MAC DENIES REPORT ON CROSS-STRAIT CHARTER

C O N F I D E N T I A L TAIPEI 003854 SIPDIS DEPT FOR EAP/TC DEPT PASS AIT/W COMMERCE FOR ITA/MAC/ASIA/MBMORGAN CABLE BOX 4431 E.O. 12958: DECL: 09/16/2015 TAGS: EAIR ECON PREL CH TW SUBJECT: MAC DENIES REPORT ON CROSS-STRAIT CHARTER DISCUSSIONS REF: TAIPEI 3661 Classified By: AIT Acting Director David J. Keegan, Reason 1.4 d ¶1. (U) The September 16 edition of Taiwan,s United Daily News carried a front page story citing an unnamed source who claimed that Taiwan would soon announce progress on cross-Strait charter flights, including an informal agreement with the Mainland to implement charter cargo flights first and then three months later begin passenger charter service. The report indicated that former Taipei Airlines Association Chairman Michael Lo had traveled to Hong Kong several times to meet with PRC counterparts. The report also said that President Chen might announce the new steps toward flights around the Mid-Autumn Festival holiday during which many Taiwan executives based in the Mainland would return and attend meetings in Taiwan. Note: The Straits Exchange Foundation hosts an event for returning Taiwan executives during the Lunar New Year, Dragon Boat Festival and Mid-Autumn Festival each year. Senior government officials often speak at the event. End note. ¶2. (C) Mainland Affairs Council Economics Department Director Fu Don-cheng told AIT/T that the reports were "false," "completely baseless," and "manufactured." Officially, Taiwan is still waiting for a formal PRC response to the announcement that the Taipei Airlines Association was designated to engage in preparatory discussions with Mainland counterparts on this issue. However, National Security Council (NSC) Senior Advisor Chen Chung-hsin commented to AIT/T that there has been some progress in TAA,s preparations for formal discussions as the two sides exchanged opinions via informal channels. However, Chen said problems remain to be resolved before any formal discussions can take place. He pointed out that Taiwan has agreed to discuss passenger and cargo flights at the same time and at this point has only ruled out discussing passenger flights without discussing cargo flights at the same time. ¶3. (C) Comment: The United Daily News report is highly suspect. In addition to Fu,s denial, it would be odd for Mandarin Airlines President Michael Lo to be involved in such an exchange because he was replaced as TAA,s Chairman by TransAisa Airways Chairman Tony C.C. Fan in April. However, there are some elements of the report that merit a second look. AIT/T believes that despite the comments by NSC,s Chen, Taiwan is still determined to implement cargo flights first. The agreement the report describes is just the sort of arrangement that would give the Chen Administration the cover it needs to move forward. Regardless of the veracity of the report, it appears that some progress toward more formal discussions is taking place. A Mid-Autumn Festival announcement would be timely. Without progress soon, the election cycle will again start to close the window of opportunity for a cross-Strait breakthrough. As the December 3 city/county elections near, the DPP-controlled government may find it more difficult to announce an opening with the PRC. End comment. KEEGAN