TAIWAN ECONOMICS MINISTER VISITS VIETNAM

UNCLAS SECTION 01 OF 02 HANOI 000223

SIPDIS

SENSITIVE

STATE FOR EAP/BCLTV, EAP/CM, EAP/RSP/TC

E.O. 12958: N/A
TAGS: PREL ETRD TW CH VM
SUBJECT: TAIWAN ECONOMICS MINISTER VISITS VIETNAM

Ref: A. 02 Hanoi 2417 B. 02 Hanoi 1290


1. (SBU) SUMMARY. Taiwan Economics Minister Lin Yi-fu
visited Vietnam January 23 - 27 as the head of a trade
mission. While his official host was the Vietnam Chamber of
Commerce and Industry, Lin held meetings with GVN officials,
including his counterparts at the Ministry of Trade as well
as the Ministry of Planning and Investment. The two sides
discussed the past 10 years of cooperation as well as plans
for boosting future economic ties. A Taiwan press report
indicated that a bilateral trade agreement (BTA) is a
possibility. The visit was not publicized by Vietnam's
state-controlled media. The PRC embassy reportedly made a
low-key objection to the GVN over the visit. A conference
on Taiwan - Southeast Asia relations planned locally by the
Institute of China Studies for last July was cancelled after
strong PRC protests but should take place in Taiwan this
year. END SUMMARY.

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ROBUST ECONOMIC AND CULTURAL TIES
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2. (SBU) While the GVN is clearly on record as faithfully
adhering to "One China" (reftels),the robust economic and
cultural relationship between Vietnam and Taiwan remains
important. By some accounts, Taiwan is the largest investor
in Vietnam. (Note: Other accounts put Singapore in first
place; however, much of that investment stems from regional
headquarters of third country firms, especially US oil
firms. End note) According to Dr. Do Tien Sam, Director of
the Institute of China Studies, Vietnam "greatly
appreciates" Taiwan investments, some of which, he observed,
are located in less developed parts of the country.
(Taiwanese businesspeople tell Embassy that they like doing
business in Vietnam and apparently that feeling is
reciprocated. While some investments are in rural areas,
most are centered in Hanoi and Ho Chi Minh City, including
several of the largest modern industrial zones in Vietnam.)
Two-way trade is also "very significant," reaching about USD
two billion in 2002, he added. (Much of that is import of
materials for garment assembly and re-export of the finished
product.) Labor exports are also increasing rapidly, with
some 60,000 Vietnamese workers going to Taiwan last year.
About 7,000 Vietnamese women married Taiwanese men last year
alone. Over 300,000 Taiwanese tourists visit Vietnam every
year. "Ties are strong and getting stronger," Dr. Sam
concluded.

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VISIT NOT UNPRECEDENTED
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3. (SBU) Minister Lin's visit was not unprecedented,
according to Dr. Sam. He noted that a previous incumbent,
whom he named as Jiang Bing Kun, visited Vietnam in his role
as Economics Minister twice. Jiang also had a role in
signing two trade-related agreements - one on investment
protection and another on double taxation avoidance.
Separately, Robert Hsieh Bor-Huei of the Taipei Economic and
Cultural Office (TECO),claimed that Jiang had visited
Vietnam "nine or 10 times," although some of these were in a
private capacity. Hsieh said that he had "heard" that the
PRC embassy predictably made a formal protest about Lin's
visit (although he was not clear whether to the Ministry of
Foreign Affairs or to the Ministry of Trade),calling it a
violation of "One China." Foreign press reports also noted
that the PRC was unhappy about the visit. Dr. Sam added
that "in adherence with "One China," no GVN visit to Taiwan
has ever gone above the deputy minister level. Reflecting
Vietnam's pragmatic foreign policy approach, Dr. Sam
assessed that "we need to maintain our relations with the
PRC, but also strengthen those with Taiwan."


4. (SBU) According to Dr. Sam, Lin and his GVN
counterparts reviewed the past ten years of Vietnam - Taiwan
economic and cultural cooperation and discussed how these
relations could "be further strengthened in the coming
years." A Taiwan press report noted that the two sides
investigated the possibility of a BTA and that Lin affirmed
Taiwan's support for Vietnam's accession to the World Trade
Organization. TECO's Hsieh said that Vietnam and Taiwan had
been discussing the possibility of a BTA for a "long time,"
adding that he "does not expect" an agreement to be reached
within 2003. Hsieh noted that Lin's visit was in the
framework of Taiwan's "go south" policy regarding trade and
investment, and that Lin had made similar visits to Malaysia
and Thailand last November.


5. (SBU) Vietnam's state-controlled broadcast or print
media did not report on Lin's visit, unlike similar visitors
from other, much less important partners. According to Dr.
Sam, this is "typical" for Taiwan visits. He suggested that
publicity over these types of visits "would antagonize" the
PRC.

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REACHING TOO FAR
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6. (SBU) Dr. Sam recounted that last summer his Institute
had planned to host a conference on Taiwan's relations with
Southeast Asian countries. When the PRC embassy heard about
it, officials there "reacted very strongly." The PRC
embassy lodged an official complaint with the Ministry of
Foreign Affairs as well as with the National Center for
Social Sciences and Humanities, the parent institution of
the Institute of China Studies. Senior officials from the
National Center "strongly urged" the Institute to cancel the
conference, which it did. Dr. Sam suggested that, in
contrast to Lin's visit, which the PRC essentially viewed in
an economic context, the proposed conference apparently
stepped over the political line and was therefore
unacceptable to the PRC. Dr. Sam said that the PRC embassy
had indicated, however, that Beijing would not object if the
conference took place in Taiwan. Taiwan authorities
subsequently agreed to host in April 2003.

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COMMENT
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7. (SBU) Vietnam continues to depend on good economic and
commercial ties with Taiwan, and is clearly willing to take
a little heat (apparently, increasingly pro forma) from the
PRC over at least economics-related senior level visits that
the PRC claims violate the "One China principle." But
Vietnamese officials will be careful not to step over
perceived political lines that might truly anger the PRC, as
illustrated by last summer's ill-fated conference.
BURGHARDT