Cablegate: Cross-Strait Economic Roundup - Third Quarter

This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS SECTION 01 OF 02 TAIPEI 003323

SIPDIS

DEPT PASS TO AIT/W

DEPT FOR EAP/RSP/TC, EAP/EP, EB/TPP/BTA, EB/TPP/MTA

E.O. 12958: N/A
TAGS: ECON PREL ETRD EINV EWWT CH TW
SUBJECT: CROSS-STRAIT ECONOMIC ROUNDUP - THIRD QUARTER
2004

REF: A) TAIPEI 2592, B) TAIPEI 84

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SUMMARY
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1. During the third quarter of 2004, the PRC legalized
tourism to Kinmen and Matsu for all Fujian residents.
Taiwan legalized 81 product categories for import from the
PRC. However, most are agricultural goods that will still
be restricted for lack of cross-Strait sanitary and
inspection agreements. Taiwan also decided to allow a fifth
PRC media outlet to station reporters in Taiwan. End
Summary.

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TRAVEL AND TRANSPORTATION
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2. PRC LIBERALIZES MINI-LINKS TOURISM: Fujian Deputy
Governor Wang Mei-xiang told visiting Kinmen County
Commissioner Lee Juh-feng and Taiwan Legislator Wu Cheng-
dian on September 16 that Fujian would remove restrictions
on the travel of Fujian residents to Kinmen and Matsu for
tourism. Taiwan had lifted its tourism ban on Fujian
residents in 2001 in order to boost economic development for
Kinmen and Matsu. Taiwan's Mainland Affairs Council (MAC)
in response announced on September 26 a few small measures
to expand the mini-links. Notably, MAC will allow Taiwan's
colleges and universities to open Executive MBA programs in
Kinmen and Matsu for employees of Taiwan firms in the PRC.

3. GREEN BUSINESSMAN DENIED VISA: Lin Wen-yuan, Chairman of
Taiwan's state-owned China Steel, was denied an entry permit
to visit the PRC. Taiwan's local press speculated that
Lin's close ties with President Chen Shui-bian were the
cause. Lin had visited China last November to inspect
investments there. Because Lin is also the Chairman of
Taiwan Steel and Iron Industries Association, the move may
have impeded consultations on the PRC's investigation of
Taiwan's alleged iron and steel dumping. In January 2004,
China imposed anti-dumping duties of up to 55 percent on
cold press steel plate from Taiwan, South Korea, Ukraine and
Russia. The PRC announced in May that it would reevaluate
the anti-dumping duties. Taiwan exported almost USD 1.2
billion worth of iron and steel to the PRC during the first
half of the year.

4. TAIWAN TIGHTENS CONTROL OF MINI-LINKS: Because
authorities believe many unqualified travelers take
advantage of mini-links travel available to Taiwan's small
businesses with investment in the Mainland, the Bureau of
Immigration and the Investment Commission tightened the
review process for travelers. Taiwan travelers must now
show PRC business licenses and PRC approved investment plans
before traveling. Separately, two members of the Control
Yuan, one Taiwan's five branches of government with
oversight functions similar to an Inspector-General or the
Government Accountability Office, visited Fujian via Kinmen
and Matsu on August 23 to inspect the mini-links operation,
investigating complaints of customs clearance and other
travel inconveniences. It was the first Control Yuan
inspection of the mini-links.

5. LOW INTEREST IN TAICHUNG TRANSSHIPMENT: After more than
two months of operation, only one vessel, a Yangming Marine
Transport Corp. ship, had taken advantage of the new
Taichung offshore transshipment center with a voyage
directly to Shanghai, according to Taichung Harbor
Administration. Observers blame low interest on the
Taiwan's government prohibition of Taichung-Fuzhou and
Taichung-Xiamen routes.

