Cablegate: Foreign Trade Officials' Views On Cancun, Ipr

Published: Mon 6 Oct 2003 02:44 PM
This record is a partial extract of the original cable. The full text of the original cable is not available.
USDA for FAS/ITP Henke, Meyer, Hansen
E.O. 12958: N/A
SUBJECT: Foreign Trade Officials' Views on Cancun, IPR
and Free Zones
Ref: (A) Ankara 5594 (B) Ankara 5808
1. (SBU) Turkish Foreign Trade officials maintained that
agriculture, particularly elimination of export
subsidies, was their key concern at the Cancun
Ministerial. This issue led the Turks to support the G-
21 at Cancun, though our interlocutors told us that
actually joining the group would have been "politically
incorrect" with respect to the European Union. Foreign
Trade also suggested that there might have been a chance
for progress in Cancun had the talks gone on longer, and
if there had been a better flow of information at the
Ministerial. The Foreign Trade Undersecretary told us
he agreed with the EU that WTO decision-making needed to
be revised. On tax reform, which is a key condition for
the IMF's sixth review, Foreign Trade believes that free
zone incentives will not be eliminated, arguing that the
IMF should focus on bringing in tax revenue from the
informal sector. Econoff raised USG concerns with IPR
protection, particularly for pharmaceuticals. End
2. (SBU) Econ Counselor discussed Turkey's role at the
Cancun Ministerial and tax reform of the free zone
system with Foreign Trade Undersecretary Tuncer Kayalar
on October 6. Meeting with Econoff on September 26,
Husnu Dilemre, Deputy Director General for Agreements at
Foreign Trade, and Bilgehan Sasmaz, of Foreign Trade's
free zones department, discussed the Cancun Ministerial,
intellectual property problems and the free zones.
Cancun - Agriculture the Key Issue for Turkey
3. (SBU) Dilemre began by reiterating Turkey's concerns
about liberalization in agriculture (ref A). He
maintained that the GOT does not have the resources to
offer sufficient domestic subsidies or the legal right
to implement safeguard measures to counter developed
world food subsidies. Turkey is very cautious about any
dilution in tariffs - the only (legal) tool it has to
protect its farmers from the effects of foreign
subsidies. Turkey's position, insisting on elimination
of export subsidies in agriculture, was identical to
that of the Group of 21 in this area.
4. (SBU) Dilemre said that Turkey nevertheless did not
formally join the G-21 in Cancun, as this would have
been "politically incorrect" in view of its customs
union with the EU. He explained that Turkey has no
difficulty in aligning its position with the EU on areas
covered by the customs union, such as public procurement
and investment. Despite the fact that the EU does not
attempt to consult with the GOT on the WTO talks in
advance and that Turkey is a long way from becoming an
EU member state, Turkey does factor EU positions into
its decisions at the WTO. Dilemre maintained, however,
that the customs union does not require complete
alignment of negotiating positions.
5. (SBU) Dilemre opined that there might have been a
chance for progress at the Cancun Ministerial had the
talks been allowed to continue longer, and if there had
been a better flow of information between the various
negotiations. He suggested that some developing country
representatives might not have stonewalled on Singapore
issues if they had been made aware of the limited
movement in the agriculture negotiations.
6. (SBU) Kayalar attributed the failure at Cancun to
excessively high expectations on the part of some
developing countries. He said the G-21 pressed Turkey
to join, but the Turkish delegation decided not to do so
in view of its relations with the EU. Kayalar does not
expect the G-21 to last, given internal disagreements.
He said he agreed with EU Trade Commissioner Lamy that
the WTO's consensus-based decision-making system needed
to be revised.
Laying a Marker on IPR
7. (SBU) Econoff told Dilemre and Sasmaz that the USG
continues to have serious concerns about Turkish
protection of intellectual property rights, particularly
for pharmaceuticals. In particular, proposals to delay
data exclusivity protection until 2007 and to weaken
patent protection are major concerns (ref B), and could,
if not addressed, result in Turkey's elevation in the
Special 301 Watch List in 2004. Dilemre responded that
Foreign Trade had been involved in the interagency
process on these proposals, but did not know the
situation in detail. He promised to look into this
Free Zones
8. (SBU) Kayalar criticized the IMF's insistence on
eliminating tax exemptions for Turkey's free zones,
arguing that the Fund should instead focus on Turkey's
huge, untaxed shadow economy. Noting that State
Minister Tuzmen staunchly defended the free zone system,
Sasmaz told us he did not believe that upcoming tax
reforms would completely eliminate tax preferences for
the free zones. He also opined that the tax incentives
at the zones were not as attractive as they appeared to
be, since businesses in the zones are more strictly
audited with regard to their (reduced) tax liabilities,
while many companies outside the zones manage to avoid a
large proportion of their (unreduced) tax bills.
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