VZCZCXYZ0000
RR RUEHWEB

DE RUEHIN #1002/01 1910907
ZNR UUUUU ZZH
R 090907Z JUL 08
FM AIT TAIPEI
TO RUEHRC/USDA FAS WASHDC 2698
RUEHC/SECSTATE WASHDC 9454

UNCLAS AIT TAIPEI 001002 
 
SENSITIVE 
SIPDIS 
 
STATE PASS USTR FOR STRATFORD, KATZ, AND O'CONNOR 
STATE PASS AIT/W 
 
USDA FOR FAS/OCRA FOR RADLER, BEILLARD; FAS/OSTA FOR 
HAMILTON, BEAN, DAWSON; AND FAS/OFSO FOR BREHM 
 
E.O. 12958: N/A 
TAGS: EAGR ETRD ECON PGOV PREL TW
SUBJECT: Taiwan COA Minister and AIT Director Discuss 
Key Agricultural Issues 
 
¶1. (SBU) SUMMARY:  In a July 2 introductory call at the 
Council of Agriculture (COA) on new Chairman, Chen Wu- 
hsiung, the AIT Director raised the importance of 
resolving key access issues for U.S. agricultural 
products including beef, pork, and rice.  Responding on 
beef, the Chairman expressed caution on the prospects 
for progress, saying the issue had become very 
sensitive given developments in Korea and worries about 
slipping public support for the Ma administration. 
Chen stated that the pork ractopamine issue is a matter 
of "national treatment," with farmers firmly opposed to 
allowing the presence of a compound in imports that is 
banned for domestic use.  He added that COA would face 
great difficulty changing a regulation established less 
than two years ago.  While acknowledging the domestic 
sensitivities involved, the Director pressed for a 
science-based solution to restore U.S. exports which he 
noted would help consumers at a time of very high pork 
prices.  On rice, the Director raised concerns about 
Taiwan's delay in fulfilling its purchasing commitments 
under the Country Specific Quota (CSQ) system. 
Speaking for Chen, the newly assigned Director-General 
for International Affairs, Zhang Su-san, sought 
understanding for the difficulty Taiwan faces in the 
current tight world market, arguing that it could not 
import rice with international prices rising above 
Taiwan domestic wholesale levels.  Finally, the 
Chairman indicated tentative willingness to hold an 
inaugural session of the Consultative Committee on 
Agriculture (CCA) this fall.  The Director proposed 
active efforts to nail down a schedule for the meeting, 
possibly in conjunction with TIFA, with decisions on 
level of participation and agenda to follow.  END 
SUMMARY. 
 
Domestic Concerns Dominate COA's Attention 
------------------------------------------ 
 
¶2. (SBU) In response to the Director's opening question 
on key work facing the Council of Agriculture (COA) 
early in the new administration, Chairman Chen 
indicated that low prices for flowers (a major Taiwan 
farm and export product), and fertilizer price 
increases have dominated his attention.  He noted that 
the increase in fertilizer prices had been partially 
offset by subsidies in the face of farmer criticism of 
the move.  Chen also mentioned recent flooding in 
Central and Southern Taiwan had created headaches for 
COA as it worked to rapidly assess damage and revise 
relief payment guidelines.  Noticeably absent in the 
Chairman's comments was any mention of the current 
international food crisis or trade issues. 
 
Beef Remains Top Access Priority 
-------------------------------- 
 
¶3. (SBU) Turning to U.S. access priorities for 
agriculture with Taiwan, the Director told Chen that he 
had discussed the beef issue with President Ma recently 
and encouraged him to discuss the topic with DOH and 
COA to ensure their reviews are proceeding as 
expeditiously as possible.  He also gave the Chairman a 
brief readout on his meeting held the day before with 
Health Minister Lin, noting the latter had expressed 
determination to rely on science for conducting DOH's 
additional review on fully opening to U.S. beef for 
human consumption.  The Director urged COA to cooperate 
with DOH to the extent required, and to proceed 
likewise toward opening for the animal feeding products 
(e.g., protein-free tallow) under its jurisdiction. 
The Director noted that Taiwan consumers enjoy and 
trust U.S. beef, as evidenced by our record-setting 
exports after the market was re-opened to boneless beef 
- a trade now valued at $130 million. 
 
¶4. (SBU) Chen responded that beef is a very sensitive 
issue for the new administration.  The timing has 
become difficult after the heavy news coverage of 
problems for President Lee in Korea.  Meanwhile, the 
high price of petroleum is affecting prices across the 
board and is contributing to a decline in public 
approval of the Ma administration.  The Director 
countered that there are reasons other than beef 
playing into the situation President Lee faces in 
Korea.  While not dismissing the difficulty this had 
 
presented Korea's still-new administration, beef had 
become an excuse to attack the President.  Taiwan's 
situation is very different, argued the Director.  He 
encouraged Chen to review the research already 
completed, have his staff do any further study needed 
quickly, and then base its decision on science.  As 
conveyed to the DOH Minister the previous day, the 
Director said if this means visiting additional packing 
houses or meeting with officials, the U.S. would do its 
best to accommodate Taiwan requests provided it is 
leading to a timely, science-based decision.  Chen 
replied that the WTO requires members to base policy on 
science -- to which the Director observed, "so does the 
OIE." 
 
