NEW INFO ON TAIWAN'S EXPORT CONTROLS

C O N F I D E N T I A L SECTION 01 OF 02 TAIPEI 003051

SIPDIS

STATE FOR EAP/TC AND NP/ECC
STATE PASS USTR/KI
STATE PASS AIT/W/RUZICKA

E.O. 12958: DECL: 07/19/2014
TAGS: ETTC KSTC PARM TW
SUBJECT: NEW INFO ON TAIWAN'S EXPORT CONTROLS

REF: A. A) TAIPEI 3001


B. B) TAIPEI 3019

Classified By: AIT Economic Chief Daniel Moore; REASONS 1.4 (B,D)


1. (SBU) SUMMARY. Following-up the AIT-BOFT meeting
reported ref A, on October 1 BOFT faxed to AIT additional
documents related to Taiwan's export control system and
correspondence regarding the Ching Hwee International Trading
Company. These documents have been relayed via fax to EAP/TC
and are translated informally below. Separately, AIT has
accepted a BOFT invitation to visit two machine tool
companies near Taichung and learned the inter-agency debate
over technology transfer legislation continues. End summary.


AIT Informal Translation of BOFT Letter to Customs
-------------- --------------


2. (SBU) Board of Foreign Trade letter to the Directorate
General of Customs, dated September 15, 2004:

(Begin text of letter)

Subject: To meet BOFT's need to strengthen sensitive high
technology commodities (SHTC) export control, the Directorate
General of Customs is advised to enroll the company "Ching
Hwee International Trading Company, Ltd" (registration
number: 23003535) in the Customs' "manufacturers high-risk
management list", and to closely monitor the machine tools
exported from the subject company to the controlled areas
including North Korea.

Explanations:


I. This action is based on MOFA's August 2, 2004 letter
responding to the written request from TECRO/W dated July 30,

2004.

II. Mr. Randy Schriver from the State Department conveyed
the message to TECRO/W Representative Mr. David Lee that
showed one Taiwan company "Ching Hwee International Trading
Co., Ltd" has been involved in exporting machine tools to
North Korea and that these commodities will likely be used in
nuclear development projects. In response, Mr. Lee
reiterated that Taiwan is willing to comply with U.S.
requests on antiterrorism and anti-WMD, and he would ask
Taiwan's related agencies to work together on this case.
Senior Advisor Mr. David Asher from the State Department also
brought up this issue in the meeting with MOJ on August 30,

2004.

III. BOFT has collected the export statistics of the subject
company on machine tools from 2001-May 2004 and has requested
the company to quickly provide detailed information related
to these exports including descriptions of the machines,
ordering and shipping information, and importer addresses.
After receiving the information, the Industrial Technology
Research Institute (ITRI) will determine whether these
commodities were SHTC.

IV. According to BOFT,s December 31, 2003 circular entitled
"SHTC Categories, Special SHTC Categories and Exporting
Control Areas," North Korea is one of the SHTC export
controlled areas. The circular references the Wassenaar
Arrangement, which includes machine tools among controlled
commodities. Moreover, the circular states that commodities
not on controlled lists, but which could possibly be used to
produce or develop nuclear or biochemical weapons or missiles
would be categorized as SHTC. Exporters of such commodities
must apply for a SHTC export permit from BOFT in advance.


V. BOFT requests all Customs offices to strengthen
inspections of Ching Hwee's machine-tool exports (Customs
Commodity Codes 8456-8466) to any controlled areas including
Iran, Iraq, Libya, North Korea and China, and immediately
inform BOFT of any finding that Ching Hwee has violated
regulations.

(End text of letter)

AIT Informal Translation of Customs' Reply
--------------


3. (SBU) Directorate General Customs letter to BOFT dated
September 23, 2004.

(Begin text of letter)

Subject: Customs will keep a close watch on the machine tool
exports of Ching Hwee to controlled areas, and, acting
according to the regulations, will only allow these exports
when accompanied by SHTC export permits.

Explanations:

I. This action is based on BOFT's September 15 letter.

II. To prevent Ching Hwee from exporting SHTC commodities
without approval, all customs bureaus shall tighten
inspections of machine tools exported to Iran, Iraq, Libya,
North Korea, China, Cuba, Sudan, and Syria. Please report
any findings of illegal exports of SHTC commodities.

(End text of letter)

Increased Number of Export Licenses
--------------


4. (SBU) A separate document received via fax from BOFT on
October 1 shows the number of export licenses granted in 2002
was 5,636; in 2003 was 8090; in the first quarter of 2004 was
2363; and in the second quarter of 2004 was 2442. The number
of licenses granted in first two quarters of 2004 represented
year-on-year increases of 41.9 and 32.6 percent respectively.
BOFT suggested the numbers were up partly because of
increased awareness among businesses of the need for export
licenses.

Invitation to Join BOFT/Customs Training Excursion
-------------- --------------


5. (SBU) AIT has accepted an invitation from BOFT to join a
BOFT-organized training program for Taiwan Customs officers.
The training will involve visits on October 22 to two machine
tool companies in the Taichung area (Victor Taichung
Machinery Works Company, Ltd., and Yeong Chin Machinery
Industries Company, Ltd.). The purpose of these visits is to
give Customs officers a better understanding of the different
types and technologies of machine tools.

Technology Transfer Legislation
--------------


6. (C) BOFT informed AIT in a telephone conversation on
October 1 that it is trying hard to persuade Taiwan's NSC to
permit it to provide AIT with a draft of the pending
legislation on technology transfer. AIT asked BOFT for
additional infomation on commodity types and destinations of
the exports which have received SHTC permits in recent
months, as well as for information on Ching Hwee's exports of
machine tools to non-restricted countries.

PAAL
PAAL