US embassy cable - 05TAIPEI2974

C O N F I D E N T I A L TAIPEI 002974 
 
SIPDIS 
 
DEPT FOR EAP/TC, NP/ECC, NP/CBM 
 
E.O. 12958: DECL: 07/08/2015 
TAGS: ETTC, PARM, PINR, PREL, PTER, TW, IT, Counterterrorism/Nonproliferation, Military Issues, Trade, Foreign Policy 
SUBJECT: TAIWAN EXPORT LICENSE APPLICATIONS AND P2S5 
 
REF: STATE 125089 
 
Classified By: AIT Acting Director David Keegan, Reason 1.4 b/d 
 
1.  (C) Summary:  AIT delivered reftel U.S. comments on 
Taiwan export license applications to Board of Foreign Trade 
(BOFT) Export Controls Task Force Head Wally Su on July 7. 
BOFT will do further investigation of the proposed sale to 
Pakistan before deciding whether or not to grant a license. 
Su discussed the status of the P2S5 now stored in Kaohsiung 
and how he solved the problem of its disposal.  End summary. 
 
2.  (C) AIT delivered to BOFT on July 7 reftel U.S. non-paper 
comments on the applications for Taiwan export licenses by 
the Ching Hung Machinery Company to export a "CHMER Wire Cut 
EDM" to end user NED University of Engineering and Technology 
(NEDUET) in Karachi, Pakistan and by the Far East Machinery 
Company to export a "CNC Horizontal Boring and Milling 
Machine" to end user Faraz Gostar-E-Sepahan in Isfahan, Iran. 
 
3.  (C) BOFT Wally Su took on board the U.S. comment that 
although the machine tools were not controlled items and 
there was no derogatory information in U.S. databases on the 
listed end-users, Taiwan should still weigh carefully the 
risk of diversion in its review of these cases.  Su indicated 
that BOFT would not approve either application without 
further review, and would consult with Japan regarding the 
appearance of NEDUET on Japan's end-user blacklist and with 
Taiwan intelligence on its report that Pakistan might use the 
machine tool might to produce WMD components.  Su was pleased 
with the quick USG response time of less than two weeks. 
 
Status of P2S5 Chemical Shipment 
------------------------- 
 
4.  (C) Su told AIT that he personally was responsible for 
the resolution of the P2S5 disposal problem.  As part of his 
research on procedures to safely destroy the material (which, 
it turns out, are fairly complicated), Su contacted the 
Italian company that manufactured it, Italmatch Chemicals. 
To his surprise, Italmatch was totally unaware of Taiwan's 
many efforts to get rid of the material and readily agreed to 
take it back if the material was still in good condition and 
if Taiwan paid for the shipping.  Based on photos Su provided 
Italmatch of the P2S5 containers and the warehouse where they 
are stored, and information on the storage conditions, 
Italmatch concluded the material was still in good condition 
with significant commercial value.  The P2S5 is now scheduled 
to be shipped to Italmatch in Italy at the end of July. 
 
5.  (C) Su told AIT that all 158 drums of P2S5 are still in 
the same storage facility that they were moved to when 
off-loaded from the North Korean ship.  The drums have no 
odors or exterior signs of rust or decay.  The drums have not 
been moved and have remained sealed.  BOFT has had control 
over the drums since they were seized almost two years ago. 
Some time ago, BOFT sent a legal notice to the listed North 
Korean end-user Daesong Corporation asking if it wished to 
file a claim.  Daesong did not respond and there were no 
subsequent requests for compensation or for the material to 
be returned.  As far as BOFT was aware, North Korea has not 
taken any legal action to recover the material or for 
compensation.  Su said that since Daesong did not respond to 
the notice BOFT sent, its legal claim to the material was 
forfeited. 
 
KEEGAN