TAIWAN AND PRC RESUME CROSS-STRAIT DIALOGUE, SIGN

C O N F I D E N T I A L SECTION 01 OF 03 TAIPEI 000831

SIPDIS

E.O. 12958: DECL: 06/13/2018
TAGS: PREL PGOV EAIR ETRD CH TW
SUBJECT: TAIWAN AND PRC RESUME CROSS-STRAIT DIALOGUE, SIGN
AGREEMENTS ON CHARTER FLIGHTS AND TOURISM

REF: A. TAIPEI 829

B. TAIPEI 808

C. TAIPEI 807

Classified By: AIT Deputy Director Robert S. Wang,
Reasons: 1.4 (b/d)


1. (C) Summary: On June 13, P.K. Chiang (Pin-kung),Chairman
of Taiwan's Straits Exchange Foundation (SEF),and Chen
Yunlin, Chairman of the PRC's Association for Relations
Across the Taiwan Strait (ARATS),signed two agreements in
Beijing, one on weekend passenger charter flights and the
other on visits to Taiwan by mainland tour groups. Weekend
cross-Strait charter flights will start July 4, and mainland
tour groups will begin arriving in Taiwan on July 18 (see
paras 8-9 for further details). In a meeting with PRC
President Hu Jintao in the afternoon of the same day, Chiang
stressed Taiwan's hope to participate in international
affairs and its hope for a truce between the two sides in
international (i.e., diplomatic) competition. Although
widely anticipated, the agreements and cross-Strait dialogue
are attracting considerable attention here, with major
newspapers devoting their first several pages to the story.
Initial estimates suggest additional tourism revenue of
nearly USD 2.0 billion. While President Ma is pleased to
deliver on a key campaign promise, the opposition DPP has
criticized P.K. Chiang for going beyond flights and tourists,
and discussing other issues, including the exchange of
representative offices and cooperation on maritime oil and
gas exploration. End Summary.


2. (SBU) The June 12-13 SEF-ARATS meetings in Beijing marked
the resumption of cross-Strait dialogue, which the PRC
suspended in 1999 in reaction to President Lee Teng-hui's
two-state theory. In a press conference following the June
13 signing ceremony, P.K. Chiang stressed that the two new
agreements were the first signed by SEF and ARATS since 1993,
when the late Koo Chen-fu (SEF) and Wang Daohan (ARATS)
signed four agreements in the first high-level cross-Strait
dialogue, which was held in Singapore. Chiang invited Chen
Yunlin to visit Taiwan this year, and Chen agreed to visit at
an "appropriate time." In addition to holding talks with
Chen Yunlin, P.K. Chiang met with Wang Yi, new director of
the Taiwan Affairs Office, on June 12, and he met PRC
President Hu Jintao later in the day on June 13. In his
meeting with Hu Jintao, Chiang stressed Taiwan's hope to
participate in international affairs and its hope for
reconciliation and truce between the two sides over
(competition in) the international arena.


3. (SBU) In comments on June 12, President Ma Ying-jeou
compared the significance for Taiwan of this event to that of
Neil Armstrong landing on the moon. Ma described the
commencement of talks between the two sides as "a giant leap
forward in the development of cross-Strait relations." He
also announced the next goal would be to expand the
cross-Strait charter flights to a daily frequency.


4. (C) In his July 13 press conference, Chiang told the
media that in his meeting with Chen Yunlin, Chen had raised
three topics: Taiwan assistance with Sichuan reconstruction,
pandas (which China plans to send to Taiwan),and the
exchange of SEF and ARATS representative offices. Chiang
reported telling Chen he would discuss the first two topics
with the relevant offices and people when he returned to
Taiwan. However, the exchange of representative offices was
a very broad issue. He would have to report to the Mainland
Affairs Council (MAC) and would notify ARATS if there was any
decision. If Taiwan reaches a consensus on this in the
future and wants to hold consultations, then it will be
necessary to develop a concrete proposal and obtain
authorization (from MAC). In other words, Chiang concluded,
exchanging offices would be a very distant future project.
(Per ref c, Chiang told AIT that he would be discussing the
exchange of SEF/ARATS offices but did not intend to sign an
agreement on this visit.)


