VZCZCXRO4975
RR RUEHCN RUEHGH
DE RUEHBJ #0406 0490441
ZNR UUUUU ZZH
R 180441Z FEB 09
FM AMEMBASSY BEIJING
TO RUEHC/SECSTATE WASHDC 2349
RUEHGZ/AMCONSUL GUANGZHOU 0132
RUEHGH/AMCONSUL SHANGHAI 9633
RUEHSH/AMCONSUL SHENYANG 9296
RUEHCN/AMCONSUL CHENGDU 9631

UNCLAS BEIJING 000406 
 
DEPARTMENT FOR EAP/EX LARRY BAER, OBO/PE JOE TOUSSIANT, OBO/SPCD 
RAYMOND PEPPER, L/BA, OFM AND EAP/CM 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ABLD AMGT CM
 
SUBJECT:  MFA AGREES TO REVIEW AND COMMENT ON COCA I SIDE LETTER 
 
REF: (A) 08 BEIJING 4700 
 
¶1. (SBU) SUMMARY: In a February 13 meeting with MFA Department of 
Administration Director General Li Chao, the Charge delivered a 
non-paper (a draft side letter in the form of a diplomatic note) 
regarding the renovation of the former PRC chancery in Washington 
DC.  If agreed to and formally sent, the draft would function as a 
side letter to the 2003 COCA I agreement.  Li promised to study the 
draft carefully and provide prompt feedback, while reiterating the 
Chinese preference that the renovation project be included under 
COCA I.  End summary. 
 
Charge: Draft Note Ensures Balance of Rights 
-------------------------------------------- 
¶2. (SBU) In delivering the draft to DG Li, the Charge stressed that 
the USG commitments in the note would remove the imbalance between 
1) US rights under COCA I for the construction of the US Embassy 
Annex and 2) PRC rights for the renovation of the former chancery. 
Although US law prevents extending COCA I's broad rights to the PRC 
chancery renovation project, the US could commit to scale down its 
privileges to match the PRC's as explained in the note, the Charge 
said. 
 
¶3. (SBU) The Charge encouraged Li to look closely at the draft 
note's description of Washington DC's zoning permit process and the 
assistance that the Department's OFM could provide in regard to the 
renovation project.  The Charge said that although OFM routinely 
provides support to foreign missions, he believed that OFM is 
offering significant assistance in this case. 
 
¶4. (SBU) Additionally, the Charge raised the issues of COCA II and 
the sale of the Embassy's "Er Ban" facility.  On COCA II, the Charge 
informed Li that the Department would likely complete its review of 
the latest Chinese draft within one week.  On Er Ban, the Charge 
said that the reality of our circumstances dictates that discussions 
on the building's sale be considered as part of our conversations on 
COCA I and COCA II. 
 
DG Li Reiterates Position on COCA I, Agrees to Review Draft Note 
--------------------------------------------- --------- 
¶5. (SBU) DG Li expressed appreciation for the Embassy's hard work 
and effort to resolve the chancery renovation issue and promised to 
"carefully study" the draft note and to provide "early feedback". 
Although Li stated the PRC shares the US's goal of ensuring a 
"balance of rights," he repeated Chinese views expressed during 
previous meetings (Ref A). 
 
¶6. (SBU) Specifically, Li reiterated the PRC's strong preference for 
including the former chancery's renovation in COCA I in order to 
avoid difficulties and delays.  Li stated that the PRC has worked 
very hard to overcome impediments associated with building a new US 
Consulate in Guangzhou and he believed that if the US used the same 
level of effort, it would be possible to include the renovation 
project in COCA I. 
 
¶7. (SBU) On Er Ban, Li said the PRC's position on payment of 
benefits of land appreciation was clear and had already been 
discussed at length.  Li said that the Er Ban sale should be handled 
separately from COCA I and COCA II, and Li offered to arrange expert 
consultations on the issue. 
 
¶8. (SBU) Several times, Li expressed in Chinese that the US 
commitments in the draft note constituted "special policies", which 
the MFA staff translated into English as "preferential treatment". 
In addition, Li repeatedly described the planned work on the former 
chancery as "demolishing and building", which the MFA staff 
translated as simply "renovation". 
 
Charge Clarifies: Draft Note Offers No Preferential Treatment 
--------------------------------------------- --------- 
¶9. (SBU) The Charge informed Li that "preferential treatment" was 
not a term that he or OFM had used, and he did not want Li to have 
any misunderstanding about the note's commitments.  Nonetheless, the 
Charge said, OFM's assistance as described in the draft includes a 
request for "expedited review" by the DC local government.  The 
Charge also encouraged Li to ask the PRC's Washington DC consulting 
firm for their input on the potential assistance on offer from OFM. 
 
 
¶10. (SBU) The Charge agreed to take back Li's proposal for 
consultations on Er Ban and observed that the appetite for such 
consultations could be increased by progress on COCA I and COCA II. 
 
PICCUTA