VZCZCXYZ0000
RR RUEHWEB

DE RUEHIN #2962/01 2370904
ZNR UUUUU ZZH
R 250904Z AUG 06
FM AIT TAIPEI
TO RUEHC/SECSTATE WASHDC 1836
INFO RUEHBJ/AMEMBASSY BEIJING 5588
RUEHUL/AMEMBASSY SEOUL 8049
RUEHKO/AMEMBASSY TOKYO 7974
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEHC/DEPT OF AGRICULTURE WASHDC
RUEHGV/USMISSION GENEVA 1761

UNCLAS AIT TAIPEI 002962 
 
SIPDIS 
 
SIPDIS 
 
 
 
STATE PASS USTR 
STATE FOR EAP/TC, 
USTR FOR BOLLYKY AND ALTBACH AND BAE, 
USDOC FOR 4431/ITA/MAC/AP/OPB/TAIWAN/JDUTTON 
USDA/FAS FOR SHEIKH/MIRELES 
 
E.O. 12958: N/A 
TAGS: EAGR ECON EIND EINT ETRD KTEX TW
SUBJECT: TAIWAN TIFA FOLLOW-UP:  PROGRESS AND HIGH LEVEL 
INTEREST 
 
REF: A. A) TAIPEI 2947 
     ¶B. B) TAIPEI 2923 
 
Summary 
------- 
¶1.  Taiwan rolled out the red carpet for Deputy Assistant 
U.S. Trade Representative Eric Altbach and the U.S. trade 
delegation visit to Taipei August 17-21 to follow-up the May 
TIFA talks.  Taiwan was eager to reaffirm its commitment to 
the TIFA process and report on actions taken since the May 
TIFA talks as well as reiterate its strong interest in 
launching talks on a Free Trade Agreement (reported in ref 
b).  On the IPR front, the Ministry of Education has started 
new initiatives to address U.S. concerns regarding on-campus 
infringements.  Executive agencies promised to press the 
Legislative Yuan to pass bills to control P2P file sharing 
and establish ISP responsibility, as well as other 
legislation to establish a new IP court.  The National 
Communications Commission outlined an ambitious work plan to 
review restrictions for foreign investment and market entry 
in telecommunications and broadcasting.  On a less positive 
note, the Council on Agriculture sought to dilute the scope 
of the Consultative Committee on Agriculture (CCA) with 
respect to policy issues.  Some progress was made on market 
access for rice; USTR legal staff will review the 
proposals.  USDel presented Taiwan a copy of the U.S. - 
Uruguay Investment Treaty to use as a model.  Taiwan 
announced it was imposing increased restrictions on trade 
with North Korea and Iran.   Altbach raised U.S. concerns on 
some individual trade cases.  Taiwan noted it is still 
waiting for a U.S. response to the draft MOU on Textile 
Transshipment. Pharmaceutical issues reported reftel A.  End 
Summary. 
 
Introduction 
------------ 
¶2.  August 17-21, DAUSTR Eric Altbach led a U.S. trade 
delegation to Taipei to review TIFA progress since the talks 
in May.  The delegation included: 
 
--Eric Altbach, Deputy Assistant USTR, Office of China 
Affairs; 
--Timothy Wineland, Director, China and Taiwan Affairs, USTR; 
--Thomas Bollyky, Director, Pharmaceutical Policy, USTR; 
--Jeffrey Dutton, Director for Korea and Taiwan, Office of 
the Pacific Basin, International Trade Administration, USDOC; 
--Lori Smith, International Economist, Foreign Agriculture 
Service, USDA; and 
--Rick Ruzicka, Director, Trade and Commercial Programs, 
AIT/W. 
 
 
IPR - Looking for progress on campus, online, and in court 
--------------------------------------------- ------------- 
¶3.  The Taiwan Intellectual Property Office (TIPO) brought 
together staff from several agencies to meet with the 
delegation on IPR issues.  DAUSTR highlighted the key areas 
of concern - IPR violations on college campuses, P2P file 
sharing, and the need to establish a strong IPR court with 
specialized prosecutors. 
 
¶4.  Jack Lu, TIPO Deputy Director General, assured DAUSTR 
that steps had already been taken following the TIFA talks 
in May and that the IPR TIFA outcomes had been incorporated 
into TIPO's formal work plan.  He reported that Premier Su 
Tseng-chang had also instructed all government agencies to 
 
SIPDIS 
continue efforts to counter IPR infringements. 
 
