MACHINE TOOL PROCUREMENT EFFORTS BY ENTITIES OF

S E C R E T STATE 057067


E.O. 12958: DECL: 05/28/2033
TAGS: PARM MTCRE PREL TW CH

SUBJECT: MACHINE TOOL PROCUREMENT EFFORTS BY ENTITIES OF
PROLFERATION CONCERN (S)

REF: A. 05 STATE 26545

B. 05 AIT TAIPEI 000683

C. 05 AIT TAIPEI 004608

D. 05 STATE 199690

E. 05 AIT TAIPEI 004416

F. 06 STATE 010021

G. 06 AIT TAIPEI 000218

H. 06 STATE 013670

I. 06 AIT TAIPEI 002349

J. 06 STATE 178573

K. 07 AIT TAIPEI 002106

Classified By: ISN/MTR DIRECTOR PAM DURHAM
REASONS 1.4 (B),(C) AND (D).


1. This is an action request. AIT Taipei, please see
paragraph 5.


2. (S) Background: On several occasions since February
2005, the U.S. has shared information with Taiwan
regarding export activities of proliferation concern by
the Taiwan-based firm She Hong Industrial Co. Ltd -
also known as Hartford - to the Pakistan-based
procurement agent K.M. Enterprise (reftels).
Specifically, in one such case we raised in February
2005 and January 2006 (Refs A & H),She Hong Industrial
was supplying K.M. Enterprise with machines intended
for an end-user associated with Pakistan's National
Development Complex (NDC). NDC is the entity
responsible for developing Pakistan's Shaheen series of
ballistic missiles. We now understand that in March
2008, K.M. Enterprise was seeking four -- possibly
Wassenaar-controlled -- computer numerically controlled
(CNC) horizontal machining centers from She Hong
Industrial.


3. (S) During this same time period, the Pakistani
firm Aerolite was seeking four model HMC-800B and one
model FBM-640L CNC horizontal machining centers from
China,s Dalian Machine Tool Group. The HMC-800B
machining centers may be variants of HMC-800 machining
centers produced by a number of companies, including
the Taiwan companies Yu Ji Machine Industrial Co. Ltd.,
and Roundtop Machinery Industries Co. Ltd. Like K.M.
Enterprise, Aerolite has previously procured materials
for missile-related entities in Pakistan, and it is
possible their tools are being sought on behalf of
Pakistan's Progressive Engineering Company, an entity
associated with Pakistan's Project Management Office.
Pakistan's Project Management Office is the
organization responsible for development of Pakistan's
Ghaznavi ballistic missile. Each of the machine tools
sought by K.M. Enterprise and Aerolite could be used
in a missile program to produce frames, bulkheads and
structural components.


4. (S) Objective: Given that these machine tools most
likely will be used to support missile programs in
Pakistan, we would like Taiwanese authorities to
immediately investigate these activities with a view to
preventing the export of these machines to Pakistan.


5. (S) Action Request: Request AIT Taipei approach
appropriate officials to deliver talking points/non-
paper in paragraph 6 below and report response.
Talking points also may be provided as a non-paper.


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

(SECRET REL TAIWAN)

-- On many occasions, we have brought to your attention
exports by the Taiwan firm She Hong Industrial Co.
Ltd., which is also known as Hartford, that pose
potential proliferation concerns.

-- One such case that we raised with you in February
2005 and January 2006, involved exports from She Hong
Industrial to the Pakistani-based procurement agent
K.M. Enterprise.

-- During those discussions, we noted that one of the
machines sought by K.M. Enterprise from She Hong
Industrial was intended for an end-user that had
previously supplied goods to Pakistan's National
Development Complex (NDC). NDC is the organization
responsible for developing Pakistan's Shaheen series of
ballistic missiles.

-- We now have information indicating that in March
2008, K.M. Enterprise was seeking four computer
numerically controlled (CNC) horizontal machining
centers from She Hong. The machines required by K.M.
Enterprise were to be equipped with Fanuc controllers
that would allow 4-axis machining operations and may be
controlled by the Wassenaar Arrangement (WA).

-- During the same time period, we understand that a
second Pakistani firm, Aerolite, was seeking four model
HMC-800B CNC horizontal machining centers and one model
FBM-630L CNC horizontal boring and milling machine from
China's Dalian Machine Tool Group. The HMC-800B
machining centers required by Aerolite may be variants
of HMC-800 machining centers produced by a number of
companies, including the Taiwan companies Yu Ji Machine
Industrial Co. Ltd. and Roundtop Machinery Industries
Co. Ltd.

-- Like K.M. Enterprise, Aerolite previously has
procured materials for missile-related entities in
Pakistan and it is possible their tools are being
sought on behalf of Pakistan's Progressive Engineering
Company.

-- Progressive Engineering Company has been associated
with the Project Management Office, the organization
responsible for the development of Pakistan's Ghaznavi
ballistic missile.

-- Each of the machine tools sought by K.M. Enterprise
and Aerolite could be used in a missile program to
produce frames, bulkheads and structural components.

-- Because of the possibility that these transactions
are intended to benefit Pakistan's missile program, we
ask that you immediately investigate these activities
with a view to preventing the export of these machines
to Pakistan.

-- We look forward to continuing cooperation on export
control and nonproliferation issues and would
appreciate learning of any actions you take in this
case at the earliest possible time.

End talking points/non-paper


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


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


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