Turkish Agriculture, Trade and EU Membership

UNCLAS SECTION 01 OF 02 ANKARA 008790

SIPDIS


SENSITIVE


STATE FOR EUR/SE, EB/EPD, AND EB/TPP/ABT
DEPT PLEASE PASS USTR FOR NOVELLI, DBIRDSEY, JHOFEMEISTER,
AND SLOAN
USDA FOR FAS FOR ITP/BERTSCH, MACKE, MEYER, THORBURN
USDOC FOR DEFALCO


E.O. 12958: N/A
TAGS: ETRD EAGR KPAO TU USTR
SUBJECT: Turkish Agriculture, Trade and EU Membership

Sensitive but Unclassified. Not for Internet Distribution.



1. (SBU) Summary. AgCounselor recently met with
representatives from International Organizations including
the World Bank and FAO as well as with local EU officials to
discuss the current state of Turkish agriculture and
agricultural trade. These representatives expressed
frustration with Turkish agriculture officials and the slow
rate of reform in the agriculture sector. EU Ag officials
also noted several problems including an import-licensing
regime that continues to inhibit EU exports to Turkey. Given
the recent elections, it is too soon to make any forecasts
about the future of Turkish agriculture policy, most
officials do not expect any radical changes in the
agriculture sector, primarily due to the lack of financial
resources. On the trade side, foreign officials felt that
the new government would be somewhat more protectionist
towards agricultural imports. End Summary.
--------------
Turkish Agriculture - One of Extremes
--------------



2. (SBU) Turkish agriculture ranges from modern state-of-
the-art operations to ones that seem to be right out of the
19th century. One EU official commented that parts of the
Turkish countryside resembled the "times of the prophets"
and that it would take years (and deep financial pockets)
before Turkey could truly modernize the majority of this
sector. The lack of domestic financial resources combined
extremely low direct foreign investment in the ag sector
will make this task extremely difficult. Corruption is also
a factor affecting Turkey's reputation and ability to
attract foreign investment. Too many decisions are made by
Turkish officials with their own personal interests in mind.
Ag Counselor was told one example in which a high-ranking
Turkish official with ties to a French company changed the
bidding criteria for cattle tags (required under EU
regulations) making it all but certain that only the French
company would be able to comply with the bid's requirements.



3. (SBU) Most officials noted that the level of support for
Turkish farmers has only slowed any reform process. Having
come to depend on this support, Turkish farmers are
reluctant to adapt to market conditions. The hazelnut
industry is a good example of a crop that is overproduced,
supported by the government and with no market.


--------------
Concerns With New Ag Policy
--------------



4. (SBU) Foreign officials working have been looking at the
new government's agriculture platform in the hopes of
getting some insight into Turkey's agriculture future. In
general, most do not believe that there will be major
changes in Turkey's policies. It would appear that the new
government may want to provide more assistance to smaller
farmers. The World Bank has been implementing a direct
support program over the past year, which they feel has been
quite successful. Unfortunately, the new government has
stated that they will try to redirect the World Bank-backed
direct support program and would focus more on low-income
farmers, something which worries World Bank officials.



5. (SBU) At recent meetings with Turkish trade and
agriculture officials, AgCounselor was told that Turkey
would seek to boost domestic agricultural production with
the goal of becoming more self-sufficient. With such a
large portion of the Turkish population still living in
rural areas (40 percent),engaged in agriculture, and
suffering with extremely low wages, the new government may
seek to provide these people with some additional
assistance.


-------------- --------------
Turkish-EU Agriculture Discussions and Reforms Will be Slow
-------------- --------------



6. (SBU) Although formal accession negotiations have not
begun, Turkey does qualify for some EU pre-accession
agriculture funds. However, this support has been primarily
targeted at upgrading Turkey's Customs, phytosanitary and
veterinary sectors as well as food safety, in order to
ensure that food products will meet EU standards. Overall
reform of the agriculture sector has been left to the
Turkish government to finance. Interestingly, Turkey does
not receive Sapard funds which have been available to other
EU member candidates. Instead Turkey receives assistance
from a Middle East and North African fund. Turkish
officials have noted that this is another example of Turkey
not being considered a serious candidate country by the EU.
On the other hand, a Turkish economist involved in this
process stated that Turkey must press harder for access to
EU resources and that Turkish agriculture officials must
commit the country to changing its agriculture system.
based on his record as Foreign Trade Under Secretary in the
previous GOT,

7. (SBU) One EU official compared Turkey to Poland in terms
of the size of its agriculture sector as well as the
problems its faces. EU officials noted that they are having
a difficult time with the lack of transparency in Turkey's
legal and regulatory systems. Too often, despite the
existence of published laws, many regulations are in
reality, governed by internal memoranda. This makes life
extremely difficult for foreign companies that find they are
in violation of an unpublished internal document, often
after the fact.


--------------
Trade Barriers Abound
--------------



8. (SBU) EU officials also expressed frustration with
Turkey's approach to trade. Although it does not concern to
agriculture, this frustration has reached such a high level
that EU officials have cancelled meetings to discuss the
Turkish-EU custom union. On an issue that U.S. officials
are quite familiar, the Turkey's import licensing regime are
a constant source of friction between the EU and Turkey.
From time to time "Unofficial" bans are introduced for many
sensitive imports which are unannounced and which cause many
headaches for EU, as well as U.S., exporters.



9. (SBU) EU agofficials are not hopeful that the new
government will take steps to rectify this situation. For
example, they believe that the new State Minister for
Foreign Trade, Kursat Tuzmen, will be much more
protectionist and unwilling to engage in any sort of
dialogue on trade issues, based on his previous record as
Foreign Trade Under Secretary under the previous Turkish
government. The EU believes it should be exporting
substantially more to Turkey than it does presently. They
attribute this phenomenon to problems connected to import
licensing as well as phytosanitary issues. The ban on EU
beef is particularly grating for EU officials. Extremely
high tariff rates also preclude market access to Turkey.


--------------
Summary: U.S. and EU, Some Common Issues
--------------



10. (SBU) The problems facing EU - Turkish trade relations
are very similar to those faced by the United States.
However, despite the many problems and frustrations
expressed by the EU agofficials, there was a sense that they
would continue to work with Turkey and, that eventually,
Turkey would qualify for membership. At the very least, the
condition of Turkey's ag sector would not prevent it from
becoming an EU member. Nonetheless, the process will be
very long and EU officials would not venture an estimate
when Turkey's agriculture sector would be ready to join the
EU. In addition, EU agofficials expressed some displeasure
with what they considered U.S. pressure in support of
Turkish membership.
Pearson