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

021628Z May 06

UNCLAS SECTION 01 OF 04 PARIS 002868 
 
SIPDIS 
 
FROM USOECD PARIS 
 
SENSITIVE 
 
DEPT FOR EUR/ERA, EAP/CM, EAP/RA/TC, AND OES 
 
E.O 12958:N/A 
TAGS: PREL PGOV ECON SENV EU CH TW FR OECD
SUBJECT: CHINA AND TAIWAN AT THE OECD: HARDBALL OVER SOFT 
LAW 
 
 
THIS MESSAGE IS SENSITIVE BUT UNCLASSIFIED.  PLEASE HANDLE 
ACCORDINGLY. 
 
1.(SBU) SUMMARY: CHINA AND THE TAIWAN AUTHORITIES ARE 
ENGAGED IN A BACK-CORRIDOR BATTLE AT THE ORGANIZATION FOR 
ECONOMIC COOPERATION AND DEVELOPMENT (OECD) OVER 
PARTICIPATION, AS NONMEMBERS, IN OECD COMMITTEES.  CHINA 
HAS RECENTLY RAISED THE LEVEL AND TENOR OF ITS OBJECTIONS 
TO TAIWAN'S PARTICIPATION, THOUGH IT IS NOT CLEAR WHETHER 
CHINA WILL CURTAIL ITS EXTENSIVE COOPERATIVE PROGRAM WITH 
THE OECD IF THE OECD IGNORES THESE PROTESTATIONS.  BOTH 
CHINA AND TAIWAN ARE MOVING TO INCREASE SIGNIFICANTLY THEIR 
PARTICIPATION IN COMMITTEES -- FOR WHICH STATEHOOD IS NOT A 
REQUIREMENT. 
 
¶2. (SBU) ACTION REQUESTED (PARAS. 16-18): PLEASE PROVIDE 
GUIDANCE ON WHETHER TO OBJECT TO TAIWAN'S APPLICATIONS TO 
JOIN TWO OECD COMMITTEES, DUE FOR DECISION ON MAY 4. END 
SUMMARY. 
 
CHINA: BACK TO THE FUTURE FOR TAIWAN? 
 
¶3. (SBU) CHINA AND THE TAIWAN AUTHORITIES ARE ENGAGED IN A 
BACK-CORRIDOR BATTLE AT THE OECD OVER PARTICIPATION IN 
COMMITTEES AND OTHER OECD SUB-GROUPS (SUCH AS WORKING 
PARTIES AND WORKING GROUPS). IN THE PAST, CHINA ROUTINELY 
VOICED OBJECTION TO TAIWAN'S PARTICIPATION AS OBSERVER IN 
OECD COMMITTEES, BUT IN THE END ACQUIESCED IN OECD 
DECISIONS TO INVITE "CHINESE TAIPEI." TAIWAN IN FACT BECAME 
A REGULAR OBSERVER IN THE COMPETITION COMMITTEE (IN 2001) 
AND THE STEEL COMMITTEE (IN 2005).  IN ADDITION, AND NOT 
RELATED TO PARTICIPATION IN THE STEEL COMMITTEE, CHINA AND 
TAIWAN HAVE BOTH PARTICIPATED IN HIGH-LEVEL STEEL TALKS, 
WHICH HAVE BEEN HELD SEVEN TIMES SINCE 2001.  SIMILARLY, 
BOTH CHINA AND TAIWAN TOOK PART IN THE SPECIAL NEGOTIATING 
GROUP ON A NEW SHIP-BUILDING AGREEMENT. 
 
¶4. (SBU) IN RECENT MONTHS, HOWEVER, IN APPARENT REACTION TO 
TAIWAN'S EXPRESSION OF INTEREST IN BECOMING A REGULAR 
OBSERVER TO SIX ADDITIONAL OECD COMMITTEES, CHINA HAS 
RAISED BOTH THE LEVEL AND THE TENOR OF ITS OBJECTIONS.  IN 
JANUARY 2006, ZHAO JINJUN, CHINA'S AMBASSADOR TO FRANCE, 
STATED IN A LETTER TO OECD SECRETARY GENERAL JOHNSTON THAT 
CHINA NOT ONLY OBJECTED TO TAIWAN'S CURRENT APPLICATIONS TO 
JOIN NEW COMMITTEES, BUT ALSO TO ITS CONTINUED 
PARTICIPATION IN THE COMMITTEES TO WHICH IT HAD ALREADY 
BEEN ADMITTED. PREVIOUSLY, CHINA'S VIEWS ON TAIWAN'S 
PARTICIPATION HAD BEEN MADE BY LOWER LEVEL OFFICIALS IN THE 
CHINESE EMBASSY'S ECONOMIC SECTION. CHINESE OFFICIALS IN 
BEIJING, INCLUDING VICE MINISTER OF COMMERCE LIAO XIAOQI, 
REITERATED AMBASSADOR ZHAO'S COMMENTS DURING SECRETARY 
GENERAL JOHNSTON'S VISIT TO CHINA IN FEBRUARY 2006. 
 
