US embassy cable - 04ANKARA3137

UNCLAS ANKARA 003137 
 
SIPDIS 
 
 
STATE FOR E, EB AND EUR/SE 
TREASURY FOR OASIA 
DEPT PLEASE PASS USTR FOR CNOVELLI/LERRION 
USDOC FOR ITA/MAC/DDEFALCO 
 
 
SENSITIVE 
 
 
E.O. 12958: N/A 
TAGS: ETRD, TU 
SUBJECT:  DEFINING A "HIGH TECH" QIZ 
 
 
Sensitive but Unclassified.  Please Handle Accordingly. 
 
 
Ref: (A) MCCORMICK-DEUTSCH 5/25/04 EMAIL 
(B) Ankara 2769 
(C) Ankara 2158 
 
 
1. (SBU) In recent months, the Turks have sent mixed 
messages on what they would like to see in U.S. 
legislation on Qualifying Industrial Zones (QIZ).  In 
an April 13 diplomatic note (ref C), the GOT gave an 
official and positive response to our proposal to move 
forward with legislation including exclusions for 
textiles and other products, while requesting that the 
legislation drop the "catch-all" clause explicitly 
allowing the U.S. side to exclude additional sensitive 
items.  However, the Turks have also raised the concept 
of a "high tech" QIZ in State Minister Tuzmen's April 5 
meeting and in followup correspondence with USTR 
Zoellick (ref B), and again during a May 24 telephone 
call between MFA U/S Ziyal and U/S Larson (ref A).  In 
the latter conversation, Ziyal undertook to send U/S 
Larson a paper outlining the "high tech" QIZ idea. 
 
 
2. (SBU) On June 3, Econ Counselor asked Mehmet Gucuk, 
MFA's Deputy Director General for Bilateral Economic 
Affairs, where the GOT paper was, noting that the U.S. 
legislative calendar for 2004 was very tight.  Gucuk 
told us that he did not believe that MFA and the 
Foreign Trade Undersecretariat would be able to deliver 
the written clarification, promised by Ziyal, defining 
desired parameters of a high tech QIZ in the near 
future.  He asked whether, instead, the USG could 
clarify whether "high tech" QIZ legislation would need 
to include the sectoral exclusions and catch-all 
provisions that the USG felt were essential in the 
current draft.  Gucuk suggested that the GOT would 
prefer "high tech" QIZ legislation if it enabled them 
to avoid these provisions. 
 
 
3. (SBU) We believe it highly desirable for the 
Administration to submit QIZ legislation to Congress 
prior to the POTUS visit to Ankara and Istanbul at the 
end of June, and have been urging GOT officials to 
provide us with clarification on the high tech QIZ 
concept on an urgent basis.  We understand that 
Washington agencies originally presented the QIZ as a 
vehicle for stimulating high tech trade and investment 
in Turkey and we do not see any substantive 
inconsistency between a high tech QIZ and the QIZ with 
the product exclusions which has been on the table 
since 2002.  It is curious that the GOT, which 
originally rejected the high tech QIZ concept on the 
grounds that high tech products are largely subject to 
low or zero duty in the U.S. trade regime, is now 
resurrecting this idea.  Based on Gucuk's comments, it 
seems the MFA is searching for a way to proceed that 
avoids the sectoral exclusions and the catch-all 
provision. 
 
 
4. (SBU) Action Request:  Although the Embassy believes 
that the onus is clearly on the Turks to define what 
they mean by a high tech QIZ, we believe it would also 
be useful to convey Washington's views on this topic, 
specifically, what the rough outlines of high tech QIZ 
legislation would look like, and whether such 
legislation would need to include sectoral exclusions 
and the catch-all provision. 
Edelman