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Cablegate: Deputy Assistant Secretary for European Affairs

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

211400Z Sep 04

UNCLAS SECTION 01 OF 04 ANKARA 005375

SIPDIS

USDOC FOR ITA/MAC/EUR/DAS/ERIC STEWART
USDOC FOR 4212/ITA/MAC/EUR/CPD/DDEFALCO/PDACHER
STATE FOR EB/CBA AND EUR/SE
USEU FOR FCS AND ECON
AMCONSUL FOR FCS/JKELLER
STATE PLEASE ALSO PASS TO USTR

E.O. 12958: N/A
TAGS: BEXP ETRD TU
SUBJECT: DEPUTY ASSISTANT SECRETARY FOR EUROPEAN AFFAIRS
ERIC STEWART'S MEETINGS WITH GOVERNMENT OF TURKEY
OFFICIALS ON SEPTEMBER 9 AND 10, 2004.


1. THIS CABLE IS SENSITIVE BUT UNCLASSIFIED. NOT
INTENDED FOR INTERNET DISTRIBUTION

2. (SBU) SUMMARY: ON SEPTEMBER 9 AND 10, DEPUTY
ASSISTANT SECRETARY FOR EUROPE ERIC STEWART TRAVELED TO
ANKARA TO MEET WITH GOVERNMENT OF TURKEY OFFICIALS ON KEY
BILATERAL ISSUES. THE DAS MET WITH OFFICIALS FROM THE
MINISTRIES OF HEALTH, AGRICULTURE,JUSTICE,ENERGY,AND
UNDERSECRETARIATS FOR FOREIGN TRADE, TREASURY, AND EU
AFFAIRS. BILATERAL ISSUES RAISED INCLUDED
PHARMACEUTICALS AND INTELLECTUAL PROPERTY RIGHTS
PROTECTION, ENERGY INVESTMENT DISPUTES, AGRI-BUSINESS
TRADE ISSUES, AND FAILURE TO ENFORCE INTERNATIONAL
ARBITRAL AWARDS. WHILE IN TURKEY, HE ALSO MET WITH THE
PHARMACEUTICALS LOCAL ACTION WORKING GROUP, LED A
ROUNDTABLE DISCUSSION WITH THE AMERICAN BUSINESS FORUM,
AND MET WITH REPRESENTATIVES OF CARGILL AND ADM ON AGRI-
BUSINESS ISSUES. THE DAS LED A VIDEOCONFERENCE ON IRAQ
RECONSTRUCTION AND HELD A PRESS CONFERENCE WITH TWENTY-
FIVE MEMBERS OF THE MEDIA (INCLUDING PRINT AND T.V.).
THE DAS WAS ACCOMPANIED BY DESK OFFICER DAVID DE FALCO.
END SUMMARY.

3. (SBU) MEETING AT THE UNDERSECRETARIAT FOR FOREIGN
TRADE WITH DEPUTY UNDER SECRETARY GUZEL: DAS STEWART
THANKED THE GOT FOR ITS SUPPORT AGAINST THE WAR ON
TERROR, INCLUDING RECONSTRUCTION EFFORTS. HE ALSO
HIGHLIGHTED TURKEY'S IMPORTANCE AS A KEY-TRADING ALLY,
DUE TO ITS GEOGRAPHIC LOCATION AND DEMOGRAPHICS. IN
2003, THE UNITED STATES EXPORTED OVER $2.9 BILLION TO
TURKEY AND IMPORTED $3.7 BILLION, AND U.S. COMPANIES
HAVE INVESTED APPROXIMATELY $2 BILLION IN TURKEY (2003
HISTORICAL COST FIGURES).

4. (SBU) DAS STEWART URGED TURKEY TO TAKE STEPS TO
IMPROVE ITS INVESTMENT CLIMATE TO ATTRACT FOREIGN
CAPITAL. AS TRADE TENDS TO FOLLOW INVESTMENT, A
STRONGER TURKISH INVESTMENT CLIMATE WILL HELP INCREASE
TRADE VOLUMES.

