US embassy cable - 05TAIPEI4480

C O N F I D E N T I A L TAIPEI 004480 
 
SIPDIS 
 
STATE FOR EAP/RSP/TC AND EB/MTA, STATE PASS USTR AND AIT/W, 
USTR FOR WINELAND AND WINTERS, GENEVA FOR SHARK, USDA FOR 
FAS/ITP/MTND AND ITP/MIRELES 
 
E.O. 12958: DECL: 11/04/2015 
TAGS: EAGR, ETRD, TW, WTO 
SUBJECT: TAIWAN BOFT: G10 WANTS TOUGHER AGR PROTECTIONS 
 
REF: STATE 199861 
 
Classified By: AIT Acting Director David Keegan, reason 1.4 b/d 
 
 1.  (C)   BOFT Deputy Director of Multilateral Affairs Jack 
Hsiao spoke with AIT about Taiwan's response to the US 
request for additional pressure on the EU to improve their 
agriculture offer at the WTO on November 2.  Hsiao 
appreciated the US position but noted that Taiwan and the 
rest of the G-10 were even more conservative than the EU. 
The members of the G-10 have publicly expressed their 
dissatisfaction with the US position and the subsequent focus 
on the EU response.  According to Hsiao the Japanese Deputy 
Trade Minister commented publicly that the US is "dreaming" 
and suggested a new grouping be created called the "Friends 
of Flexibility".  Hsiao predicted that the G-10 would have no 
choice but to try to veto any US/EU accommodation that did 
not take into account the G-10 position. 
 
2.  (C) When Econoff asked whether the G-10 might keep a low 
profile and let the EU take the heat for the lack of progress 
on agricultural reform negotiations, Hsiao said no.  If the 
G-10 can share the EU's burden it would be much better, he 
said.  He noted that the Japanese Trade ministry had 
volunteered to fly to London for planned US/EU agriculture 
discussions on November 7 just to ensure that G-10 views were 
taken into account, but to date they had not been invited. 
The G-10 members are worried that the Hong Kong Ministerial 
will result in a repeat of the July Package, which Hsiao 
characterized as a US/EU "consensus" that the G-10 was forced 
to join.  Hsiao predicted that the G-10 members would not 
allow this to happen again. 
 
3.  (C) Regarding the U.S. position on non-agricultural 
market access (NAMA), Hsiao acknowledged that the Taiwan 
position was in line with the U.S.-supported formula on 
market opening for manufactured goods, but noted that Taiwan 
has products that need flexibility.  He suggested that Taiwan 
could be given some special leeway as a newly acceded member 
or, if that was not possible, that Taiwan might be treated as 
a developing country.  As a developing country, Taiwan would 
have a 10% leeway on cuts in tariffs, he said.  He noted that 
Taiwan had agreed not to seek developing country status in 
accession negotiations but denied that agreement precluded 
future treatment as a developing country.  In agriculture 
trade, countries are still allowed to protect certain 
sensitive sectors and products, but in non-agriculture trade 
developed countries don't have that option.  According to 
Hsiao treating Taiwan as a developing country would allow a 
slower phase in of agreed commitments.  Hsiao also insisted 
that Taiwan could not move any faster on market 
liberalization than its regional competitors, including South 
Korea, Singapore, and Malaysia. 
 
4.  (C) Comment: Hsiao's suggestion that Taiwan be treated as 
a developing country for the purposes of implementing any 
future agreement on NAMA rises from Taiwan's concern that 
they pushed the limits of local industry's willingness to 
accept tariff cuts in order to join the WTO in 2002.  Taiwan 
argues that industry needs additional time to adjust to the 
competitive pressures from trade liberalization.  Demanding 
additional liberalization so soon after accession puts Taiwan 
companies at a disadvantage, says BOFT.  Taiwan has been 
pushing without success for special treatment for newly 
acceded members, this proposal should be seen as a creative 
attempt on the part of BOFT to reach that goal.  This is the 
first we've heard of the proposal that Taiwan be treated like 
a developing country for the purposes of phasing in NAMA 
commitments.  However, we can't imagine others at Taiwan's 
same income level wouldn't want similar treatment, severely 
compromising the effectiveness of any future NAMA agreement. 
End Comment. 
Keegan