US embassy cable - 05TAIPEI3573

S E C R E T SECTION 01 OF 03 TAIPEI 003573 
 
SIPDIS 
 
DEPT FOR EAP/TC, EAP/EP, NP/ECC, NP/CBM 
DEPT PASS AIT/W 
 
E.O. 12958: DECL: 08/11/2015 
TAGS: ETTC, PARM, PINR, PREL, PTER, TW, Foreign Policy, Military Issues, Counterterrorism/Nonproliferation, Trade 
SUBJECT: TAIWAN AGREES TO EXPORT CONTROL GAMEPLAN IN NP 
TALKS 
 
REF: A. STATE 138267 
     B. STATE 145274 
 
Classified By: AIT Director Douglas Paal, Reason 1.4 b/d 
 
1.  (S) Summary:  The U.S. team led by NP/CBM Director Vann 
Van Diepen August 10-11 obtained Taiwan's agreement to 
cooperate to improve Taiwan's export controls over the long 
term, and all six points in the near term portion of the U.S. 
"gameplan" concerning Iran and North Korea (ref A).  Point 
one, on controlling more exports to Iran and North Korea, was 
most contentious.  In the end both sides agreed that 1) there 
need to be more items controlled to Iran and North Korea than 
on the current Taiwan list; 2) non-sensitive items should not 
be on the new control list; and 3) both sides would work 
together to develop a more extensive control list.  Taiwan 
will provide a new list within 60 days for the U.S. to 
review.  In the meantime, work will begin on other points in 
the gameplan.  AIT also presented ref B comments on export 
license application 94-000417.  End summary. 
 
General Flow of Discussion 
-------------------------- 
 
2.  (S) AIT Taipei Deputy Director Keegan emphasized at the 
beginning of the talks that the export control issue was of 
critical importance to the most senior leadership in 
Washington, and that decisive action was required to stop 
exports to proliferators.  While stating their general 
agreement with this position, Taiwan officials tried to avoid 
taking steps that all other Asian economies were not being 
asked to take, and then tried to maintain that they were 
empowered only to hear the U.S. out and pass recommendations 
to higher levels for later decision.  The U.S. delegation 
repeatedly emphasized the seriousness of the proliferation 
problem, both in security terms and for U.S.-Taiwan 
relations, and emphasized that Washington would find a "we'll 
get back to you later" answer from Taiwan unacceptable. 
 
3.  (S) The most contentious and time-consuming issues 
concerned "what is controlled" to Iran and North Korea in the 
near-term portion of the U.S. gameplan (point 1, and its 
enforcement in point 2).  Taiwan had to be pressed hard by 
the U.S. delegation to move from not wanting to add anything 
more to control, to only wanting to add items like machine 
tools and certain chemicals identified in past U.S. 
demarches, to a grudging recognition, based on its own export 
data, that the bulk of its trade with Iran/DPRK involved 
"non-sensitive" items that would not be subject to additional 
export controls.  The Taiwan position then evolved to 
"basically agreeing in principle" to everything the U.S. 
proposed, but needing to overcome industry opposition -- to 
which the U.S. made clear that Taiwan industry needed to 
choose between the burden of additional controls for 
Iran/DPRK and the burden of restricted trade with the U.S. 
prompted by proliferation concerns. 
 
4.  (S) Discussion then shifted to detailed expositions of 
how the U.S., Taiwan, Japan, and others implement "catch-all" 
controls on unlisted items, transit/transshipment, and 
re-export -- with U.S. experts Warker (DHS/CBP) and Sonderman 
(DOC/OEE) providing key input.  The positive momentum of the 
experts discussion -- which clearly revealed deficiencies in 
Taiwan practice that substantiated the U.S. diagnosis of the 
problem -- was accelerated by the related discussion of the 
more procedural aspects of the U.S. gameplan (points 3-6). 
This revealed that Taiwan already was taking some of these 
steps, was already partially implementing others, and already 
had a legal framework for the rest but had not been 
implementing it.  The U.S. delegation was able to redirect 
this momentum back into the "what is controlled" portion of 
the gameplan (points 1 and 2), leveraging (a) the fact that 
most of the gameplan had been agreed, (b) continual 
reiteration of the security/political consequences of failure 
to agree to all of the gameplan (including in frank side 
discussions with senior Taiwan officials), and (c) U.S. 
willingness to move from a "negative" to a "positive" list 
describing the additional items to be added to control to 
secure Taiwan agreement to the rest of the gameplan. 
 
What Was Agreed 
--------------- 
 
5.  (S) Two days of non-proliferation talks between U.S. and 
Taiwan interagency delegations held in Taipei August 10-11 
ended with satisfactory results and agreement beyond the 
expectations of either delegation.  Agreement was reached on 
all six points in the U.S. gameplan: 
 
-- On Gameplan point 1a, Taiwan agreed that it will 
immediately require individual export licenses for all direct 
or indirect exports to Iran and North Korea of all goods, 
software, and technology on the Australia Group, Chemical 
Weapons Convention, Missile Technology Control Regime, 
Nuclear Suppliers Group, and Wassenaar Arrangement lists 
(collectively known as the Strategic High-Tech Commodity, or 
SHTC lists), including future additions to those lists. 
Taiwan indicated that it already has this requirement for 
China, Cuba, Iraq, Libya, Syria, and Sudan, in addition to 
North Korea and Iran. 
 
