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Viewing cable 08AITTAIPEI1473, EXBS: TAIWAN MONTHLY REPORTING CABLE - SEPTEMBER 2008

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Reference ID Created Released Classification Origin
08AITTAIPEI1473 2008-10-15 08:33 2011-08-23 00:00 UNCLASSIFIED//FOR OFFICIAL USE ONLY American Institute Taiwan, Taipei
VZCZCXYZ0000
PP RUEHWEB

DE RUEHIN #1473/01 2890833
ZNR UUUUU ZZH
P 150833Z OCT 08
FM AIT TAIPEI
TO RUEHC/SECSTATE WASHDC PRIORITY 0124
RHMFIUU/USCBP WASHINGTON DC PRIORITY
RHEBAAA/DEPT OF ENERGY WASHINGTON DC
UNCLAS AIT TAIPEI 001473 
 
SENSITIVE 
SIPDIS 
 
STATE FOR ISN/ECC - YWONG, ACHURCH, AND ROWEN 
STATE FOR EAP/TC - MTOYRYLA 
STATE FOR ISN/MTR - PDURHAM, SBOYER, JMAYES, AND RPALMIERO 
DHS/CBP/INA FOR DKING 
DOE/NNSA/INECP FOR TPERRY AND SJONES 
 
E.O. 12958: N/A 
TAGS: ETTC MNUC PARM PREL KSTC KNNP TW
SUBJECT: EXBS: TAIWAN MONTHLY REPORTING CABLE - SEPTEMBER 2008 
 
REF:  08 TAIPEI 9966 
 
I.  BROAD ITEMS OF INTEREST TO ADVISORS AND AGENCY MANAGERS: 
 
A. (U) Based on a survey by the U.S. Association for Manufacturing 
Technology (AMT), Taiwan's machine tools industry is poised to 
perform well in overall production value and export volumes for 
2008. The 2008 AMT survey shows that Taiwan is estimated to rank 
5th, with a total production value of USD 5.3 billion among the 
world's major machine tool manufacturing economies, and remain the 
world's 4th largest machine tool exporter with a total export volume 
of USD 4.1 billion. In 2007, Taiwan ranked 6th in terms of 
production, valued at USD 4.4 billion, and 4th in terms of exports, 
valued at USD 3.4 billion. 
 
The survey showed that Germany will become the world's largest 
machine tool manufacturer by the end of 2008 with a total production 
value reaching USD 16 billion, surpassing Japan, which is estimated 
to have a production value of USD 12.9 billion.  China follows at 
USD 12.3 billion and Italy at USD 8.62 billion.  Korea ranks below 
Taiwan at 6th place, with USD 4.9 billion in production value. 
 
In terms of export volume, Germany is expected to rank 1st at USD 
11.4 billion, Japan at USD 8 billion, Italy at USD 4.9 billion, 
Taiwan at USD 4.1 billion, with China and Korea both at USD 2.2 
billion. 
 
The survey was conducted by the AMT during the International 
Manufacturing Technology Show in Chicago in September 2008. It was 
based on data compiled from the world's 22 major machine tool 
producing and consuming economies in attendance at the trade show. 
 
II. COMPLETED ACTIONS FOR THE REPORTING PERIOD 
 
A.  SITE ASSESSMENTS AND MEETINGS DURING REPORTING PERIOD: 
 
1. (SBU) On September 4, the Advisor met with officials of the 
Taiwan External Trade Development Council (TAITRA) to discuss 
Taiwan's trade promotion activities in the Middle East. TAITRA is a 
non-governmental organization funded partly by the Ministry of 
Economic Affairs (MOEA).  TAITRA works closely with the Trade 
Development Division of the Bureau of Foreign Trade of the MOEA in 
its trade promotion activities. 
(SBU) According to TAITRA officials, the current Middle East market 
share for Taiwan is small, consisting mainly of general consumer 
goods. However, TAITRA officials see bigger business opportunities 
in the region.  TAITRA is particularly focused on gaining market 
share for Taiwan's machinery products.  The official stated that 
only 1.5% of machine tools exhibited in the three major machine tool 
trade shows in the world are made in Taiwan. One-third of machine 
tools under the Taiwan pavilion in the trade shows are in fact 
machine tool products made in China by Taiwan-owned companies. 
 
(SBU) The TAITRA official stated that the biggest impediment to 
increasing trade in the Middle East is cultural differences in 
business practices.  For example, entering into a business 
relationship is a "life-time" commitment that can only be terminated 
by the Middle Eastern partner, but not by the Taiwan partner.  Also, 
the officials stated that smaller Taiwan companies cannot compete 
with the European and Japanese conglomerates for mega projects, 
which is where the money is. 
 
