Cablegate: Apec: U.S. Senior Official for Apec Tong

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PP RUEHCHI RUEHCN RUEHDT RUEHFK RUEHGH RUEHHM RUEHKSO RUEHNAG RUEHNH
RUEHPB RUEHVC
DE RUEHBJ #2849/01 2862310
ZNR UUUUU ZZH
P 132310Z OCT 09
FM AMEMBASSY BEIJING
TO RUEHC/SECSTATE WASHDC PRIORITY 6397
INFO RUEHZU/ASIAN PACIFIC ECONOMIC COOPERATION
RUCNASE/ASEAN MEMBER COLLECTIVE
RUEHOO/CHINA POSTS COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RHEHNSC/NSC WASHINGTON DC

UNCLAS SECTION 01 OF 04 BEIJING 002849

SENSITIVE
SIPDIS

STATE FOR EAP/FO TONG
ALSO FOR EAP/EP STEELE, EEB/TPP CRAFT, EEB/BTA
MANOGUE, EAP/CM KLEIN
STATE PASS USTR FOR AUGEROT
NSC FOR LOI

E.O. 12958: N/A
TAGS: ECIN ECON PGOV ETRD APECO CH

SUBJECT: APEC: U.S. SENIOR OFFICIAL FOR APEC TONG
HOLDS BILATERAL REVIEW WITH CHINA'S SENIOR OFFICIAL
LU

(U) This cable is Sensitive But Unclassified.
Please protect accordingly.

Summary
-------

1. (SBU) Summary: Meeting in Beijing September 29,
U.S. Senior Official for Asia-Pacific Economic
Cooperation (APEC) Affairs Kurt Tong reviewed a
range of U.S. priorities in APEC with China's Senior
Official for APEC (SOM) Lu Kang, Ministry of Foreign
Affairs. The two highlighted the shared interests
of the United States and China in pushing forward
with APEC work on regional economic integration (REI)
and climate change, with a view toward producing a
substantive Leaders' Statement in November. Lu
noted that Chinese ministries remain cautious
regarding APEC proposals on services trade and trade
in environmental goods and services (EGS). Lu
reported little support in Beijing at this time for
China hosting APEC in 2014, since that would be
"earlier than normal." Lu signaled strong interest
in the "inclusive growth" concept and said China
looks forward with enthusiasm to the U.S. hosting of
APEC in 2011. At a meeting at the China Council for
the Promotion of International Trade (CCPIT)
September 30, Tong conferred with China's APEC
Business Advisory Council (ABAC) Secretariat and key
representatives of China's ABAC delegation. End
Summary.

Getting Ready for Singapore
---------------------------

2. (SBU) Lu welcomed Tong's visit as a first
opportunity for Beijing and Washington to compare
notes during the final run-up to the APEC Leaders'
Meeting in November. China is particularly focused
on clean energy, climate change, anti-protectionism,
and the future reform and development of APEC.
Asked about China's G20 takeaways, Lu ranked
coordination on global financial and economic
recovery as the top item. Lu also stressed that the
world was looking to the United States for a
stronger stance on the Doha Round negotiations and
anti-protectionism. This was particularly important
with the clock running out on Doha in 2010. Lu said
that while climate change was important, China does
not see APEC or the G20 as a negotiating forum for
climate change. He expected Copenhagen to be
fruitful and thought that Ministers should not push
beyond what was already decided. Both SOMs agreed
that the United States should compare notes on their
climate change positions during October and November,
before and during APEC.

3. (SBU) Tong reviewed key U.S. priorities for APEC
in 2009, including strong Leaders' Statement
language (instructions for 2010) on regional
economic integration, "inclusive growth", climate
and clean energy, and food security. In addition,
the United States will seek APEC endorsement of the
key policy outcomes from the Pittsburgh G20 Summit.
Lu asked about the U.S. position on the Free Trade
Area of the Asia-Pacific (FTAAP) concept in 2009, as
well as on Australia's Asia-Pacific Community (APC)
proposal (noting that Australia raises this issue
every time China speaks with them). Tong explained
that it is imperative to continue to make positive
forward progress on regional economic integration,
in the direction of FTAAP, in concrete terms each
year. For 2009, the United States does not
anticipate dramatic new instructions regarding FTAAP
from the Leaders, but we do need to show credible
"deliverables" -- the most important this year being
an APEC statement of principles on services trade
and the APEC proposal on handling trade in

BEIJING 00002849 002 OF 004

environmental goods and services (EGS). Lu
responded that China does not necessarily agree that
APEC is the appropriate forum to discuss EGS, and he
noted considerable Chinese inter-agency resistance
to the services principles. Tong reiterated the
importance of those issues. Regarding the Asia-
Pacific Community, Tong noted that the best regional
"architectures" will be ones that include the United
States, because of the substantive contribution that
the United States can bring, as well as because
Asia-Pacific institutions that include the United
States will make the biggest explicit and implicit
contributions to regional stability.

APEC Membership Moratorium
--------------------------

4. (SBU) Lu also asked for Tong's opinion on the
APEC membership moratorium. Tong answered that the
United States believes it is worth considering a
more flexible approach to allowing non-members to
attend certain APEC meetings. Lu pointed out that
currently, some non members such as Colombia sit in
at meetings lower than SOM-level. He asked if the
United States was considering supporting interested
non-members sitting in at the Senior Officials level
and above, to which Tong replied that attendance at
ministerial meetings, on a case-by-case basis, might
make sense. Referencing the results of the
Pittsburgh G20 Summit, Lu Kang noted that China's
senior leadership, including Vice Minister He Yafei,
see "efficiency" in keeping multilateral and
regional discussions such as the G20 and APEC
limited to the minimum number of relevant economies.

