Cablegate: Deputy Treasury Undersecretary On U.S. Company

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





E.O. 12958: N/A
SUBJECT: Deputy Treasury Undersecretary on U.S. Company
Problems and the March Investor Conference

Ref: Ankara 377


1. (SBU) Cavit Dagdas, a Deputy Undersecretary at the
Turkish Treasury, told us the GOT is working toward a useful
Investor Advisory Council meeting in March, in which foreign
companies give frank advice on how to improve the investment
climate. He also asked for USG help in ensuring that the
U.S. private sector is represented. On data exclusivity,
Dagdas said the GOT is working on a compromise between the
generic and brand-name companies, and hinted that a policy
announcement will not be made for some time. We also raised
problems facing Cargill, energy companies, Dillingham and
Motorola. End Summary.

Investor Advisory Council (IAC)

2. (U) In a January 28 meeting on investment issues, Deputy
Treasury Undersecretary Cavit Dagdas told EconCouns and
Econoff that the Turkish Government is working toward a
successful launch of the IAC on March 15. The goal is for a
group of about 15 chief executives from large multinationals
to share their views on how Turkey could attract more
foreign direct investment with the Prime Minister and senior
GOT officials, as well as with IMF Managing Director Kohler
and World Bank President Wolfensohn. The IAC would be
convened once or twice a year, and Turkey's Investment
Environment Improvement Coordinating Committee (Turkish
acronym YOIKK) would serve as its secretariat.

3. (U) The GOT invited executives from multinationals with
investments in Turkey as well as from those who have not
invested. Dagdas asked for USG assistance in ensuring that
at least one U.S. company is represented at the CEO level at
the IAC. He said the GOT is thinking about inviting one or
all of the following: Newmont, Texas Instruments, Dell, IBM
and DuPont. Some of the other foreign companies invited
include Metro, Iscar, Pirelli-FIAT, Sony, Toyota, Renault
and Cadbury-Schweppes, though it is not yet clear how many
of them will participate and at what level.

4. (U) EconCouns responded that the Embassy would look into
this request, but emphasized that progress on outstanding
investment and other disputes involving U.S. companies is
the best way to spark investor interest in the Turkey.

Pharmaceuticals/Intellectual Property

5. (U) We stressed the importance of swiftly implementing
data exclusivity protection to Turkey's investment climate,
its record of WTO compliance and its prospects in the
upcoming Special 301 cycle.

6. (SBU) Dagdas stressed that Turkey's pharmaceuticals
policies should protect intellectual property and reward the
research that generates new drugs. Alluding to Turkey's
policy of referencing drug prices to those in other
countries, he said Turkey cannot be expected to pay
developed world prices for brand-name drugs.

7. (SBU) Dagdas said he had met repeatedly with both generic
and research-based companies on data exclusivity, and that
the GOT definitely intends to implement it, but with a
compromise implementation date somewhere between the
generics companies' proposal of 2007 and the research-based
companies' demand that this happen immediately. Echoing
other Embassy contacts (reftel), he suggested the GOT might
start with a short protection period (two or three years)
and increase it gradually.

8. (SBU) Dagdas said that an interagency committee would
meet on the data exclusivity issue in early February and
recommend a "roadmap" for implementation to relevant
ministers, but he implied that a final decision might not be
issued until after the March 15 IAC. We pressed hard for a
decision that would bring Turkey in line with international
standards rapidly, arguing that there is no justification
for allowing local generic producers to continue to profit
based on the work of research-based companies.

Other Investment Problems

9. (SBU) Cargill: We raised Cargill's zoning problem,
noting our understanding that a draft industrial zones law
addressing the problem would be submitted to Parliament
soon. Dagdas expressed sympathy for Cargill's predicament,
but opined that the legal issues surrounding the case would
not easily be resolved and might even require constitutional
amendments. Comment: Cagdas is the only GOT interlocutor
who has implied that the Cargill problem cannot be resolved
relatively easily and soon, and he may not be well-briefed
on this issue. End Comment.

10. (SBU) Energy Projects: Econ Counselor stressed the need
to come to a fair resolution of the dispute between the
Energy Ministry and energy build-operate-transfer (BOT)
companies over pricing and licensing. GOT harassment of the
companies is sending a very negative signal to potential
investors. Dagdas responded that this was a very difficult
issue for the GOT because corruption is alleged in some of
the contracts and because high electricity tariffs are
hurting Turkish industry. He suggested that he might try to
open discussion on this issue in the YOIKK framework in the

11. (U) Others: EconCouns also raised the Motorola-Telsim
case and Dillingham International's difficulties in
enforcing arbitral judgements in Turkey. Dagdas took notes
on our presentation, but offered no substantive answer on
these disputes.

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