TAIWAN COMPANY POSSIBLY SUPPLYING MACHINE TOOLS

S E C R E T STATE 002997


E.O. 12958: DECL: 01/12/2034
TAGS: PARM MTCRE PREL TW PK

SUBJECT: TAIWAN COMPANY POSSIBLY SUPPLYING MACHINE TOOLS
TO WEAPONS-RELATED ENTITIES IN PAKISTAN(S)

REF: A. STATE 036646

B. AIT TAIPEI 000607

C. AIT TAIPEI 000622

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: In April 2008, we alerted Taiwan
authorities that the Taiwan firm Euma-Spinner Corporation was
negotiating the sale of a machine tool controlled by the
Wassenaar Arrangement and Nuclear Suppliers Group to a firm
in Syria (Ref A). Because of our concerns about the
proliferation risks inherent in supplying controlled machine
tools to Syria, we urged Taiwan authorities to investigate
this activity and take measures to stop this transfer from
taking place. In May 2008, Taiwan representatives responded
that they did not find evidence that Euma-Spinner had
exported this machine tool to Syria, but noted that they
planned to subject Euma-Spinner exports to greater scrutiny
in the future (Refs B and C).


3. (S) Since our May 2008 discussions of this case, we have
learned that Euma-Spinner may be engaged in machine tool
sales that appear to pose proliferation concerns.
Specifically, we understand that in November 2008, the
Turkish company Spinner Takim Tezgahlari Sanayi ve Ticaret
Ltd. arranged the shipment of a five-axis machining center
controlled by the Wassenaar Arrangement and Nuclear Suppliers
Group to a Pakistani firm associated with the Pakistani
Atomic Energy Commission. This machine was produced in
Taiwan by Euma-Spinner Corporation and is suitable for
producing precision components for missile or nuclear
applications. Our information also indicates that Spinner
Takim Tezgahlari Sanayi ve Ticaret shipped a similar machine
in December 2007 to an entity linked to Pakistan's Missile
Technology Control Regime (MTCR) Category I missile programs.



4. (S) Because it is possible these machining centers were
intended to support weapons-related programs in Pakistan, we
want to request Taiwan authorities investigate this
information and determine whether they have reviewed any
licensing requests involving Euma-Spinner related to these
exports. If such requests were received, we would like to
know if there were any indications that the ultimate
end-users for these machines were in Pakistan. We also want
to use this case to press Taiwan to closely scrutinize all
exports of controlled goods from Taiwan to ensure that third
country intermediaries are not re-exporting Taiwan-origin
technology to programs or end-users of proliferation concern.



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)

-- As part of our extensive cooperation under the U.S.-Taiwan
"Gameplan," we have raised with you on many occasions exports
of computer numerically controlled (CNC) machine tools that
pose potential proliferation concerns.

-- You will recall that in April 2008, we alerted you that
the Taiwan firm Euma-Spinner Corporation was negotiating the
sale of a machine tool controlled by the Wassenaar
Arrangement and Nuclear Suppliers Group to a firm in Syria.

-- You responded in May 2008 that you did not find evidence
of Euma-Spinner Corporation having exported this machine tool
to Syria, but informed us that you planned to implement
measures to subject Euma-Spinner Corporation to greater
export control scrutiny.

-- We now would like to share with you additional information
regarding sales of machine tools produced by Euma-Spinner
that appear to pose proliferation concerns.

-- Specifically, we understand that in November 2008, the
Turkish company Spinner Takim Tezgahlari Sanayi ve Ticaret
Ltd. arranged the shipment of a model MC1020P CNC vertical
machining center to a Pakistani firm known as Engineering and
Commercial Services. This machine was produced in Taiwan by
Euma-Spinner Corporation.

-- We believe this model MC1020P vertical machining center is
configured to perform five-axis machining operations and is
controlled by the Nuclear Suppliers Group and the Wassenaar
Arrangement. This is a highly capable machine suitable for
producing precision components for missile or nuclear
applications.

-- Our information indicates that Engineering and Commercial
Services is associated with the Pakistani Atomic Energy
Commission.

-- In addition, Spinner Takim Tezgahlari Sanayi ve Ticaret
shipped a similar machine in December 2007 to New Auto
Engineering, a company associated with Pakistan's Project
Management Organization (PMO). PMO is an entity involved in
Pakistan's Missile Technology Control Regime (MTCR) Category
I missile programs.

-- Because it is possible that these machines were being
procured to support weapons-related programs in Pakistan, we
ask that you investigate this information and determine
whether you reviewed any licensing requests for Euma-Spinner
to export these machines to Spinner Takim Tezgahlari Sanayi
ve Tikaret in Turkey.

-- If you did receive such requests, we would appreciate
learning if there were any indications that the ultimate
end-users for these machines were in Pakistan, not Turkey.

-- We urge you to closely scrutinize all exports of
controlled goods from Taiwan to ensure that third country
intermediaries are not re-exporting Taiwan-origin technology
to programs or end-users of proliferation concern and thereby
undermining your export control efforts.

-- We look forward to continuing cooperation on export
control and nonproliferation issues and would appreciate
hearing the results of any actions you take in response to
this information.


7. (U) Washington POC is ISN/MTR James Mayes (Phone:
202-647-3185). 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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