TURKEY CONTINUES TO SEEK WTO RICE SETTLEMENT

UNCLAS ANKARA 006505 SIPDIS SENSITIVE SIPDIS USTR FOR S. DONNELLY, L. ERRION, A. STEVENS, J. WEISS USDA/FAS OCRA FOR ALEXANDER AND FLEMINGS E.O. 12958: N/A TAGS: ETRD EAGR WTRO TU SUBJECT: TURKEY CONTINUES TO SEEK WTO RICE SETTLEMENT REF: STATE 183957 SENSITIVE BUT UNCLASSIFIED. ¶1. (SBU) We met November 22 with Foreign Trade Undersecretariat Director General Sevket Ilgac to discuss ways to improve cooperation on IPR issues in advance of the regular Special 301 cycle (reftel). Ilgac appreciated the demarche and instructed his staff to work with the embassy on the various issues identified in the talking points. He noted that such a cooperative approach to solving issues was in keeping with the spirit of the most recent TIFA consultations, and said he would suggest a date soon for a next round of TIFA talks in Washington. ¶2. (SBU) Changing the topic, Ilgac said he was very concerned about the apparent inability to make progress on a negotiated settlement to the rice import dispute that the United States has brought to a WTO panel. He asserted that Turkey has stopped permanently all the restrictive import practices to which the United States objected and that it had several times indicated a desire for a negotiated settlement, and readiness to sign a binding settlement. He said that Minister Tuzmen wrote directly to USTR Schwab about Turkey's desire for a bilateral settlement. In the meantime, he said there has been no response from the United States other than the one implicit in the continued pursuit of panel proceedings. ¶3. (SBU) Ilgac said this dynamic has led FTU to suspect that the United States has "other objectives" in pursuing this case in Geneva. Ilgac said that if this is the case, to please inform FTU so that they can address the U.S. concerns. In the meantime, he has asked his deputy Hasan Yalcin to propose a new text of an agreement. ¶4. (SBU) Meanwhile, a influential and prominent rice trader without whose cooperation and information the case could not have been built, told AgCouns November 14 that he is scared to talk to the United States anymore as he is threatened with tax and customs audits. He offered to serve as an intermediary for informal bilateral discussions to resolve the issue and mentioned an offer by FTU to lower the tariff on U.S. rice to zero. He also said that FTU threatened to lower the tariff on Egyptian rice to zero of the United States did not settle. While there may be some "Turkish conspiracy" thinking in this account, it is still noteworthy. ¶5. (SBU) Comment: In contrast to some of his predecessors (and colleagues) Ilgac is a straight-shooter who has consistently shown a desire to improve trade relations with the United States. His tone suggested that lack of progress on a settlement to the rice issue has become a greater concern within the GOT. At the same time, it appears that FTU trade bureaucrats are extremely nervous about the prospect of Turkey losing a panel decision on their watch. This suggests that the window is now open to move forward with clear U.S. terms for a settlement and to engage in bilateral consultations on the subject with the GOT. But this window won't stay open long; if we are interested in a negotiated settlement, we need to move now before the Turkish position solidifies. WILSON