TAIWAN'S REVISED TECH PROTECTION BILL

C O N F I D E N T I A L SECTION 01 OF 02 TAIPEI 001853

SIPDIS

STATE PLEASE PASS AIT/W AND USTR
STATE FOR EAP/RSP/TC, EAP/EP, EB/IFD/OIA AND NP/ECC/MCCELLAN
STATE FOR INR/EC NKWG
USTR FOR SCOTT KI

E.O. 12958: DECL: 04/15/2025
TAGS: ETTC PARM PINR PREL PTER TW
SUBJECT: TAIWAN'S REVISED TECH PROTECTION BILL

REF: TAIPEI 1780

Classified By: AIT DIRECTOR DOUGLAS PAAL, REASON 1.5 B/D


1. (C) Summary and comment: At a Cabinet meeting on April
13, Taiwan's Executive Yuan (EY) passed a "Sensitive
Technology Protection" bill that is a more comprehensive,
tougher version of the "Technology Protection Bill" that has
been stalled in the Legislative Yuan (LY) for over two years.
While Taiwan's export control officials believe the bill is
a distinct improvement that addresses some of the
deficiencies the recent EXBS training participants noted in
the earlier draft law, there is still no indication of how
long it will take to be passed by the LY to become law, and
the current heated partisan atmosphere in the LY does not
bode well for quick action. Rather than relying on uncertain
new legislation, AIT/T believes a quicker, more efficient way
to protect sensitive technologies would be for the Ministry
of Economic Affairs to add administratively a provision on
trade in intangibles to existing export control regulations.
End Summary and comment.


2. (SBU) Taiwan media reports that the new draft Sensitive
Technology Protection Law would impose penalties of up to NTD
30 million and seven years imprisonment for the unauthorized
export of techniques and know-how. If the unauthorized
export of technology were done with knowledge that it would
benefit foreign agencies or authorities, the penalties can go
up to NTD 45 million and 10 years imprisonment. Transfers of
sensitive technologies would need to be reviewed by both
Taiwan's National Security Council and the Ministry of
Economic Affairs Investment Commission. Although the bill
still appears to restrict Taiwan high-tech investment in
China, Taiwan Premier Frank Hsieh portrayed the new bill as a
way of furthering the government's policy of active opening
and efficient management towards cross-Strait trade and
investment since it sets clear limits on technologies that
can be transferred.


3. (C) BOFT Import/Export Administration Acting Director
Wally Su told AIT on April 14 that his office had not yet
received the full text of draft Sensitive Technology
Protection Law, but that the summaries of it that he had seen
indicated a significant improvement over the previous
Technology Protection Law bill. He said that in several ways
the new bill broadened the scope to cover more types of
intangible technologies, and strengthened the penalties for
violations, probably in response to criticism made of the
previous draft during the recent EXBS training. He admitted
though that the bill still focused on Taiwan investment in
China, and that it was being pushed by the Taiwan Solidarity
Union political party as a way of restricting investment in
China. Su said that within the next few days the draft would
be circulated to relevant ministries with instructions to
urge legislators to take action quickly. He also noted that
once the LY starts debating the bill, there was no telling
how the contents might change.

Behind the Technology Protection Bill
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4. (SBU) The drafting of a technology protection law has
been in process in Taiwan for about two years, with different
version submitted to Taiwan's National Security Council by
different political parties. The recent cases of United
Microelectronics Corporation illegal investment in Mainland
semi-conductor manufacturer He Jian and efforts by the Taiwan
government to fine Robert Chang, the Chairman of China's
Semiconductor Manufacturing International Corporation's
(SMIC) have amplified local concerns about the ongoing flow
of high technology from Taiwan to China. Taiwan's high
technology sector has begun lobbying through various
channels, such as a public hearing on technology protection
hosted by TSU Legislator Chen Ying Ho on March 29, for
minimizing the scope of any technology protection law.


5. (C) Taiwan already has export control regulations that
cover the export of commodities embodying sensitive
technologies to "high risk" areas. However, these
regulations do not currently cover intangible technologies.
Taiwan officials maintain that completely new legislation is
needed to address the issue of controlling intangible items.
Given the heated partisan debate over previous iterations of
this bill in the LY, AIT/T believes a more predictable way
for Taiwan to protect sensitive technologies would be to
administratively add a provision on trade in intangibles to
existing export control regulations.
PAAL