US embassy cable - 05ANKARA2170

UNCLAS SECTION 01 OF 02 ANKARA 002170 
 
SIPDIS 
 
DEPT FOR EB/TPP/MTA/IPE - JURBAN, EUR/SE, EB/TPP/ABT 
DEPT PASS USTR FOR LERRION/JCHOE-GROVES 
DEPT PASS LIBRARY OF CONGRESS FOR STEPP 
DEPT PASS USPTO FOR JURBAN AND EWU 
USDOC FOR ITA/MAC/DDEFALCO AND JBOGER 
 
SENSITIVE 
 
E.O. 12958: N/A 
TAGS: ETRD, KIPR, TU 
SUBJECT:  TRADE OFFICIAL COMMENTS ON PHARMACEUTICALS, 
GSP, AND THE BILATERAL TRADE RELATIONSHIP 
 
Ref: State 66948 
 
Summary 
------- 
 
1. (SBU) Econoff met with Foreign Trade 
Undersecretariat (FTU) Deputy Director General for 
Agreements Osman Bekaroglu to deliver reftel demarche 
on anti-schizophrenia drug Zyprexa.  Bekaroglu said 
that the Health Ministry was well aware of the 
sensitivities involved in the Zyprexa issue.  With 
regard to the possible PhRMA petition to restrict GSP 
benefits for Turkey, Bekaroglu responded that the GSP 
program was of limited benefit to Turkey.  However, 
Bekaroglu told us that FTU planned to give higher 
priority to trade with the United States, and would 
announce a promotion strategy later this year.  End 
Summary. 
 
Pharmaceuticals and Special 301 
------------------------------- 
 
2. (SBU) Meeting with Osman Bekaroglu, FTU Deputy 
Director General for Agreements, on April 15, Econoff 
made reftel points and also provided a copy of Senator 
Lugar's April 13 letter to FM Gul on Zyprexa.  Note: 
Embassy has also faxed copies of reftel talking points 
to the Health, Foreign Affairs, and Justice Ministries, 
as well as the Turkish Patent Institute.  End Note. 
Econoff stressed that U.S. drug companies may petition 
the USG to deny or restrict Generalized System of 
Preferences (GSP) benefits for Turkey as a result of 
weaknesses in intellectual property protection.  He 
also noted that U.S. pharmaceutical companies in Turkey 
recently reported that the Health Ministry was planning 
to strengthen protection afforded by the January 2005 
data exclusivity regulation, possibly by affording 
protection to off-patent drugs.  Econoff pointed out 
that Washington would announce the results of the 2005 
review by early May, and suggested that it would be to 
Turkey's benefit to implement any positive steps under 
consideration within this timeframe, if possible. 
 
3. (U) Bekaroglu responded that FTU was coordinating a 
multi-agency response to U.S. industries' Special 301 
submissions, and hoped to transmit this to us next 
week.  He related that the Health Ministry's maintained 
that the data exclusivity regulation complies fully 
with the terms of the EU Customs Union Agreement, and 
said that the Ministry was well aware of the 
sensitivity of the Zyprexa issue.  Econoff responded 
that the EC's concerns about the data exclusivity 
regulation are similar to our own, particularly with 
respect to lack of protection for non-patented drugs 
and for molecules registered before 2005 for which a 
generic application had been filed. 
 
4. (U) Note:  Embassy faxed the Health Ministry's 
written comments to EB/IPE. In addition to providing 
its rationale on the data exclusivity regulation, the 
Ministry contradicts PhRMA's assertion concerning a ten 
percent price preference for drugs using domestic raw 
materials; this preference was cancelled in 2004.  End 
Note. 
 
5. (SBU) Commenting on a possible PhRMA GSP petition, 
Bekaroglu opined that the program was of limited 
benefit to Turkey.  Referring to a recent study by FTU, 
he stated that some 30 percent of Turkish exporters 
were not aware of the program and did not pursue its 
benefits.  Furthermore, despite the high value of 
Turkish exports under GSP, the actual benefit in waived 
tariffs was "only" about USD 50 million annually, with 
the jewelry and travertine industries as the leading 
beneficiaries. 
 
New U.S. Trade Strategy 
----------------------- 
 
6. (U) Bekaroglu told Econoff that FTU was crafting a 
new strategy to boost trade with the United States 
beginning in 2006.  The strategy will target five 
states (New York, Texas, California, Illinois and 
Florida) and would involve posting five new Turkish 
commercial officers to the U.S.  Bekaroglu said that 
Minister Tuzmen or Undersecretary Kayalar would host a 
press conference, probably in the fall of 2005, to 
announce the strategy. 
 
7. (U) Econoff reiterated USG interest in holding a 
meeting of the Trade and Investment Framework Agreement 
(TIFA) Council.  Bekaroglu responded that he was 
working with the FTU Undersecretary's Office to 
identify possible TIFA dates and would send us a 
proposal. 
 
Comment 
------- 
 
8. (SBU) Bekaroglu remarks on GSP are surprising, given 
longstanding Turkish interest in expanding the scope of 
its benefits, their efforts to educate Turkish 
companies about the program, and the trade 
bureaucracy's strategic priority of boosting bilateral 
trade.  However, his comments highlight the apparent 
disparity in political and economic weight between the 
industries that would be hurt by loss of GSP (jewelry, 
building stone and a host of smaller exporters) and the 
one that has the most to lose as a consequence of 
stronger IP rights (the huge generic drug industry). 
EDELMAN