5. (SBU) DAS STEWART RAISED USG CONCERN ABOUT THE GOT'S
DECISION TO WAIT UNTIL DECEMBER 31, 2007, TO PROTECT
CONFIDENTIAL TEST DATA. TURKEY IS NOT IN COMPLIANCE
WITH ITS TRIPS OBLIGATIONS - PROTECTION IN THIS AREA
SHOULD HAVE COMMENCED IN 2000. LACK OF PROTECTION FOR
CONFIDENTIAL TEST DATA THREATENS THE COMMERCIAL
POSITION OF SEVERAL U.S. FIRMS AND WILL HINDER CURRENT
AND FUTURE INVESTMENT IN THE TURKISH MARKET.
ADDITIONALLY, HE ASKED THAT TURKEY CEASE APPROVING ANY
COPIES OF PATENTED PRODUCTS. DAS STEWART ASKED THAT
THE GOT ESTABLISH AN INTER-MINISTERIAL WORKING GROUP TO
DISCUSS THESE ISSUES WITH INNOVATIVE PHARMACEUTICAL
PRODUCERS.

6. (SBU) DAS STEWART ENCOURAGED TURKEY TO STEP UP
ENFORCEMENT MEASURES TO ADDRESS PRODUCTION OF
COUNTERFEIT TRADEMARKED AND PIRATED COPYRIGHTED WORKS
SUCH AS APPAREL, OPTICAL MEDIA, AND BOOKS.

7. (SBU) ON ENERGY INVESTMENT, WE EXPECT THE GOT TO
RESPECT ITS OBLIGATIONS UNDER THE INTERNATIONALLY
BINDING CONTRACTUAL AGREEMENTS WITH INDEPENDENT POWER
PRODUCERS. HE ENCOURAGED THE GOT TO RESOLVE ANY
OUTSTANDING DISPUTES THROUGH DIALOGUE AND REFRAIN FROM
TAKING EXTRA JUDICIAL STEPS SUCH AS UNILATERAL
CANCELLATION OF BOT CONTRACTS. ADDITIONALLY, HONORING
THE EXCHANGE RATE GUARANTEE FOR EXISTING REGISTERED
CAPITAL INVESTMENTS IS NON-NEGOTIABLE FOR FOREIGN OIL
AND GAS COMPANIES.

8. (SBU) THE DAS NOTED HIS PLEASURE WITH THE PASSAGE OF
AMENDMENTS TO THE ZONING LAW THAT ALLOW CARGILL TO
OPERATE ITS FACILITY FREE OF LEGAL ENCUMBRANCES. HE
DID, HOWEVER, NOTE THAT THE SUGAR LAW, WHICH PLACES A
QUOTA ON THE PRODUCTION OF CORN SYRUP, WILL FORCE U.S.
COMPANIES TO REEVALUATE THEIR $170 MILLION WORTH OF
INVESTMENTS. HE ASKED THAT THE GOT FIND A WAY TO
ACCOMMODATE THE CONCERNS OF THE HIGH-FRUCTOSE CORN
SYRUP INDUSTRY.

9. (SBU) THE DAS RAISED CONCERNS IN THE DISTILLED
SPIRITS INDUSTRY OVER THE ESTABLISHMENT OF AN IMPORT
REGIME THAT IS NON- TRANSPARENT AND THE IMPLEMENTATION
OF NEW STANDARDS REGARDING SUPERIOR ALCOHOLS.

10. (SBU) THE DAS APPLAUDED TURKEY FOR ADOPTING THE EU
NEW APPROACH DIRECTIVES AND BELIEVES THAT MEETING
EUROPEAN AND INTERNATIONAL STANDARDS DOES AFFORD
GREATER CONSUMER, WORKER, AND ENVIRONMENTAL PROTECTION.
HOWEVER, HE NOTED INCONSISTENCY WITH THE IMPLEMENTATION
OF THE DIRECTIVES IN TURKEY. SPECIFICALLY, THE TURKISH
CUSTOMS SERVICE IS CLEARING CE-MARKED PRODUCTS
ORIGINATING IN THE EU AND DELAYING THE ENTRY OF CE-
MARKED PRODUCTS FROM COUNTRIES OUTSIDE THE EU.

