US embassy cable - 05ANKARA2294

UNCLAS SECTION 01 OF 02 ANKARA 002294 
 
SIPDIS 
 
DEPT FOR EB/TPP/ABT - EHEARTNEY, EB/TPP/MTA/MST, EUR/SE 
COMMERCE FOR ITA/OTEXA/MARIA D'ANDREA 
DEPT PASS USTR FOR LERRION 
TREASURY FOR INTERNATIONAL AFFAIRS - PLANTIER 
 
SENSITIVE 
 
E.O. 12958: N/A 
TAGS: ETRD, KTEX, EFIN, TU, CH, EUN 
SUBJECT:  APPAREL EXECUTIVES ON CHINESE EXPORTS, TIFA, 
QIZ AND OTHER SUBJECTS 
 
Ref:  (A) Ankara 2161 (B) Ankara 2170 
 
1. (U) This message was coordinated with Amconsul 
Istanbul. 
 
2. (SBU) Summary:  In an April 8 lunch, textile and 
apparel industry representatives praised U.S. movement 
toward limits on Chinese textile imports and expressed 
the hope the European Commission would follow suit. 
They also supported convening a meeting of the U.S.- 
Turkey Trade and Investment Framework Agreement (TIFA) 
Council and plan to lobby the GOT to again propose 
creation of Qualifying Industrial Zones with duty-free 
access for Turkish textiles.  Textile manufacturers 
have called on the GOT to cut taxes on labor and value- 
added and to reduce energy costs for their sector.  A 
representative of the Turkish exporters union remarked 
that U.S. GSP was not a major benefit to Turkey.  End 
Summary. 
 
2. (U) Istanbul Polecon Chief and Econoffs met with 
Suleyman Orakcioglu, Chair of the Istanbul Ready-Made 
Garment Exporters Association (IHKIB), A. Rusen Cetin, 
an IHKIB board member, and Ziya Sukun, the U.S. 
representative of the Turkish Exporters Assembly (TIM), 
to discuss developments in the textile and garment 
industry, as well as broader trade concerns. 
 
Urging Limits on China, Breaks for Domestic Industry 
--------------------------------------------- ------- 
 
3. (U) Orakcioglu praised the decision taken earlier 
that week by the U.S. Committee for the Implementation 
of Textile Agreements (CITA) to investigate imports 
from China, the first step toward measures to limit 
Chinese imports (and reduce competition for Turkish 
exports).  Orakcioglu expressed the hope that the EC 
would also impose limits on its imports from China.  He 
and his colleagues deployed standard arguments on the 
inability of Turkish industry to compete against unfair 
Chinese labor, subsidy and exchange rate practices, 
maintaining that Turkish apparel exporters to U.S. and 
European markets observe fair labor and other 
practices. 
 
4. (U) Note:  Early in April, IHKIB, TIM and a raft of 
other business chambers issued a manifesto urging the 
GOT to reduce employment taxes and premia as well as 
energy costs for the apparel sector, arguing that 
continuing loss of employment in this area threatened 
social stability.  More recently, these groups called 
on the GOT to cut value added tax rates from 18 to 8 
percent. Although Finance Minister Unakitan told the 
press that such incentives were a real possibility, the 
IMF strongly opposes this on fiscal and equity grounds 
(ref A).  End Note. 
 
Interest in Both a TIFA and a QIZ 
--------------------------------- 
 
5. (SBU) Econoff's told Orakcioglu and his colleagues 
that the U.S. side was interested in making use of the 
Trade and Investment Framework Agreement (TIFA) to deal 
with bilateral economic problems, but that we had been 
unable to schedule a TIFA with the Foreign Trade 
Undersecretariat as yet.  Orakcioglu agreed that that a 
TIFA meeting would be useful, and promised to raise 
this directly with State Minister Tuzmen.  He stated 
that industry would lobby the GOT to resurrect their 
longstanding proposal to grant textile and apparel 
products duty-free preferences in a Turkey Qualifying 
Industrial Zone (QIZ). 
 
GSP of Marginal Interest 
------------------------ 
 
6. (SBU) Econoff pointed out to Sukun, who, unlike 
Orakcioglu and Cetin, theoretically represents the 
range of Turkish exporters rather than solely the 
textile industry, that Turkey had made great strides in 
diversifying exports and in expanding use of the 
Generalized System of Preferences (GSP) in recent 
years.  Echoing recent comments by a Foreign Trade 
official (ref B), the TIM representative disparaged GSP 
benefits as limited to several somewhat marginal, low 
value-added sectors which would be subject to low U.S. 
tariffs without GSP. 
 
Mandatory Importers Associations a Great Idea 
--------------------------------------------- 
 
7. (SBU) Econoff also raised concerns that the GOT plan 
to require all importers to join and pay fees to 
importers associations could result in new nontariff 
barriers, and asked Sukun the status of efforts to 
implement an alternate concept which would create a 
hybrid (but still mandatory) business chamber based on 
TIM and including both importers and exporters.  Sukun, 
who may not have been current on this issue, offered a 
passionate defense of mandatory importers associations 
as necessary in collecting improved import statistics. 
He criticized the Foreign Investor Association (YASED) 
for opposing the measure, denouncing them as a group of 
"foreign agents".  Econoff responded that it would be 
unusual for an association representing foreign 
investors to ignore foreign business views and 
interests on questions of Turkish trade policy. 
 
Comment 
------- 
 
8. (SBU) Turkish textile exporters are pleased with 
evolving U.S. policy on imports from China, and are 
eager to see us and the Europeans do even more.  While 
not explicitly stated at this meeting, good relations 
with the U.S. textile industry may be inflating the 
hopes of Turkish textile producers for preferential 
trade with the U.S., such as through a QIZ.  The Turks 
would likely argue that any increase in Turkish exports 
would come at the expense of China or other lower-cost 
producers, rather than of U.S. industry. 
Edelman