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