DOUBLE SUCCESS IN TAIWAN EXPORT CONTROL

S E C R E T SECTION 01 OF 02 TAIPEI 004956 SIPDIS E.O. 12958: DECL: 12/25/2025 TAGS: PARM PREL TW CN SUBJECT: DOUBLE SUCCESS IN TAIWAN EXPORT CONTROL Classified By: AIT Director Douglas Paal, Reason 1.4 b/d ¶1. (S) Summary: During meetings with Taiwan Bureau of Foreign Trade (BOFT) on December 16 and 21, Export Controls Task Force Head Wally Su enthused to AIT that the USG "gameplan" on export control was already a great success, judging from the offers of assistance BOFT has received from Japan, Australia, and the UK in recent days. Su also said that BOFT is now, for the first time ever, preparing an export control violation case to send to the Ministry of Justice for prosecution. End summary. Gameplan a Success -------------- ¶2. (S) Su sees the gameplan in the way we presented it to him: A USG effort to encourage other countries to join in assisting Taiwan to improve its export control regime. Su said that in the past few days he has heard from representatives of Japan, Australia, and the UK about plans those countries have to provide export control training for Taiwan officials. ¶3. (S) Su confided that Japan representatives in Taiwan have told BOFT they will send an export control delegation to Taiwan for discussions early next year, and they will invite Taiwan to a regional export control seminar that will be held in Tokyo in February or March. He said he believed that China and the U.S. would also be invited to attend the seminar. Su also confided that BOFT had received assistance from the Japanese government on the export control violation case described para 5. Su said that a representative of Australia in Taiwan told him that Taiwan would be invited to an Australian-sponsored regional export control event in April and that the Taiwan office in London had been approached about the possibility of Taiwan officials attending training there. ¶4. (S) Separately, British Trade and Cultural Office Political and Economic Section Head Den Moore explained to AIT that it was unlikely that British export control experts could conduct training in Taiwan, and asked for our opinion of the utility of bringing Taiwan officials to the UK for training. We encouraged the idea. BOFT Gets Tough on Violators -------------- ¶5. (S) Su described in detail the first ever export control violation case that BOFT will refer for prosecution. The case involves one of Taiwan,s prominent families and has resulted in some high-level pressure on BOFT. ¶6. (S) According to Su, in September of this year, the BOC Lien Hwa Industrial Gases Company (a Taiwan a joint venture with the British international gas supplier BOC Group plc.) imported from Japan three shipments of ClF3 (Chlorine Trifloride- a dual-use poison gas controlled by the Nuclear Suppliers Group that can be used as a solvent in the electrical industry or as an oxidizer in rocket propellant). The export licenses stated that the gas was for use in Taiwan. Japan Assistance to Taiwan in the Investigation -------------- -- ¶7. (S) Without seeking a re-export license, Lien Hwa shipped the chemical to its branch in Taichung, Taiwan, then re-exported it to the Taiwan Semiconductor Manufacturing Corporation branch in Shanghai (TSMC is the world's largest integrated circuit foundry firm). BOFT sent at least two official letters asking for complete documentation related to the case within one week. Lien Hwa responded with a letter requesting more time. The Japanese government assisted in providing copies of the original export licenses. ¶8. (S) After making some phone calls to BOFT, Lien Hwa lawyers realized that BOFT already had clear evidence that the company had violated Taiwan's export control regulations found in section 13 and 27 of the Trade Act. At that point, the company decided it was better to cooperate in hope of getting more lenient treatment. Hope for Special Treatment Disappointed -------------- ¶9. (S) The Lien Hwa Chairman John Miao (Feng Meng)- the younger brother of Mitac Chairman Matthew Miao (Feng Chiang)- made two visits to BOFT to argue that the re-export was the result of unintentional mistakes. A "famous" lawyer called on the Ministry of Economic Affairs to echo the "unintentional mistake" argument and plead for "lenient" treatment, which generated some "pressure" on BOFT to justify sending the case for prosecution. ¶10. (S) However, according to Su, there was evidence that the errors on the shipping documents were intentional. The gas never could have been exported from Japan if China was listed as the destination. Lien Hwa's use of its Taichung branch appears to have been done to complicate the paper trail and to use a port believed to have less frequent inspections (Taichung Harbor). BOFT Actions a Significant Step Forward -------------- ¶11. (S) Su is very aware of the significance of this first-ever BOFT effort to sanction a Taiwan company for export control violations, and has insisted to reluctant superiors that the case be sent to the Taichung Prosecutor's Office for legal action. AIT Suggestion Finds Legs -------------- ¶12. (S) Su also said he had taken to heart a recent AIT suggestion that identification of the end-user be required on export documents even for non-sensitive items. He said he will hold a meeting with Customs on December 23 to discuss how this could be done. Comment -------------- ¶13. (S) AIT believes that BOFT is on the right path to making a significant change in local attitudes towards export control regulations. A few prosecutions of violators would make other companies think twice about cutting legal corners. The fact that BOFT has been able to stand firm against one of Taiwan,s leading families in a case involving powerful companies is also worth noting as a positive development. PAAL