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### Viewing cable 04ANKARA5375, DEPUTY ASSISTANT SECRETARY FOR EUROPEAN AFFAIRS

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Reference ID | Created | Released | Classification | Origin
--- | --- | --- | --- | ---
04ANKARA5375 | 2004-09-21 14:00 | 2011-08-24 01:00 | UNCLASSIFIED | Embassy Ankara

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    This record is a partial extract of the original cable. The full text of the original cable is not available.

    211400Z Sep 04

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    UNCLAS SECTION 01 OF 04 ANKARA 005375

    SIPDIS

    USDOC FOR ITA/MAC/EUR/DAS/ERIC STEWART
    USDOC FOR 4212/ITA/MAC/EUR/CPD/DDEFALCO/PDACHER
    STATE FOR EB/CBA AND EUR/SE
    USEU FOR FCS AND ECON
    AMCONSUL FOR FCS/JKELLER
    STATE PLEASE ALSO PASS TO USTR

    E.O. 12958: N/A
    TAGS: BEXP ETRD TU
    SUBJECT:  DEPUTY ASSISTANT SECRETARY FOR EUROPEAN AFFAIRS
    ERIC   STEWART'S  MEETINGS  WITH  GOVERNMENT  OF   TURKEY
    OFFICIALS ON SEPTEMBER 9 AND 10, 2004.

      ¶1.    THIS  CABLE  IS SENSITIVE BUT UNCLASSIFIED.   NOT
         INTENDED FOR INTERNET DISTRIBUTION

      ¶2.   (SBU) SUMMARY: ON SEPTEMBER 9 AND 10, DEPUTY
         ASSISTANT SECRETARY FOR EUROPE ERIC STEWART TRAVELED TO
         ANKARA TO MEET WITH GOVERNMENT OF TURKEY OFFICIALS ON KEY
         BILATERAL ISSUES.  THE DAS MET WITH OFFICIALS FROM THE
         MINISTRIES OF HEALTH, AGRICULTURE,JUSTICE,ENERGY,AND
         UNDERSECRETARIATS FOR FOREIGN TRADE, TREASURY, AND EU
         AFFAIRS.  BILATERAL ISSUES RAISED INCLUDED
         PHARMACEUTICALS AND INTELLECTUAL PROPERTY RIGHTS
         PROTECTION, ENERGY INVESTMENT DISPUTES, AGRI-BUSINESS
         TRADE ISSUES, AND FAILURE TO ENFORCE INTERNATIONAL
         ARBITRAL AWARDS.  WHILE IN TURKEY, HE ALSO MET WITH THE
         PHARMACEUTICALS LOCAL ACTION WORKING GROUP, LED A
         ROUNDTABLE DISCUSSION WITH THE AMERICAN BUSINESS FORUM,
         AND MET WITH REPRESENTATIVES OF CARGILL AND ADM ON AGRI-
         BUSINESS ISSUES.  THE DAS LED A VIDEOCONFERENCE ON IRAQ
         RECONSTRUCTION AND HELD A PRESS CONFERENCE WITH TWENTY-
         FIVE MEMBERS OF THE MEDIA (INCLUDING PRINT AND T.V.).
         THE DAS WAS ACCOMPANIED BY DESK OFFICER DAVID DE FALCO.
         END SUMMARY.

     ¶3. (SBU) MEETING AT THE UNDERSECRETARIAT FOR FOREIGN
     TRADE WITH DEPUTY UNDER SECRETARY GUZEL: DAS STEWART
     THANKED THE GOT FOR ITS SUPPORT AGAINST THE WAR ON
     TERROR, INCLUDING RECONSTRUCTION EFFORTS.  HE ALSO
     HIGHLIGHTED TURKEY'S IMPORTANCE AS A KEY-TRADING ALLY,
     DUE TO ITS GEOGRAPHIC LOCATION AND DEMOGRAPHICS.  IN
     2003, THE UNITED STATES EXPORTED OVER $2.9 BILLION TO
     TURKEY AND IMPORTED $3.7 BILLION, AND U.S. COMPANIES
     HAVE INVESTED APPROXIMATELY $2 BILLION IN TURKEY (2003
     HISTORICAL COST FIGURES).