11. (SBU) THE DAS CONCLUDED HIS REMARKS BY ASKING THE
UNDERSECRETARIAT FOR SUPPORT IN RESOLVING THESE TRADE
AND INVESTMENT ISSUES. HE ASKED THAT THE DEPUTY UNDER
SECRETARY JOIN HIM IN A DIALOGUE AIMED AT MOVING THESE
ISSUES THROUGH THE VARIOUS LINE MINISTRIES.

12. (SBU) DEPUTY UNDER SECRETARY GUZEL AGREED THAT IN
ORDER TO ATTRACT FURTHER INVESTMENT TO TURKEY MANY OF
THE OUTSTANDING DISPUTES WOULD HAVE TO BE RESOLVED.
SHE WAS FAMILIAR WITH MANY OF THE MATTERS LISTED AND
UNDERSTOOD THE NEED TO WORK WITH INDUSTRY AND THE USG
TO ADDRESS THEM. SHE ALSO AGREED TO PARTICIPATE IN ANY
INTER-MINISTERIAL DIALOGUE WITH INNOVATIVE
PHARMACEUTICALS PRODUCERS ON PHARMACEUTICALS ISSUES.
THE DEPUTY UNDER SECRETARY AGREED TO CONTINUE THIS
EXCHANGE WITH THE DAS AND TO WORK WITH THE LINE
MINISTRIES TO RESOLVE OUTSTANDING ISSUES.

13. (SBU) MEETING AT THE MINISTRY OF HEALTH WITH
DIRECTOR GENERAL GUMRUKCUOGLU: THE DAS RAISED USG
CONCERNS OVER THE LACK OF DATA EXCLUSIVITY AND
IMPLEMENTATION OF A NEW REIMBURSEMENT REGIME THAT MAY
INCLUDE THE CREATION OF A POSITIVE LIST. THE DAS URGED
THE MOH TO PARTICIPATE IN AN INTER-MINISTERIAL DIALOGUE
WITH INDUSTRY OVER THE CREATION OF A NEW REIMBURSEMENT
REGIME IN TURKEY.

14. (SBU) THE DIRECTOR GENERAL ACKNOWLEDGED
DIFFICULTIES WITH THE IMPLEMENTATION OF DATA
EXCLUSIVITY, BUT ASSURED US THAT THE LAW HAD BEEN
DRAFTED AND THAT IT WOULD BE IMPLEMENTED BY THE
DECEMBER 2007 DATE. HE HIGHLIGHTED THE COST OF
IMPLEMENTATION AS A MAJOR FACTOR FOR THE DELAY. HE
NOTED THAT THE POSITIVE LIST HAD NOT BEEN ESTABLISHED
YET AND THAT IT WAS NOT THE MOH'S INTENTION TO
DISCOURAGE IMPORTS WITH THE CREATION OF SUCH A LIST.
HE PROMISED TO WORK WITH INDUSTRY OVER THE DEVELOPMENT
OF NEW REIMBURSEMENT POLICIES AND AGREED TO PARTICIPATE
IN ANY INTER-MINISTERIAL DISCUSSIONS HELD WITH
INNOVATIVE PRODUCERS OVER THE ESTABLISHMENT OF SUCH
POLICIES.

