DIRECTOR'S INTRODUCTORY CALL ON TAIWAN'S AGRICULTURE

UNCLAS AIT TAIPEI 001444 SIPDIS SENSITIVE FAS FOR ITP/AAD STATE FOR EAP/RSP/TC AND EB/TPP/ABT STATE PASS AIT/W STATE PASS USTR FOR ERIC ALTBACH SIPDIS E.O. 12958: N/A TAGS: EAGR ETRD TW SUBJECT: DIRECTOR'S INTRODUCTORY CALL ON TAIWAN'S AGRICULTURE MINISTER RAISE HOPEFUL SIGNALS REF: TAIPEI 01356 SENSITIVE BUT UNCLASSIFIED ¶1. (SBU) Summary. During his April 24 introductory call on Taiwan's Council of Agriculture (COA) Minister, Mr. Su Chia-chyuan, Director Young raised U.S. concerns over Taiwan's sanitary and phytosanitary (SPS) import requirements and Taiwan's advocacy of protection for so-called sensitive agricultural products. The two also discussed the agriculture proposals mentioned at the Lien-Hu meetings in Beijing. Minister Su showed considerable political savvy and a strong commitment to science-based decisions. On rice imports, however, Minister Su reiterated that Taiwan must maintain policies that protect this sensitive agricultural crop. End summary. ¶2. (SBU) On April 24, Director Young made an introductory call on COA Minister Su Jia-chyuan, who took up the COA position in January after serving as Minister of the Interior. The Director and Minister Su had a lively and wide-ranging discussion that focused on three key issues: Taiwan's adherence to SPS provisions; Taiwan's position on agricultural trade liberalization in the WTO Doha round; and, recent proposals to facilitate cross-straits agriculture trade. ¶3. (SBU) On SPS-related import requirements, Minister Su stated in precise and clear terms that COA was committed to a science-based process to resolve technical SPS issues that impinge on market access. He made the specific point that, under its previous leadership, COA opposed the decision to resume imports of U.S. beef. That opposition was inappropriate, Minister Su felt, since the authority and expertise for making that decision lay with the Department of Health (DOH). There should be a unified Taiwan position on these types of issues. The Minister noted that Taiwan imports a wide variety of agricultural and food products from a broad list of countries and must follow science-based principles when importing any item from any supplier. ¶4. (SBU) COMMENT: As the lead agency on the beef issue, DOH adhered to a science-based decision making process that favored the resumption of trade. Under its previous leadership, COA attempted to undermine both the scientific evidence supporting the U.S. position and DOH's authority over the issue. The bureaucratic infighting between COA and DOH helped fuel strong LY and consumer group criticism of DOH that ultimately forced the decision up to the Presidential office. Minister Su's statement is a welcome signal that COA will support science-based decisions on food safety issues handled by DOH, as well as plant and animal health issues under COA authority. END COMMENT. ¶5. (SBU) Minster Su also made special reference to apple imports and reiterated COA's commitment to a science-based resolution of the ongoing concern over the codling moth problem. He stressed that these issues, especially cases where Taiwan does not produce a competitive product, should not become political. He also suggested that it is in everyone's interest to keep official comments low-key and the rhetoric toned down to avoid political interference when technical issues arise. (COMMENT: This latter point is especially welcome since COA chose in the past year to broadly publicize its detection of codling moth in U.S. apple shipments and to warn Taiwan consumers of the perceived threat to Taiwan, thereby raising the political profile of the issue and making it more difficult to reach a resolution. END COMMENT.) ¶6. (SBU) In response, Director Young thanked COA for its April 21 decision to keep Taiwan's market open to U.S. potatoes following the discovery of potato cyst nematode in Idaho. Taiwan's decision was an appropriate response to the limited risk this detection poses and stands in stark contrast to Japan's decision to completely ban U.S. potatoes. ¶7. (SBU) Indirectly alluding to Taiwan's protectionist agricultural trade position in the WTO, Minister Su noted that COA was under considerable pressure from the Legislative Yuan and farmer groups to take a stand that protects Taiwan's rice producers. He said that Taiwan authorities have an obligation to ensure the well-being and economic livelihood of farmers, especially rice farmers, not least because of the traditional support these farmers provide the DPP. He noted that Taiwan's market is, in fact, open to rice imports and asked for U.S. assistance to finally resolve the outstanding WTO rice market access case. He expressed COA's concern over the likelihood of a negative reaction from Egypt to the arrangement between Taiwan, Thailand, Australia, and the United States that is close to being finalized. (See reftel for additional details). ¶8. (SBU) In responding to Director Young's query on the recent cross-straits agriculture proposals that came out of the Lien-Hu meetings in Beijing, Minister Su noted COA has the same attitude toward agricultural trade with the PRC as it does toward any market: it welcomes market opportunities for Taiwan agricultural products. The recent proposals, as well as the ones formulated last year, however, are politically motivated, according to Minister Su, and will not be economically significant. Low agricultural prices in the PRC will make it difficult for Taiwan products to command the kind of premium and provide the higher return that is available in markets like the United States or Japan. Minister Su also expressed COA's concern over the unauthorized use of Taiwan trade names that cheat the PRC consumer and damage Taiwan companies' trademarks and brand names. Minister Su said that Taiwan had three options to address these infringements: using PRC-based lawyers to file legal claims; work through the Straits Exchange Foundation; and, utilize the WTO. He acknowledged that the WTO provides the best mechanism for Taiwan to protect its trademark and intellectual property rights, but noted it was difficult and sensitive to take that approach with the PRC over agricultural trade. ¶9. (SBU) COMMENT: Minister Su's remarks on adhering to science in order to resolve technical SPS issues were essentially the same as those offered by his predecessor. That said, his pointed example of the U.S. beef decision, recommendation to maintain a low profile when problems arise, and the overall context in which he made his remarks suggest that COA may adopt a more pragmatic and reasoned approach on the whole SPS discussion. Indeed, the decision by COA on April 21 to maintain access for U.S. potatoes despite the more draconian response by other markets may be a positive indicator of a new approach. ¶10. (SBU) The Minister's defense of Taiwan's position on sensitive products, notably rice, shows, however, that COA may not be ready to make a significant adjustment on major trade policy issues that directly affect a key political constituency. This reluctance means that Taiwan's alliance with the G-10 in the WTO Doha round and advocacy of market restrictions for sensitive agriculture products will likely continue to detract from Taiwan's larger interest to secure for itself improved access for non-agricultural manufactured products. It is important that AIT and U.S. agencies continue to point out the inconsistencies in Taiwan's WTO position to Taiwan's trade and economic entities. In addition, Minister Su's leadership may provide an opportunity for the U.S. to explore with COA various policy options that will allow it to meet its economic and social welfare objectives for rice farmers, without employing trade-distorting policies. END COMMENT. YOUNG