     ¶4. (SBU) DAS STEWART URGED TURKEY TO TAKE STEPS TO
     IMPROVE ITS INVESTMENT CLIMATE TO ATTRACT FOREIGN
     CAPITAL.  AS TRADE TENDS TO FOLLOW INVESTMENT, A
     STRONGER TURKISH INVESTMENT CLIMATE WILL HELP INCREASE
     TRADE VOLUMES.

     ¶5. (SBU) DAS STEWART RAISED USG CONCERN ABOUT THE GOT'S
     DECISION TO WAIT UNTIL DECEMBER 31, 2007, TO PROTECT
     CONFIDENTIAL TEST DATA.  TURKEY IS NOT IN COMPLIANCE
     WITH ITS TRIPS OBLIGATIONS - PROTECTION IN THIS AREA
     SHOULD HAVE COMMENCED IN 2000.  LACK OF PROTECTION FOR
     CONFIDENTIAL TEST DATA THREATENS THE COMMERCIAL
     POSITION OF SEVERAL U.S. FIRMS AND WILL HINDER CURRENT
     AND FUTURE INVESTMENT IN THE TURKISH MARKET.
     ADDITIONALLY, HE ASKED THAT TURKEY CEASE APPROVING ANY
     COPIES OF PATENTED PRODUCTS.  DAS STEWART ASKED THAT
     THE GOT ESTABLISH AN INTER-MINISTERIAL WORKING GROUP TO
     DISCUSS THESE ISSUES WITH INNOVATIVE PHARMACEUTICAL
     PRODUCERS.

     ¶6. (SBU) DAS STEWART ENCOURAGED TURKEY TO STEP UP
     ENFORCEMENT MEASURES TO ADDRESS PRODUCTION OF
     COUNTERFEIT TRADEMARKED AND PIRATED COPYRIGHTED WORKS
     SUCH AS APPAREL, OPTICAL MEDIA, AND BOOKS.

     ¶7. (SBU) ON ENERGY INVESTMENT, WE EXPECT THE GOT TO
     RESPECT ITS OBLIGATIONS UNDER THE INTERNATIONALLY
     BINDING CONTRACTUAL AGREEMENTS WITH INDEPENDENT POWER
     PRODUCERS.  HE ENCOURAGED THE GOT TO RESOLVE ANY
     OUTSTANDING DISPUTES THROUGH DIALOGUE AND REFRAIN FROM
     TAKING EXTRA JUDICIAL STEPS SUCH AS UNILATERAL
     CANCELLATION OF BOT CONTRACTS.  ADDITIONALLY, HONORING
     THE EXCHANGE RATE GUARANTEE FOR EXISTING REGISTERED
     CAPITAL INVESTMENTS IS NON-NEGOTIABLE FOR FOREIGN OIL
     AND GAS COMPANIES.

     ¶8. (SBU) THE DAS NOTED HIS PLEASURE WITH THE PASSAGE OF
     AMENDMENTS TO THE ZONING LAW THAT ALLOW CARGILL TO
     OPERATE ITS FACILITY FREE OF LEGAL ENCUMBRANCES.  HE
     DID, HOWEVER, NOTE THAT THE SUGAR LAW, WHICH PLACES A
     QUOTA ON THE PRODUCTION OF CORN SYRUP, WILL FORCE U.S.
     COMPANIES TO REEVALUATE THEIR $170 MILLION WORTH OF
     INVESTMENTS.  HE ASKED THAT THE GOT FIND A WAY TO
     ACCOMMODATE THE CONCERNS OF THE HIGH-FRUCTOSE CORN
     SYRUP INDUSTRY.

     ¶9. (SBU) THE DAS RAISED CONCERNS IN THE DISTILLED
     SPIRITS INDUSTRY OVER THE ESTABLISHMENT OF AN IMPORT
     REGIME THAT IS NON- TRANSPARENT AND THE IMPLEMENTATION
     OF NEW STANDARDS REGARDING SUPERIOR ALCOHOLS.