-- Point 1b:  Both sides agreed that it is necessary to 
expand the scope of the export license requirements beyond 
the items on the SHTC lists for exports to Iran and North 
Korea, but that non-sensitive items should be exempt from 
export license requirements.  Both sides also agreed that 
because of BOFT,s familiarity with analyzing Taiwan's 
patterns of trade according to the Harmonized Tariff System 
designations, it would develop an expanded list of 4-digit 
categories to divide the HTS code into two categories; one 
category requiring and the other not requiring an export 
license.  Taiwan agreed to consult with nonproliferation 
experts and industry and provide this list within 60 days for 
U.S. approval. 
 
-- Point 1c:  Taiwan agreed that all transits and 
transshipments through Taiwan to Iran/North Korea of cargoes 
that would require an export license from Taiwan, including 
under the expanded list developed under point 1b, would also 
require a license to transit/transship through Taiwan. 
Taiwan law already requires all SHTC items transiting or 
being transshipped through Taiwan to obtain a license from 
BOFT.  However, Taiwan Customs revealed that it has never 
fully implemented this provision, and it has not even been 
collecting the manifest data necessary to determine 
compliance.  Taiwan agreed to work out how it will begin to 
ensure compliance with this license requirement, and to 
inform the U.S. in 60 days of how it will be implemented. 
 
-- Point 1d:  Restrictions on intangible transfers of 
sensitive technology (i.e., via speech, fax, e-mail, 
telephone, etc.) will be covered by the "Science and 
Technology Protection Law" now being deliberated in Taiwan's 
legislature.  Both sides recognized that passage of this bill 
and the exact contents of its final version would be 
determined by the legislature.  National Science Council 
Director Yang Ing-shoang expressed his belief that the 
legislature would take the bill as a priority in its upcoming 
session, and asked for copies of U.S. regulations covering 
intangible transfers. 
 
-- Point 2:  Taiwan Customs agreed to closely monitor all 
exports, transits, or transshipments to Iran/North Korea, and 
all Iran/North Korea-flagged or -bound ships and aircraft. 
Taiwan Customs said it currently conducts 100% inspection of 
all cargoes exported to North Korea.  Taiwan Customs said it 
will work with BOFT to ensure that manifest data is collected 
for all transit/transshipped cargoes bound for Iran/North 
Korea and that AIT is informed of unlicensed items that 
required a license or licensed items that do not correspond 
to the items authorized by the license. 
 
-- Point 3:  Taiwan agreed that export licenses it grants for 
individual exports to territories other than Iran/North Korea 
will include a proviso that subsequent Taiwan government 
authorization is required if the items are re-exported to 
Iran, North Korea, and specified diversion points.  BOFT said 
that a global re-export control proviso was already included 
on all Taiwan export licenses.  Taiwan also agreed that 
end-users found to have re-exported without permission will 
be denied future licenses. 
 
-- Point 4:  Taiwan agreed that all applications for travel 
visas to visit Taiwan by present or former (as indicated in 
information on the visa form) Iran/North Korea citizens will 
be reviewed for non-proliferation concerns and those visits 
Taiwan assesses as posing a proliferation risk will be 
denied.  Taiwan officials noted that they already have a 
rudimentary system of nonproliferation review, and undertook 
to provide the U.S. a list of previous Iranian and North 
Korean applicants, annotated with the results of Taiwan's 
review. 
 
-- Point 5:  Taiwan agreed to consult with U.S. agencies 
through AIT prior to issuance of export/transit/transshipment 
licenses for cargoes bound for Iran/North Korea and before 
granting travel visas to any present or former Iran/North 
Korea citizens with a background in science or high-tech. 
The U.S. agreed to comment on visa applications within one 
week (with the ability to ask for more time in complex cases, 
and with the understanding that the time limit may need to be 
adjusted based on experience) and will comment on other 
licenses within an agreed timeframe.  Taiwan agreed to inform 
the U.S. of its final decision in each case. 
 
-- Point 6:  Taiwan agreed to strengthen its efforts to 
investigate and impose penalties on Taiwan entities that 
violate its export control policy. 
 
AIT To Draft Information Exchange Procedures 
------------------------------------------- 
 
6.  (S) Both sides agreed that AIT will work on procedures 
for relaying license and visa information for Washington 
review, so that the USG can provide model procedures to 
Taiwan within two weeks. 
 
Export License Application 94-000417 
------------------------------------ 
 
7.  (S) On the margins of the non-proliferations talks, AIT 
delivered ref B talking points to BOFT. 
 
PAAL 
PAAL