1. (S) On January 22, 2007, AIT Economic Section received
a letter from the Bureau of Foreign Trade (BOFT)
regarding the Dah Lih Machinery and Industry Co. in
response to a request submitted by AIT as instructed in
ref A. The text of the letter was sent to ISN/MTR by
classified e-mail on January 24 (ref B). Ref C reports
on the pre-license check of Dah Lih that AIT conducted on
January 24. An unofficial translation of the BOFT letter
follows.



2. (S) Begin text:

Bureau of Foreign Trade Letter

Address: 1 Hukou Road, Taipei
Point of contact: Chang Chih-chung
Telephone number: (02) 23977492
Fax number: (02) 23970522
E-mail address: rogerchang@treade.gov.tw

Addressee: American Institute in Taiwan Economic Section
Date: January 19, 2007
Document number: Central Trade No. 09601501660
Urgent
Classification: Confidential (Declassification date:
January 31, 2009)

Main Point: Regarding Dah Lih Machinery and Industry Co.,
Ltd.'s alleged exports of precision machine tools to
Iranian Saipa Heavy Die Manufacturing Co. without
permission.

Explanation:

--1. The case was processed based on the non-official
document submitted by the Economic Section of AIT.
--2. The circumstances of this case's investigation by
BOFT are as follows:
--(1) During the period of January to November 2006, Dah
Lih Machinery and Industry Co., Ltd. declared to export
three sets of comprehensive machine tools to Balin Tech
Co. of Iran on August 27 with a sensitive high-tech
commodities (SHTC) export permit (FTSA95W0036973, see
addendum one) issued by BOFT. Through the "U.S.-Taiwan
Rapid Verification Assistance Mechanism," the United
States had confirmed that the transaction had nothing to
do with weapons proliferation. Thus, BOFT issued the
permit.
--(2) On November 22, 2006, when Dah Lih Machinery and
Industry Co., Lid. again applied for an SHTC export
permit from BOFT in order to export another three sets of
comprehensive machine tools to Balin Tech Co. of Iran,
the United States discovered that the end user for the
machine tools was Saipa Heavy Dies Manufacturing Co. with
weapons proliferation concerns (see addendum two).
Therefore, BOFT did not issue the export permit for the
machine tools.
--(3) In order to prevent Dah Lih Machinery and Industry
Co., Ltd. from illegally exporting items on the SHTC list,
BOFT has listed Dah Lih Machinery and Industry Co., Ltd
and Saipa Heavy Dies Manufacturing Co. of Iran on
Taiwan's watch list since July 10, 2006, and requested
Taiwan Customs, visa issuance agency, and relevant
intelligence agencies to maintain continued monitoring.

Original document to: AIT Economic Section
Copy to: National Security Bureau liaison in AIT Economic
Section (secured fax)

Director General: Huang Chih-peng (absent)
Deputy Director General: Wu Shin-hua (acting)

End text.
YOUNG