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Cablegate: Taiwan Tifa Follow-Up: Progress and High Level

VZCZCXYZ0000
RR RUEHWEB

DE RUEHIN #2962/01 2370904
ZNR UUUUU ZZH
R 250904Z AUG 06
FM AIT TAIPEI
TO RUEHC/SECSTATE WASHDC 1836
INFO RUEHBJ/AMEMBASSY BEIJING 5588
RUEHUL/AMEMBASSY SEOUL 8049
RUEHKO/AMEMBASSY TOKYO 7974
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEHC/DEPT OF AGRICULTURE WASHDC
RUEHGV/USMISSION GENEVA 1761

UNCLAS AIT TAIPEI 002962

SIPDIS

SIPDIS

STATE PASS USTR
STATE FOR EAP/TC,
USTR FOR BOLLYKY AND ALTBACH AND BAE,
USDOC FOR 4431/ITA/MAC/AP/OPB/TAIWAN/JDUTTON
USDA/FAS FOR SHEIKH/MIRELES

E.O. 12958: N/A
TAGS: EAGR ECON EIND EINT ETRD KTEX TW
SUBJECT: TAIWAN TIFA FOLLOW-UP: PROGRESS AND HIGH LEVEL
INTEREST

REF: A. A) TAIPEI 2947
B. B) TAIPEI 2923

Summary
-------
1. Taiwan rolled out the red carpet for Deputy Assistant
U.S. Trade Representative Eric Altbach and the U.S. trade
delegation visit to Taipei August 17-21 to follow-up the May
TIFA talks. Taiwan was eager to reaffirm its commitment to
the TIFA process and report on actions taken since the May
TIFA talks as well as reiterate its strong interest in
launching talks on a Free Trade Agreement (reported in ref
b). On the IPR front, the Ministry of Education has started
new initiatives to address U.S. concerns regarding on-campus
infringements. Executive agencies promised to press the
Legislative Yuan to pass bills to control P2P file sharing
and establish ISP responsibility, as well as other
legislation to establish a new IP court. The National
Communications Commission outlined an ambitious work plan to
review restrictions for foreign investment and market entry
in telecommunications and broadcasting. On a less positive
note, the Council on Agriculture sought to dilute the scope
of the Consultative Committee on Agriculture (CCA) with
respect to policy issues. Some progress was made on market
access for rice; USTR legal staff will review the
proposals. USDel presented Taiwan a copy of the U.S. -
Uruguay Investment Treaty to use as a model. Taiwan
announced it was imposing increased restrictions on trade
with North Korea and Iran. Altbach raised U.S. concerns on
some individual trade cases. Taiwan noted it is still
waiting for a U.S. response to the draft MOU on Textile
Transshipment. Pharmaceutical issues reported reftel A. End
Summary.

Introduction
------------
2. August 17-21, DAUSTR Eric Altbach led a U.S. trade
delegation to Taipei to review TIFA progress since the talks
in May. The delegation included:

--Eric Altbach, Deputy Assistant USTR, Office of China
Affairs;
--Timothy Wineland, Director, China and Taiwan Affairs, USTR;
--Thomas Bollyky, Director, Pharmaceutical Policy, USTR;
--Jeffrey Dutton, Director for Korea and Taiwan, Office of
the Pacific Basin, International Trade Administration, USDOC;
--Lori Smith, International Economist, Foreign Agriculture
Service, USDA; and
--Rick Ruzicka, Director, Trade and Commercial Programs,
AIT/W.


IPR - Looking for progress on campus, online, and in court
--------------------------------------------- -------------
3. The Taiwan Intellectual Property Office (TIPO) brought
together staff from several agencies to meet with the
delegation on IPR issues. DAUSTR highlighted the key areas
of concern - IPR violations on college campuses, P2P file
sharing, and the need to establish a strong IPR court with
specialized prosecutors.

4. Jack Lu, TIPO Deputy Director General, assured DAUSTR
that steps had already been taken following the TIFA talks
in May and that the IPR TIFA outcomes had been incorporated
into TIPO's formal work plan. He reported that Premier Su
Tseng-chang had also instructed all government agencies to

SIPDIS
continue efforts to counter IPR infringements.

