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Cablegate: Uscc Meeting with Taiwan President Ma Ying-Jeou

VZCZCXRO1154
OO RUEHCN RUEHGH RUEHVC
DE RUEHIN #1407/01 2690723
ZNR UUUUU ZZH
O 250723Z SEP 08
FM AIT TAIPEI
TO RUEHC/SECSTATE WASHDC IMMEDIATE 0010
INFO RUEHOO/CHINA POSTS COLLECTIVE
RHEFDIA/DIA WASHINGTON DC
RUEAIIA/CIA WASHDC
RUEKJCS/SECDEF WASHINGTON DC
RHHMUNA/USPACOM HONOLULU HI
RHHJJAA/JICPAC HONOLULU HI

UNCLAS SECTION 01 OF 03 TAIPEI 001407

SENSITIVE
SIPDIS

STATE PASS USCC FOR SCOTT BUNTON

E.O. 12958: N/A
TAGS: PREL PGOV MARR MCAP TW US CH
SUBJECT: USCC MEETING WITH TAIWAN PRESIDENT MA YING-JEOU

SENSITIVE BUT UNCLASSIFIED. PLEASE PROTECT ACCORDINGLY.

1. (SBU) Summary: Taiwan's key short-term goals in its
relations with the United States are securing the approval of
the pending package of weapons systems, obtaining public U.S.
support for Taiwan's proposal on meaningful participation in
UN specialized agencies and strengthening of bilateral
commercial ties, preferably through an FTA, President Ma told
visiting members of the U.S.-China Economic and Security
Review Commission (USCC) during their August 22 meeting. Ma
described his strategy for improving cross-Strait relations,
building trust (and bolstering Taiwan's economy) by removing
barriers to economic, commercial and cultural exchanges
before moving on to the thornier political issues. The USCC
members expressed concern about the danger of increased
transfers of sensitive technologies that could result from
increasing economic integration and investment. End summary.

Cross-Strait Tensions Down, U.S. Relations Improving
--------------------------------------------- -------

2. (SBU) Ma began the meeting by expressing appreciation for
the Commission's work and by underscoring his goal of
improving Taiwan's relations with the United States. His
recent transits of the United States had gone well, Ma said,
and U.S. officials had also expressed relief that his less
confrontational policy toward China had reduced tensions in
the region. Asked by USCC Vice Chair Bartholomew to identify
specific things he hoped to achieve from closer U.S. ties, Ma
listed approval of a pending request to sell Taiwan a package
of defense items, support for his recently announced effort
to secure meaningful participation in UN specialized agencies
and eventual conclusion of a bilateral free trade agreement.

Pending Arms Sale a Key to Taiwan Defense
-----------------------------------------

3. (SBU) Despite the improvement in relations with China, Ma
said, he was acutely aware of the continuing military threat.
He cited in particular the &phenomenal8 growth in the size
of the Chinese military budget and the enormous improvements
in the quality and precision of PLA missiles targeting the
island. It was therefore essential that Taiwan be prepared
militarily to respond to this threat. While Ma dodged a
request to prioritize the items on the pending notification,
he did note the particular importance the Taiwan military
placed on improving its C4ISR capabilities and the value of
high-level contacts like (ret.) Adm. Blair,s participation
in the recent Hanguang exercise

4. (SBU) At the same time, Ma added, Taiwan's response cannot
be limited simply to buying more weapons, citing William
Murray,s article on Taiwan's defense strategy in the Summer
2008 edition of the Naval War College Journal. (Note: This
article, which AIT forwarded to EAP/TC, argues that Taiwan
should shift to an asymmetrical defense strategy that plays
to its strengths as a defender.)

&Meaningful Participation" in Key UN Agencies
---------------------------------------------

5. (SBU) Taiwan needed to have a voice in key international
organizations, Ma emphasized. For example, he said, access
to basic health information provided by the WHO was a
question of fundamental human rights. Politically, he added,
it would be impossible for him to ignore the will of the
people of Taiwan, who felt strongly about the need to be
treated with respect by the international community. That
said, he was aware of the problems created by Taiwan's
previous efforts to gain full membership in the UN and its
specialized agencies. Instead, his administration had taken
the concerns of the United States and others into account and
was seeking only &meaningful participation8 in key
agencies. While Taiwan did not expect the proposal submitted
by its diplomatic allies on August 14 to be voted on at the
UNGA, it was essential that the United States and others
support it publicly. The real test would be in May of 2009,
he said, when Taiwan's request for WHA observer status would
once again be on the table.

