MFA AGREES TO REVIEW AND COMMENT ON COCA I SIDE LETTER

UNCLAS BEIJING 000406 DEPARTMENT FOR EAP/EX LARRY BAER, OBO/PE JOE TOUSSIANT, OBO/SPCD RAYMOND PEPPER, L/BA, OFM AND EAP/CM SENSITIVE SIPDIS E.O. 12958: N/A TAGS: ABLD AMGT CM SUBJECT: MFA AGREES TO REVIEW AND COMMENT ON COCA I SIDE LETTER REF: (A) 08 BEIJING 4700 ¶1. (SBU) SUMMARY: In a February 13 meeting with MFA Department of Administration Director General Li Chao, the Charge delivered a non-paper (a draft side letter in the form of a diplomatic note) regarding the renovation of the former PRC chancery in Washington DC. If agreed to and formally sent, the draft would function as a side letter to the 2003 COCA I agreement. Li promised to study the draft carefully and provide prompt feedback, while reiterating the Chinese preference that the renovation project be included under COCA I. End summary. Charge: Draft Note Ensures Balance of Rights -------------- ¶2. (SBU) In delivering the draft to DG Li, the Charge stressed that the USG commitments in the note would remove the imbalance between 1) US rights under COCA I for the construction of the US Embassy Annex and 2) PRC rights for the renovation of the former chancery. Although US law prevents extending COCA I's broad rights to the PRC chancery renovation project, the US could commit to scale down its privileges to match the PRC's as explained in the note, the Charge said. ¶3. (SBU) The Charge encouraged Li to look closely at the draft note's description of Washington DC's zoning permit process and the assistance that the Department's OFM could provide in regard to the renovation project. The Charge said that although OFM routinely provides support to foreign missions, he believed that OFM is offering significant assistance in this case. ¶4. (SBU) Additionally, the Charge raised the issues of COCA II and the sale of the Embassy's "Er Ban" facility. On COCA II, the Charge informed Li that the Department would likely complete its review of the latest Chinese draft within one week. On Er Ban, the Charge said that the reality of our circumstances dictates that discussions on the building's sale be considered as part of our conversations on COCA I and COCA II. DG Li Reiterates Position on COCA I, Agrees to Review Draft Note -------------- -------------- ¶5. (SBU) DG Li expressed appreciation for the Embassy's hard work and effort to resolve the chancery renovation issue and promised to "carefully study" the draft note and to provide "early feedback". Although Li stated the PRC shares the US's goal of ensuring a "balance of rights," he repeated Chinese views expressed during previous meetings (Ref A). ¶6. (SBU) Specifically, Li reiterated the PRC's strong preference for including the former chancery's renovation in COCA I in order to avoid difficulties and delays. Li stated that the PRC has worked very hard to overcome impediments associated with building a new US Consulate in Guangzhou and he believed that if the US used the same level of effort, it would be possible to include the renovation project in COCA I. ¶7. (SBU) On Er Ban, Li said the PRC's position on payment of benefits of land appreciation was clear and had already been discussed at length. Li said that the Er Ban sale should be handled separately from COCA I and COCA II, and Li offered to arrange expert consultations on the issue. ¶8. (SBU) Several times, Li expressed in Chinese that the US commitments in the draft note constituted "special policies", which the MFA staff translated into English as "preferential treatment". In addition, Li repeatedly described the planned work on the former chancery as "demolishing and building", which the MFA staff translated as simply "renovation". Charge Clarifies: Draft Note Offers No Preferential Treatment -------------- -------------- ¶9. (SBU) The Charge informed Li that "preferential treatment" was not a term that he or OFM had used, and he did not want Li to have any misunderstanding about the note's commitments. Nonetheless, the Charge said, OFM's assistance as described in the draft includes a request for "expedited review" by the DC local government. The Charge also encouraged Li to ask the PRC's Washington DC consulting firm for their input on the potential assistance on offer from OFM. ¶10. (SBU) The Charge agreed to take back Li's proposal for consultations on Er Ban and observed that the appetite for such consultations could be increased by progress on COCA I and COCA II. PICCUTA