact 
of the removal of textile quotas for the WTO CTC 
(with the goal of addressing China's export 
practices), and asked for U.S. support and 
information for that project.  Wilson expressed 
support for information sharing, but cautioned that 
care should be taken to avoid the appearance of 
ganging up.  He also invited Turkey to consider 
joining as a co-complainant in any WTO case on 
Chinese export subsidies. 
 
¶15. (SBU) Yalcin also asked for U.S. support and 
information on a WTO dispute resolution case that 
Turkey is preparing on the EU's restrictions on boron 
imports, specifically the information gathered by Rio 
Tinto when it was considering bringing a case. 
Wilson noted that the boron restrictions are tied to 
the larger issue of the need for the EU to base its 
regulations on scientific research, which is also of 
concern to the U.S.  He undertook to investigate 
whether Rio Tinto would agree to share the 
information, but cautioned that it might be subject 
to confidentiality rules. 
 
¶16. (SBU) Yalcin further requested U.S. support for a 
Turkish proposal on road transit liberalization at 
the WTO.  Acknowledging that the U.S. has little 
direct interest, Yalcin argued that the U.S. should 
support the principle of liberalized transit and that 
the proposal would help U.S. exports and strategic 
 
ANKARA 00000117  004.2 OF 006 
 
 
interests in the landlocked countries of Central 
Asia.  Wilson promised to respond as soon as 
possible, with the caveat that additional 
conversations might be required on transit 
restrictions related to legitimate road safety 
considerations. 
 
¶17. (SBU) Yuksel Akca of FTU observed that U.S. and 
Turkish companies successfully cooperated on various 
construction projects in Iraq and Afghanistan and 
proposed looking at ways to deepen cooperation in 
construction projects in other third countries.  Mark 
Mowrey of USTR noted that the role of the U.S. 
Government as a provider of funds in Iraq and 
Afghanistan was unique and so the dynamic would be 
different in other countries, but Commercial 
Counselor said that he would look at ways to 
encourage U.S. companies to meet with prospective 
Turkish partners before undertaking work in countries 
such as Georgia and Azerbaijan.  He also promised to 
examine possibilities for holding a seminar for U.S. 
companies, similar to DOD seminars organized in the 
past. 
 
¶18. (SBU) Akca also noted that Turkey would like to 
invite (at GOT expense) USG speakers on a variety of 
topics to give seminars to Turkish officials 
businessmen on how to do business with the U.S.  He 
noted that there is significant interest in U.S. 
customs procedures, agriculture regulations (esp. 
fruits and vegetables), consumer safety rules, and 
the Generalized System of Preferences.  Wilson 
welcomed the concept and asked for a detailed 
proposal with dates, times, and topics. 
 
------------------- 
Agricultural Issues 
------------------- 
 
¶19. (SBU) Roger Wentzel of USTR thanked Turkey for 
the agreement to allow imports of live female 
breeding cattle and the recent agreement on a similar 
protocol for bulls.  He noted with concern, however, 
that there continue to be reports of frequent delays 
in the issuance of control certificates for 
agricultural imports (often coinciding with the 
domestic harvest season for a given product), which 
should be a nearly automatic process.  He also urged 
Turkey to be more diligent in notifying sanitary and 
phytosanitary (SPS) and technical barriers to trade 
(TBT) regulation changes to the WTO. 
 
¶20. (SBU) Ministry of Agriculture and Rural Affairs 
(MARA) representatives insisted that control 
certificates are issued in a timely manner, noting 
that they face penalties if an application is not 
processed within 24 days.  They blamed missing 
paperwork as the most frequent cause for delay.  They 
acknowledged that they need to do a better job on SPS 
notification and stated that MARA staff will undergo 
WTO training in March on how to file notifications. 
They also observed that they publish draft 
regulations (in Turkish) on their website and that 
they regularly notify the EU of changes in product 
categories and would endeavor to be more active on 
the WTO side. Regarding technical barriers to trade 
(TBT), they noted that as the GOT is harmonizing its 
standards to meet EU specifications (which are 
already accepted as an "international standard"), 
they see no need to notify. 
 
¶21. (SBU) Wilson noted that the EU is not Turkey's 
only trading partner and that WTO notification is 
important to create an open, transparent system.  He 
also disputed the idea that EU legislation represents 
an "international standard." He requested a written 
explanation of licensing procedures, and asked 
whether the GOT could organize seminars for U.S. 
exporters. 
 
 
ANKARA 00000117  005.2 OF 006 
 
 
¶22. (SBU) The Turkish side asked about two proposals 
on the export of figs and pomegranates to the United 
States.  Wilson noted that the applications were on 
track for priority consideration this year.  In 
response to a U.S. inquiry, the Turkish side noted 
that within two weeks they would be delivering their 
response to the proposed U.S. memorandum of 
understanding on the WTO rice case. 
 
