US embassy cable - 05TAIPEI280

C O N F I D E N T I A L SECTION 01 OF 02 TAIPEI 000280 
 
SIPDIS 
 
STATE PASS AIT/W 
 
E.O. 12958: DECL: 01/24/2015 
TAGS: PREL, ECON, CH, TW, Cross Strait Politics, Cross Strait Economics 
SUBJECT:  TAIWAN CONSIDERS NEXT STEPS AFTER CHINESE NEW 
YEAR CHARTER FLIGHTS 
 
REF: TAIPEI 00130 
 
Classified By: AIT Director Douglas H. Paal, Reason: 1.4 (B/D) 
 
1.  (C) Summary.  With the Taiwan public,s largely 
enthusiastic reception of the January 15 Chinese New Year 
cross-Strait charter flight agreement, ruling Democratic 
Progressive Party (DPP) and opposition Kuomintang (KMT) have 
each sought to claim credit for the &breakthrough8 and 
belittle the other,s role.  Public and policy attention 
almost immediately focused on next steps, including proposals 
for phased-in regular cross-Strait air service.  The Chen 
administration is moving to maintain close control of the 
cross-Strait process, and plans to resurrect its proposal for 
cargo flights, to which Beijing did not respond last year. 
End Summary. 
 
Vying for Credit 
---------------- 
 
2.  (C) Since the January 15 announcement (reftel), both DPP 
and KMT leaders have been publicly claiming credit for the 
cross-Strait charter flight agreement.  KMT leaders argue the 
KMT was instrumental in pushing the Taiwan government to 
initiate negotiations, then to make a last-minute concession 
enabling the agreement.  John Chang (Chang Hsiao-yen) told 
AIT that the initial December 28 announcement of the KMT 
Beijing visit spurred the DPP to hurriedly arrange the first 
Macao meeting on June 7, and the January 10 KMT visit to 
Beijing pushed the DPP to compromise on its insistence that 
MAC officials be members of the Taiwan negotiating team. 
This compromise, he said, caught Beijing by surprise -- TAO 
Chairperson Chen Yunlin had told Chang when they first met in 
Beijing on the morning of January 10, "Hsiao-yen, tensions 
are so high that cross-Strait flights will not be possible 
this year." 
 
3.  (C) Taiwan government officials, on the other hand, 
continue to dismiss the KMT trip as inconsequential.  Both 
NSC Senior Advisor for cross-Strait issues Chen Chung-hsin 
and Mainland Affairs Council (MAC) Chair Joseph Wu told AIT 
that the KMT had &absolutely nothing8 to do with either the 
fact of the Macao negotiations or the final agreement.  MAC 
Vice Chair Liu Te-hsun told AIT January 20, that the charter 
flight initiative was a product of a series of proposals 
President Chen made in 2004 and, more specifically, his 
personal pledge on charter flights to a meeting of 
China-based Taiwanese business people during an Autumn 
Festival dinner, September 28.  In November, Liu continued, 
President Chen pledged to push for cross-Strait improvements 
following the December 11 legislative election and that, he 
said, is just what the President did.  Liu stated that MAC 
and the Ministry of Transportation and Communication had been 
working quietly toward cross-Strait charter flights but did 
not go public until the KMT legislators visited Beijing. 
 
Staving Off Criticism 
--------------------- 
 
4.  (C) DPP leaders have played down the notion that Taiwan 
made any concessions in the charter flight negotiations in 
order, explained NSC's Chen, to obviate criticism of the 
agreement from pro-independence elements, particularly the 
Taiwan Solidarity Union (TSU).  MAC's Wu and Liu separately 
insisted to AIT that Taiwan had held firm while the Mainland 
acquiesced to the 2002 &Hong Kong model8 (negotiations for 
a Hong Kong-Taiwan air service agreement by delegations 
nominally headed by airline industry officials, but with all 
negotiations done by government officials).  Chu Li-shi, Vice 
President of government-owned China Television Station (CTS) 
described the negotiations to AIT as Beijing caving in to 
Taiwan,s negotiating demands.  When AIT pointed out to Chu 
that both sides had compromised on the critical issue of 
delegation composition, Chu reluctantly acknowledged "there 
may have been some changes."  Other Taiwan officials concede 
that Taipei did abandon many of its original conditions in 
order to quickly conclude a deal. 
 
