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 NNNN