MAC CHAIRPERSON LAI SHIN-YUAN ON CROSS-STRAIT

C O N F I D E N T I A L SECTION 01 OF 03 TAIPEI 000915

SIPDIS

E.O. 12958: DECL: 06/27/2018
TAGS: PGOV PREL CH TW
SUBJECT: MAC CHAIRPERSON LAI SHIN-YUAN ON CROSS-STRAIT
DEVELOPMENTS

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


1. (C) Summary: Mainland Affairs Council (MAC) Chairperson
Lai Shin-yuan told the Director on June 25 that she has not
encountered problems so far coordinating cross-Strait policy,
pointing out that MAC is the government agency legally
responsible for dealing with cross-Strait affairs and
policies. Lai noted that Straits Exchange Foundation (SEF)
and Association for Relations Across the Taiwan Strait
(ARATS) working level teams will be discussing flight routes,
sea transportation, and air cargo flights. Foreign nationals
with valid documents will be able to take the weekend
cross-Strait charter flights, Lai suggested. She underscored
the importance of good U.S.-Taiwan relations, including in
the context of developing cross-Strait relations. The
Director stressed the strong U.S. support for Taiwan and our
encouragement for the positive development of cross-Strait
relations, on equal terms and without coercion. End Summary.



2. (C) The Director discussed cross-Strait developments with
Mainland Affairs Council (MAC) Chairperson Lai Shin-yuan and
Vice Chairman Fu Don-cheng in a meeting at MAC headquarters
on June 25. Noting she had been on the job just over five
weeks, Lai said cross-Strait relations are off to a good
start, and she stressed her appreciation for the hard work
and professionalism of the 170-strong MAC staff. Lai said
coordinating policy has not been a problem for her despite
the high level interest by a range of political leaders.
Since 1991 in both law and practice, MAC has been the sole
government body legally authorized to deal with mainland
affairs and policies, she explained. MAC plays a
coordinating role, consolidating policies from different
perspectives in an orderly process.


3. (C) According to the constitution and the NSC law, Lai
noted, the president has the major say in cross-Strait,
defense, and foreign policies. Decision-making works through
the NSC, which organizes high-level meetings to deal with
these issues, and which also can address major economic
issues, such as the 1997 Asian Financial Crisis. When it is
necessary, for example, in discussing cross-Strait economic
issues, other relevant ministers such as the Minister of
Economic Affairs or the head of the Council on Agriculture
are also included in the decision making process.


4. (C) Lai said she will be color blind in the political
sense, and her guiding principle will always be to safeguard
the interests of the Taiwan people. She noted that the
Taiwan Solidarity Union (TSU) had fully supported her taking
up the MAC position even before the appointment, and added
that Lee Teng-hui had urged her to take up the challenge.
When she was first appointed, Lai recalled, some people had
suggested MAC would be sidelined or marginalized. This has
not happened, she stressed. MAC represents the government,
which has take into account the overall national interest,
including Taiwan's relations with the U.S. and Japan. Some
KMT leaders may have their own viewpoints or agendas, which
can be useful for reference, but these do not outweigh MAC,
which is the government. Lai did complain, however, that MAC
is often unfairly blamed by other ministries for blocking or
going too slow on their initiatives


5. (C) The Director asked whether Lai was concerned Beijing
might try to use different cross-Strait channels, for
example, the party-to-party dialogue, to manipulate
cross-Strait relations. Lai responded that Taipei has sent
Beijing a clear message, which is reflected in the resumption
of the institutional dialogue between the Straits Exchange
Foundation (SEF) and the Association for Relations Across the
Taiwan Strait (ARATS). Lai credited SEF Chairman P.K. Chiang
with taking a firm stand that he is the only one authorized
by the government to deal with China. Also, Chiang has made
clear to the press and to the Legislative Yuan (LY) that MAC
is his superior.


