US and GOT Discuss Bilateral Ag Issues

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E.O. 12958: N/A
TAGS: ETRD EAGR PGOV PREL GR TU
SUBJECT: US and GOT Discuss Bilateral Ag Issues

Sensitive but Unclassified. Not for Internet
Distribution.


1. (SBU) Summary. On January 24, U.S. and Turkish
officials met on the margins of the Trade and Investment
Framework Agreement (TIFA) Council Meeting in Ankara to
discuss bilateral trade issues at the Ministry of
Agriculture and Rural Affairs (MARA). Assistant U.S.
Trade Representative for Europe and the Mediterranean,
Shaun Donnelly, and MARA Under Secretary, Hasim Ogut,
discussed the U.S. WTO rice case as well as other
bilateral trade issues including imports of meat and
taxes on cola consumption. End Summary.

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Changes in Turkish Agriculture Strategy
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2. (SBU) Under Secretary of Agriculture, Hasim Ogut,
welcomed the opportunity to discuss U.S.-Turkish
bilateral agriculture trade issues. He noted that
Turkey had made major revisions in its agriculture
policies since the early 1980s and that the GOT is
seeking to further restructure its agriculture sector,
primarily as part of its EU accession process. Ogut
explained that the government's strategic plan included:
(1) Continued Market Reform based on free market
principles; (2) Parastatals will be reduced to a
regulatory role in the agriculture market; (3) Support an
increase in direct income support programs. The GOT
hoped that by making these changes, Turkey could avoid
any future trade problems.

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2006 - 2010
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3. (SBU) U/S Ogut outlined the measures the GOT plans to
structurally change its agriculture sector based on the
principles of the free market in which the private sector
and competition will play the dominant role. He noted
that this was the first time in Turkey's history that the
GOT had developed a 5-year plan for agriculture. Among
the areas they hoped to address were implementation of
deficiency payments, support for the livestock sector,
rural development projects including cold storage and
some sort of government-supported crop insurance program.
The U/S told the U.S. delegation that draft legislation
encompassing these plans had been prepared and had
already passed through the necessary parliamentary
committees. He hoped that the law would be passed in a
month. The goal would be to ensure that agriculture
policies do not interfere with the market. In addition,
these new policies will be much more transparent for
farmers and investors. He underscored that before 1980,
Turkey followed an import substitution policy for
agriculture products but that that will no longer be the
case.

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WTO Rice Case
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4. (SBU) In addressing the proposed U.S. WTO case
against Turkey on rice, the Under Secretary acknowledged
that the agriculture ministry understands the process and
had 2 of their experts attend meetings in Geneva and
respond to the U.S. questionnaire.


5. (SBU) U/S Ogut stated that there already were limits
on paddy rice production in Turkey due to constraints on
the availability of water and competition from
alternative crops, which were proving more profitable.
As a result, Turkey would never be able to meet total
demand in the country. (Note: Turkey only produces
about 60 percent of rice demand. End note.) He reported
that the 2003 rice program had reached its objectives and
that the country's rice regime was again being modified
to be more in-line with the country's agricultural
strategy described above, i.e. more market oriented, more
direct payments, less parastatal involvement.).

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Livestock and Meat
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6. (SBU) U/S Ogut reported that meat and livestock
restrictions were directly linked to GOT legislation.
Ogut noted that the GOT respects OIE guidelines and that,
according to those guidelines, a country can ban imports
of meat and livestock from any country, which has a
single case of BSE. Given the OIE guidelines and the 2
cases of BSE in the United States, the U/S felt that
Turkey was within its rights to ban imports from the
United States. Ogut did acknowledge that the BSE
outbreaks in the United States were minor in nature and
that most of the country was completely free of BSE.
Given their negotiations with the European Union on trade
in livestock and livestock products, it would be
difficult to lift the bans at this time.

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U.S. Concerns
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7. (SBU) Ambassador Donnelly stated that U.S. concerns
with Turkey's rice import regime had been discussed for
some time and at various levels to no avail. He noted
that the U.S. rice industry was very concerned with a
loss of market share. Moreover, the U.S. two major
problems with the current regime. First, the USG was
concerned with linking issuance of import licenses with
domestic purchases, which the U.S. believes was
inconsistent with WTO obligations. Second, the GOT
refused to issue any out-of-quota licenses for rice
imports. Any settlement must address these issues.


8. (SBU) Ambassador Donnelly emphasized that the United
States values its friendship with Turkey and that the GOT
should not take our concerns regarding rice as a sign
that this relationship had failed. He noted that
countries had agreed to the dispute settlement clause
specifically as a way to address trade concerns.


9. (SBU) On the livestock and meat issue, Ambassador
Donnelly stated that the U.S. was very competitive on
meat products and that many Turkish importers were
interested in U.S. breeding livestock. He asked the
Under Secretary to again look at this issue.


10. (SBU) Finally, Ambassador Donnelly raised the issue
of Turkish taxes on cola products as well as the GOT's
sugar policy. U.S. companies are complaining that the
cola taxes discriminate against U.S. companies and that
Turkey's sugar policy limits production of High-Fructose
Corn Syrup in U.S. plants in Turkey. He encouraged the
GOT to examine these issues again.

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Turkish Response
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11. (SBU) U/S Ogut again emphasized that Turkey's
Agriculture Policy is based on its current strategy,
which is meant to be more market oriented. Ogut
committed future agriculture policy to be in line with
WTO commitments and its agreements with the European
Union. U/S asked for patience from the United States
because changing the current laws in Turkey is very
difficult and would open the GOT up to law suits by
domestic companies.


12. (SBU) The U/S stated that the current domestic
purchase requirement for 2005/2006 had been fulfilled and
that any changes to the requirement would subject the GOT
to legal action. The current regulation is due to
expire on July 31, 2006 and Ogut emphasized that the GOT
plans to modify the domestic purchase requirement under
any new regulation. He hoped that any disagreement
would be addressed in the consultative process. The GOT
is committed to limiting paddy rice production, which
results in continued rice imports.


13. (SBU) Concerning meat and livestock imports, U/S
Ogut stated that the GOT is constrained by its
discussions with the European Union and by an internal
scientific committee, which reviews all scientific
information concerning the issue. Unless this committee
changes its recommendation regarding imports of meat and
livestock from the United States, it would be impossible
for the Ministry of Agriculture to permit such imports.


14. (SBU) U/S Ogut responded that his ministry was
responsible for sugar beet production while the Ministry
of Industry and Trade had authority over sugar production
quotas. Consumption taxes are strictly the concern of
the Ministry of Finance.

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Comment: WTO Rice Dispute
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15. (SBU) The meeting concluded with both sides
expressing the hope that some sort of agreement might be
reached to resolve the rice issue. Turkish officials
seem to genuinely want to resolve the rice dispute
outside the WTO dispute settlement process, but the
timeline Ogut described for changing the current
regulations in a satisfactory manner remains unclear and
similar to other vague promises to change the system that
we have heard in the past. End Comment.


16. (SBU) AUSTR Donnelly did not clear this message.

Wilson