Cablegate: Taiwan Coa Minister and Ait Director Discuss


DE RUEHIN #1002/01 1910907
R 090907Z JUL 08





E.O. 12958: N/A
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

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

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

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.

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-
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


--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.,
--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
--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

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