SEF CHAIRMAN P.K. CHIANG ON CROSS-STRAIT TALKS AND

C O N F I D E N T I A L SECTION 01 OF 03 TAIPEI 000860

SIPDIS

STATE PASS USTR, STATE FOR EAP/TC,USTR FOR STRATFORD AND
KATZ,TREASURY FOR OASIA/TTYANG AND MPISA,COMMERCE FOR
4431/ITA/MAC/AP/OPB/TAIWAN

E.O. 12958: DECL: 06/18/2018
TAGS: PREL PGOV PBTS ECON ETRD EINV EAIR EFIS CH
JA, TW
SUBJECT: SEF CHAIRMAN P.K. CHIANG ON CROSS-STRAIT TALKS AND
RECENT DIAOYUTAI (SENKAKU) INCIDENT WITH JAPAN

REF: TAIPEI 00831

Classified By: AIT Director Stephen M. Young,
Reason(s): 1.4 (B/D)


1. (C) Summary: Straits Exchange Foundation (SEF) Chairman
P.K. Chiang told the Director on June 17 he was pleased with
the results of the June 11-14 talks in Beijing with China's
Association for Relations Across the Taiwan Strait (ARATS).
Chiang said the two agreements on passenger charter flights
and Chinese tourism were "relatively straightforward."
Future SEF-ARATS talks will focus on starting cargo charter
flights, establishing direct flight routes, and opening
direct sea shipping. On the ongoing dispute between Taiwan
and Japan over the recent sinking of a Taiwan fishing vessel
near the disputed Diaoyutai (Senkaku) Islands, Chiang said
the Japanese have essentially apologized for the incident,
but he added that it will be difficult to reach a negotiated
settlement over fishing rights in the surrounding seas. End
Summary.

Charter and Tourist Agreements the Easy Part
--------------


2. (C) SEF Chairman P.K. Chiang (Pin-kung) met with the
Director on June 17 to discuss his June 11-14 visit to
Beijing. Chiang was satisfied with the resumption of the
SEF-ARATS dialogue, which produced the signing of agreements
on cross-Strait weekend charter flights and Chinese tourism
on June 13 (Ref A). Chiang said both sides had clearly
signaled their intentions well in advance of the actual talks
and worked off the foundation laid by informal negations
conducted by the Chen administration over the past few years,
making an agreement "relatively straightforward." Chiang
predicted that the number of mainland tourists to Taiwan will
quickly reach the agreed to limit of 3,000 per day once the
new cap goes into effect on July 18.


3. (C) The Director reiterated U.S. support for resumption of
the SEF-ARATS talks, and asked Chiang what the U.S. could do
to support progress in future talks. Chiang replied that
Taiwan appreciates USG statements of support. He noted that
reaching consensus on the issues currently being discussed is
comparatively simple, since both sides see clear economic
benefit. However, more complex economic issues such as
liberalizing trade and investment restrictions, will be
politically more difficult.

President Hu, Chinese Officials Cautious
--------------


4. (C) Chiang said that in his meeting with President Hu
Jintao on June 13 he reiterated Taiwan's desire to play a
fuller role in the international community. Chiang noted
that Hu's response did not go beyond his earlier remarks to
KMT Chairman Wu Poh-hsiung that in principle these and other
issues can be discussed. Chiang said he also raised the
issue more directly with Taiwan Affairs Office Director Wang
Yi, focusing on Taiwan's participation in the World Health
Organization, a "truce" in the battle for diplomatic
recognition by small states, and Taiwan's participation in
regional forums such as ASEAN 3. Chiang said Wang avoided a
direct response and urged Chiang not to reveal to the public
that such issues had been raised during their meeting,
indicating, Chiang said, the question remains too sensitive
for lower-level officials to broach. Chiang added that Wang
appeared more "steady" than his predecessor Chen Yunlin.
Chiang believed Wang's appointment brings a seasoned diplomat
to the TAO and should help to represent the office's views on
Taiwan more clearly to the Chinese Foreign Ministry.


TAIPEI 00000860 002 OF 003


One "Surprise"
--------------


5. (C) Chiang told the Director that he was surprised when
ARATS Chairman Chen Yunlin raised the issue of establishing
in Taiwan a branch of the Hong Kong Chinese Tourism
Association, which handles document processing for Taiwanese
visitors to China. Chiang said he responded that the SEF and
ARATS would be better suited to handle such responsibilities,
but told Chen he would take the issue back to Taipei for
further discussion. Chiang told the Director that the
discussion of exchanging representative offices was cursory,
but nevertheless made headlines in Taiwan. He added that
negotiating on the issue would require explicit instructions
from the Mainland Affairs Council (MAC). (Note: In response
to media reports about the talks, DPP legislators and
political commentators charged that Chiang had exceeded his
authority by agreeing to China's proposal on representative
offices. On Thursday, June 13, the MAC issued a statement
that no agreement had been reached on the issue and that the
SEF delegation was merely bringing China's proposal back to
Taiwan for consideration. End Note.)


6. (C) Commenting on Legislative Speaker Wang Jin-pyng's
declaration on June 16 that the SEF-ARATS agreements will
require review and approval by the Legislative Yuan (LY),
Chiang said Wang was trying to be helpful by reminding people
of the LY's role in cross-Strait affairs. According to the
Act Governing Relations Between People of the Taiwan Area and
the Mainland Area, Chiang continued, revisions to the Act or
the passage of new laws may be required for the
implementation of certain agreements, such as the
establishment of representative offices and direct sea
transport routes.

Next Steps
--------------


7. (C) The Director asked Chiang to outline the priorities
for the next round of SEF-ARATS talks expected to take place
later this year. Chiang replied that both sides had already
agreed that the issue of air cargo charter flights would be
on the agenda. The other two highest priority issues for
Taiwan are starting direct cross-Strait marine cargo shipping
and establishing a new direct flight route for flights
between Taipei and destinations on the mainland. Currently
all flights between Taiwan and China must pass through a
third flight information region (FIR) such as Hong Kong.
Chiang said the lack of such direct shipping and flight
routes adds enormous costs for Taiwan businesses and is a
major obstacle to the island's future economic growth.
Chiang noted that Taiwan is well aware of the political and
security implications of "direct" flight routes that would
cross or run along the Strait. Rather, the most likely route
would run directly north from Taiwan before veering west
toward the mainland.


8. (C) Chiang said his working relationship with MAC
Chairwoman Lai Shin-yuan is good, adding that SEF and MAC
have had good coordination so far. Upon his return to
Taiwan, Chiang noted, he first reported on the talks to Lai
and the two then went together to brief President, the
Premier, and national security advisers.

Thoughts on the Diaoyutai Incident
--------------


9. (C) Chiang, also an expert on Japan affairs, told the
Director that the root cause of the incident last week is the
lack of a negotiated agreement between Taiwan and Japan on
fishing rights in the seas around the disputed Diaoyutai

TAIPEI 00000860 003 OF 003


(Senkaku) Islands. Chiang said he saw Japan's expression of
regret as equivalent to an apology and believed President Ma
does not want to see recent tensions harm the good
relationship built up between Taipei and Tokyo over recent
years. Nevertheless, Chiang expects it will be difficult to
conclude an agreement with Japan over fishing rights.
YOUNG