Identifier
Created
Classification
Origin
06PARIS2868
2006-05-02 16:28:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Paris
Cable title:  

CHINA AND TAIWAN AT THE OECD: HARDBALL OVER SOFT

Tags:  PREL PGOV ECON SENV EU CH TW FR OECD 
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021628Z May 06
UNCLAS SECTION 01 OF 04 PARIS 002868 

SIPDIS

FROM USOECD PARIS

SENSITIVE

DEPT FOR EUR/ERA, EAP/CM, EAP/RA/TC, AND OES

E.O 12958:N/A
TAGS: PREL PGOV ECON SENV EU CH TW FR OECD
SUBJECT: CHINA AND TAIWAN AT THE OECD: HARDBALL OVER SOFT
LAW


THIS MESSAGE IS SENSITIVE BUT UNCLASSIFIED. PLEASE HANDLE
ACCORDINGLY.
UNCLAS SECTION 01 OF 04 PARIS 002868

SIPDIS

FROM USOECD PARIS

SENSITIVE

DEPT FOR EUR/ERA, EAP/CM, EAP/RA/TC, AND OES

E.O 12958:N/A
TAGS: PREL PGOV ECON SENV EU CH TW FR OECD
SUBJECT: CHINA AND TAIWAN AT THE OECD: HARDBALL OVER SOFT
LAW


THIS MESSAGE IS SENSITIVE BUT UNCLASSIFIED. PLEASE HANDLE
ACCORDINGLY.

1.(SBU) SUMMARY: CHINA AND THE TAIWAN AUTHORITIES ARE
ENGAGED IN A BACK-CORRIDOR BATTLE AT THE ORGANIZATION FOR
ECONOMIC COOPERATION AND DEVELOPMENT (OECD) OVER
PARTICIPATION, AS NONMEMBERS, IN OECD COMMITTEES. CHINA
HAS RECENTLY RAISED THE LEVEL AND TENOR OF ITS OBJECTIONS
TO TAIWAN'S PARTICIPATION, THOUGH IT IS NOT CLEAR WHETHER
CHINA WILL CURTAIL ITS EXTENSIVE COOPERATIVE PROGRAM WITH
THE OECD IF THE OECD IGNORES THESE PROTESTATIONS. BOTH
CHINA AND TAIWAN ARE MOVING TO INCREASE SIGNIFICANTLY THEIR
PARTICIPATION IN COMMITTEES -- FOR WHICH STATEHOOD IS NOT A
REQUIREMENT.


2. (SBU) ACTION REQUESTED (PARAS. 16-18): PLEASE PROVIDE
GUIDANCE ON WHETHER TO OBJECT TO TAIWAN'S APPLICATIONS TO
JOIN TWO OECD COMMITTEES, DUE FOR DECISION ON MAY 4. END
SUMMARY.

CHINA: BACK TO THE FUTURE FOR TAIWAN?


3. (SBU) CHINA AND THE TAIWAN AUTHORITIES ARE ENGAGED IN A
BACK-CORRIDOR BATTLE AT THE OECD OVER PARTICIPATION IN
COMMITTEES AND OTHER OECD SUB-GROUPS (SUCH AS WORKING
PARTIES AND WORKING GROUPS). IN THE PAST, CHINA ROUTINELY
VOICED OBJECTION TO TAIWAN'S PARTICIPATION AS OBSERVER IN
OECD COMMITTEES, BUT IN THE END ACQUIESCED IN OECD
DECISIONS TO INVITE "CHINESE TAIPEI." TAIWAN IN FACT BECAME
A REGULAR OBSERVER IN THE COMPETITION COMMITTEE (IN 2001)
AND THE STEEL COMMITTEE (IN 2005). IN ADDITION, AND NOT
RELATED TO PARTICIPATION IN THE STEEL COMMITTEE, CHINA AND
TAIWAN HAVE BOTH PARTICIPATED IN HIGH-LEVEL STEEL TALKS,
WHICH HAVE BEEN HELD SEVEN TIMES SINCE 2001. SIMILARLY,
BOTH CHINA AND TAIWAN TOOK PART IN THE SPECIAL NEGOTIATING
GROUP ON A NEW SHIP-BUILDING AGREEMENT.


