TURKMEN MINISTRY OF TRADE: TRADE VOLUME WITH

C O N F I D E N T I A L SECTION 01 OF 02 ASHGABAT 000662

SIPDIS

STATE FOR SCA/CEN, EEB
USTR (LILIENFELD)

E.O. 12958: DECL: 05/28/2019
TAGS: PREL EIND EINV ETRD TIFA TX AZ AF ZK
SUBJECT: TURKMEN MINISTRY OF TRADE: TRADE VOLUME WITH
UNITED STATES SHOULD BE BILLIONS, NOT MILLIONS; A
MCDONALD'S WOULD BE NICE, TOO

Classified By: Charge Richard Miles, reasons 1.4 (B) and (D).


1. (C) SUMMARY: In a productive meeting, Deputy Assistant
U.S. Trade Representative, Claudio Lilienfeld exchanged ideas
with Vepa Garriyev, the Head of the International Directorate
of Turkmenistan's Ministry of Trade and Foreign Economic
Relations. Very little time was spent discussing the
regional Trade and Investment Framework Agreement. Instead,
Garriyev focused on establishing a bilateral experts group
commission to examine trade issues, diversify
U.S.-Turkmenistan trade and address the current decrease in
U.S. demand for Turkmen textiles. Garryev also raised
Turkmenistan's interest in taking another look at a possible
bilateral investment treaty. The Turkmen Government
illustrated its readiness for foreign investment by
discussing its initial correspondence with the McDonald's
regional headquarters in Baku. END SUMMARY.


2. (C) As part of his Central Asia tour, Deputy Assistant
U.S. Trade Representative (DAUSTR),Claudio Lilienfeld met
with Turkmenistan's Ministry of Trade and Foreign Economic
Relations, represented by Head of the International
Directorate, Vepa Garriyev. DAUSTR Lilienfeld emphasized
that, as part of the new administration's policy reviews, the
United States was examining ways to invigorate its trade
relationships in Central Asia. While recognizing that the
U.S.-Central Asia Trade and Investment Framework Agreement
(TIFA) has been the primary vehicle for the United States to
discuss trade issues in Central Asia, Lilienfeld suggested
that the TIFA needed to move beyond just annual meetings and
into substantive follow-through and results. He suggested
that while he was exploring invigorating the TIFA council
process as one option -- including possibly by creating an
official working group that would meet during the year to
help implement the TIFA council agenda -- he also recognized
that the TIFA alone was not helping the U.S. to develop more
robust bilateral trade ties with the region, and he was also
exploring how best to expand commercial ties that could
bridge Afghanistan,s economy more robustly to the Central
Asia region. Lilienfeld expressed USTR,s readiness to
explore ways to expand bilateral trade and investment with
Turkmenistan, especially as Turkmenistan's economy further
evolves and opens to foreign investment.


3. (C) Garriyev responded that there seems to be a general
concurrence between the U.S. and Turkmenistan visions for
trade cooperation. Well informed, Garriyev started by
suggesting that a bilateral investment treaty could be an
excellent place to begin strengthening bilateral trade.
(NOTE: Apparently the U.S. and Turkmenistan initially
discussed a bilateral investment treaty in 1998, proposed it
in draft, but never concluded it. END NOTE.) Noting that
there are 40-some bilateral documents signed between the U.S.
and Turkmenistan, he suggested a bilateral, inter-ministerial
working group, or group of experts, that could meet to
examine all trade and investment issues, to include
transportation, import/export barriers, and any others. This
group would review the documents that have been signed as
well as the draft bilateral investment treaty and create a
way to quickly and dramatically improve trade between the
countries.


4. (C) Garriyev suggested that the current trade volume of
about 20 million USD could and should be much more -- in the
billions rather than in the millions. (NOTE: While Garriyev
cited a trade volume of 20 million USD, U.S. data indicates a
total bilateral goods trade of 200 million USD in 2008,
including 60 million USD in exports to Turkmenistan and 140
million USD in imports from Turkmenistan, both significant
drops from 2007. END NOTE.) Garriyev expressed concern that
U.S. demand for Turkmen goods, especially its textile

ASHGABAT 00000662 002 OF 002


products, had decreased over the past year. Going back to
the idea of a bilateral commission, he suggested that such a
group could look into why the U.S. demand for high-quality,
low-priced designer textiles had decreased.


5. (C) Garriyev turned to his colleague, the Head of the
Ashgabat Food Supply Department, to note one concrete area
where Turkmenistan is ready for increased U.S. investment:
McDonald's. Apparently, the Ministry of Trade and the
regional McDonald's headquarters in Baku exchanged some
correspondence in November 2008, but nothing has come of it.
The Turkmen side asked for assistance that would help open
McDonald's franchises in the near future. Garriyev said that
top levels of the government -- read: the President -- had a
great desire to see a big-name American retailer/business
invest in Turkmenistan.


6. (C) Garriyev wrapped up by returning to the bilateral
investment treaty. Lilienfeld suggested that the two
governments could discuss the idea as an agenda item in a
bilateral dialogue, which could take place in September in
conjunction with the notionally-planned next meeting of the
TIFA council in Washington, DC. Lilienfeld said that such
agreements include strong protections for foreign investors,
which would create significant requirements for a country
like Turkmenistan. Garriyev acknowledged that trade
agreements bring heavy responsibilities, and he noted that
these requirements are exactly what Turkmenistan needs to
attract more foreign investment: foreign companies would
feel safer investing knowing that the protections were
written into the agreement. He further revealed that one of
President Berdimuhammedov's priorities is to "get the
government's hands off business" and develop the private
sector. He remarked that the private sector is currently
responsible for 40 percent of Turkmenistan's economy, but the
government has plans to increase that share to 70 percent as
soon as possible. He closed by expressing the wish that a
bilateral commission could be formed soon, and reiterating
that they want billions in trade with the U.S., not just the
current millions.


7. (C) COMMENT: Garriyev was fully engaged in the meeting
and well prepared for the issues that DAUSTR Lilienfield
raised while furthering Turkmenistan's agenda. Garriyev
spent no time discussing the regional TIFA, and rather
focused on bilateral possibilities, perhaps reflecting
Turkmenistan's desire for independence from the rest of the
region. As Turkmenistan's economy continues to evolve, it
will be interesting to see how far privatization can go, how
quickly, and what the bumps on the road will be. More
engagement from the U.S. side could help smooth out some of
those bumps, and create opportunities. Garriyev might be an
excellent partner as we move down that road. END COMMENT.


8. (U) DAUSTR Lilienfield has cleared this message.
MILES