US embassy cable - 04TAIPEI3323

UNCLAS SECTION 01 OF 02 TAIPEI 003323 
 
SIPDIS 
 
DEPT PASS TO AIT/W 
 
DEPT FOR EAP/RSP/TC, EAP/EP, EB/TPP/BTA, EB/TPP/MTA 
 
 
E.O. 12958: N/A 
TAGS: ECON, PREL, ETRD, EINV, EWWT, CH, TW 
SUBJECT: CROSS-STRAIT ECONOMIC ROUNDUP - THIRD QUARTER 
2004 
 
REF: A) TAIPEI 2592, B) TAIPEI 84 
 
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SUMMARY 
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1.  During the third quarter of 2004, the PRC legalized 
tourism to Kinmen and Matsu for all Fujian residents. 
Taiwan legalized 81 product categories for import from the 
PRC.  However, most are agricultural goods that will still 
be restricted for lack of cross-Strait sanitary and 
inspection agreements.  Taiwan also decided to allow a fifth 
PRC media outlet to station reporters in Taiwan.  End 
Summary. 
 
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TRAVEL AND TRANSPORTATION 
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2.  PRC LIBERALIZES MINI-LINKS TOURISM: Fujian Deputy 
Governor Wang Mei-xiang told visiting Kinmen County 
Commissioner Lee Juh-feng and Taiwan Legislator Wu Cheng- 
dian on September 16 that Fujian would remove restrictions 
on the travel of Fujian residents to Kinmen and Matsu for 
tourism.  Taiwan had lifted its tourism ban on Fujian 
residents in 2001 in order to boost economic development for 
Kinmen and Matsu.  Taiwan's Mainland Affairs Council (MAC) 
in response announced on September 26 a few small measures 
to expand the mini-links.  Notably, MAC will allow Taiwan's 
colleges and universities to open Executive MBA programs in 
Kinmen and Matsu for employees of Taiwan firms in the PRC. 
 
3.  GREEN BUSINESSMAN DENIED VISA: Lin Wen-yuan, Chairman of 
Taiwan's state-owned China Steel, was denied an entry permit 
to visit the PRC.  Taiwan's local press speculated that 
Lin's close ties with President Chen Shui-bian were the 
cause.  Lin had visited China last November to inspect 
investments there.  Because Lin is also the Chairman of 
Taiwan Steel and Iron Industries Association, the move may 
have impeded consultations on the PRC's investigation of 
Taiwan's alleged iron and steel dumping.  In January 2004, 
China imposed anti-dumping duties of up to 55 percent on 
cold press steel plate from Taiwan, South Korea, Ukraine and 
Russia.  The PRC announced in May that it would reevaluate 
the anti-dumping duties.  Taiwan exported almost USD 1.2 
billion worth of iron and steel to the PRC during the first 
half of the year. 
 
4.  TAIWAN TIGHTENS CONTROL OF MINI-LINKS: Because 
authorities believe many unqualified travelers take 
advantage of mini-links travel available to Taiwan's small 
businesses with investment in the Mainland, the Bureau of 
Immigration and the Investment Commission tightened the 
review process for travelers.  Taiwan travelers must now 
show PRC business licenses and PRC approved investment plans 
before traveling.  Separately, two members of the Control 
Yuan, one Taiwan's five branches of government with 
oversight functions similar to an Inspector-General or the 
Government Accountability Office, visited Fujian via Kinmen 
and Matsu on August 23 to inspect the mini-links operation, 
investigating complaints of customs clearance and other 
travel inconveniences.  It was the first Control Yuan 
inspection of the mini-links. 
 
5.  LOW INTEREST IN TAICHUNG TRANSSHIPMENT: After more than 
two months of operation, only one vessel, a Yangming Marine 
Transport Corp. ship, had taken advantage of the new 
Taichung offshore transshipment center with a voyage 
directly to Shanghai, according to Taichung Harbor 
Administration.  Observers blame low interest on the 
Taiwan's government prohibition of Taichung-Fuzhou and 
Taichung-Xiamen routes. 
 
