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Viewing cable 09ISTANBUL32, TIFA DELEGATION HOLDS PRIVATE SECTOR DIALOGUE IN

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Reference ID Created Released Classification Origin
09ISTANBUL32 2009-01-20 08:33 2011-08-24 01:00 UNCLASSIFIED//FOR OFFICIAL USE ONLY Consulate Istanbul
VZCZCXRO0411
PP RUEHAG RUEHAST RUEHDA RUEHDF RUEHFL RUEHIK RUEHKW RUEHLA RUEHLN
RUEHLZ RUEHNP RUEHPOD RUEHROV RUEHSK RUEHSR RUEHVK RUEHYG
DE RUEHIT #0032/01 0200833
ZNR UUUUU ZZH
P 200833Z JAN 09
FM AMCONSUL ISTANBUL
TO RUEHC/SECSTATE WASHDC PRIORITY 8707
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE PRIORITY
RUEHRC/USDA FAS WASHDC PRIORITY 0022
RUEAIIA/CIA WASHDC PRIORITY
RHEHAAA/WHITE HOUSE WASHDC PRIORITY
RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY
RUEKJCS/DIA WASHDC PRIORITY
UNCLAS SECTION 01 OF 02 ISTANBUL 000032 
 
SIPDIS 
SENSITIVE 
 
USDOC FOR 4200/ITA/MAC/EUR/CRUSNAK 
 
E.O. 12958: N/A 
TAGS: ETRD KIPR EAGR TU
SUBJECT: TIFA DELEGATION HOLDS PRIVATE SECTOR DIALOGUE IN 
ISTANBUL 
 
REF: ANKARA 15 
 
1. (SBU) Summary:  The American Business Forum in Turkey 
(ABFT) organized a private sector forum for the U.S. 
delegation ahead of the Turkey-U.S. Trade and Investment 
Framework Agreement (TIFA) talks in Ankara.  Representatives 
of U.S. companies in Istanbul provided formal briefings on 
the pharmaceutical and agro-business sector; discussed broad 
issues of concern including bias against foreign companies, 
perceptions of corruptions and the difficulty many expatriate 
managers face when applying for work authorization; and 
provided recommendations for the delegation.  End Summary. 
 
2. (SBU) The U.S. delegation to the TIFA Council met with 
American business representatives in Istanbul on January 12 
ahead of the January 13 sixth TIFA meetings in Ankara.  The 
American Business Forum in Turkey (ABFT), an AmCham 
affiliate, sponsored this event to inform the delegation of 
key issues facing U.S. businesses operating in Turkey.  The 
delegation, headed by A/USTR Christopher Wilson and including 
representatives from USTR, Commerce and State, received 
detailed briefings on the pharmaceutical and agricultural 
sectors, and highlights from other sectors. 
 
HEALTH CARE SECTOR 
 
3. (SBU) A representative of the Pharma Local Action Working 
Group, speaking on behalf of his group, reported that drug 
sales exceeded $9 billion in 2008, making Turkey the 
fourteenth largest pharmaceutical market in the world.  He 
pointed out that the Government of Turkey (GOT) has recently 
increased transparency in the health care systems as well as 
patient coverage with approximately 95% of the Turkish 
population covered by the public health care system. 
Coordination with pharmaceutical companies has also improved. 
 
4. (SBU) He noted that issues including concerns about the 
reference pricing system, the reimbursement process, and 
changes to the data exclusivity period still remain. 
Industry is pressing the Ministry of Health to reduce a built 
in exchange rate lag in medicine pricing that adversely 
affects vendors.  He also highlighted changes to the data 
exclusivity period currently under review by the Ministry of 
Health as potentially quite problematic. 
 
FOOD AND AGRIBUSINESS 
 
5. (SBU) A representative of the Pepsi Bottling Company 
described the agricultural sector in Turkey as still 
primitive and labor intensive.  He noted that the sector 
accounts for just 13% of the GDP despite employing 40% of the 
work force.  He listed many challenges to the agricultural 
sector including drought conditions, irrigation 
inefficiencies, very small farm plots, cumbersome government 
subsidy programs, and problems with seed production and 
importation.  He argued that the GOT could do many things to 
improve conditions on farms, including speeding up the 
process for dealing with small plots through reform of the 
Civil Law, preventing unregistered production, encouraging 
certified seed usage, and improving the subsidy process.  He 
emphasized the need for the GOT to address water and 
irrigation issues and to have a single government agency 
manage its national water resources. 
 
