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