Cablegate: Turkey Gsp Waiver Review


DE RUEHAK #1182/01 1801418
O 281418Z JUN 08




E.O. 12958: N/A

REF: STATE 69109

1. (SBU) Summary: Ambassador carried out reftel instructions
regarding Turkey's Generalized System of Preferences (GSP)
eligibility for gold jewelry with MFA U/S Apakan by phone
June 27 and in person June 28. Apakan reaffirmed the
positions stated in Foreign Trade Minister Tuzmen's April 8,
2008 letter to USTR Ambassador Schwab. Apakan said that
removing GSP benefits from Turkish gold jewelry exports would
undercut improving public perceptions of the US and of
US-Turkish relations, and would adversely affect jewelry
producing beneficiaries in Turkey's impoverished southeast.
End Summary.

2. (SBU) Meeting with Apakan on June 28, Ambassador reviewed
the main points of their telcon the day earlier, and he
walked Apakan through the facts and arguments contained in
reftel. Ambassador highlighted US concern to administer the
GSP program in a consistent, rules-based way that will
protect it against any WTO challenge and ensure continued
Congressional support. He noted that the recommendations
being considered in Washington do not envision Turkey's
removal from the GSP program, as had been discussed in
2006-07. In fact, an additional product, copper cables and
plaited bands, is being approved for a competitive needs
limitation (CNL) waiver. We want to protect the overall
program, and the jewelry CNL revocation being considered was
a step to do that.

3. (SBU) Apakan expressed appreciation for the benefits
Turkey continues to receive under GSP, for the news about
copper products, and for the opportunity to comment prior to
a US decision on the gold jewelry CNL. He said that Turkey's
position remains as stated by Foreign Trade Minister Tuzmen
to USTR Ambassador Schwab in writing on April 4. He noted
key points in Tuzmen's letter.

-- Turkey has significantly improved its market access for US
products and provides some of the lowest tariff rates for US
industrial goods in comparison with other top ten GSP
beneficiary countries. A jewelry waiver revocation would
likely open the market to such suppliers as China, Hong Kong
and Italy rather than the least-developed countries the GSP
program would like to target more.

-- Turkish jewelry products do not compete directly with US
jewelry products and provide critical inputs for American
wholesalers, who often re-export Turkish items to other

-- While the dollar value of Turkish jewelry exports to the
US has increased, the volume has actually decreased by 17
percent over the past three years. Rising gold prices mask a
decline in overall sales that should be taken into account.

4. (SBU) Apakan expressed concern about the impact of a
jewelry CNL revocation on US-Turkish relations. Our ties and
the Turkish public's perception of them have been improving.
While the dollar amount at stake is relatively small, this
policy change will be viewed negatively by the Turkish
public. It will be "counterproductive," and Turkey asks that
the CNL waiver be continued. It was also noted that while
much of gold jewelry exported to the US is produced in
Istanbul, small-medium size jewelry producers in such cities
of Turkey's impoverished southeast as Sanlifurfa,
Kahramanmaras and Gaziantep have gained access to American
market via GSP. They will be adversely affected by its
revocation. This would contradict the mutually agreed
interest in stimulating SME development that was discussed in
the April Economic Partnership Commission meetings in
Washington and would be unhelpful as the government seeks to
bolster development and trade in the country's troubled
southeast. Turkey asks, Apakan concluded, that the US keep
GSP as it is, including with regard to Turkish exports of
gold jewelry.

5. (SBU) In post's view, a CNL revocation for Turkish gold
jewelry will generate substantial negative press for the US
and undermine the improvements made over the last nine months
in the abysmal public "approval" rating the US typically
receives in Turkey. It will undercut successful work done
here, and those Turks who have advocated for us, to improve
US market access -- e.g., for live cattle and certain
alcoholic beverages -- and to secure better IPR protections.
We judge that there will be little or no specific impact on
our collaboration on such foreign policy priorities as Iraq,
Iran, the Middle East, energy, terrorism, etc., at least as
long as the present government remains in office, and that
the broader political-economic impact in Turkey will be
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