US embassy cable - 02ANKARA8790

UNCLAS SECTION 01 OF 02 ANKARA 008790 
 
SIPDIS 
 
 
SENSITIVE 
 
 
STATE FOR EUR/SE, EB/EPD, AND EB/TPP/ABT 
DEPT PLEASE PASS USTR FOR NOVELLI, DBIRDSEY, JHOFEMEISTER, 
AND SLOAN 
USDA FOR FAS FOR ITP/BERTSCH, MACKE, MEYER, THORBURN 
USDOC FOR DEFALCO 
 
 
E.O. 12958: N/A 
TAGS: ETRD, EAGR, KPAO, TU, USTR 
SUBJECT: Turkish Agriculture, Trade and EU Membership 
 
Sensitive but Unclassified.  Not for Internet Distribution. 
 
 
1.  (SBU)  Summary.  AgCounselor recently met with 
representatives from International Organizations including 
the World Bank and FAO as well as with local EU officials to 
discuss the current state of Turkish agriculture and 
agricultural trade.  These representatives expressed 
frustration with Turkish agriculture officials and the slow 
rate of reform in the agriculture sector. EU Ag officials 
also noted several problems including an import-licensing 
regime that continues to inhibit EU exports to Turkey. Given 
the recent elections, it is too soon to make any forecasts 
about the future of Turkish agriculture policy, most 
officials do not expect any radical changes in the 
agriculture sector, primarily due to the lack of financial 
resources.  On the trade side, foreign officials felt that 
the new government would be somewhat more protectionist 
towards agricultural imports.  End Summary. 
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Turkish Agriculture - One of Extremes 
------------------------------------- 
 
 
2.  (SBU) Turkish agriculture ranges from modern state-of- 
the-art operations to ones that seem to be right out of the 
19th century. One EU official commented that parts of the 
Turkish countryside resembled the "times of the prophets" 
and that it would take years (and deep financial pockets) 
before Turkey could truly modernize the majority of this 
sector.  The lack of domestic financial resources combined 
extremely low direct foreign investment in the ag sector 
will make this task extremely difficult. Corruption is also 
a factor affecting Turkey's reputation and ability to 
attract foreign investment.  Too many decisions are made by 
Turkish officials with their own personal interests in mind. 
Ag Counselor was told one example in which a high-ranking 
Turkish official with ties to a French company changed the 
bidding criteria for cattle tags (required under EU 
regulations) making it all but certain that only the French 
company would be able to comply with the bid's requirements. 
 
 
3.  (SBU) Most officials noted that the level of support for 
Turkish farmers has only slowed any reform process.  Having 
come to depend on this support, Turkish farmers are 
reluctant to adapt to market conditions.  The hazelnut 
industry is a good example of a crop that is overproduced, 
supported by the government and with no market. 
 
 
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Concerns With New Ag Policy 
--------------------------- 
 
 
4.  (SBU) Foreign officials working have been looking at the 
new government's agriculture platform in the hopes of 
getting some insight into Turkey's agriculture future.  In 
general, most do not believe that there will be major 
changes in Turkey's policies.  It would appear that the new 
government may want to provide more assistance to smaller 
farmers.  The World Bank has been implementing a direct 
support program over the past year, which they feel has been 
quite successful.  Unfortunately, the new government has 
stated that they will try to redirect the World Bank-backed 
direct support program and would focus more on low-income 
farmers, something which worries World Bank officials. 
 
 
5.  (SBU) At recent meetings with Turkish trade and 
agriculture officials, AgCounselor was told that Turkey 
would seek to boost domestic agricultural production with 
the goal of becoming more self-sufficient.  With such a 
large portion of the Turkish population still living in 
rural areas (40 percent), engaged in agriculture, and 
suffering with extremely low wages, the new government may 
seek to provide these people with some additional 
assistance. 
 
 
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Turkish-EU Agriculture Discussions and Reforms Will be Slow 
--------------------------------------------- -------------- 
 
 
6.  (SBU) Although formal accession negotiations have not 
begun, Turkey does qualify for some EU pre-accession 
agriculture funds. However, this support has been primarily 
targeted at upgrading Turkey's Customs, phytosanitary and 
veterinary sectors as well as food safety, in order to 
ensure that food products will meet EU standards.  Overall 
reform of the agriculture sector has been left to the 
Turkish government to finance.  Interestingly, Turkey does 
not receive Sapard funds which have been available to other 
EU member candidates.  Instead Turkey receives assistance 
from a Middle East and North African fund.  Turkish 
officials have noted that this is another example of Turkey 
not being considered a serious candidate country by the EU. 
On the other hand, a Turkish economist involved in this 
process stated that Turkey must press harder for access to 
EU resources and that Turkish agriculture officials must 
commit the country to changing its agriculture system. 
based on his record as Foreign Trade Under Secretary in the 
previous GOT, 
7.  (SBU) One EU official compared Turkey to Poland in terms 
of the size of its agriculture sector as well as the 
problems its faces. EU officials noted that they are having 
a difficult time with the lack of transparency in Turkey's 
legal and regulatory systems.  Too often, despite the 
existence of published laws, many regulations are in 
reality, governed by internal memoranda.  This makes life 
extremely difficult for foreign companies that find they are 
in violation of an unpublished internal document, often 
after the fact. 
 
 
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Trade Barriers Abound 
--------------------- 
 
 
8.  (SBU) EU officials also expressed frustration with 
Turkey's approach to trade.  Although it does not concern to 
agriculture, this frustration has reached such a high level 
that EU officials have cancelled meetings to discuss the 
Turkish-EU custom union.  On an issue that U.S. officials 
are quite familiar, the Turkey's import licensing regime are 
a constant source of friction between the EU and Turkey. 
From time to time "Unofficial" bans are introduced for many 
sensitive imports which are unannounced and which cause many 
headaches for EU, as well as U.S., exporters. 
 
 
9.  (SBU) EU agofficials are not hopeful that the new 
government will take steps to rectify this situation. For 
example, they believe that the new State Minister for 
Foreign Trade, Kursat Tuzmen, will be much more 
protectionist and unwilling to engage in any sort of 
dialogue on trade issues, based on his previous record as 
Foreign Trade Under Secretary under the previous Turkish 
government. The EU believes it should be exporting 
substantially more to Turkey than it does presently.  They 
attribute this phenomenon to problems connected to import 
licensing as well as phytosanitary issues.  The ban on EU 
beef is particularly grating for EU officials.  Extremely 
high tariff rates also preclude market access to Turkey. 
 
 
----------------------------------------- 
Summary:  U.S. and EU, Some Common Issues 
----------------------------------------- 
 
 
10. (SBU) The problems facing EU - Turkish trade relations 
are very similar to those faced by the United States. 
However, despite the many problems and frustrations 
expressed by the EU agofficials, there was a sense that they 
would continue to work with Turkey and, that eventually, 
Turkey would qualify for membership.  At the very least, the 
condition of Turkey's ag sector would not prevent it from 
becoming an EU member.  Nonetheless, the process will be 
very long and EU officials would not venture an estimate 
when Turkey's agriculture sector would be ready to join the 
EU.  In addition, EU agofficials expressed some displeasure 
with what they considered U.S. pressure in support of 
Turkish membership. 
Pearson