Inclusive Growth
----------------

5. (SBU) Lu and Tong agreed that the "inclusive
growth" concept being explored by APEC Senior
Officials was useful for both the United States and
China. Lu complained that China does not yet have a
good Mandarin translation for "inclusive growth",
currently using "baorongxing zengzhang", but the
Chinese officials will work further on defining this
in a way that captures the concept for the Chinese
public. As a related matter, Lu said that China's
Ministry of Human Resources and Social Services
(MOHRSS) is exploring setting up a multi-year fund
for the APEC Human Resources Working Group. He
noted that China has both a lot to learn and a lot
to share on this issue, and he encouraged the United
States to get involved in this discussion. Lu and
Tong agreed that the work program on "inclusive
growth" should stress creating opportunities to
broaden participation in trade-led growth, as
opposed to emphasizing ways to compensate for missed
opportunities.

APEC Nuts and Bolts
-------------------

6. (SBU) Lu raised the issue of non-proliferation,
noting China's long-standing opposition to handling
this topic within the APEC framework. Lu appeared
satisfied with Tong's answer that counter-terrorism
cooperation in areas such as airport security and
tracking human movements belongs in APEC as long as
that work has a demonstrable relationship to trade
and economics. Tong noted the usefulness of smooth
cooperation between China and Taiwan in APEC, and Lu
responded that things in that area seem to be going
well.

7. (SBU) Tong raised the ongoing discussion in the
SOM Committee on Economic and Technical Cooperation
regarding the setting of priorities, and explained

BEIJING 00002849 003 OF 004

that the United States is opposed to the Philippines
idea of setting quotas for projects according to the
sponsoring economy. At the same time, the United
States sees great value in developing countries
pulling together projects for APEC sponsorship, and
noted that the U.S. Technical Assistance Task Force
(TATF) in Singapore was established just for such a
purpose. Lu took the point, but responded only that
he had read the Philippine paper and agreed that
proposals lacking "expertise" had a hard time
getting approved.

8. (SBU) Following up on an inquiry made by Tong at
the July Senior Officials' Meeting in Singapore, Lu
told Tong that China was probably not ready to host
APEC in 2014, having done so previously in 2001. He
noted that the United States waited a longer time
(18 years) between hosting, and economies such as
Canada, New Zealand, Malaysia and the Philippines
may be on the "waiting list" to host ahead of China.
He said he would pass on Tong's request to continue
to consider the idea, based on the logic that the
largest and most capable economies should host more
often. Personally, he said he was 100 percent
behind the proposal, but that in the next few months
it would be very difficult for China to make that
kind of decision.

9. (SBU) Lu noted that Singapore told him they
wanted to change the format of the Foreign Ministers'
informal meeting from a 90-minute working breakfast
to a 2.5 or 3-hour meeting. He said he personally
discouraged Singapore from taking this step, out of
consideration for Hong Kong and "Chinese Taipei."
Lu also said that Singapore had told him that the
United States had originally raised this idea. Tong
clarified that the United States favors an informal
meeting similar in length and format to previous
years. Lu and Tong also discussed the fact that the
Finance Ministers Meeting and APEC Ministerial
Meeting will conclude on the same day, and noted the
need to closely coordinate the statements issued out
of these two events.

10. (SBU) Lu raised the Australia-U.S.-China
forestry project in APEC, and said it might be a
good idea to hold the next meeting in Indonesia. Lu
said China's Ministry of Agriculture was not
enthusiastic about an Agricultural Ministerial
Meeting in Japan, but found very interesting Tong's
suggestion that the meeting focus on inviting
ministers broadly responsible for food security
issues, possibly from more than one ministry, rather
than simply inviting agriculture ministries. Tong
explained the U.S. analysis of the key food security
challenges in the Asia-Pacific region. Lu said he
would pass to the U.S. list of these issues (i.e.,
work to improve productivity, human resources, trade
and investment flows, utilization of national
resources, and infrastructure) to the Agriculture
Ministry, and encourage them to "think holistically"
about the ministerial in Japan.

11. (SBU) Lu also asked Tong how the United States
might react to the Chinese Land Resources Ministry
hosting an APEC mining industry ministerial meeting
during 2011, and asked what other ministerials the
United States was planning for 2011. Tong responded
that the United States had not yet finalized a slate
of ministerial meetings to host in 2011, but noted
that mining was unlikely to be such a topic. Tong
explained that the U.S. approach to ministerial
meetings would be results-oriented, with discussions
focused relatively narrowly on making progress on
specific key issues, rather than holding more
general discussions.

BEIJING 00002849 004 OF 004

12. (SBU) During his one-day visit to Beijing,
Tong also met with China's APEC Business Advisory
Council (ABAC) Secretariat chief Han Meiqing, who is
Deputy Director General of the Department of
International Relations at the China Council for the
Promotion of International Trade (CCPIT). Joining
Han were corporate executives representing China's
ABAC delegates Jack Ma, CEO of Alibaba Inc. and Lili
Wang, EVP of the Industrial and Commercial Bank of
China (ICBC). Han reported that President Hu plans
to address the APEC CEO Summit in Singapore, as in
past years.

13. (U) This cable was cleared by Senior Official
Tong.

HUNTSMAN

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