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Background Information on Issues Related to the Third Chiang-Chen Talks

Mainland Affairs Council, April 1, 2009

1. The time and venue of negotiations

According to the consensus reached by the Straits Exchange Foundation (SEF) and the Association for Relations Across the Taiwan Strait (ARATS), the third Chiang-Chen Talks will be held during the first half of this year. The exact timing will be arranged based on the progress of discussions between the two sides. After discussing operational issues, the two sides can make the various arrangements for the third round of talks and the preparatory consultations. The communication about operational matters is still underway. If it progresses smoothly, we have not excluded the possibility of starting the procedural and preparatory consultations around mid-April to arrange the time, venue and matters related to the signing of the agreement for the third talks. As for the venue of the talks, the possibility of selecting an area outside of Beijing was discussed at the second Chiang-Chen Talks. However, the exact time and venue of the third talks still needs to be further discussed by the SEF and the ARATS before finalization.

2. Negotiations issues

Negotiations during the third round of talks will cover four issues, including: joint crackdowns on crime and mutual judicial assistance, regular cross-strait flights, cross-strait financial cooperation and Mainland investment in Taiwan. Currently, the two sides are proceeding with communication on operational matters (involving various forms of communication and liaison by specialized units), and a certain level of consensus has been reached.

(1) Regarding joint crackdowns on crime and mutual judicial assistance, the two sides will establish judicial liaison and assistance mechanisms in civil and criminal matters. A normalized cooperation mechanism will be established with a focus on crackdowns on various types of crime, cooperation in investigations, information exchange, and expatriation of criminals, so as to safeguard the rights and interests of the people on both sides and enable more efficient handling of judicial cases. Communication between the two sides on this issue has proceeded very smoothly and an agreement should be reached without difficulty.

(2) The emphasis of negotiations on regular flight services is placed on normalizing cross-strait air transport services based on the current weekday charter flight services, as well as making accompanying arrangements for optimizing flight paths and expanding the number of flights and flight points to comprehensively upgrade air transport efficiency and quality of services. Progress on this issue has been relatively slow due to the longer time required by the Mainland side to consolidate its internal views. Consequently, breakthroughs are still needed on some key issues.

(3) Regarding cross-strait financial cooperation, the two sides have engaged in communications about operational matters that are related to the original four sub-issues, including: the signing of three memoranda of understanding (MOUs) on supervision and management in the banking industry, securities and futures industry and insurance industry; and the currency exchange issues related to the supply of renminbi and a currency settlement mechanism. Due to the highly technical nature of the three MOUs, the different demands of the various industries, and the very broad scope of financial cooperation, after deliberation between the two sides, the future arrangement will be for the SEF and the ARATS to sign an overall financial cooperation agreement. Sections common to all three MOUs, along with the currency exchange and other financial cooperation issues, will be included within the scope of the agreement. In addition, the financial supervisory agencies responsible for each of the banking, securities, futures, and insurance industries will be entrusted to further arrange the details of the supervision and management cooperation and follow-up signing of the three MOUs. This type of tiered arrangement should be able to meet the special needs of the various agencies in charge of financial administration.

(4) Regarding Mainland investment in Taiwan, emphasis will be placed on communication and dialogue on the policies, laws and regulations, the approach to deregulation and investment items, and other aspects related to easing restrictions on Mainland investment in Taiwan's manufacturing industry, service industry, the i-Taiwan 12 Projects and real estate sector. After communication, the two sides have expressed a high level of interest in promoting Mainland investment in Taiwan. The Mainland side will also form a delegation to pay an inspection visit to Taiwan. Through various follow-up arrangements, Taiwan will gradually open up to Mainland investment so as to inject new momentum into Taiwan's economy.

3. Possible arrangement of dialogue on an ECFA

The Ministry of Economic Affairs and the MAC are intensifying efforts to domestically communicate and build consensus on the issue of a cross-strait Economic Cooperation Framework Agreement (ECFA). However, this issue is still not at the stage when cross-strait negotiations can be held. We understand that the Mainland side is still studying the ECFA. Therefore, the timing of talks between the two sides on an ECFA will depend on the developments in the preparations. Nevertheless, the fourth Chiang-Chen Talks will definitely touch on the ECFA issue. Therefore, the ROC side will, during preparatory consultations or other suitable occasions, exchange views with the Mainland side on whether or not to include the ECFA issue in the third Chiang-Chen Talks agenda. If there is a consensus, we will not exclude the possibility of making related arrangements. However, it must be emphasized that dialogue and negotiations are on two different levels. If the dialogue produces a consensus, the two sides must make preparations before the subject of the dialogue can become an issue for cross-strait negotiations. This point needs to be especially clarified to avoid creating misunderstanding.