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Cablegate: Senator Cantwell Sep 4-5 Visit to Beijing

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UNCLAS SECTION 01 OF 03 BEIJING 002653

SENSITIVE
SIPDIS

STATE FOR E, H, EAP, EAP/CM
STATE PASS USTR FOR TIM STRATFORD, ANN MAIN, JEAN GRIER
DOC FOR IRA KASOFF, NICOLE MELCHER, MAC
TREASURY FOR OASIA/DOHNER/WINSHIP
GENEVA PASS USTR
NSC FOR LOI

E.O. 12958: N/A
TAGS: ETRD EFIN ECON PREL WTRO CH
SUBJECT: SENATOR CANTWELL SEP 4-5 VISIT TO BEIJING

SENSITIVE BUT UNCLASSIFIED - PLEASE HANDLE ACCORDINGLY.

1. (SBU) Summary. Senator Cantwell (D-WA) visited Beijing
September 4-5, 2009, meeting with State Council Vice Premier
Wang Qishan and NDRC Vice Chairman Xie Zhenhua. The Senator's
key message to policy makers here was that although the U.S. and
China together created 40 percent of the world's greenhouse gas
emissions, putting a price on that emitted carbon would create
an enormous market opportunity for both the U.S. and Chinese
economies. Cantwell also met with U.S. industry representatives
to discuss intellectual property rights. End Summary.

State Council Vice Premier Wang Qishan
--------------------------------------
2. (SBU) In her September 4 meeting with State Council Vice
Premier Wang Qishan, Senator Cantwell expressed hope that U.S.-
China relations would maintain the positive momentum begun at
the inaugural meeting of the Strategic and Economic Dialogue
(S&ED). Cantwell noted that though the U.S. and China together
created 40 percent of the world's greenhouse gas emissions,
addressing this challenge offers important market opportunities
for U.S. and Chinese firms. Cantwell urged China to reduce
tariffs on green products and services, saying doing so would
set a powerful example for other nations. Cantwell asked VP
Wang how best to move forward under the memorandum of
understanding (MOU) initialed at the inaugural meeting of the
S&ED. Wang responded by calling for a "positive, cooperative,
and comprehensive" relationship, noting that her follow-on
meeting National Development and Reform Commission (NDRC) Vice
Chairman Xie Zhenhua will allow greater discussion of
cooperation on energy and environment matters.

3. (SBU) Wang stated that current development models can no
longer be sustained environmentally by the earth. He noted
India and China's combined population alone would exceed 2.5
billion by 2025, a significant percentage of the globe, and
argued that international aspirations for addressing climate
change expressed in the Kyoto Protocol and Bali Roundup cannot
be attained without U.S. agreement. Wang said that while
developing countries could not leapfrog the industrialization
phase to modernization, they must not repeat errors made under
Western industrialization. Chinese authorities thus have made
the economic development model a paramount consideration.

4. (SBU) Wang recounted the difficult decisions he took as mayor
of Beijing, specifically in the run up to the 2008 Olympic Games
when he ordered the closure of a chemical plant, employing 8,000
workers, as well as relocation outside Beijing of iron and steel
facilities. Because of such difficult political considerations,
Wang argued for "common but differentiated responsibilities" on
environmental issues consistent with a global framework.
Developed countries should take responsibility to fund and
transfer at low cost environmental technologies to help
developing countries, according to Wang. Developed countries,
he said, must pledge absolute reductions in emissions, while
developing countries should commit to the slowing of emission
output growth.

5. (SBU) Wang next raised previously delivered points regarding
the then-pending U.S. decision on whether to impose a trade
remedy under the WTO special safeguard mechanism against Chinese
exports of light vehicle tires. Wang underscored U.S.-China
cooperation to overcome the global economic downturn and the
pledge at the last G-20 not to implement protectionist measures
before the end of 2010. Wang reiterated that, in the four cases
brought under the Bush administration, the U.S. had refrained
from invoking safeguards. In this case, he said that the
Chinese tire exports present no structural conflict with U.S.-
produced tires, given their qualitative differences (Chinese
tires were replacement tires whereas U.S. tires were high-end).
Wang acknowledged U.S. President Obama was facing pressure from
labor unions, but feared invocation of safeguards could be
viewed as a negative barometer for the overall U.S.-China
economic relationship.

