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Taiwan blocks US beef imports, strains trade ties

By Ralph Jennings

TAIPEI (Reuters) - Taiwan reversed a food safety law on Tuesday to ban some U.S. beef imports, sparking an angry response from its biggest ally, the United States, which said the move undermined the island's credibility as a trading partner.

The U.S. government "deeply regrets" parliament's decision to reinstate the ban over widespread fears of mad cow disease, Washington's de facto embassy said in a statement, hinting at a chill in U.S. support for Taiwan's World Trade Organization role.

Taiwan's handling of the issue has caused confusion for U.S. beef exporters in their sixth-largest market by value, worth $114 million as of the end of October compared to overall U.S. exports valued at $14.5 billion for the first 10 months of last year.

The decision to reimpose the ban presents Taiwan President Ma Ying-jeou with his biggest crisis since the widespread destruction caused by an August typhoon in which many thought authorities were slow to act.

The United States recognizes China over self-ruled Taiwan, which Beijing claims as its own under its "one China" policy, but remains the island's closest informal ally and biggest arms supplier.

On October 22, Taiwan said it would reopen its markets to U.S. bone-in beef such as T-bone steaks as well as ground beef and offal, which includes parts such as cow brain. Under the bill given final approval in parliament on Tuesday, imports of ground beef and cow offal will now not be allowed.

"This action also undermines Taiwan's credibility as a responsible trading partner and will make it more difficult for us to conclude future agreements to expand and strengthen bilateral trade and economic ties going forward," the U.S. statement said.

Ma said he recognized the United States as Taiwan's "security ally" but said the island could not ignore the people's health.

"We will do our utmost to settle the dispute. Our international trade reputation may be impacted, but that's something we've got to deal with," Ma said in a televised news conference. "(The U.S. dispute) is limited to trade and won't spill over into other areas."

A Taiwan-U.S. meeting set for this month for Trade and Investment framework agreement talks has been postponed over the beef dispute, local media said. The agreement, signed in 1994, allows either side to hash out trade issues of the moment.

"Ma is not sunken in by this development of events but he's not out of the woods, either," said Raymond Wu, managing director of e-telligence, a Taipei-based political risk consultancy. "How does he restore trust with Washington?"

Pressured by U.S. officials, Taiwan lifted the beef bans before it had gauged public opinion, analysts say.

A backlash from voter-conscious senior members of the ruling Nationalist Party (KMT) led to an official apology followed by the bipartisan legislative bill.

"To protect the health of the people is a huge responsibility of ours," KMT caucus whip Lu Hsueh-chang told parliament after the vote. "There were hardly any opposition voices."

Taiwan first banned U.S. beef in December 2003, after the United States acknowledged its first case of mad cow disease. In 2006, Taiwan opened its markets to boneless U.S. beef from cattle aged 30 months or younger.

(Editing by Jeremy Laurence)

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