4. (SBU) IN RECENT MONTHS, HOWEVER, IN APPARENT REACTION TO
TAIWAN'S EXPRESSION OF INTEREST IN BECOMING A REGULAR
OBSERVER TO SIX ADDITIONAL OECD COMMITTEES, CHINA HAS
RAISED BOTH THE LEVEL AND THE TENOR OF ITS OBJECTIONS. IN
JANUARY 2006, ZHAO JINJUN, CHINA'S AMBASSADOR TO FRANCE,
STATED IN A LETTER TO OECD SECRETARY GENERAL JOHNSTON THAT

CHINA NOT ONLY OBJECTED TO TAIWAN'S CURRENT APPLICATIONS TO
JOIN NEW COMMITTEES, BUT ALSO TO ITS CONTINUED
PARTICIPATION IN THE COMMITTEES TO WHICH IT HAD ALREADY
BEEN ADMITTED. PREVIOUSLY, CHINA'S VIEWS ON TAIWAN'S
PARTICIPATION HAD BEEN MADE BY LOWER LEVEL OFFICIALS IN THE
CHINESE EMBASSY'S ECONOMIC SECTION. CHINESE OFFICIALS IN
BEIJING, INCLUDING VICE MINISTER OF COMMERCE LIAO XIAOQI,
REITERATED AMBASSADOR ZHAO'S COMMENTS DURING SECRETARY
GENERAL JOHNSTON'S VISIT TO CHINA IN FEBRUARY 2006.


5. (SBU) IN THESE AND OTHER CONVERSATIONS WITH OECD
OFFICIALS, BEIJING HAS ASSERTED THAT TAIWAN'S RECENT SPATE
OF APPLICATIONS IS POLITICALLY MOTIVATED. THE OECD HAS
RESPONDED THAT ITS COMMITTEES, IN MAKING A "TECHNICAL
EVALUATION" OF APPLICATIONS FOR OBSERVERSHIPS OR OTHER
FORMS OF PARTICIPATION, STEER AWAY FROM POLITICAL
CONSIDERATIONS, BUT DO LOOK SERIOUSLY AT FACTORS SUCH AS
"MUTUAL BENEFIT" AND WHETHER APPLICANTS ARE "MAJOR PLAYERS"
IN THE SUBSTANTIVE AREA OF THE COMMITTEE'S JURISDICTION.
THE OECD HAS ALSO NOTED THAT AS A MATTER OF PRINCIPLE,
NONMEMBERS HAVE NO RIGHT OR STANDING TO COMMENT ON THE
QUALIFICATIONS OF OTHER NONMEMBERS CONCERNING OECD
ACTIVITIES. (NOTE: IN ACCORDANCE WITH A 1998 OECD COUNCIL
DECISION, STATEHOOD IS NOT A REQUIREMENT FOR PARTICIPATION
IN OECD COMMITTEES AND RELATED BODIES. HONG KONG, UNDER THE
NAME OF "HONG KONG CHINA," IS AN OBSERVER TO THE COMMITTEE
ON FINANCIAL MARKETS AND TO THE TRADE COMMITTEE, FOR
EXAMPLE.)

GO SLOW ON INNOVATION.


6. (SBU) TO SHOW THAT IT IS SERIOUS ABOUT ITS OBJECTIONS,
CHINA BRIEFLY HALTED ITS COOPERATION WITH AN ONGOING OECD
REPORT ON CHINA'S INNOVATION POLICY, TO BE DRAFTED UNDER
THE AUSPICES OF THE OECD'S COMMITTEE ON SCIENCE AND
TECHNOLOGY POLICY (CSTP) -- A COMMITTEE WHICH SUPPORTED
TAIWAN'S APPLICATION TO BE AN OBSERVER SEVERAL MONTHS AGO.
THE NEXT STEP IN TAIWAN'S APPLICATION TO THE CSTP WILL BE
APPROVAL (NORMALLY GRANTED ROUTINELY IN LIGHT OF THE
SUBSTANTIVE COMMITTEE'S EARLIER APPROVAL) BY THE OECD'S
COMMITTEE ON COOPERATION WITH NONMEMBERS AT ITS MEETING ON
MAY 4. THE FINAL STEP WOULD BE APPROVAL BY THE OECD
COUNCIL, LIKELY TO OCCUR LATER IN MAY.


7. (SBU) CHINA ITSELF BECAME AN OBSERVER TO THE CSTP IN
2001; IF "CHINESE TAIPEI" JOINED, THIS WOULD MARK THE FIRST
TIME BOTH CHINA AND TAIWAN HAVE BEEN OBSERVERS ON THE SAME
COMMITTEE. CURRENTLY, BOTH CHINA AND TAIWAN ALSO HAVE
STATUS -- THOUGH NOT THE SAME STATUS -- IN THE STEEL
COMMITTEE (SEE BELOW).

