P 200310Z JAN 10
FM AIT TAIPEI
TO SECSTATE WASHDC PRIORITY 3150
INFO CHINA POSTS COLLECTIVE
AMEMBASSY WELLINGTON 
AMEMBASSY SEOUL 
AMEMBASSY TOKYO 
AMCONSUL CHIANG MAI 
AMCONSUL HO CHI MINH CITY 
NATIONAL SECURITY COUNCIL WASHINGTON DC
DIA WASHINGTON DC
DEPT OF TREASURY WASHINGTON DC
JICPAC HONOLULU HI
USPACOM HONOLULU HI
DEPT OF COMMERCE WASHINGTON DC
SECDEF WASHINGTON DC
CIA WASHINGTON DC
DEPT OF AGRICULTURE WASHINGTON DC

C O N F I D E N T I A L AIT TAIPEI 000080 
 
 
STATE FOR EAP/TC 
STATE PASS USTR FOR STRATFORD AND ALTBACH, TREASURY FOR 
OASIA/WINSHIP AND JEWELL, NSC FOR LOI, COMMERCE FOR 
4431/ITA/MAC/AP/OPB/TAIWAN,USDA FOR FAS/OSTA BEAN, DAWSON, 
AND RASMUSSEN; FAS/OCRA RADLER, BURDETT, AND 
ANDERSON-SPRECHER; FAS/OTN BERTSCH; AND FAS/OFSO SALLYARDS 
 
E.O. 12958: DECL: 01/19/2020 
TAGS: ECON ETRD PGOV PREL EARG TW
SUBJECT: A ROADMAP FOR BUILDING THE U.S.-TAIWAN ECONOMIC 
RELATIONSHIP 
 
REF: A. 09 TAIPEI 1224 
     ¶B. TAIPEI 23 
 
 
Classified By: Bill Stanton, AIT Director, for reasons 1.4 (b) and (d). 
 
¶1. (C) SUMMARY: As the U.S. works to resolve the beef market 
access issue while reviving its bilateral economic agenda 
with Taiwan (reftels), AIT proposes using a revived Trade and 
Investment Framework Agreement (TIFA) as a vehicle to 
facilitate progress on a specific timeline of trade 
agreements.  Devising a more detailed timeline would bolster 
U.S. interests with our tenth-largest trading partner, 
reinforce a key forum for resolving trade disputes and market 
access issues, and serve as a dynamic counterpoint to 
Taiwan's burgeoning economic ties with the PRC. END SUMMARY. 
 
--------------------------------------------- -- 
Improving Prospects for a Major Trading Partner 
--------------------------------------------- -- 
 
¶2. (C) Although the volume of bilateral trade slumped during 
the global recession, Taiwan was our tenth-largest trading 
partner for the first eleven months of 2009.  Taiwan is now 
emerging from the worst economic slump in its history, and is 
projected to post over 4% GDP growth in 2010.  Later this 
year, Taiwan hopes to conclude an Economic Cooperation 
Framework Agreement (ECFA) with the PRC.  Combined with 
numerous other PRC-Taiwan measures, expanded cross-Strait 
economic ties will continue to contribute to Taiwan's 
economic growth and increase its attractiveness as a 
destination for U.S. business and investment. 
 
------------------------- 
Expanding U.S. Engagement 
------------------------- 
 
¶3. (C) With over USD 16 billion in cumulative investment, the 
U.S. is Taiwan's largest foreign investor.  Although 
generally satisfied with Taiwan's investment climate, the 
U.S. business community has grown increasingly restive as 
agricultural market access concerns have dominated our 
bilateral trade agenda.  As we have already noted, a revived 
Trade and Investment Framework Agreement (TIFA) process 
should form the centerpiece of an expanded bilateral economic 
relationship (reftels). 
 
--------------------------- 
Targets for the End of 2010 
--------------------------- 
 
¶4. (C) The last TIFA meeting took place in July 2007.  While 
recognizing the potential impact of unforeseen circumstances, 
setting an ambitious timeline for action would help ensure 
that our efforts achieve concrete results.  Assuming we are 
able to hold one TIFA meeting by the summer of 2010, followed 
by a series of follow-on technical meetings by DVC, we should 
target the following accomplishments this year: 
 
-- Completion of the pending eCommerce agreement before or 
during the next TIFA meeting. 
 
-- Interagency consultation to address issues related to 
Congressional approval of potential bilateral and tax 
agreements with Taiwan, followed by a decision to launch 
negotiations toward these agreements before or during the 
next TIFA meeting (see septel for more detailed analysis of 
these two proposed agreements), plus at least two follow-up 
DVCs apiece to negotiate these agreements. 
 
-- Before or during the next TIFA meeting, a decision to 
explore negotiations on at least two of the following 
candidates (reftel) for other bilateral agreements:  labor, 
environment, transparency, IPR, and technical barriers of 
trade (TBT).  Based on U.S. business interests, TBT should be 
the top priority among these. 
 
-- In conjunction with the next TIFA meeting, consider 
holding the inaugural session of the bilateral Consultative 
Committee on Agriculture (CCA) to address priority 
agricultural issues such as maximum residue levels (MRLs), 
pork, rice, and remaining beef market access issues not 
covered by the bilateral protocol (e.g., BSE-related 
suspensions for animal feeding products).  The CCA would also 
serve to invigorate cooperation in areas such as biotech, 
food security, and agricultural research. 
 
--------------------------- 
Targets for the End of 2011 
--------------------------- 
 
¶5. (C) By the end of 2011, we should use at least one 
additional meeting, follow-up DVCs, and other meetings to: 
 
-- Complete negotiations for a bilateral investment 
agreement, and continue negotiations toward completion of a 
bilateral tax agreement. 
 
-- Make significant progress toward the completion of the two 
new agreements identified as priorities before or during the 
2011 TIFA. 
 
-- In addition to resolving beef market access concerns 
through the bilateral protocol consultations process, make 
significant progress in further reducing the MRL backlog 
through a joint workplan that sets a timetable for completing 
work on new MRL priorities, including Taiwan's suspended 
efforts on pork ractopamine.  On rice, we should seek 
re-tendering or compensation for shortfalls in 2007-08 
quotas, while ensuring Taiwan fulfills its 2009 
Simultaneous-Buy-Sell (SBS) purchase commitments and all 
upcoming 2010 quota tenders. 
 
¶6. (C) COMMENT:  Bilateral trade agreements should not be the 
only benchmark by which to evaluate the U.S.-Taiwan economic 
relationship.  At the same time, however, recent years have 
seen a lack of concrete progress that has frustrated the U.S. 
business community and stood in growing contrast to 
blossoming cross-Strait ties.  Individual trade disputes will 
continue to arise, and we must also continue to emphasize 
broad, sectoral issues such as government procurement and 
pharmaceuticals.  In addition to addressing individual 
disputes and sectoral concerns, however, TIFA should also be 
revived as a vehicle for advancing concrete progress toward 
building trade ties with a key partner. END COMMENT. 
 
 
STANTON