     ¶10. (SBU) THE DAS APPLAUDED TURKEY FOR ADOPTING THE EU
     NEW APPROACH DIRECTIVES AND BELIEVES THAT MEETING
     EUROPEAN AND INTERNATIONAL STANDARDS DOES AFFORD
     GREATER CONSUMER, WORKER, AND ENVIRONMENTAL PROTECTION.
     HOWEVER, HE NOTED INCONSISTENCY WITH THE IMPLEMENTATION
     OF THE DIRECTIVES IN TURKEY.  SPECIFICALLY, THE TURKISH
     CUSTOMS SERVICE IS CLEARING CE-MARKED PRODUCTS
     ORIGINATING IN THE EU AND DELAYING THE ENTRY OF CE-
     MARKED PRODUCTS FROM COUNTRIES OUTSIDE THE EU.

     ¶11. (SBU) THE DAS CONCLUDED HIS REMARKS BY ASKING THE
     UNDERSECRETARIAT FOR SUPPORT IN RESOLVING THESE TRADE
     AND INVESTMENT ISSUES.  HE ASKED THAT THE DEPUTY UNDER
     SECRETARY JOIN HIM IN A DIALOGUE AIMED AT MOVING THESE
     ISSUES THROUGH THE VARIOUS LINE MINISTRIES.

     ¶12. (SBU) DEPUTY UNDER SECRETARY GUZEL AGREED THAT IN
     ORDER TO ATTRACT FURTHER INVESTMENT TO TURKEY MANY OF
     THE OUTSTANDING DISPUTES WOULD HAVE TO BE RESOLVED.
     SHE WAS FAMILIAR WITH MANY OF THE MATTERS LISTED AND
     UNDERSTOOD THE NEED TO WORK WITH INDUSTRY AND THE USG
     TO ADDRESS THEM.  SHE ALSO AGREED TO PARTICIPATE IN ANY
     INTER-MINISTERIAL DIALOGUE WITH INNOVATIVE
     PHARMACEUTICALS PRODUCERS ON PHARMACEUTICALS ISSUES.
     THE DEPUTY UNDER SECRETARY AGREED TO CONTINUE THIS
     EXCHANGE WITH THE DAS AND TO WORK WITH THE LINE
     MINISTRIES TO RESOLVE OUTSTANDING ISSUES.

     ¶13. (SBU) MEETING AT THE MINISTRY OF HEALTH WITH
     DIRECTOR GENERAL GUMRUKCUOGLU: THE DAS RAISED USG
     CONCERNS OVER THE LACK OF DATA EXCLUSIVITY AND
     IMPLEMENTATION OF A NEW REIMBURSEMENT REGIME THAT MAY
     INCLUDE THE CREATION OF A POSITIVE LIST.  THE DAS URGED
     THE MOH TO PARTICIPATE IN AN INTER-MINISTERIAL DIALOGUE
     WITH INDUSTRY OVER THE CREATION OF A NEW REIMBURSEMENT
     REGIME IN TURKEY.

     ¶14. (SBU) THE DIRECTOR GENERAL ACKNOWLEDGED
     DIFFICULTIES WITH THE IMPLEMENTATION OF DATA
     EXCLUSIVITY, BUT ASSURED US THAT THE LAW HAD BEEN
     DRAFTED AND THAT IT WOULD BE IMPLEMENTED BY THE
     DECEMBER 2007 DATE.  HE HIGHLIGHTED THE COST OF
     IMPLEMENTATION AS A MAJOR FACTOR FOR THE DELAY.  HE
     NOTED THAT THE POSITIVE LIST HAD NOT BEEN ESTABLISHED
     YET AND THAT IT WAS NOT THE MOH'S INTENTION TO
     DISCOURAGE IMPORTS WITH THE CREATION OF SUCH A LIST.
     HE PROMISED TO WORK WITH INDUSTRY OVER THE DEVELOPMENT
     OF NEW REIMBURSEMENT POLICIES AND AGREED TO PARTICIPATE
     IN ANY INTER-MINISTERIAL DISCUSSIONS HELD WITH
     INNOVATIVE PRODUCERS OVER THE ESTABLISHMENT OF SUCH
     POLICIES.

