US embassy cable - 04TAIPEI4134

S E C R E T SECTION 01 OF 02 TAIPEI 004134 
 
SIPDIS 
 
STATE FOR EAP, NP/CBM AND NP/NE - ALEX BURKART 
 
E.O. 12958: DECL: 12/22/2014 
TAGS: ETTC, KNNP, MNUC, PARM, PREL, TW 
SUBJECT: TAIWAN ASKS FOR RECONSIDERATION OF SANCTIONS ON 
TAIWAN ENTITY 
 
REF: A. TAIPEI 4105 
     B. STATE 272228 
     C. STATE 273724 
     D. STATE 240201 
 
Classified By: AIT DEPUTY DIRECTOR DAVID KEEGAN; REASONS:  1.4 (B), (D) 
 AND (H) 
 
1.  (U)  This is an action request.  Please see paragraph 8. 
 
2.  (S)  Summary:  In a meeting on December 30, Taiwan's 
Board of Foreign Trade Director Peter Ho requested that 
Washington Agencies reconsider sanctions on Taiwan's Ecoma 
Enterprise Co. Ltd. Taiwan had checked with Washington 
Agencies regarding the case prior to issuing the export 
permit, and Washington Agencies said they had no relevant 
information about the case.  On a separate issue involving 
sensitive technologies, AIT provided ref c points in response 
to Ho's earlier request for information on how AIT would 
handle a report from Taiwan that addressed how Taiwan is 
implementing the measures of UNSC 1540.  Ho also reported 
that Taiwan has decided to seek Taiwan firms that can safely 
destroy the phosphorus pentasulfide shipment detained in 
Kaohsiung.  Taiwan might well request US assistance to 
dispose of the shipment.  End Summary. 
 
Taiwan Asks for Reconsideration of Sanctions on Ecoma Co. 
--------------------------------------------- ------------ 
 
3.  (S) AIT Econ Chief met with Peter Ho, Director of 
Import/Export Administration in Taiwan's Board of Foreign 
Trade on December 30 at Ho's request to discuss USG sanctions 
on Taiwan's Ecoma Enterprise Co. Ltd. (Refs A & B).  Ho 
discussed the case at some length. He said that in 2003 BOFT 
had issued an export permit to Ecoma company to sell the CNC 
tilting rotary table to Iran's Mizan Machine Manufacturing 
Company, but only after seeking comment from the USG about 
the proposed transaction.  According to Ho, in September 2003 
Ecoma sought an export permit from BOFT.  BOFT, in turn, 
notified TECRO/Washington of the proposed transaction and 
requested comment from Washington Agencies.  TECRO/Washington 
had reported back that, after consulting with Susan Daoussi 
of USDOC's Bureau of Industrial Security, Washington Agencies 
had quote no relevant information end quote on its computer 
system regarding the proposed transaction. Based on this 
response from Washington Agencies, Ho said BOFT issued the 
export permit. 
 
4.  (S) Ho noted that he and BOFT Director General Francisco 
Huang became concerned about this case when AIT notified BOFT 
in November 2004 about USG concerns over the Ecoma/Mizan sale 
(reftel D).  He said that BOFT requested that 
TECRO/Washington reconfirm Washington Agencies comment on the 
sale.  On December 15, 2004, Ho said that TECRO/Washington 
reported that it had checked with Brian Nilsson of BIS and 
received the same comment that Washington Agencies had quote 
no relevant information end quote on its computer system 
regarding the proposed transaction. 
 
5.  (S) Ho said that, in his view the Ecoma Company has 
complied with Taiwan's export control regulations and should 
not be subject to sanctions.  He asked that Washington 
Agencies reconsider the decision to sanction Ecoma based on 
the factors listed above.  He noted that Ecoma first sought 
an export permit and then waited for the appropriate process 
to be completed before shipping the equipment.  Further, he 
said Ecoma continues to act in good faith and as evidence of 
this told us that on December 21, 2004 Ecoma applied for an 
export permit to sell another machine of the same type to 
Mizan Machine Manufacturing.  In light of the recent 
information from AIT about Mizan Machine Manufacturing, Ho 
said that BOFT would of course deny this application.  AIT 
suggested to Ho that he should notify Washington Agencies of 
the second request for a CNC tilting rotary table from Mizan 
Machine Manufacturing. 
 
Taiwan Plans for UNSC 1540 Report 
--------------------------------- 
 
6.  (C) Earlier, Taiwan had responded positively to AIT's 
proposal that Taiwan issue a voluntary report on its efforts 
to prevent proliferation of weapons of mass destruction 
similar to the one required under UNSC 1540.  AIT conveyed to 
Ho the points contained in ref c regarding AIT plans on how 
the US would handle Taiwan's report.  We noted such a report 
would provide Taiwan an opportunity for a peer review 
evaluation process of Taiwan's non-proliferation measures and 
assured Ho that AIT does not intend to release Taiwan's 
report.  Nevertheless, we encouraged Taiwan to release its 
own report.  Ho expressed appreciation for the response and 
told us that DG Huang will be hosting an interagency meeting 
on January 12 to discuss Taiwan's approach to preparing the 
report.  He said that a number of agencies will participate 
in the meeting, including the Ministry of Foreign Affairs, 
the Ministry of National Defense, the Atomic Energy Council, 
Taiwan's Environmental Protection Administration, the 
Ministry of Finance, Taiwan's Customs Administration and the 
Ministry of Justice Investigation Bureau. 
 
 
Taiwan Has Decided to Destroy P2S5 
---------------------------------- 
7.  (S) Referring to a case dating back to August 2003 of 
Taiwan having detained a shipment of phosphorus pentasulfide 
(P2S5), Ho said that last week Minister of Economic Affairs 
Ho Mei-yueh had reached a preliminary decision that Taiwan 
should destroy the chemicals rather than continue to store 
them because of their hazardous nature.  He said that Taiwan 
will check to see if firms in Taiwan can safely destroy the 
detained shipment.  If firms in Taiwan are unable to do so, 
he said that Taiwan will then ask the US to adopt the same 
approach as was used in 1996 regarding Ammonium Perchlorate 
and remove the detained shipment from Taiwan.  Ho did not 
mention that when AIT Director hosted Premier Yu and Minister 
Ho Mei-yueh to lunch last Thursday, the Premier directed 
Minister Ho to find a way to destroy the detained chemicals 
and seek assistance from the US military if necessary. 
(Comment:  Taiwan had little success in its original efforts 
to locate a buyer or someone willing to destroy the shipment. 
 For many months Taiwan has been pressing the US to resolve 
the status of the detained P2S5 by asking Washington Agencies 
to locate a buyer.  Progress of a sort has been made in that 
Taiwan has now decided that it is best to destroy the 
shipment rather than continue storing it, but we see little 
reason to expect that it will report any greater success this 
time around.  It is likely that Taiwan will shortly be making 
a formal request for the US. to remove this shipment from 
Kaohsiung harbor.  End Comment.) 
 
8.  Action request:  AIT requests Washington Agencies 
guidance on how to respond to BOFT's request for 
reconsideration of the sanctions on Ecoma. 
PAAL