Government Questions Destinations Of Exported Precision Machine Tools

Since the beginning of this year the Ministry of Economic Affairs (MOEA) has been trying to control exports of Taiwan-made high-technology products, including precision machine tools, with the aim of preventing them from helping Iraq, Iran, and North Korea to make missiles and weapons of mass destruction.

Despite the effort, reports the MOEA's Industrial Development Bureau (IDB), at least one of the island's traders has illegally exported machine tools to Iran, attracting the attention of the United States authorities. The U.S. government asked Taiwanese precision machine-tool makers not to sell their products to buyers in the so-called "axis of evil"—the three countries listed above.

Huang Ying-chien, senior advisor to the IDB, said on July 1 that Taiwan would again formally request that domestic manufacturers not export to the three countries. At a meeting of the Machine Tool Committee of the Taiwan Association of Machinery Industry (TAMI) he warned that the overall interests of the island's machine-tool makers would be undermined if the U.S. finds that local firms have carried out exports in violation of its request. The IDB has promised to help the U.S. investigate illegal exports.

The company that is reported to have exported locally made precision machine tools to Iran is Goodly Industry Co., which is not a machine-tool manufacturer.

The U.S. originally asked that a number of categories of machine tools not be exported to the three countries. After negotiations with the representative associations of domestic manufacturers, the Americans finally agreed to allow the manufacturers to exercise self-discipline and refrain from exporting machines defined by number of spindles and machining accuracy, rather than product category.

At the above-mentioned Machine Tool Committee meeting, TAMI vice president Wang Cheng-ching noted that Taiwan has agreed to join the global anti-terrorist movement by controlling its exports of high-tech products. He called on domestic machine-tool makers to ask buyers for guarantees that they will not use Taiwan-made precision machine tools for military purposes, nor sell on to any entity that might.

According to statistics compiled by TAMI, Taiwan sold US$640 million worth of machine tools in the first four months of this year, up 34% over the corresponding period of 2003.

Wang attributed this growth to the rapid expansion of mainland China's auto industry, which needs large numbers of imported precision machine tools. Taiwan-made machine tools are also popular in Southeast Asia, Turkey, and India, thanks to their high quality and reasonable prices. Turkey was the fastest-growing market for Taiwan's machine tools in the first four months, and some local machine-tool makers are forecasting growth of 30% to 80% in exports to that country this year.

Among the island's machine-tool exports, Wang reports, the two largest categories are computerized numerically controlled (CNC) lathes and machining centers. This year, he predicts, Taiwan will export 5,000 to 8,000 CNC lathes and 12,000 to 16,000 machining centers. In all, machine-tool exports could reach an all-time high of US$2 billion this year.