Don't Forget About Pork 
----------------------- 
 
¶5. (SBU) Recognizing the more sensitive nature of the 
pork issue, the Director urged Chen to make a quiet 
review of the science.  This could then be shared with 
the public to gain support for approving ractopamine. 
Given the rising price of pork in Taiwan, imports could 
play a role stabilizing the market and help consumers, 
added the Director.  Moreover, while some Taiwan hog 
producers may never support the U.S. position on 
ractopamine, AIT has been told others understand the 
benefits and wish to use it.  In response, the Chairman 
took a different tack in justifying Taiwan's position 
than his COA predecessor.  He referred to the issue as 
a matter of "national treatment," given that the 
compound had been banned for domestic use.  As a 
result, farmers have taken a firm stand against imports 
being allowed to contain ractopamine since they are not 
allowed to use it.  Chen told the Director that COA 
would encounter great difficulty allowing the presence 
of ractopamine in pork since it would mean changing 
regulations COA instituted less than two years earlier 
(i.e., in October 2006) prohibiting its use. 
 
¶6. (SBU) The Director reiterated the importance of 
basing decisions on science, which had clearly not been 
adhered to in this case.  Setting a MRL at the Codex- 
recommended level of 10 ppb remains the only viable 
solution ultimately, but in the interim, Taiwan should 
revisit setting the 1 ppb MRPL (detection limit) it 
rescinded in March.  Absent such action, explained the 
Director, the trade has become too risky.  This is 
hurting U.S. exporters and Taiwan consumers alike as 
there is clear demand for the product. 
 
¶7. (SBU) Chen agreed there is demand, as witnessed by 
the significant flow of U.S. pork into Taiwan in recent 
years.  He maintained, however, that the issue is one 
of "national treatment" that had become extremely 
difficult for COA to address.  The Director suggested 
the Chairman should work with Taiwan producers, and 
then educate consumers to gain support for a change. 
He noted that the previous administration had 
repeatedly pointed to upcoming elections as the reason 
it couldn't move on the issue.  With elections over 
until well into 2009, the Director argued the politics 
should be easier to manage now. 
 
Growing Concern about Delayed Rice Purchases 
-------------------------------------------- 
 
¶8. (SBU) The final issue raised by the Director was 
growing U.S. concern about delays in Taiwan fulfilling 
its purchase commitments for U.S. rice under the 
Country Specific Quota (CSQ) system initiated in 2007. 
The crux of the problem, according to the Director, 
lies with implementation of Taiwan's ceiling price 
policy which appears to lag international market 
conditions.  This has caused purchase tenders for U.S. 
rice to fail in an all too frequent pattern, resulting 
in Taiwan falling well behind filling the 2007 and 2008 
quotas. 
 
¶9. (SBU) The newly-assigned Director General of the 
International Affairs Department, Zhang Su-san, 
responded that skyrocketing international rice prices 
were the real problem.  She pointed out that Taiwan's 
ceiling price policy is bound by government procurement 
requirements, and argued that it has generally 
 
functioned well except in recent months when market 
conditions radically changed.  Zhang stated that 
international prices have risen above Taiwan wholesale 
rice prices making it very difficult for Taiwan to 
import.  She also sought understanding for Taiwan's 
decision not to put added pressure on the tight 
international market during this sensitive period. 
[Note: Zhang's previous position was in the TECRO 
Office in Geneva, where she was involved in 
negotiations to establish the rice CSQs, and thus she 
is already familiar with this issue.  End Note] 
 
¶10. (SBU) AGR Chief responded that the problem of 
failing tenders pre-dates the current run-up in 
international prices and has been a recurring problem 
for timely purchasing of U.S. rice.  While the U.S. 
appreciated Taiwan's efforts to establish the new CSQ 
system as agreed under the WTO, the tendering process 
is raising serious concerns about Taiwan's ability to 
fulfill commitments that are already well behind 
schedule.  In a side discussion with Zhang following 
the meeting, AGR Chief noted we look forward to 
discussing the issue further and receiving Taiwan's 
reply as soon as possible to a USDA letter outlining 
these concerns sent under AIT cover to the Director 
General of COA's Agriculture and Food Agency (AFA) in 
early June. 
 
