Cablegate: Taiwan's Minister of Foreign Affairs Tries To

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UNCLAS SECTION 01 OF 02 TAIPEI 003309

SIPDIS

STATE PLEASE PASS AIT/W AND USTR

STATE FOR EAP/RSP/TC, EAP/EP

USTR FOR WINTER AND WINELAND

USDOC FOR 4420/USFCS/OCEA/EAP/LDROKER
USDOC FOR 3132/USFCS/OIO/EAP/ADAVENPORT
TREASURY FOR OASIA/LMOGHTADER

E.O. 12958: N/A
TAGS: EINV EFIN ECON PINR TW
SUBJECT: Taiwan's Minister of Foreign Affairs Tries to
Bolster Ties to Chad and Burkina Faso

1. Summary: Taiwan's Minister of Foreign Affairs
(MOFA) (Mark) Chen Tan-sun led a delegation to Chad and
Burkina Faso July 8-14 to reinforce Taiwan's interest
in further developing diplomatic relations with Africa.
Taiwanese businessmen have established small operations
in the two African countries, but MOFA believes
Taiwan's government lacks the financial resources
needed to encourage Taiwan businesses to invest in
Africa. Paralleling PRC's interests in Chad's oil
sector, Chen expressed Taiwan's interest in investing
in Chad's oil industry. End Summary.

MOFA Minister First Visits to Chad & Burkina Faso
--------------------------------------------- ----

2. Mark Chen Tan-sun (Tang-shan), Taiwan's Minister of
Foreign Affairs, visited the African countries of Chad
and Burkina Faso in July. His visit marked the first
visit of a Republic of China (ROC) Minister of Foreign
Affairs to Africa since then Minister Eugene Chien
visited these two ROC allies in December 2002. The
deputation included Chen, two MOFA Director General,
three legislators, and nineteen reporters. The
delegation was dispatched in part to reinforce
diplomatic ties with Chad and Burkina Faso, a
reflection of increasing Taiwan government concern
about what it sees as the PRC's growing influence in
Africa. The Taiwan government fears China's increased
activities in Africa will sway Taiwan's few diplomatic
partners in the region toward the PRC. In addition to
his efforts to shore up Taiwan's diplomatic
relationships, Chen also used his visit to encourage
closer business ties with Taiwan.

Factors Hinder Taiwanese Venture Into Africa
--------------------------------------------

3. Several factors hinder Taiwanese business ventures
in Africa. These difficulties include language barriers
(few Taiwanese businessmen speak French), expensive
energy prices, and simple distance. MOFA's West Africa
Section Chief, Alexandre Chang, noted that successful
Taiwanese investments in West Africa are primarily
joint ventures with third country partners. He
acknowledged that Taiwan is unable to compete with
China in the amount of government support available to
businesses willing to invest in Africa. Chen did
discuss oil investment with Chadian officials on behalf
of China Petroleum Corp. (CPC), said Cheng, but neither
side made commitments.

Taiwan Tax and Investment Agreements With Africa
--------------------------------------------- ---

4. Taiwan has signed investment agreements with
Nigeria, Liberia, Malawi, Senegal, and Burkina Faso to
give both sides most-favored nation treatment; and tax
agreements with Gambia, Senegal, and Swaziland to avoid
double taxation. According to an Industrial
Development and Investment Center (IDIC) official,
Taiwan does not offer special investment incentives
beyond these agreements to encourage investment in
Africa and Taiwanese firms rely on their own
negotiations in order to receive preferential terms
from African countries. The "Africa Growth and
Opportunity Act (AGOA)" and GSP on textiles have
encouraged Taiwan's textile firms to invest in the
region. Taiwan is a major foreign investor in South
Africa, with about 280 Taiwanese industrial
manufacturing and 320 service firms investing USD 1.5
billion in the market. Taiwan's most notable
investments in Malawi are two garment factories that
export to South Africa and the US and have total
investments of USD 25 million. Swaziland is home to 29
Taiwan investments, which amount to USD 43.2 million.

Negligible trade with Africa
----------------------------

5. Trade with Africa is an insignificant 1.2 percent
of Taiwan's total trade. Some percentages of total
Taiwan trade with African countries: 0.494% with South
Africa, 0.237% with Congo, 0.220% with Angola, 0.174%
with Equatorial Guinea, 0.109% with Nigeria, and only
0.005% with Burkina Faso. Major Taiwan imports from
Africa include mineral raw materials and crude oil;
Taiwan exports to these African nations include
electronics, synthetic fiber, and machinery equipment.
Taiwan's major exports to Burkina Faso and Chad are
electrical fans and computer peripherals; and imports
from these two nations are mainly un-carded cotton.

(This report was prepared by AIT/Kaohsiung Intern Cindy
Chou.)
PAAL

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