US embassy cable - 05TAIPEI2025

C O N F I D E N T I A L SECTION 01 OF 02 TAIPEI 002025 
 
SIPDIS 
 
STATE PLEASE PASS AIT/W AND USTR 
STATE FOR EAP/RSP/TC, EAP/EP, EB/IFD/OIA AND NP/ECC/MCCELLAN 
STATE FOR INR/EC NKWG 
USTR FOR SCOTT KI 
 
E.O. 12958: DECL: 04/25/2025 
TAGS: ETTC, PARM, PINR, PREL, PTER, TW 
SUBJECT: TAIWAN PROPOSAL ON EXPORT CONTROL PROCEDURES 
 
REF: A. TAIPEI 1909 
 
     B. EAP/TC TO AIT/T OVERNIGHT OF APRIL 28 
 
Classified By: AIT ECONOMIC CHIEF DANIEL MOORE, REASON 1.5 B/D 
 
1.  (C) Summary: During a meeting with AIT on April 29, the 
Bureau of Foreign Trade (BOFT) presented an outline proposal 
for parameters of the new export control procedures and the 
"rapid evaluation mechanism" for end-user checks (ref A). 
BOFT said it would greatly increase the scope of its export 
license requirements once a robust mechanism for end-user 
checks is established.  BOFT also spoke of its progress on 
preparing a report responding to UNSCR 1540 and indicated KMT 
Chairman Lien Chan may have discussed cross-Strait confidence 
building measures while in China.  End summary. 
 
2.  (C) AIT met with Ministry of Economic Affairs BOFT 
officials in their offices on April 29.  In the meeting BOFT 
emphasized the importance of a "rapid evaluation mechanism" 
direct communications channel between itself and USDOC for 
the purpose of conducting end-user checks on exports of 
sensitive materials to sensitive areas.  BOFT presented AIT 
with a written outline of its proposal for of the parameters 
of the new procedures (a translation of the document has been 
sent separately to EAP/TC). 
 
3.  (C) BOFT said that once a reliable communications channel 
is established, it would greatly expand the scope of its 
export license requirements, making export licenses necessary 
for a much larger number of exports.  The first stage of 
expansion would be to require a license for all machine tool 
exports in Harmonized Tariff System (HTS) categories 8456 
through 8466 bound for "sensitive" destinations, unless the 
end-user has been previously checked and no new information 
about the end-user is available.  This expansion alone will 
cause the estimated volume of requests for USDOC end-user 
checks to jump from the current 2-3 per month to around 2 per 
day (Taiwan is now the world's fourth largest exporter of 
machine tools.) 
 
Why China is Not on the Restricted List 
--------------------------------------- 
 
4.  (C) The BOFT list of sensitive areas includes seven 
countries: Cuba, Libya, Iran, Iraq, North Korea, Syria, and 
Sudan, but does not include Mainland China. 
 
5.  (C) Comment: The deletion of China from the list of 
sensitive areas is a new and surprising development.  This is 
especially surprising since technology loss to China is 
currently a hot media and political topic in Taiwan. 
Apparently, this change reflects the realization among Taiwan 
officials that the rationale for restrictions on trade with 
and investment in China is to protect Taiwan trade secrets 
and commercial advantages rather than preventing weapons 
proliferation.  This was one of the observations highlighted 
by the EXBS trainers during their presentations on export 
control laws and regulations in March 2005.  Exports to China 
will still be restricted through mechanisms like the pending 
technology protection law, which focuses on high tech 
investment in China, and the Cross-strait Relations Act which 
contains a list of items related to silicon wafer production 
that are banned from export to China.  End comment. 
 
Keep it Simple 
-------------- 
 
6.  (C) Based on the advice received in the April 28 
overnight (ref B), we told BOFT that its plan to submit 
Chinese language product catalogues, schematic drawing, 
photos, and specification tables for each export that it 
wanted a U.S. opinion on was not workable.  We suggested that 
BOFT limit its submissions to USDOC related to end-user 
checks to English language information that can be 
transmitted in "cable format."  BOFT proposed a maximum 
waiting time of two weeks for a U.S. response.  BOFT agreed 
that the "rapid evaluation mechanism" would not work unless 
it was simple, robust, and speedy. 
 
UNSCR 1540 
---------- 
 
7.  BOFT also said it had made considerable progress on 
Taiwan's UNSCR 1540 report.  (Note: While Taiwan is not a UN 
member, the USG encourages Taiwan to abide by UN resolutions 
whenever possible, and AIT demarched Taiwan in late 2004 to 
prepare a UNSCR 1540 report.  End note.)  Taiwan committed to 
deliver its report by May 20, 2005.  BOFT noted that the 
report was difficult to prepare because of the complexity of 
the issues and number of government agencies involved, but it 
was trying its best to meet the May 20 deadline. 
 
Lien Chan's China Talks Cover CBM 
--------------------------------- 
 
8.  BOFT indicated that some of Lien Chan's staff 
accompanying him to China had been briefed on &Confidence 
Building Measures8 (CBM) as presented in the recent course 
offered by Sandia Labs in New Mexico earlier this year for 
Taiwan officials.  BOFT believed that CBM would be a major 
topic of the KMT discussions in China. 
 
PAAL