     ¶15. (SBU) MEETING AT THE UNDERSECRETARIAT OF TREASURY
     WITH UNDER SECRETARY CANAKCI: DAS STEWART HIGHLIGHTED
     TURKEY'S NEED TO CREATE AN ENVIRONMENT FRIENDLY TO
     FOREIGN INVESTMENT IF IT WISHES TO ATTRACT CAPITAL.
     TURKEY HAS TAKEN A NUMBER OF STEPS, WHICH SERVE TO
     CREATE UNCERTAINTY IN THE MARKET.  THESE INCLUDE, AN
     INABILITY TO RESOLVE OUTSTANDING ENERGY CONTRACTS AND
     THE REFUSAL TO HONOR THE EXCHANGE RATE GUARANTEE FOR
     EXISTING ENERGY INVESTMENTS.  HE ENCOURAGED THE GOT TO
     OPEN A DIALOGUE WITH FOREIGN INVESTORS TO CLARIFY THE
     STATUS OF PROJECTS.

     ¶16. (SBU) THE UNDER SECRETARY SHARED THE DAS' CONCERNS
     AND UNDERSTOOD THE NEED TO CREATE AN ENVIRONMENT THAT
     WILL ATTRACT NEEDED INVESTMENT.  THE UNDER SECRETARY
     NOTED THAT ENERGY PROJECTS (ESPECIALLY THE HYDRO-POWER
     PROJECTS) HAD RUN INTO FINANCING ISSUES BECAUSE OF THE
     IMF REQUIREMENT THAT TURKEY CUT ITS PRIMARY SURPLUS TO
     6.5 PERCENT OF GDP.  HE ASSURED US THAT THE GOT WAS
     WORKING ON A SOLUTION FOR THE EXCHANGE RATE GUARANTEE.
     HE ASKED THAT THE DAS PASS ALONG A LIST OF PROBLEM
     ENERGY PROJECTS AND HE WOULD DO WHAT HE COULD TO WORK
     WITH THE MINISTRY OF ENERGY AND NATURAL RESOURCES AND
     INDUSTRY TO DISCUSS NEXT STEPS.

     ¶17. (SBU) MEETING AT MINISTRY OF AGRICULTURE WITH UNDER
     SECRETARY CAGIL:  DAS STEWART RAISED USG CONCERNS OVER
     THE MANY STEPS TAKEN BY THE GOT THAT LIMIT ACCESS FOR
     U.S. EXPORTERS.  THEY INCLUDE: AN ONEROUS, NON-
     TRANSPARENT LICENSING REGIME FOR DISTILLED SPIRITS;
     HIGH AD VALOREM TAXES AND A SUPERIOR ALCOHOL STANDARD
     FOR DISTILLED SPIRITS; A SUGAR QUOTA THAT CAPS CAPACITY
     OF U.S. PLANTS AT APPROXIMATELY FIFTY PERCENT; A SEED
     CRUSHING TARIFF INCREASE OF SEVEN PERCENT WITHOUT
     NOTIFICATION OR DISCUSSION WITH INDUSTRY; AND A WTO-
     INCONSISTENT POLICY WITH REGARDS TO RICE QUOTAS.  HE
     NOTED THAT THE RICE ISSUE WOULD BE TAKEN UP DURING THIS
     MONTH'S ROUND OF WTO AGRICULTURE COMMITTEE MEETINGS.

     ¶18. (SBU) THE DAS ASKED THE UNDER SECRETARY ABOUT
     TURKEY'S PLANS WITH REGARDS TO ACCEPTING GMO PRODUCTS.
     ¶19. (SBU) UNDER SECRETARY CAGIL ADMITTED THAT HIS
     MINISTRY FACED DIFFICULT DECISIONS BECAUSE IT HAD TO
     BALANCE TRADE INTERESTS WITH DOMESTIC PRODUCERS'
     INTERESTS.  HE FELT CONFIDENT THAT THE ISSUES COULD BE
     RESOLVED THROUGH AN OPEN DIALOGUE WITH THE AFFECTED
     COMPANIES.

     ¶20. (SBU) ON THE DISTILLED SPIRITS ISSUE, HE NOTED THAT
     A LAW WOULD COME INTO EFFECT OVER THE NEXT MONTH THAT
     WOULD CREATE THE CODEX COMMISSION AND BEGIN
     HARMONIZATION WITH EU AGRICULTURE DIRECTIVES - WHICH
     WOULD ADDRESS MOST OF THESE CONCERNS.  ON THE SEED
     CRUSHING ISSUE HE DEFERRED TO THE EXPERTS, BUT SAID HE
     BELIEVED THE TARIFF WOULD BE TEMPORARY AND OFFERED TO
     INTERVENE WITH THE COMPANY TO CLEAR UP ANDY
     UNCERTAINTIES.

