Nine people stand indicted in Taiwan over an alleged scheme to move AI chips to China, and Asia Times notes the oddity: "Yet none of the nine faces an export charge." Keelung prosecutors indicted them in August, among them the general manager of Flying Tiger Technology, for breach of trust and document forgery under the Criminal Code. Taiwan News also reported a special breach of trust count under the Securities and Exchange Act. The nine are charged, not convicted.
The reason lies in the statute. Exports to China are restricted only for 12 categories of wafer-fabrication equipment. On Monday 2 November the Legislative Yuan's Economics Committee held a public hearing on a Foreign Trade Act amendment to close that gap. According to Taiwan News, the DPP legislator Chung Chia-pin proposed the new rules, under which violators could face up to 10 years in prison and fines of up to NT$10 million. The proposal adds an anti-circumvention clause against transshipment of chips through third countries. The Ministry of Economic Affairs backed the amendment, saying it would strengthen coordination with the US.
The idea: a rule's core and its penumbra
H.L.A. Hart argued that legal rules leave a penumbra in which judges must exercise judgement, according to the Stanford Encyclopedia of Philosophy. Where a rule's words stop deciding cases, someone has to decide.
Strictly, Hart's penumbra does not describe this case: the export list is clear, and chips fall outside it. What the case shows is the next step. Where a legislature leaves a clear gap, prosecutors reach for the nearest offence. Breach of trust and forgery were charged, and none of the nine faces an export charge. A named offence puts the choice back with legislators. We think the amendment is right for that reason.
The limit of the idea
The new text will have its own penumbra. The clause bars "transshipment" of "semiconductor chips" through third countries, and the reports we read give no definition of either. What counts will decide who is caught. Wang Guo-chen warned Asia Times: "But Taiwanese firms in China could be caught in a crossfire." Firms cannot afford to guess where a broad clause ends.
A second critic doubts the remedy itself. Tseng Chih-chao of the Association for Chinese Economic and Financial Research said "the amendment may not be enough to tackle Taiwan's real security risks". As Asia Times reported, he wants the general control mechanism fixed rather than a law that is merely a policy statement. The disagreement is whether a criminal penalty or a licensing system closes the gap. We would pass the offence first, and tighten its edges in committee.
Watch for: the committee's definition of transshipment, and whether the amendment lists the chips it covers or leaves them to later regulation.
Cover image: The Legislative Yuan in Taipei, Taiwan's parliament, in a June 2024 file photo. Photo: Yu tptw / Wikimedia Commons, CC BY-SA 4.0.