US embassy cable - 04ANKARA608

UNCLAS SECTION 01 OF 02 ANKARA 000608 
 
SIPDIS 
 
 
DEPT FOR EB/IFD/OIA AND EUR/SE 
DEPT PLEASE PASS USTR FOR LERRION/BPECK 
USDA FOR FAS/ITP HENKE, MEYER, HANSEN 
TREASURY FOR OASIA - MILLS AND LECHTER 
 
 
SENSITIVE 
 
 
E.O. 12958: N/A 
TAGS: EINV, KIPR, TU 
SUBJECT:  Deputy Treasury Undersecretary on U.S. Company 
Problems and the March Investor Conference 
 
Ref:  Ankara 377 
 
 
Summary 
------- 
 
 
1. (SBU) Cavit Dagdas, a Deputy Undersecretary at the 
Turkish Treasury, told us the GOT is working toward a useful 
Investor Advisory Council meeting in March, in which foreign 
companies give frank advice on how to improve the investment 
climate.  He also asked for USG help in ensuring that the 
U.S. private sector is represented.  On data exclusivity, 
Dagdas said the GOT is working on a compromise between the 
generic and brand-name companies, and hinted that a policy 
announcement will not be made for some time.  We also raised 
problems facing Cargill, energy companies, Dillingham and 
Motorola.  End Summary. 
 
 
Investor Advisory Council (IAC) 
------------------------------- 
 
 
2. (U) In a January 28 meeting on investment issues, Deputy 
Treasury Undersecretary Cavit Dagdas told EconCouns and 
Econoff that the Turkish Government is working toward a 
successful launch of the IAC on March 15.  The goal is for a 
group of about 15 chief executives from large multinationals 
to share their views on how Turkey could attract more 
foreign direct investment with the Prime Minister and senior 
GOT officials, as well as with IMF Managing Director Kohler 
and World Bank President Wolfensohn.  The IAC would be 
convened once or twice a year, and Turkey's Investment 
Environment Improvement Coordinating Committee (Turkish 
acronym YOIKK) would serve as its secretariat. 
 
 
3. (U) The GOT invited executives from multinationals with 
investments in Turkey as well as from those who have not 
invested.  Dagdas asked for USG assistance in ensuring that 
at least one U.S. company is represented at the CEO level at 
the IAC.  He said the GOT is thinking about inviting one or 
all of the following:  Newmont, Texas Instruments, Dell, IBM 
and DuPont.  Some of the other foreign companies invited 
include Metro, Iscar, Pirelli-FIAT, Sony, Toyota, Renault 
and Cadbury-Schweppes, though it is not yet clear how many 
of them will participate and at what level. 
 
 
4. (U) EconCouns responded that the Embassy would look into 
this request, but emphasized that progress on outstanding 
investment and other disputes involving U.S. companies is 
the best way to spark investor interest in the Turkey. 
 
 
Pharmaceuticals/Intellectual Property 
------------------------------------- 
 
 
5. (U) We stressed the importance of swiftly implementing 
data exclusivity protection to Turkey's investment climate, 
its record of WTO compliance and its prospects in the 
upcoming Special 301 cycle. 
 
 
6. (SBU) Dagdas stressed that Turkey's pharmaceuticals 
policies should protect intellectual property and reward the 
research that generates new drugs.  Alluding to Turkey's 
policy of referencing drug prices to those in other 
countries, he said Turkey cannot be expected to pay 
developed world prices for brand-name drugs. 
 
 
7. (SBU) Dagdas said he had met repeatedly with both generic 
and research-based companies on data exclusivity, and that 
the GOT definitely intends to implement it, but with a 
compromise implementation date somewhere between the 
generics companies' proposal of 2007 and the research-based 
companies' demand that this happen immediately.  Echoing 
other Embassy contacts (reftel), he suggested the GOT might 
start with a short protection period (two or three years) 
and increase it gradually. 
 
 
8. (SBU) Dagdas said that an interagency committee would 
meet on the data exclusivity issue in early February and 
recommend a "roadmap" for implementation to relevant 
ministers, but he implied that a final decision might not be 
issued until after the March 15 IAC.  We pressed hard for a 
decision that would bring Turkey in line with international 
standards rapidly, arguing that there is no justification 
for allowing local generic producers to continue to profit 
based on the work of research-based companies. 
 
 
Other Investment Problems 
------------------------- 
 
 
9. (SBU) Cargill:  We raised Cargill's zoning problem, 
noting our understanding that a draft industrial zones law 
addressing the problem would be submitted to Parliament 
soon.  Dagdas expressed sympathy for Cargill's predicament, 
but opined that the legal issues surrounding the case would 
not easily be resolved and might even require constitutional 
amendments.  Comment:  Cagdas is the only GOT interlocutor 
who has implied that the Cargill problem cannot be resolved 
relatively easily and soon, and he may not be well-briefed 
on this issue.  End Comment. 
 
 
10. (SBU) Energy Projects:  Econ Counselor stressed the need 
to come to a fair resolution of the dispute between the 
Energy Ministry and energy build-operate-transfer (BOT) 
companies over pricing and licensing.  GOT harassment of the 
companies is sending a very negative signal to potential 
investors.  Dagdas responded that this was a very difficult 
issue for the GOT because corruption is alleged in some of 
the contracts and because high electricity tariffs are 
hurting Turkish industry.  He suggested that he might try to 
open discussion on this issue in the YOIKK framework in the 
future. 
 
 
11. (U) Others:  EconCouns also raised the Motorola-Telsim 
case and Dillingham International's difficulties in 
enforcing arbitral judgements in Turkey.  Dagdas took notes 
on our presentation, but offered no substantive answer on 
these disputes. 
Deutsch