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TRADE AND INVESTMENT
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6. MORE IMPORT BANS LIFTED: On September 4, Taiwan's BOFT
eliminated import bans on 81 PRC products. Nine categories
of manufactured goods such as portable outdoor gas grills
were legalized. The remaining 72 categories are
agricultural or fishery products legalized to comply with
WTO standards. However, because there are no cross-strait
sanitary and inspection agreements, these new categories of
agricultural products are still unable to enter Taiwan's
market. Access for these categories is unlikely without
cross-Strait negotiations.

7. PRC ANTI-DUMPING MOVE: The PRC's Ministry of Commerce
announced on August 27 that it would impose an antidumping
duty on yarn of nylon and textured yarn of nylon imported
from Taiwan. More than 13 Taiwan firms were affected.
According to Taiwan Customs, the PRC is Taiwan's largest
export market for these nylon products, accounting for over
70 percent of exports. The PRC had previously imposed
antidumping taxes on caprolactam (CPL), a chemical used in
the manufacture of synthetic fibers, including nylon.
8. NEW SERVICE SECTOR INVESTMENTS: Following the PRC's
approval of its insurance joint venture in Shanghai, Cathay
Life Insurance Co., Ltd., Taiwan's leading life insurance
company, dispatched some 40 Taiwan professionals to Shanghai
for marketing, training and logics. It plans to expand its
Shanghai site to employ over 60 Taiwanese employees. On a
separate note, the PRC approved on August 10 the
establishment in Dongguan, Guangdong province, of the first
Taiwan-owned hospital in the Mainland. Taiwan investors in
Dongguan will own 80 percent of the hospital, and Taiwan's
Cheng Hsin Rehabilitation Medical Center will own the
remaining 20 percent. Construction is scheduled to begin in
November.

9. PRC COURT ACCEPTS TAIWAN ARBITRATION RESULTS: On August
19, the settlement of a dispute between two Taiwan investors
regarding a property in Xiamen that had been mediated in
Taiwan by the Chinese Arbitration Association, Taipei (CAA)
was honored by a Xiamen court and implemented. CAA says
this marks the first time that the result of a cross-strait
commercial dispute mediated by CAA has been accepted and
implemented by a PRC court and indicates the protection of
cross-strait commercial activities is improving.

10. TELECOM COMMERCIAL COOPERATION: Taiwan's Chunghwa
Telecom and the PRC's China Telecom jointly announced cross-
Strait private line services available to enterprises
located in Suzhou, Taipei, Kaohsiung and Tainan. The
service may be expanded soon to other areas such as Beijing,
Shanghai, Guangdong, Shenzhen, Xiamen and Dongguan.

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EXCHANGES AND CONTACTS
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11. MAC APPROVES PRC NEWS SERVICE: On July 27, the MAC
announced that it would approve a fifth mainland media,
China News Agency (CNA), to station reporters in Taiwan on a
trial basis. CNA can post two reporters for two months,
after which the MAC will make a final decision on whether
the agency can stay.

12. IPR VISIT UNDERSCORES STEADY FLOW OF EXCHANGES: The
pace of people-to-people exchanges across the Strait
continued unabated during the quarter. Notably, a 20-member
PRC delegation made up of judges and officials of the Taiwan
Affairs Office and Bureau of Trademarks traveled to Taiwan
to meet with Taiwan's Intellectual Property Office to
discuss trademark protection. Liu You-mei, a member of the
PRC's Chinese People's Political Consultative Conference
also visited Taiwan to attend a railroad construction and
technology conference. Other highlights included Taiwan
Strait Shipping Association Chairman Chen Ting-hui, Taiwan
Electrical and Electronic Manufacturers Association Chairman
Rock Hsu, and Taiwan's Petrochemical Industry Association
Chairman Chiou Huai-hsin traveling separately to the
Mainland. In addition, numerous conferences and trade shows
were held on each side with cross-Strait participation.
Many focused on cross-Strait relations, but other Topics
ranged from wireless local area networks to Chinese opera.

PAAL

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