¶5.  (SBU) IN THESE AND OTHER CONVERSATIONS WITH OECD 
OFFICIALS, BEIJING HAS ASSERTED THAT TAIWAN'S RECENT SPATE 
OF APPLICATIONS IS POLITICALLY MOTIVATED.  THE OECD HAS 
RESPONDED THAT ITS COMMITTEES, IN MAKING A "TECHNICAL 
EVALUATION" OF APPLICATIONS FOR OBSERVERSHIPS OR OTHER 
FORMS OF PARTICIPATION, STEER AWAY FROM POLITICAL 
CONSIDERATIONS, BUT DO LOOK SERIOUSLY AT FACTORS SUCH AS 
"MUTUAL BENEFIT" AND WHETHER APPLICANTS ARE "MAJOR PLAYERS" 
IN THE SUBSTANTIVE AREA OF THE COMMITTEE'S JURISDICTION. 
THE OECD HAS ALSO NOTED THAT AS A MATTER OF PRINCIPLE, 
NONMEMBERS HAVE NO RIGHT OR STANDING TO COMMENT ON THE 
QUALIFICATIONS OF OTHER NONMEMBERS CONCERNING OECD 
ACTIVITIES.  (NOTE: IN ACCORDANCE WITH A 1998 OECD COUNCIL 
DECISION, STATEHOOD IS NOT A REQUIREMENT FOR PARTICIPATION 
IN OECD COMMITTEES AND RELATED BODIES. HONG KONG, UNDER THE 
NAME OF "HONG KONG CHINA," IS AN OBSERVER TO THE COMMITTEE 
ON FINANCIAL MARKETS AND TO THE TRADE COMMITTEE, FOR 
EXAMPLE.) 
 
GO SLOW ON INNOVATION. 
 
¶6.  (SBU) TO SHOW THAT IT IS SERIOUS ABOUT ITS OBJECTIONS, 
CHINA BRIEFLY HALTED ITS COOPERATION WITH AN ONGOING OECD 
REPORT ON CHINA'S INNOVATION POLICY, TO BE DRAFTED UNDER 
THE AUSPICES OF THE OECD'S COMMITTEE ON SCIENCE AND 
TECHNOLOGY POLICY (CSTP) -- A COMMITTEE WHICH SUPPORTED 
TAIWAN'S APPLICATION TO BE AN OBSERVER SEVERAL MONTHS AGO. 
THE NEXT STEP IN TAIWAN'S APPLICATION TO THE CSTP WILL BE 
APPROVAL (NORMALLY GRANTED ROUTINELY IN LIGHT OF THE 
SUBSTANTIVE COMMITTEE'S EARLIER APPROVAL) BY THE OECD'S 
COMMITTEE ON COOPERATION WITH NONMEMBERS AT ITS MEETING ON 
MAY 4.  THE FINAL STEP WOULD BE APPROVAL BY THE OECD 
COUNCIL, LIKELY TO OCCUR LATER IN MAY. 
 
¶7. (SBU) CHINA ITSELF BECAME AN OBSERVER TO THE CSTP IN 
2001; IF "CHINESE TAIPEI" JOINED, THIS WOULD MARK THE FIRST 
TIME BOTH CHINA AND TAIWAN HAVE BEEN OBSERVERS ON THE SAME 
COMMITTEE.  CURRENTLY, BOTH CHINA AND TAIWAN ALSO HAVE 
STATUS -- THOUGH NOT THE SAME STATUS -- IN THE STEEL 
COMMITTEE (SEE BELOW). 
 
FORGE AHEAD ON STEEL. 
 
