TAIWAN REMAINS INTENT ON A FREE TRADE AGREEMENT

C O N F I D E N T I A L SECTION 01 OF 02 TAIPEI 002923 SIPDIS SIPDIS STATE PASS USTR STATE FOR EAP/TC, USTR FOR STRATFORD AND ALTBACH, USDOC FOR 4431/ITA/MAC/AP/OPB/TAIWAN/JDUTTON USDA/FAS FOR SHEIKH/MIRELES TREASURY ALSO PASS TO FEDERAL RESERVE/BOARD OF GOVERNORS, AND SAN FRANCISCO FRB/TERESA CURRAN E.O. 12958: DECL: 07/06/2016 TAGS: ETRD ECON PREL PGOV TW SUBJECT: TAIWAN REMAINS INTENT ON A FREE TRADE AGREEMENT REF: A. TAIPEI 900 ¶B. TAIPEI 1831 Classified By: AIT DEPUTY DIRECTOR ROBERT WANG FOR REASONS 1.5 (b),(d) ¶1. (U) Summary: Taiwan remains intent on securing U.S. concurrence to launch talks on a bilateral Free Trade Agreement. Taiwan officials at all levels took advantage of the August 17-21 trade talks in Taipei to raise the issue, emphasizing that an FTA is Taiwan's number one trade goal. Taiwan officials and business representatives are already fully engagaed in lobbying USG officials, U.S. business and the U.S. Congress to support an FTA. End Summary. ¶2. (C) At the conclusion of her meeting with DUSTR Bhatia in May (reftel B),Vice Premier Tsai Ing-wen said that Taiwan had been patient in its quest to join the WTO and would also be patient, but persistent, in pursuing its goal of launching bilateral talks with the U.S. on a Free Trade Agreement. Taiwan officials, including Tsai, took advantage of the August 17-21 bilateral TIFA talks held in Taipei to reiterate Taiwan's strong desire to move forward on an FTA. Vice Premier Tsai Ing-wen, Minister of Economic Affairs Steve Chen (Ruey-long),Board of Foreign Trade Director General Franco Huang (and his Deputy, James Wu) and TECRO/Taipei Deputy Director General Terry Ting all made a point of highlighting Taiwan's resolve to secure a FTA with the U.S. Vice Premier Tsai -------------- ¶3. (C) Vice Premier Tsai Ing-wen told AIT/T Director on August 16 that she remains focused on an FTA with the U.S. While she did not go into any detail on the issue due to time constraints, she clearly indicated a willingness and ability to discuss the intricacies of an FTA at any time or place. Minister Chen -------------- ¶4. (U) Recently promoted to the top job in the Ministry of Economic Affairs, Chen welcomed the visit of the U.S. trade delegation and expertly reviewed all of the outstanding issues from the TIFA meeting in May. He reiterated that an FTA is Taiwan's top trade priority and suggested that with the DOHA round now on hold, it would be a good opportunity for the U.S. to reassign negotiating resources and launch FTA talks with Taiwan. He noted that Taiwan fully understands the need for it to generate additional support for an FTA in both the U.S. business community and in the U.S. Congress and said Taiwan will be working on those goals in the next six months. (Note: DAUSTR Altbach told AIT/T that Chen had deployed similar points during his recent lunch with DUSTR Bhatia in Washington. End Note.) TECRO DDG Ting -------------- ¶5. (SBU) TECRO/Taipei Deputy Director General Terry Ting went on at length about an FTA in a lunch with AIT/T Econ Chief and Deputy Chief on August 17. In marked contrast to the remarks by Tsai and Chen, Ting ranged well beyond the economic focus voiced by those senior officials. Ting at one point or another repeated all of the various points Taiwan has made over the past several years as reasons for an FTA with the U.S., including how an FTA will provide political support for economic opening to the PRC while also encouraging other countries in the region to enter into FTA talks with Taiwan. (Reftel A provides further details on Taiwan's arguments for an FTA.) Ting went a step farther than we have heard before, making a specific link between the U.S. moving forward on FTA talks and Taiwan then responding by moving forward on its military defense budget and on TAIPEI 00002923 002 OF 002 loosening restrictions on cross-strait trade. Econ Chief cautioned Ting against any suggestion that Taiwan is linking FTA with the military budget. We told Ting Taiwan should concentrate on making the economic case for the benefits of an FTA and noted the U.S. will not be in a position to consider taking on new FTA talks unless and until trade promotional authority is extended. We noted Taiwan's military preparedness should be considered on its own merits. (Comment: When Ting suggested linking FTA and military budgets, Ting's companions from the Board of Foreign Trade (BOFT) and MOEA seemed uncomfortable with the tone Ting was taking. As we pushed back, Ting dropped the subject and made no further references to linkages. Our sense is that Ting was making comments without specific instructions in an effort to gauge probable USG reaction to such a linkage. End comment.) BOFT Urges Taiwan Business to Generate FTA Support in U.S. -------------- -------------- ¶6. (U) Franco Huang, the Director General of BOFT echoed Steve Chen's comments on an FTA in a meeting with the trade delegation on August 18. His Deputy Director General, James Wu, spoke to the ROC-US Business Council on August 16 on Taiwan-U.S. trade relations. About three quarters of the speech focused on the benefits to be derived from a Taiwan-U.S. FTA. Wu identified an FTA as Taiwan's top trade goal, cited a range of studies concluding there could be measurable trade benefits and urged the Council members to utilize every opportunity to lobby their U.S. business partners to voice support for an FTA and to seek U.S. congressional support as well. Council Chairman Chen Mu-tsai followed up Wu's remarks by seconding the call for Taiwan businesses to help generate FTA support in the U.S. COMMENT -------------- ¶7. (C) Taiwan's top economic trade officials have carefully listened to USG comments on the prospects for an FTA and are in the process of implementing a coordinated program to address U.S. concerns voiced during DUSTR Bhatia's visit in May. We can anticipate Taiwan officials at all levels having FTA talking points ready to deploy when meeting any U.S. officials in Taiwan, the U.S. or at any type of international organizations. Taiwan interests will also be strongly lobbying the U.S. Congress and the U.S. business community. End Comment. YOUNG