FTA Would Address Critical Economic Worries
-------------------------------------------

6. (SBU) While his efforts to reduce cross-Strait tensions

TAIPEI 00001407 002 OF 003


had gotten the most attention outside of Taiwan, Ma said,
people on the island were more interested in his ability to
deliver on economics. He recounted how small textile mill
owners in a remote corner of the island buttonholed him about
their fears that the Korean free trade agreement (FTA) would
put them out of business. That said, Ma recognized the
difficulty in our system of getting FTA negotiations started
at this time, and said Taiwan hoped also to pursue interim
steps under the TIFA.

Removing Barriers to Cross-Strait Economic Ties
--------------------------------------------- --

7. (SBU) Cross-Strait relations had entered a new phase in
the three months since his inauguration, Ma told the
delegation. He expressed optimism that his call for a
diplomatic truce to what he termed &malignant competition8
between Taiwan and China over diplomatic recognition was
achieving results. For example, Ma said, China had not
responded positively to approaches by some of Taiwan's
diplomatic allies considering recognizing the PRC.
Maintaining the status quo was important to Taiwan, which now
had only 23 diplomatic partners whereas China, recognized by
171 countries, did not need more allies.

8. (SBU) His first priority in the cross-Strait relations,
however, was allowing closer economic integration with the
mainland. China's initial response to Taiwan's new approach
had generally been positive, Ma said, citing the inauguration
of direct weekend charter passenger flights between Taiwan
and the mainland, mainland Chinese tourist travel to Taiwan,
his decision to legalize the exchange of renminbi on Taiwan
and relaxation of investment controls. These were positive
first steps, he said, and his government hoped to reach
agreement soon to start daily charter flights and to
eliminate the costly and time-consuming requirement that they
fly through the Hong Kong FIR rather than directly from
Taiwan to mainland destinations.

9. (SBU) Commissioner Shea expressed concern that the
proposal to lift the cap on Taiwan investments in the
mainland would leave the island increasingly vulnerable and
could result in the transfer of sensitive technology. Ma
responded that his proposal to raise the investment ceiling
to 60 percent would, and was intended to, encourage Taiwan
investors to relist their companies on the Taiwan stock
market. At present, he said, the cap forced many investors
doing business in China to sever financial ties with Taiwan.
Already, he added, seventeen companies had relisted on the
Taiwan exchange.

10. (SBU) Taiwan also had concerns about technology transfer,
Ma said, and had in place controls on sensitive and dual-use
items in line with international regimes. Responding to
Commissioner Mulloy,s specific question about
semiconductors, Ma noted that Taiwan also had to think of
market share. For example, he said, Taiwan previously
prohibited investors from producing 12 inch wafer chips in
China. Now that U.S. manufacturer Intel was doing so,
however, Taiwan had to consider the need to preserve market
share in a sector critical to its economy.

Participants
------------

11. (U) Taiwan:

President Ma Ying-jeou
National Security Advisor Su Chi
Deputy Minister of Foreign Affairs David Lin
MFA DG for North American Affairs Harry Tseng
MFA DDG for North American Affairs Douglas Hsu
MFA U.S. Desk Officer Hans Chiao

United States:

Carolyn Bartholomew, Vice Chair
Daniel Blumenthal, Commissioner
Peter Brookes, Commissioner
Jeffrey Fiedler, Commissioner
Patrick Mulloy, Commissioner
Dennis Shea, Commissioner
Daniel Slane, Commissioner
Scott Bunton, USCC Executive Director

TAIPEI 00001407 003 OF 003


John Dotson, USCC Research Coordinator
Shannon Knight, Research Coordinator
Robert Wang, AIT A/DIR
Dave Rank, AIT Political Chief
Deanna Kim, AIT Political Officer

12. (U) The delegation has cleared this cable.
YOUNG

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