Top rice importer calls on Ambassador to ask United States

UNCLAS ANKARA 000238 SIPDIS SENSITIVE STATE FOR EUR/SE, EB/EPD, and EB/TPP/ABT USDA FAS FOR OFSO/DEVER, OCRA/FLEMINGS, MANNIX, BURDETT USTR FOR WEISS, ERRION ISTANBUL FOR FAS GENEVA FOR FAS E.O. 12958: N/A TAGS: EAGR ETRD TU WTO SUBJECT: Top rice importer calls on Ambassador to ask United States to drop WTO rice case ¶1. (SBU) Summary: On February 1, 2007, the Ambassador met with a top rice importer who wants to persuade the USG to drop the WTO case on Turkish rice imports in exchange for the GOT promising to lower the tariff on paddy (unmilled) rice. The Ambassador responded that although he also hoped for a negotiated settlement that would enhance trade, any solution must be legally binding and WTO consistent. End Summary. ¶2. (SBU) In a meeting with the Ambassador on February 1, Mr. Yahya Akel, a wealthy and politically well-connected importer of rice and other agricultural products, expressed hope that the United States would agree to drop its WTO case against Turkey's rice import regime if the GOT agrees to reduce apparently temporarily the duty on imports of paddy rice, and not milled rice, to zero. Such an agreement, he explained, would result in increased imports of U.S. paddy rice and fewer imports of Egyptian milled rice. This would allow Turkish millers to stay in business. Currently, because of the high cost of U.S. rice ($420/ton) and a 34 percent tariff, lower priced Egyptian milled rice, even with a 45 percent duty, is more attractive. ¶3. (SBU) After expressing appreciation for Mr. Akel's comments and an understanding of his predicament, the Ambassador said that he would like to see the case resolved amicably through negotiation, but emphasized that any resolution of the case must be legal, permanent and adhere to WTO rules. He made it clear that at this stage the process was legal, not political. ¶4. (SBU) Mr. Akel admitted that the GOT knows that its rice import policies are WTO inconsistent, but at the same time is committed to "protecting its farmers" and will not change its system. According to Mr. Akel, it may be impossible to negotiate a solution because the Turkish side is only willing to discuss the paddy rice tariff-reduction proposal at this time. He said that Turkish officials are not ready to discuss the other points that the U.S. has raised in bilateral discussions. He expressed concern that failure to resolve this case quickly could lead to deliberate discrimination against U.S. products, such as a further hike in soybean tariffs. ¶5. (SBU) The conversation concluded with the Ambassador reiterating his hope that a negotiated solution could be reached, but that a solution must be WTO consistent. -------------- Rising Tide of Threats -------------- ¶6. (SBU) For several weeks now, Embassy's Agricultural Affairs Office has been inundated by a rising tide of messages similar to Mr. Akel's, not only from millers and importers, but from FTU officials and farmer groups. During the Ambassador's meeting with Mr. Akel, Agoffice received two faxes addressed to the Ambassador from Turkish rice producer associations, threatening that their 300,000 members would boycott all U.S. products if the case is not dropped. ¶7. (SBU) Earlier this month the FTU official responsible for imports said that last year's hike in tariffs for soybeans and soybean meal was a deliberate response to the rice case, and that the tariff could be increased again. ¶8. (SBU) Comment: So far, the Turkish side has not offered any substantive response to U.S. proposals. Apparently, Turkish officials are not prepared to talk about the three points outlined in Ambassador Schwab's Jan. 12 letter to FTU Minister Tuzmen. The Ministry of Agriculture, which obviously has an interest in the case, has neither lobbied to drop the case nor threatened retaliation. End Comment. WILSON