FORGE AHEAD ON STEEL.


8. (SBU) IN A NEW TWIST, THE OECD RECENTLY INVITED CHINA TO
JOIN THE STEEL COMMITTEE AS A FULL PARTICIPANT (THE HIGHEST
CATEGORY OF NONMEMBER PARTICIPATION) -- NOTWITHSTANDING
CHINESE TAIPEI'S EXISTING STATUS AS AN OBSERVER. CHINA
PREVIOUSLY HAD NO ENGAGEMENT WITH THE STEEL COMMITTEE,
THOUGH, AS NOTED ABOVE, IT HAD PARTICIPATED IN THE HIGH
LEVEL STEEL TALKS. NOW CHINA HAS LEAPFROGGED TO THE STATUS
OF FULL PARTICIPANT, AND HAS DONE SO WITHOUT OBJECTING TO
TAIWAN'S CONTINUING STATUS AS OBSERVER. ACCORDING TO OECD
OFFICIALS, BOTH CHINA AND TAIWAN PLAN TO SEND
REPRESENTATIVES TO THE NEXT STEEL COMMITTEE MEETING, TO BE
HELD IN INDIA ON MAY 17. CHINA HAS RAISED NO SPECIFIC
OBJECTION TO TAIWAN'S ATTENDANCE AT THIS UPCOMING STEEL
COMMITTEE MEETING, NOTWITHSTANDING ITS GENERAL COMMENTS IN
PARIS AND IN BEIJING TO SECRETARY GENERAL JOHNSTON OPPOSING
TAIWAN'S PARTICIPATION IN COMMITTEES.

AND ON THE ENVIRONMENT, AND REGULATORY REFORM


9. (SBU) IN ADDITION, OECD-CHINA COOPERATION PROCEEDS ON
THE OECD'S ENVIRONMENTAL POLICY REVIEW OF CHINA. THE OECD
REVIEW TEAM, WITH MEMBER COUNTRY PARTICIPANTS, INCLUDING
THE UNITED STATES, COMPLETED ITS "REVIEW MISSION" TO CHINA
IN FEBRUARY. IN NOVEMBER, THE OECD PLANS TO HOLD A "PEER
REVIEW MEETING" ON THE COMPLETED ENVIRONMENTAL REVIEW IN
BEIJING. CHINA HAS ALSO RAISED NO OBJECTIONS TO AN ONGOING
OECD REGULATORY REFORM REVIEW OF CHINA, IN COLLABORATION
WITH THE NATIONAL DEVELOPMENT RESEARCH COMMISSION (NDRC) IN
BEIJING.

CHINA AND THE OECD


10. (U) THE CHINA-OECD PROGRAM OF COOPERATION EXTENDS BACK
OVER TEN YEARS. COMMERCE MINISTER BO XILAI'S VISIT TO THE
OECD LAST YEAR WAS THE HIGHEST OFFICIAL LEVEL CONTACT IN
PARIS, WHILE SECRETARY GENERAL JOHNSTON HAS MADE SEVERAL
VISITS TO CHINA AND MET WITH VICE MINISTER-LEVEL OFFICIALS.
THE OECD'S CHINA "COUNTRY PROGRAM" IS THE MOST ACTIVE OF
ITS THREE COUNTRY PROGRAMS (CHINA, RUSSIA, BRAZIL) AND HAS
PRODUCED A PLETHORA OF REPORTS ADVOCATING ECONOMIC REFORM
MEASURES IN CHINA, INCLUDING COMPLIANCE WITH WTO
OBLIGATIONS -- REPORTS THAT GENERALLY TRACK WELL WITH U.S.
BILATERAL POLICIES AND INITIATIVES.


