TAIWAN RESPONSE TO EXPORT CONTROL GAMEPLAN DEMARCHE

S E C R E T SECTION 01 OF 02 TAIPEI 003201

SIPDIS

DEPT FOR EAP/TC, EAP/EP, NP/ECC, NP/CBM
DEPT PASS AIT/W

E.O. 12958: DECL: 07/11/2015
TAGS: ETTC PARM PINR PREL PTER TW
SUBJECT: TAIWAN RESPONSE TO EXPORT CONTROL GAMEPLAN DEMARCHE

REF: A. STATE 138267

B. TAIPEI 3140

C. STATE 137495

D. TAIPEI 1909

E. TAIPEI 2983

F. TAIPEI 2974

G. STATE 125089

Classified By: AIT Director Douglas Paal, Reason 1.4 b/d


1. (S) Summary: AIT delivered ref A demarche on July 28 to
National Security Council Deputy Secretary General Wang
Hsi-tien and on July 29 to Ministry of Economic Affairs Vice
Minister Yiin Chii-ming. Both officials welcomed a U.S.
export control delegation to come for discussions on August
10-11. After hearing the talking points, both officials said
that the U.S. and Taiwan shared the same view on the need to
strengthen Taiwan's export control regime. However, it was
apparent from other remarks that there is still significant
ground to be covered between the U.S. proposal and Taiwan's
current thinking on this issue. AIT has also spoken with and
received a positive response from Taiwan's National Security
Bureau about the upcoming talks. End summary.

Demarche on National Security Council
--------------


2. (S) On July 28 AIT/T Deputy Director called on National
Security Council (NSC) Deputy Secretary General Wang Hsi-tien
to deliver ref A demarche. After listening to the talking
points, Wang said the U.S. proposal was an excellent idea and
stated that U.S. and Taiwan views on export control were in
complete accord. He emphasized that Taiwan did not want to
see its exports used in WMD programs and quipped that Taiwan
had been waiting a long time for this U.S. delegation to
come. DSG Wang liked the idea of the U.S. and Taiwan forming
a joint interagency task force.


3. (S) However, from Wang's remarks, it was also clear that
there were elements of the U.S. proposal that went beyond
Taiwan's thinking on the issue. When Wang spoke of Taiwan's
acceptance of the need to expand export license requirements,
he only mentioned strategic high-tech commodities and machine
tool exports to North Korea. When AIT reminded to him that
the U.S. proposal was to require export licenses for all
non-food/medicine/clothing exports to North Korea and Iran,
and perhaps to Syria, Wang commented on the difficulty of
getting industry buy-in.

Demarche on Ministry of Economic Affairs
--------------


4. (S) On July 29 AIT/T Deputy Director called on Ministry
of Economic Affairs (MOEA) Vice Minister Yiin Chii-ming to
deliver the same demarche. While stressing that Taiwan
agreed with the United States on the importance of
strengthened export controls, Yiin hesitated initially to
accept the proposed dates, saying that Bureau of Foreign
Trade (BOFT) Director General Franco Huang (Chih-peng) would
not be available and there was not enough time to make
necessary preparations by August 10-11. However, when AIT
held firm on these dates, and explained that the primary
purpose of the meetings was to give U.S. presenters a chance
to explain the details and mechanics of the U.S. proposal,
Yiin said he welcomed the delegation on August 10-11. AIT
advised Yiin that it would be helpful if his Ministry could
prepare statistical information on Taiwan's trade with North
Korea and Iran.


5. (S) VM Yiin noted that BOFT would not have an easy time
persuading exporters to accept new controls because of:
Taiwan's economic dependence on exports, the difficulty in
getting industry buy-in, and industry concerns that export
controls could create a competitive disadvantage for Taiwan
exporters which would accelerate the migration of Taiwan
manufacturers to other territories. Yiin said he hoped U.S.
agencies could assist Taiwan authorities in their effort to
gain industry support for stricter measures, perhaps by
supplying talking points or speakers on these topics. Yiin
spoke at length about the fragmented nature of global supply
chains, and the difficulty this presented for controlling
SHTC components. As an example, he said that computer
numeric control devices might be exported by Japan via
Vietnam to Thailand, where they would be added to machine
tools exported from Taiwan then exported to North Korea.


6. (S) AIT noted that stricter export controls could be a
competitive advantage for Taiwan companies and that it seemed
to be only a few less-reputable companies doing most of the
trade with North Korea. AIT suggested that there needed to
be an effective deterrent for these less-reputable companies.


Additional AIT Comments for Gameplan Agenda
--------------

7. (S) The U.S. proposal asks that Taiwan expand the
requirement for export licenses to all
non-food/medical/clothing exports to North Korea and Iran
within 30 days after agreeing to do so. AIT suggests that
these measures might be applied to North Korea within 10 days
of agreement to do so. Taiwan's volume of trade with North
Korea is low enough that there would be minimal impact on
industry. The 20-day head start with North Korea would give
valuable experience when applying the measures to Iran. As
indicated in ref B, a potential problem with asking Taiwan
authorities to provide export license application and visa
information in English is that the BOFT records are kept only
in Chinese and there are no compulsory or consistent
standards for romanization of company or individual names.
Thus, BOFT may spell an individual's or company's name
differently on different documents, and use a completely
different spelling than that used by the individual or
company on other documents. Companies and individuals
commonly also use English names that have no direct relation
to their Chinese or Korean name as transliterated into
Chinese characters. AIT also suggests that a "peer review"
evaluation of Taiwan's UNSCR 1540 report consistent with the
methodology used in the UN 1540 Committee be added to the
agenda. The report provides a fairly detailed description of
Taiwan's non-proliferation and export control regime, and the
linkage to the United Nations could provide Taiwan
authorities with the political cover they need to take speedy
action by executive order instead of inaction by legislative
measures.


8. (S) AIT has also discussed the proposed visit with
Taiwan's National Security Bureau (NSB) and has received
assurances of that organization's support for the August
10-11 dates. BOFT Import/Export Administration Director
Wally Su called AIT/Econ the evening of July 29 to ask which
Taiwan agency should be coordinating the visit, MOEA, BOFT,
NSC, or NSB. AIT/Econ replied that Taiwan authorities should
make that decision.
PAAL