¶8. (SBU) IN A NEW TWIST, THE OECD RECENTLY INVITED CHINA TO 
JOIN THE STEEL COMMITTEE AS A FULL PARTICIPANT (THE HIGHEST 
CATEGORY OF NONMEMBER PARTICIPATION) -- NOTWITHSTANDING 
CHINESE TAIPEI'S EXISTING STATUS AS AN OBSERVER. CHINA 
PREVIOUSLY HAD NO ENGAGEMENT WITH THE STEEL COMMITTEE, 
THOUGH, AS NOTED ABOVE, IT HAD PARTICIPATED IN THE HIGH 
LEVEL STEEL TALKS.  NOW CHINA HAS LEAPFROGGED TO THE STATUS 
OF FULL PARTICIPANT, AND HAS DONE SO WITHOUT OBJECTING TO 
TAIWAN'S CONTINUING STATUS AS OBSERVER.  ACCORDING TO OECD 
OFFICIALS, BOTH CHINA AND TAIWAN PLAN TO SEND 
REPRESENTATIVES TO THE NEXT STEEL COMMITTEE MEETING, TO BE 
HELD IN INDIA ON MAY 17. CHINA HAS RAISED NO SPECIFIC 
OBJECTION TO TAIWAN'S ATTENDANCE AT THIS UPCOMING STEEL 
COMMITTEE MEETING, NOTWITHSTANDING ITS GENERAL COMMENTS IN 
PARIS AND IN BEIJING TO SECRETARY GENERAL JOHNSTON OPPOSING 
TAIWAN'S PARTICIPATION IN COMMITTEES. 
 
AND ON THE ENVIRONMENT, AND REGULATORY REFORM 
 
¶9. (SBU) IN ADDITION, OECD-CHINA COOPERATION PROCEEDS ON 
THE OECD'S ENVIRONMENTAL POLICY REVIEW OF CHINA.  THE OECD 
REVIEW TEAM, WITH MEMBER COUNTRY PARTICIPANTS, INCLUDING 
THE UNITED STATES, COMPLETED ITS "REVIEW MISSION" TO CHINA 
IN FEBRUARY. IN NOVEMBER, THE OECD PLANS TO HOLD A "PEER 
REVIEW MEETING" ON THE COMPLETED ENVIRONMENTAL REVIEW IN 
BEIJING.  CHINA HAS ALSO RAISED NO OBJECTIONS TO AN ONGOING 
OECD REGULATORY REFORM REVIEW OF CHINA, IN COLLABORATION 
WITH THE NATIONAL DEVELOPMENT RESEARCH COMMISSION (NDRC) IN 
BEIJING. 
 
CHINA AND THE OECD 
 
¶10. (U) THE CHINA-OECD PROGRAM OF COOPERATION EXTENDS BACK 
OVER TEN YEARS.  COMMERCE MINISTER BO XILAI'S VISIT TO THE 
OECD LAST YEAR WAS THE HIGHEST OFFICIAL LEVEL CONTACT IN 
PARIS, WHILE SECRETARY GENERAL JOHNSTON HAS MADE SEVERAL 
VISITS TO CHINA AND MET WITH VICE MINISTER-LEVEL OFFICIALS. 
THE OECD'S CHINA "COUNTRY PROGRAM" IS THE MOST ACTIVE OF 
ITS THREE COUNTRY PROGRAMS (CHINA, RUSSIA, BRAZIL) AND HAS 
PRODUCED A PLETHORA OF REPORTS ADVOCATING ECONOMIC REFORM 
MEASURES IN CHINA, INCLUDING COMPLIANCE WITH WTO 
OBLIGATIONS -- REPORTS THAT GENERALLY TRACK WELL WITH U.S. 
BILATERAL POLICIES AND INITIATIVES. 
 
¶11. (U) IN ADDITION TO ITS STATUS AS OBSERVER IN THE OECD'S 
COMMITTEE ON FISCAL AFFAIRS AND THE COMMITTEE ON SCIENCE 
AND TECHNOLOGY POLICY (CSTP), IN THE PAST YEAR, CHINA HAS 
BEEN INVITED TO BE AN OBSERVER TO THE EDUCATION COMMITTEE 
AND TO THE STATISTICS COMMITTEE, AND, AS NOTED, TO BE A 
FULL PARTICIPANT IN THE STEEL COMMITTEE. AS A MAJOR 
NONMEMBER ECONOMY, CHINA (AS IN PREVIOUS YEARS) HAS BEEN 
INVITED TO SEND A DELEGATION TO ATTEND PARTS OF THE OECD'S 
ANNUAL MINISTERIAL COUNCIL MEETING (MCM) ON MAY 23-24; AT 
PRESENT, VICE MINISTER OF FINANCE LOU JIWEI IS SCHEDULED TO 
LEAD CHINA'S DELEGATION. (CHINESE TAIPEI WAS NOT INVITED; 
OTHER INVITEES INCLUDE BRAZIL, INDIA, RUSSIA, AND SOUTH 
AFRICA; IN ADDITION, "HONG KONG CHINA," ARGENTINA, AND 
CHILE, ALL OF WHICH ARE REGULAR OBSERVERS IN THE TRADE 
COMMITTEE ARE AMONG NON-MEMBERS INVITED TO ATTEND THE MCM'S 
TRADE SESSION). 
 