¶5.  The Ministry of Education, which in the past had been 
criticized for unresponsiveness on IPR issues, has 
established an office through which rights holders and 
government agencies can bring their IPR concerns.  To show 
its resolve to curb on-campus copy shops, the Ministry of 
Education had notified in writing all on-campus copy shops 
that they would lose their leases if they were found 
violating copyright laws. Further, the Ministry has set up 
an office to monitor traffic on TANet, the island-wide 
university computer network, to try to block online 
copyright infringement.  Altbach praised the Ministry for 
these efforts and noted that follow-through and enforcement 
 
was key.  School has yet to start in Taiwan, but AIT will 
monitor implementation. 
 
¶6.  Lu noted the LY will shortly return to session in 
mid-September and review two draft bills that would regulate 
P2P file sharing and establish ISP responsibility.  Lu said 
the executive agencies will push the LY to pass these 
bills.  In a separate meeting, recording industry 
representatives told the delegation that they were currently 
in negotiations with Taiwan's two P2P companies to reach a 
legal settlement.  They were hopeful that they would have 
"good news" to report on these cases by the end of 
September. 
 
¶7.  The delegation also raised concerns with Lu about draft 
legislation establishing an IP court.  Industry 
representatives have raised two major concerns about the 
bill as it stands: Although the IP court would have a 
dedicated cadre of IP judges, there would be no dedicated 
group of prosecutors to handle IP cases.  Industry believes 
that without trained, dedicated prosecutors, convictions and 
meaningful penalties will be difficult to obtain.  A second 
concern is that under the current draft, the IP courts will 
have jurisdiction only over civil, not criminal cases (which 
includes copyright cases) in the first instance.  This means 
that these cases will still first go through the district 
courts, which in the past have not aggressively dealt with 
IPR violators. 
 
¶8.  Altbach also raised these concerns separately in his 
meetings with Minster Chen and Director General Huang.  He 
stressed that establishing a strong, well-functioning IP 
Court was more important than establishing one quickly. 
 
¶9.  To further dialogue on IPR issues, DAUSTR delivered a 
letter from Rachel Bae of USTR inviting TIPO to participate 
in a DVC to review progress on IPR issues.  The letter 
suggested mid-September timing, but TIPO has informally 
requested that the DVC be postponed until mid-October.  With 
universities and the Legislative Yuan still on break, this 
will allow more time to see how the new programs are going 
and report on legislative developments.  In addition, TIPO 
Deputy Jack Lu will depart for his new job on September 1 
and thus not be available for the discussion. 
 
National Communications Commission - Unconstitutional and 
Ambitious 
--------------------------------------------- ---------------- 
------- 
¶10.  DAUSTR and delegation called on Chairman Su Yeong-chin 
of the newly established National Communications Commission 
(NCC).  The NCC was created in February to serve as an 
independent body (akin to our FCC) to regulate broadcasting 
and telecommunications.  Establishment of an independent 
regulatory body fulfills a longstanding commitment to the 
U.S.  The Council of Grand Justices, however, has ruled that 
the manner of selecting NCC commissioners is 
unconstitutional.  In order to give the government time to 
establish a new selection method, the Council's ruling 
allows the NCC to maintain its current form and NCC 
decisions to be legally enforceable through December 2008. 
 
¶11.  Chairman Su assured Altbach that the government would 
solve the constitutional question and that the NCC had 
already developed an ambitious work plan.  Su stated that 
the NCC wanted to lower capital and build out requirements 
for new market entrants to the telecom market.  He also said 
that the Commission would review restrictions on tiered 
pricing and channel lineups for the cable television 
industry.  The commissioners, Su assured Altbach, want to 
liberalize foreign investment regulations. 
 
¶12.  The NCC wants more interactions with the U.S. FCC.  Su 
stated that FCC officials were being invited to a 
communications regulatory roundtable November 20-21 and 
asked for additional exchanges. 
 
Agriculture - Taking the Meat out of our Consultations 
--------------------------------------------- --------- 
¶13.  In the only sour note of the visit, The Council of 
 
Agriculture argued that the TIFA-mandated Consultative 
Committee on Agriculture (CCA) not be given the authority to 
make policy recommendations and discuss market access 
issues.  Altbach countered that these were precisely our 
goals in setting up the CCA.  He urged the COA to reconsider 
and solicited support from MOEA Minister Chen, noting that 
it would be difficult to attract high-level USG interest in 
a process that does neither of those things.  He also noted 
that any recommendations would need to be agreed to by both 
sides.  Negotiations regarding Country Specific Quota (CSQ) 
for Taiwan's public sector rice imports made some progress; 
the delegation is carrying back the proposals for review by 
USTR legal staff.  Details reported septel. 
 
