Identifier
Created
Classification
Origin
06TAIPEI2452
2006-07-20 22:00:00
CONFIDENTIAL
American Institute Taiwan, Taipei
Cable title:  

GPA/PVS DEMARCHE DELIVERED TO VP TSAI

Tags:  WTO ETRD ECON PREL TW 
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VZCZCXRO6851
PP RUEHCN RUEHGH
DE RUEHIN #2452/01 2012200
ZNY CCCCC ZZH
P 202200Z JUL 06
FM AIT TAIPEI
TO RUEHC/SECSTATE WASHDC PRIORITY 1182
INFO RUEHGV/USMISSION GENEVA PRIORITY 1753
RUEHBJ/AMEMBASSY BEIJING 5438
RUEHUL/AMEMBASSY SEOUL 7945
RUEHKO/AMEMBASSY TOKYO 7841
RUEHHK/AMCONSUL HONG KONG 6645
RUEHGH/AMCONSUL SHANGHAI 0243
RUEHGZ/AMCONSUL GUANGZHOU 9424
RUEHCN/AMCONSUL CHENGDU 1326
RUEHSH/AMCONSUL SHENYANG 5287
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHDC
C O N F I D E N T I A L SECTION 01 OF 02 TAIPEI 002452 

SIPDIS

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STATE PASS USTR
USTR FOR ALTBACH, WINTER AND WINELAND,
TREASURY PASS TO FEDERAL RESERVE/BOARD OF GOVERNORS,
AND SAN FRANCISCO FRB/TERESA CURRAN

E.O. 12958: DECL: 07/20/2026
TAGS: WTO ETRD ECON PREL TW
SUBJECT: GPA/PVS DEMARCHE DELIVERED TO VP TSAI

REF: A. SECSTATE 117785

B. PHRMA TIFA RECOMMENDATIONS WHITE PAPER

C. JULY 18 BHATIA-CHEN LETTER

Classified By: AIT DIRECTOR STEPHEN M. YOUNG, REASON 1.4 B

C O N F I D E N T I A L SECTION 01 OF 02 TAIPEI 002452

SIPDIS

SIPDIS

STATE PASS USTR
USTR FOR ALTBACH, WINTER AND WINELAND,
TREASURY PASS TO FEDERAL RESERVE/BOARD OF GOVERNORS,
AND SAN FRANCISCO FRB/TERESA CURRAN

E.O. 12958: DECL: 07/20/2026
TAGS: WTO ETRD ECON PREL TW
SUBJECT: GPA/PVS DEMARCHE DELIVERED TO VP TSAI

REF: A. SECSTATE 117785

B. PHRMA TIFA RECOMMENDATIONS WHITE PAPER

C. JULY 18 BHATIA-CHEN LETTER

Classified By: AIT DIRECTOR STEPHEN M. YOUNG, REASON 1.4 B


1. (C) Summary: On July 19 Taiwan Vice Premier Tsai Ing-wen
assured AIT Director that U.S. comments on the Fifth
Price-Value Survey (PVS) would be welcome and given full
consideration through September 15 and that the Bureau of
National Health Insurance (BNHI) would make no further
announcements on the PVS prior to that time. VP Tsai
responded cautiously to ref A points on the WTO Government
Procurement Agreement (GPA),but said she would relay the
points to the National Security Council (NSC) and President.
Tsai commented briefly on Taiwan's continuing desire for a

SIPDIS
Free Trade Agreement (FTA) with the United States, and
expressed pessimism that the upcoming Sustainable Economic
Development Conference would produce significant results.
Separately on July 19, AIT delivered ref B/C documents to
BNHI and the Ministry of Economic Affairs (MOEA). Action
request para 10. End summary.


2. (C) On July 19 AIT Director delivered ref A talking
points, and left copies of the ref B letter and ref C white
paper during a meeting with Taiwan Vice Premier Tsai Ing-wen,
who had invited Hsiao Mei-ling of the Taiwan Department of
Health and Lee Cheng-hua of BNHI to join the session. The
Director received assurances that a) the deadline for
industry (and U.S.) comments on the Fifth Price-Value Survey
(PVS) would be extended until September 15, b) BNHI would
make no further announcements concerning the PVS, and c) USTR
and PhRMA views on pharmaceutical pricing issues would be
given careful consideration.

