EXBS: TAIWAN MONTHLY REPORTING CABLE - OCTOBER 2007

UNCLAS AIT TAIPEI 002486

SIPDIS

SENSITIVE
SIPDIS

DEPT FOR ISN/ECC - YWONG, ACHURCH AND KCROUCH
DEPT FOR EAP - SBREMNER
CBP/INA FOR RWATT AND JGOUGE
DEPT FOR ENERGY/NNSA FOR T. PERRY AND S. JONES

E.O. 12958: N/A
TAGS: ETTC MNUC PARM PREL KSTC KNNP TW
SUBJECT: EXBS: TAIWAN MONTHLY REPORTING CABLE - OCTOBER 2007


I. BROAD ITEMS OF INTEREST TO ADVISORS AND AGENCY
MANAGERS:

(SBU) During the week of November 19, the EXBS Advisor will be in
Washington, D.C. for her 6-month review and consultation.

II. COMPLETED ACTIONS FOR THE REPORTING PERIOD.


A. SITE ASSESSMENTS AND MEETINGS DURING REPORTING PERIOD:


1. (SBU) On October 23, the EXBS Advisor, CSI Consultant and AIT
Regional Security Officer met with the Ministry of Justice
Investigation Bureau (MJIB) to discuss on-going cooperation on
investigations, including investigations of export control
violations. Mr. Yeh Cherng-Maw, Director General of MJIB welcomed
the AIT visitors and stressed the important export control
enforcement work being done by both sides. DG Yeh stated that,
recently, more MJIB agents are interested and are involved in export
control investigations. He stated that the export control work of
MJIB was a topic of discussion at a recent meeting he had with
President Chen Shui-bian. DG Yeh also stated that he was briefed on
the Washington export control meeting held in September and that he
was pleased to hear the meeting was very productive and positive for
both sides. The EXBS Advisor echoed the sentiments voiced by DG Yeh
and thanked him for his office's participation in the Washington
meeting.


2. (SBU) October 24, the EXBS Advisor and Econoff met with Chun-Nen
(Jimmy) Huang, Chair of Department of Security Management of the
Kainan University in Taipei County. (Professor Huang participated
in post-shipment outreach visits organized by the Bureau of Foreign
Trade (BOFT) of the Taiwan Ministry of Economic Affairs in August
2007.) The meeting was to discuss Professor Huang's study on
investments and relocation of Taiwan companies to China. Professor
Huang stated that, based on his research thus far, it appears that
the major reasons for Taiwan companies moving to China are lower
production costs (31.3%); innovation plateau and
mergers/acquisitions/joint ventures by companies (20.3%); human
capital, investment opportunity, competition (15.6%); and
governmental policy, including export control rules (14.1%). (The
percentages are based on responses by 100+ Taiwan companies that
attended the Taiwan-Germany Industry Outreach program on October 5.)
Professor Huang found that the current trend is for companies to
move back to Taiwan due to the regulatory environment in China,
rather than a rush of investments in China as has been the case in
the past. Professor Huang plans to use his findings to make
recommendations to Taiwan officials on what Taiwan can do so that
Taiwan companies will invest in Taiwan rather than move overseas.
He suggested that his recommendations would include investments by
Taiwan in certain key sectors such as semiconductors, electronics,
computers, and mechanical manufacturing (e.g., machine tools) and
offering incentives such as tax breaks and research and development
opportunities for companies.


3. (SBU) On October 25, the EXBS Advisor visited Siemens Taiwan
Limited for a demonstration of Damex, Siemens' proprietary internal
control program for export controls. Damex was developed by Siemens
headquarters in Germany with customization at specific "country"
levels. For example, the system used by the Taiwan company has
search tools for the United States, Germany, the United Kingdom,
Japan and Taiwan rules and regulations, including published "watch
lists" by the countries. Siemens is in the process of upgrading
Damex, which will be completed in 2008.


B. BLUE LANTERN:

(U) AIT did not receive Blue Lantern check requests during the
reporting period.


C. TRAINING CONDUCTED DURING REPORTING PERIOD:

(U) The Department of State, through Los Alamos Technical
Associates, Inc., conducted the two-day Transit/Transshipment
training on October 30-31 in Taipei. Forty-six Taiwan officials
participated in the program. Officials from the Japanese, South
Korean, and German representative offices attended certain parts of
the program. The participants were about evenly split between those
who have attended previous EXBS programs and those attending for the
first time. The participants were mostly interested in
transit/transshipment control implementation by other countries such
as the United States and Singapore, including transit license
processing; the legal basis for compliance by forwarders and
shippers; and customs practices and procedures for
transit/transshipment. A reporting cable from Washington will have
a detailed agenda, attendee list, and analyses of feedback and
questions from participants.

III. UPCOMING TRAINING:


1. (U) The week-long Targeting and Risk Management training
implemented by Customs and Border Protection originally planned for
the week of November 12 in Kaohsiung has been postponed until spring

2008.


2. (U) The three-day Commodity Identification Training program
implemented by the Department of Energy is being planned for
February 2008 in Kaohsiung.

IV. UPCOMING MEETINGS

(SBU) On November 8 and 9, the EXBS Advisor and Econoff will meet
with officials of the Southern Taiwan Science-Based Industrial Park
in Tainan and with representatives of Corning Display Technologies
Taiwan; Applied Materials Taiwan Ltd.; ChipMos Technologies, Inc.;
Kenmos Technology Co., Ltd.; and Great Wall Enterprises Co., Ltd.
The Advisor's focus for the meetings will be export control
licensing processes and procedures by the Tainan Science Park and by
companies located in the Science Park. (Science Parks have separate
export control licensing authority from the BOFT.) The meetings
will be used to assess the program needs, if any, of the Science
Park and the companies located in the Science Park.


V. RED FLAG ISSUES:

None.

POC for this report is Mi-Yong Kim, EXBS Advisor.
Telephone 886 2 2162 2347.

YOUNG