P 100715Z JUN 08 ZDK
FM AIT TAIPEI
TO SECSTATE WASHDC PRIORITY 9128
INFO CHINA POSTS COLLECTIVE
AMEMBASSY BANGKOK 
AMEMBASSY CANBERRA 
AMEMBASSY MANILA 
AMEMBASSY SINGAPORE 
AMEMBASSY TOKYO 
AMEMBASSY WELLINGTON 
AMCONSUL CHIANG MAI 
AMCONSUL HO CHI MINH CITY 
NATIONAL SECURITY COUNCIL WASHINGTON DC
DIA WASHINGTON DC
DEPT OF TREASURY WASHDC
JICPAC HONOLULU HI
DEPT OF COMMERCE WASHDC
SECDEF WASHINGTON DC
CIA WASHDC
DEPT OF AGRICULTURE WASHDC

C O N F I D E N T I A L AIT TAIPEI 000808 
 
 
STATE FOR EAP/TC 
STATE PASS USTR FOR STRATFORD AND KATZ, TREASURY FOR 
OASIA/TTYANG, 
NSC FOR TONG, COMMERCE FOR 4431/ITA/MAC/AP/OPB/TAIWAN, USDA 
FOR FAS/OCRA RADLER AND BEILLARD 
 
E.O. 12958: DECL: 06/09/2018 
TAGS: ECON ETRD EAGR PROG PREL TW CH
SUBJECT: VICE PRESIDENT SIEW OUTLINES TAIWAN ECONOMIC 
POLICY AGENDA 
 
REF: TAIPEI 731 (NOTAL) 
 
Classified By: Robert S. Wang, Acting AIT Director, for reasons 1.4 (b) 
 and (d). 
 
¶1. (C) SUMMARY. In a June 10 meeting with ADIR and visiting 
AIT/W Director for Trade and Commercial Policy, Vice 
President Vincent Siew said the Ma administration is now 
concentrating on inflation control, stimulating domestic 
demand, and expanding cross-Strait economic ties through 
implementing weekend charter flights and increasing the 
number of Mainland tourists.  Taiwan must work to "normalize" 
cross-Strait economic relations, said Siew, a process he 
estimated would take at least three-to-four years.  Siew 
asserted that South Korean protests have made it politically 
difficult for Taiwan to secure rapid market opening for the 
full range of U.S. beef imports.  ADIR emphasized the 
importance of addressing beef and other priority bilateral 
trade concerns as a precursor to a successful U.S.-Taiwan 
Trade and Investment Framework Agreement (TIFA) meeting in 
Taipei this September.  END SUMMARY. 
 
¶2. (SBU) The meeting took place at the Office of the Vice 
President.  Vice President Vincent Siew was accompanied by 
Ministry of Economic Affairs (MOEA) Bureau of Foreign Trade 
(BOFT) Second Bilateral Trade Division Section Chief Jason 
Hsu, MOEA BOFT Second Bilateral Trade Division U.S. and 
Canada Trade Officer Kate Liao, and a staff aide.  Vice 
Presidential Chief of Staff Francis Liang was present for the 
beginning of the meeting.  Acting Director and AIT Washington 
Director for Trade and Commercial Policy Francis Ruzicka were 
joined by Economic Chief (notetaker). 
 
---------------------------- 
Cross-Strait economic agenda 
---------------------------- 
¶3. (C) Outlining the Ma administration's overall economic 
priorities, Siew stressed that Taiwan must avoid economic 
isolation by pursuing a policy of openness, including 
enhancing its economic relationship with the U.S.  Siew 
emphasized the importance of stimulating domestic demand, and 
said the administration's success in that area would depend 
on maintaining consumer confidence in the face of rising 
inflation (reftel) and enhancing cross-Strait economic links. 
 Successful negotations with the PRC to implement 
cross-Strait weekend charter flights and increase the number 
of Chinese tourists visiting Taiwan, in particular, will help 
boost domestic spending and consumer confidence. Siew 
estimated that the charter flight and tourism measures could 
increase Taiwan's annual GDP growth rate by roughly 1 
percentage point. 
 
¶4. (C) Responding to a question from Ruzicka, Siew observed 
that a cross-Strait common market is "a long way in the 
future," and will "probably not be reached in my lifetime." 
Instead, he emphasized, Taiwan's "most important" task is to 
"build up mutual trust" with the PRC and "normalize economic 
relations" across the Taiwan Strait, a process Siew estimated 
would take "at least three or four years."  According to 
Siew, the Ma administration "does not have any illusions" 
that cross-Strait relations will improve to the extent that 
all problems will be resolved.  Instead, he observed, Taiwan 
must pursue a patient, incremental policy of gradual 
improvement in its relations with the PRC. Siew mentioned 
that Taiwan's ASEAN trading partners all say they are waiting 
to see the results of efforts to improve cross-Strait 
economic ties before considering how to enhance their own 
economic relations with Taiwan.  Improved relations with 
Beijing will give Taiwan a chance to participate in regional 
economic integration, noted Siew. 
 