TAIWAN AND THE OECD 
 
¶12. (U) IN ADDITION TO ITS STATUS AS OBSERVER IN THE 
COMPETITION AND STEEL COMMITTEES, CHINESE TAIPEI ALSO 
APPLIED TO BECOME A REGULAR OBSERVER TO THE TRADE COMMITTEE 
IN 2003. IN 2005 TAIWAN SIGNALED ITS INTEREST IN OBSERVING 
SIX OTHER COMMITTEES: THE COMMITTEE ON SCIENCE AND 
TECHNOLOGY POLICY (CSTP), THE FISHERIES COMMITTEE, THE 
INVESTMENT COMMITTEE, THE EMPLOYMENT, LABOR AND SOCIAL 
AFFAIRS COMMITTEE, AND TWO SUBGROUPS OF THE ENVIRONMENTAL 
POLICY COMMITTEE. 
 
STATUS OF TAIWAN'S APPLICATIONS 
 
¶13. (SBU) ON APRIL 27, THE OECD'S GOVERNING COUNCIL 
ENDORSED THE TRADE COMMITTEE'S DECISION NOT TO APPROVE 
REQUESTS FROM CHINESE TAIPEI AND FOUR COUNTRIES TO BECOME 
OBSERVERS, BUT TO OFFER INSTEAD "AD HOC" INVITATIONS TO 
ATTEND VARIOUS COMMITTEE MEETINGS OR EVENTS.  AS NOTED, ON 
MAY 4, THE OECD'S COMMITTEE ON COOPERATION WITH NONMEMBERS 
IS LIKELY TO ENDORSE TAIWAN'S MEMBERSHIP AS OBSERVER IN THE 
COMMITTEE ON SCIENCE AND TECHNOLOGY POLICY, WITH COUNCIL 
APPROVAL SOON THEREAFTER.  SIMILARLY, AND ALSO ON MAY 4, 
THE COMMITTEE ON COOPERATION WITH NONMEMBERS WILL LIKELY 
ENDORSE THE FISHERIES COMMITTEE'S PREVIOUS EXPRESSION OF 
SUPPORT OF TAIWAN AS AN OBSERVER; THAT WOULD BE FOLLOWED 
SHORTLY BY THE COUNCIL'S FINAL APPROVAL. TAIWAN'S 
APPLICATIONS TO BECOME AN OBSERVER TO THE INVESTMENT 
COMMITTEE, THE EMPLOYMENT, LABOR AND SOCIAL AFFAIRS 
COMMMITTEE, AND THE ENVIRONMENTAL POLICY COMMITTEE 
SUBGROUPS ARE STILL IN PRELIMINARY STAGES. 
 
OECD ENLARGEMENT 
 
¶14. (SBU) THE CHINA-TAIWAN IMBROGLIO TAKES PLACE IN THE 
CONTEXT OF A U.S.-LED MOVEMENT OVER THE PAST YEAR AIMED AT 
STREAMLINING THE OECD'S GOVERNANCE PROCEDURES, AS A 
PREREQUISITE FOR OECD ENLARGEMENT BEYOND ITS CURRENT 
MEMBERSHIP OF THIRTY COUNTRIES. THE OECD CONVENTION, SIGNED 
BY REPRESENTATIVES OF MEMBER GOVERNMENTS, AUTHORIZES ITS 
GOVERNING COUNCIL TO INVITE "GOVERNMENT(S)" TO JOIN THE 
ORGANIZATION AND THE CONVENTION (ARTICLE 16).  THE OECD'S 
LEGAL ADVISOR HAS TOLD US INFORMALLY THAT THIS AND OTHER 
PROVISIONS WOULD PROHIBIT TAIWAN'S MEMBERSHIP IN THE OECD, 
ABSENT A CHANGE IN THE CONVENTION. NO OECD MEMBER HAS 
OFFICIAL RELATIONS WITH TAIWAN. 
 