11. (U) IN ADDITION TO ITS STATUS AS OBSERVER IN THE OECD'S
COMMITTEE ON FISCAL AFFAIRS AND THE COMMITTEE ON SCIENCE
AND TECHNOLOGY POLICY (CSTP),IN THE PAST YEAR, CHINA HAS
BEEN INVITED TO BE AN OBSERVER TO THE EDUCATION COMMITTEE
AND TO THE STATISTICS COMMITTEE, AND, AS NOTED, TO BE A
FULL PARTICIPANT IN THE STEEL COMMITTEE. AS A MAJOR
NONMEMBER ECONOMY, CHINA (AS IN PREVIOUS YEARS) HAS BEEN
INVITED TO SEND A DELEGATION TO ATTEND PARTS OF THE OECD'S
ANNUAL MINISTERIAL COUNCIL MEETING (MCM) ON MAY 23-24; AT
PRESENT, VICE MINISTER OF FINANCE LOU JIWEI IS SCHEDULED TO
LEAD CHINA'S DELEGATION. (CHINESE TAIPEI WAS NOT INVITED;
OTHER INVITEES INCLUDE BRAZIL, INDIA, RUSSIA, AND SOUTH
AFRICA; IN ADDITION, "HONG KONG CHINA," ARGENTINA, AND
CHILE, ALL OF WHICH ARE REGULAR OBSERVERS IN THE TRADE
COMMITTEE ARE AMONG NON-MEMBERS INVITED TO ATTEND THE MCM'S
TRADE SESSION).

TAIWAN AND THE OECD


12. (U) IN ADDITION TO ITS STATUS AS OBSERVER IN THE
COMPETITION AND STEEL COMMITTEES, CHINESE TAIPEI ALSO
APPLIED TO BECOME A REGULAR OBSERVER TO THE TRADE COMMITTEE
IN 2003. IN 2005 TAIWAN SIGNALED ITS INTEREST IN OBSERVING
SIX OTHER COMMITTEES: THE COMMITTEE ON SCIENCE AND
TECHNOLOGY POLICY (CSTP),THE FISHERIES COMMITTEE, THE
INVESTMENT COMMITTEE, THE EMPLOYMENT, LABOR AND SOCIAL
AFFAIRS COMMITTEE, AND TWO SUBGROUPS OF THE ENVIRONMENTAL
POLICY COMMITTEE.

STATUS OF TAIWAN'S APPLICATIONS


13. (SBU) ON APRIL 27, THE OECD'S GOVERNING COUNCIL
ENDORSED THE TRADE COMMITTEE'S DECISION NOT TO APPROVE
REQUESTS FROM CHINESE TAIPEI AND FOUR COUNTRIES TO BECOME
OBSERVERS, BUT TO OFFER INSTEAD "AD HOC" INVITATIONS TO
ATTEND VARIOUS COMMITTEE MEETINGS OR EVENTS. AS NOTED, ON
MAY 4, THE OECD'S COMMITTEE ON COOPERATION WITH NONMEMBERS
IS LIKELY TO ENDORSE TAIWAN'S MEMBERSHIP AS OBSERVER IN THE
COMMITTEE ON SCIENCE AND TECHNOLOGY POLICY, WITH COUNCIL
APPROVAL SOON THEREAFTER. SIMILARLY, AND ALSO ON MAY 4,
THE COMMITTEE ON COOPERATION WITH NONMEMBERS WILL LIKELY
ENDORSE THE FISHERIES COMMITTEE'S PREVIOUS EXPRESSION OF
SUPPORT OF TAIWAN AS AN OBSERVER; THAT WOULD BE FOLLOWED
SHORTLY BY THE COUNCIL'S FINAL APPROVAL. TAIWAN'S
APPLICATIONS TO BECOME AN OBSERVER TO THE INVESTMENT
COMMITTEE, THE EMPLOYMENT, LABOR AND SOCIAL AFFAIRS
COMMMITTEE, AND THE ENVIRONMENTAL POLICY COMMITTEE
SUBGROUPS ARE STILL IN PRELIMINARY STAGES.

OECD ENLARGEMENT


14. (SBU) THE CHINA-TAIWAN IMBROGLIO TAKES PLACE IN THE
CONTEXT OF A U.S.-LED MOVEMENT OVER THE PAST YEAR AIMED AT
STREAMLINING THE OECD'S GOVERNANCE PROCEDURES, AS A
PREREQUISITE FOR OECD ENLARGEMENT BEYOND ITS CURRENT
MEMBERSHIP OF THIRTY COUNTRIES. THE OECD CONVENTION, SIGNED
BY REPRESENTATIVES OF MEMBER GOVERNMENTS, AUTHORIZES ITS
GOVERNING COUNCIL TO INVITE "GOVERNMENT(S)" TO JOIN THE
ORGANIZATION AND THE CONVENTION (ARTICLE 16). THE OECD'S
LEGAL ADVISOR HAS TOLD US INFORMALLY THAT THIS AND OTHER
PROVISIONS WOULD PROHIBIT TAIWAN'S MEMBERSHIP IN THE OECD,
ABSENT A CHANGE IN THE CONVENTION. NO OECD MEMBER HAS
OFFICIAL RELATIONS WITH TAIWAN.


