US embassy cable - 05TAIPEI954

C O N F I D E N T I A L SECTION 01 OF 02 TAIPEI 000954 
 
SIPDIS 
 
STATE FOR EAP/RSP/TC, STATE PASS AIT/W AND USTR, USTR FOR 
KI AND FREEMAN, COMMERCE FOR 4431/ITA/MAC/AP/OPB/TAIWAN 
MBMORGAN 
 
E.O. 12958: DECL: 03/04/2015 
TAGS: ECON, ETRD, TW 
SUBJECT: UNEASY RIDER: GETTING HARLEY-DAVIDSON INTO TAIWAN 
 
Classified By: AIT Director Douglas Paal, Reason 1.4 d 
 
1.  (SBU) Summary: A representative from Harley-Davidson met 
with AIT March 1 to discuss how best to overcome a Taiwan 
regulation requiring heat shields on motorcycle exhaust 
systems.  Harley-Davidson believes complying with this 
regulation will negatively impact the look, sound and feel of 
their motorcycles and views this as the last remaining 
obstacle to their entry into the Taiwan market. 
Harley-Davidson has not raised this concern with the Taiwan 
government, has no presence in Taiwan, has not engaged with 
local industry, and is not listening to the advice of their 
lawyers in Taiwan.  Instead, Harley would like AIT to make 
the case to the Taiwan government that Harley-Davidson should 
be exempted from these requirements.  AIT officials expressed 
continued support for Harley-Davidson's efforts to enter the 
Taiwan market but suggested several approaches that are 
likely to prove more successful than Harley's current 
strategy.  End Summary. 
 
2.  (SBU) Harley-Davidson's Vice President for Government 
Affairs, Tim Hoelter, stopped by the Commercial Section March 
1 on his way to attend an international motorcycle 
enthusiasts meeting in east Taiwan.  Although occasionally 
seen on the streets, Harley-Davidson currently has no 
authorized dealer in Taiwan due to a Ministry of 
Transportation and Communication (MOTC) regulation that 
requires all two-wheeled vehicles to use heat shields to 
cover the exhaust system.  Hoelter's message to assembled AIT 
Commercial and Econ staff was that complying with the MOTC 
requirement would ruin the look, sound and feel of 
Harley-Davidson motorcycles, could have safety implications, 
and that Taiwan's requirement was a unique standard that 
existed nowhere else in the world.  He asked AIT to make 
these points to appropriate officials in order to secure an 
exemption from the regulations for Harley-Davidson products. 
Hoelter said he himself had no plans to meet either with 
Harley's local legal counsel or government officials while in 
Taiwan. 
 
3.  (SBU) AIT staff expressed appreciation for Mr. Hoelter's 
visit and desire to help Harley-Davidson bring its products 
into the Taiwan market, as evidenced by our concerted efforts 
to help Harley-Davidson successfully overcome emissions and 
fuel economy requirements.  Although the heat shield 
requirement is preventing Harley-Davidson from entering the 
market, other large displacement foreign motorcycle 
manufacturers are already in Taiwan and have found ways to 
comply with the letter of the law.  The few rider 
associations in Taiwan are weak and have not been mobilized 
to pressure the government this issue.  Without pressure from 
industry groups or constituents, and without a regular 
Harley-Davidson presence on the ground in Taiwan, government 
officials outside of MOTC have told AIT there is little 
incentive to make an exception to existing regulations solely 
for the benefit of Harley-Davidson. 
 
4.  (SBU) Hoelter clearly believed that Harley-Davidson had a 
strong case that was not being pursued vigorously enough by 
AIT and that a resolution of the issue was being held back 
only by a lack of USG involvement.  However, Harley-Davidson 
has not been actively pursuing a resolution to the heat 
shield issue.  Harley-Davidson's Taiwan representative, the 
law firm Lee and Li, has not approached MOTC to discuss an 
exemption from the heat shield requirements because they are 
concerned that doing so without a stronger case may 
perversely lead to more stringent regulations. 
Harley-Davidson technical staff, during their infrequent 
visits to Taiwan have also never approached the government to 
discuss this issue.  Harley-Davidson is unaware of rider 
groups active in Taiwan and has not made efforts to discuss 
the heat shield requirement with other motorcycle dealers in 
Taiwan. 
 
5.  (SBU) AIT staff advised Hoelter that an effective 
resolution of this issue for Harley-Davidson would be best 
served by taking several steps, including the establishment 
of a dedicated presence in Taiwan, preferably through the 
naming of an authorized dealer willing to work for a 
resolution of this issue.  AIT also suggested a concerted 
effort by Harley-Davidson to contact and enlist the support 
of local rider groups or other interested parties for changes 
in the regulations, coordination with representatives of 
other large engine motorcycle manufacturers active in Taiwan, 
establishing direct contact with decision-makers in the 
Taiwan government, and the development of a strategy that 
acknowledges the Taiwan government's health and safety 
concerns while providing a reasonable means to allow 
Harley-Davidson to come into the market without having to 
make significant modifications to their motorcycles.  AIT 
stands ready to facilitate and assist Harley-Davidson's 
efforts to implement a sound strategy to secure a resolution 
that will allow their products to enter the market. 
 
6.  (C) Comment: AIT has already helped Harley-Davidson 
overcome Taiwan regulations on emissions and fuel economy 
that could have potentially proven barriers to entry into the 
Taiwan market.  Our commitment to seeing Harley-Davidson 
products in Taiwan remains strong.  The Taiwan regulation 
requiring heat shields on all motorcycle exhaust systems is 
clearly aimed at the ubiquitous small scooters that dominate 
Taiwan's roads and sidewalks, not at the large motorcycles 
that are the province of weekend pleasure riders.  Other 
large motorcycle dealers circumvent the intent of the law by 
installing temporary heat shields that are removed soon after 
inspection.  Harley-Davidson understandably does not want to 
play that game. 
 
7.  (C)  Comment continued: Hoelter said AIT had not fully 
supported Harley-Davidson's efforts to resolve the heat 
shield problem.  In fact, Harley-Davidson's efforts to find a 
solution have been non-existent.  Harley-Davidson has no 
presence in Taiwan and has made no efforts to discuss this 
issue with government officials, local interest groups, or 
the local industry.  Hoelter told AIT he has been trying to 
get Harley products into Taiwan for ten years, but has made 
just three visits to the island.  He was unaware if there is 
a local Harley enthusiast organization and had no plans to 
meet with either relevant Taiwan government officials or 
Harley's own local legal counsel while in Taiwan.  AIT 
believes it is unlikely that Taiwan government officials will 
be sympathetic to a request by AIT on behalf of 
Harley-Davidson to change or exempt certain products from 
safety regulations on account of the negative impact on 
Harley-Davidson's look and feel.  Instead, AIT would welcome 
and happily assist in the development and execution of a 
strategy that supports Harley-Davidson as they mobilize local 
interests and approach the government with a proposal that 
acknowledges the responsibility of the government to protect 
public safety and regional norms, while minimizing any 
modifications to Harley-Davidson's iconic design.  End 
Comment. 
PAAL