TAIWAN WILL FURTHER INVESTIGATE SUSPECT EXPORTS

C O N F I D E N T I A L TAIPEI 003600

SIPDIS

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

E.O. 12958: DECL: 08/11/2015
TAGS: ETTC PARM PINR PREL PTER TW IR
SUBJECT: TAIWAN WILL FURTHER INVESTIGATE SUSPECT EXPORTS

REF: STATE 157206

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


1. (C) Summary: AIT delivered reftel non-paper/talking
points to the Bureau of Foreign Trade (BOFT) on August 26.
AIT also delivered and explained the AIT-developed license
template. BOFT said it will further investigate the cases
mentioned in the talking points. BOFT praised the template's
"sophisticated design," and described efforts to conduct
post-shipment checks through Taiwan offices in Iran. End
summary.


2. (C) AIT/ECON delivered reftel non-paper/talking points on
Taiwan machine tool exports to Syria to BOFT Export Controls
Task Force Head Wally Su on August 26. AIT/ECON stressed the
importance of requiring companies to know the end user of
their products and asked for a clear explanation of what
restrictions had been placed on the She Hong Company. Su was
unable to readily explain the restrictions placed on She
Hong, or how Eumatech, an unregistered company, could
continue to export machine tools to Syria, but said BOFT
would investigate the cases further. Su said he had asked
Ecoma's General Manager Mr. Guo to travel from Taichung to
Taipei to explain the company's contact with Iran after its
commitment earlier this year not to have further dealing with
that country. Ecoma General Manager Guo said an Iranian
company had approached Ecoma in May for a price quotation on
machine tools, but no deal had been reached.


3. (C) Su told AIT he did not have any questions on the
export/transit/re-export license template that AIT had
designed and provided to BOFT. He said it seemed
"self-explanatory" and that his technical people had praised
the template's "sophisticated design."


4. (C) Su also spoke of his efforts to conduct post-shipment
verification in Iran through the Taiwan External Trade Office
(TAITRA) in Tehran. He said that he had asked TAITRA to
investigate the Iranian companies which purchased the machine
tools from Ecoma. However, Su learned from TAITRA that many
companies in Iran operate with a low public profile and
routinely use invoice manipulation to keep import duties to a
minimum. As a result, TAITRA's investigation aroused
suspicions, revealed little, and left the investigator
fearing for his physical safety after making inquiries. Su
said TAITRA reported that Iran was making a major push to
develop its automobile industry and estimated the potential
market for car manufacturing equipment at USD 3 billion.
TAITRA further reported that Germany had sold USD 1 billion
worth of car manufacturing equipment to Iran in the past
year.
PAAL