Turkey seeks "fairer" access to US textile market
Doug Palmer, Washington, Jan 17 (Reuters) - Turkey's Commerce Minister Tunca Toskay said on Thursday his country was seeking a preferential trade agreement that would allow textile producers to ship their goods duty-free to the U.S. market.

Toskay, in an interview with Reuters, said Ankara wanted the United States to establish "qualifying industrial zones" in Turkey, similar to those in Jordan, to increase sales of textiles and other products to the United States.

Turkey's trade relationship with the United States was less than it deserved as a strategic security partner, he said. Turkey is the only Muslim member of NATO and has broadly supported the U.S. military action in Afghanistan.

"It is our opinion that Turkey is being treated in an unfair way," Toskay said, speaking through a translator.

The United States has an open market for most goods, but Turkey's main exports -- textiles, iron and steel, and ceramic tiles -- all face stiff U.S. trade barriers, he said.

Toskay was in Washington this week as part of a team of Turkish officials, including Prime Minister Bulent Ecevit, looking for more aid from the International Monetary Fund.

The country, which has borrowed $19 billion from the IMF over the past year or so, was expected to sign a letter of intent on Friday for as much as $12 billion in new loans.

Also, the State Department on Wednesday announced the creation of a U.S.-Turkey Economic Partnership Commission, which will hold its first meeting in Ankara on Feb. 26-27.

U.S. Undersecretary of State for Economic Affairs Alan Larson will lead the U.S. delegation at that meeting to explore ways of expanding trade between the two countries.

US Textile Manufactures Opposed
Toskay said U.S. Trade Representative Robert Zoellick in a meeting on Wednesday was open to the idea of a preferential trade arrangement with Turkey, but warned that opposition from U.S. textile producers could make that difficult.

Charles Bremer, director of international trade for the American Textile Manufacturers Institute, confirmed that his group opposed the idea.

"I think the answer at the end of the day is 'sorry, we can't help,"' Bremer said.

A sharp drop in the value of Turkey's currency over the past two years has already reduced the cost of importing textiles from Turkey by 60 percent, he said.

U.S. textile companies also are worried that providing more market access for Turkey would make it difficult for the Bush administration to deny similar requests from countries like Pakistan and Bangladesh.

"Everybody and his brother is going to be lined up at the door. And this industry, which has been losing workers at the rate of 1,500 per week for the last year and a half, is in no condition to grant favors to foreigners," Bremer said.

Edward Gresser, director of the Progressive Policy Institute's trade and global markets project, said duty-free industrial zones in Turkey might be a good first step if the United States was not ready for a broader trade agreement.

"They've proved remarkably successful" in Jordan, where the number of jobs created since they were first established in 1998 has far exceeded expectations, Gresser said.

Also, with current quotas on U.S. textile imports set to expire by 2005, the U.S. industry should be looking at new ways of competing internationally, he said.

"I don't think, politically, trade protection is a very workable strategy for them over the long term," Gresser said.

Motorola, Nokia sue Turkish Telsim family
Uzan family accused with extorting and intimidating the handset makers' executives
Ben Klayman, Chicago, Jan 28 (Reuters) - Finland's Nokia and Motorola Inc., the world's two largest mobile telephone makers, filed a joint lawsuit on Monday charging the owners of Telsim, Turkey's No. 2 wireless carrier, with fraud under U.S. anti-racketeering laws.

The two handset makers filed the suit, which seeks the recovery of about $3 billion in loans plus damages, in U.S. District Court in New York. It charges that Telsim's owners, the Uzan family, intentionally defrauded the two companies in violation of the U.S. Racketeer Influenced and Corrupt Organizations, or RICO, statute.

The Uzan family could not be reached for comment. The suit was filed against Kemal Uzan, four children including Telsim Chairman Hakan Uzan and board member Cem Uzan, three Uzan-controlled firms and an individual close to the family.

"We are taking the unusual step of jointly filing this action because it is clear to both companies that the Uzans had no intention of dealing in good faith with us in an effort to resolve this situation," Motorola's general counsel, Peter Lawson, said in a statement.

"This action is in recognition that this is not a normal commercial dispute between private parties -- it is, rather, a premeditated and unlawful attempt by the Uzans to rob both Motorola and Nokia of our assets," he added.

The RICO statute was designed to eliminate organized crime and racketeering in legitimate businesses operating across state lines. Over the years, RICO cases have encompassed illegal activities related to enterprises affecting interstate or foreign commerce.

Pressure on Turkish Government
Bear Stearns analyst Wojtek Uzdelewicz said the lawsuit was more to put pressure on the Turkish government and did not mean much to investors as the process will be long and the companies had already taken reserves for the loans. He added Motorola is not likely to get back anything close to $2 billion.

Nokia and Motorola last year hired a U.S.-based private investigator, Kroll Associates, to look into the assets of the Uzan family, whose wealth was estimated last year at $1.6 billion. The Uzan family last year ranked fifth in a published list of Turkish billionaires.

Hakan Uzan said last year his family was prepared to pay some of the money owed, followed by the remainder after a grace period to allow the struggling Turkish economy to recover.

To boost sales in the past few years, Motorola, Nokia, Sweden's Ericsson and other major technology companies have loaned money to customers in an approach called vendor financing. The practice was especially aggressive in emerging markets such as Turkey, China and Latin America, where growth prospects seemed bright.

Companies loaned their customers the money to buy products from them, a practice that backfired as business slowed and many smaller customers defaulted on payments.

Motorola disclosed late last year that about $2 billion of its $2.7 billion outstanding in vendor financing at the end of September was related to Telsim, which has repaid $170 million. Motorola has since tightened its customer financing policies.

The suit alleges 13 separate counts of wrongdoing, including four counts of criminal activity in violation of RICO, Motorola and Nokia said. The RICO counts allege members of the Uzan family as well as others tied to the Uzans entered into loan arrangements with Motorola and Nokia that they had no intention of ever paying back.

The companies said Motorola seeks more than $2 billion in compensatory damages, while Nokia seeks more than $700 million. They also want unspecified punitive damages, as well as triple damages under four counts relating to RICO.

They are also asking the court to restore the value of their loans. They said the Uzan family devalued their stakes in Telsim by two-thirds by diluting the shares held as collateral for the loans and designating them as nonvoting shares.

A Motorola spokesman said the Uzans have extensive U.S. real estate holdings, but declined to say whether the Chicago area-based firm would push for those assets to be seized.

Motorola and Nokia charge that the Uzans used deals that allowed them to shift assets from Telsim, in which Motorola and Nokia have a pledged stock interest, to other Uzan entities over which Motorola and Nokia have no interest.

The companies said the Uzans took action that will allow the transfer of Telsim assets to a Turkish foundation, making it more difficult for creditors to receive loan repayment.

Motorola and Nokia said the Uzans extorted and intimidated the handset makers' executives to avoid their debts, "including issuing threats, filing baseless criminal charges in Turkey ... and hacking into Motorola's computer system." (Additional reporting Paul de Bendern in Helsinki)