TAIWAN EXPORT CONTROL DOWNGRADE?

C O N F I D E N T I A L TAIPEI 000772 SIPDIS STATE PASS AIT/W STATE FOR EAP/RSP/TC, EAP/EP ADN EB/IFD/OIA E.O. 12958: DECL: 02/23/2025 TAGS: ETTC ECON ETRD TW CH SUBJECT: TAIWAN EXPORT CONTROL DOWNGRADE? REF: TAIPEI 710 Classified By: AIT DIRECTOR DOUGLAS H. PAAL, REASON 1.5 B/D ¶1. (C) Summary and action request: Taiwan Board of Foreign Trade (BOFT) Director Peter Ho called with an &urgent8 request for AIT to find out if there was any truth to the claim made by legislators on February 23 that the U.S. has doubts about Taiwan's ability to control exports of sensitive high-tech products and technology and might downgrade Taiwan from a &group B8 country to a &group C8 country (a more restrictive classification) for U.S. high-tech exports. The possible downgrade has been widely reported in Taiwan media. AIT requests guidance on how to respond to Peter Ho and to media questions on the issue. End summary. ¶2. (C) BOFT Director Peter Ho, a key AIT contact on export control issues, called on February 24 with what he described as an &urgent8 request for AIT to find out if there was any truth to the claim made by Taiwan Solidarity Union (TSU) Legislators David Huang (Huang Shi-zao) and Mark Ho (Ho Ming-hau) in the LY on February 23 that the U.S. has doubts about Taiwan's ability to control exports of sensitive high-tech products and technology. Peter Ho said Economic Minister Ho Mei-yueh will address the Legislative Yuan (LY) on Friday, February 25 and expects to be asked if there is anything behind the TSU legislators statements. The two TSU legislators claim the information about U.S. doubts comes from sources in Taiwan's National Security Council, who asserted that as a consequence of the doubts the U.S. might downgrade Taiwan from a &group B8 country to a &group C8 country (a more restrictive classification) for U.S. high-tech exports. ¶3. (C) The claim that the U.S. could downgrade Taiwan's export control ranking occurs in the context of impassioned debate in the LY over the advisability of liberalizing regulations on trade and investment with China. The TSU strongly opposes liberalization, preferring to keep restrictions in place that prevent an &over-reliance8 on China. However, the UMC case has highlighted that Taiwan companies are evading current restrictions and led to calls from business and political circles that the restrictions be relaxed (reftel). The statements of TSU legislators' are part of their arguments against liberalization, arguing that easing restrictions on trade and investment with China could both weaken Taiwan's economy and lead to restrictions in U.S. exports to Taiwan. ¶4. (C) We have told Director Ho we have no information on the reports of a possible downgrade of Taiwan, but would immediately request guidance on how we think his Minister should respond to questions on the issue. As a regular participant in export control meetings with U.S. agencies, Ho is clearly aware that the U.S. does have "doubts" about Taiwan's export control regime. The incendiary element in the legislators statements is linking these doubts with the debate over restrictions on investment and trade with China and to the possibility of downgraded ties with the U.S. ¶5. (C) TSU Legislator (and former NSC official) Lai Hsin-yuan raised the same issue with AIT on February 23, but said her TSU colleague Mark Ho claimed his information came directly from a U.S. official rather than the NSC. Lai expressed doubts over Ho's sources and asked for USG clarification. Lai acknowledged that the TSU is fishing for information in order to block any liberalization of rules governing the transfer of sensitive technologies to China. Lai said the TSU is deeply concerned over the the NSC's lack of interest (and the Executive Yuan's lack of resolve) in protecting Taiwan's high-tech competitiveness. Nevertheless, Lai asserted that she did not want the TSU to misconstrue USG policy in order to advance its agenda. PAAL