MTAG: AUGUST 2006 UPDATE ON TAIWAN EXPORT CONTROL

S E C R E T SECTION 01 OF 02 TAIPEI 002701

SIPDIS

SIPDIS

STATE FOR EAP/TC AND ISN/MTR

E.O. 12958: DECL: 08/09/2026
TAGS: MTCRE PARM TW ECCT
SUBJECT: MTAG: AUGUST 2006 UPDATE ON TAIWAN EXPORT CONTROL

REF: A. STATE 130069


B. STATE 128600

C. STATE 119654

Classified By: AIT ADDIR Charles E. Bennett, REASONS 1.4 B/C


1. (S) Summary: On August 9, AIT delivered to the Taiwan
Bureau of Foreign Trade (BOFT)ref A talking points on recent
machine tool transfers to North Korea by Ching Hwee
International Trading and ref B results of three export
license reviews. BOFT noted that the U.S. response on export
license case WA0606261115448007 is overdue. BOFT said its
recommendation on measures to demonstrate Taiwan's
displeasure over recent North Korean missile tests has been
forwarded to Taiwan's Ministry of Foreign Affairs for
announcement. Separately, AIT has forwarded the results of
BOFT's investigation of recent Euma-Spinner Corporation
transfer of machine tools to Syria (ref C) via email. Action
Request para 5. End summary.

Ching Hwee Machine Tools to North Korea
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2. (S) AIT delivered ref a talking points/non-paper on
machine tool transfers to North Korea by Ching Hwee to the
BOFT Export Controls Task Force Head Wally Su. AIT
emphasized that Ching Hwee has been selling machine tools to
North Korea for years now and needs to be stopped. Su said
he suspected that Ching Hwee was shipping machine tools to
North Korea via intermediate territories to evade the need
for an export license. He said that he is currently working
with the Ministry of Justice Investigation Bureau on ways of
collecting evidence such as phone conversations or bank
records that could prove Ching Hwee is aware that its
products are going to North Korea and thus provide the legal
basis for prosecution. He agreed with AIT's recommendation
that a harsh penalty could be an effective deterrent for
other companies tempted to engage in such behavior.

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3. (S) BOFT noted an apparent mix-up of case numbers in ref

B. Su explained that case WA060712165238018 is the shipment
going for temporary display at the industrial fair in Iran,
while case WA060705160110006 was inadvertently sent twice.
AIT and BOFT agreed that to prevent such confusion in the
future, BOFT will add the letters 'XO' (meaning for
exhibition only) to the SCL column in the template. Su
reiterated that in general Taiwan is pleased at how well the
review system is working, but he also noted that the U.S.
response on export license case WA0606261115448007 is
overdue.

Measures Against North Korea
--------------


4. (S) BOFT Su told AIT that in response to repeated AIT
high-level demarches that Taiwan restrict its trade with
North Korea, an interagency group last week approved his
recommendation to immediately expand the list of items
requiring an export license to be shipped to North Korea to
include the 344 additional items recommended by U.S. agencies
in December 2005. Su said a letter announcing this has been
sent to the Ministry of Foreign Affairs for delivery, and
that it would also be noted at the TIFA follow-up talks
scheduled for next week.

Investigation Results
--------------


5. (S) AIT has forwarded the results of BOFT's investigation
of the Euma-Spinner companies to EAP/TC and ISN/MTR via email
(ref C). The documents forwarded include a list of Euma
machine tool exports to the Spinner Company in Germany. The

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Spinner Company maintains a sales office in the Middle East,
which, Taiwan officials suspect, has transshipped machine
tools to Syria. In its investigation report, BOFT requests
U.S. assistance in passing this information to the German
Government. Action request: please advise what, if any,
response we should give to this request for U.S. assistance
in relaying export control information to the German
Government.
YOUNG