RESPONSE FOR BLUE LANTERN LEVEL 3: POST-SHIPMENT

UNCLAS TOKYO 000328 SENSITIVE SIPDIS PM/DTCC BLUE LANTERN COORDINATOR E.O. 12958: N/A TAGS: ETTC KOMC JA SUBJECT: RESPONSE FOR BLUE LANTERN LEVEL 3: POST-SHIPMENT END-USE CHECK ON LICENSES 050102957 REF: STATE 1514 ¶1. (SBU) Post submits the following information in response to reftel inquiry. On January 20, Econoff conducted a site visit and met with Mr. Tsuneo TAKEDA, President of Sky Trading Co., Ltd. Takeda produced documentation (Japan Ministry of Defense (MOD) receipts) to verify the following eight shipments: (I) Shipment dated July 2, 2008, contained three valves and pressure equalizers. Delivered to Japan Air Self Defense Force (JASDF) 2nd Depot on July 9, 2008 (II) Shipment dated July 6, 2008, contained 40 valves. Delivered to JASDF 2nd Depot on July 17, 2008/ (III) Shipment dated August 31, 2008, contained 23 valves and one relay. Delivered to JASDF 2nd Depot on September 11, 2008 (IV) Shipment dated October 8, 2008, contained five valves and 25 switch and P/B assy. Delivered to JASDF 2nd Depot on October 16, 2008. (V) Shipment dated January 24, 2009, contained 136 gauges, 64 valves, and 72 check valves. Delivered to JASDF 2nd Depot on February 5, 2009. (VI) Shipment dated April 22, 2009, contained 10 valves. Delivered to JASDF 1st Depot on June 2, 2009. (VII) Shipment dated May 9, 2009, contained 131 gauges, 50 valves, and 77 check valves. Delivered to JASDF 2nd Depot on May 21, 2009. (VIII) Shipment dated October 3, 2009, contained 131 gauges. Delivered to JASDF 2nd Depot via Sumitomo Precision Products Co., Ltd. (http://www.spp.co.jp/English/index2-e.html). The goods were delivered to Sumitomo Precision on October 26, ¶2009. Sumitomo Precision will use these gauges for High Assy. repairs under a separate contract with MOD. MOD officials verified that the final products are to be delivered to JASDF 2nd Depot. ¶2. (SBU) All information concerning shipments was confirmed via e-mail on February 17 by MOD official, Mr. Teramoto of the Equipment Policy Division. The receipts did not indicated the dollar value of the goods, but Econoff verified that the amount in the invoices from Trans-Pac Sales Corp. matched the values indicated in the shipping records supplied by Department. Econoff further verified all contracts between Sky Trading and MOD for these shipments. ¶3. (SBU) Sky Trading used Kawasaki Kisen, also known as K-line (http://www.kline.co.jp/index e.html),as its exclusive shipping company for these goods. Takeda explained that when they receive the goods from the United States, they tend to keep the bulk of the goods at the K-line facility at the airport. If it is a small amount, however, they store it in their office. The length of time such goods are stored at the office depends of the scheduling of inspection. Before they can deliver the goods to the end-user, officials from the end-user come to their office to inspect the goods. This can take up to two weeks. Once goods clear inspection, they are shipped by truck to the relevant end-user. ¶4. (SBU) The company is housed in a small one-room office in a small office building in a mixed use district. Sky Trading employs a security system that detects any changes in room temperature caused by the entry of a person. Any change in temperature causes a security guard to be notified. Takeda said there have been no incidents of theft. ¶5. (SBU) Takeda said his company has never stockpiled any military items in their office or elsewhere. He further stated the company never imports goods for the purpose of stockpiling. They only place orders with suppliers when they have a request from an end-user, he explained. Takeda did say, however, that the several years could pass between the date of contract with the MOD and the actual delivery of the desired goods. He said the Non-Transfer and Use Certificate (DSP-83) covers several contracts. Takeda is aware that the license is only valid for four years and understands the need to apply for a new license should the current one expire before receiving all the goods included in the value of this license. ¶6. (SBU) COMMENT. At this point, Embassy Tokyo recommends no further follow-up action. The transactions undertaken by Sky Trading appear, as far as we can tell, legitimate. They have been confirmed by the MOD. Sky Trading's behavior and explanations indicate an understanding of the regulations governing the handling of USML items. END COMMENT. ROOS