¶15. (SBU) WE WILL SEE IN THE COMING MONTHS HOW SERIOUS 
CHINA IS ABOUT ITS OBJECTIONS TO TAIWAN'S PARTICIPATION IN 
OECD NONMEMBER ACTIVITIES.  AT PRESENT, IT APPEARS THAT THE 
REACTION, IF ANY, IS LIKELY TO BE LIMITED TO THOSE 
COMMITTEES WHERE BOTH CHINA AND TAIWAN ARE MEMBERS. THE 
UPCOMING STEEL COMMITTEE MEETING IN INDIA WILL BE A TEST 
CASE, AS WILL THE OECD'S LIKELY APPROVAL OF TAIWAN AS AN 
OBSERVER TO THE CSTP LATER THIS MONTH (SEE ACTION REQUEST). 
 
ACTION REQUESTED 
 
¶16. (SBU) MISSION REQUESTS GUIDANCE ON WHETHER TO OBJECT TO 
TAIWAN'S APPLICATION TO BE AN OBSERVER IN THE COMMITTEE ON 
SCIENTIFIC AND TECHNOLOGY POLICY (CSTP).  THIS APPLICATION 
WILL BE APPROVED ROUTINELY BY THE OECD'S COMMITTEE ON 
COOPERATION WITH NONMEMBERS ON MAY 4 UNLESS ONE OR MORE 
MEMBER COUNTRIES OBJECT.  THE CSTP, WITH UNITED STATES 
PARTICIPATION AND AGREEMENT, HAS ALREADY MADE A "TECHNICAL 
EVALUATION" AND CONCLUDED THAT TAIWAN IS WELL-QUALIFIED TO 
BE AN OBSERVER TO THE COMMITTEE. THAT APPROVAL OCCURRED IN 
2005, PRIOR TO THE ESCALATION OF THIS MATTER BY AMBASSADOR 
ZHAO AND OTHER CHINESE OFFICIALS. 
 
¶17.  (SBU) WE ALSO REQUEST GUIDANCE ON WHETHER TO OBJECT TO 
TAIWAN'S MEMBERSHIP IN THE FISHERIES COMMITTEE.  AS WITH 
THE CSTP, THE FISHERIES COMMITTEE HAS FOUND TAIWAN WELL- 
QUALIFIED TO BE AN OBSERVER.  UNLIKE THE CSTP, HOWEVER, 
CHINA IS NOT NOW ENGAGED WITH THE FISHERIES COMMITTEE, NOR 
HAS IT INDICATED INTEREST IN OBSERVERSHIP. TAIWAN (AS 
"CHINESE TAIPEI") PARTICIPATED ENTHUSIASTICALLY IN THE 26- 
28 APRIL MEETING OF THE FISHERIES COMMITTEE AS AN AD HOC 
OBSERVER.  THE COMMITTTEE ON COOPERATION WITH NONMEMBERS 
WILL ALSO APPROVE THIS APPLICATION ON MAY 4, ABSENT 
OBJECTION BY ONE OR MORE MEMBER STATES. 
 
¶18. (SBU) FROM THE POINT OF VIEW OF U.S. INTERESTS AT THE 
OECD, WE BELIEVE THAT CHINA'S OBJECTIONS TO A LONG-SETTLED 
OECD PRACTICE GO TOO FAR.  STATEHOOD IS NOT A REQUIREMENT 
FOR COMMITTEE PARTICIPATION; INDEED, BEIJING HAS NOT 
CLAIMED THAT GRANTING AN OBSERVERSHIP IS TANTAMOUNT TO 
RECOGNITION OF A STATE, ONLY THAT TAIWAN HAS "POLITICAL" 
MOTIVATIONS.  THOUGH WE WOULD REGRET A MOVE BY CHINA TO 
CURTAIL THE VALUABLE COOPERATIVE PROGRAM WITH THE OECD, WE 
WOULD REGRET EVEN MORE, AND BELIEVE IT IS NOT IN U.S. 
INTERESTS AS SEEN FROM HERE, PERMITTING CHINA (PARTICULARLY 
GIVEN ITS STATUS AS A NON-MEMBER) TO RAISE THE BAR FOR 
PARTICIPATION BY TAIWAN IN THE OECD.  WE RECOMMEND APPROVAL 
OF TAIWAN'S APPLICATIONS FOR BOTH THE CSTP AND THE 
FISHERIES COMMITTEE ON MAY 4, AND SUBSEQUENTLY WHEN BOTH 
MATTERS COME UP FOR APPROVAL BY THE OECD'S GOVERNING 
COUNCIL. 
MORELLA