6. (C) The Director asked about security considerations in
selecting new cross-Strait flight routes that are more direct

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than the current circuitous route through Hong Kong airspace.
Lai noted that devising more direct flight routes was
included in the agenda agreed upon by SEF and ARATS ten days
ago. Contrary to misleading press reports, however, new
routes have not been decided, Lai said, adding that she has
not yet discussed potential air routes with the Defense
Ministry. In addition to flight routes, the two sides will
also be working on sea transportation links, and within three
months they will be discussing air cargo flights, quickly
completing an agreement on this issue. Lai predicted working
level SEF-ARATS talks will start soon, adding that Taiwan and
the mainland are each setting up project committees (zhuan'an
xiaozu).


7. (C) The Director stressed the importance to the U.S. and
international business community that foreign nationals be
allowed to use the cross-Strait charter flights. Based on
the previous discussions between Taiwan and PRC
representatives, Lai suggested that foreign nationals with
proper travel documents will be able to take the weekend
cross-Strait charter flights. In the future, the Director
said, he hoped that U.S. airlines would be able to fly the
cross-Strait route. This would make it easier for Taiwan to
become a transportation hub, he pointed out. Lai agreed this
would be good for Taiwan, but predicted China would probably
be opposed, mainly for political reasons. Cross-Strait
progress will be step by step, and this kind of issue can be
addressed in the future, she suggested.


8. (C) ARATS and SEF vaguely touched on the idea of
exchanging representative offices during P.K. Chiang's recent
visit to China, Lai said. ARATS Chairman Chen Yunlin
mentioned the idea of establishing a quasi-official China
Travel Service office in Taiwan, but Taiwan is more
interested in an exchange of representative offices between
SEF and ARATS. There is already a legal basis in Taiwan for
the exchange of representative offices, Lai added.


9. (C) Asked about the possibility of lifting current
restrictions on Taiwan business investment in China, Lai said
MAC will coordinate on this issue, based on the assessments
and plans it receives from various agencies, including the
Ministry of Economic Affairs (MOEA). Lai noted proposals to
lift the current 40 percent investment limit to a certain
degree and also to allow Chinese investment in Taiwan. MAC
Vice Chairman Fu added that the PRC authorities are the main
obstacle blocking Chinese investment in Taiwan. Currently,
Beijing does not allow FDI or portfolio investment in Taiwan,
even in real estate, he explained, and this issue needs to be
discussed with the Chinese.


10. (C) Lai stressed that U.S.-Taiwan relations are of
crucial importance to Taiwan, including in the context of the
now changing cross-Strait relationship. The Ma
administration will eliminate the tensions that affected
U.S.-Taiwan relations under President Chen, Lai assured the
Director. Noting the positive U.S. statements encouraging
the development of cross-Strait relations, Lai asked whether
the USG has any reservations. The Director responded that
the U.S. supports the development of cross-Strait relations
so long as any agreements are made freely and without PRC
coercion. Taiwan's democracy will provide a process for
determining how Taiwan should address the more controversial
cross-Strait issues, he added. The Director stressed the
strong U.S. support for Taiwan, including support for
Taiwan's meaningful participation in appropriate
international organizations. Lai pointed to PRC Taiwan
Affairs Office (TAO) Director Wang Yi recent comments that
Taiwan's health needs could be met through some kind of
health network. This type of statement will not please the
Taiwan people, who want to see action, not rhetoric, she said.


11. (C) In response to the Director's question, Lai said she
would not rule out traveling to China herself, if it could be
arranged on an "equal basis." She noted she had visited
China many times in the past, most recently to attend a
conference in Shanghai in 2003 at the time she was an NSC
advisor under President Chen.


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


12. (C) Despite the earlier criticism of her appointment
from many quarters (Green, Blue, and Red),Lai seemed quite
upbeat in this meeting and to be enjoying the challenges of
her new job. The success of P.K. Chiang's recent trip to
China and the upcoming start of weekend charter flights and
expansion of PRC tourism to Taiwan have probably boosted
morale at MAC. Although cross-Strait relations appear to be
off to a good start, the two sides so far have focused on
relatively easy issues, and there will be more difficult
challenges ahead, including questions involving Taiwan's
quest for increased international space. As these questions
are joined, the coordination process Lai sketched out could
become more contentious.
YOUNG