US embassy cable - 05TAIPEI3201

S E C R E T SECTION 01 OF 02 TAIPEI 003201 
 
SIPDIS 
 
DEPT FOR EAP/TC, EAP/EP, NP/ECC, NP/CBM 
DEPT PASS AIT/W 
 
E.O. 12958: DECL: 07/11/2015 
TAGS: ETTC, PARM, PINR, PREL, PTER, TW, Counterterrorism/Nonproliferation, Foreign Policy 
SUBJECT: TAIWAN RESPONSE TO EXPORT CONTROL GAMEPLAN DEMARCHE 
 
REF: A. STATE 138267 
     B. TAIPEI 3140 
     C. STATE 137495 
     D. TAIPEI 1909 
     E. TAIPEI 2983 
     F. TAIPEI 2974 
     G. STATE 125089 
 
Classified By: AIT Director Douglas Paal, Reason 1.4 b/d 
 
1.  (S) Summary:  AIT delivered ref A demarche on July 28 to 
National Security Council Deputy Secretary General Wang 
Hsi-tien and on July 29 to Ministry of Economic Affairs Vice 
Minister Yiin Chii-ming.  Both officials welcomed a U.S. 
export control delegation to come for discussions on August 
10-11.  After hearing the talking points, both officials said 
that the U.S. and Taiwan shared the same view on the need to 
strengthen Taiwan's export control regime.  However, it was 
apparent from other remarks that there is still significant 
ground to be covered between the U.S. proposal and Taiwan's 
current thinking on this issue.  AIT has also spoken with and 
received a positive response from Taiwan's National Security 
Bureau about the upcoming talks.  End summary. 
 
Demarche on National Security Council 
------------------------------------- 
 
2.  (S) On July 28 AIT/T Deputy Director called on National 
Security Council (NSC) Deputy Secretary General Wang Hsi-tien 
to deliver ref A demarche.  After listening to the talking 
points, Wang said the U.S. proposal was an excellent idea and 
stated that U.S. and Taiwan views on export control were in 
complete accord.  He emphasized that Taiwan did not want to 
see its exports used in WMD programs and quipped that Taiwan 
had been waiting a long time for this U.S. delegation to 
come.  DSG Wang liked the idea of the U.S. and Taiwan forming 
a joint interagency task force. 
 
3.  (S) However, from Wang's remarks, it was also clear that 
there were elements of the U.S. proposal that went beyond 
Taiwan's thinking on the issue.  When Wang spoke of Taiwan's 
acceptance of the need to expand export license requirements, 
he only mentioned strategic high-tech commodities and machine 
tool exports to North Korea.  When AIT reminded to him that 
the U.S. proposal was to require export licenses for all 
non-food/medicine/clothing exports to North Korea and Iran, 
and perhaps to Syria, Wang commented on the difficulty of 
getting industry buy-in. 
 
Demarche on Ministry of Economic Affairs 
---------------------------------------- 
 
4.  (S)  On July 29 AIT/T Deputy Director called on Ministry 
of Economic Affairs (MOEA) Vice Minister Yiin Chii-ming to 
deliver the same demarche.  While stressing that Taiwan 
agreed with the United States on the importance of 
strengthened export controls, Yiin hesitated initially to 
accept the proposed dates, saying that Bureau of Foreign 
Trade (BOFT) Director General Franco Huang (Chih-peng) would 
not be available and there was not enough time to make 
necessary preparations by August 10-11.  However, when AIT 
held firm on these dates, and explained that the primary 
purpose of the meetings was to give U.S. presenters a chance 
to explain the details and mechanics of the U.S. proposal, 
Yiin said he welcomed the delegation on August 10-11.  AIT 
advised Yiin that it would be helpful if his Ministry could 
prepare statistical information on Taiwan's trade with North 
Korea and Iran. 
 
5.  (S) VM Yiin noted that BOFT would not have an easy time 
persuading exporters to accept new controls because of: 
Taiwan's economic dependence on exports, the difficulty in 
getting industry buy-in, and industry concerns that export 
controls could create a competitive disadvantage for Taiwan 
exporters which would accelerate the migration of Taiwan 
manufacturers to other territories.  Yiin said he hoped U.S. 
agencies could assist Taiwan authorities in their effort to 
gain industry support for stricter measures, perhaps by 
supplying talking points or speakers on these topics.  Yiin 
spoke at length about the fragmented nature of global supply 
chains, and the difficulty this presented for controlling 
SHTC components.  As an example, he said that computer 
numeric control devices might be exported by Japan via 
Vietnam to Thailand, where they would be added to machine 
tools exported from Taiwan then exported to North Korea. 
 
6.  (S) AIT noted that stricter export controls could be a 
competitive advantage for Taiwan companies and that it seemed 
to be only a few less-reputable companies doing most of the 
trade with North Korea.  AIT suggested that there needed to 
be an effective deterrent for these less-reputable companies. 
 
 
Additional AIT Comments for Gameplan Agenda 
------------------------------------------- 
7.  (S) The U.S. proposal asks that Taiwan expand the 
requirement for export licenses to all 
non-food/medical/clothing exports to North Korea and Iran 
within 30 days after agreeing to do so.  AIT suggests that 
these measures might be applied to North Korea within 10 days 
of agreement to do so.  Taiwan's volume of trade with North 
Korea is low enough that there would be minimal impact on 
industry.  The 20-day head start with North Korea would give 
valuable experience when applying the measures to Iran.  As 
indicated in ref B, a potential problem with asking Taiwan 
authorities to provide export license application and visa 
information in English is that the BOFT records are kept only 
in Chinese and there are no compulsory or consistent 
standards for romanization of company or individual names. 
Thus, BOFT may spell an individual's or company's name 
differently on different documents, and use a completely 
different spelling than that used by the individual or 
company on other documents.  Companies and individuals 
commonly also use English names that have no direct relation 
to their Chinese or Korean name as transliterated into 
Chinese characters.  AIT also suggests that a "peer review" 
evaluation of Taiwan's UNSCR 1540 report consistent with the 
methodology used in the UN 1540 Committee be added to the 
agenda.  The report provides a fairly detailed description of 
Taiwan's non-proliferation and export control regime, and the 
linkage to the United Nations could provide Taiwan 
authorities with the political cover they need to take speedy 
action by executive order instead of inaction by legislative 
measures. 
 
8.  (S) AIT has also discussed the proposed visit with 
Taiwan's National Security Bureau (NSB) and has received 
assurances of that organization's support for the August 
10-11 dates.  BOFT Import/Export Administration Director 
Wally Su called AIT/Econ the evening of July 29 to ask which 
Taiwan agency should be coordinating the visit, MOEA, BOFT, 
NSC, or NSB.  AIT/Econ replied that Taiwan authorities should 
make that decision. 
PAAL