SCENESETTER FOR THE SIXTH U.S.-TURKEY TIFA

UNCLAS SECTION 01 OF 03 ANKARA 000015

DEPT PLEASE PASS USTR FOR CWILSON, MMOWREY AND
RWENZEL
USDOC FOR ITA/MAC CHERIE RUSNAK
DEPT FOR EUR/SE AND EEB/TPP/BTA
FAS FOR MICHAEL SMITH

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: ETRD ECON EAGR KIPR TU
SUBJECT: SCENESETTER FOR THE SIXTH U.S.-TURKEY TIFA
MEETINGS

Ref: 08 Ankara 2191

This information is sensitive but unclassified.
Please protect accordingly.


1. (SBU) Summary: We should focus our efforts in the
sixth U.S.-Turkey Trade and Investment Framework
Agreement (TIFA) discussions on expanding U.S. market
access in Turkey and building on recent progress in
reducing barriers to trade and investment, with
emphasis on market access issues, particularly for
agricultural products. IPR protections have improved
in the past two years despite a recent setback to
trademark protection. This year's meetings will be
set in a markedly gloomier global economic context
than the TIFA meetings in 2006 and 2007, a context
which may be used as an excuse for inaction on the
part of the GOT). End summary.


2. (SBU) The sixth U.S.-Turkey Trade and Investment
Framework Agreement discussions, scheduled for
January 13, 2009, in Ankara will be led by Foreign
Trade (FTU) Deputy Undersecretary Ulker Guzel and
will have representatives from the Ministries of
Culture, Justice, Agriculture, Health, and Finance,
as well as from the Treasury Undersecretariat and the
Turkish Patent Institute. The talks will be preceded
by a private sector event in Istanbul on January 12
for the U.S. delegation to discuss issues affecting
the U.S. business community.

Points to Raise
--------------


3. (SBU) Recommend highlighting:

- Access for agricultural products must be
streamlined and brought in line with WTO norms (see
para. 6)

- Momentum on improving IPR should be maintained,
despite recent setbacks (see paras. 7)

- Improving the process for foreign workers to get
necessary permits will aid investment in Turkey (see
para. 8)

Likely Turkish Concerns
--------------


4. (SBU) The Turkish side could raise:

- Increasing opportunities for cooperation and
foreign investment(see para. 9)

- Turkish perception of the negative impact of
changes in Generalized System of Preferences and
textile quotas (see para. 10)

- Concern about implementation of the Container
Security Initiative and Secure Freight Initiative
(see para. 11)

Financial Crisis and Domestic Political Concerns
--------------


5. (SBU) Reforms following its 2001 financial crisis
largely shielded Turkey's financial system from the
global financial crisis, but the knock-on economic
effects in the commercial and manufacturing sectors
are beginning to bite. Factories are closing,
exports in 2009 are expected to decline by 20 percent
(and have already started falling),and unemployment
is on the rise (officially now at 10.2 percent,
unofficially much higher). Growth in 2009 is
expected to be flat at best. The GOT is pinning its
hopes on a planned IMF agreement to calm markets and
provide needed financing to the private sector, but
ruling AK Party is positioning itself for local
elections in March 2009 and the GOT may be tempted to
take more protectionist actions. We assess that the
GOT will be reluctant to undertake major policy

ANKARA 00000015 002 OF 003


changes that could be construed as damaging to the
local producers whose support the AKP is courting.

Agricultural Issues
--------------


6. (SBU) Despite some limited successes, market
access remains restricted for U.S. agricultural
products. In 2007, Turkey agreed to a protocol
permitting the import of live breeding cattle. As a
result of a WTO dispute resolution case brought by
the U.S., Turkey has resumed the import of U.S. rice.
Despite these successes, significant challenges
remain, including:

-- failure to comply with WTO requirements for
Sanitary and Phytosanitary Standards(SPS)/Technical
Barriers to Trade (TBT) notifications;

-- unscientific SPS measures and import
documentation requirements;

-- inordinately high tariffs;

-- de facto seasonal bans on imports of agricultural
products during the domestic harvest season for that
product; and

-- de facto import restrictions on items such as
beef and poultry.

Intellectual Property Rights
--------------


7. (SBU) Turkey's considerable improvement in IPR
protection infrastructure and legal framework led in
2008 to its shift from the Special 301 Priority Watch
List down to the Watch. Issues related to
pharmaceutical data exclusivity, pricing and
reimbursement continue to be a major concern to U.S.
pharmaceutical companies. In addition, a recent
Turkish Supreme Court decision invalidated thousands
of pending trademark cases (see reftel). We should
request an update from the GOT on their strategy to
remedy this situation. Turkey must continue its law
enforcement efforts to combat the production and
distribution of counterfeit trademarked goods. The
Turkish delegation is preparing an update on the new
patent law under consideration by Parliament.

Work Permits and Degree Equivalency
--------------


8. (SBU) A frequent complaint of U.S. investors is
that it takes too long for skilled foreign workers to
receive certification that their degrees are
equivalent to local degrees for the purposes of
obtaining work permits. The work permit itself then
requires an additional complicated process. This
discourages investment in Turkey because it is
difficult for companies to bring in their own talent
to open up or run operations in Turkey.

Turkish Concerns: Increased Cooperation
--------------


9. (SBU) The GOT is eagerly looking for areas where
cooperation with the U.S. can lead to increased trade
and investment. They will present updates on planned
programs to promote Turkey in the U.S. and to educate
Turkish companies about U.S. procedures. They also
want to discuss possibilities for cooperation in
construction (for example, in northern Iraq).
Finally, they will propose the creation of a U.S.
Trade Center in Istanbul and explore the possibility
of beginning a preferential trade agreement with the
U.S. (Comment: It is unclear how this would work in
the context of Turkey's EU commitments and our own
existing trade treaties. End comment.)

GSP
---

ANKARA 00000015 003 OF 003




10. (SBU) The Turkish delegation will request an
update on the current status of the Generalized
System of Preferences and the prognosis for Turkey's
participation in the system. Turkey is concerned
that the extensions to its participation may be
discontinued. They will also raise the issue of the
recently-expired textile quotas and the likely impact
on Turkish exporters.

CSI/Secure Freight Initiative
--------------


11. (SBU) The GOT has requested that the U.S. provide
a status update on the Container Security and Secure
Freight Initiatives and the likelihood of those
programs being implemented in Turkey in the near
future. Turkey is concerned about the potential
expense and administrative burden of the CSI/SFU
requirements for their ports.

JEFFREY