5. (C) In downplaying the office exchange issue, Chiang was
working to dampen some misleading reports from the day before

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that the two sides had already reached a consensus on
exchanging representative offices. These reports had sparked
criticism from the DPP that Chiang was going beyond what he
was authorized to talk about. The DPP also attacked Chiang
for proposing to ARATS that the two sides discuss cooperation
on joint oil and gas exploration in maritime areas.
According to the DPP, this had never been discussed
domestically and involved complex issues of defense,
diplomacy, and economics.


6. (SBU) In a related cross-Strait development on June 12,
Taiwan's Legislative Yuan (LY) passed an amendment allowing
direct NTD-RMB currency exchange, which will benefit tourists
and other cross-Strait travelers (see ref a). A Taiwan
tourist industry representative predicted that increased
Chinese tourism may bring in NTD 60 billion (USD 1.9 billion)
annually. In addition to visits to well-known tourist sites
such as the National Palace Museum in Taipei and Sun Moon
Lake in central Taiwan, a number of local governments are
hoping that sites related to historical figures, especially
Chiang Kai-shek, will be popular tourist destinations. The
temporary resting place for the remains of Chiang Kai-shek
and Chiang Ching-kuo in Taoyuan County has reopened after
having been closed down by the DPP government as part of its
anti-Chiang Kai-shek movement, and military honor guards will
soon return also. Taoyuan has also set up a park to display
cast-off Chiang Kai-shek statues.

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


7. (C) During the presidential campaign, one of Ma
Ying-jeou's central planks was the early opening of weekend
cross-Strait charter flights and travel by Chinese tourists
to Taiwan. He and the KMT will be pleased that the
administration has been able to deliver on a campaign
promise. This is especially so since Ma's cabinet has come
under criticism since the May 20 inauguration for mishandling
a variety of issues, including floods, price hikes, "green
cards," and now an incident with Japan over the sinking of a
fishing boat near the disputed Diaoyutai (Senkaku) Islands.
Although the two SEF-ARATS agreements are significant, they
were largely completed (in talks under trade association
auspices) before the KMT came into office. Rather than
something completely new, they represent an expansion (albeit
significant) of existing arrangements for holiday charter
flights and for visits to Taiwan by PRC tourists who are in
other countries. Although Vice President Vincent Siew
recently told AIT that he expected such increased tourism to
add one percent to Taiwan's GDP, some of our contacts are
more conservative in their estimates (ref b). Chiang's
raising the issue of Taiwan's international space in his
meeting with Hu Jintao will be well received by the public in
Taiwan.

Highlights of the SEF-ARATS Agreements
--------------


8. (SBU) The weekend cross-Strait charter flights will
start July 4, and to begin with, each side will fly 18 round
trips, for a total of 36 round trip flights per week. This
number can be increased as warranted by the market. Taiwan
is opening eight airports to cross-Strait charter flights:
Taoyuan, Kaohsiung, Taichung, Taipei (Sungshan),Penghu
(Makung),Hualien, Kinmen, and Taitung. The mainland is now
opening Beijing, Shanghai (Pudong),Guangzhou, Xiamen, and
Nanjing, and will gradually open Chengdu, Chongqing,
Hangzhou, Dalian, Guilin, Shenzhen, and other airports as the
market warrants. All travelers with valid travel documents
for cross-Strait travel can use the charter flights. Charter
flights will take place on four full days, Friday - Monday of
each week. PRC airlines operating charter flights can send
personnel to Taiwan right away to carry out their work and
set up preparatory facilities, and will be able to open
regular offices within six months. Pending agreement on
direct flight routes (which is to be done quickly),all
charter flights will traverse the Hong Kong flight
information region (FIR). The two sides will hold
consultations on cargo charter flights within three months of

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the start of the weekend charters and quickly reach and
implement an agreement. The two sides agree to consult
quickly on opening direct cross-Strait scheduled flights.


9. (SBU) The tourism agreement provides for tour groups from
the mainland to travel to Taiwan, with an initial maximum of
3,000 tourists per day. The size of tour groups can range
from 10-40 persons, and their maximum stay in Taiwan is 10
days. Travel by tour groups under this agreement will begin
on July 18, though there will be 600 special tourists on the
July 4 flights. In his meeting with Chen Yunlin on June 12,
P.K. Chiang proposed several topics for the two sides to
discuss later this year: direct cross-Strait sea transport,
cooperation on maritime oil and gas exploration, anti-crime
cooperation, expansion of the mini-three links between the
offshore islands and the mainland, and cooperation on climate
change and weather research.

YOUNG