15. (SBU) MEETING AT THE UNDERSECRETARIAT OF TREASURY
WITH UNDER SECRETARY CANAKCI: DAS STEWART HIGHLIGHTED
TURKEY'S NEED TO CREATE AN ENVIRONMENT FRIENDLY TO
FOREIGN INVESTMENT IF IT WISHES TO ATTRACT CAPITAL.
TURKEY HAS TAKEN A NUMBER OF STEPS, WHICH SERVE TO
CREATE UNCERTAINTY IN THE MARKET. THESE INCLUDE, AN
INABILITY TO RESOLVE OUTSTANDING ENERGY CONTRACTS AND
THE REFUSAL TO HONOR THE EXCHANGE RATE GUARANTEE FOR
EXISTING ENERGY INVESTMENTS. HE ENCOURAGED THE GOT TO
OPEN A DIALOGUE WITH FOREIGN INVESTORS TO CLARIFY THE
STATUS OF PROJECTS.

16. (SBU) THE UNDER SECRETARY SHARED THE DAS' CONCERNS
AND UNDERSTOOD THE NEED TO CREATE AN ENVIRONMENT THAT
WILL ATTRACT NEEDED INVESTMENT. THE UNDER SECRETARY
NOTED THAT ENERGY PROJECTS (ESPECIALLY THE HYDRO-POWER
PROJECTS) HAD RUN INTO FINANCING ISSUES BECAUSE OF THE
IMF REQUIREMENT THAT TURKEY CUT ITS PRIMARY SURPLUS TO
6.5 PERCENT OF GDP. HE ASSURED US THAT THE GOT WAS
WORKING ON A SOLUTION FOR THE EXCHANGE RATE GUARANTEE.
HE ASKED THAT THE DAS PASS ALONG A LIST OF PROBLEM
ENERGY PROJECTS AND HE WOULD DO WHAT HE COULD TO WORK
WITH THE MINISTRY OF ENERGY AND NATURAL RESOURCES AND
INDUSTRY TO DISCUSS NEXT STEPS.

17. (SBU) MEETING AT MINISTRY OF AGRICULTURE WITH UNDER
SECRETARY CAGIL: DAS STEWART RAISED USG CONCERNS OVER
THE MANY STEPS TAKEN BY THE GOT THAT LIMIT ACCESS FOR
U.S. EXPORTERS. THEY INCLUDE: AN ONEROUS, NON-
TRANSPARENT LICENSING REGIME FOR DISTILLED SPIRITS;
HIGH AD VALOREM TAXES AND A SUPERIOR ALCOHOL STANDARD
FOR DISTILLED SPIRITS; A SUGAR QUOTA THAT CAPS CAPACITY
OF U.S. PLANTS AT APPROXIMATELY FIFTY PERCENT; A SEED
CRUSHING TARIFF INCREASE OF SEVEN PERCENT WITHOUT
NOTIFICATION OR DISCUSSION WITH INDUSTRY; AND A WTO-
INCONSISTENT POLICY WITH REGARDS TO RICE QUOTAS. HE
NOTED THAT THE RICE ISSUE WOULD BE TAKEN UP DURING THIS
MONTH'S ROUND OF WTO AGRICULTURE COMMITTEE MEETINGS.

18. (SBU) THE DAS ASKED THE UNDER SECRETARY ABOUT
TURKEY'S PLANS WITH REGARDS TO ACCEPTING GMO PRODUCTS.
19. (SBU) UNDER SECRETARY CAGIL ADMITTED THAT HIS
MINISTRY FACED DIFFICULT DECISIONS BECAUSE IT HAD TO
BALANCE TRADE INTERESTS WITH DOMESTIC PRODUCERS'
INTERESTS. HE FELT CONFIDENT THAT THE ISSUES COULD BE
RESOLVED THROUGH AN OPEN DIALOGUE WITH THE AFFECTED
COMPANIES.

20. (SBU) ON THE DISTILLED SPIRITS ISSUE, HE NOTED THAT
A LAW WOULD COME INTO EFFECT OVER THE NEXT MONTH THAT
WOULD CREATE THE CODEX COMMISSION AND BEGIN
HARMONIZATION WITH EU AGRICULTURE DIRECTIVES - WHICH
WOULD ADDRESS MOST OF THESE CONCERNS. ON THE SEED
CRUSHING ISSUE HE DEFERRED TO THE EXPERTS, BUT SAID HE
BELIEVED THE TARIFF WOULD BE TEMPORARY AND OFFERED TO
INTERVENE WITH THE COMPANY TO CLEAR UP ANDY
UNCERTAINTIES.

