US embassy cable - 04ANKARA1228

UNCLAS SECTION 01 OF 02 ANKARA 001228 
 
SIPDIS 
 
 
SENSITIVE 
 
 
STATE FOR E, EB/CBED, EUR/SE AND NEA/NGA 
TREASURY FOR OASIA - JLEICHTER AND MMILLS 
DEPT PLEASE PASS USTR FOR CNOVELLI/LERRION 
FAS FOR ITP/THORBURN 
USDOC FOR ITA/MAC/DDEFALCO 
DEPT PASS OPIC - BRIAN TREADWELL 
DEPT PASS EXIMBANK - RAY ELLIS 
 
 
E.O. 12958: N/A 
TAGS: ECON, PREL, ETRD, EINV, ENRG, BEXP, KIPR, TU, IZ 
SUBJECT:  Economic Partnership Commission:  Update on 
Action Items and Suggested Points 
 
 
Ref:  A) Ankara 386 B) Errion/Marciel Email 1/22/04 
C) Ankara 45 and previous 
 
 
Summary 
------- 
 
 
1. (SBU) MFA U/S Ziyal and U/S Larson agreed to discuss 
implementation of the Economic Partnership Commission 
Action Plan (ref c) by telephone at 10:30 EST on March 
5.  Embassy recommends that U/S Larson encourage Turkey 
to adhere to the economic reform program; press for 
resolution of U.S. business disputes; and insist on a 
unified Turkish position on whether to proceed with non- 
textile Qualifying Industrial Zone legislation.  Embassy 
encourages USG agencies to agree to send an interagency 
team to consult with the GOT on trade issues, and to 
provide a list of areas in which Turkish law and 
regulation on intellectual property is inconsistent with 
TRIPS.  End Summary. 
 
 
Economic Reform 
--------------- 
 
 
2. (SBU) Turkey has taken positive steps since the EPC: 
completion of the sixth IMF review, with the seventh 
review underway; and signs of reengagement with the 
World Bank.  However, a number of concerns remain and we 
will need to monitor Turkey's performance closely. 
Embassy does not see much value in going into detail on 
these issues with Ziyal, but recommends that U/S Larson 
stress the need for deeper and fuller implementation of 
the broad reform program. 
 
 
Investment 
---------- 
 
 
3. (SBU) The GOT sent a formal response to the report by 
the Advisory Committee on International Economic Policy 
(ACIEP).  OPIC briefed Treasury Undersecretariat and MFA 
officials on OPIC-supported investment funds in January. 
There has been no change in the status of ratification 
of the Cape Town Convention on Commercial Aircraft 
Ownership Registration.  Most importantly, Turkey has 
not resolved a single U.S. company dispute.  Suggested 
points include: 
 
 
--At the EPC, we agreed on the importance of resolving 
investment and other business disputes involving U.S. 
companies as key to improving Turkey's business image 
and attracting foreign direct investment. 
 
 
--Strong protection of intellectual property, including 
data exclusivity protection for pharmaceutical test 
data, is not only a WTO TRIPS and EU Customs Union 
requirement, but also a key element in encouraging FDI 
and the development of high technology sectors. 
 
 
--Turkey has not resolved any of the business issues 
facing U.S. companies which we raised at the EPC.   Urge 
Ziyal to engage other Turkish agencies to fix these 
problems. 
 
 
--Turkey should ratify the Cape Town Convention, which 
would enable state-owned Turkish Airlines to 
significantly cut its financing costs in acquiring 
Boeing aircraft. 
 
 
Trade 
----- 
 
 
4. (U) Eximbank:  The U.S. Eximbank briefed Turkish 
Eximbank and officials from other Turkish agencies on 
the Trade Bank of Iraq Framework Agreement, and, as far 
as we know, no further USG action on this issue is 
necessary. 
 
 
5. (SBU) QIZs:  The USG and GOT have not come to closure 
on the parameters of a Turkey Qualifying Industrial 
Zone.  Embassy transmitted ref A points on our 
requirement that any Turkey QIZ exclude textiles and 
apparel.  MFA has said that it would accept a QIZ with 
these sectoral exclusions, but others in the GOT 
bureaucracy (especially the Foreign Trade 
Undersecretariat) and the Turkish private sector do not 
see any significant economic benefit under this 
arrangement.  We understand that another cable 
instructing the Embassy to approach the Turks for a 
definitive answer to the QIZ proposal is forthcoming. 
Embassy recommends that U/S Larson  reiterate the USG 
position on sectoral exclusions; request a unified GOT 
response to our QIZ offer; and request that the Turks 
provide a draft business plan so that we can show 
Congress how a non-textile QIZ might work. 
 
 
6. (U) Experts Visit:  We agreed to meet with the Turks 
to discuss a wide range of trade issues (IPR, non-tariff 
measures, WTO compliance, cooperation in the WTO Doha 
Round, textiles) by end-March 2004.  We also owe the GOT 
a list of areas in which Turkish laws and regulations 
are inconsistent with the WTO TRIPS Agreement.  Both 
actions take on added importance and urgency given the 
Special 301 review underway. 
 
 
7. (SBU) USTR proposed consultations with the GOT on IPR 
at the March TRIPS Council meeting in Geneva, or by 
videoconference (ref B).  Embassy continues to urge 
Washington agencies to send an interagency delegation to 
Ankara on all outstanding trade issues (and to use this 
forum to press on investment issues as well).  Meeting 
in Ankara would ensure that key Turkish agencies (such 
as Health, Culture, Customs) are included in the 
discussions.  More importantly, the GOT would interpret 
an Ankara visit as a signal that we take these issues 
seriously. 
 
 
Energy 
------ 
 
 
8. (U) Ambassador Mann visited Ankara in December to 
promote cooperation on both the Baku-Tbilisi-Ceyhan 
(BTC) pipeline and natural gas transit to European 
markets.  Turkey's BOTAS and Greece' DEPA reached 
agreement on a gas interconnector pipeline to be 
completed in 2006.  Discussion with Italy's Edison Gas 
about a pipeline from Greece to Italy is ongoing.  BOTAS 
and gas companies from Austria, Hungary, Romania and 
Bulgaria established a company to build a gas pipeline 
network from Turkey to Austria, with a final decision 
expected by year-end. 
 
 
Regional Cooperation 
-------------------- 
 
 
9. (U) In January, Commerce organized a series of 
conferences on Iraq reconstruction in Turkey, and helped 
organize a Turkish delegation for a regional conference 
in Amman.  We continue to support Turkey-Iraq cross- 
border initiatives and trade.  Afghanistan Coordinator 
Taylor will visit Ankara in March. 
 
 
10. (U) Baghdad minimize considered. 
Edelman