This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS SECTION 01 OF 03 TAIPEI 002653 
 
SIPDIS 
 
SENSITIVE 
 
DEPT FOR EAP/TC 
PLEASE PASS AIT/W, USTR 
COMMERCE FOR 4400/ITA/MAC/M-BMORGAN 
COMMERCE FOR 3005/ITA/CS/ADVOCACYCENTER BLOPP AGELFUSO 
COMMERCE FOR 3132/ITA/CS/OIO/DRD EAP JHAMILTON 
 
E.O. 12958: N/A 
TAGS: ECON ETRD EINV TW
SUBJECT: AMCHAM WHITE PAPER FOCUSES ON HUMAN RESOURCE AND 
PUBLIC HEALTH ISSUES 
 
REF: A. TAIPEI 2124 
     ¶B. TAIPEI 2526 
     ¶C. TAIPEI 2546 
 
Summary 
------- 
 
¶1. (SBU) The American Chamber of Commerce in Taipei's 
(Amcham) 2005 White Paper focuses primarily on human 
resources and public health.  It urges steps that would 
enable firms operating in Taiwan to hire more foreign 
employees, including PRC nationals - both to relieve 
manpower shortages and internationalize the workforce. 
Health-related recommendations address intellectual 
property concerns and barriers that limit market access for 
U.S. pharmaceuticals and medical devices.  Other important 
issues include completing financial sector reforms, 
improving government procurement processes, and the 
establishment of the National Communications Commission 
that would act as a regulator for telecommunications and 
broadcasting.  Amcham's White Paper priorities have changed 
little over the past three years, reflecting the Taiwan 
government's difficulty in managing cross-Strait issues and 
in dealing with some of the challenges facing its maturing 
economy.  If progress doesn't improve soon, it risks 
falling behind its competitors in the region.  End summary. 
 
 
¶2. (U) The American Chamber of Commerce in Taipei released 
its 2005 Taiwan White Paper on May 31 with advice for 
Taiwan's government on improving the island's business 
climate.  This year's White Paper had two main focuses - 
human resources and public health.  Among the paper's seven 
overall recommendations, eliminating government 
restrictions on hiring decisions moved to the top of the 
list, followed by improving Taiwan's public health and 
healthcare environment.  Tightening intellectual property 
protection was the third item.  This year the paper 
highlights the importance of intellectual property 
protection to public health due to the dangers posed by 
counterfeit drugs and agro-chemicals. 
 
¶3. (U) The other overall recommendations are insisting on 
world-class infrastructure, building on economic synergies 
with China, completing financial reforms, and strengthening 
the attack on corruption.  The seven recommendations are 
identical to the 2004 White Paper recommendations although 
human resources moved up the list to replace cross-Strait 
issues as the top priority.  They also include all six of 
the recommendations made in the 2003 White Paper.  The 2005 
White Paper reports that five of the 69 priority issues 
identified in the 2004 White Paper have been resolved. 
Thirty-seven priority issues from 2004 have been carried 
over to the 2005 White Paper, and 32 new issues have been 
added. 
 
Human Resources - Internationalization 
-------------------------------------- 
 
¶4. (U) Many of the human resources-related recommendations 
in the 2005 White Paper would enable firms operating in 
Taiwan to hire more foreign employees, including PRC 
nationals - both to relieve manpower shortages and 
internationalize the workforce.  The paper urges the 
government to eliminate the two-year work experience 
requirement for work permit applications and to allow 
companies to pay foreign interns.  Amcham also urges the 
government to convene a high-level interagency meeting to 
work out policies to facilitate hiring of PRC technical 
personnel.  In addition, it recommends several measures to 
expedite short-term visits by PRC nationals working for 
multinational companies and the establishment of direct 
transportation links. 
 
Health - IP Protection and Market Access 
---------------------------------------- 
 
¶5. (U) Amcham's health-related recommendations address 
intellectual property concerns or barriers that limit 
market access for U.S. pharmaceuticals and medical devices. 
All of the priority issues identified by Amcham's Agro- 
chemical Committee are intellectual property concerns, such 
as trademark infringement and the smuggling of patent- 
protected products.  Amcham highlights the health risk 
posed by counterfeit agro-chemicals.  The Pharmaceuticals 
Committee also offers three industry requests related to 
intellectual property, including more resources for the 
surveillance and investigation of counterfeit drug sales as 
well as stronger sanctions for violators. 
 
