Over the last two years, the European Union (EU) has been considering lifting its armsembargo on the People's Republic of China (PRC), imposed after the June 1989 Tiananmen Squarecrackdown. (1) Manycountries imposed sanctions on China, after Deng Xiaoping and other PRC rulers ordered themilitary, the People's Liberation Army (PLA), to violently suppress peaceful demonstrators inBeijing on June 4, 1989. (Although the killing of demonstrators took place beyond the TiananmenSquare in the capital of Beijing, the crackdown is commonly called the Tiananmen Crackdown inreference to the square that was the focal point of the nation-wide pro-democracy movement.) The Bush Administration opposes an end to the EU's arms embargo on China, seeing it asa relaxation in the EU's human rights and arms export policies toward China, and out of step withU.S. sanctions on arms sales to China that have remained since 1989. Overall, there are two sets ofquestions for Congress in examining U.S. policy toward this question. What are the implicationsfor U.S. political and security interests concerning Europe and China? If U.S. interests are adverselyaffected, what are some options for Congress to discourage the EU from lifting its arms embargo onChina and, if it is lifted, to protect U.S. national security interests? The purpose of this CRS Reportis to discuss U.S. concerns and implications for U.S. interests, as the EU considers the future of thearms embargo, as well as options for U.S. policy. Given strenuous U.S. objections, there are concerns that a decision made by the EU to expandengagement with China by lifting the arms embargo would negatively impact the trans-Atlanticalliance (if there is a division in U.S. and European approaches toward China) and defensecooperation (if the United States responds by restricting technology transfers to Europe or defenseprocurement from Europe). At the same time, the current disagreement presents an opportunity forcloser coordination of U.S.-European policies, including controls over military-related exports andstrategy towards China. The United States has important interests in maintaining strong allianceswith common approaches toward a rising China. Like Europe, Washington increasingly has engaged Beijing on the economic, political, andmilitary fronts. A fundamental issue, then, has been how engagement is pursued and whether itcontributes to a more responsible China in domestic and international affairs or aggravatesdevelopments in China with adverse implications. For decades, U.S.-PRC relations have expandedwith trade and cooperation on international issues. There remain Western concerns, however, aboutrestrictions on human rights and democracy in China, and about the impact of China's weaponsproliferation practices and military buildup on peace and stability in Asia and other regions aroundthe world. Because some European companies have transferred defense-related systems to China underthe arms embargo that is not legally binding, the United States has called for the EU to maintain theembargo and strengthen export controls. There are fears that any acceleration of China's militarymodernization with European defense technology would result in instability in the Taiwan Strait,which could involve U.S. military intervention. This concern stems from one dilemma for U.S.policy: adherence to the "one China" policy since the Nixon Administration started secret talks withthe PRC in 1971 while maintaining diplomatic relations with the Republic of China (commonlycalled Taiwan) until 1979 and unofficial relations since then. Taiwan remains the major U.S.-PRC issue that could bring the countries into conflict. The1979 Taiwan Relations Act (TRA), P.L. 96-8 , governs U.S. policy toward Taiwan, including offeringarms to assist its self-defense. The TRA did not commit the President and Congress to determineany decision to intervene in the event of threats to Taiwan, other than to consider any non-peacefulefforts to determine Taiwan's future "of grave concern to the United States." Nonetheless, amongthe stipulations of U.S. policy, the TRA declared that it is U.S. policy "to maintain the capacity ofthe United States to resist any resort to force or other forms of coercion that would jeopardize thesecurity, or the social or economic system, of the people on Taiwan." (2) Thus, in addition to issuesabout arms sales to Taiwan and the extent of any U.S. commitment to help defend Taiwan, onequestion is whether the U.S. forces have the capability to deter or defeat the PLA, not only in theevent of a use of force but also coercion against Taiwan. Maintenance of cross-strait stability hasrequired a careful balance of ties with both the PRC and Taiwan. There have been periodicallyheightened tensions between the PRC and Taiwan since the Taiwan Strait Crisis