TAIWAN ASKS FOR RECONSIDERATION OF SANCTIONS ON

S E C R E T SECTION 01 OF 02 TAIPEI 004134

SIPDIS

STATE FOR EAP, NP/CBM AND NP/NE - ALEX BURKART

E.O. 12958: DECL: 12/22/2014
TAGS: ETTC KNNP MNUC PARM PREL TW
SUBJECT: TAIWAN ASKS FOR RECONSIDERATION OF SANCTIONS ON
TAIWAN ENTITY

REF: A. TAIPEI 4105

B. STATE 272228

C. STATE 273724

D. STATE 240201

Classified By: AIT DEPUTY DIRECTOR DAVID KEEGAN; REASONS: 1.4 (B),(D)
AND (H)


1. (U) This is an action request. Please see paragraph 8.


2. (S) Summary: In a meeting on December 30, Taiwan's
Board of Foreign Trade Director Peter Ho requested that
Washington Agencies reconsider sanctions on Taiwan's Ecoma
Enterprise Co. Ltd. Taiwan had checked with Washington
Agencies regarding the case prior to issuing the export
permit, and Washington Agencies said they had no relevant
information about the case. On a separate issue involving
sensitive technologies, AIT provided ref c points in response
to Ho's earlier request for information on how AIT would
handle a report from Taiwan that addressed how Taiwan is
implementing the measures of UNSC 1540. Ho also reported
that Taiwan has decided to seek Taiwan firms that can safely
destroy the phosphorus pentasulfide shipment detained in
Kaohsiung. Taiwan might well request US assistance to
dispose of the shipment. End Summary.

Taiwan Asks for Reconsideration of Sanctions on Ecoma Co.
-------------- --------------


3. (S) AIT Econ Chief met with Peter Ho, Director of
Import/Export Administration in Taiwan's Board of Foreign
Trade on December 30 at Ho's request to discuss USG sanctions
on Taiwan's Ecoma Enterprise Co. Ltd. (Refs A & B). Ho
discussed the case at some length. He said that in 2003 BOFT
had issued an export permit to Ecoma company to sell the CNC
tilting rotary table to Iran's Mizan Machine Manufacturing
Company, but only after seeking comment from the USG about
the proposed transaction. According to Ho, in September 2003
Ecoma sought an export permit from BOFT. BOFT, in turn,
notified TECRO/Washington of the proposed transaction and
requested comment from Washington Agencies. TECRO/Washington
had reported back that, after consulting with Susan Daoussi
of USDOC's Bureau of Industrial Security, Washington Agencies
had quote no relevant information end quote on its computer
system regarding the proposed transaction. Based on this
response from Washington Agencies, Ho said BOFT issued the
export permit.


4. (S) Ho noted that he and BOFT Director General Francisco
Huang became concerned about this case when AIT notified BOFT
in November 2004 about USG concerns over the Ecoma/Mizan sale
(reftel D). He said that BOFT requested that
TECRO/Washington reconfirm Washington Agencies comment on the
sale. On December 15, 2004, Ho said that TECRO/Washington
reported that it had checked with Brian Nilsson of BIS and
received the same comment that Washington Agencies had quote
no relevant information end quote on its computer system
regarding the proposed transaction.


5. (S) Ho said that, in his view the Ecoma Company has
complied with Taiwan's export control regulations and should
not be subject to sanctions. He asked that Washington
Agencies reconsider the decision to sanction Ecoma based on
the factors listed above. He noted that Ecoma first sought
an export permit and then waited for the appropriate process
to be completed before shipping the equipment. Further, he
said Ecoma continues to act in good faith and as evidence of
this told us that on December 21, 2004 Ecoma applied for an
export permit to sell another machine of the same type to
Mizan Machine Manufacturing. In light of the recent
information from AIT about Mizan Machine Manufacturing, Ho
said that BOFT would of course deny this application. AIT
suggested to Ho that he should notify Washington Agencies of
the second request for a CNC tilting rotary table from Mizan
Machine Manufacturing.

Taiwan Plans for UNSC 1540 Report
--------------


6. (C) Earlier, Taiwan had responded positively to AIT's
proposal that Taiwan issue a voluntary report on its efforts
to prevent proliferation of weapons of mass destruction
similar to the one required under UNSC 1540. AIT conveyed to
Ho the points contained in ref c regarding AIT plans on how
the US would handle Taiwan's report. We noted such a report
would provide Taiwan an opportunity for a peer review
evaluation process of Taiwan's non-proliferation measures and
assured Ho that AIT does not intend to release Taiwan's
report. Nevertheless, we encouraged Taiwan to release its
own report. Ho expressed appreciation for the response and
told us that DG Huang will be hosting an interagency meeting
on January 12 to discuss Taiwan's approach to preparing the
report. He said that a number of agencies will participate
in the meeting, including the Ministry of Foreign Affairs,
the Ministry of National Defense, the Atomic Energy Council,
Taiwan's Environmental Protection Administration, the
Ministry of Finance, Taiwan's Customs Administration and the
Ministry of Justice Investigation Bureau.


Taiwan Has Decided to Destroy P2S5
--------------

7. (S) Referring to a case dating back to August 2003 of
Taiwan having detained a shipment of phosphorus pentasulfide
(P2S5),Ho said that last week Minister of Economic Affairs
Ho Mei-yueh had reached a preliminary decision that Taiwan
should destroy the chemicals rather than continue to store
them because of their hazardous nature. He said that Taiwan
will check to see if firms in Taiwan can safely destroy the
detained shipment. If firms in Taiwan are unable to do so,
he said that Taiwan will then ask the US to adopt the same
approach as was used in 1996 regarding Ammonium Perchlorate
and remove the detained shipment from Taiwan. Ho did not
mention that when AIT Director hosted Premier Yu and Minister
Ho Mei-yueh to lunch last Thursday, the Premier directed
Minister Ho to find a way to destroy the detained chemicals
and seek assistance from the US military if necessary.
(Comment: Taiwan had little success in its original efforts
to locate a buyer or someone willing to destroy the shipment.
For many months Taiwan has been pressing the US to resolve
the status of the detained P2S5 by asking Washington Agencies
to locate a buyer. Progress of a sort has been made in that
Taiwan has now decided that it is best to destroy the
shipment rather than continue storing it, but we see little
reason to expect that it will report any greater success this
time around. It is likely that Taiwan will shortly be making
a formal request for the US. to remove this shipment from
Kaohsiung harbor. End Comment.)


8. Action request: AIT requests Washington Agencies
guidance on how to respond to BOFT's request for
reconsideration of the sanctions on Ecoma.
PAAL