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FM AMEMBASSY ANKARA
TO RUEHC/SECSTATE WASHDC PRIORITY 1910
INFO RUEHIT/AMCONSUL ISTANBUL PRIORITY 6856
RUEHDA/AMCONSUL ADANA PRIORITY 4442
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UNCLAS SECTION 01 OF 06 ANKARA 000145 
 
SENSITIVE 
SIPDIS 
 
FROM AMBASSADOR JEFFREY 
NSC FOR LIZ SHERWOOD-RANDLE, BRIDGET BRINK 
DEPT PLEASE PASS USTR FOR CHRIS WILSON, MARK MOWREY 
DEPT FOR E, SEEE MORNINGSTAR, EUR/SE, EEB/TPP/BTA, EEB/CBA 
COMMERCE FOR CHERIE RUSNAK AND KRISTIN NAJDI 
USDA FAS FOR OCRA 
 
E.O. 12958: N/A 
TAGS: ECON ETRD EINV USTR TU
SUBJECT: KEY QUESTIONS FOR NEW U.S.-TURKISH ECONOMIC 
FRAMEWORK 
 
¶1. (SBU) Following up on the successful announcement of the 
new Framework for Strategic Economic and Commercial 
Cooperation (FSECC) with Turkey during PM Erdogan's visit, we 
now need to put meat on the 
bones of the proposal.  I and my staff will be working 
closely with the Turks, but the USG will need to come to 
consensus on what our vision for the FSECC is, what we expect 
to achieve, and what we are willing to offer.  To help frame 
that discussion, I outline below what I believe to be the key 
questions that need to be answered at this point.  I have 
also provided some context and suggestions following each 
question, and a list of potential deliverables that we could 
consider. 
 
¶2. (SBU) How will the FSECC be orchestrated?  What is the 
timeline and what are the key milestones?  How will the 
Economic Partnership Commission (EPC) and Trade and 
Investment Framework Agreement (TIFA) meetings fit in with 
the FSECC? 
 
The initial meeting of the FSECC has been tentatively set for 
Spring 2010 in DC.  That means we have to set up the Business 
Council in the next few months.  The first step is to agree 
with the Turks on Terms of Reference for the Council, 
followed by the Federal Register selection process.  Even if 
the terms can be agreed in January, the earliest the Council 
could be stood up is probably mid-April.  We should also 
prepare ourselves for a protracted back and forth with the 
GOT on the Terms of Reference, which could delay the Business 
Council selection process. 
 
In the interim, State and MFA could convene the EPC in Turkey 
and USTR and the Foreign Trade Undersecretariat (FTU) can 
convene the TIFA in Washington.  We can use these two 
meetings as planning sessions for the FSECC and an 
opportunity to float proposals for deliverables for the 
FSECC.  The GOT has already begun its own interagency 
preparations for the FSECC, so we should expect new proposals 
from the Turkish side as well.  Convening TIFA and EPC in the 
near-term would provide a shot of momentum for the project 
and allow the outcomes to feed into the FSECC.  An EPC by 
late March would allow time to evaluate any proposals before 
an April FSECC, but that creates a tight timeline for 
developing our EPC agenda. 
 
We propose holding the first meetings of the Business Council 
and FSECC in April in Washington.  The FSECC could take up 
proposals from EPC and TIFA, as well as new proposals coming 
out of the Business Council. 
 
So a rough timeline would be: 
 
January 12     DOC provides draft Terms of Reference for the 
Business Council 
 
Late January   Agreement is reached on Terms and Federal 
Register notice is published (although there is a danger this 
could take weeks depending upon GOT response times) 
 
February/March TIFA meeting in Washington, proposals made for 
FSECC 
 
Late March     EPC meeting in Ankara, proposals made for FSECC 
 
March          Selection process for Business Council 
 
April          Business Council meets in Washington, followed 
by FSECC 
 
 
¶3. (SBU) What deliverables can we offer to Turkey for the 
FSECC?  What deliverables should we seek from Turkey? 
 
The Turks have made it clear that they expect tangible 
results from this process.  We need to come to the table with 
some attractive proposals to increase trade, investment, and 
bilateral cooperation that the interagency can agree on. 
There are bilateral agreements already in train that we can 
 
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complete or international agreements that the Turks could 
sign.  However, the key to success in this process, we 
believe, will be effective private sector input and concrete 
government follow-up. 
 
A detailed but not exhaustive list of potential FSECC 
deliverables, based largely on previous TIFA and EPC 
discussions, is at the end of this cable. 
 