Bureau of Foreign Trade - Investment, Textiles, Export 
Controls 
--------------------------------------------- ---------------- 
------ 
¶14.  On August 21 the delegation met Franco Huang 
(Chih-peng), Director General of the Bureau of Foreign 
Trade.  Altbach passed a letter from DUSTR Bhatia addressed 
to Minister for Economic Affairs Chen with a copy of the 
U.S.-Uruguay Investment Treaty.  This, he stated, could 
serve as a model for bilateral investment agreement talks 
between TECRO and AIT. 
 
¶15.  Huang raised the issue of the Memorandum of 
Understanding for Textile Cooperation.  He noted that BOFT 
had reviewed and forwarded a draft MOU on July 21 for 
response.  Altbach replied the MOU was important and that 
the U.S. side was currently finalizing its response and 
would reply soon. 
 
¶16.  Huang announced that Taiwan had issued a notice that 
same day (August 21) announcing increased controls on trade 
with North Korea and Iran.  He expected the controls would 
go into effect around September 15 following the public 
comment period. 
 
Raid, Customs, and Chiropractors 
-------------------------------- 
¶17.  Altbach raised two trade cases with Huang.  He noted 
that Taiwan's restrictions on cross-strait trade and 
investment were hampering Taiwan from integrating fully in 
the regional economy.  It also affected the business 
operations of U.S. firms with a presence in Taiwan.  SC 
Johnson, for example was unable to import one of its 
products - Raid - in aerosol form from China, where it has 
rationalized production to provide product for the entire 
region.  In reply, Huang outlined the petition and review 
process that companies can use to lift restrictions on 
certain mainland imports.  He stressed that the process 
involved several agencies and that the BOFT was only one 
voice.  He stated that due to "volatile relations" between 
China and Taiwan, it has gotten harder to remove these 
restrictions. He also noted that if the restriction was 
removed for Raid, it would be removed for all products in 
that particular category.  The Department of Health, 
particularly, argues that many Mainland products are unsafe 
and/or poor quality.  DAUSTR replied that quality and health 
concerns did not seem to be the issue because Taiwan did not 
restrict similar imports from a variety of other Asian 
countries at a similar stage of development to China's. 
Huang assured Altbach that he would once again review the 
case. 
 
¶18.  Then DAUSTR raised the long-standing Tyco customs 
classifications case which had been raised in July with 
Minister Chen in Washington.  Altbach suggested that the 
Ministry could play some role in resolving the case.  He 
noted that World Customs Organization had classified Tyco's 
thermistors as tariff-free.  Huang noted, however, that the 
case was now in the courts and that it was difficult for 
BOFT to play a role.  Altbach replied that Tyco continues to 
pursue some kind of remedy and that the USG will remain 
engaged in the matter. 
 
¶19.  Responding to concerns by Amcham, Altbach also urged 
Taiwan to reexamine its treatment of US-licensed 
chiropractors.  After operating informally in Taiwan for 
 
many years outside of Taiwan's established framework of 
health care regulation, U.S.-licensed chiropractors have 
faced a crackdown.  The Department of Health was requiring 
providers of chiropractic services to obtain local licenses 
as a "Western" medical doctor, a Chinese medical doctor, or 
physiotherapist.  The DOH ignored U.S. certifications and 
training which were directly relevant to the provision of 
those services.  He asked that the BOFT look into the 
matter. 
 
Minister of Economic Affairs Steven Chen Reaffirms Support 
for TIFA 
--------------------------------------------- ---------------- 
------ 
¶20.  To wrap up the visit, DAUSTR called on Minister of 
Economic Affairs Steve Chen (Ruey-long).  Comments on 
biotech rice are reported septel and interest in a Free 
Trade Agreement are reported ref b. The Minister expressed 
his strong support for the TIFA process and stated that he 
would continue to lobby other ministries to participate 
actively in the process.  In particular he would try to 
"encourage" COA on the scope of the CCA and noted that Vice 
Premier also took an active interest in the TIFA process. 
 
Comment 
------- 
¶21.  DAUSTR Altbach received a clear and consistent message 
that Taiwan is committed to moving forward on economic and 
trade matters and in the TIFA process in particular. 
Clearly this is part of the effort to move towards eventual 
FTA negotiations, but is also a real opportunity to make 
progress in several areas.  End Comment. 
YOUNG