THE DIRECTOR'S MEETING WITH KMT SECRETARY GENERAL

C O N F I D E N T I A L AIT TAIPEI 000090


STATE PASS USTR FOR STRATFORD, ALTBACH AND O'CONNOR,
TREASURY FOR OASIA/WINSHIP AND JEWELL, NSC FOR LOI,
COMMERCE FOR 4431/ITA/MAC/AP/OPB/TAIWAN,USDA FOR FAS/OCRA
RADLER, BURDETT AND ANDERSON-SPERECHER; FAS/OSTA FOR BLUM,
BEAN, AND DAWSON; FAS/ONA FOR BERTSCH, AND FAS/OFSO FOR
SALLYARDS

E.O. 12958: DECL: 01/20/2019
TAGS: ECON EAGR ETRD PREL PINR TW
SUBJECT: THE DIRECTOR'S MEETING WITH KMT SECRETARY GENERAL
KING PU-TSUNG

Classified By: Bill Stanton, AIT Director, for reasons 1.4 (b) and (d).



1. (C) Summary: Poor political judgment by the Ma
administration was a key factor in Taiwan's inability to
implement fully the bilateral beef protocol, KMT Secretary
General King Pu-tsung told the Director on January 21. King
agreed to work to lift Taipei city's anti-U.S. beef campaign,
and said ordinary citizens' overwhelmingly positive view of
the United States should help to turn the overall situation
around. On domestic politics, King argued that recent KMT
electoral losses will make the party stronger in the more
important municipal elections in December and the 2012
Presidential campaign. End Summary.

Beef: "Poor Political Judgment" by Taiwan
--------------


2. (C) In hindsight, the Ma administration showed poor
political judgment in its handling expanded market access for
U.S. beef imports, KMT Secretary General King Pu-tsung told
the Director during their January 21 introductory meeting.
King, a close confidant of the President who assumed his
position in late December, criticized both the timing of the
government's announcement, which came in the run-up to
hotly-contested local elections, and its lack of transparency
in dealing with the Legislative Yuan (LY) and public
throughout the process. The challenge now was to create
conditions under which Taiwan could live up to as many of its
commitments under the protocol as possible, King said. The
first step should be to take advantage of the positive
attitudes about the United States and U.S. products.


3. (C) Although it was useful to draw lessons from the
episode, the Director stated Washington was most interested
in seeing the protocol implemented fully, and in consumers
and exporters seeing concrete benefits from expanded trade
opportunities. Taiwan's inability to live up to the protocol
had raised serious concerns within the U.S. administration
and Congress, the Director confirmed, and would clearly
affect how Washington looked at TIFA and future trade
negotiations with Taiwan. That said, the U.S. administration
had made clear that it did not want fallout from beef to
spill over into other areas of the relationship such as arms
sales. It was more difficult to predict the impact of
Congressional dissatisfaction, the Director said, noting the
need for Hill support on issues of great interest to
President Ma like Visa Waiver and extradition.

Ending Taipei City's Anti-U.S. Beef Campaign
--------------


4. (C) Although it was, relatively speaking, a sideshow, the
Director said, it was very disappointing that Taipei city
continued its blatantly campaign against U.S. beef, which
visitors might easily interpret as motivated by anti-American
sentiments. Continuing to urge restaurants and other food
outlets to display a logo announcing they would not serve
American ground beef and offal, even after the LY banned
their importation into Taiwan, was gratuitous and unhelpful,
the Director stressed. King agreed that, whatever the
questionable merits of the city's original policy, the
situation had now changed. Noting that he had close ties to
Mayor Hau, King said he was optimistic that "something could
be done" to address the Director's concerns.

Grassroots Support Key to Change
--------------


5. (C) As the administration and the KMT worked to improve
party discipline, an essential precondition to resolving the
issue, King urged U.S. beef exporters to work to change
public attitudes. Specifically, he urged the U.S. government
to endorse noted PR expert (Jerry) Fan Ke-ching's public
relations plan. Fan's proposal to develop grassroots support
for U.S. bone-in beef wa the right approach, King suggested,
but had, he understood, been put on hold based on U.S.
industry concerns. (Note: The details of this plan have been
presented to the beef industry only, although the U.S. Meat
Export Federation has kept AIT well-informed of these
contacts and its initial, cautious decision not to engage
immediately. End note.) Large segments of Taiwan's public
were comfortable with bone-in beef, King said, and once this
was clear it would be easier to look at undoing the damage
done by LY action. King also expressed confidence that
demonstrating public support for bone-in beef would undercut
the Taiwan Consumer Federation-led effort to put the entire
protocol to a referendum.

Lessons for Dealing with China
--------------


6. (C) The lessons from beef were that it was important to be
as transparent as possible and to face public concerns early,
King stressed. President Ma remained committed to
negotiating an Economic Cooperation Framework Agreement with
the PRC, and would make sure that the LY and ordinary people
understood both the benefits and the risks associated with
pursuing closer economic ties with the mainland, as well as
the dangers of not doing so.

KMT Paying Now to Improve Long-Term Prospects
--------------


7. (C) King described his main job within the KMT as ensuring
the party's long-term vitality. To some degree, this
required short-term pain, including the party's recent
electoral reverses. He noted that two of the three seats up
for grabs in January's LY by-elections were vacant because
the KMT incumbents had been convicted of vote buying. By
running "clean" but relatively unknown candidates in those
races, the KMT suffered embarrassing defeats, but had
improved the party's image and prospects ahead of the far
more significant municipal elections in December and the 2012
Presidential race.


8. (C) The next test was to improve party cohesion, King
continued particularly in advance of another set of LY
by-elections in February. To this end, the KMT's recent
success in physically overcoming DPP efforts to stop the
amendment of the Local Government Act had boosted morale and
reminded party members of the importance of discipline. Even
if the KMT only won one of the four races at stake, it was
more important to demonstrate unity. The real test, and the
real reason he had been named Secretary General, was the 2012
Presidential election, King said. If KMT candidates won in
three of the five municipal races in December 2010, it would
be a sign that he and the party were on the right track.


STANTON