AUSTR STRATFORD MEETING WITH VICE PREMIER CHIOU

C O N F I D E N T I A L SECTION 01 OF 02 TAIPEI 001420

SIPDIS

SIPDIS

STATE PASS USTR
STATE FOR EAP/TC,
USTR FOR STRATFORD AND ALTBACH, TREASURY FOR
OASIA/LMOGHTADER

E.O. 12958: DECL: 06/21/2010
TAGS: ETRD ECON ECIN TW
SUBJECT: AUSTR STRATFORD MEETING WITH VICE PREMIER CHIOU
I-JEN


Classified By: AIT DIRECTOR STEPHEN M. YOUNG FOR REASONS 1.4 (b),(d)

1.(C) SUMMARY. During a June 14 meeting with Vice Premier
Chiou I-Jen, AUSTR Timothy Stratford underscored ongoing U.S.
interest in a strong bilateral economic relationship with
Taiwan, including clear progress in the July Trade and
Investment Framework Agreement (TIFA) talks. Stratford
expressed satisfaction at the very productive preliminary
discussions on a possible bilateral investment agreement and
his impression that both sides are working hard to assess
whether official negotiations can be launched in the near
future. Citing U.S. negotiating concerns over a bilateral
Government Procurement Agreement (GPA),Stratford urged
Taiwan to return to consideration of a multilateral GPA at
the WTO. Stratford also urged that, in light of the OIE's
decision in May to reclassify the United States as a
controlled-risk country, Taiwan should resume imports of all
U.S. beef products. Chiou emphasized Taiwan interest in
concrete, rapid progress under the TIFA talks. Although he
expressed willingness to revisit the GPA issue at the WTO,
Chiou said political concerns make it difficult to address
the issue now. END SUMMARY.

2.(U) Assistant United States Trade Representative (AUSTR)
Timothy Stratford was accompanied by the Director, Deputy
Assistant USTR Eric Altbach, AIT/W Trade and Commercial
Programs Representative Rick Ruzicka, and econoffs. Vice
Premier Chiou I-Jen was joined by Economic Affairs Minister
Steve Chen (Ruey-Long) and John Deng, Chief Representative,
Office of Trade Negotiations.

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Revisiting multilateral GPA options
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3. (C) Stratford opened by stressing U.S. interest in
building long-term economic relations with Taiwan. He
observed that a bilateral government procurement agreement
(GPA) could pose significant technical problems for the U.S.,
and urged Taiwan to take a fresh look at acceding to the WTO
government procurement agreement. Chiou asked for U.S. help
in addressing political concerns, including potential PRC
objections, if the multilateral option were pursued. Since
PRC clout is likely to continue to increase, explained
Stratford, Taiwan may want to adopt a pragmatic approach and
try for a multilateral agreement as soon as possible. Chiou
thanked the U.S. for its support in the World Animal Health
Organization (OIE),and said that Taiwan will "maintain a
very flexible attitude" on the WTO GPA issue. He cautioned,
however, that Taiwan has clear political limitations on the
terminology it can accept, and would prefer not to raise the
issue now.


4. (C) Stratford observed that previous concerns regarding
former President Lee Teng-hui's position on the WTO GPA
agreement appear to have abated. Chiou replied that although
relations with Lee and the Taiwan Solidarity Union (TSU) are
a serious issue for some in the DPP, Chiou himself is less
concerned with Lee's objections to the GPA accession.


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TIFA prospects and the bilateral economic relationship
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5. (SBU) Stratford noted that discussions on a possible
bilateral investment agreement (BIA) appear to be progressing
well. He expressed optimism about prospects for an eventual
agreement, but was uncertain about how quickly a negotiation
could be concluded. Stratford emphasized that the results of
ongoing bilateral discussions will determine the nature of a
BIA announcement during the TIFA talks. The U.S. must be
convinced of the negotiation's likely success before talks

TAIPEI 00001420 002 OF 002


can be launched, he cautioned, adding that prospects would
depend on the nature of Taiwan's proposed exclusion list
(received on June 15 and e-mailed to the Department and
USTR). The U.S. side is continuing to lay the groundwork for
bilateral tax agreement (BTA) negotiations, he said. Chiou
stressed Taiwan interest in achieving concrete results during
the TIFA talks, and said Taiwan will continue to push for a
free trade agreement (FTA).


6. (C) A BIA would be significant in and of itself, observed
Stratford. He noted U.S. interest in receiving Taiwan's
analysis of how the U.S.-Korea FTA would affect Taiwan's
economic competitiveness. According to Chiou, many Taiwan
representatives have warned President Chen about the alleged
negative impact of the U.S.-Korea FTA. If Congress doesn't
approve the agreement, he asserted, it will "remove some
psychological threat" from the Taiwan business sector.
Stratford stated that Congress' failure to pass a Korea FTA
would in fact have a negative effect on Taiwan, as such a
result would indicate an overall lack of support for free
trade in the U.S. The U.S. will maintain its long-term
commitment to a strong economic relationship with Taiwan,
stated Stratford, and will remain a steady and reliable trade
partner. "We can feel your commitment," replied Chiou.


7. (SBU) Stratford and Altbach both stressed U.S. interest in
Taiwan adopting a science-based approach that would ensure
market access for the full range of U.S. beef imports. Chiou
said the U.S. request appears reasonable. He mentioned that
the Canadians are complaining that their beef imports are
still restricted, even though they applied to allow imports
before the U.S. did. On pharmaceuticals, Altbach urged
Taiwan to fully implement a mandatory standard contract
before the next price volume survey or alternative
reimbursement price adjustment mechanism.


8. (SBU) As the meeting closed, the Director expressed the
hope that the reinvorgated TIFA process will yield concrete
progress at the July talks, as well as maintaining the
momentum for close dialogue and exchange.

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Former Vice Premier Tsai shares views on trade relations
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9. (C) In a separate June 15 meeting with Altbach, Ruzicka,
and Econ Chief, Chiou's predecessor Tsai Ing-wen offered her
own analysis of the GPA issue. In her view, domestic
political concerns would make it very difficult to reach a
multilateral deal in Geneva, both before and after Taiwan's
presidential and legislative elections. After the elections,
she explained, any new president will be unlikely to enjoy a
solid political base and would therefore be reluctant to make
any compromises on the sensitive issue of Taiwan sovereignty.


10. (C) On a broader level, Tsai characterized deepening
U.S.-Taiwan economic relations as part of an overall process
of "balancing" Taiwan's external trade. She implied that
TIFA progress would help pave the way for additional Taiwan
opening on cross-strait trade. Tsai was wary about publicly
announcing any TIFA-related negotiations, fearing that
announcements would prompt PRC political interference.
Altbach replied that USTR is prepared to resist Chinese
pressure.

YOUNG