US embassy cable - 05TAIPEI2475

C O N F I D E N T I A L SECTION 01 OF 02 TAIPEI 002475 
 
SIPDIS 
 
STATE PASS AIT/W AND USTR 
STATE FOR EAP/RSP/TC, EAP/EP, NP/ECC/MCCELLAN 
STATE FOR INR/EC NKWG 
USTR FOR SCOTT KI 
 
E.O. 12958: DECL: 06/02/2010 
TAGS: ETTC, PARM, PREL, PTER, PINR, TW 
SUBJECT: TAIWAN TO REQUIRE EXPORT LICENSES FOR MACHINE 
TOOLS TO NORTH KOREA 
 
REF: TAIPEI 2025 
 
Classified By: AIT DIRECTOR DOUGLASS PAAL FOR REASONS 1.5 B/D 
 
1.  (U) This is an action message.  Please see paragraph 8. 
 
2.  (C) Summary:  Taiwan plans to impose a positive 
requirement that Taiwan firms obtain an export license before 
shipping machine tools, including reexports, to North Korea. 
Board of Foreign Trade Deputy Director General Wu provided a 
written plan to AIT/T on June 3 and requests USG comments as 
soon as possible.  Taiwan's UNSCR 1540 report is in the final 
review process.  End Summary. 
 
Export Licenses for Machine Tools Headed to North Korea 
--------------------------------------------- ---------- 
 
3.  (C) At the request of Taiwan's Board of Foreign Trade, 
AIT/T Econ Chief met with BOFT Deputy Director General James 
Wu on June 3 to receive an English-language paper prepared by 
BOFT describing Taiwan's plans to implement a positive 
requirement for Taiwan firms to obtain an export permit 
before shipping machine tools, including reexports, to North 
Korea.  Wu said that following the recent visit of National 
Security Bureau Director General Hsueh Shih-ming to the U.S., 
Taiwan wanted to provide the paper to the USG as soon as 
possible.  AIT/T has sent the document via e-mail to EAP/TC 
(Jim Levy) and NP (Kathy Crouch).  This document has been 
prepared by Taiwan agencies and not yet shared with its 
machine tool industry.  Wu requested USG comments on Taiwan's 
proposed export control plan so that BOFT can proceed to 
implement the plan. 
 
4.  (C) Wu described the proposed procedure as requiring all 
Taiwan companies to apply to BOFT for a license before 
exporting machine tools to North Korea.  BOFT will review all 
applications and check end users and end use against the 
Sensitive High-Technology Control List.  If the commodity is 
on the SHTC, Taiwan will hold the application and forward the 
case through AIT to Washington Agencies for comment.  If the 
commodity is not on the SHTC list, BOFT will issue a license 
and inform AIT of such licenses issued.  Wu noted that these 
procedures will also apply to goods to be re-exported from 
Taiwan to North Korea.  In a subsequent conversation to 
clarify Taiwan's procedures regarding shipment of machine 
tools to destinations other than North Korea, BOFT Export 
Control Task Force leader Wally Su requested U.S. assistance 
to provide updated lists of goods on the SHTC and "black 
lists" of companies that should not receive high technology 
goods.  Su reiterated Taiwan's longstanding concern that it 
lacks the means to verify the final destination and end use 
of products that it ships to places like Hong Kong.  He said 
that Taiwan needs assistance to build up its capability to 
determine if companies in intermediate points are then 
reexporting Taiwan goods on to prohibited destinations. 
 
5.  (c) Wu particularly asked how long it would take for the 
U.S. to process and comment on the cases submitted by Taiwan. 
 Given that Taiwan is currently planning to implement this 
positive licensing requirement only for North Korea, it 
expects to have two or three cases per month.  When we asked 
about a positive licensing requirement for other countries of 
concern, Wu said that Taiwan would first like to try out the 
system on North Korea and then would consider expanding the 
process to other countries. 
 
6.  (SBU) Wu noted that exports of machine tools from Taiwan 
to North Korea, and exports to North Korea in general, make 
up a very small proportion of Taiwan's exports.  In 2004, 
BOFT recorded approximately USD2 million of machine tool 
exports to North Korea.  Some 20 Taiwan companies shipped 
machine tools to North Korea in 2004. 
 
UNSCR Report Under Final Review 
------------------------------- 
 
7.  (C) When asked, Wu said that Taiwan is continuing to work 
hard on the UNSCR 1540 report and may have it ready in the 
next week or two.  It is currently at the Executive Yuan for 
final review. 
 
8.  (C) Action Request:  Request Washington agencies' 
comments on the paper prepared by BOFT.  In particular, we 
would appreciate an estimate of the amount of time that will 
be required for U.S. review of license applications sent for 
review by BOFT.  End action request. 
PAAL