5.  (C) Cross-Strait negotiations remain a highly contentious 
political issue.  Parents joined Pan-Blue legislators in 
criticizing the Taiwan government decision to exclude Taiwan 
students studying in China from the charter flight agreement. 
 MAC's Liu told AIT the reason for this was that student 
holidays did not coincide with the schedules of Taiwan 
business people.  Inclusion of students, moreover, would have 
opened up pressure for  charter flights from other groups, 
including the problematic area of tourism (see para 9 below). 
 With President Chen seeking to fulfill his pledge to create 
a "Peace and Development Committee," KMT LY Chair Wang 
Jin-pyng pushing to establish an LY "Cross-Strait Affairs 
Reactive Panel," and the People,s First Party (PFP) levering 
its critical minority of 34 legislators in support of its 
proposed "Cross-Strait Peace Committee," all parties are 
seeking a piece of the cross-Strait action. 
 
Next Steps 
---------- 
6.  (C) The question of "next steps" is a daily discussion 
topic among government and political leaders and on Taiwan's 
plethora of broadcast talk shows, with listeners daily 
calling in from across the island offering suggestions for 
next steps.  John Chang, long involved with cross-Strait 
issues, told AIT that two of the "three links" -- post and 
commerce -- have already been effectively implemented, and 
the impending charter flights will bring the third link of 
transportation on the road to realization. 
 
7.  (C) On January 15, MAC Chair Joseph Wu told a press 
conference he would like to see the New Year charter flight 
model expanded to &other holidays.8  When AIT asked MAC 
Vice Chair Liu whether MAC intended to propose this to 
Mainland China, however, he responded that there are really 
only a few holidays in common on both sides of the Strait, 
all one-day events not conducive to charter flights.  He 
noted that the suggestion of one KMT legislator that Wu,s 
holiday idea should be extended to the &weekly holidays8 of 
Saturday and Sunday was not practical. 
 
8.  (C) NSC,s Chen Chung-hsin, who was at least in part 
responsible for the Taiwan decision not to insist on the 
&Hong Kong model,8 called AIT a second time last week to 
emphasize that his prediction that Beijing would accept 
Taiwan,s delegation counter-proposal had proven true.  He 
also reiterated his earlier statement that President Chen had 
already approved a graduated three-stage negotiation process: 
 first charter flights, second &Hong Kong model8 expanded 
negotiations (topic undecided), and third implementation of 
the &three links.8 
 
9. (C) MAC Vice Chair Liu told AIT that MAC is now focusing 
on charter, or even regular, cargo flights as the next step 
forward in cross-Strait exchange.  The Taiwan business 
community has been pushing for direct cargo flights to reduce 
shipping costs and time between Taiwan and China.  Taiwan, he 
noted, had proposed this to Beijing last year but had 
received no response.  In response to AIT's query, Liu 
explained that MAC was not interested in moving toward 
regularized passenger service to promote tourism, in part 
because of the pattern of tourists from Mainland China 
disappearing in Taiwan in recent years. 
 
Comment 
------- 
 
10.  (C) While the KMT January 10 visit to Beijing may have 
put pressure on the Chen government to expedite charter 
flight negotiations, the government was already working its 
own line, a product of President Chen,s own commitments last 
year reinforced by his and his party,s setback in the 
December 11 elections.  The competition for credit for the 
January 15 charter flight agreement indicates that both sides 
see political advantage in meeting popular demands for 
cross-Strait flights.  KMT legislator John Chang told AIT 
that the December legislative elections had shown that many 
Taiwan voters dislike the kind of confrontational rhetoric 
they saw in the LY campaign and that improving cross-Strait 
relations has become one calculus in Taiwan politics. 
PAAL