Cablegate: Economic Partnership Commission: Update On

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: Economic Partnership Commission: Update on
Action Items and Suggested Points

Ref: A) Ankara 386 B) Errion/Marciel Email 1/22/04
C) Ankara 45 and previous


1. (SBU) MFA U/S Ziyal and U/S Larson agreed to discuss
implementation of the Economic Partnership Commission
Action Plan (ref c) by telephone at 10:30 EST on March
5. Embassy recommends that U/S Larson encourage Turkey
to adhere to the economic reform program; press for
resolution of U.S. business disputes; and insist on a
unified Turkish position on whether to proceed with non-
textile Qualifying Industrial Zone legislation. Embassy
encourages USG agencies to agree to send an interagency
team to consult with the GOT on trade issues, and to
provide a list of areas in which Turkish law and
regulation on intellectual property is inconsistent with
TRIPS. End Summary.

Economic Reform

2. (SBU) Turkey has taken positive steps since the EPC:
completion of the sixth IMF review, with the seventh
review underway; and signs of reengagement with the
World Bank. However, a number of concerns remain and we
will need to monitor Turkey's performance closely.
Embassy does not see much value in going into detail on
these issues with Ziyal, but recommends that U/S Larson
stress the need for deeper and fuller implementation of
the broad reform program.


3. (SBU) The GOT sent a formal response to the report by
the Advisory Committee on International Economic Policy
(ACIEP). OPIC briefed Treasury Undersecretariat and MFA
officials on OPIC-supported investment funds in January.
There has been no change in the status of ratification
of the Cape Town Convention on Commercial Aircraft
Ownership Registration. Most importantly, Turkey has
not resolved a single U.S. company dispute. Suggested
points include:

--At the EPC, we agreed on the importance of resolving
investment and other business disputes involving U.S.
companies as key to improving Turkey's business image
and attracting foreign direct investment.

--Strong protection of intellectual property, including
data exclusivity protection for pharmaceutical test
data, is not only a WTO TRIPS and EU Customs Union
requirement, but also a key element in encouraging FDI
and the development of high technology sectors.

--Turkey has not resolved any of the business issues
facing U.S. companies which we raised at the EPC. Urge
Ziyal to engage other Turkish agencies to fix these

--Turkey should ratify the Cape Town Convention, which
would enable state-owned Turkish Airlines to
significantly cut its financing costs in acquiring
Boeing aircraft.


4. (U) Eximbank: The U.S. Eximbank briefed Turkish
Eximbank and officials from other Turkish agencies on
the Trade Bank of Iraq Framework Agreement, and, as far
as we know, no further USG action on this issue is

5. (SBU) QIZs: The USG and GOT have not come to closure
on the parameters of a Turkey Qualifying Industrial
Zone. Embassy transmitted ref A points on our
requirement that any Turkey QIZ exclude textiles and
apparel. MFA has said that it would accept a QIZ with
these sectoral exclusions, but others in the GOT
bureaucracy (especially the Foreign Trade
Undersecretariat) and the Turkish private sector do not
see any significant economic benefit under this
arrangement. We understand that another cable
instructing the Embassy to approach the Turks for a
definitive answer to the QIZ proposal is forthcoming.
Embassy recommends that U/S Larson reiterate the USG
position on sectoral exclusions; request a unified GOT
response to our QIZ offer; and request that the Turks
provide a draft business plan so that we can show
Congress how a non-textile QIZ might work.

6. (U) Experts Visit: We agreed to meet with the Turks
to discuss a wide range of trade issues (IPR, non-tariff
measures, WTO compliance, cooperation in the WTO Doha
Round, textiles) by end-March 2004. We also owe the GOT
a list of areas in which Turkish laws and regulations
are inconsistent with the WTO TRIPS Agreement. Both
actions take on added importance and urgency given the
Special 301 review underway.

7. (SBU) USTR proposed consultations with the GOT on IPR
at the March TRIPS Council meeting in Geneva, or by
videoconference (ref B). Embassy continues to urge
Washington agencies to send an interagency delegation to
Ankara on all outstanding trade issues (and to use this
forum to press on investment issues as well). Meeting
in Ankara would ensure that key Turkish agencies (such
as Health, Culture, Customs) are included in the
discussions. More importantly, the GOT would interpret
an Ankara visit as a signal that we take these issues


8. (U) Ambassador Mann visited Ankara in December to
promote cooperation on both the Baku-Tbilisi-Ceyhan
(BTC) pipeline and natural gas transit to European
markets. Turkey's BOTAS and Greece' DEPA reached
agreement on a gas interconnector pipeline to be
completed in 2006. Discussion with Italy's Edison Gas
about a pipeline from Greece to Italy is ongoing. BOTAS
and gas companies from Austria, Hungary, Romania and
Bulgaria established a company to build a gas pipeline
network from Turkey to Austria, with a final decision
expected by year-end.

Regional Cooperation

9. (U) In January, Commerce organized a series of
conferences on Iraq reconstruction in Turkey, and helped
organize a Turkish delegation for a regional conference
in Amman. We continue to support Turkey-Iraq cross-
border initiatives and trade. Afghanistan Coordinator
Taylor will visit Ankara in March.

10. (U) Baghdad minimize considered.

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