Export Controls Voyeurism, Taiwan and Iran

Earlier today I was reading posts on Andrea Viski’s Nuclear Export Controls blog, and eventually found my way to item on another site related to Taiwan export control issues and Iran.

There is a short story in today’s Tapei Times based on a recently-released WikiLeaks cable. The article, US worried over Taiwan’s exports to Iran, offers a rare glimpse – at least to those of us not in the government, and good for that – inside the State Department’s decision-making apparatus when it comes to trade security issues. This sliver of political voyeurism shows us a State Department asking Tapei counterparts to deny export licenses for technology of value to the Iranian mullahs.

The SV-41 is capable of performing five-axis machining operations that could in Iran's nuclear and missile program.

The technology at issue is a computer numerically controlled machine or, as they call it in the trade, a CNC. CNCs have been around for a long time and are especially useful manufacturing items to very exacting specifications.

The machines have complex software-based brains that improve automation, consistency as well as the accuracy of finished products. In other words, really precise and exacting standards.  The machines are not cheap and many of the more advanced units are controlled for export by the U.S. and other countries.

According to the Tapei Times article the CNC machine in question “was capable of performing five-axis machining operations and could be used to manufacture liquid rocket engine and missile guidance components.” The company that makes the CNC machine is Roundtop Machinery Industries based in Tapei. It has  U.S. subsidiary based in Lorain, Ohio called Absolute Machine Tools, Inc.

The transactions discussed in this article includes a typical area of diversion concern in Asia, Malaysia. Roundtop allegedly falsely identified a Malaysian company as the purchaser of machine tools that it intended to re-export from Malaysia to Iran. Other cables discussed similar transactions through Turkey. By all account is appears as if the Taiwanese government was cooperating with the United States.

The article and the cables, offer a useful view into the back and forth that likely takes place very frequently on trade security issues between the U.S. and our trade partners. For those of us that advise companies on these issues, it helps to reinforce to clients the real-world impact of why these laws and regulations matter.

There has been a lot of talk in this town the past two years about reforming the current export control regulations. As someone who has real world experience in the private sector with theses rules, let’s hope the government takes it time and makes certain that it does not make an already complex (but manageable) legal regime more onerous.

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