22.10.2008:: RESPONSE TO BOFT ON GAMEPLAN LICENSE

S E C R E T STATE 112707

E.O. 12958: DECL: 10/22/2033 TAGS: PARM, MTCRE, PREL, ETTC, TW, IR, MY

SUBJECT: RESPONSE TO BOFT ON GAMEPLAN LICENSE WA080820142628008

REF: A. 08 STATE 102340 B. 08 STATE 66110 C. KIM-BOYER EMAIL DATED 10/4/08

Classified By: ISN/MTR DIRECTOR PAMELA K. DURHAM REASONS 1.4 (B) (C) AND (D).

1.(U) This is an action request. AIT Taipei, please see paragraph 3.

2. (S) Background and Purpose/Objective: In September 2008, we recommended that Taiwans Bureau of Foreign Trade (BOFT) hold on Taiwan export license WA080820142628008 (Ref A) due to proliferation concerns with this transaction. This license involved an export of a computer numerically controlled (CNC) vertical machining center from the Taiwan company Roundtop Machinery Industries to a Malaysian intermediary known as Era Machinery. Previously, in June 2008, we alerted Taiwan that these companies appeared to be working together to avoid Taiwans export control restrictions and facilitate unauthorized machine tool exports to Iran (Ref B). In response to these concerns, Taiwan authorities informed the U.S. that it had added Era Machinery to its exporter watch list (Ref C). We now want to follow-up with Taiwan on this matter and recommend that Taiwan deny this export license request. We also would like to use this opportunity to request an update on the status of Taiwans investigation into these firms activities.

3. (S) Action Request: Request AIT Taipei approach appropriate Taiwan officials to deliver talking points/non-paper in paragraph 4 below and report response.

4. (S) Begin talking points/non-paper:

(SECRET REL TAIWAN)

-- The U.S. appreciates your continuing efforts to strengthen Taiwans export control system by implementing the U.S.-Taiwan Gameplan.

-- As part of our Gameplan commitments, we reviewed Taiwan export license WA080820142628008 and requested in September 2008 that the Bureau of Foreign Trade (BOFT) place a hold on this license due to proliferation concerns.

-- We believe that this license should be denied, and would like to explain the basis for this recommendation.

-- In June 2008, we alerted you to information indicating that Era Machinery was working with Roundtop Machinery to evade Taiwans export controls on machine tool transfers to Iran.

-- In particular, we understood that Roundtop had falsely identified Era Machinery as the purchaser of machine tools that Era Machinery intended to re-export from Malaysia to Iran.

-- In response to this information, you informed us in October 2008 that Era Machinery had been added to your exporter watch list.

-- Similar to the case we raised in June, this license involves the sale of an SV-41 computer numerically controlled (CNC) vertical machining center that would be useful in a missile or nuclear weapons program.

-- Given the risk of diversion to a program of concern as well as the capabilites of the machining center, we therefore recommend export license WA080820142628008 be denied.

-- We also would appreciate an update on your investigation into Roundtop and its cooperation with Era Machinery that we brought to your attention in June 2008.

-- We also urge you to continue to scrutinize exports of machine tools to third country intermediaries and distributors to prevent unauthorized exports of Taiwan-origin machine tools to Iran.

-- We look forward to continued cooperation on export control and nonproliferation issues.

5. (U) Washington POC is ISN/MTR Samantha Boyer (Phone: 202-736-7176). Please slug any reporting on this issue for ISN and EAP.

6. (U) A word version of this document will be posted at . RICE

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