US embassy cable - 05SANSALVADOR2691

UNCLAS SAN SALVADOR 002691 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ES, ETRD, PREL, TW 
SUBJECT: EL SALVADOR WILL NEGOTIATE TRADE AGREEMENT WITH 
TAIWAN 
 
REF: A. A) SAN SALVADOR 1440 
 
     B. B) SAN SALVADOR 2333 
 
1. The September 27 press reported that El Salvador and 
Taiwan had agreed at the September 26 Managua summit of 
Central America, Taiwan and the Dominican Republic to 
negotiate a free trade agreement.  President Saca made the 
announcement that the two countries would begin talks very 
soon following a private evening meeting with Taiwan 
President Chen Shui-bian.  "El Salvador cannot remain at a 
disadvantage," Saca is quoted as saying, in reference to the 
fact that Guatemala and Panama have already agreed to an FTA 
with Taiwan, "since Taiwan could be an excellent buyer of 
sugar and coffee; they are interested in closing this 
relationship as soon as possible."  A statement on the 
President's web site states that El Salvador will seek an 
agreement that gives Salvadorans the ability to enter Taiwan 
and that expands exports from coffee and several other 
products, in particular to include sugar. 
 
2.  The Ministry of Economy's trade policy deputy director 
confirmed on September 28 that El Salvador would negotiate an 
agreement with Taiwan (despite an earlier declaration - see 
ref a - suggesting that the Ministry would prefer to 
consolidate its CAFTA commitments rather than seek out new 
trade deals).  El Salvador will be looking to complete the 
negotiations quickly, said this official, who also 
acknowledged that there had been little preparation for trade 
talks ("falta coordinacion"). 
 
3.  According to Central Bank figures, in 2004, El Salvador 
exported goods valued at 2.06 million to Taiwan and imported 
goods of 27.8 million.  Aside from merchandise trade, El 
Salvador remains keenly interested in attracting Taiwanese 
investment. Taiwan reportedly announced at the summit the 
creation of a 250 million dollar fund as part of a program to 
support Central American investment by Taiwanese businesses. 
Taiwan announced earlier this year the establishment of an 
industrial park to house agroindustrial projects and has been 
working to put this project together (see ref b).  Comment: 
although the government has offered Taiwan land near the 
international airport, local contacts told Emboff that the 
Taiwanese have been looking at property more toward the 
cooler, western area of the country where worker productivity 
would not be as negatively affected by hot weather. 
Barclay