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RUEHBJ/AMEMBASSY BEIJING 0758
RUEHCN/AMCONSUL CHENGDU 0215
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RUEHGH/AMCONSUL SHANGHAI 0214
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RUEHGV/USMISSION GENEVA 0008
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEATRS/DEPT OF TREASURY WASHINGTON DC 0151
RHMFIUU/DEPT OF JUSTICE WASHINGTON DC 0023
RHEHAAA/NSC WASHINGTON DC 0065
RUEAIIA/CIA WASHDC 0263
RUEKJCS/DIA WASHDC 0259

UNCLAS SECTION 01 OF 02 GUANGZHOU 000574 
 
SENSITIVE 
SIPDIS 
 
State for EAP/CM; EEB/CIP; EEB/TPP; INR/EAP; S/P 
USTR for China Office; IPR Office 
NSC for JBader, JLoi 
 
 
E.O. 12958: N/A 
TAGS: ETRD PREL EINV KIPR ECON PGOV TW CH
SUBJECT: Cross-Strait Trade and Economics Surging Forward at CIFIT 
Conference 
 
REF: A) GUANGZHOU 546, B) BEIJING 2574, C) BEIJING 2534, D) AIT 
TAIPEI 1076 
 
(U) This document is sensitive but unclassified.  Please protect 
accordingly. Not for release outside U.S. government channels. Not 
for internet publication. 
 
¶1. (SBU) Summary and comment: Cross-Strait economic cooperation was 
a hot topic at the 13th annual China International Fair for 
Investment and Trade (CIFIT) Conference earlier this month in 
Xiamen.  A large group of Taiwan business leaders, academics and 
working-level officials participated in a half-day seminar organized 
by the PRC's Ministry of Commerce (MOFCOM) and Taiwan Affairs Office 
(TAO) on how to establish mechanisms to promote cross-Strait trade 
and investment.  Most of the public discussions focused on the 
Economic Cooperation Framework Agreement (ECFA) agreement currently 
under discussion between the PRC and Taiwan.  Participant comments 
from both Chinese and Taiwan speakers were almost all positive, 
conveying a sense of inevitability regarding increased economic 
cooperation and the signing of ECFA.  Among the few negative 
comments, one participant highlighted PRC concerns about third 
countries possibly using Taiwan as a duty free entry to mainland 
markets if ECFA were fully implemented, and a Taiwan business leader 
called for improved rule of law in the mainland, especially to 
protect intellectual property rights of Taiwan investors. 
 
¶2. (SBU) Comment continued:  Although no Chinese officials said so 
directly, observers noted several symbolic differences from last 
year's CIFIT Conference including the absence of a high-level Taiwan 
official at the opening ceremonies and a relatively lower profile 
for the Taiwan pavilion in the CIFIT exhibition hall.  These 
differences might indicate that despite robust working-level 
engagement on purely economic issues, political-level steps forward 
are still affected by external factors such as the Dalai Lama's 
Taiwan visit one week before CIFIT.  End summary and comment. 
 
Cross-Strait Trade and Investment Full-Steam Ahead 
--------------------------------------------- ----- 
 
¶3. (U) MOFCOM Vice Minister Jiang Zengwei opened the Cross-Strait 
Economic Cooperation and Development Forum by reviewing recent 
progress, including the economic evolution from three "big links" to 
further opening of cross-Strait direct investment.  He told an 
audience of more than 200 people that "peaceful development" had 
become the theme of cross-Strait relations.  Jiang said mainland 
buying missions who had recently visited Taiwan and purchased 
billions of dollars in Taiwan-produced goods were good for both 
sides, and he said that institutionalizing the mechanism to 
facilitate even greater economic activity would be beneficial. 
Director Liu Xueqin of MOFCOM-affiliated Chinese Academy of 
International Trade and Economic Cooperation offered a variety of 
economic statistics and analysis to support completion of ECFA.  As 
if anticipating criticism that ECFA might benefit Taiwan more than 
the mainland, Director Liu said that early and complete 
implementation of the agreement would allow larger scale mainland 
purchases of Taiwan-produced goods and services, giving Taiwan 
businesses the financial boost they need to further increase direct 
investment on the mainland.  Liu said that in addition to the 
benefits of consuming high quality Taiwan products, mainland firms 
would benefit from increased access to technology and expertise 
developed on the island, and ECFA-related growth would be 
self-reinforcing. 
 
¶4. (U) Taiwan business leaders echoed MOFCOM's positive assessment 
and called for early completion of ECFA as the best way to move 
forward.  Wang Zhigang, Chair of Taipei World Trade Center, said 
that Taiwan investors are well-positioned to participate in the 
mainland's industrial upgrading.  Wang told the audience that Taipei 
World Trade Center is planning product promotion fairs in 50 second- 
and third-tier mainland cities in order to take advantage of 
ECFA-induced market liberalization.  Chair Wang Wenyuan of the 
 
GUANGZHOU 00000574  002 OF 002 
 
 
Taiwan Textile Promotion Association explained that the mainland 
textile industry's advantages in natural fibers and Taiwan's 
strength in synthetic fibers are complementary and will yield 
unprecedented opportunities for both sides once ECFA is signed. 
 
Some Sensitivities Persist on Each Side 
--------------------------------------- 
 
¶5. (SBU) Buried in the middle of her otherwise optimistic speech, 
MOFCOM Trade Academy Director Liu Xueqin did raise a sober warning 
that both the PRC and Taiwan must carefully respect trade-related 
sensitivities that would inevitably arise from increased 
liberalization.  Specifically, Liu cautioned that full 
implementation of ECFA would create a virtually duty-free market 
between the PRC and Taiwan, which third countries might try to 
exploit in their efforts to penetrate mainland markets.  Although 
Liu couched her comments in the language of WTO compliance and trade 
liberalization, her warning was clear - Taiwan can not allow third 
countries to skirt the PRC's import tariff regime by establishing 
separate agreements or transshipping products through Taiwan for 
sale on the mainland with reduced or waived duties. 
 
¶6. (SBU) Director Huang Fuxiong of the Taiwan Industrial and 
Commercial Promotion Association also detoured from otherwise upbeat 
remarks to call for improved rule of law and increased regulatory 
transparency on the mainland, especially relating to protection of 
intellectual property rights (IPR) for Taiwan investors.  Huang said 
that without such improvements, investors would hesitate to 
introduce new technology to the mainland market, regardless of how 
open the market was.  He said that improvements could already be 
seen across the mainland, but problems still remained that would 
require efforts from Chinese officials at every level of government 
and across many bodies including both the enforcement departments 
and the judicial system. 
 
Symbolism Still Appears Important at Higher Levels 
--------------------------------------------- - 
 
¶7. (SBU) Despite all of the positive discussion of cross-Strait 
economic cooperation, CIFIT opening ceremonies this year were 
conspicuous in their absence of a high-level Taiwan leader.  This 
contrasted with last year's participation of Legislative Yuan Vice 
President Tseng Yung-Chuan, who joined Vice Premier Wang Qishan and 
former Vice Premier Wu Yi for opening ceremonies at the 12th annual 
CIFIT conference in September 2008.  In addition, this year's Taiwan 
pavilion occupied a relatively lower profile in the exhibition hall 
when compared to its central position at last year's exhibition. 
Although no Chinese officials directly acknowledged the symbolism, 
MOFCOM Vice Minister Jiang Zengwei did use his opening of the 
Cross-Strait Economic Cooperation and Development Forum to note that 
difficulties caused by the Dalai Lama visit and other political 
irritants should be recognized and avoided. 
 
GOLDBECK