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