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TRADE AND INVESTMENT 
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6.  MORE IMPORT BANS LIFTED: On September 4, Taiwan's BOFT 
eliminated import bans on 81 PRC products.  Nine categories 
of manufactured goods such as portable outdoor gas grills 
were legalized.  The remaining 72 categories are 
agricultural or fishery products legalized to comply with 
WTO standards.  However, because there are no cross-strait 
sanitary and inspection agreements, these new categories of 
agricultural products are still unable to enter Taiwan's 
market.  Access for these categories is unlikely without 
cross-Strait negotiations. 
 
7.  PRC ANTI-DUMPING MOVE: The PRC's Ministry of Commerce 
announced on August 27 that it would impose an antidumping 
duty on yarn of nylon and textured yarn of nylon imported 
from Taiwan.  More than 13 Taiwan firms were affected. 
According to Taiwan Customs, the PRC is Taiwan's largest 
export market for these nylon products, accounting for over 
70 percent of exports.  The PRC had previously imposed 
antidumping taxes on caprolactam (CPL), a chemical used in 
the manufacture of synthetic fibers, including nylon. 
8.  NEW SERVICE SECTOR INVESTMENTS: Following the PRC's 
approval of its insurance joint venture in Shanghai, Cathay 
Life Insurance Co., Ltd., Taiwan's leading life insurance 
company, dispatched some 40 Taiwan professionals to Shanghai 
for marketing, training and logics.  It plans to expand its 
Shanghai site to employ over 60 Taiwanese employees.  On a 
separate note, the PRC approved on August 10 the 
establishment in Dongguan, Guangdong province, of the first 
Taiwan-owned hospital in the Mainland.  Taiwan investors in 
Dongguan will own 80 percent of the hospital, and Taiwan's 
Cheng Hsin Rehabilitation Medical Center will own the 
remaining 20 percent.  Construction is scheduled to begin in 
November. 
 
9.  PRC COURT ACCEPTS TAIWAN ARBITRATION RESULTS: On August 
19, the settlement of a dispute between two Taiwan investors 
regarding a property in Xiamen that had been mediated in 
Taiwan by the Chinese Arbitration Association, Taipei (CAA) 
was honored by a Xiamen court and implemented.  CAA says 
this marks the first time that the result of a cross-strait 
commercial dispute mediated by CAA has been accepted and 
implemented by a PRC court and indicates the protection of 
cross-strait commercial activities is improving. 
 
10.  TELECOM COMMERCIAL COOPERATION: Taiwan's Chunghwa 
Telecom and the PRC's China Telecom jointly announced cross- 
Strait private line services available to enterprises 
located in Suzhou, Taipei, Kaohsiung and Tainan.  The 
service may be expanded soon to other areas such as Beijing, 
Shanghai, Guangdong, Shenzhen, Xiamen and Dongguan. 
 
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EXCHANGES AND CONTACTS 
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11.  MAC APPROVES PRC NEWS SERVICE: On July 27, the MAC 
announced that it would approve a fifth mainland media, 
China News Agency (CNA), to station reporters in Taiwan on a 
trial basis.  CNA can post two reporters for two months, 
after which the MAC will make a final decision on whether 
the agency can stay. 
 
12.  IPR VISIT UNDERSCORES STEADY FLOW OF EXCHANGES: The 
pace of people-to-people exchanges across the Strait 
continued unabated during the quarter.  Notably, a 20-member 
PRC delegation made up of judges and officials of the Taiwan 
Affairs Office and Bureau of Trademarks traveled to Taiwan 
to meet with Taiwan's Intellectual Property Office to 
discuss trademark protection.  Liu You-mei, a member of the 
PRC's Chinese People's Political Consultative Conference 
also visited Taiwan to attend a railroad construction and 
technology conference.  Other highlights included Taiwan 
Strait Shipping Association Chairman Chen Ting-hui, Taiwan 
Electrical and Electronic Manufacturers Association Chairman 
Rock Hsu, and Taiwan's Petrochemical Industry Association 
Chairman Chiou Huai-hsin traveling separately to the 
Mainland.  In addition, numerous conferences and trade shows 
were held on each side with cross-Strait participation. 
Many focused on cross-Strait relations, but other Topics 
ranged from wireless local area networks to Chinese opera. 
 
PAAL