DIRECTOR'S MEETING WITH COA CHAIRMAN SU: PAVING THE WAY FOR

UNCLAS AIT TAIPEI 000205

SIPDIS

SENSITIVE

FAS FOR OCRA/SMITH; OFSO/THURSLAND
STATE FOR EAP/TC
STATE PASS USTR FOR ERIC ALTBACH

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E.O. 12958: N/A
TAGS: EAGR ETRD TW
SUBJECT: DIRECTOR'S MEETING WITH COA CHAIRMAN SU: PAVING THE WAY FOR
CCA

REF: TAIPEI 00024

SENSITIVE BUT UNCLASSIFIED


1. (SBU) Summary. In his January 25 meeting with Taiwan's Council
of Agriculture (COA) Chairman, Mr. Su Chia-chyuan, AIT Director
Young proposed that the inaugural session of the Consultative
Committee on Agriculture (CCA) be convened soon, hopefully in the
spring. A senior USDA official is expected to come to Taipei to
open the CCA, leading a small group of experts who will participate
in the meetings. Chairman Su noted that since the remaining issues
over the CCA founding documents are resolved, he expected that
Executive Yuan clearance of these documents and other internal
administrative processes will be completed before the start of the
Chinese New Year (February 17). COA's earlier misgivings over the
CCA appear to have given way to a more proactive desire to use this
mechanism to deepen its relationship with the United States.
Director Young also described for Chairman Su his recent meeting
with USDA Secretary Johanns, heard COA's concerns over escalating
corn prices, and reviewed the status of the WTO rice market access
case. End summary.


2. (SBU) Director Young and COA Chairman Su held their third
meeting in the last ten months on January 25. Each session has
demonstrated the Chairman's broad political expertise and his keen
interest in Taiwan's overall political environment including, of
course, the political context of the agricultural issues he must
manage. Director Young opened with a report of his January 3
meeting with USDA Secretary Johanns in Washington, D.C., noting that
while serving as Governor of Nebraska, the Secretary traveled to
Taiwan more than once. The Secretary was joined in the DC meeting
by the newly arrived Under Secretary for Farm and Foreign
Agricultural Services, Mark Keenum. The Director related Secretary
Johanns' great interest in Taiwan's current situation and the status
of the overall trade and economic relationship. In particular, the
Director noted, Secretary Johanns is quite interested in seeing that
the CCA be established in order to strengthen the existing
agricultural relationship between the United States and Taiwan.


3. (SBU) Moving on to the specifics of the CCA, the Director
proposed that we target spring as the time to hold the first CCA
meeting in Taipei. A senior USDA official will represent the U.S.
side in convening this inaugural session and will lead a group of
experts who will participate in the meetings. Specific dates depend
on the availability of appropriate officials from both sides.
Chairman Su agreed with that proposal and suggested that
AIT/Agriculture and COA's International Cooperation staff coordinate
over coming weeks to develop a precise planning timeline and draft
agenda for the CCA. This coordination is already underway.
Chairman Su added that differences over specific wording in the
documents that will formalize the CCA have been resolved and he
expected that the remaining administrative procedures in Taiwan,
clearance by the EY and notification to the LY, can be wrapped up
before the start of the Spring Festival on February 17.


4. (SBU) Chairman Su picked up on an earlier comment by the
Director regarding Secretary Johanns' review of the global corn
situation to describe the detrimental impact current high corn
prices have on Taiwan's livestock sector. The rise in production
costs is putting an economic squeeze on hog and poultry producers.
One consequence is pressure by hog producers to import corn from
China. (See reftel for a more detailed analysis of this situation).
The Chairman noted that there are no barriers to prevent Taiwan
companies from purchasing Chinese corn. In his view, if the United
States loses market share due to current high prices, it will prove
difficult to regain these sales in the future. (Comment: Taiwan
companies have so far been unable to agree with Chin on a
reasonable price for its corn. China's corn prices are currently
about the same as U.S. prices, and Taiwan users demand a discounted
price due to the poorer quality of Chinese corn. End Comment) The
Director pointed out that high corn prices are affecting users
around the world, including the United States. This largely reflects
growing demand for corn by the biofuels sector. He also noted the
visit to Taiwan on February 1 by senior executives from the U.S.
Grains Council who will meet with COA to discuss this situation.


5. (SBU) Moving from corn to rice, Chairman Su described Taiwan's
concern that Australia was objecting to terms of the side agreement
already negotiated with the United States. The side agreements must
be in place before Taiwan will notify its new rice import regime to
the WTO, thereby ending the five-year WTO dispute over rice market
access. He also said Taiwan was concerned that Egypt will file a
WTO objection once Taiwan notifies its new import regime, while
discounting the threat of an objection from Vietnam. The Director
noted that our bilateral agreement with Taiwan says the United
States will help Taiwan respond to any WTO objections.



6. (SBU) Comment: The corn and rice issues raised in this meeting
illustrate the value of a mechanism like the CCA to focus regular,
high-level attention on trade, market access, and policy problems
that affect U.S. interests in our sixth-largest agricultural market.
COA's earlier misgivings over the CCA appear to have given way to a
more proactive desire to deepen its agricultural relationship with
the United States through this consultative framework. Support for
the CCA now seems well established at the highest levels. In coming
weeks, it will be important for both sides to establish a
constructive timeline and meaningful agenda for the first CCA
meeting in Taipei. Similarly, USDA should begin determining the
availability of the appropriate senior official to lead the U.S.
delegation. End comment.

YOUNG