¶4. (SBU) What are the obstacles to the formation of the 
Business Council and how can we ensure participation by key 
organizations such as the U.S. Chamber, American Turkish 
Council, American Business Forum in Turkey, etc.? 
 
The goal of the Business Council is to serve as an advisory 
committee and provide recommendations -- we need to achieve 
this goal with the cleanest possible structure that meets our 
legal requirements. 
 
Our understanding is that only actual companies will be able 
to participate in the Business Council -- 
non-profits cannot join, at least on the U.S. side (the Turks 
may have business association heads on their side).  We want 
U.S. business groups to participate in some form because they 
know Turkey and represent a broad swathe of firms.  One way 
to encourage this would be for the Council to decide to 
receive written reports and proposals from NGOs or create 
some other mechanism for these organizations to provide input. 
 
We should seek to include organizations such as the U.S. 
Chamber of Commerce and its affiliates (the American Turkish 
Council, the American Business Forum in Turkey, and the 
Turkish American Business Association) in events on the 
margins of the FSECC and Business Council meeting and/or 
encourage them to host events such as receptions or speaking 
programs.  We will also need to work with these organizations 
to encourage their membership to apply.  We will need to 
actively reach out to a broad range of companies to ensure 
that the Business Council represents a variety of sectors and 
not just the usual suspects, i.e. pharma and defense. 
 
¶5. (SBU) How do we solicit ideas (and complaints) from 
companies that are not currently doing business in Turkey (or 
the U.S.)? 
 
A problem with the Business Council model is that those 
companies most likely to volunteer and be selected are 
already doing business in Turkey.  We will have a hard time 
getting input from companies 
that considered investing or trading in Turkey, but decided 
against it.  But their input may be more valuable if we want 
to open up new growth and new markets rather than just 
incrementally expanding existing business. 
 
We had earlier floated the idea of doing a survey of all 
member companies of the U.S. Chamber of Commerce and the 
Turkish Union of Chambers and Commodity Exchanges (TOBB). 
TOBB is willing to do this, but 
the Chamber says it doesn,t have the resources to conduct 
the survey and analyze results.  Such a survey would be an 
excellent way for the business NGOs to contribute to the 
Business Council, and we may want to take this up again with 
the Chamber and other groups. 
 
¶6. (SBU) How do we encourage the GOT to select a 
representative grouping from its own private sector? 
 
The GOT is likely to designate the existing Turkish-American 
Business Council (TAIK) of TOBB's Foreign Economic Relations 
Board (DEIK) as the Turkish half of the private sector group. 
 This group already has a secretariat and staff and 
incorporates most of the major companies doing business with 
the U.S. We may want to encourage the GOT through the Terms 
of Reference to expand the grouping to include 
under-represented sectors or geographic regions, as well as 
small and medium firms. 
 
¶7. (SBU) If the ROZ legislation ever passes, how can we 
 
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ensure that Turkish firms take full advantage of it? 
 
The legislation for Reconstruction Opportunity Zones (ROZs) 
in Afghanistan and Pakistan is of great interest to Turkish 
firms and would be a tangible benefit to which we can point. 
Turkish investment 
in Af-Pak -- where they are known and trusted -- furthers 
both our bilateral U.S.-Turkish and Af-Pak policy goals.  If 
the legislation passes, we should look for ways to get 
Turkish companies on the ground quickly.  We could offer 
seminars and training for Turkish firms on how to maximize 
ROZ benefits.  Working with Embassies Kabul and Islamabad, we 
also could identify particularly appropriate areas of 
investment for Turkish firms, and look at ways to encourage 
partnerships with U.S. firms. 
 
¶8. (SBU) How do we highlight the many ways that the USG and 
U.S. private sector contribute to the growth of the Turkish 
economy and move the discussion beyond balance of trade 
figures? 
 
Given how fixated the GOT is on "correcting" its unfavorable 
bilateral balance of trade with the U.S., we need to stress 
how USG initiatives like the Energy Working Group, TDA, 
Eximbank and OPIC also contribute to the Turkish economy. 
The role of U.S. investment is pivotal - for example, Exxon's 
investment in offshore exploration or Ford's investment in 
co-production with Otosan.  These investments, often in 
production for export, provide significant benefits to 
Turkey's bottom line, but are not credited to "the U.S. 
account."  Similarly, many U.S. companies trade with Turkey 
via European subsidiaries to take advantage of the Customs 
Union, so their contributions are credited the EU countries. 
Finally, many U.S. exports to Turkey, such as cotton and 
scrap metal, are used by Turkey to produce its own exports to 
third markets. 
 