15. (SBU) WE WILL SEE IN THE COMING MONTHS HOW SERIOUS
CHINA IS ABOUT ITS OBJECTIONS TO TAIWAN'S PARTICIPATION IN
OECD NONMEMBER ACTIVITIES. AT PRESENT, IT APPEARS THAT THE
REACTION, IF ANY, IS LIKELY TO BE LIMITED TO THOSE
COMMITTEES WHERE BOTH CHINA AND TAIWAN ARE MEMBERS. THE
UPCOMING STEEL COMMITTEE MEETING IN INDIA WILL BE A TEST
CASE, AS WILL THE OECD'S LIKELY APPROVAL OF TAIWAN AS AN
OBSERVER TO THE CSTP LATER THIS MONTH (SEE ACTION REQUEST).

ACTION REQUESTED


16. (SBU) MISSION REQUESTS GUIDANCE ON WHETHER TO OBJECT TO
TAIWAN'S APPLICATION TO BE AN OBSERVER IN THE COMMITTEE ON
SCIENTIFIC AND TECHNOLOGY POLICY (CSTP). THIS APPLICATION
WILL BE APPROVED ROUTINELY BY THE OECD'S COMMITTEE ON
COOPERATION WITH NONMEMBERS ON MAY 4 UNLESS ONE OR MORE
MEMBER COUNTRIES OBJECT. THE CSTP, WITH UNITED STATES
PARTICIPATION AND AGREEMENT, HAS ALREADY MADE A "TECHNICAL
EVALUATION" AND CONCLUDED THAT TAIWAN IS WELL-QUALIFIED TO
BE AN OBSERVER TO THE COMMITTEE. THAT APPROVAL OCCURRED IN
2005, PRIOR TO THE ESCALATION OF THIS MATTER BY AMBASSADOR
ZHAO AND OTHER CHINESE OFFICIALS.


17. (SBU) WE ALSO REQUEST GUIDANCE ON WHETHER TO OBJECT TO
TAIWAN'S MEMBERSHIP IN THE FISHERIES COMMITTEE. AS WITH
THE CSTP, THE FISHERIES COMMITTEE HAS FOUND TAIWAN WELL-
QUALIFIED TO BE AN OBSERVER. UNLIKE THE CSTP, HOWEVER,
CHINA IS NOT NOW ENGAGED WITH THE FISHERIES COMMITTEE, NOR
HAS IT INDICATED INTEREST IN OBSERVERSHIP. TAIWAN (AS
"CHINESE TAIPEI") PARTICIPATED ENTHUSIASTICALLY IN THE 26-
28 APRIL MEETING OF THE FISHERIES COMMITTEE AS AN AD HOC
OBSERVER. THE COMMITTTEE ON COOPERATION WITH NONMEMBERS
WILL ALSO APPROVE THIS APPLICATION ON MAY 4, ABSENT
OBJECTION BY ONE OR MORE MEMBER STATES.


18. (SBU) FROM THE POINT OF VIEW OF U.S. INTERESTS AT THE
OECD, WE BELIEVE THAT CHINA'S OBJECTIONS TO A LONG-SETTLED
OECD PRACTICE GO TOO FAR. STATEHOOD IS NOT A REQUIREMENT
FOR COMMITTEE PARTICIPATION; INDEED, BEIJING HAS NOT
CLAIMED THAT GRANTING AN OBSERVERSHIP IS TANTAMOUNT TO
RECOGNITION OF A STATE, ONLY THAT TAIWAN HAS "POLITICAL"
MOTIVATIONS. THOUGH WE WOULD REGRET A MOVE BY CHINA TO
CURTAIL THE VALUABLE COOPERATIVE PROGRAM WITH THE OECD, WE
WOULD REGRET EVEN MORE, AND BELIEVE IT IS NOT IN U.S.
INTERESTS AS SEEN FROM HERE, PERMITTING CHINA (PARTICULARLY
GIVEN ITS STATUS AS A NON-MEMBER) TO RAISE THE BAR FOR
PARTICIPATION BY TAIWAN IN THE OECD. WE RECOMMEND APPROVAL
OF TAIWAN'S APPLICATIONS FOR BOTH THE CSTP AND THE
FISHERIES COMMITTEE ON MAY 4, AND SUBSEQUENTLY WHEN BOTH
MATTERS COME UP FOR APPROVAL BY THE OECD'S GOVERNING
COUNCIL.
MORELLA