VZCZCXYZ0002
RR RUEHWEB

DE RUEHIN #0777/01 0990839
ZNR UUUUU ZZH
R 090839Z APR 07
FM AIT TAIPEI
TO RUEHC/SECSTATE WASHDC 4794
INFO RUEHBJ/AMEMBASSY BEIJING 6610
RUEHHK/AMCONSUL HONG KONG 7861

UNCLAS AIT TAIPEI 000777 
 
SIPDIS 
 
SIPDIS 
 
DEPARTMENT FOR INR/R/MR, EAP/TC, EAP/PA, EAP/PD - LLOYD NEIGHBORS 
DEPARTMENT PASS AIT/WASHINGTON 
 
E.O. 12958: N/A 
TAGS: OPRC KMDR KPAO TW
SUBJECT: MEDIA REACTION: U.S.-ROK FREE TRADE AGREEMENT, 
U.S.-CHINA-TAIWAN RELATIONS 
 
 
¶1. Summary:  Taiwan's major Chinese-language dailies focused news 
coverage April 7-9 on the suspicion that China's "Internet army" may 
have hacked into home computers of senior officials from Taiwan's 
University of National Defense, planted a Trojan Horse virus, and 
gained access to classified information, including the Yushan war 
game, the Hankuang no. 23 military exercise and the Posheng project. 
 Another focus of news coverage was on a villa of the late President 
Chiang Kai-shek on Yangmingshan that was burnt to the ground on 
Saturday morning, apparently by arson and allegedly by pan-Green 
supporters who were influenced by President Chen Shui-bian's 
campaign to uproot Chiang's legacy. 
 
¶2. In terms of editorials and commentaries, an editorial in the 
pro-independence, English-language "Taipei Times" said that the 
U.S.-ROK Free Trade Agreement surely will have a negative impact on 
Taiwan's economy and called upon Taiwan manufacturers to enhance 
their competitiveness and quality.  An editorial in the 
pro-unification, English-language "China Post" said that TECRO 
Chief-designate Joseph Wu's wish actively to lobby the U.S. 
government to treat Taiwan 'fairly and equally' will not help the 
opening of cross-Strait direct transportation links, since Taiwan 
cannot avoid responsibility for the lack of trust and bad atmosphere 
that has stymied the chances for talks under President Chen's 
administration.  End summary. 
 
¶3. U.S.-ROK Free Trade Agreement 
 
The pro-independence, English-language "Taipei Times" [circulation: 
30,000] editorialized that (04/08): 
 
"It would be difficult to overstate the likely impact on Taiwan of 
last week's free-trade agreement (FTA) between South Korea and the 
US, because South Korea and Taiwan produce many similar products and 
are rivals in key industrial sectors. 
 
"But the strange thing is that few -- especially in the media -- saw 
the issue as being as serious as trade officials and analysts did. 
Most daily newspapers last week displayed such an indifference to 
the trade pact [that] it was as though it had never happened. 
Instead, these newspapers were reporting on the campaign activities 
of the potential candidates for next year's presidential election, 
the proposals to allow auto and horse racing and politicians 
bickering over issues of ethnicity. 
 
"On the bright side, the South Korea-US trade pact could encourage 
the US to develop more bilateral free-trade agreements in the 
region, as countries fear they may fall behind in the race to cut 
trade barriers. 
 
"Most importantly, though, if the pact is ratified by lawmakers in 
both countries, South Korean companies will receive advantageous 
access to the US market, which would in turn put many Taiwanese 
firms at a potential disadvantage. In other words, it would not only 
make South Korea's economy more competitive but also result in US 
trade being lost by Taiwan and gained by South Korea. 
 
"Based on a study conducted by the Chung Hua Institute for Economic 
Research, approximately US$2 billion worth of goods are shipped to 
the US from Taiwan each year, goods that could be replaced by those 
from South Korea. 
 
"Those US$2 billion goods are likely to be shipped from South Korea 
once the lower, or zero, tariffs agreed in the FTA take effect. That 
would represent a potential loss of approximately 5 percent of 
Taiwan's annual shipments to the US, or 0.5 percent of the nation's 
GDP growth. 
 
"Some economists have warned that a South Korea-US deal would 
negatively impact on Taiwanese firms, particularly those in 
traditional manufacturing sectors such as textiles, automobiles, 
bicycles and shoes, and urged the government to accelerate its own 
trade talks with Washington. Others believe that Taiwanese 
manufacturers would be able to survive the South Korean competition 
as they have shifted production offshore to retain a price 
advantage. 
 
"The South Korea-US trade deal is likely to increase the pressure on 
other Asian countries to seek similar pacts, and, as long as 
Taiwan's economy is heavily export-oriented, it also needs to 
negotiate similar pacts with its trading partners. 
 
"It is lamentable that the 'China factor' has been used as an excuse 
to slow the progress of the nation's FTA negotiations, and so far 
Taiwan has only managed to secure FTAs with some Central American 
allies, including Panama, Guatemala and Nicaragua. But the trend 
toward trade agreements is not going to stop and the government 
needs to catch up and better prepare for the imminent changes in 
trading patterns that these agreements will bring. 
U.S.-CHINA-TAIWAN RELATIONS 
 
 
"Whether the plan is to achieve FTAs with other countries or the 
nation looks to join a Free-Trade Area of Asia Pacific -- a free 
trade area proposed by APEC leaders at their summit in Vietnam last 
November -- the government should study the South Korea-US deal 
carefully and use it as a starting point for their future talks. 
 