21. (SBU) ON THE RICE QUOTA ISSUE, THE UNDER SECRETARY
CONFIRMED THAT THE PRACTICE WAS TO PROTECT LOCAL
PRODUCERS AND HE COMPLAINED THAT THE PRICE OF RICE IN
TURKEY WAS EXTREMELY HIGH. THE REQUIREMENTS TURKEY HAS
IMPLEMENTED SERVE TO ENSURE THE PURCHASE OF TURKISH
RICE. HE CLAIMED THERE WAS NO IMPORT BAN AND THAT THE
MINISTRY WAS FORCED TO TAKE THIS STEP BECAUSE IT WAS
DIRECTED TO DO SO BY MINISTERIAL DECREE.

22. (SBU) IN RESPONSE TO THE QUESTION REGARDING GMOS,
THE UNDER SECRETARY SAID THAT TURKEY WOULD FOLLOW THE
EU'S LEAD. HE PERSONALLY FELT THE PRODUCTS SHOULD BE
ALLOWED INTO THE COUNTRY IF THEY ARE PROPERLY LABELED.

23. (SBU) MEETING AT UNDERSECRETARIAT FOR EU AFFAIRS
WITH DIRECTOR CAN: THE DAS RAISED THREE ISSUES WITH
THE DIRECTOR THAT RELATE DIRECTLY TO TURKEY'S
HARMONIZATION WITH EU DIRECTIVES. THE THREE ISSUES
WERE: INCONSISTENT CE-MARK ENFORCEMENT; LACK OF DATA
EXCLUSIVITY FOR PHARMACEUTICAL TEST DATA; AND GOT
IMPLEMENTATION OF SUPERIOR ALCOHOL STANDARDS.

24. (SBU) DIRECTOR CAN NOTED THAT THE UNDERSECRETARIAT
WAS HAVING DIFFICULTIES IN EDUCATING LINE MINISTRIES ON
EU HARMONIZATION. SHE WAS VERY FAMILIAR WITH THE DATA
EXCLUSIVITY ISSUE AND TOLD THE DAS THAT ONE OF HER
COLLEAGUES WAS WATCHING THE ISSUE VERY CLOSELY (AN EU
TRADE BARRIER REPORT ON TURKEY THAT HIGHLIGHTS
DEFICIENCIES WITH THE PROTECTION OF DATA EXCLUSIVITY IS
EXPECTED TO COME OUT IN OCTOBER). ON THE DISTILLED
SPIRITS ISSUE, THE DIRECTOR CONFIRMED WHAT WE HEARD AT
THE MINISTRY OF AGRICULTURE WITH REGARD TO THE CREATION
OF THE CODEX COMMISSION WITHIN THE MONTH. SHE ALSO
CONFIRMED THAT A DRAFT LAW ON DISTILLED SPIRITS HAD
ALREADY BEEN DRAFTED AND COULD BE IMPLEMENTED QUICKLY.
FINALLY, ON THE CE-MARK ISSUE SHE EXPRESSED FRUSTRATION
OVER GETTING THE LINE MINISTRIES TO UNDERSTAND THEIR
DUTIES AND PROMISED TO GET AN UPDATE TO THE DAS ON THE
MATTER WITHIN THE NEXT COUPLE OF WEEKS.

