CHINESE COMPANY OFFERING TO SELL TAIWAN-ORIGIN

S E C R E T STATE 010746

SIPDIS


E.O. 12958: DECL: 02/01/2033
TAGS: PARM MTCRE PREL TW CH

SUBJECT: CHINESE COMPANY OFFERING TO SELL TAIWAN-ORIGIN
MACHINE TOOLS TO WEAPONS-RELATED ENTITY IN NORTH KOREA (S)

Classified By: ISN/MTR Acting Director Ralph Palmiero 1.4 (B),
(C) and (D)


1. This is an action request. AIT Taipei, please see
paragraph 4.


2. (S) Background and Purpose: In light of our
extensive cooperation with Taiwan under the export
control "Gameplan," we want to alert Taiwan
authorities to efforts by a Chinese firm to transfer
Taiwan-origin machine tools to North Korea.
Specifically, in December 2007, China's Dandong Union
Trading Co. Ltd. offered to provide a variety of
Taiwan-origin machine tools to the Korea Kumryong
Trading Corporation, which is associated with Korea's
primary weapons trading firm Korea Mining Development
Corporation (KOMID). Although these machine tools are
not controlled, they are capable of being used to
support the manufacture of missile components or in
advanced conventional weapons applications.


3. (S) Objective: Because the USG believes that
Dandong Union Trading Co. may be working with KOMID or
its affiliates to circumvent Taiwanese export control
laws, we want to ask Taiwan authorities to investigate
this information and take measures to prevent third-
country intermediaries from supplying Taiwan-origin
technology with potential applications to ballistic
missiles, WMD or advanced conventional weapons to
entities in North Korea. We also want to note that
such action would be consistent with United Nations
Security Council Resolution 1718.


4. (S) Action Request: Request AIT Taipei approach
appropriate officials to deliver talking points/non-
paper in paragraph 5 below and report response.
Talking points also may be provided as a non-paper.


5. (S) Begin talking points/non-paper:

(SECRET REL TAIWAN)

-- The U.S. appreciates your continuing efforts to
strengthen Taiwan's export control system by
implementing the U.S.-Taiwan "Gameplan."

-- It is in this context that we would like to share
with you information concerning efforts by an entity
in China to export Taiwan-origin machine tools to
North Korea.

-- Specifically, we have information that in December
2007, China's Dandong Union Trading Co. Ltd. had
offered to provide a variety of machines produced by
Taiwan companies to the Korea Kumryong Trading
Corporation.

-- Korea Kumryong Trading Corporation is associated
with the Korea Mining Development Corporation (KOMID),
which is North Korea's primary weapons trading firm.

-- The machine tools offered to Korea Kumryong Trading
Corporation include equipment manufactured by the
Taiwan CombiTech Co. Ltd., Jagura Industry Ltd., and
the Taichung-based firm Iron Flower Machinery Inc.

-- Although none of these machines is export-
controlled, we estimate that they could be used to
support the manufacture of missile components or in
advanced conventional weapons applications.

-- Given the increased scrutiny applied to such
exports to North Korea under the Gameplan, we believe
that Dandong Union Trading Co. may be working with
KOMID or its affiliates to circumvent your export
control laws.

-- We therefore ask that you investigate this
information and take measures to prevent
intermediaries in China or elsewhere from supplying
Taiwan-origin technology with potential applications
to ballistic missiles, WMD or advanced conventional
weapons to entities in North Korea. We believe such
action would be consistent with United Nations Security
Council Resolution 1718.

-- We look forward to continued cooperation on export
control matters and would appreciate your sharing with
us the results of your investigation into this
activity at the earliest possible time.


6. (U) Washington POC is ISN/MTR April Jones (Phone:
202-647-3176). Please slug any reporting on this
issue for ISN and EAP.


7. (U) A word version file of this document will be
posted at www.state.sgov/demarche.
RICE


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