Quantifying all of this would be difficult, and we may need 
to look to outside experts to take on this project (perhaps 
to a business school or other academic group.)  To the extent 
that we can put hard numbers on the non-bilateral trade 
contribution of the USG and private sector, it will make it 
easier to move the discussion into a more constructive 
atmosphere instead of just focusing on eliminating a 
supposedly "unfair" U.S. surplus. 
 
¶9. (SBU) What is our long-term response on the Turkish 
request for tangible trade programs such as a QIZ or an 
expanded list of products eligible for GSP? 
 
The GOT raises the idea of a Qualified Industrial Zone (QIZ) 
in almost any meeting related to trade. 
Our standard response has been that it would be difficult to 
get through Congress.  While accurate, that does not satisfy 
the Turks, who think we should be willing to expend some 
political capital on their behalf, as we do for other key 
allies. 
 
There are ways to make a QIZ more politically palatable to 
Congress.  The original QIZs in Egypt and Jordan were 
designed to increase cooperation and strengthen ties with 
Israel.  We can make a compelling case for a similar 
initiative with Turkey-Armenia and, to a lesser extent, 
Turkey-Israel.  These two countries also have powerful 
lobbies on the Hill that could be enlisted to help make 
Turkey's case,  if there is an improvement in the political 
environment with both countries.  The case for a QIZ becomes 
much stronger if it is tied to USG political goals in the 
region, and this has the added bonus of putting the ball back 
in the Turkish court, as a QIZ would be tied to their own 
willingness to move politically.  This is not to say that we 
need to offer the Turks a QIZ, but we do need to think 
creatively about how we can respond to likely Turkish 
requests for trade benefits. 
 
Turkey is likely to graduate completely from the Generalized 
System of Preferences (GSP) program in the near future when 
its GDP per capita makes it an "upper income country" as 
 
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defined by the World Bank.  This is a welcome sign of 
Turkey's economic success, but there is little that can be 
done about the 
negative impact it will have on Turkish exporters.  We should 
encourage Turkey to start thinking now about new types of 
bilateral or multilateral trade agreements (e.g, a sectoral 
FTA in agriculture, which is excluded from the Customs Union, 
joining the WTO Government Procurement Agreement, etc.) that 
would provide new trade access to the U.S. market, to 
substitute for its inevitable loss of GSP.  Turkey 
needs to accept that if it really is an economic power, it 
cannot continue benefiting from programs designed for 
developing countries.  Our trade relations going forward will 
have to be based on mutually beneficial agreements between 
developed-world partners.  That will be a tough sell, but 
it,s a message we need to start delivering now, reinforcing 
the message that we view Turkey as an economic partner, not 
an aid recipient. 
 
¶10. (SBU) Below is a list of potential FSECC deliverables. 
Items drawn from the EPC or TIFA Action Plans are noted. 
 
-- Agreements and Trade Preference Systems 
 
* Mutual 
 
Sign the Agricultural Memorandum of Understanding (EPC, 
although this may be difficult given the current problems in 
biotech) 
 
Finalize and sign the Science and Technology Cooperation 
Agreement (EPC, although actual signing ceremony and 
follow-on work should take place separately from EPC, with 
participation from science agencies) 
 
Sign a Letter of Intent on business matchmaking between the 
Small Business Administration and its Turkish equivalent 
(KOSGEB) (EPC) 
 
Sign a Framework Agreement between the Export-Import Banks of 
the two countries to allow for joint financing of projects in 
third countries 
 
Sign a reciprocal maritime agreement, increasing the 
flexibility of U.S. and Turkish maritime service providers to 
operate in the other country's market (TIFA) 
 
Agree on a Memorandum of Understanding to recognize CE marks 
on U.S.-origin products entering Turkey via Europe or to 
recognize U.S. quality standards as being equivalent to 
European for customs purposes 
 
Explore possibility of a preferential trade agreement, 
perhaps in conjunction with a South Caucasus initiative 
involving the U.S., Turkey, Azerbaijan, Armenia and Georgia. 
 
* U.S. 
 