5. The Ministry of Education, which in the past had been
criticized for unresponsiveness on IPR issues, has
established an office through which rights holders and
government agencies can bring their IPR concerns. To show
its resolve to curb on-campus copy shops, the Ministry of
Education had notified in writing all on-campus copy shops
that they would lose their leases if they were found
violating copyright laws. Further, the Ministry has set up
an office to monitor traffic on TANet, the island-wide
university computer network, to try to block online
copyright infringement. Altbach praised the Ministry for
these efforts and noted that follow-through and enforcement

was key. School has yet to start in Taiwan, but AIT will
monitor implementation.

6. Lu noted the LY will shortly return to session in
mid-September and review two draft bills that would regulate
P2P file sharing and establish ISP responsibility. Lu said
the executive agencies will push the LY to pass these
bills. In a separate meeting, recording industry
representatives told the delegation that they were currently
in negotiations with Taiwan's two P2P companies to reach a
legal settlement. They were hopeful that they would have
"good news" to report on these cases by the end of
September.

7. The delegation also raised concerns with Lu about draft
legislation establishing an IP court. Industry
representatives have raised two major concerns about the
bill as it stands: Although the IP court would have a
dedicated cadre of IP judges, there would be no dedicated
group of prosecutors to handle IP cases. Industry believes
that without trained, dedicated prosecutors, convictions and
meaningful penalties will be difficult to obtain. A second
concern is that under the current draft, the IP courts will
have jurisdiction only over civil, not criminal cases (which
includes copyright cases) in the first instance. This means
that these cases will still first go through the district
courts, which in the past have not aggressively dealt with
IPR violators.

8. Altbach also raised these concerns separately in his
meetings with Minster Chen and Director General Huang. He
stressed that establishing a strong, well-functioning IP
Court was more important than establishing one quickly.

9. To further dialogue on IPR issues, DAUSTR delivered a
letter from Rachel Bae of USTR inviting TIPO to participate
in a DVC to review progress on IPR issues. The letter
suggested mid-September timing, but TIPO has informally
requested that the DVC be postponed until mid-October. With
universities and the Legislative Yuan still on break, this
will allow more time to see how the new programs are going
and report on legislative developments. In addition, TIPO
Deputy Jack Lu will depart for his new job on September 1
and thus not be available for the discussion.

National Communications Commission - Unconstitutional and
Ambitious
--------------------------------------------- ----------------
-------
10. DAUSTR and delegation called on Chairman Su Yeong-chin
of the newly established National Communications Commission
(NCC). The NCC was created in February to serve as an
independent body (akin to our FCC) to regulate broadcasting
and telecommunications. Establishment of an independent
regulatory body fulfills a longstanding commitment to the
U.S. The Council of Grand Justices, however, has ruled that
the manner of selecting NCC commissioners is
unconstitutional. In order to give the government time to
establish a new selection method, the Council's ruling
allows the NCC to maintain its current form and NCC
decisions to be legally enforceable through December 2008.

11. Chairman Su assured Altbach that the government would
solve the constitutional question and that the NCC had
already developed an ambitious work plan. Su stated that
the NCC wanted to lower capital and build out requirements
for new market entrants to the telecom market. He also said
that the Commission would review restrictions on tiered
pricing and channel lineups for the cable television
industry. The commissioners, Su assured Altbach, want to
liberalize foreign investment regulations.

12. The NCC wants more interactions with the U.S. FCC. Su
stated that FCC officials were being invited to a
communications regulatory roundtable November 20-21 and
asked for additional exchanges.

Agriculture - Taking the Meat out of our Consultations
--------------------------------------------- ---------
13. In the only sour note of the visit, The Council of

Agriculture argued that the TIFA-mandated Consultative
Committee on Agriculture (CCA) not be given the authority to
make policy recommendations and discuss market access
issues. Altbach countered that these were precisely our
goals in setting up the CCA. He urged the COA to reconsider
and solicited support from MOEA Minister Chen, noting that
it would be difficult to attract high-level USG interest in
a process that does neither of those things. He also noted
that any recommendations would need to be agreed to by both
sides. Negotiations regarding Country Specific Quota (CSQ)
for Taiwan's public sector rice imports made some progress;
the delegation is carrying back the proposals for review by
USTR legal staff. Details reported septel.