 
¶5. (C) After implementing passenger flights and raising the 
limit on Mainland tourist visits, explained Siew, Taiwan's 
cross-Strait economic priorities will shift to setting up 
mechanisms for air and sea cargo, and to increasing financial 
market integration with the PRC.  According to Siew, the PRC 
is unlikely to pursue its obligations with Taiwan within the 
WTO, as doing so would require internal coordination with the 
Foreign Ministry, a step the PRC's officials responsible for 
Taiwan would prefer to avoid. Ruzicka thanked Siew for 
Taiwan's decision to support the U.S. as a co-complainant in 
its WTO action involving the Information Technology Agreement 
(ITA), a policy the Office of Trade Negotiation (OTN) shared 
with Ruzicka and visiting USTR representatives the previous 
day. 
 
-------------------------------------------- 
Infrastructure program and WTO GPA accession 
-------------------------------------------- 
¶6. (C) Siew mentioned that his new duties as Vice President 
will require him to spend a great deal of time on unfamiliar 
areas such as culture and sports, rather than the economic 
issues on which he has concentrated in the past.  He noted 
that many foreign equity funds are showing interest in the Ma 
administration's twelve major infrastructure projects, which 
will be the subject of an investment promotion campaign later 
in the year.  The projects will be incoroporated in next 
year's official budget, added Siew. After Ruzicka highlighted 
the importance of Taiwan's accession to the WTO Government 
Procurement Agreement (GPA), Siew said he has asked the 
Ministry of Public Works to devise more transparent 
procurement policies.  Siew indicated that he has not yet 
focused on the WTO GPA issue, and noted that the Cabinet has 
primarily been concentrating on inflation control, domestic 
demand, and cross-Strait relations. 
 
------------------ 
Health care reform 
------------------ 
¶7. (C) Alluding to Siew's past role in helping to establish 
Taiwan's national health insurance program, Ruzicka urged the 
Vice President to address reform of a health care system that 
lacks accountability and leads to significant discrepancies 
between the cost of original drugs and the official 
reimbursement price.  Siew noted that Taiwan's national 
health scheme is mired in deficit, and said he has asked the 
Ministry of Health to reform the system. 
 
------------------ 
Beef market access 
------------------ 
¶8. (C) Ruzicka stressed the importance of assuring the prompt 
opening of Taiwan's market to the full range of U.S. beef 
imports, consistent with OIE standards.  Siew cited ongoing 
South Korean protests and a recent demonstration by Taiwan 
farmers against efforts to revise fertilizer prices in 
asserting that the issue is "too sensitive" to be resolved in 
the immediate future.  Ruzicka emphasized the OIE's 
science-based criteria indicating that bone-in and other 
restricted forms of beef are safe for human consumption, and 
underscored White House and Congressional interest in opening 
the Taiwan market to affected U.S. beef exports.  Siew said 
he is unfamiliar with the details of the beef issue, but 
maintained that the issue is "highly politically sensitive in 
Korea and Taiwan" and "has to be cooled down" before Taiwan 
can address the problem. 
 
----------- 
TIFA agenda 
----------- 
 
 
¶9. (C) The Acting Director noted U.S. interest in preparing a 
strong, positive agenda for the Trade and Investment 
Framework Agreement (TIFA) talks tentatively scheduled for 
September in Taipei.  Taiwan's ability to resolve outstanding 
concerns regarding beef, GPA, and other priority trade issues 
would help demonstrate its ability to pursue a productive 
TIFA agenda and enhance economic relations with the U.S. 
Siew observed that the relevant ministries now have varying 
degrees of familiarity with the U.S.-Taiwan economic agenda, 
and expressed a general hope for improved bilateral economic 
ties based on a "new framework to consolidate our relations." 
 ADIR and Ruzicka noted that the TIFA already exists as the 
primary vehicle for improving bilateral economic relations, 
and progress will best be made by achieving progress on 
outstanding priorities in that forum. 
 
¶10. (C) COMMENT. Siew and Ruzicka have known each other for 
many years, and the meeting was formally billed as a private 
exchange between old friends and colleagues. Domestic and 
cross-Strait concerns are at the center of Siew's economic 
policy agenda, and he appeared less familiar with the current 
U.S.-Taiwan economic and trade agenda.  Siew's invocation of 
the South Korean protests as cause for caution on beef 
market-opening has been echoed by other Taiwan officials in 
recent days, and will complicate our efforts to achieve 
progress on that front. END COMMENT. 
 
 
WANG