US embassy cable - 04ANKARA1055

UNCLAS ANKARA 001055 
 
SIPDIS 
 
 
DEPT FOR EUR/SE, NEA/NGA AND EB 
 
 
SENSITIVE 
 
 
E.O. 12958: N/A 
TAGS: ETRD, PREL, TU, IZ 
SUBJECT:  Turkish Foreign Trade Official on Desirability 
of a Turkish-Iraqi Trade Agreement 
 
1. (U) Baghdad minimize considered. 
 
 
2. (SBU) In a February 10 meeting with Econoffs and Econ 
Specialist on Iraq-Turkey transport and fuel trade 
issues (septel), Sevket Ilgac, Deputy Director General 
for Agreements at the Turkish Foreign Trade 
Undersecretariat, also described Turkish thinking on 
formal trade agreements with Iraq.  Ilgac said that the 
GOT proposed "preferential" and border trade agreements 
to Iraqi representatives. proposed "preferential" and 
border trade agreements to Iraqi representatives, and 
that the Turks would ultimately like to negotiate a free 
trade agreement (FTA) with Iraq (did he really said 
that. What I got was they wanted to sign a free trade 
agreement with Iraq, but they cannot due to the Customs 
Union. So, they now consider a preferential trade 
agreement with Iraq). 
 
 
3. (SBU) Preferential Trade:  Ilgac told us that Turkey 
would like to negotiate a free trade agreement (FTA) 
with Iraq, but acknowledged that the EU Customs Union 
preventsed Turkey from doconcluding so.an FTA with Iraq 
or any other country with which the EU has no FTA. 
However, he argued that Turkey planned to use what 
flexibility there is in the customs union to allow the 
Turks and Iraqis to reduce trade barriers.  Ilgac said 
that a draft Turkish agreement recently passed to Iraqis 
proposed that Iraq cut industrial tariffs on Turkish 
goods to 4.4 percent (Turkey's most-favored-nation 
average rate).  In exchange, Turkey could make 
concessions in agriculture, which is largely outside the 
scope of the customs union.  These reduced tariffs could 
be offered in the form of Generalized System of 
Preferences (duty free import privileges for developing 
country trading partners) benefits for Iraqi 
agricultural exports.  Turks also want to eliminate 
tariff renovation agreement with Iraq to eliminate non- 
tariff barrie The GOT also supports WTO membership 
forwants Iraq. 
 to become a member of the WTO, and to realize trade 
with the WTO rule.  They also want to trade goods for 
oil. 
 
 
4. (SBU) Border Trade:  Turkey has also proposed special 
border trade arrangements to Iraq and neighboring 
countries.  Ilgac explained that this system would cut 
tariffs on limited quantities of trade by 30 to 40 
percent and eliminate non-tariff barriers to support 
local employment, to encourage cross-boarder trade and 
to formalize some unregistered economic activity.  Note: 
The border trade arrangement is distinct from the pre- 
war bilateral trade agreement, which the Turks are also 
pushing Baghdad to continue.  End Note. 
 
 
5. (SBU) Trade Figures:  Ilgac told us that Turkey has 
been exporting about USD 110 to 120 million in goods 
monthly over the last six months, and that fuels account 
for roughly half of these sales. 
Edelman