US embassy cable - 05TAIPEI3309

UNCLAS SECTION 01 OF 02 TAIPEI 003309 
 
SIPDIS 
 
STATE PLEASE PASS AIT/W AND USTR 
 
STATE FOR EAP/RSP/TC, EAP/EP 
 
USTR FOR WINTER AND WINELAND 
 
USDOC FOR 4420/USFCS/OCEA/EAP/LDROKER 
USDOC FOR 3132/USFCS/OIO/EAP/ADAVENPORT 
TREASURY FOR OASIA/LMOGHTADER 
 
 
E.O. 12958: N/A 
TAGS: EINV, EFIN, ECON, PINR, TW, Finance, Foreign Policy 
SUBJECT:  Taiwan's Minister of Foreign Affairs Tries to 
Bolster Ties to Chad and Burkina Faso 
 
1.  Summary: Taiwan's Minister of Foreign Affairs 
(MOFA) (Mark) Chen Tan-sun led a delegation to Chad and 
Burkina Faso July 8-14 to reinforce Taiwan's interest 
in further developing diplomatic relations with Africa. 
Taiwanese businessmen have established small operations 
in the two African countries, but MOFA believes 
Taiwan's government lacks the financial resources 
needed to encourage Taiwan businesses to invest in 
Africa. Paralleling PRC's interests in Chad's oil 
sector, Chen expressed Taiwan's interest in investing 
in Chad's oil industry. End Summary. 
 
MOFA Minister First Visits to Chad & Burkina Faso 
--------------------------------------------- ---- 
 
2.  Mark Chen Tan-sun (Tang-shan), Taiwan's Minister of 
Foreign Affairs, visited the African countries of Chad 
and Burkina Faso in July.  His visit marked the first 
visit of a Republic of China (ROC) Minister of Foreign 
Affairs to Africa since then Minister Eugene Chien 
visited these two ROC allies in December 2002.  The 
deputation included Chen, two MOFA Director General, 
three legislators, and nineteen reporters.  The 
delegation was dispatched in part to reinforce 
diplomatic ties with Chad and Burkina Faso, a 
reflection of increasing Taiwan government concern 
about what it sees as the PRC's growing influence in 
Africa.  The Taiwan government fears China's increased 
activities in Africa will sway Taiwan's few diplomatic 
partners in the region toward the PRC.  In addition to 
his efforts to shore up Taiwan's diplomatic 
relationships, Chen also used his visit to encourage 
closer business ties with Taiwan. 
 
Factors Hinder Taiwanese Venture Into Africa 
-------------------------------------------- 
 
3.  Several factors hinder Taiwanese business ventures 
in Africa. These difficulties include language barriers 
(few Taiwanese businessmen speak French), expensive 
energy prices, and simple distance.  MOFA's West Africa 
Section Chief, Alexandre Chang, noted that successful 
Taiwanese investments in West Africa are primarily 
joint ventures with third country partners.  He 
acknowledged that Taiwan is unable to compete with 
China in the amount of government support available to 
businesses willing to invest in Africa.  Chen did 
discuss oil investment with Chadian officials on behalf 
of China Petroleum Corp. (CPC), said Cheng, but neither 
side made commitments. 
 
Taiwan Tax and Investment Agreements With Africa 
--------------------------------------------- --- 
 
4.  Taiwan has signed investment agreements with 
Nigeria, Liberia, Malawi, Senegal, and Burkina Faso to 
give both sides most-favored nation treatment; and tax 
agreements with Gambia, Senegal, and Swaziland to avoid 
double taxation.  According to an Industrial 
Development and Investment Center (IDIC) official, 
Taiwan does not offer special investment incentives 
beyond these agreements to encourage investment in 
Africa and Taiwanese firms rely on their own 
negotiations in order to receive preferential terms 
from African countries.  The "Africa Growth and 
Opportunity Act (AGOA)" and GSP on textiles have 
encouraged Taiwan's textile firms to invest in the 
region.  Taiwan is a major foreign investor in South 
Africa, with about 280 Taiwanese industrial 
manufacturing and 320 service firms investing USD 1.5 
billion in the market. Taiwan's most notable 
investments in Malawi are two garment factories that 
export to South Africa and the US and have total 
investments of USD 25 million. Swaziland is home to 29 
Taiwan investments, which amount to USD 43.2 million. 
 
Negligible trade with Africa 
---------------------------- 
 
5.  Trade with Africa is an insignificant 1.2 percent 
of Taiwan's total trade. Some percentages of total 
Taiwan trade with African countries: 0.494% with South 
Africa, 0.237% with Congo, 0.220% with Angola, 0.174% 
with Equatorial Guinea, 0.109% with Nigeria, and only 
0.005% with Burkina Faso. Major Taiwan imports from 
Africa include mineral raw materials and crude oil; 
Taiwan exports to these African nations include 
electronics, synthetic fiber, and machinery equipment. 
Taiwan's major exports to Burkina Faso and Chad are 
electrical fans and computer peripherals; and imports 
from these two nations are mainly un-carded cotton. 
 
(This report was prepared by AIT/Kaohsiung Intern Cindy 
Chou.) 
PAAL