US embassy cable - 05TAIPEI2555

UNCLAS SECTION 01 OF 02 TAIPEI 002555 
 
SIPDIS 
 
SENSITIVE 
 
DEPT FOR EAP/TC, H-LMO Peter Su 
DEPT PLEASE PASS TO AIT/W 
 
E.O. 12958: N/A 
TAGS: OREP, PGOV, PINS, PREL, MASS, ETRD, EINV, CH, TW, Cross Strait Politics 
SUBJECT: President Chen Tells Congressman Mark Kennedy He 
Will Promote Special Military Budget 
 
1. (SBU) Congressman Mark Kennedy from Minnesota's Sixth 
District met with Taiwan President Chen Shui-bian June 5 
during a two-day trip to Taiwan.  Kennedy praised Taiwan 
opening its beef market to U.S. imports and progress on the 
protection of intellectual property.  He recommended 
relaxation of government regulations that restrict 
businesses, especially their cross-Strait activities. 
Congressman Kennedy also urged President Chen to ensure the 
passage of Taiwan's Special Defense Procurement Budget. 
President Chen reaffirmed his commitment to the Special 
Budget and pledged to use upcoming television appearances to 
promote it.  End Summary 
 
2. (SBU) President Chen began the meeting with Congressman 
Kennedy by expressing appreciation for his support of Taiwan 
in the House of Representatives.  He noted Congressman 
Kennedy's positions on Taiwan participation in the World 
Health Assembly, the European Union's proposal to lift its 
embargo on arms sales to the PRC, the PRC's Anti-Secession 
Law, and other Taiwan-related issues.  Congressman Kennedy 
in turn praised Taiwan's close relationship with the United 
States, its support for democracy and embrace of free 
markets.  He underscored U.S. appreciation for Taiwan 
reopening its beef market to U.S. exports.  He also 
complimented Taiwan's progress on the protection of 
intellectual property (IP), noting that he had visited a 
Taipei night market the previous evening and found scant 
evidence of counterfeit goods in marked contrast to rampant 
IP violations in a Beijing market he had visited earlier in 
his trip.  He asked President Chen to ensure that Taiwan 
makes further progress on market access for U.S. goods, 
emphasizing medical products, which are produced in large 
numbers in Minnesota. 
 
3.  (SBU) Congressman Kennedy also asked President Chen to 
remove unnecessary regulations that impede business in 
Taiwan.  He noted that Taiwan, like the United States, is 
working on finding ways to stay competitive economically as 
economies like China with the advantage of low wages grow 
rapidly.  He remarked that Taiwan was a very easy place for 
Americans to live, and Taiwan could further capitalize on 
that advantage in attracting investment by relaxing some 
regulations.  As an example, he explained that his son would 
be working a paid internship with Caterpillar Corporation in 
Beijing this summer.  However, under current Taiwan 
regulations, foreign students were unable to obtain this 
kind of paid internship.  Congressman Kennedy also commented 
that restrictions that limit the amount of investment a 
Taiwan-based company can invest in the Mainland also have a 
negative effect on Taiwan's investment environment. 
 
4. (SBU) President Chen assured the Congressman that his 
administration was working on these and related concerns. 
He noted that the following day he would meet with music 
industry leaders and assure them of his commitment to the 
protection of intellectual property rights.  He also 
welcomed the resumption of Trade and Investment Framework 
Agreement (TIFA) discussions in late 2004 and reiterated 
Taiwan's interest in seeing these lead to discussion of a 
free trade agreement. 
 
5. (SBU) Regarding Taiwan's Special Defense Procurement 
Budget, which would allocate funding to purchase USD 18 
billion worth of weapons from the United States, Congressman 
Kennedy expressed U.S. concern that the passage of this 
legislation was taking so long.  He explained that in the 
United States, political parties have a tradition that 
partisan differences end at the border.  He urged President 
Chen to work towards resolving the political controversy 
surrounding the Special Budget and ensure its passage.  He 
pointed out that he had delivered a similar message to 
Legislative Yuan Chairman Wang Jin-pyng the previous day. 
Congressman Kennedy also noted that some critics of the 
weapons purchase believe that it is unnecessary because the 
United States will defend Taiwan.  He asked that Taiwan not 
take U.S. assistance for granted. 
 
6. (SBU) President Chen reaffirmed his commitment to defend 
Taiwan and assured Congressman Kennedy that all Taiwan 
people, regardless of political affiliation, are committed 
to Taiwan's security.  He said that Taiwan would shoulder 
the burden of its defense and not shift that burden to the 
United States.  According to President Chen, those who 
oppose the Special Budget are not counting on the United 
States to defend Taiwan.  Instead they believe that the PRC 
will not attack Taiwan and that Taiwan can therefore disarm. 
He stated that he does not want an arms race with the PRC; 
he wants to prevent war.  He argued that by being ready for 
war, Taiwan could have hope for a permanent peace.  He 
expressed his goal of seeking a permanent peace across the 
Taiwan Strait and his plan to increase Taiwan's defense 
expenditures to 3 percent of GDP. 
 
7. (SBU) President Chen described in detail the timing of 
the various weapons purchase proposals and their approval by 
the U.S. government in order to emphasize that they were 
originally put forward by the Kuomintang (Nationalist) Party 
(KMT) administration that preceded Chen's Democratic 
Progressive Party (DPP) administration.  He commented that 
the two major opposition parties had changed their positions 
and currently opposed the Special Budget for various 
political reasons that had changed over time.  First, the 
opposition parties looked for advantage in the December 2004 
Legislative Yuan elections; then they sought Chinese 
approval to smooth the way for the visits of Lien Chan and 
James Soong to the PRC; and most recently, the Special 
Budget had become an issue in the campaign for chairman of 
the KMT.  President Chen speculated that with the fading 
influence of the "China fever" that ensued in Taiwan 
following the Lien and Soong visits and following July's KMT 
chairmanship election there would be an improved political 
environment for passage of the Special Budget.  He pledged 
to push for the passage of the Special Budget in upcoming 
television appearances and other planned media events. 
 
8. (U) Congressman Kennedy's office has cleared this 
message. 
 
PAAL