     ¶21. (SBU) ON THE RICE QUOTA ISSUE, THE UNDER SECRETARY
     CONFIRMED THAT THE PRACTICE WAS TO PROTECT LOCAL
     PRODUCERS AND HE COMPLAINED THAT THE PRICE OF RICE IN
     TURKEY WAS EXTREMELY HIGH.  THE REQUIREMENTS TURKEY HAS
     IMPLEMENTED SERVE TO ENSURE THE PURCHASE OF TURKISH
     RICE. HE CLAIMED THERE WAS NO IMPORT BAN AND THAT THE
     MINISTRY WAS FORCED TO TAKE THIS STEP BECAUSE IT WAS
     DIRECTED TO DO SO BY MINISTERIAL DECREE.

     ¶22. (SBU) IN RESPONSE TO THE QUESTION REGARDING GMOS,
     THE UNDER SECRETARY SAID THAT TURKEY WOULD FOLLOW THE
     EU'S LEAD.  HE PERSONALLY FELT THE PRODUCTS SHOULD BE
     ALLOWED INTO THE COUNTRY IF THEY ARE PROPERLY LABELED.

     ¶23. (SBU) MEETING AT UNDERSECRETARIAT FOR EU AFFAIRS
     WITH DIRECTOR CAN:  THE DAS RAISED THREE ISSUES WITH
     THE DIRECTOR THAT RELATE DIRECTLY TO TURKEY'S
     HARMONIZATION WITH EU DIRECTIVES.  THE THREE ISSUES
     WERE: INCONSISTENT CE-MARK ENFORCEMENT; LACK OF DATA
     EXCLUSIVITY FOR PHARMACEUTICAL TEST DATA; AND GOT
     IMPLEMENTATION OF SUPERIOR ALCOHOL STANDARDS.

     ¶24. (SBU) DIRECTOR CAN NOTED THAT THE UNDERSECRETARIAT
     WAS HAVING DIFFICULTIES IN EDUCATING LINE MINISTRIES ON
     EU HARMONIZATION.  SHE WAS VERY FAMILIAR WITH THE DATA
     EXCLUSIVITY ISSUE AND TOLD THE DAS THAT ONE OF HER
     COLLEAGUES WAS WATCHING THE ISSUE VERY CLOSELY (AN EU
     TRADE BARRIER REPORT ON TURKEY THAT HIGHLIGHTS
     DEFICIENCIES WITH THE PROTECTION OF DATA EXCLUSIVITY IS
     EXPECTED TO COME OUT IN OCTOBER).  ON THE DISTILLED
     SPIRITS ISSUE, THE DIRECTOR CONFIRMED WHAT WE HEARD AT
     THE MINISTRY OF AGRICULTURE WITH REGARD TO THE CREATION
     OF THE CODEX COMMISSION WITHIN THE MONTH.  SHE ALSO
     CONFIRMED THAT A DRAFT LAW ON DISTILLED SPIRITS HAD
     ALREADY BEEN DRAFTED AND COULD BE IMPLEMENTED QUICKLY.
     FINALLY, ON THE CE-MARK ISSUE SHE EXPRESSED FRUSTRATION
     OVER GETTING THE LINE MINISTRIES TO UNDERSTAND THEIR
     DUTIES AND PROMISED TO GET AN UPDATE TO THE DAS ON THE
     MATTER WITHIN THE NEXT COUPLE OF WEEKS.