25. (SBU) MEETING AND MINISTRY OF ENERGY AND NATURAL
RESOURCES WITH UNDER SECRETARY DEMIRBILEK: DAS STEWART
RAISED USG CONCERNS OVER THE GOT'S INABILITY TO MOVE
FORWARD ON BOT PROJECTS WITH SIGNED CONTRACTS. WHILE
THE USG UNDERSTANDS THE DIFFICULTY OF MOVING FORWARD ON
ALL THE PROJECTS, THE COMPANIES ARE FRUSTRATED THAT
THEY HAVE NOT RECEIVED STATUS UPDATES. THE DAS ASKED
THE MINISTRY TO WORK WITH COMPANIES INTERESTED IN THE
NINE PROTOCOL HYDROPOWER PROJECTS. HE URGED TURKEY TO
RESOLVE THE EXCHANGE RATE GUARANTEE ISSUE AND ADDRESS A
PROBLEM TOREADOR RESOURCES FACES WITH OBTAINING A BLACK
SEA LICENSE - WHICH THE COMPANY CLAIMS WAS GIVEN TO
TPAO CONTRARY TO THE PETROLEUM LAW OF 1954 (THIS MATTER
IS CURRENTLY WORKING ITS WAY THROUGH THE TURKISH
JUDICIAL SYSTEM).

26. (SBU) THE UNDER SECRETARY ASSURED US THAT A
RESOLUTION TO THE BOT PROBLEM WOULD BE REACHED AND THAT
IT WOULD FALL WITHIN THE PARAMETERS OF THE SIGNED
CONTRACTS. HE ALSO APPEARED NOT TO BE CONCERNED OVER
PENDING LAW SUITS. ON THE EXCHANGE RATE ISSUE, HE TOLD
US THAT THE GOT WOULD RESOLVE THE PROBLEM BY ALLOWING
INVESTORS TO REPATRIATE PROFITS, UP TO THE AMOUNT OF
THE INITIAL INVESTMENT, FREE OF TAXES - A SOLUTION HE
CLAIMS WAS REACHED WITH INDUSTRY INPUT. ON THE LICENSE
ISSUE, HE CLAIMS THAT EVERYTHING THE MINISTRY DID WAS
LEGAL. HE ALLEGES THAT THE PETROLEUM LAW OF 1954 HAS
AN EXEMPTION FOR OFF-SHORE DRILLING WHICH ALLOWS TPAO
TO RECEIVE THE LICENSE.

27. (SBU) MEETING AT THE MINISTRY OF JUSTICE WITH UNDER
SECRETARY KASIRGA: DAS STEWART CONGRATULATED THE UNDER
SECRETARY FOR HIS MINISTRY'S ROLE IN PROMOTING IP
PROTECTION AND WORKING WITH THE U.S. DEPARTMENT OF
JUSTICE AND PATENT AND TRADEMARK OFFICE ON THE
SEPTEMBER IP SEMINAR. THE DAS RAISED USG CONCERNS OVER
HIGH PIRACY LEVELS IN TURKEY, THE LACK OF DATA
EXCLUSIVITY, AND THE FAILURE OF SOME TURKISH COURTS TO
ENFORCE INTERNATIONAL ARBITRAL AWARDS.

28. (SBU) THE UNDER SECRETARY REMAINS COMMITTED TO
ENFORCE IP LAWS AND NOTED THE INTEREST ON THE PART OF
HIS MINISTRY TO CONTINUE TO EDUCATE JUDGES AND
PROSECUTORS. HE HIGHLIGHTED THE FACT THAT TURKEY HAS
SEVEN SPECIALIZED IP COURTS WHOSE JUDGES WERE REQUIRED
TO STUDY IP LAWS IN EUROPE FOR ONE YEAR. HE WAS NOT
FAMILIAR WITH THE DATA EXCLUSIVITY ISSUE AND DIRECTED
US TO THE MINISTRY OF HEALTH.

29. (SBU) ON THE ARBITRATION ISSUE, HE WAS SURPRISED TO
HEAR ABOUT THE PROBLEM. HE ASKED THAT WE SEND HIM A
PAPER DETAILING OUR COMPLAINT SO THAT HE CAN ASSIGN
LAWYERS ON HIS STAFF TO INVESTIGATE. HE ASKED THAT WE
NAME THE COURTS RENDERING THESE JUDGEMENTS AND PROMISED
TO GET BACK TO US WITH HIS FINDINGS.

30. (U) DAS ERIC STEWART HAS CLEARED THIS CABLE.

EDELMAN

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