US embassy cable - 04TAIPEI3968

UNCLAS SECTION 01 OF 02 TAIPEI 003968 
 
SIPDIS 
 
SENSITIVE 
 
DEPARTMENT FOR EAP/TC AND EB/TRA 
 
DEPARTMENT PASS AIT/W 
 
E.O. 12938: N/A 
TAGS: ECON, PREL, EAIR, PGOV, OVIP, TW 
SUBJECT: DOT A/S Bhatia Attends AAPA Meeting, Meets with 
Taiwan Officials 
 
REF: A) AIT TAIPEI 2827, B) AIT TAIPEI 3734 
 
Summary 
------- 
 
1. (SBU) Department of Transportation (DOT) Assistant 
Secretary for Aviation and International Affairs Karan 
 
SIPDIS 
Bhatia traveled to Taiwan November 25 and 26 to speak at the 
Association of Asia Pacific Airlines (AAPA) 48th Annual 
Assembly of Presidents Meeting.  A/S Bhatia also met with 
Taiwan civil aviation officials and expressed U.S. interest 
in adding seventh freedom rights for all-cargo flights to 
the U.S.-Taiwan open skies agreement.  Officials responded 
positively but indicated that they would have to consult 
further within the Taiwan government.  AIT/T will continue 
to explore the possibility of adding "cargo sevenths" to the 
open skies agreement.  However, prospects for adding it in 
the near future are mixed.  End summary. 
 
AAPA 48th Annual Assembly of Presidents 
--------------------------------------- 
 
2. (U) A/S Bhatia traveled to Taiwan November 25 and 26 to 
participate in the AAPA 48th Annual Assembly of Presidents 
Meeting.  A/S Bhatia delivered remarks to the assembly on 
the direction of U.S. aviation policy and changes in the 
U.S. airline industry.  Other speakers at the event included 
Peter Harbison, chief executive of the Centre for Asia 
Pacific Aviation, who spoke on low cost airlines and their 
impact on the Asia Pacific aviation market; Nigel Harvey, 
division director of Macquarie Bank, who addressed rising 
fuel prices; Mark Hue-Williams, regional director of Willis 
Aerospace, who spoke on the aviation insurance market; and 
Nick Brown, senior vice president of AIG Aviation, who gave 
remarks on war and terrorism insurance.  Note: Texts or 
summaries of all of the remarks are available at the AAPA 
website at www.aapairlines.org.  End note. 
 
Civil Aeronautics Administration DG Chang 
----------------------------------------- 
 
3. (U) While in Taiwan, A/S Bhatia paid a courtesy call on 
Taiwan Civil Aeronautics Administration (CAA) Director 
General Billy Chang.  A/S Bhatia was accompanied by FAA Asia 
Pacific Region Director Elizabeth Erickson and AIT/T 
econoff.  A/S Bhatia noted the strong relationship between 
Taiwan and the U.S. on aviation issues.  He pointed out the 
benefits to both sides offered by the bilateral "open skies" 
agreement.  He praised Taiwan's recent progress in improving 
air safety and expressed U.S. willingness to continue to 
work with Taiwan in this area.  A/S Bhatia also expressed 
U.S. appreciation for the strong relationship between Boeing 
and Taiwan carriers China Airlines and Eva Airways. 
 
4. (U) A/S Bhatia told Chang that the U.S. is interested in 
expanding the bilateral open-skies agreement to include 
seventh freedom rights for all-cargo flights.  "Cargo 
sevenths" would allow U.S. airlines to fly cargo routes 
between Taiwan and a third location without serving the 
United States.  So, for example, a U.S. carrier could 
conduct a cargo flight between Taipei and Singapore without 
having the flight serve any point in the United States.  A/S 
Bhatia pointed out that China Airlines and Eva Air are both 
very competitive in the international air cargo market and 
would stand to benefit if the U.S. granted Taiwan "cargo 
sevenths."  Chang raised no objections to adding "cargo 
sevenths" to the bilateral agreement but said that the 
Ministry of Transportation and Communications (MOTC) would 
make the final decision on such a proposal. 
 
5. (U) Chang explained Taiwan's interest in joining the 
International Civil Aviation Organization (ICAO) as a full 
member or being allowed to participate in ICAO events as an 
observer.  He said that participation in ICAO would improve 
Taiwan's communication with other civil aviation authorities 
in the region and would allow Taiwan to take advantage of 
ICAO training programs.  A/S Bhatia noted the difficulties 
imposed by Taiwan's current status and offered to help 
facilitate Taiwan's access to ICAO information. 
 
Ministry of Transportation and Communications VM Tsai 
--------------------------------------------- -------- 
 
6. (U) In a brief meeting with MOTC Vice Minister Tsai Duei, 
A/S Bhatia again expressed U.S. interest in expanding the 
U.S.-Taiwan open skies to include "cargo sevenths."  Tsai 
agreed that "cargo sevenths" could be beneficial but said 
that he would like to discuss this issue with CAA.  A/S 
Bhatia also raised U.S. concerns about auto traffic safety. 
He emphasized that reducing the number of deaths caused by 
auto accidents is one of Secretary Mineta's highest 
priorities.  He pointed out that the U.S. and Taiwan already 
had a positive dialogue on this issue and looked forward to 
continued cooperation. 
 
Comment - Prospects for Cargo Sevenths 
-------------------------------------- 
 
7. (SBU) Chang and Tsai's receptive but non-committal 
reactions on the proposal to add "cargo sevenths" to the 
bilateral are consistent with Taiwan's response to AIT's 
efforts in 2003 to advance the same proposal.  Some agencies 
and individuals in the Taiwan government support further 
liberalization of the air cargo market with "cargo 
sevenths."  However, interest in protecting domestic 
carriers strong advantage in the air cargo industry has thus 
far prevented the Taiwan government from reaching a 
consensus to agree to such a proposal.  Taiwan's carriers 
rely heavily on cargo shipments to make them profitable and 
support continued restrictions of international 
participation in Taiwan's cargo routes.  Taiwan's recently 
concluded bilateral air services agreement with South Korea 
excludes cargo fifth freedom rights (ref A).  Taiwan and 
South Korea signed the new agreement on September 1 after a 
dozen years without direct air links.  AIT/T will continue 
to urge Taiwan to add "cargo sevenths" to our bilateral 
aviation agreement.  However, at this time, the Taiwan 
government is not likely to grant "cargo sevenths."  End 
comment. 
 
8. (U) A/S Bhatia has cleared on this cable. 
 
KEEGAN