The media has reported that a Russian arms manufacturer had recently used third-country transshipments to import Taiwan-made machine tools. In response, the Ministry of Economic Affairs (MOEA) has added the Russian company, I Machine Technology, into its Entity List in January 2024, banning all exports from Taiwan to that company. The MOEA stressed that business reputations are crucial for Taiwanese firms as a whole and needed to be safeguarded by industry stakeholders. Hence, the MOEA has been working closely with relevant associations to strengthen outreach efforts to avoid affecting the development of Taiwan's industries. 

The MOEA pointed out that in order to prevent Taiwanese high-tech goods from being used for Russia's weapons proliferation, the MOEA had announced in January 2023 the expansion of measures to control machine tool exports to Russia. This aligned with the practices of most allied countries. As a result, export applications that are within the scope of control have, in principle, not be approved.

The MOEA has required Taiwanese firms to commit not to export to Russia via high-risk areas (e.g., Turkey, the United Arab Emirates, and Central Asian countries). In addition, the MOEA has raised the fine for unauthorized exportation to Russia and Belarus. Particularly, the fine for initial violation has been increased more than 15-fold to NT$1 million to clearly convey this message to businesses.  

Preventing the transshipment of controlled goods to Russia has become a common challenge for allied countries because not all countries have imposed export controls on Russia. The MOEA continues to reference the practices of allied countries and add entities suspected of engaging in weapons proliferation to Taiwan's Entity List (it covers over 1,900 military-related Russian entities as of January 2024). I Machine Tools, the Russian company in this case, was added to the Entity List earlier this year, meaning all exports from Taiwan to this company have been banned.

The MOEA reiterates that it continues to work with relevant associations to strengthen outreach efforts and remind enterprises not to engage in illegal transshipments via third countries. The International Trade Administration (TITA) held 16 outreach events in 2023, and 3 of them in December alone, with more than 500 attendees. The MOEA will step up outreach efforts targeting machine tool enterprises and require them to conduct due diligence before exporting.