Cablegate: Turkish Foreign Trade Official On Desirability

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: Turkish Foreign Trade Official on Desirability
of a Turkish-Iraqi Trade Agreement

1. (U) Baghdad minimize considered.

2. (SBU) In a February 10 meeting with Econoffs and Econ
Specialist on Iraq-Turkey transport and fuel trade
issues (septel), Sevket Ilgac, Deputy Director General
for Agreements at the Turkish Foreign Trade
Undersecretariat, also described Turkish thinking on
formal trade agreements with Iraq. Ilgac said that the
GOT proposed "preferential" and border trade agreements
to Iraqi representatives. proposed "preferential" and
border trade agreements to Iraqi representatives, and
that the Turks would ultimately like to negotiate a free
trade agreement (FTA) with Iraq (did he really said
that. What I got was they wanted to sign a free trade
agreement with Iraq, but they cannot due to the Customs
Union. So, they now consider a preferential trade
agreement with Iraq).

3. (SBU) Preferential Trade: Ilgac told us that Turkey
would like to negotiate a free trade agreement (FTA)
with Iraq, but acknowledged that the EU Customs Union
preventsed Turkey from doconcluding FTA with Iraq
or any other country with which the EU has no FTA.
However, he argued that Turkey planned to use what
flexibility there is in the customs union to allow the
Turks and Iraqis to reduce trade barriers. Ilgac said
that a draft Turkish agreement recently passed to Iraqis
proposed that Iraq cut industrial tariffs on Turkish
goods to 4.4 percent (Turkey's most-favored-nation
average rate). In exchange, Turkey could make
concessions in agriculture, which is largely outside the
scope of the customs union. These reduced tariffs could
be offered in the form of Generalized System of
Preferences (duty free import privileges for developing
country trading partners) benefits for Iraqi
agricultural exports. Turks also want to eliminate
tariff renovation agreement with Iraq to eliminate non-
tariff barrie The GOT also supports WTO membership
forwants Iraq.
to become a member of the WTO, and to realize trade
with the WTO rule. They also want to trade goods for

4. (SBU) Border Trade: Turkey has also proposed special
border trade arrangements to Iraq and neighboring
countries. Ilgac explained that this system would cut
tariffs on limited quantities of trade by 30 to 40
percent and eliminate non-tariff barriers to support
local employment, to encourage cross-boarder trade and
to formalize some unregistered economic activity. Note:
The border trade arrangement is distinct from the pre-
war bilateral trade agreement, which the Turks are also
pushing Baghdad to continue. End Note.

5. (SBU) Trade Figures: Ilgac told us that Turkey has
been exporting about USD 110 to 120 million in goods
monthly over the last six months, and that fuels account
for roughly half of these sales.

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