6. (SBU) A Cargill representative discussed the Turkish Sugar 
Law and the negative impact of the quota system on U.S. 
agricultural businesses.  Enacted in 200, the law requires 
that 90% of the sugar made from domestic consumption be 
produce from sugar beets, and limits the production of 
starch-based sweetener to just 10% of the volume of the beet 
sugar quota.  As a result of the quota system, the supply of 
starch-based sweetener meets less than 50% of the demand, 
leading to prices that are four to five times higher than 
world market prices.  He noted that while industry would 
prefer the complete elimination of the sugar quotas this 
remains unlikely as long as the GOT operates over 20 
inefficient beet sugar factories.  As an interim remedy, he 
argued the GOT should increase the starch-based sweetener 
quota by 50%; and apply a dry substance coefficient to treat 
starch-based sweetener, primarily high fructose corn syrup 
which is a liquid, equally with sucrose, which is a solid. 
The GOT also needs to enact effective controls to fight 
smuggling and unregistered production of sugar. 
 
ISTANBUL 00000032  002 OF 002 
 
 
 
OTHER SECTORS 
 
7. (SBU) A representative from JPMorgan Chase Bank discussed 
the banking sector in the context of the world-wide credit 
crisis.  He noted that banks in Turkey continue to maintain 
near-normal commercial banking operations but investment 
banking activities had slowed measurably, along with the rest 
of the world.  When asked by a member of the U.S. delegation 
about assistance to small and medium enterprises (SME), he 
pointed out that while banks are not making many loans to 
SMEs, the GOT operates a special program called "Lifeboat" 
that provides interest-free credit of up to $100,000 to SMEs. 
 
8. (SBU) A Motorola representative stated that while overall 
conditions within the information technology sector remain 
positive, he was concerned about recent problems with product 
labeling.  He said that Turkish customs officials seem to be 
implementing EU standards on labeling more strictly than the 
Europeans, causing delays in getting his produce to market in 
Turkey.  When asked by a member of the delegation about the 
reason for the change, he suggested that it was indicative of 
a general bias against foreign companies, and was not 
directed specifically at U.S. businesses. 
 
 
9. (SBU) A representative of Microsoft described the efforts 
of his company to combat software piracy and his frustration 
at the lack of implementation of existing intellectual 
property rights laws.  He pointed out that the overall use of 
pirated software in Turkey is over 65 percent and claimed 
that if it were to be lowered to world average levels of 32 
percent, the software sector in Turkey would double in size. 
He also highlighted that although the Prime Minister had 
recently issued a statement calling on government offices to 
use licensed software, the GOT is a heavy user of pirated 
software.  He indicated local software producers have also 
been affected by rampant piracy and have joined forces with 
foreign companies to combat IPR violations. 
 
10.(SBU) The day closed with a session devoted to the general 
business environment in Turkey.  A lively discussion of 
corruption focused on the difference between payments made to 
ensure speedy and efficient service and payments made to 
induce an official to commit wrong-doing.  An 
accountant/auditor and a lawyer gave presentations on the 
recent revisions to the Turkish Commercial Code, highlighting 
positive changes with regard to professionalism and 
transparency.  The presenters focused on the need for the GOT 
to provide adequate training to the judges and prosecutors 
assigned to implement this new law.  A presentation on the 
work authorization process underscored the difficulties 
highly-skilled employees and executives face when seeking 
permission to work legally in Turkey. 
 
11. (SBU) Comment: Feedback from the business community after 
the event was very good.  Participants welcomed the 
opportunity to interact directly with Washington-based 
officials.  The format of the event - brief presentations 
followed by Q and A - was particularly successful.  We 
recommend that future delegations include an Istanbul stop 
and private sector event such as the one described above on 
their itinerary.  End comment. 
 
This message has been cleared by the delegation 
Wiener