RS20365 -- Taiwan: Annual Arms Sales Process Updated June 5, 2001 The Taiwan Relations Act (TRA) ( P.L. 96-8 ) has governed arms sales to Taiwan since 1979, when the United States recognized the People's Republic of China(PRC) instead. Sec. 3(a) states that "the United States will make available to Taiwan such defense articles anddefense services in such quantity as may benecessary to enable Taiwan to maintain a sufficient self-defense capability." Sec. 3(b) stipulates that both thePresident and the Congress shall determine thenature and quantity of such defense articles and services based solely upon their judgment of the needs of Taiwan. The TRA set up the American Institute inTaiwan (AIT), a nonprofit corporation, to handle relations with Taiwan. AIT implements U.S. policy, with directionfrom the Departments of Defense and Stateas well as the National Security Council (NSC) of the White House, and organizes the meetings on arms sales inTaipei or Washington. SuccessiveAdministrations used a process in determining arms sales to Taiwan that became institutionalized as annual roundsof talks with Taiwan authorities consisting ofseveral phases leading up to final meetings usually in April. In 1999, U.S.-Taiwan arms sales talks took place onApril 27-28, in Washington, and the ClintonAdministration confirmed that a Taiwan military delegation was still in Washington on April 29, 1999. (1) On the positive side, the process used in determining arms sales to Taiwan has evolved over the last two decades into a routine, rather than ad hoc, one whereTaiwan's evolving defense needs can be expected to be considered carefully every year by the United States at a highlevel. Official Taiwan media say that in thelast 20 years, Taiwan's armed forces have procured "a lot of defensive weapons and equipment" from the UnitedStates. (2) Quoting a Taiwan military source, aTaiwan newspaper reports that the military there believes the Pentagon, rather than the State Department, is "quitesupportive" of Taiwan's needs, and thesituation is thus "favorable." (3) This regular processallows for more predictable planning by Taiwan authorities in charge of the defense budget and potentiallyreduces the chance that developments in U.S. relations with the PRC could influence arms sales to Taiwan. Moreover, Taiwan could send senior militarydelegations to Washington. Through the 1990s, the arms talks were low-profile, reducing the opportunities forgreater U.S.-PRC friction. Indicating securitybenefits of arms sales for Taiwan, China objects to the TRA and argues that Washington is not observing the August17, 1982 U.S.-PRC communique (onreducing arms sales to Taiwan). (4) Testifying beforethe Senate Foreign Relations Committee on August 4, 1999, Deputy Assistant Secretary of Defense KurtCampbell declared that the TRA "has been the most successful piece of legislative leadership in foreign policy inrecent history." Indeed, despite the unofficial nature of relations, U.S. arms sales to Taiwan have been significant. From 1991 to 1998, arms deliveries (primarily U.S.) to Taiwantotaled $20 billion -- the second highest (after arms transfers to Saudi Arabia). (5) Contracts are signed under the Foreign Military Sales (FMS) program, withnotification to Congress as required by the Arms Export Control Act. Moreover, beginning after tensions in theTaiwan Strait in 1996, the Pentagon, under theClinton Administration, is said to have quietly expanded the sensitive military relationship with Taiwan to levelsunprecedented since 1979. The broaderexchanges reportedly have increased attention to "software," including discussions over strategy, military thinking,and plans in the event of an invasion. (6) InSeptember 1999, to enhance cooperation, a Pentagon team visited Taiwan to assess its air defense capability andmake recommendations on upgrading it. (7) Criticisms within the United States of the arrangements in determining arms sales might include observations on the lack of a strategic, longer-range U.S.approach, rather than currently looking at Taiwan's defense needs narrowly on a year-by-year, weapon-by-weaponfashion, that has involved intense inter-agencydifferences. Some defense industry observers say that the arms sales talks have "generally ended in disappointmentfor Taiwan because its requests for dieselsubmarines, long-range surveillance radars, and other defensive items have been rejected in deference to Beijing." (8) In 1999, some in Congress introduced theTaiwan Security Enhancement Act ( S. 693 , Helms; H.R. 1838 , Delay), arguing that "pressures to delay,deny, and reduce arms sales toTaiwan have been prevalent since the signing of the August 17, 1982 communique." Other comments both within and outside the Administration criticize a perceived traditional overemphasis on selling military equipment. Some would prefergreater attention to diplomatic solutions, including efforts to ease tensions in the Taiwan Strait. In 1998, formerAssistant Secretary of Defense for InternationalSecurity Affairs Chas. Freeman argued that increasing military tensions in the Taiwan Strait "call for a reevaluationof arms sales to Taiwan." (9) Susan Shirk,Deputy Assistant Secretary of State for East Asian and Pacific Affairs, is quoted as saying in a speech on April 14,1999, that "neither the PRC or Taiwan wouldbe served by overemphasis on military hardware, while neglecting the art of statesmanship." (10) Others who urge greater support for Taiwan'smilitary have calledfor more attention to "software," including absorption of new equipment, military contacts, training, and advice forTaiwan's military, especially broader trainingprograms on C4I, combined arms, and joint warfare operations -- rather than narrow training tied to particularweapon systems. (11) Some critics are concerned that the White House might secretly negotiate with Beijing over arms sales to Taiwan. An authoritative weekly magazine reported that,during the June 1998 summit in Beijing, the PRC requested a U.S. promise to deny theater missile defense (TMD)technology to Taipei, in return for a PRCpledge not to provide missiles to Iran; but no agreement was reached. (12) Finally, some on Capitol Hill contend that successive Administrations have neglected a congressional role in determining arms sales as outlined in the TRA, and some Members are seeking to increase their say. Representative Gilman, Chairman of the House InternationalRelations Committee, wrote President Clinton onApril 19, 1999, to urge approval for the sale of long-range early warning radars to Taiwan. He also wrote Secretaryof State Albright on April 22, 1999, sayingthat if the Administration did not approve the sale, he would introduce legislation to do so. (13) In the end, the Clinton Administration decidedin principle to sellearly warning radars to Taiwan (see below). The process for arms sales talks between Washington and Taipei generally has included four stages, culminating in an arms sales meeting in Washington eachApril. 