¶23. (SBU) Wilson asked about a new requirement for 
textile exporters to register with the nearest 
Turkish Embassy or Consulate prior to February 1, 
expressing especial concern for products already en 
route.  Yuksel Akca noted that this requirement is 
aimed at China and promised to investigate with FTU's 
Imports Department whether there is any way to 
provide an extension to the registration deadline. 
Agricultural Counselor promised to follow up directly 
with Akca. 
 
----------------- 
Distilled Spirits 
----------------- 
 
¶24. (SBU) Cherie Rusnak from Commerce asked for a 
clarification of Turkish requirements regarding the 
licensing and taxation of distilled spirits imports. 
Mehmet Erkan of the Ministry of Finance explained 
that the minimum tax rate for the any given product 
(such as raki) is the same whether it is imported or 
exported, but that different products (such as raki 
and whiskey) are taxed at different rates.  He also 
stated that the licensing procedure was somewhat 
streamlined in 2008. Previously all importers had to 
file with MARA and then be approved by the Tobacco 
and Alcohol Board.  In 2008, this was changed to 
require notification to the Tobacco and Alcohol Board 
for statistical purposes, but not approval.  Commerce 
noted that this still requires two different sets of 
paperwork, which leads to delays.  Wilson suggested 
that the GOT might want to examine moving to a 
unified tax rate system based on alcohol content, 
since imported foreign varieties in many cases 
compete directly with local Turkish brands. 
 
--------------------------------- 
Reimportation of Leased Machinery 
--------------------------------- 
 
¶25. (SBU) The U.S. side inquired about a requirement 
that leased machinery be exported and re-imported 
every two years, describing it as an expensive 
prospect for some companies.  FTU noted that this is 
a function of the Customs Law, which exempts leased 
products from duties.  They suggested that any 
affected company could either sell the product or 
just pay the duty to avoid the reimportation 
requirement. 
 
-------------- 
Trade Remedies 
-------------- 
 
¶26. (SBU) Wilson observed that USTR was carefully 
following the recent Turkish imposition of a 24.1 
percent antidumping duty on oriented strand board and 
noted that the issue might be raised at the next 
meeting of the WTO Rules Committee.  The Turkish side 
thanked the U.S. for the termination of antidumping 
duties on rebar products and expressed hope that the 
duties on other steel products - some of them now 23 
years old - would also be lifted. 
 
--- 
GSP 
--- 
 
¶27. (SBU) Guzel noted that Turkey views participation 
in the GSP as vitally important, as fully a quarter 
of Turkish exports to the U.S. benefited from the 
 
ANKARA 00000117  006.2 OF 006 
 
 
program in 2007 (USD 1.127 billion).  While she 
regretted the exclusion of gold jewelry in 2008, 
which led to a decline of 17 percent in jewelry 
exports, she asked for a response to recent Turkish 
proposals to include high-density polyethylene and 
copper wire.  Wilson noted that the removal of gold 
jewelry was a statutory requirement and that he 
expected a response on copper wire within the next 
few weeks and on polyethylene by the end of June. 
 
------- 
CSI/SFI 
------- 
 
¶28. (SBU) Guzel expressed concern about the potential 
impact of the 100 percent screening requirement of 
the CSI and SFI programs on Turkish exports.  Wilson 
promised to have the Department of Homeland Security 
provide additional information and offered to brief 
the Turkish Embassy in Washington. 
 
--------------- 
Shipping Issues 
--------------- 
 
¶29. (SBU) FTU noted that one Turkish company would 
like to be able to ship empty containers from New 
Jersey to Georgia.  Mark Mowrey of USTR observed that 
this is prohibited under the Jones Act, but that 
exceptions can be made on a reciprocal basis.  He 
promised to provide a copy of an existing reciprocal 
agreement and encouraged FTU to follow up directly 
with State.  FTU also complained that ship repairs 
done at Turkish shipyards carry a fifty percent duty 
when the ship returns to the U.S., putting Turkish 
shipyards at a substantial disadvantage compared to 
the duty-free treatment given to ships repaired in 
Israel, Mexico or Canada.  USTR promised to 
investigate whether such treatment could be extended 
to Turkey. 
 
-------------------------------------------- 
Turkey-U.S. Trade: More Money, More Problems 
-------------------------------------------- 
 
¶30. (SBU) Guzel noted that when the Turkey-U.S. TIFA 
meetings began ten years ago the laundry list of 
contentious issues was much shorter.  Observing that 
"The more two countries trade, the more problems 
arise," she was encouraged by the long list of issues 
addressed at this meeting because it meant that trade 
between the two countries had truly blossomed. 
Wilson agreed with this sentiment and again expressed 
his hope that TIFA would move beyond just a forum for 
resolving complaints and become a mechanism for 
strategically advancing the bilateral relationship, 
with the involvement of the private sector.  Both 
sides agreed to the creation and possible publication 
of an Action Plan to help move forward the issues 
discussed at the meeting. 
 
¶31. (U) This cable has been cleared by the 
delegation. 
 
JEFFREY