DUSTR BHATIA'S MEETING WITH PREMIER SU TSENG-CHANG

C O N F I D E N T I A L SECTION 01 OF 02 TAIPEI 001837

SIPDIS

SIPDIS

E.O. 12958: DECL: 05/26/2016
TAGS: PREL ECON TW
SUBJECT: DUSTR BHATIA'S MEETING WITH PREMIER SU TSENG-CHANG


Classified By: AIT Deputy Director David J. Keegan, Reason 1.4 b


1. (C) Summary. Deputy USTR Karan Bhatia called on Taiwan
Premier Su Tseng-chang on May 26, the second day of the
U.S.-Taiwan TIFA talks in Taipei. Stressing Taiwan's
cooperation with the U.S. on export controls,
pharmaceuticals, and other trade issues, Su urged the U.S. to
consider a bilateral FTA. DUSTR Bhatia expressed U.S.
commitment to strengthening bilateral trade relations, urged
Taiwan cooperation on the Doha round, but explained "frankly"
that an FTA would be very difficult. End Summary.

Sressing Taiwan Cooperation, Premier Su Appeals for FTA
-------------- --------------


2. (C) Premier Su Tseng-chang welcomed DUSTR Bhatia,
explaining that Taiwan has worked extremely hard in
preparation for the U.S.-Taiwan Trade and Investment
Framework Agreement (TIFA) meetings. President Chen
Shui-bian, he said, places great weight on the TIFA talks and
had instructed his ministers to give top priority to the
meeting. Su, in turn, assigned Vice Premier Tsai to oversee
planning for the talks. The large U.S.-Taiwan bilateral
trade, he continued, was particularly significant given that
Taiwan is geographically small and has a relatively small
population. Taiwan's close cooperation with the U.S. on
pharmaceuticals, export controls, and other areas, moreover,
reflected the importance Taiwan attaches to bilateral trade
relations with the U.S. In the face of considerable
legislative opposition, he noted, his Executive Yuan (EY) had
boldly decided to permit importation of U.S. beef. In turn,
Taiwan, he said, appreciates U.S. support of Taiwan in
international organizations, particularly WTO and WHO.
Premier Su was accompanied by Ministry of Economic Affairs
(MOEA) Deputy Minister Steve Chen (Ruey-long) and Council on
Economic Planning and Development (CEPD) Chairman Hu
Sheng-chang.


3. (C) Given Taiwan's dependency on trade, including
regional trade in East Asia, Premier Su continued, Taiwan
hopes for a bilateral Free Trade Agreement (FTA) with the
U.S., which would be beneficial to both sides. An FTA, he
argued, would assist Taiwan's efforts to integrate into the
region in the face of the growing regional integration and
regional trade agreements. Taiwan's exclusion from these
trends is the source of great frustration for Taiwan.
Conclusion of a TIFA this week, Su concluded, would provide a
firm base for future bilateral FTA discussions.

DUSTR Bhatia Stresses Doha, Downplays an FTA
--------------


4. (C) DUSTR Bhatia expressed appreciation for the warm
welcome he and his delegation had received in Taipei, noting
in particular his very useful meetings with Vice Premier Tsai
Ing-wen, MOEA Minister Hwang Ing-san and Deputy Minister
Steve Chen. Conveying greetings from Washington and from
President Bush, he explained that there was a great deal of
interest in Washington in the TIFA discussions. Bhatia
complimented Taiwan's readiness to work on a range of trade
issues, including pharmaceuticals and export controls. The
purpose of the TIFA discussions and of his own visit, he
explained, was to strengthen the already strong economic ties
between the U.S. and Taiwan, with bilateral trade totaling
USD 60 billion and growing. There were always areas in which
we can improve, on regulatory and other issues, and this was
the aim of the TIFA process.


5. (C) In addition to specific bilateral trade issues, DUSTR
Bhatia continued, the U.S. wanted to discuss global and
regional trade issues with Taiwan. In particular, the U.S.
is focusing on the Doha Round. The U.S. appreciates Taiwan's
support and hopes, in particular, to secure Taiwan's
accession to the WTO Government Procurement Agreement. The
U.S. wants to discuss economic growth and development in the
East Asia region, in which the U.S. intends to play a part
and supports Taiwan also playing a part. The U.S. also wants
to discuss cross-Strait economic cooperation, which plays an
important role in attracting American business to Taiwan by
enabling Taiwan to serve as a convenient base of operations
for the PRC and East Asia.


6. (C) The U.S. places high priority on the future of
U.S.-Taiwan bilateral economic relations, DUSTR Bhatia told
Premier Su. He promised to relay Su's points on a bilateral
FTA to Washington, noting that Vice Premier Tsai and MOEA

TAIPEI 00001837 002 OF 002


Minister Hwang had also spoken strongly and articulately on
the FTA issue. "In the interests of frankness," Bhatia
continued, he wanted to explain to Su that the U.S. is now
heavily focused on the Doha Round and on concluding FTA
discussions already well under way with several trading
partners and that to undertake FTA discussions with Taiwan
would be extremely difficult. He understood Su's concerns
about Taiwan's regional economic marginalization, he
continued, and it was his hope that his current visit to
Taipei demonstrated U.S. commitment to Taiwan. The U.S., he
concluded, is committed to both bilateral trade relations and
Taiwan's participation in regional and international trade
regimes. Bilateral trade discussions and cooperation should
not end with TIFA, he stressed, but rather this should be the
beginning of sectoral discussions. This trade engagement
demonstrates that the U.S. and Taiwan are closely linked and
are moving forward.

Post TIFA
--------------


7. (C) Premier Su responded that he believes the TIFA talks
will move U.S.-Taiwan bilateral relations "to a higher
level." DUSTR Bhatia agreed and told Su that AIT Director
Young and AUSTR Tim Stratford would continue pushing
bilateral cooperation forward. Director Young had
demonstrated in his short tenure that he is a strong advocate
for bilateral relations, while AUSTR Stratford will return
soon and often to Taiwan for further discussions. Su
responded that Young and Stratford know Taiwan very well and
can communicate with Taiwan, not only in Chinese "but even in
Taiwanese."

(This cable has been cleared by USTR.)

KEEGAN