VZCZCXRO6032
OO RUEHCN RUEHGH RUEHVC
DE RUEHIN #0377/01 0910732
ZNY CCCCC ZZH
O 010732Z APR 09
FM AIT TAIPEI
TO RUEHC/SECSTATE WASHDC IMMEDIATE 1267
INFO RUEHOO/CHINA POSTS COLLECTIVE
RUEHWL/AMEMBASSY WELLINGTON 2427
RUEHCHI/AMCONSUL CHIANG MAI 0687
RUEHHM/AMCONSUL HO CHI MINH CITY 0550
RUEHJA/AMCONSUL SURABAYA 0098
RUEKJCS/SECDEF WASHINGTON DC
RHHMUNA/USPACOM HONOLULU HI
RHHJJAA/JICPAC HONOLULU HI
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RHEHAAA/NATIONAL SECURITY COUNCIL WASHINGTON DC
RUEAIIA/CIA WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEHC/DEPT OF AGRICULTURE WASHINGTON DC

C O N F I D E N T I A L SECTION 01 OF 03 TAIPEI 000377 
 
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,USDA FOR FAS/OCRA RADLER AND 
BEILLARD; FAS/OSTA FOR WETZEL, HAMILTON,DAWSON, AND 
SHNITZLER; FAS/ONA FOR BERTSCH AND FAS/OFSO FOR WAINIO 
 
E.O. 12958: DECL: 03/31/2019 
TAGS: ECON PGOV ETRD EAGR PREL CVIS KIPR TW
SUBJECT: THE DIRECTOR'S MARCH 31 MEETING WITH PREMIER LIU 
CHAO-SHIUAN 
 
TAIPEI 00000377  001.2 OF 003 
 
 
Classified By: Stephen M. Young, AIT Director, for reasons 1.4 (b) and 
(d). 
 
¶1. (C) SUMMARY.  In a March 31 meeting with the Director, 
Premier Liu Chao-shiuan said opening Taiwan's market to the 
full range of U.S. beef imports is only a matter of timing. 
He predicted the opening could take place as early as May or 
early June.  The Premier saw no obstacles to Legislative Yuan 
(LY) approval of Taiwan's accession to the WTO Government 
Procurement Agreement (GPA), and said draft Internet Service 
Provider (ISP) legislation is a priority bill for the 
administraiton.  The Director urged rapid progress on 
resolving pork market access problems, filling Taiwan's WTO 
rice quota, and establishing maximum residue levels (MRLs) 
for common food additives. He stressed the importance of 
avoiding protectionism, including in the implementation of 
Taiwan's new public infrastructure projects.  The Premier 
reiterated Taiwan's interest in participating in the Visa 
Waiver Program (VWP).  He also provided an update on plans to 
consolidate local government jurisdictions, and noted that 
Taichung is likely to be the first of Taiwan's three major 
cities to merge with its surrounding county. END SUMMARY. 
 
------------ 
Participants 
------------ 
¶2. (SBU) The meeting took place at the Executive Yuan (EY) 
Office of the Premier.  The Director was accompanied by 
economic chief (notetaker) and acting political chief. 
Premier Liu Chao-shiuan was joined by Deputy Minister of 
Foreign Affairs for Administration Javier Hou, MFA Department 
of North American Affairs Director General Harry Tseng, MFA 
Staff Assistant Jiang Xen, EY Second Section Chief Lee 
Tien-ming, EY Fifth Section Chief Hsia Zheng-zhong, and EY 
Second Section Staff Assistant Chang Hong-jun. 
 
 
-------------------------------------- 
Cabinet relations with the legislature 
-------------------------------------- 
¶3. (C) The Premier complained that the Cabinet has to spend a 
great deal of time explaining and defending administration 
policy to the Legislative Yuan (LY), and must often sit and 
wait while the LY conducts internal business.  He noted with 
relief that he will not have to return to the LY until 
September, after the current session ends later this spring. 
According to Liu, all but a few members of the KMT majority 
are generally supportive of the Cabinet.  In contrast, the 
opposition DPP is often "very reactive," although such 
behavior is "understandable" given their small number of 
seats. 
 
 
--------------------------------------------- -------- 
Economic Cooperation Framework Agreement with the PRC 
--------------------------------------------- -------- 
¶4. (C) According to Liu, DPP criticism of administration 
plans to negotiate an Economic Cooperation Framework 
Agreement (ECFA) with the PRC has been helpful in spurring 
the Cabinet to "work harder" in explaining the policy to the 
public.  The Director reiterated U.S. support for Taiwan's 
efforts to improve relations with China and enhance its 
international space.  The Obama administration is committed 
to continuing longstanding U.S. policy toward Taiwan, he 
stated.  The Premier replied that the Ma administration has 
set the direction of its cross-Strait policy, but must "very 
carefully" calibrate the pace of its implementation.  He 
expressed appreciation for ongoing U.S. support of Taiwan. 
 
 
--------------------------- 
GPA accession and ISP bills 
 
TAIPEI 00000377  002.2 OF 003 
 
 
--------------------------- 
¶5. (C) In response to the Director's question, Liu said he 
could not see any obstacles to LY approval of Taiwan's 
accession to the WTO Government Procurement Agreement (GPA). 
The Director urged prompt LY action on draft Internet Service 
Provider (ISP) legislation, which the Premier said is a 
"priority" bill for the administration. 
 