Bureau of Foreign Trade - Investment, Textiles, Export
Controls
--------------------------------------------- ----------------
------
14. On August 21 the delegation met Franco Huang
(Chih-peng), Director General of the Bureau of Foreign
Trade. Altbach passed a letter from DUSTR Bhatia addressed
to Minister for Economic Affairs Chen with a copy of the
U.S.-Uruguay Investment Treaty. This, he stated, could
serve as a model for bilateral investment agreement talks
between TECRO and AIT.

15. Huang raised the issue of the Memorandum of
Understanding for Textile Cooperation. He noted that BOFT
had reviewed and forwarded a draft MOU on July 21 for
response. Altbach replied the MOU was important and that
the U.S. side was currently finalizing its response and
would reply soon.

16. Huang announced that Taiwan had issued a notice that
same day (August 21) announcing increased controls on trade
with North Korea and Iran. He expected the controls would
go into effect around September 15 following the public
comment period.

Raid, Customs, and Chiropractors
--------------------------------
17. Altbach raised two trade cases with Huang. He noted
that Taiwan's restrictions on cross-strait trade and
investment were hampering Taiwan from integrating fully in
the regional economy. It also affected the business
operations of U.S. firms with a presence in Taiwan. SC
Johnson, for example was unable to import one of its
products - Raid - in aerosol form from China, where it has
rationalized production to provide product for the entire
region. In reply, Huang outlined the petition and review
process that companies can use to lift restrictions on
certain mainland imports. He stressed that the process
involved several agencies and that the BOFT was only one
voice. He stated that due to "volatile relations" between
China and Taiwan, it has gotten harder to remove these
restrictions. He also noted that if the restriction was
removed for Raid, it would be removed for all products in
that particular category. The Department of Health,
particularly, argues that many Mainland products are unsafe
and/or poor quality. DAUSTR replied that quality and health
concerns did not seem to be the issue because Taiwan did not
restrict similar imports from a variety of other Asian
countries at a similar stage of development to China's.
Huang assured Altbach that he would once again review the
case.

18. Then DAUSTR raised the long-standing Tyco customs
classifications case which had been raised in July with
Minister Chen in Washington. Altbach suggested that the
Ministry could play some role in resolving the case. He
noted that World Customs Organization had classified Tyco's
thermistors as tariff-free. Huang noted, however, that the
case was now in the courts and that it was difficult for
BOFT to play a role. Altbach replied that Tyco continues to
pursue some kind of remedy and that the USG will remain
engaged in the matter.

19. Responding to concerns by Amcham, Altbach also urged
Taiwan to reexamine its treatment of US-licensed
chiropractors. After operating informally in Taiwan for

many years outside of Taiwan's established framework of
health care regulation, U.S.-licensed chiropractors have
faced a crackdown. The Department of Health was requiring
providers of chiropractic services to obtain local licenses
as a "Western" medical doctor, a Chinese medical doctor, or
physiotherapist. The DOH ignored U.S. certifications and
training which were directly relevant to the provision of
those services. He asked that the BOFT look into the
matter.

Minister of Economic Affairs Steven Chen Reaffirms Support
for TIFA
--------------------------------------------- ----------------
------
20. To wrap up the visit, DAUSTR called on Minister of
Economic Affairs Steve Chen (Ruey-long). Comments on
biotech rice are reported septel and interest in a Free
Trade Agreement are reported ref b. The Minister expressed
his strong support for the TIFA process and stated that he
would continue to lobby other ministries to participate
actively in the process. In particular he would try to
"encourage" COA on the scope of the CCA and noted that Vice
Premier also took an active interest in the TIFA process.

Comment
-------
21. DAUSTR Altbach received a clear and consistent message
that Taiwan is committed to moving forward on economic and
trade matters and in the TIFA process in particular.
Clearly this is part of the effort to move towards eventual
FTA negotiations, but is also a real opportunity to make
progress in several areas. End Comment.
YOUNG

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