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