Cablegate: Turkey Now On Both Sides of Gsm Issue

This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS ANKARA 000466

SIPDIS

STATE FOR EUR/SE, EB/EPD, AND EB/TPP/ABT
DEPT PLEASE PASS USTR FOR NOVELLI, DBIRDSEY, JHAFEMEISTER
USDA FOR FAS FOR ITP/SCANDURRA, GRUEFF, BERTSCH, MACKE,
MEYER, THORBURN

E.O. 12958: N/A
TAGS: ETRD EAGR KPAO TU USTR
SUBJECT: Turkey Now on Both Sides of GSM Issue

Sensitive but Unclassified. Not for Internet Distribution.

1. (SBU) Summary: After hearing about the benefits of
USDA credit guarantee program from the Turkish private
sector, the Undersecretariate for Foreign Trade seems to
have softened their opposition to the U.S. proposal on
export credits. However they remain concerned that the
program's subsidy component distorts trade and contradicts
their current WTO position on domestic and export subsidies.
They are aware of the upcoming meetings in Geneva on this
issue and are uncertain whether they will have a revised
position in such a short time.

2. (SBU) On January 17, Ag Counselor and Ag Attache met
with Deputy Director General for Agreements, Husnu Dilemre
at the Undersecretariate of Foreign Trade to discuss the
U.S. WTO proposal on export credit programs. After
receiving information from domestic groups (see para 3)
Dilemre seems to have a more balanced view of the GSM
program and recognizes its importance to the domestic feed
and poultry industries. At the same time, Dilemre and other
officials at Foreign Trade reference a 2002 OECD report
entitled Agriculture and Trade Liberalization that
identifies a subsidy component to the GSM program. Note:
Dilemre stated that, according to the report, USDA's GSM-102
program is more trade distorting than any export subsidy
program. End note. This has created a dilemma for Foreign
Trade, since according to their WTO position, they strongly
oppose domestic and export subsidies. Nonetheless, Dilemre
and his staff indicated that will continue discussions on
the issue and may seek a more balanced response to WTO
discussion on export credits - presumably to one that is
more positive than previously reported.

3. (SBU) On January 16, Husnu Dilemre met with a diverse
group of domestic agriculture associations (including feed
and poultry), banks, the State Planning Office and
representatives from the Ministry of Agriculture and
Ministry of Industry to discuss the GSM program. Comment:
Before the meeting, some industry participants indicated to
us that they were surprised and pleased that the government
would engage them on such short notice. This is one
positive sign that the GOT may be beginning to recognize the
need to engage domestic private sector participants as they
formulate policy. End Comment. During this meeting,
domestic groups impressed upon Dilemre the benefits that the
GSM program provided them. Foreign Trade now acknowledges
that Turkey is deficient in the production of many
agricultural products that are key inputs to several
domestic industries. Dilemre also now recognizes the
benefits reaped by users of the GSM program. Even long-time
opponents of the GSM program including the Ministry of
Agriculture, and the Chamber of Agricultural Engineers have
softened their criticism.

4. (SBU) Comment. FAS/Ankara along with USDA cooperators
and banks encouraged local importers, banks as well as feed
and poultry associations to discuss the issue with Turkish
officials. Upon hearing that such a discussion of export
credit programs was taking place, most of these private
sector representatives wrote letters and contacted officials
to express their support for continuation of the program
with the current terms. FAS/Ankara will follow-up with
Foreign Trade on their revision of their position on GSM and
any change to their overall WTO position and proposal.
PEARSON

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