DIRECTOR TALKS BEEF, CROSS-STRAIT, TAIWAN ECONOMY

C O N F I D E N T I A L AIT TAIPEI 000775


STATE FOR EAP/TC
STATE PASS USTR FOR STRATFORD AND ALTBACH, TREASURY FOR
OASIA/WINSHIP AND PISA, NSC FOR LOI, COMMERCE FOR
4431/ITA/MAC/AP/OPB/TAIWAN,USDA FOR FAS/OCRA RADLER AND
BEILLARD; FAS/OSTA FOR BLUM, HAMILTON,AND SHNITZLER;
FAS/ONA FOR BERTSCH AND FAS/OFSO FOR WAINIO

E.O. 12958: DECL: 06/25/2019
TAGS: ECON ETRD PREL TW
SUBJECT: DIRECTOR TALKS BEEF, CROSS-STRAIT, TAIWAN ECONOMY
WITH PREMIER LIU

Classified By: Stephen M. Young, AIT Director, for reasons 1.4 (b) and
(d).

Summary
--------------

1. (C) In the Director's June 25 farewell call, Premier Liu
Chao-shiuan said he sees no problems with implementing the
proposed plan to re-open Taiwan,s market to the full range
of U.S. beef imports, but did not say Taiwan would agree to
include a date certain to hold consultations on lifting an
initial 30-month limit for bone-in beef. Liu said Taiwan and
the PRC may be increasing economic ties too quickly, and
assured the Director the Ma administration talks regularly
with the opposition DPP on cross-Strait issues. Although
unemployment will creep up to six percent in August, Liu
said, the Taiwan economy has hit bottom and will begin to
grow in the fourth quarter of 2009. The Ma administration
will work with Taipei City to quickly issue needed land use
and building permits for the new AIT building, Liu assured
the Director. He also pledged to look into AIT's plan to
obtain the adjacent property in collaboration with the City
Government. End summary.

Participants
--------------


2. (SBU) The meeting took place at the Executive Yuan (EY)
Office of the Premier. The Director was accompanied by
political chief and econoff (notetaker). Premier Liu
Chao-shiuan was joined by Deputy Minister of Foreign Affairs
(MOFA) Department of North American Affairs Deputy Director
General Michael Hsu, MOFA Department of North American
Affairs Section Chief Johnson Chiang, EY Second Section Chief
Lee Tien-ming, and EY Fifth Section Chief Hsia Zheng-zhong.

Liu: Taiwan Wants to Close Deal on Beef
--------------


3. (C) Liu said he sees "no problems" with the process
toward re-opening the Taiwan market to the full range of U.S.
beef, and assured the Director Taiwan would "do what it
takes to close the deal." Liu highlighted recent positive
statements Department of Health Minister Yeh Chin-chuan made
on the safety of U.S. beef. Liu, however, did not say if
Taiwan would agree to include a date certain to hold
consultations on lifting the proposed initial 30-month limit
for bone-in beef.

Cross-Straits: Taiwan may be moving too fast
--------------


4. (C) Liu told the Director Taiwan is working hard to build
up its economic relationship with the PRC, but added economic
ties are improving so quickly the two sides are moving into
more sensitive issues. He said Taiwan needs to be more
patient, warning that if the two sides move too fast, things
could "go wrong" both within Taiwan and between the two
sides of the Strait. Liu said even if the PRC wants to
increase economic ties more quickly, the Ma administration
has to consider further steps very carefully.


5. (C) The Director urged Liu to ensure dialogue on
cross-Straits issues between the Ma administration and the
opposition Democratic Progressive Party (DPP). Liu responded
the administration frequently talks with the DPP leadership,
but added successfully governing a democracy requires
&maturity on both sides8 of the political aisle.

GPA, WHO
--------------


6. (C) The Director expressed hope Taiwan,s accession to the
WTO Government Procurement Agreement (GPA) would go as
smoothly as possible. The Director praised Taiwan,s plan to
produce and export an H1N1 flu vaccine, which demonstrates
the benefits of Taiwan,s recent participation in the World
Health Organization (WHO) World Health Assembly (WHA). The
director said the United States and Taiwan should continue to
talk regularly about Taiwan,s participation in international
organizations, so that the United States can be appropriately
supportive. Liu thanked the Director for U.S. support, which
Liu said allows Taiwan to participate and contribute
meaningfully to organizations like the WHO.

Economic Situation
--------------


7. (SBU) Liu believes the worst is over for Taiwan,s
economy, which he said would begin to grow in the fourth
quarter of this year. According to Taiwan's statistics,
unemployment numbers would continue to creep higher over the
next few months--hitting six percent by August--but would
level off in September and begin to decline thereafter.


8. (SBU) Liu said inflation is still not a problem, but added
the administration is watching carefully for any signs of
inflation. According to Liu, the EY's "inflation team,"
formed by Vice Premier Paul Chiu last August but largely
inactive since, would meet on Friday, June 26 to consider the
issue.


9. (SBU) Liu said quantifying the effect of this year,s
consumer voucher program is difficult, but praised the
"social success" of the program, which he thinks helped
Taiwan consumers pass a more pleasant Chinese New Year. Liu
said the Ma administration has no plans for issuing another
round of vouchers.

New AIT Office
--------------


10. (SBU) Liu congratulated the Director for AIT,s June 22
site dedication for the new AIT office building, and said the
EY and Taipei City would do everything possible to quickly
issue needed land use and building permits. The Director,s
told Liu of AIT,s hope to acquire 2.5 hectares of land
adjacent to the new AIT site to be used for a language
school, warehouse, and Director,s residence. Liu said the
request is understandable, and seemed favorable to possible
land swaps for AIT-owned land in other parts of Taipei.


YOUNG