1. Pre-Talks. Taiwan's various military services request items for procurement to be decided by their Ministryof National Defense (MND). The MND decides on an official list of about 5-15 major items to request from theUnited States. The list may include hardware,technical assistance, and professional military education courses. This list is usually presented to the U.S. sidetowards the end of each year. In recent years, Taiwan has requested items such as P-3 anti-submarine reconnaissance aircraft and AIM-120 Advanced Medium Range Air-to-Air Missiles(AMRAAM). (14) For the 1999 talks, Taiwan'srequest reportedly totaled $1.7 billion and included: (15) four Aegis-equipped destroyers (or technology); (16) 6-10 diesel-electric submarines (including training, technical assistance, and logistical support possiblyfor assembly inTaiwan); (17) two Patriot Advanced Capability (PAC)-3 missile defense systems; (18) two AN/BOND long-range, early-warning radars for missile defense; (19) satellite early-warning reconnaissance. (20) 2. Working-Level Talks in Taiwan. At the beginning of the following year, a few small working-level teamsorganized by AIT travel to Taiwan to collect information and discuss the request in greater detail with Taiwan'smilitary. Composed mainly of Pentagon staff, theteams may visit various sites in Taiwan to obtain a better understanding of its defense needs. After the visits, the Office of the Assistant Secretary of Defense for International Security Affairs (ISA) formulates the Pentagon's position, including the views ofthe various services and the joint staff. Meanwhile, the State Department and NSC formulate their own positionson the requests from Taiwan. The agencies mayformulate decisions based on different priorities involving several factors, including: implications for regional stability; military balance in the Taiwan Strait (including assessments of the PRC threat against Taiwan andprospects for a peaceful resolution of theTaiwan question); U.S.-PRC relations; U.S. policy on technology transfer; offensive vs. defensive capabilities of the items; the value of arms called the "bucket." (21) 3. Resolution of Disagreements Within U.S. Government. From March to April, U.S. policymakers work toresolve any disagreements with the Defense Department's position at the level of the Under Secretary of Defensefor Policy, Under Secretary of State for ArmsControl and International Security Affairs, and the Deputy National Security Advisor at the NSC. If disagreementspersist, they are then elevated to the highestlevels at the various agencies. For example, in the case of the 1999 decision on early-warning radars, toppolicymakers at the NSC, State Department, and thePentagon reportedly agreed to approve the sale, overruling mid-level NSC and State officials who opposed the saleout of concerns that it might provoke the PRCand increase already heightened tensions between Washington and Beijing. (22) 4. Annual Talks. The talks between Washington and Taipei on U.S. arms sales to Taiwan take place everyyear, usually in April. The U.S. side, as represented by AIT and the Defense Department, presents the finaldecisions on the requested items. A militarydelegation from Taiwan usually visits for a few days of scheduled meetings and social functions. The formalmeetings on approved sales may take place on oneday. There may also be trips outside of Washington to visit military bases, inspect pilots from the Taiwan Air Forcetraining to fly F-16 fighters, and watchdemonstrations of equipment for possible acquisition. During the April 1999 talks, the State Department, which prefers to avoid public discussion of the talks, nonetheless confirmed that a Taiwan delegation was inWashington at the end of April. It also confirmed that, in providing defensive weapons and services to Taiwanunder the TRA, "periodic consultations take placethat include Taiwan military representatives" and that there was a "frank and broad exchange of views on issuesrelated to Taiwan self-defense needs, but bothsides agreed not to discuss the details of this process." (23) On the sale of long-range early-warning radars to Taiwan urged by some in Congress, the State Department spokesperson confirmed that the United States agreedon the request in principle and acknowledged that under the TRA, "the President and Congress determined whichdefense articles and services Taiwan needs." (24) The Pentagon spokesperson also confirmed that the United States "agreed to work with the Taiwanese to evaluatetheir early warning radar needs, and that willtake place over the next year or so, but there is no specific agreement on a specific type of radar, specific sale, orspecific terms of sale at this time." (25) For the 1999 talks, Taiwan's military was reportedly represented by its new Vice Chief of General Staff, Lieutenant General Teng Tzu-lin, accompanied by deputydefense ministers in charge of intelligence, operations, logistics, and planning. (26) The director of the Taipei Economic and Cultural Representative Office(TECRO), Stephen Chen, also participated in the talks. (27) The U.S. side, sponsored by AIT, was said to include the Deputy Assistant Secretary of Defense(International Security Affairs) on Asian and Pacific Affairs. This representative was apparently accompanied bythose from the Defense Security CooperationAgency (DSCA) and the State Department's Office of Taiwan Coordination in the East Asian and Pacific AffairsBureau.

Summary: This CRS Report discusses the low-profile annual arms talks process that successiveAdministrations used from theearly 1980s to 2001 in determining arms sales to Taiwan, which are governed by the Taiwan Relations Act. Thediscussion is based on interviews in 1998 and1999 with U.S. and Taiwan observers as well as U.S. and Taiwan news reports. This report on the process will notbe updated. (On April 24, 2001, PresidentGeorge W. Bush announced that he would drop this annual arms talks process in favor of one with considerationson an "as-needed basis." See also CRS Report RL30957, Taiwan: Major U.S. Arms Sales Since 1990.)