DIRECTOR'S INTRODUCTORY MEETING WITH STRAITS

C O N F I D E N T I A L SECTION 01 OF 02 TAIPEI 001166 SIPDIS 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 E.O. 12958: DECL: 09/25/2019 TAGS: ECON PREL TW EINV ETRD PGOV SUBJECT: DIRECTOR'S INTRODUCTORY MEETING WITH STRAITS EXCHANGE FOUNDATION CHAIRMAN P. K. CHIANG REF: TAIPEI 1149 Classified By: AIT Director Bill Stanton for Reasons 1.4 (b/d) ¶1. (C) Summary. Straits Exchange Foundation (SEF) Chairman Chiang Ping-kun (P. K. Chiang) told the Director on September 24 the pace of cross-Strait working-level negotiations had increased after a dip that was partly attributable to China's displeasure over the Dalai Lama's visit. Chiang said several technical issues still needed to be resolved to ensure agreements could be signed at the next round of cross-Strait talks with his China counterpart expected in December. He indicated an Economic Cooperation Framework Agreement (ECFA) would not be on the agenda of cross-Strait talks until early next year. Next Round of Talks -------------- ¶2. (C) In the Director's September 24 introductory meeting, SEF Chairman P. K. Chiang indicated working-level contacts in preparation for the fourth round of talks with the Association for Relations Across the Taiwan Strait (ARATS) were picking up steam. Earlier, the pace of contacts between the two sides had slowed at least in part because of Beijing's displeasure over the Dalai Lama,s visit to Taiwan and the screening in Kaohsiung of a documentary film about Uighur activist Rebiya Kadeer (reftel). Chiang said no change had been made to the proposed agenda for the upcoming round, which included quarantine and inspection of agricultural products, harmonization of industrial and communication standards, cooperation on fisheries, and avoidance of double taxation. Although the date and venue for the talks had yet to be decided, Chiang expected they would be in December somewhere in Taiwan outside of Taipei to ensure that demonstrations would not be a problem. Chiang further declared the financial services Memorandum of Understanding (MOU) might be ready to be signed at the fourth round pending resolution of two issues: ensuring technical terms had the same meaning on both sides of the Strait and agreeing on who would sign the MOU. ECFA -------------- ¶3. (C) Chiang said signing an ECFA at the fifth round of SEF-ARATS talks next year in China might be possible. While issues such as customs duties and access to service sector markets had yet to be discussed, concluding an agreement should be relatively easy because an ECFA was only a framework that did not require extensive details. He expressed his belief that Beijing was prepared to continue the ECFA talks despite irritation with the Dalai visit and Kadeer film because China would benefit from the accord. Chiang also thought that signing an ECFA would lift a major impediment to Taiwan negotiating free-trade agreements (FTA) with its major trading partners such as Singapore, Japan and the United States. Over-reliance on China for Economic Growth -------------- ¶4. (C) The Director raised the issue of reported concerns that an over-reliance on China for growth could allow Beijing to apply economic pressure on Taiwan for political purposes and affect its ability to act independently. Chiang responded that while cross-Strait tourism was positive, it was not significant enough to provide a noticeable bounce to Taiwan's export-driven economy. A reduction in PRC tourists, whether or not ordered by Beijing, therefore would not drag down economic recovery. Chiang did acknowledge that Beijing could use economic levers to exert political pressure on Taiwan, but added such action would upset consumer confidence in cross-Strait stability, which would hurt China economically. Moreover, the PRC could not control Taiwan's exports, which would continue to drive growth in the near term. Chiang also noted that direct investments from China had yet to flow into Taiwan and that no "big deals" were in TAIPEI 00001166 002 OF 002 the works. The lack of activity was due to the limited number of industrial sectors in Taiwan open for Chinese investment and the ban on investments in banking and real estate, two areas of keen interest to the mainland. International Space -------------- ¶5. (C) Chiang at first demurred in responding to the Director's question on Taiwan's strategy for participation in international organizations. He then proceeded to detail his own hope to see the two sides agree to a ranked list of organizations in which Taiwan could seek membership without eliciting Beijing's ire. Chiang indicated he had proposed this suggestion to Wang Yi, his counterpart in China, and to the Ministry of Foreign Affairs in Taipei, and thought that Wang at least was receptive to the idea. STANTON