     ¶25. (SBU) MEETING AND MINISTRY OF ENERGY AND NATURAL
     RESOURCES WITH UNDER SECRETARY DEMIRBILEK: DAS STEWART
     RAISED USG CONCERNS OVER THE GOT'S INABILITY TO MOVE
     FORWARD ON BOT PROJECTS WITH SIGNED CONTRACTS.  WHILE
     THE USG UNDERSTANDS THE DIFFICULTY OF MOVING FORWARD ON
     ALL THE PROJECTS, THE COMPANIES ARE FRUSTRATED THAT
     THEY HAVE NOT RECEIVED STATUS UPDATES.  THE DAS ASKED
     THE MINISTRY TO WORK WITH COMPANIES INTERESTED IN THE
     NINE PROTOCOL HYDROPOWER PROJECTS.  HE URGED TURKEY TO
     RESOLVE THE EXCHANGE RATE GUARANTEE ISSUE AND ADDRESS A
     PROBLEM TOREADOR RESOURCES FACES WITH OBTAINING A BLACK
     SEA LICENSE - WHICH THE COMPANY CLAIMS WAS GIVEN TO
     TPAO CONTRARY TO THE PETROLEUM LAW OF 1954 (THIS MATTER
     IS CURRENTLY WORKING ITS WAY THROUGH THE TURKISH
     JUDICIAL SYSTEM).

     ¶26. (SBU) THE UNDER SECRETARY ASSURED US THAT A
     RESOLUTION TO THE BOT PROBLEM WOULD BE REACHED AND THAT
     IT WOULD FALL WITHIN THE PARAMETERS OF THE SIGNED
     CONTRACTS.  HE ALSO APPEARED NOT TO BE CONCERNED OVER
     PENDING LAW SUITS.  ON THE EXCHANGE RATE ISSUE, HE TOLD
     US THAT THE GOT WOULD RESOLVE THE PROBLEM BY ALLOWING
     INVESTORS TO REPATRIATE PROFITS, UP TO THE AMOUNT OF
     THE INITIAL INVESTMENT, FREE OF TAXES - A SOLUTION HE
     CLAIMS WAS REACHED WITH INDUSTRY INPUT.  ON THE LICENSE
     ISSUE, HE CLAIMS THAT EVERYTHING THE MINISTRY DID WAS
     LEGAL.  HE ALLEGES THAT THE PETROLEUM LAW OF 1954 HAS
     AN EXEMPTION FOR OFF-SHORE DRILLING WHICH ALLOWS TPAO
     TO RECEIVE THE LICENSE.

     ¶27. (SBU) MEETING AT THE MINISTRY OF JUSTICE WITH UNDER
     SECRETARY KASIRGA: DAS STEWART CONGRATULATED THE UNDER
     SECRETARY FOR HIS MINISTRY'S ROLE IN PROMOTING IP
     PROTECTION AND WORKING WITH THE U.S. DEPARTMENT OF
     JUSTICE AND PATENT AND TRADEMARK OFFICE ON THE
     SEPTEMBER IP SEMINAR.  THE DAS RAISED USG CONCERNS OVER
     HIGH PIRACY LEVELS IN TURKEY, THE LACK OF DATA
     EXCLUSIVITY, AND THE FAILURE OF SOME TURKISH COURTS TO
     ENFORCE INTERNATIONAL ARBITRAL AWARDS.

     ¶28.  (SBU)  THE  UNDER  SECRETARY REMAINS  COMMITTED  TO
     ENFORCE  IP LAWS AND NOTED THE INTEREST ON THE  PART  OF
     HIS   MINISTRY  TO  CONTINUE  TO  EDUCATE   JUDGES   AND
     PROSECUTORS.   HE HIGHLIGHTED THE FACT THAT  TURKEY  HAS
     SEVEN  SPECIALIZED IP COURTS WHOSE JUDGES WERE  REQUIRED
     TO  STUDY  IP LAWS IN EUROPE FOR ONE YEAR.  HE  WAS  NOT
     FAMILIAR  WITH THE DATA EXCLUSIVITY ISSUE  AND  DIRECTED
     US TO THE MINISTRY OF HEALTH.

     ¶29. (SBU) ON THE ARBITRATION ISSUE, HE WAS SURPRISED  TO
     HEAR  ABOUT  THE PROBLEM.  HE ASKED THAT WE SEND  HIM  A
     PAPER  DETAILING  OUR COMPLAINT SO THAT  HE  CAN  ASSIGN
     LAWYERS  ON HIS STAFF TO INVESTIGATE.  HE ASKED THAT  WE
     NAME  THE COURTS RENDERING THESE JUDGEMENTS AND PROMISED
     TO GET BACK TO US WITH HIS FINDINGS.

     ¶30. (U) DAS ERIC STEWART HAS CLEARED THIS CABLE.

     EDELMAN

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