 
-------------------------- 
Beef, pork, rice, and MRLs 
-------------------------- 
¶6. (C) Referring to his late February meetings in Washington 
with U.S. economic and trade officials, the Director 
emphasized the importance of rapid Taiwan action on opening 
its market to the full range of U.S. beef imports.  He noted 
that Taiwan published its beef risk assessment report over 
two months ago, with virtually no negative reaction from the 
public so far.  The Premier agreed that the report has 
elicited "very little" unfavorable comment.  Liu said he sees 
"no problem" for beef market opening, and it is "just a 
matter of the best timing" to announce that Taiwan will allow 
all U.S. beef imports.  Liu said such an announcement could 
"hopefully" be made in May or early June. 
 
¶7. (C) In addition to beef, the Director stressed U.S. 
interest in resolving pending market access problems related 
to pork and the fulfillment of Taiwan's WTO rice quota.  The 
underlying problem remains Taiwan's lack of progress in 
establishing internationally-consistent maximum residue 
levels (MRLs) for a large number of food additives.  The 
Director observed that resolving outstanding agricultural 
market access problems will contribute to an environment 
conducive to expanding the overall bilateral trade agenda, 
including eventual progress on bilateral investment and other 
agreements. 
 
 
--------------------------------------- 
Public infrastructure and protectionism 
--------------------------------------- 
¶8. (C) The Premier explained that the Ma administration's 
"I-Taiwan" (a play on "Ai", or "Love" Taiwan) twelve major 
public infrastructure projects would help reduce unemployment 
and stimulate economic development.  He described reducing 
Taiwan's record-high 5.75% jobless rate as the 
administration's top priority.  Liu said some spending for 
the "I-Taiwan" projects is included in the regular budget 
already passed by the LY, and that additional funding would 
be part of the supplemental budget slated to be approved by 
the legislature on April 10.  He clarified that work on all 
twelve projects will begin simultaneously, in part to boost 
public confidence that the administration is serious about 
tackling the economic downturn. 
 
¶9. (C) The Director emphasized the importance of facilitating 
free trade and avoiding protectionism, including in the 
implementation of public works and other official stimulus 
measures.  He drew the Premier's attention to a March 26 
letter from the president of AmCham regarding troubling 
indications that some official agencies appear to be pursuing 
"Buy Taiwan" initiatives.  The Premier was familiar with the 
letter, and said free trade is a core economic value for 
Taiwan.  "We will do our best to fight against 
protectionism," he stated. 
 
 
------------------- 
Visa Waiver Program 
------------------- 
¶10. (C) The Premier expressed hope that Taiwan could 
participate in the Visa Waiver Program (VWP) as quickly as 
 
TAIPEI 00000377  003.2 OF 003 
 
 
possible.  The Director replied that Taiwan must make 
additional progress in meeting VWP criteria, including a 
lower visa refusal rate and improved procedures for issuing 
passports.  At the same time, other potential VWP 
participants are further along the route to qualification for 
the program.  Taiwan's VWP participation is a future 
possibility, said the Director, but the process will take 
time.  The Director added that a bilateral extradition 
agreement is a more near-term prospect, and the issue is now 
being looked at by State Department legal experts.  The 
Premier observed that VWP participation would further enhance 
the people-to-people ties that have long been a main pillar 
of the bilateral relationship. 
 
 
------------------------------ 
Local government consolidation 
------------------------------ 
¶11. (C) In response to the Director's question, the Premier 
confirmed the administration's plan to consolidate Taiwan's 
local government jurisdictions into three municipalities 
(Taipei, Kaohsiung, and Taichung) and fifteen counties. 
Achieving this plan would require merging Taipei, Kaohsiung, 
and Taichung with their surrounding counties and raising the 
status of Taichung from city to municipality.  According to 
the Premier, Taichung county and city are closest to 
achieving this consolidation.  The LY must now amend existing 
laws to form the legal basis for consolidation.  The Premier 
said the bill would need to be approved by the end of April 
for the Taichung merger to take place before the December 
2009 local elections. If the merger is approved in time, the 
incumbent mayor and magistrate would have their terms 
extended for a one-year transition period, he added, and a 
new municipality chief would be elected in December 2010. The 
Premier, who said he is hopeful the Taichung merger can move 
ahead, declined to offer a timeline for when Taipei and 
Kaohsiung would effect similar consolidations. (Comment: 
Other contacts have told us they are unsure if the Taichung 
merger will take place during this election cycle.) 
 
 
------------------ 
DRAM restructuring 
------------------ 
¶12. (C) The Premier appeared unfamiliar with the current 
status of administration plans to restructure Taiwan's DRAM 
sector.  He implied that announcement of the new Taiwan 
Memory Company's (TMC) choice of foreign partner originally 
scheduled for that day would in fact take place on April 1, 
and might simply be a "progress report" rather than a final 
decision on whether Japan's Elpida or Micron of the U.S. 
would be chosen to work with TMC. Liu said creating a strong 
competitor for South Korea's Samsung is the major goal of the 
restructuring program.  The administration, he added, is also 
concerned about DRAM companies' outstanding debt to 
state-owned banks.  The Director expressed appreciation for 
the administration's attention to Micron's efforts to be 
chosen as TMC's partner. (Note: On April 1, TMC announced 
that it will choose both Elpida and Micron as partners. 
Negotiations with Elpida are apparently more advanced than 
those with Micron.  See septel for details.) 
 
¶13. (C) COMMENT. We've had false dawns on the beef issue in 
the past.  Nevertheless, the Premier's words (in conjunction 
with what we've heard from others recently) were encouraging, 
and we'll continue to press the administration for prompt 
action on market opening.  END COMMENT. 
YOUNG