US embassy cable - 03ANKARA7253

UNCLAS SECTION 01 OF 02 ANKARA 007253 
 
SIPDIS 
 
 
E.O. 12958: N/A 
TAGS: ETRD, PREL, MOPS, ETTC, TU, IZ 
SUBJECT: IRAQ-TURKEY TRADE: IGC PRESIDENT TALABANI AGREES 
ON 9 STEPS TO IMPROVE TRADE WITH TURKISH FOREIGN TRADE 
UNDERSECRETARY TUZMAN 
 
SENSITIVE BUT UNCLASSIFIED 
 
 
1. (SBU) Iraqi Governing Council President Jalal Talabani 
shared with PolMilOff in Ankara Nov. 20 the text of an 
agreement (at Para 2) he said he and the IGC/Iraqi Ministers 
delegation reached Nov. 19 with Turkish Acting Foreign 
Minister and Foreign Trade Undersecretary Tuzman.  Tuzman 
presented the text to Talabani and his delegation and they 
agreed to it with one change.  The Iraqis would not agree to 
a Turkish request for permission for Turkish companies to 
import scrap metal from Iraq.  Talabani explained that Iraq 
needed the scrap metal as a source of rebar for construction. 
 The document is to be signed as "Agreed Minutes" on Nov. 20. 
 A detailed readout of Talabani's Ankara visit, along with a 
report of our Nov. 20 discussion with Foreign Trade 
Undersecretary Kayalar on Iraq-Turkey trade, will follow 
septel. 
 
 
2. (SBU) Begin text: 
 
 
Agreed Minutes 
 
 
1. The two sides agreed to exert every possible effort to 
further promote and diversify bilateral trade to a higher 
level corresponding to their potentials on a mutually 
beneficial basis. 
 
 
2. With the aim to promote and sustain bilateral trade on a 
mutually beneficial basis, and the economic cooperation 
between their respective countries, the two sides agreed to 
initiate the negotiations for concluding a preferential trade 
agreement between Turkey and Iraq within two months from the 
date of signing of this document.  In this framework, the two 
sides undertook to apply five percent as the average 
protection tariff rate in the commercial exchanges between 
the two countries, except negative lists of agricultural 
products.  The number of lines in the negative list cannot be 
more than twenty percent of the total tariff lines. 
 
 
The two sides also agreed to eliminate all non-tariff 
barriers in their bilateral trade. 
 
 
The two sides decided to hold the first round of negotiations 
of a preferential trade agreement in the second half of 
January 2004 in Ankara. 
 
 
3. The two sides agreed to re-establish border trade between 
the two countries.  To this end, the Turkish side submitted 
to the Iraqi side the following lists of the contracts signed 
by the Turkish companies. 
 
 
a) Contracts funded and partially shipped, (contracted goods 
that are ready for shipment); 
b) Contracts funded but not shipped (contracted goods for 
which production process has not started yet); 
c) Contracts with pending issues. 
 
 
4. The two sides agreed to initiate the negotiations 
concerning a new contract between SOMO and TPIC for the 
purchase of crude oil from Iraq within the framework of 
border trade with the aim to finance the new projects of the 
Iraqi side.  The two sides decided that the modalities of the 
new system and the implementation of the above-mentioned 
contracts would be determined during the negotiations to be 
held in the first half of December 2003. 
 
 
5. The two sides agreed to enhance the relations in the field 
of banking.  The Iraqi side agreed to facilitate the 
procedures for opening of branch offices by Turkish banks and 
establishment of Turkish banks in Iraq. 
 
 
6. The two sides agreed to exert every possible effort for 
the implementation of the contracts signed by the Turkish 
companies within the framework of the "Oil for Food Program." 
 To this end, the Turkish side informed the Iraqi side of the 
list of contracts to be prioritized by the CPA.  The Iraqi 
side agreed to give full support to the prioritization 
process of the contracts before the CPA. 
 
 
7. In order to boost economic activities of border and 
peripheral cities of the two countries, the two sides agreed 
to establish Border Trade Centers (BTC) on the borders 
between Turkey and Iraq.  The two sides decided to hold the 
expert level meeting in the second half of January 2004 in 
Ankara in order to discuss and finalize the following issues 
concerning BTC projects: 
 
 
a) The location of the BTC; 
b) The design, construction and operational matters; 
c) The list of products and quantities to be subject to 
transactions; 
d) Procedures to be applied for passengers and goods; 
e) Privileges and exemptions to be granted for the passengers 
and goods. 
 
 
8. The two sides discussed the possibilities of initiation of 
alternative transportation routes between the two countries. 
Within this context, the two sides agreed to take the 
necessary and urgent measures in order use the 
Nusaybin-Qamishly-Mosul railway connection.  The Turkish side 
agreed to support the efforts of the IRR with the aim to 
improve the capacity of this line. 
The two sides agreed to initiate the negotiations regarding 
the second border crossing point in January 2004. 
 
 
The Turkish side requested from the Iraqi side to accelerate 
the registration procedure for the establishment of foreign 
companies in Iraq by Turkish firms.  The Iraqi side agreed to 
issue the necessary licenses for the Turkish companies within 
a month after the date of application. 
 
 
9. The two sides underlined the importance of the 
Kirkuk-Yumurtalik Crude Oil Pipeline for exportation of the 
Iraqi crude oil and agreed to take all necessary measures for 
the proper functioning and protection of the pipeline. 
 
 
Done and signed in Ankara on November 20, 2003 in two 
originals in the English language, both texts being equally 
authentic. 
 
 
End text. 
 
 
3. (U)  Baghdad minimize considered. 
EDELMAN