Continue to push for passage of pending ROZ legislation for 
Afghanistan and Pakistan, opening opportunities for Turkish 
firms in that area, and plan ROZ seminars for Turkish firms 
if the legislation passes (both EPC and TIFA) 
 
Explore possibility of creating an ROZ in northern Iraq 
 
Explore potential for expanding the existing Qualified 
Industrial Zone (QIZ) program to Turkey (with Israeli 
participation) or creating a new QIZ program for 
Turkey-Armenia (with minimum Turkish participation 
requirements in an Armenian QIZ or minimum Armenian 
participation requiremetns in a Turkish QIZ) 
 
* Turkey 
 
Sign WTO Government Procurement Agreement (EPC) 
 
Join Cape Town Treaty on aircraft financing (EPC) 
 
 
ANKARA 00000145  005 OF 006 
 
 
-- Intergovernmental Cooperation and Measures to Facilitate 
Trade and Investment 
 
* Mutual 
 
Form an Intellectual Property Rights Working Group to discuss 
issues of mutual interest and develop strategies for 
addressing each country's IPR concerns (TIFA) 
 
Finalize Trade Development Agency (TDA) proposals on energy 
and climate change feasibility studies and explore 
possibility of a reverse trade mission on nuclear energy 
 
Increase cooperation between the U.S. Embassy and the 
Investment Support and Promotion Agency of Turkey (ISPAT) to 
identify marketing opportunities in the United States and to 
reach key audiences 
 
Establish a Pharmaceutical Sector Working Group, chaired by 
the Ministry of Health, to explore ways to increase the 
opportunities for trade and investment in pharamceuticals and 
look at methods for establishing Turkey as a platform for 
pharmaceutical research, production, and export (already 
begun, although recent developments in the pharmaceutical 
sector have made progress difficult) 
 
Survey the two business communities to see if there are 
specific fixes that they would like to see implemented to 
remove existing obstacles to trade and investment 
 
Develop a program for graduate-level students or entry-level 
officials to work in the trade and investment-related 
agencies of the other country 
 
Explore ways to work jointly to facilitate Turkish and U.S. 
trade and investment in Iraq, the Caucasus, Afghanistan, 
Pakistan and other areas of particular interest (both EPC and 
TIFA) 
 
* U.S. 
 
Complete pest risk assessment to allow fresh fig and 
pomegranate exports to U.S. (EPC) 
 
* Turkey 
 
Pass new patent law (EPC) 
 
Provide reciprocal treatment for business and investor 
visas/work permits for U.S. citizens investing in or working 
in Turkey (EPC) 
 
-- Increasing Awareness and Information Exchanges 
 
* Mutual 
 
Hold seminars in both countries on import-export rules 
(customs, agricultural sanitary requirements, etc.), how to 
do business in the other country, what financing tools are 
available, what special visas can be utilized, etc. (TIFA) 
 
Bring USTR experts to talk about how to maximize Turkish 
usage of its Generalized System of Preferences eligibility 
(TIFA) 
 
Conduct and orientation and training program for the 
Undersecretariat of Foreign Trade on how the U.S. Commercial 
Service works to promote U.S. goods and services abroad, and 
provide assistance in developing similar Turkish programs 
 
Develop training tools for customs officers in both countries 
on how export documents are certified in the exporting 
country and what documents are sufficient to meet local 
regulations (for example, certificates issued by U.S. states) 
 
* U.S. 
 
Work to increase awareness of U.S. ExIm Bank and OPIC 
 
ANKARA 00000145  006 OF 006 
 
 
products and how they can help finance Turkish companies' and 
municipalities' projects 
 
Identify Turkish sectors that could benefit from TDA 
feasibility studies or TDA-funded orientation trips to see 
U.S. operations 
 
Continue outreach on the "Invest in America" initiative (EPC) 
 
-- Increasing Partnership between Private Sectors 
 
* Mutual 
 
Encourage the U.S. Chamber of Commerce and TOBB to create an 
online B2B portal (based on existing TOBB architecture) to 
facilitate business matchmaking and provide information on 
doing business in the other country, such as customs 
requirements with exemplars 
 
Encourage business associations to organize trade missions 
for their memebers to the other country and to develop annual 
plans to advance U.S.-Turkish commercial relations 
 
Ask business associations in both countries to encourage 
their members to attend trade fairs focused on the other 
country 
 
Encourage greater cooperation between specific industry 
assocaitions in each country 
 
* U.S. 
 
Hold the American Society of Travel Agents (ASTA) annual 
conference in Istanbul in April 2010 to highlight Turkey's 
potential as a tourist destination (will already happen) 
 
* Turkey 
 
Create an annual award program to recognize the top Turkish 
firms that import from or export to the United States 
Jeffrey 
 
           "Visit Ankara's Classified Web Site at http://www.intelink.s 
gov.gov/wiki/Portal:Turkey"