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 TAIPEI 00000831 002 OF 003 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 TAIPEI 00000831 003 OF 003 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