US embassy cable - 04ANKARA5376

UNCLAS SECTION 01 OF 02 ANKARA 005376 
 
SIPDIS 
 
SENSITIVE 
 
STATE FOR EUR/SE, EB/EPD, AND EB/TPP/ABT 
DEPT PLEASE PASS USTR FOR NOVELLI, LERRION 
USDA for APHIS/ACKERMAN 
USDA FOR FAS FOR ITP/YOUNG, FLEMING 
TREASURY FOR OASIA 
USDOC FOR ITA/MAC/DDEFALCO 
 
E.O. 12958: N/A 
TAGS: ETRD, EAGR, PGOV, PREL, CY, GR, TU 
SUBJECT: Ambassador Raises Rice Demarche and AgTrade Issues 
 
Ref: State 180202 
 
Sensitive but Unclassified.  Not for Internet Distribution. 
 
1. (SBU) Summary.  In separate meetings, the Ambassador 
delivered a demarche on the Turkish rice import regime 
(reftel) to the Ministers of Foreign Trade and Agriculture. 
Both Ministers noted that the decision to impose quotas and 
seasonal bans was an effort to protect a politically 
sensitive sector of the Turkish economy.  The Ambassador 
noted that their policy has led to almost 60 percent drop in 
U.S. exports from the previous year.  The Ambassador stated 
that the issue would be raised at the WTO Committee on 
Import Licensing scheduled for the end of September in 
Geneva.  End Summary. 
 
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State Minister for Foreign Trade 
-------------------------------- 
 
2.  (SBU) On September 17, the Ambassador met with Kursad 
Tuzmen, the State Minister of Foreign Trade to deliver the 
rice demarche (reftel).  The Minister responded that Turkey 
is a net importer of many agriculture products including 
rice and corn.  He stated that Turkey only produces about 40 
percent of its rice needs and will for the foreseeable 
future need to import rice.  Tuzmen claimed that that the 
GOT's rice policy is aimed at discouraging speculators and 
preventing shortages, and that imports are permitted at the 
bound rate.  He added that the rice sector was politically 
sensitive in Turkey and that the quota was imposed to 
stabilize the market and help Turkish producers.   Comment: 
Minister Tuzmen seemed to ignore or not comprehend the 
negative effect the Turkish import regime had had on trade 
or that Turkey's practices might in any way not be in 
compliance with WTO rules.  U.S. exports have dropped by 
almost 60 percent from the previous year.  The Turkish 
seasonal ban has continued for over a year and even with the 
changes, will last until January 2005.  End Comment. 
 
3.  (SBU) The Ambassador pointed out the discrepancy in 
Turkish policy, pointing out that, while Minister Tuzmen may 
claim that Turkey needed to import, statistics showed that 
trade had been impacted.  The Ambassador informed the 
Minister that the issue would be raised at the WTO Committee 
on Licensing scheduled for the end of September in Geneva. 
Minister Tuzmen responded that the Secretariat would work 
with the Turkish Agriculture and Rural Affairs Ministry on 
this. 
 
4.  (SBU) The Ambassador also raised the issue of Turkish 
regulations limiting import of distilled spirits, but noted 
that this issue appeared to be on its way to a mutually- 
satisfactory resolution. 
 
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Ministry of Agriculture and Rural Affairs 
----------------------------------------- 
 
5.  (SBU) On September 20, the Ambassador met with Sami 
Guclu, the Minister of Agriculture and Rural Affairs. The 
Ambassador reported on his meeting with Minister Tuzmen and 
raised the points regarding Turkey's rice import regime from 
reftel.  The Ambassador noted that, despite what Turkish 
officials have reported, the impact of seasonal bans and the 
requirement that domestic purchases be made in order to 
import, U.S. exports to Turkey have declined nearly 60 
percent from a year ago.  He informed the Minister that the 
issue would be raised at the WTO Committee on Import 
Licensing in Geneva ant that unless our differences were 
worked out, the United States would have to consider all its 
options including dispute settlement. 
 
6.  (SBU) Minister Guclu responded that relations with the 
United States were good and that bilateral confidence was 
growing particularly on Turkey's trade in the region.  He 
felt that trade issues should be discussed bilaterally and 
both sides should find a solution.  Minister Guclu noted 
that while some groups in Turkey sympathize and support the 
importation of U.S. products, some are not as supportive. 
 
7.  (SBU) On the rice issue, Minister Guclu stated that 
there were 100,000 Turkish rice farmers and the government 
needed to protect their income and living standards.  There 
is tremendous pressure on the government to maintain their 
income level.  Guclu noted that Turkey imports over 50 
percent of its demand and that the new quota system does not 
limit U.S. exports nor does it discriminate against U.S. 
exporters.  Guclu stated that the reason for the drop in 
U.S. exports was not the ban on import licenses but rather 
high U.S. freight costs.  Comment:  At a meeting with the 
head of the Turkish Grain Board that same day, AgCounselor 
was informed that Turkey had maintained its seasonal ban 
despite rising U.S. prices and freight costs (averaging USD 
75 - 90/ton and subject to a 32 percent tariff) because 
Turkey's domestic price for rice is even higher.  According 
the head of TMO, Turkey would need a 90 percent duty on 
imported rice in order to protect its market.  End Comment. 
 
8. (SBU)  The Minister suggested that U.S. and Turkish 
technical staff should find a better solution (than the WTO) 
and that the Ministry would make the necessary amendments. 
He added that anything can be resolved bilaterally. 
Comment:  Turkey has imposed the seasonal ban for the past 3 
years and refused to respond to requests to lift the ban. 
End comment.  In response, the Ambassador noted that it is 
always better to find a bilateral solution, particularly for 
politically sensitive issues.  The Ambassador also suggested 
that it is incumbent on all of us to balance domestic 
policies with our international trade commitments. 
 
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Other Ag Issues 
--------------- 
 
9. (SBU)  The Ambassador took the opportunity to raise other 
agriculture related issues.  He thanked the Minister and his 
staff for their assistance in resolving Cargill's investment 
dispute, noting that it would instill greater confidence in 
Turkey and hopefully encourage more foreign investment. 
 
10. (SBU)  The Ambassador also noted that, hopefully, 
changes in Turkish standards would allow the resumption of 
U.S. whiskey and bourbon exports to Turkey.  He encouraged 
the Minister to accelerate the formation of the food codex 
committee, which will review all changes in Turkish food 
regulations.  The Ambassador expressed the hope that the new 
Turkish regulations, which would amend Turkish whiskey 
standards, would be one of the first regulations submitted 
to the committee. 
 
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Minister Guclu's Issues 
----------------------- 
 
11. (SBU)  Minister Guclu requested information on three 
topics.  First, the Minister inquired about the status of an 
MOU between USDA and MinAg.  This MOU had been signed in 
1995 and expired in 2000.  The Minister requested training 
assistance for Turkish agriculture officials. 
 
Edelman