TAIWAN CONSIDERS NEXT STEPS AFTER CHINESE NEW

C O N F I D E N T I A L SECTION 01 OF 02 TAIPEI 000280

SIPDIS

STATE PASS AIT/W

E.O. 12958: DECL: 01/24/2015
TAGS: PREL ECON CH TW
SUBJECT: TAIWAN CONSIDERS NEXT STEPS AFTER CHINESE NEW
YEAR CHARTER FLIGHTS

REF: TAIPEI 00130

Classified By: AIT Director Douglas H. Paal, Reason: 1.4 (B/D)


1. (C) Summary. With the Taiwan public,s largely
enthusiastic reception of the January 15 Chinese New Year
cross-Strait charter flight agreement, ruling Democratic
Progressive Party (DPP) and opposition Kuomintang (KMT) have
each sought to claim credit for the &breakthrough8 and
belittle the other,s role. Public and policy attention
almost immediately focused on next steps, including proposals
for phased-in regular cross-Strait air service. The Chen
administration is moving to maintain close control of the
cross-Strait process, and plans to resurrect its proposal for
cargo flights, to which Beijing did not respond last year.
End Summary.

Vying for Credit
--------------


2. (C) Since the January 15 announcement (reftel),both DPP
and KMT leaders have been publicly claiming credit for the
cross-Strait charter flight agreement. KMT leaders argue the
KMT was instrumental in pushing the Taiwan government to
initiate negotiations, then to make a last-minute concession
enabling the agreement. John Chang (Chang Hsiao-yen) told
AIT that the initial December 28 announcement of the KMT
Beijing visit spurred the DPP to hurriedly arrange the first
Macao meeting on June 7, and the January 10 KMT visit to
Beijing pushed the DPP to compromise on its insistence that
MAC officials be members of the Taiwan negotiating team.
This compromise, he said, caught Beijing by surprise -- TAO
Chairperson Chen Yunlin had told Chang when they first met in
Beijing on the morning of January 10, "Hsiao-yen, tensions
are so high that cross-Strait flights will not be possible
this year."


3. (C) Taiwan government officials, on the other hand,
continue to dismiss the KMT trip as inconsequential. Both
NSC Senior Advisor for cross-Strait issues Chen Chung-hsin
and Mainland Affairs Council (MAC) Chair Joseph Wu told AIT
that the KMT had &absolutely nothing8 to do with either the
fact of the Macao negotiations or the final agreement. MAC
Vice Chair Liu Te-hsun told AIT January 20, that the charter
flight initiative was a product of a series of proposals
President Chen made in 2004 and, more specifically, his
personal pledge on charter flights to a meeting of
China-based Taiwanese business people during an Autumn
Festival dinner, September 28. In November, Liu continued,
President Chen pledged to push for cross-Strait improvements
following the December 11 legislative election and that, he
said, is just what the President did. Liu stated that MAC
and the Ministry of Transportation and Communication had been
working quietly toward cross-Strait charter flights but did
not go public until the KMT legislators visited Beijing.

Staving Off Criticism
--------------


4. (C) DPP leaders have played down the notion that Taiwan
made any concessions in the charter flight negotiations in
order, explained NSC's Chen, to obviate criticism of the
agreement from pro-independence elements, particularly the
Taiwan Solidarity Union (TSU). MAC's Wu and Liu separately
insisted to AIT that Taiwan had held firm while the Mainland
acquiesced to the 2002 &Hong Kong model8 (negotiations for
a Hong Kong-Taiwan air service agreement by delegations
nominally headed by airline industry officials, but with all
negotiations done by government officials). Chu Li-shi, Vice
President of government-owned China Television Station (CTS)
described the negotiations to AIT as Beijing caving in to
Taiwan,s negotiating demands. When AIT pointed out to Chu
that both sides had compromised on the critical issue of
delegation composition, Chu reluctantly acknowledged "there
may have been some changes." Other Taiwan officials concede
that Taipei did abandon many of its original conditions in
order to quickly conclude a deal.


5. (C) Cross-Strait negotiations remain a highly contentious
political issue. Parents joined Pan-Blue legislators in
criticizing the Taiwan government decision to exclude Taiwan
students studying in China from the charter flight agreement.
MAC's Liu told AIT the reason for this was that student
holidays did not coincide with the schedules of Taiwan
business people. Inclusion of students, moreover, would have
opened up pressure for charter flights from other groups,
including the problematic area of tourism (see para 9 below).
With President Chen seeking to fulfill his pledge to create
a "Peace and Development Committee," KMT LY Chair Wang
Jin-pyng pushing to establish an LY "Cross-Strait Affairs
Reactive Panel," and the People,s First Party (PFP) levering
its critical minority of 34 legislators in support of its
proposed "Cross-Strait Peace Committee," all parties are
seeking a piece of the cross-Strait action.

Next Steps
--------------

6. (C) The question of "next steps" is a daily discussion
topic among government and political leaders and on Taiwan's
plethora of broadcast talk shows, with listeners daily
calling in from across the island offering suggestions for
next steps. John Chang, long involved with cross-Strait
issues, told AIT that two of the "three links" -- post and
commerce -- have already been effectively implemented, and
the impending charter flights will bring the third link of
transportation on the road to realization.


7. (C) On January 15, MAC Chair Joseph Wu told a press
conference he would like to see the New Year charter flight
model expanded to &other holidays.8 When AIT asked MAC
Vice Chair Liu whether MAC intended to propose this to
Mainland China, however, he responded that there are really
only a few holidays in common on both sides of the Strait,
all one-day events not conducive to charter flights. He
noted that the suggestion of one KMT legislator that Wu,s
holiday idea should be extended to the &weekly holidays8 of
Saturday and Sunday was not practical.


8. (C) NSC,s Chen Chung-hsin, who was at least in part
responsible for the Taiwan decision not to insist on the
&Hong Kong model,8 called AIT a second time last week to
emphasize that his prediction that Beijing would accept
Taiwan,s delegation counter-proposal had proven true. He
also reiterated his earlier statement that President Chen had
already approved a graduated three-stage negotiation process:
first charter flights, second &Hong Kong model8 expanded
negotiations (topic undecided),and third implementation of
the &three links.8


9. (C) MAC Vice Chair Liu told AIT that MAC is now focusing
on charter, or even regular, cargo flights as the next step
forward in cross-Strait exchange. The Taiwan business
community has been pushing for direct cargo flights to reduce
shipping costs and time between Taiwan and China. Taiwan, he
noted, had proposed this to Beijing last year but had
received no response. In response to AIT's query, Liu
explained that MAC was not interested in moving toward
regularized passenger service to promote tourism, in part
because of the pattern of tourists from Mainland China
disappearing in Taiwan in recent years.

Comment
--------------


10. (C) While the KMT January 10 visit to Beijing may have
put pressure on the Chen government to expedite charter
flight negotiations, the government was already working its
own line, a product of President Chen,s own commitments last
year reinforced by his and his party,s setback in the
December 11 elections. The competition for credit for the
January 15 charter flight agreement indicates that both sides
see political advantage in meeting popular demands for
cross-Strait flights. KMT legislator John Chang told AIT
that the December legislative elections had shown that many
Taiwan voters dislike the kind of confrontational rhetoric
they saw in the LY campaign and that improving cross-Strait
relations has become one calculus in Taiwan politics.
PAAL