PRESIDENT CHEN AND THE DIRECTOR DISCUSS UPCOMING

C O N F I D E N T I A L SECTION 01 OF 03 TAIPEI 001007

SIPDIS

SIPDIS

DEPT PASS USTR FOR STRATFORD AND ALTBACH

E.O. 12958: DECL: 05/02/2032
TAGS: PGOV PREL ETRD ECON TW
SUBJECT: PRESIDENT CHEN AND THE DIRECTOR DISCUSS UPCOMING
PRESS CONFERENCE, DOMESTIC POLITICS, AND ECONOMIC ISSUES

REF: A. TAIPEI 932


B. TAIPEI 908

Classified By: AIT Director Stephen M. Young,
Reasons: 1.4 (b/d)


1. (C) Summary: On May 1, the Director told President Chen he
would stress in his May 3 press conference that the U.S takes
very seriously the issue of maintaining cross-Strait security
and stability. He noted that senior U.S. defense officials
had recently asked him to emphasize to Taiwan leaders the
imperative to avoid steps that might damage cross-Strait
stability during a period when the U.S. is facing security
challenges in Iraq and Afghanistan. Senator Warner had also
emphasized this point publicly in a recent Senate hearing.
Noting Vice Premier Tsai Ing-wen's recent request to hold
TIFA talks prior to the June 30 TPA expiration date (Refs
a-b),the Director explained that agreeing to hold the TIFA
talks in July will give our two sides the time and incentive
needed to prepare a productive agenda. President Chen
attributed Tsai's request to pressure from the business
community, which is concerned that the U.S.-ROK FTA may
affect their interests. Chen also said Taiwan hopes the U.S.
will consider holding TIFA talks more frequently in order to
accelerate progress on trade issues. End Summary.

Defense Issues
--------------


2. (C) In a May 1 meeting (other subjects reported Septel),
the Director previewed to President Chen several themes for
his May 3 press conference. Presidential Office Secretary
General Chiou I-jen and DDIR also participated. President
Chen and the Director also discussed economic issues and
Taiwan domestic politics. In his press conference, the
Director explained, he would underscore the importance of
maintaining the cross-Strait status quo as a basis for
Taiwan's continued democratic development, pointing out that
U.S. and Taiwan interests are largely the same. The Director
said he would stress that, as Taiwan's major partner, the
U.S. takes very seriously the issue of cross-Strait security
and stability. He recalled that senior U.S. defense
officials had recently asked him to emphasize to Taiwan
leaders the imperative to avoid steps damaging to
cross-Strait stability during a period when the U.S. is
facing security challenges in Iraq and Afghanistan. Senator
Warner had made the same point publicly in a Senate hearing
with PACOM Commander Admiral Keating, the Director added.
Finally, the Director told President Chen, the U.S. cannot
understand why the Legislative Yuan (LY) continues to block
the defense budget and not give the Taiwan military the
weapons needed to defend Taiwan.

"Four Noes"
--------------


3. (C) The Director told Chen he would emphasize in his
press conference that the U.S. respects and does not
interfere in Taiwan's democracy. The U.S. will work with the
president elected by the Taiwan people next year, whoever
that might be. If asked whether the U.S. would request
Taiwan's next president to reiterate the "four noes," the
Director said, he would respond that the U.S. would not
dictate to Taiwan's new president but would candidly explain
the U.S. positions and interests on economic, political, and
security issues. It would be up to the new Taiwan president
to decide whatever he or she might want to say. The Director
recalled that it was President Chen who had decided on
announcing the "four noes" in his 2000 inaugural address.
Contrary to some current misimpressions, he added, the U.S.
had not dictated the "four noes." President Chen agreed
with the Director's recollection.

DPP Presidential Primary
--------------

TAIPEI 00001007 002 OF 003




4. (C) In brief comments on the DPP presidential primary,
Chen noted that the result will be known on May 12. No
matter who wins, the candidate will face the key task of
unifying the party after the primary battle. It may take
time for the presidential candidate to identify a running
mate, Chen predicted. The process will involve more than
personal considerations as the vice presidential candidate
will need to provide added value to the ticket which will
contribute to victory in the general election.

TIFA Talks
--------------


5. (C) The Director noted that in two recent meetings Vice
Premier Tsai Ing-wen had stressed to him that she regarded
June 30 as an important date in the TIFA process, because
Trade Promotion Authority (TPA) would expire on that date and
the U.S. had recently concluded an FTA with the ROK. Tsai
had expressed hope that the next round of U.S.-Taiwan TIFA
talks could be held in Washington prior to June 30. The
Director told Chen he had explained to Tsai that the date
June 30 held no special significance since a) it was not
clear whether TPA might be extended then or at some future
date, and b) the just-initialed U.S.-ROK FTA was not likely
to be put to the U.S. Congress until the fall. The U.S. has
proposed dates in early July to hold the TIFA talks, and
could not accommodate the Tsai-proposed June dates.


6. (C) Chiou I-jen suggested that Tsai's request to advance
the dates for the TIFA talks stemmed from Taiwan business
community pressure on the Executive Yuan (EY) to talk quickly
to the U.S. before the June 30 expiration of TPA. The
Director explained that DUSTR Bhatia has no free time in
June, but he and his team have been working diligently on
U.S.-Taiwan trade issues, including tax and investment
agreements, agriculture, and a government procurement
agreement. By scheduling the TIFA talks in July, our two
sides will have time to arrange a productive agenda, the
Director observed. TIFA is good in its own right and can
help lay groundwork for a possible future FTA if the proper
conditions for an FTA exist at that time.


7. (C) President Chen agreed with Chiou that there has been
unprecedented pressure from the business community, which, in
reaction to the U.S.-ROK FTA, wants the Taiwan government to
consult quickly with the U.S. on an FTA. Observing that the
TIFA process has been underway for a long time, Chen said
that Taiwan would like to accelerate the talks and quickly
sign some agreements, as this would help to reassure the
business community. Saying that he was making a formal
request on behalf of the Taiwan government, Chen asked if it
would be possible to hold TIFA talks several times per year.


8. (C) The Director said he would inform Washington of
Taiwan's request, adding that other U.S. partners, including
Japan, have also expressed concern about our FTA with South
Korea. Pointing to recent progress in one important aspect
of our economic relations, the Director noted that the EY
recently approved the agreement establishing the U.S.-Taiwan
Consultative Committee on Agriculture (CCA). Our two sides
will soon sign this agreement in Washington, with the first
CCA meeting to be held in Taipei this coming fall. Asked by
Chen about the possibility of a high-level visit to Taiwan,
the Director responded that we are always looking at
appropriate visits that could advance key U.S. interests.

Comment
--------------


9. (C) We tried in this exchange to persuade President Chen
that July TIFA dates would not jeopardize Taiwan's economic
interests. While less adamant than Vice Premier Tsai, Chen's
response hasn't solved our drive to lock in the July dates.
We will have to go back to Tsai once we've gotten

TAIPEI 00001007 003 OF 003


Washington's update on outstanding questions she posed in
Reftel meetings last week.

YOUNG