(SBU) With regard to trade with Iran, the TAITRA official stated 
that Taiwan considers Iran to be a growth market.  TATIRA 
participates in trade shows in Iran, such as the Plastic Machinery, 
Automobile Parts and Electronic Exhibition.  (Note:  According to 
press reports, TAITRA is organizing Taiwan companies' participation 
in the Plastics and Rubber Machinery Show in Iran (PRMS) from 
 
November 11 to November 14, 2008.  In 2007, Taiwan's total export 
value of plastics and rubber machinery to Iran reached USD 18.96 
million, a 32.7% increase from 2006.  According to the press report, 
Iran's PRMS is the only professional trade show of its size in the 
Middle East. The organizers of the PRMS are Iran International 
Exhibitions Company and Iranian International Petroleum Company. 
Previous PRMS, with total exhibition space of 27.313 square meters, 
attracted 886 companies from 24 countries.  Approximately 40,000 
visitors are expected to attend the November trade show, and over 30 
Taiwan companies are expected to participate.) 
 
(SBU) The official added that Iranian companies have easy access to 
Taiwan companies, and so TAITRA does not regularly act as a 
communication channel between Iranian and Taiwan business people. 
Moreover, the officials added that Iran can easily obtain 
commodities from China since China is less restrictive in its trade 
with Iran. 
 
(SBU) With respect to trade with the United Arab Emirates (UAE), 16 
Taiwan companies currently have branch offices there. The TAITRA 
official stated that Taiwan companies who would like to develop 
trade relations with Iran do not need to establish offices in Iran 
since Iranian companies themselves have offices in the UAE to 
facilitate trade between Iran and other trading partners, including 
Taiwan. 
2. (SBU) On September 4, the Advisor met with Kang Da, the local 
subcontractor for ICP software development, and the Bureau of 
Foreign Trade to review the progress of the software development. 
BOFT will review the ICP software content and will submit the final 
version to the local subcontractor.  The first deployment seminar is 
scheduled to be conducted before April 2009 following the training 
for local instructors in January 2009. 
3. (SBU) On September 10, the Advisor participated in the Australia 
Group's briefing on its recent activities to Taiwan officials. 
Representatives from Japan and the Czech Republic also attended. 
The meeting was hosted by the Ministry of Foreign Affairs.  A 
reporting paper has been forwarded to ISN/CB. 
4.  (SBU) On September 11, the Advisor met with the Ministry of 
Justice Investigation Bureau to get an update on export control 
enforcement activities.  See reftel for details on closed and 
on-going cases. 
5. (SBU) From September 22-26, the Advisor was in Seoul, Republic of 
Korea (ROK), to participate in the Fourth Regional Assistance and 
Protection Course for Asian States Parties hosted by the ROK and the 
OPCW, attend an industry outreach event sponsored by the Korea 
Strategic Trade Institute, and meet with officials of the Ministries 
of Knowledge Economy and Foreign Affairs and Trade (MOFAT) to 
discuss future bilateral export control cooperation.  A read-out 
from the meetings has been sent to ISN/ECC. 
B. BLUE LANTERN: 
 
(SBU)  No checks were conducted by the Advisor during the reporting 
period. 
 
III. TRAINING CONDUCTED DURING REPORTING PERIOD: 
 
(SBU) No trainings were conducted during the reporting period. 
 
IV. UPCOMING TRAINING: 
 
(SBU) On December 10-11, an Industry-Government Outreach program, 
implemented by the Department of Energy, is being planned in 
Taichung.  This program will follow the same format as the July 
program with a focus on companies located in Central Taiwan.  Many 
machine tool manufacturers are located in Taichung. 
 
V. UPCOMING MEETINGS: 
 
A. (SBU) On October 6, the Advisor is scheduled to meet with the 
Bureau of Foreign Trade to review the progress of the software 
development and export control related issues. 
 
B. (SBU) On October 6, the Advisor will meet with the Directorate 
General of Customs to follow up on the Iranian shipping company 
issue. 
 
C. (SBU) On October 16, the Advisor will travel to Taichung to 
select a venue for the IG training programs and to meet with the 
President of the Taiwan Machine Tool and Accessory Builders 
Association. 
 
D. (SBU) On November 3-4, the Advisor will speak at an Export 
Administration Regulations Seminar organized by the Ministry of 
Knowledge Economy of the Republic of Korea on U.S. re-export rules, 
and meet with officials of ROK's MOFAT on export control cooperation 
issues. 
 
VI. RED FLAG ISSUES: 
 
None. 
 
POC for this report is Mi-Yong Kim, EXBS Advisor.  Telephone +886 2 
2162 2347. 
 
YOUNG