THE DIRECTOR'S JUNE 30 FAREWELL CALL ON VICE

C O N F I D E N T I A L AIT TAIPEI 000795


STATE FOR EAP/TC
STATE PASS USTR FOR STRATFORD AND ALTBACH, TREASURY FOR
OASIA/WINSHIP AND PISA, NSC FOR LOI, COMMERCE FOR
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FAS/ONA FOR BERTSCH AND FAS/OFSO FOR WAINIO

E.O. 12958: DECL: 06/29/2019
TAGS: PGOV ECON ETRD PREL EAGR TW CH
SUBJECT: THE DIRECTOR'S JUNE 30 FAREWELL CALL ON VICE
PRESIDENT SIEW

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


1. (C) SUMMARY. In a June 30 farewell call with the Director,
Vice President Vincent Siew on his own initiative said "the
beef issue will be solved soon," but did not provide a
detailed timeline. Looking wan but engaged after recent
cancer surgery, the Vice President called for a vibrant
U.S.-Taiwan Trade and Investment Framework Agreement (TIFA)
dialogue, including progress toward bilateral investment and
tax agreements. The Vice President said the Ma
administration hopes for "full normalization" of cross-Strait
economic relations by 2012, and would use a second term in
office to tackle more difficult cross-Strait political and
security issues. In Siew's view, TIFA should serve as a
parallel to the Taiwan-PRC Economic Cooperation Framework
Agreement (ECFA). Taiwan hopes to sign an early edition of
an ECFA in the near future, noted the Vice President, and
will include an "early harvest" of tariff reductions for the
Taiwan industries most affected by next year's advent of the
ASEAN-plus-one agreement with the PRC. The Vice President
agreed with the Director's emphasis on enhanced dialogue
between the KMT and the opposition, both to build consensus
on cross-Strait policy and as a necessary foundation for
successful democracy. END SUMMARY.

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Participants
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2. (SBU) The meeting took place at the Office of the Vice
President. Vice President Vincent Siew was joined by Vice
Minister of Foreign Affairs Javier Ho, MFA North America
Department Deputy Director General Michael Hsu, Chief of
Staff Francis Liang, and other MFA officials. The Director
was accompanied by the Deputy Director and econ chief
(notetaker).

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Vice President's recovery from cancer
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3. (C) In response to the Director's query, the Vice
President said he resumed working full days only last week as
part of an ongoing recovery from recent cancer surgery. Siew
explained that doctors at a Taipei hospital removed much of
his left lung, which had been stricken by cancer. The
operation took between four and five hours, explained the
Vice President, and doctors have told him to expect a
three-to-six month recovery period. The Vice President noted
that he is avoiding long hours at the office. He will soon
begin to take regular walks, and eventually hopes to resume
playing golf. Siew said he is still taking cancer
medication, but is not undergoing chemotherapy. He noted
that doctors first identified a spot on his lung nearly a
decade ago, but added that the cancer was detected by chance
when he opted to test new MRI equipment during an official
visit to a Taipei hospital. The Vice President mentioned
that he has shared his medical information with a relative
who works as a cancer specialist at Vanderbilt University.

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Beef issue "will be solved soon"
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4. (C) The Director highlighted U.S. interest in an active
bilateral Trade and Investment Framework Agreement (TIFA)
dialogue, and said prompt resolution of the beef market issue
would help lead to such a result. The Vice President assured
the Director that "the beef issue will be solved soon."
Noting that both the Chen and Ma administrations have
conducted their own science-based risk assessments confirming
the safety of U.S. beef consistent with OIE standards, the
Director emphasized that a strong basis exists for opening
Taiwan's market as quickly as possible. Siew stated that
Taiwan recognizes and appreciates the Director's sustained
efforts to resolve the beef issue.


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Ma administration cross-Strait agenda
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5. (C) The Director expressed U.S. encouragement and support
for Ma administration efforts to improve cross-Strait
relations, and asked the Vice President for a preview of
Taiwan's upcoming discussion agenda with the PRC. Siew
replied that the administration's progress over the past year
have now made it easier for the Taiwan and the PRC to resolve
disputes. Before the end of President Ma's current term in
2012, he continued, Taiwan will experience the "full
normalization of cross-Strait economic relations," including
the conclusion of a bilateral Economic Cooperation Framework
Agreement (ECFA). If Ma is re-elected in 2012, observed the
Vice President, the administration will confront the more
difficult challenge of resolving outstanding cross-Strait
political issues, including a peace treaty, a formal end to
hostilities, and development of bilateral military confidence
mechanisms. These "highly political" issues will be
controversial in Taiwan, said Siew, but should be able to
build on four years of cooperative engagement on economic
issues.