6. (SBU) Cantwell detailed her record on supporting measures in

BEIJING 00002653 002 OF 003


dealing U.S.-China economic matters, and queried Wang as to when
he thought the safeguards should be used given their adoption at
the WTO. Wang called safeguards a product of "Cold War"
mentality to be used as a "deterrent" whose usage would
constitute a "trade atomic bomb," especially negative given the
current economy. Wang predicted if safeguards are invoked in
this case, the precedent would be used by other industries and
countries, leading to a dangerous "trade war."

7. (SBU) Cantwell closed by arguing for greater access for U.S.
firms in China's markets, specifically container shipping/port
operations. Cantwell noted that as China's state-owned COSECO
shipping group had been granted rights to operate port terminals
in Long Beach, CA, similar access should be granted to U.S.
firms such as SSA Marine, which is striving to be the first U.S.
port operator in China. Wang pledged to consider the issue, but
noted disparity exists in certain industries for China such as
in the airline industry, where U.S. carriers far outcompete
Chinese carriers in passenger volume.

NDRC Vice Chairman Xie Zhenhua
------------------------------
8. (SBU) In her meeting with NDRC Vice Chairman Xie Zhenhua,
Senator Cantwell said the United States and China had made good
progress on strengthening efforts to combat global climate
change and promote green energy technologies, citing the recent
MOU initialed at the S&ED. She reiterated points on U.S.-
China's responsibility for 40 percent of the world's greenhouse
gas emissions and related market opportunities, particularly if
that carbon had a price, again urging China to reduce tariffs on
green products and services. While agreeing U.S.-China
cooperation on green energy had increased following the signing
of the Ten Year Framework and MOU, Xie urged faster
implementation of the agreements in order to show "concrete
results." He said that he would meet with Special Envoy for
Climate Change Todd Stern in Washington on September 17 to
formally sign the MOU and hoped the two sides could quickly
decide on projects and begin to move forward. Regarding trade
in clean energy products and services, Xie stressed that China
had an open attitude as long as the cooperation was mutually
beneficial.

9. (SBU) Xie pressed Cantwell on the prospects of the U.S.
Senate passing a clean energy bill before the end of the
year. While noting that the recent House clean energy bill was
more complex than needed, Cantwell expressed optimism that the
Senate would be successful in passing a more streamlined
bill. She said Congress was aware that failure to act could
result in the EPA taking unilateral action on limiting
greenhouse gas emissions, which would lead to a less predictable
outcome than a legislative solution. Cantwell told Xie that
conservative Senators would support a climate change bill if
there was strong support for the nuclear energy industry. Xie
urged speedy passage of a climate change bill, saying it would
send a positive signal ahead of the Copenhagen climate change
talks in December. He also agreed with Cantwell that U.S.
businesses were worried about unpredictability and that a price
on carbon was essential to create market incentives for industry
to pursue innovative solutions.

10. (SBU) Xie said China's policy of promoting greater energy
efficiency and moving to a low carbon economy was clear and
would not change. He said Cantwell would see this commitment
firsthand during her follow-on visit to Shanghai; he said the
2010 World Expo would be the first 100 percent carbon neutral
event of its kind. Noting that China's 12th Five-Year Plan
would include new "proactive" initiatives, Xie also indicated
that China is likely to issue a new climate change plan before
the Copenhagen meeting.

Meeting with U.S. Industry and Associations
-------------------------------------------
11. (SBU) Cantwell closed her day of meetings with
representatives from Microsoft, Cummins, AmCham, and the U.S.
China Business Council. Primarily discussing intellectual
property rights issues, Cantwell heard strong consensus IPR

BEIJING 00002653 003 OF 003


infringement remains a critical threat for U.S. industry in
China, and that U.S. innovation and intellectual property are
the cornerstone of U.S. strategic economic advantage in the face
of an ever-more-competitive, industrializing China. Cantwell
pledged to maintain vigilance and work with her Congressional
counterparts to defend these and other U.S. interests.

12. (U) Senator Cantwell's delegation did not have an
opportunity to clear this message.

HUNTSMAN

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