"For now, the government should be watchful, because, with no 
immediate possibility of new trade pacts, large Taiwanese 
manufacturers may well respond by shifting even more production 
overseas, adding to concerns about economic isolation. As for the 
future of Taiwanese firms, without the promise of FTAs to remove 
tariffs and other trade barriers, all they can do is to strive to 
enhance their competitiveness and quality, nothing else." 
 
¶4. U.S.-Taiwan Relations 
 
"'Treatment' is not the Issue" 
 
The conservative, pro-unification, English-language "China Post" 
[circulation: 30,000] said in its editorial (04/08): 
 
"Once again, it appears that ideology is clouding the thinking of 
our high-ranking government officials. On the eve of his departure 
for Washington, Joseph Wu, the new de facto ambassador to the United 
States, told reporters he would actively lobby the U.S. government 
to treat Taiwan 'fairly and equally' after taking up his new post. 
 
"Wu, the former Mainland Affairs Council chairman who is known to be 
close to President Chen Shui-bian, told reporters that ordinary 
people in Taiwan generally feel that Washington has not treated 
Taiwan fairly. 
 
"As a glaring example of how the Americans are purportedly treating 
us badly, Wu noted that a U.S. official who recently visited our 
country pressed us to lift our longstanding ban on direct 
transportation links with mainland China. 
 
"According to Wu, our American visitor 'missed the point,' since our 
government has repeatedly expressed its desire to negotiate direct 
transport links with Beijing and never gotten a positive response. 
 
"Wu told reporters that if Washington really wanted to see 
cross-strait transport links opened up, the United States should 
lobby Beijing to open talks with our government so the technical 
details of transport links could be worked out. 
 
"While Wu means well and we are sure he intends to promote our 
interests, it is clear to see that he views the world through 
ideologically tinted glasses. 
 
"In the narrow world-view of Joseph Wu, Beijing is solely to blame 
for the fact that both sides of the Taiwan Strait are not talking to 
each other. 
 
"While Beijing remains politically hostile to our government and 
shares some of the blame for the lack of talks, we cannot avoid 
responsibility for the lack of trust and bad atmosphere that has 
stymied the chances for talks to take place under President Chen's 
administration. 
 
"That is because every time a tiny thaw has appeared in the icy 
relations between Taipei and Beijing, President Chen has done his 
best to make sure they go back into a deep freeze. 
 
"When Beijing pragmatically offered to sidestep political 
sensitivities by having representatives of private aviation 
associations negotiate details about direct links, our government 
refused to go along. 
 
"In the meantime, President Chen has deliberately irritated 
cross-strait ties by taking steps toward de jure independence every 
time an election is around the corner. 
 
"Besides tossing a monkey wrench in the potential to resume 
cross-strait talks, these actions have also become a major irritant 
in our relations with the United States. 
 
"Since taking office, President Chen has all but abandoned his 
momentous 'four noes and a not' pledge made at his inauguration in 
¶2000. 
 
"In that speech, President Chen solemnly promised not to declare 
independence, not to change the national title of the Republic of 
China, not to amend the Constitution to codify the existence of two 
separate states in Taiwan and mainland China, and not to seek to 
hold a public referendum on sensitive issues of independence or 
reunification that would change the status quo in the Taiwan Strait. 
U.S.-CHINA-TAIWAN RELATIONS 
 
 
 
"In that same speech, President Chen promised that there was 'no 
question of abolishing the National Unification Guidelines and the 
National Unification Council,' the advisory guidelines and body that 
had formed the basis of our policies toward Beijing before President 
Chen took office. 
 
"Since these promises were mainly aimed at reassuring leaders in 
Washington and Beijing that President Chen's government would not 
make radical changes, we should not in the least bit be surprised 
that our friends in Washington are not pleased with us right now. 
 
"Indeed, just about the only part of 'four noes and a not' that has 
not been smashed into pieces is the promise not to change our 
national title of the Republic of China. 
 
"Since the United States needs Beijing's help to cope with major 
world crises ranging from Iraq to Iran and North Korea, Wu should 
not be shocked to learn that sometimes our friends in Washington 
would like to see us stop rocking the boat at every opportunity. 
 
"The reason why Washington wants us to open direct transport links 
with the mainland is because the U.S. government is, as it should 
be, primarily looking after American interests. 
 
"We find it especially odd that Joseph Wu thinks that our problems 
can be solved through lobbying foreign governments, rather than by 
making our own wise policies that produce good results. 
 
"The reason why cross-strait transport links have not been opened 
has little to do with our poor treatment from the Americans, and 
more to do with our own incompetence. 
 
"If our leaders had done less to shake up the status quo in the 
Taiwan Strait for the sake of scoring votes in local elections, 
direct transportation links probably would have been opened long 
ago." 
 
WANG