US embassy cable - 05TAIPEI3854

C O N F I D E N T I A L TAIPEI 003854 
 
SIPDIS 
 
DEPT FOR EAP/TC 
DEPT PASS AIT/W 
COMMERCE FOR ITA/MAC/ASIA/MBMORGAN CABLE BOX 4431 
 
E.O. 12958: DECL: 09/16/2015 
TAGS: EAIR, ECON, PREL, CH, TW, Transportation, Cross Strait Politics, Foreign Policy 
SUBJECT: MAC DENIES REPORT ON CROSS-STRAIT CHARTER 
DISCUSSIONS 
 
REF: TAIPEI 3661 
 
Classified By: AIT Acting Director David J. Keegan, Reason 1.4 d 
 
1. (U) The September 16 edition of Taiwan,s United Daily 
News carried a front page story citing an unnamed source 
who claimed that Taiwan would soon announce progress on 
cross-Strait charter flights, including an informal 
agreement with the Mainland to implement charter cargo 
flights first and then three months later begin passenger 
charter service.  The report indicated that former Taipei 
Airlines Association Chairman Michael Lo had traveled to 
Hong Kong several times to meet with PRC counterparts.  The 
report also said that President Chen might announce the new 
steps toward flights around the Mid-Autumn Festival holiday 
during which many Taiwan executives based in the Mainland 
would return and attend meetings in Taiwan.  Note: The 
Straits Exchange Foundation hosts an event for returning 
Taiwan executives during the Lunar New Year, Dragon Boat 
Festival and Mid-Autumn Festival each year.  Senior 
government officials often speak at the event.  End note. 
 
2. (C) Mainland Affairs Council Economics Department 
Director Fu Don-cheng told AIT/T that the reports were 
"false," "completely baseless," and "manufactured." 
Officially, Taiwan is still waiting for a formal PRC 
response to the announcement that the Taipei Airlines 
Association was designated to engage in preparatory 
discussions with Mainland counterparts on this issue. 
However, National Security Council (NSC) Senior Advisor 
Chen Chung-hsin commented to AIT/T that there has been some 
progress in TAA,s preparations for formal discussions as 
the two sides exchanged opinions via informal channels. 
However, Chen said problems remain to be resolved before 
any formal discussions can take place.  He pointed out that 
Taiwan has agreed to discuss passenger and cargo flights at 
the same time and at this point has only ruled out 
discussing passenger flights without discussing cargo 
flights at the same time. 
 
3. (C) Comment: The United Daily News report is highly 
suspect.  In addition to Fu,s denial, it would be odd for 
Mandarin Airlines President Michael Lo to be involved in 
such an exchange because he was replaced as TAA,s Chairman 
by TransAisa Airways Chairman Tony C.C. Fan in April. 
However, there are some elements of the report that merit a 
second look.  AIT/T believes that despite the comments by 
NSC,s Chen, Taiwan is still determined to implement cargo 
flights first.  The agreement the report describes is just 
the sort of arrangement that would give the Chen 
Administration the cover it needs to move forward. 
Regardless of the veracity of the report, it appears that 
some progress toward more formal discussions is taking 
place.  A Mid-Autumn Festival announcement would be 
timely.  Without progress soon, the election cycle will 
again start to close the window of opportunity for a 
cross-Strait breakthrough.  As the December 3 city/county 
elections near, the DPP-controlled government may find it 
more difficult to announce an opening with the PRC.  End 
comment. 
KEEGAN