Consultative Committee on Agriculture 
------------------------------------- 
 
¶11. (SBU) The Director remarked that agriculture has 
been a big positive for U.S.-Taiwan relations over many 
years.  As a result, Taiwan is the United States' sixth 
largest export market, and the U.S. ranks second for 
Taiwan.  To build further on that important sectoral 
relationship, the two sides had agreed last year to set 
up a Consultative Committee on Agriculture (CCA).  He 
told Chen the U.S. is interested in holding an 
inaugural session this fall, and hoped the two sides 
could use the meeting to discuss areas in the 
relationship that are positive as well as those where 
things have soured.  Such a session would then set a 
course for our continued work into 2009, according to 
the Director, and would ensure the CCA is held once per 
year as agreed. 
 
¶12. (SBU) The Director acknowledged that the proposed 
timing might be a little off for Taiwan given the 
still-recent change in administrations, but also 
emphasized the importance of holding it ahead of U.S. 
elections in November.  Otherwise, he cautioned, 
scheduling could slip into mid-2009.  Seeking a soft 
commitment from Chen, the Director said the first order 
of business is to agree on timing, possibly in 
conjunction with the next round of the Trade and 
Investment Framework Agreement (TIFA) talks.  Then the 
two sides can proceed to firm up participation levels 
and agenda. 
 
¶13. (SBU) In response, Chen did not object to launching 
the CCA this fall, but he expressed concern about 
avoiding a conflict with the restart of Taiwan's 
legislative session in September.  He then turned to 
Grace Lin, Deputy Director-General of the International 
Affairs Department, for additional comment.  Lin 
indicated COA has already identified topics covering 
the broad areas of policy, trade, and technical 
cooperation.  She also mentioned organic agriculture 
specifically.  She said the COA is anxious to know 
which topics the U.S. wants to discuss and would 
appreciate conferring on this well in advance.  The 
Director replied this would not be a problem once a 
commitment to hold the meeting has been set.  He noted 
that the key issues for his call on the Chairman (e.g., 
beef, pork, and rice) should provide a good clue on our 
access-related priorities should they remain 
unresolved.  The Director also provided the Chairman 
with a fact sheet on the CCA prepared by USDA. 
 
¶14. (SBU) COMMENT:  COA Chairman Chen, while professing 
interest in using science as the basis for decision- 
making on the beef and pork issues, gave no sign of 
having initiated any new processes for doing so. 
Flanked by the Deputy Director General of COA's Bureau 
 
of Animal and Plant Health Inspection & Quarantine 
(BAPHIQ), who did not speak during the meeting, the 
Chairman at times seemed reticent to engage and stuck 
to the theme of caution that has pervaded all of our 
contacts with the new administration on the beef and 
pork issues.  As had been the case at DOH and 
elsewhere, Chen pointed to the situation in Korea and 
its ramifications for the fledgling Ma administration, 
which already faces slipping public support under the 
weight of slower-than-expected progress improving 
Taiwan's economy.  One exception was Chen's apparent 
willingness to hold the CCA at a relatively early date. 
He even queried the Director whether this would be 
possible in late August, although we think this 
unrealistic target simply reflected the Chairman's 
concern about senior COA availability after the 
Legislature Yuan returns to session in early September. 
END COMMENT. 
 
¶15. (SBU) COA Participants: 
 
Chairman Chen Wu-hsiung 
International Affairs Dept. DG Chang, Su-san 
International Affairs Dept. DDG Lin, Grace Lih-fang 
BAPHIQ DDG Huang, Kwo-ching 
BAPHIQ, Animal Quarant. Div., Sec. Chief Peng, Ming- 
hsing 
AFA, Food Storage & Transport. Div. Director, Pan Chih 
 
¶16. (U) BIO Note: 
 
Bio of New COA Chairman (Minister) 
 
Name: Chen, Wu-Hsiung 
Birth Place: Taipei County, Taiwan 
Birth Date: March 11, 1944 
 
Education: 
 
--Dept. Agricultural Economics, University of 
  Illinois at Urbana-Champaign, U.S.A., Ph.D., 1980 
--Graduate School of Agricultural Economics, 
  National Chung-Hsing University, Taiwan, M.S., 
  1970 
--Department of Agricultural Economics, National 
  Chung-Hsing University, B.S., 1966 
 
Employment & Experience: 
 
--Foundation Fellow, Technology & Economy Division, 
  National Policy Foundation (KMT Think Tank) 
--Associate Professor, Dept. of Agricultural 
  Economics, National Taiwan University 
--Ad Hoc National Assembly Representative, 2005 
--Advisor, Executive Yuan, January 2002 - October 
  2004 
--Vice Chairman, Council of Agriculture, July 1999 - 
  January 2002 
--Secretary General, Taiwan Provincial Government, 
  December 1998 - June 1999 
--Commissioner, Provincial Department of Agriculture 
  & Forestry, November 1996 - December 1998 
--Deputy Commissioner and Acting Commissioner, July - 
  November 1996 
--Chinese Taipei's lead agricultural negotiator in 
  WTO accession talks, 1994 - 1996 
--Division Chief, Deputy Director General and 
  Director General, Dept. of Economics & Planning, 
  Council of Agriculture, 1984 - 1996