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Importance of dialogue with the opposition
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6. (C) The Vice President stressed that the administration
must have a dialogue not only with Beijing, but also with the
opposition DPP. The Director noted that he has made the same
point to the President, highlighting the importance of the
KMT reaching out to a DPP that has little voice in the
legislature. A vital opposition is essential for democracy
to thrive, he said. Siew said he discussed the issue with
President Ma the previous day, and the President urged him to
open channels for dialogue with the DPP.

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U.S. and cross-Strait relations
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7. (C) According to the Vice President, the Ma
administration's rapid success in facilitating cross-Strait
economic ties has made some in Taiwan uncomfortable about the
pace and potential future scope of cross-Strait
rapprochement. He added, however, that Taiwan "has no excuse
to neglect the reality of China." Siew said he made a
similar point to President Hu Jintao when they met at the
2008 Boao Forum, before Ma took office. The Director said
the U.S. will do what it can to facilitate better
cross-Strait relations, citing support for Taiwan's World
Health Assembly (WHA) observer status as a recent example.
Although the PRC would prefer that the U.S. not get involved,
he noted, the Chinese ultimately realize that the U.S. will
remain engaged. U.S.-Taiwan security cooperation is
necessary for Taiwan to deal with the PRC in a position of
confidence, stated the Director.

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TIFA as a complement to ECFA
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8. (C) The Vice President said that in coming years, ECFA and
TIFA should be maintained as parallel consultations. The
TIFA process, he noted, should be used to develop U.S.
business interest in Taiwan's economy. To this end, Siew
highlighted Taiwan's interest in progress toward a bilateral
investment agreement (BIA),a bilateral tax agreement (BTA),
and other vehicles for enhanced economic cooperation. In
this way, he stated, both Taiwan and U.S. businesses will be
able to enjoy the fruits of Taiwan's closer economic
relationship with the PRC. The Vice President explained that
Taiwan and the PRC have already identified the initial
components of the ECFA. Taiwan's Chong-hua Institution for
Economic Research (CIER) and the PRC's Tsingbao University
are preparing economic impact assessments and other
background information, he added.

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ECFA and bilateral FTAs
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9. (C) Siew noted Taiwan's hope that an ECFA could be signed
by the end of the year. The agreement, he explained, will
initially cover Taiwan industries most affected by next
year's advent of the ASEAN-plus-one agreement, and will
include provisions for the petrochemical, auto parts,
textile, and machinery sectors as an "early harvest." In
response to a question from the Director, the Vice President
indicated that talks with Singapore, Japan, and other
potential bilateral free trade agreement (FTA) partners would
not necessarily have to await conclusion of the ECFA.
Instead, Taiwan will try to achieve progress on other FTAs at
the same time it negotiates the ECFA. The Vice President
agreed with the Director's suggestion that Taiwan and the
U.S. consider a "building block" approach to achieving the
substance of an FTA, regardless of formal nomenclature.

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AIT New Office Compound
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10. (C) The Vice President highlighted the June 22 dedication
of the AIT New Office Compound (NOC) site as one of the
Director's most significant contributions during his tenure.
The Director noted that AIT will seek ongoing support from
the administration as the NOC project moves ahead, including
the acquisition of an adjacent piece of land for eventual
construction of a Director's residence, warehouse, and other
facilities.

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Taiwan Competitiveness Forum
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11. (C) The Deputy Director sought the Vice President's
continued support for the Taiwan Competitiveness Forum.
Developed by AIT and co-sponsored by the Council for Economic
Planning and Development (CEPD),AIT, the American Chamber of
Commerce, and two Taiwan economic think tanks, the Forum was
launched with a June 2008 conference and includes a series of
sector-specific follow-up workshops designed to improve
market access and enhance Taiwan's competitiveness in the
financial services, pharmaceutical, retail, and other
priority business sectors.


12. (C) As the meeting concluded, the Vice President
repeatedly thanked the Director for his longstanding efforts
to improve U.S.-Taiwan relations and his many contributions
to the bilateral relationship.


13. (C) COMMENT. Although visibly a bit tired, and clearly
having lost some weight, the Vice President did not show any
serious effects from his recent surgery during the one-hour
meeting. END COMMENT.

YOUNG