of 1995-1996,sensitive assertions of a separate national identity in Taiwan since 1999, and President Bush'sarticulation of stronger U.S. support for Taiwan's self-defense in 2001, later qualified by criticismof Taiwan's president in 2003 for perceived attempts to change the cross-strait status quo. Congress exercises oversight of the effectiveness of the Bush Administration's diplomacytoward Europe. Since 2004, U.S. officials have pressured EU member states not to lift the armsembargo. Congress has supported this stance. Congress also has expressed concerns about policy toward China, including promotion ofhuman rights. Moreover, Congress has expressed increasing concerns about the PLA'smodernization, particularly following the military exercises and missile launches targeted againstTaiwan in 1995-1996. Because many EU member states have narrowly interpreted the armsembargo as banning only lethal weapons, some EU countries have sold defense-related technologyto China. There is concern that without the arms embargo, EU countries might sell additionaldual-use technology and/or weapons systems to China. The PLA could then employ Europeantechnology and weapons against U.S. forces and friends, in the event of a conflict with China. Moreover, there is concern about the potential for EU companies involved in U.S.-European defensecooperation to transfer U.S. defense technology to China, undermining U.S. export controls andsanctions on arms sales to China. In May 2004, the House passed its version of the National Defense Authorization Act forFY2005 ( H.R. 4200 ), reported out of the House Armed Services Committee, whichincluded a provision to impose procurement sanctions against any foreign person that transferscertain military items to China. (Also see section on Legislation below.) In early 2005, Senator Richard Lugar warned that "the technology the U.S. shares withEuropean allies could be in jeopardy if allies were sharing that through these commercial sales withthe Chinese." (3) SenatorJoseph Biden said that lifting the embargo is "a non-starter with Congress." (4) In the House, RepresentativeHenry Hyde wrote that "the choice for Europe could not be clearer: it is between policies thatpromote the development of democracy in China or those that support China's military buildup andthreaten U.S. security interests." (5) At a hearing of the Senate Foreign Relations Committee on March 16, 2005, Senator Lugarcautioned that if European military-related transfers to China rises markedly, "we should reassesssales to Europe of our most critical military technology." Referring to China's adoption two daysearlier of its "Anti-secession Law" threatening the use of force against Taiwan and raising cross-straittensions, Senator Lugar counseled that "this is no time to be taking steps that might either help Chinaachieve a decisive military advantage over Taiwan or send the wrong political signal." Likewise,Senator Biden urged the Europeans to maintain the embargo as well as strengthen the Code ofConduct on arms sales, particularly given the timing when the Bush Administration "has reached outto try to begin to mend our frayed relationships with our European allies...." (6) Convening a joint hearing in April 2005, Representatives Duncan Hunter, Ike Skelton, HenryHyde, and Tom Lantos, the Chairs and Ranking Members of the House Armed Services andInternational Relations Committees expressed their opposition to an end to the EU's armsembargo. (7) Between 1985 and 1987, the United States had agreed to extend to China four programs ofForeign Military Sales (FMS): modernization of artillery ammunition production facilities;modernization of avionics in F-8 fighters (called the "Peace Pearl" program); sale of four Mark-46anti-submarine torpedoes; and sale of four AN/TPQ-37 artillery-locating radars. (8) However, in response to theTiananmen Crackdown, the United States suspended military-to-military contacts and arms sales. First imposed by President George H.W. Bush on June 5, 1989, the ban on arms sales was latercodified among sanctions passed in Section 902 of the Foreign Relations Authorization Act for FYs1990 and 1991 ( P.L. 101-246 ), approved in February 1990. Faced with the sanctions, in April 1990,China canceled the "Peace Pearl" program to upgrade the avionics of the F-8 fighters. (9) In December 1992, PresidentBush decided to close out the four suspended FMS programs, returning PRC equipment, reimbursingunused funds, and delivering sold items without support. (10) Congress has oversight of these sanctions that continue to prohibit the issuance of licensesunder the Arms Export Control Act to export Munitions List items to China, explicitly includinghelicopters and helicopter parts; crime control and detection equipment; as well as satellites exportedfor PRC launch.