VZCZCXRO1969
RR RUEHCN RUEHGH RUEHVC
DE RUEHIN #0650 0810329
ZNR UUUUU ZZH
R 220329Z MAR 07
FM AIT TAIPEI
TO RUEHC/SECSTATE WASHDC 4562
INFO RUEHOO/CHINA POSTS COLLECTIVE
RUEHML/AMEMBASSY MANILA 9977
RUEAIIA/CIA WASHDC
RHEFDIA/DIA WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC

UNCLAS TAIPEI 000650 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE PASS USTR 
STATE FOR EAP/TC 
COMMERCE FOR 3132/USFCS/OIO/EAP/WZARIT 
TREASURY FOR OASIA/LMOGHTADER 
USTR FOR STRATFORD, ALTBACH 
 
E.O. 12958: N/A 
TAGS: ETRD ECON PREL CH TW
SUBJECT: TAIWAN WAITS FOR PRC RESPONSE ON SAND EXPORT 
REQUEST 
 
REF: TAIPEI 297 
 
¶1. (SBU) Summary: Effective March 1, the PRC banned sand 
exports, which supply nearly 25 percent of Taiwan's sand 
needs for construction.  Taiwan has requested cross- 
Strait consultations to negotiate relaxation of the ban 
for Taiwan, but Beijing has not yet agreed to a meeting. 
In the meantime, Taiwan has moved to increase imports 
from the Philippines, use local stockpiles and expand 
local production.  End summary. 
 
¶2. (U) The PRC banned all sand exports on March 1, 
approximately one year after initially announcing its 
intention to do so.  Taiwan's local construction industry 
relies on imports of PRC sand.  According to the Taiwan 
Ministry of Economic Affairs (MOEA) Bureau of Bureau of 
Mines, Taiwan imported 30 million metric tons of river 
sand from China in 2006 accounting for nearly 25 percent 
of sand used in Taiwan.  Taiwan's own sand resources are 
unable to meet demand as sand extractors have been forced 
farther upriver to sources where the sand has higher 
stone content.  An MOEA official speculated to AIT that 
exports to Taiwan accounted for more than 90 percent of 
the PRC's total sand exports prior to the ban. 
 
Seeking Consultations 
--------------------- 
 
¶3. (SBU) The Taiwan authorities have requested cross- 
Strait consultations to negotiate a relaxation of the ban. 
Beijing concluded talks in February with Hong Kong and 
Macao in which it agreed to continue sand exports. 
According to media reports, PRC officials have also 
expressed willingness to work out a similar arrangement 
with Taiwan.  Each side has appointed a semi-official 
trade entity to nominally lead the discussions.  Taiwan 
appointed the Taiwan External Trade Development Council 
(TAITRA), while China named the Association for Economy 
and Trade across the Taiwan Strait.  However, MOEA and 
Mainland Affairs Council officials separately told AIT on 
March 20 that Beijing had not yet agreed to a meeting. 
 
Searching for Other Sources 
--------------------------- 
 
¶4. (U) Taiwan is working on developing alternative 
sources for sand.  Taiwan firms have increased investment 
in the Philippines.  MOEA believes that investment could 
increase Philippine sand exports to Taiwan from 110,000 
metric tons in 2006 to 3.5 million metric tons this year. 
Taiwan officials have urged local firms to release their 
stockpiles of sand.  MOEA estimates this could add 
another 2.3 million metric tons to the market.  In 
addition, Taiwan firms are being encouraged to accelerate 
dredging in Taiwan and increase the capacity to grind 
stone into sand.  However, MOEA officials acknowledge 
these measures will not be sufficient to meet the short 
fall caused by the PRC ban. 
 
¶5. (SBU) The price of sand has stayed relatively stable, 
rising only about 1 percent.  However, if there are no 
consultations within the next month or two, MOEA 
estimates the price could rise by approximately 7 percent 
after the busy season for construction begins. 
YOUNG