¶6. (U) Most of the remaining health-related issues concern 
the registration and approval processes for drugs and 
medical devices or problems in the national health system 
that discourage the purchase of U.S. medical products, 
including innovative pharmaceuticals.  Approval and 
registration problems include plant inspection requirements 
for pharmaceutical manufacturers and the ability of the 
Department of Health to efficiently process registration 
applications for medical devices.  Concerns about the 
national health system are centered on the Bureau of 
National Health Insurance's implementation of the "global 
budget" system, which seeks to limit hospital spending, but 
has had the perverse effect of encouraging hospitals and 
clinics to seek additional resources by demanding steep 
discounts from medical supply and pharmaceutical companies, 
creating a bias towards prescribing generic drugs, and 
encourages the practice of reusing single-use medical 
devices. 
 
Other Issues 
------------ 
 
¶7. (U) The Banking, Capital Markets and Insurance 
Committees together name 14 priority issues for Taiwan's 
financial sector.  Many identify very specific problems in 
Taiwan's regulatory regime.  However, some of the 
recommendations ask for broader changes, reflecting the 
continuing need for substantial reform.  These include 
passage of the draft Unified Reorganization and 
Bankruptcies Law, which would help create an effective 
mechanism for identifying insolvent companies that can be 
successfully reorganized; passage of a Finance Company Law 
to allow non-bank lenders to take a more active role in 
Taiwan's financial markets; and allocation of funds for the 
Financial Reconstruction Fund and other measures to address 
non-performing loan issues.  (Note:  Ref C reports on the 
May 31 passage of legislation allocating funds to the FRF, 
though only 10 percent of what had been requested, to 
resolve nonperforming loan issues. End note.) 
 
¶8. (U) Regarding Taiwan's infrastructure, Amcham's 2005 
recommendations focus on government procurement.  The 
Infrastructure Committee asks Taiwan unilaterally to agree 
to abide by the conditions of the WTO's Government 
Procurement Agreement.  It also asks Taiwan to revise its 
standard procurement contract to follow international 
standards that would encourage more foreign participation 
in government tenders.  (Note:  Ref B reports on complaints 
by Taiwan officials that the White Paper did not recognize 
some steps that Taiwan took in 2004.  End Note.)  In 
addition, both the Infrastructure and Chemical 
Manufacturers Committee offer recommendations related to 
Taiwan's power system, asking for enhanced energy security 
through increased emphasis on coal and capital investment 
that would produce a more reliable supply system. 
 
¶9. (U) The Chemical Manufacturers and Environmental 
Protection Committees both recommended revision of the Soil 
and Groundwater Pollution Remediation Act, identifying the 
assessment system and fees for environmental clean up as 
problems with the current Act.  In addition, both 
committees requested that Taiwan improve its emergency 
response system for chemical accidents.  The Environmental 
Protection Committee also asked the Taiwan government to 
develop a clear and long-term strategy for complying with 
the Kyoto Protocol for greenhouse gases. 
 
¶10. (U) Other important recommendations include two 
Telecommunications Committee requests.  It asks that Taiwan 
complete the establishment of the National Communications 
Commission that would act as a regulator for 
telecommunications and broadcasting and that Taiwan finish 
the privatization of Chunghwa Telecommunications, the 
island's dominant telecommunications service provider.  The 
Transportation Committee offered several specific 
recommendations for Taiwan's Customs procedures as well as 
measures to improve the ability of express delivery firms 
to make local deliveries.  The Committee also recommended 
that Taiwan follow international standards for compensation 
in cases of flight delay due to forces beyond the control 
of air carriers (reported ref A).  Finally, Amcham's new 
Education Committee identified several barriers that 
inhibit the ability of foreign firms to compete in Taiwan's 
market for private education. 
 
Comment - A C-minus Student 
--------------------------- 
 
¶11. (SBU) If the 2005 White Paper were a report card, 
former honor student Taiwan would be falling behind most of 
its class.  The fact that Amcham's overall recommendations 
have barely changed in the last three years is symptomatic 
of the Taiwan government's difficulty in dealing with the 
new challenges facing its maturing economy and the unique 
problems caused by cross-Strait tensions.  The few bright 
spots like progress on intellectual property protection are 
sadly overshadowed.  Many of Amcham's recommendations, 
especially in human resources, would help the Taiwan 
government achieve some of its own economic goals, such as 
developing Taiwan as a regional operations and logistical 
hub.  If the Taiwan government does not increase the pace 
of progress on these issues it risks falling behind its 
competitors in the region.  AIT/T will continue working 
with Amcham and the Taiwan government to address these 
important issues.  End comment. 
 
¶12. (U) The 2005 White Paper can be downloaded at 
www.amcham.com.tw/publication wp.php. 
PAAL