Two-Month Comment Period on PVS
--------------


3. (C) In response to direct questioning from the Vice
Premier, Hsiao and Lee claimed that BNHI had all along
planned to allow a two-month period for industry to comment

on the PVS guidelines (from July 17 to September 15). They
explained that talk of a two-week deadline during a July 14
meeting between BNHI and AIT was only to indicate they wanted
to receive industry comments as soon as possible.


4. (C) AIT ECON relayed the Bhatia letter and PhRMA white
paper to BNHI President Liu Chien-hsiang, and to MOEA with
instructions that the documents be forwarded to MOEA Vice
Minister Steve Chen who is currently traveling out of Taiwan.
AIT later confirmed that Chen received the documents.

GPA Nomenclature a Sensitive Issue
--------------


5. (C) As instructed ref A, the Director made clear that on
the issue of the WTO Government Procurement Agreement the
U.S. would like to have a Taiwan response to the suggested
footnotes prior to Economic Deputy Minister Steve Chen's
meetings in Washington the week of July 23. VP Tsai
cautiously responded that she would relay the U.S. points to
NSC Chiou I-jen and President Chen.


6. (C) Comment: Tsai's cautious response reflected the
political sensitivities surrounding the GPA nomenclature
issue. The Director stressed our sense that this was a
reasonable solution to a long-standing problem, and proper
handling by Taiwan was necessary to avoid our losing
confidence that Taiwan is approaching the problem from a
practical perspective. The Director has a meeting with
President Chen on July 21 during which he will follow-up on
this question.

FTA Again Raised
--------------


7. (C) Vice Minister Tsai sought at one point to complain

TAIPEI 00002452 002 OF 002


that we were demanding a "high price" in market opening from
Taiwan as a "down payment" for an FTA without offering any
guarantee that an FTA deal would ever be reached. She said
some business people reported that South Korea claimed to
have offered a $30 billion package of trade incentives to the
United States as an incentive for an FTA. These business
people suggested that Taiwan needed to offer a similar value
of trade incentives. The VP said she hoped U.S. officials
realized that Taiwan markets were already far more open to
U.S. products than were South Korea's markets.


8. (C) The Director corrected Vice Premier Tai's multiple
misperceptions: First, he explained, we are working on the
TIFA agenda laid out in May because progress on these issues
is in both sides' interests, and it was inappropriate to
label this a "high price." Second, any comparison between
U.S. trade relations with Taiwan and with South Korea was
misplaced here. Third, DUSTR Bhatia and others have clearly
spelled out the limitations that prevent the United States
from embarking on another FTA negotiation at this time.
Fourth, any possibility that in the future (with special
emphasis on the expiration next summer of Congressionally
mandated negotiating authority) an FTA with Taiwan might
become feasible will very much take into account our ability
to advance the trade agenda within TIFA.

Sustainable Economic Development Conference
--------------


9. (C) On the margins of the meeting discussed above, Vice
Premier Tsai privately told the Director that she had lost
hope of substantive outcomes on economic policy at the
long-planned, much maligned July 27-28 Sustainable Economic
Development Conference. The Director told Tsai that
Washington has been impressed by her efforts and those of
Premier Su Tseng-chang to further liberalize cross-Strait
economic links. He expressed hope that the political climate
here will permit this trend to continue. Agreeing on the
importance of this work, Tsai said that at this point she and
the Premier just hope nothing said or done at the conference
will limit or restrict efforts to liberalize cross-Strait
economic relations. She particularly noted the deep Greens'
(particularly former president Lee Teng-hui's TSU party)
desire to derail such efforts.

Action Request
--------------


10. (C) The Director told VP Tsai that AIT would advise
Washington of these assurances on the PVS issues and let the
Vice Premier know just as soon as possible if they fully
addressed all U.S. concerns. Action request: Please advise
if Washington agencies believe these assurances fully meet
the U.S. concerns whether Taiwan is living up to the spirit
and letter of understandings reached on pharmaceutical
pricing during the May 2006 TIFA talks in Taipei.

YOUNG