Order Code RL30957
CRS Report for Congress
Received through the CRS Web
Taiwan: Major U.S. Arms Sales Since 1990
Updated June 28, 2004
Shirley A. Kan
Specialist in National Security Policy
Foreign Affairs, Defense, and Trade Division
Congressional Research Service ˜ The Library of Congress

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Taiwan: Major U.S. Arms Sales Since 1990
Summary
This report, updated as warranted, discusses U.S. security assistance to Taiwan,
or Republic of China (ROC), including policy issues for Congress and legislation.
The Taiwan Relations Act (TRA), P.L. 96-8, has governed U.S. arms sales to Taiwan
since 1979, when the United States recognized the People’s Republic of China (PRC)
instead of the ROC. Two other relevant parts of the “one China” policy are the
August 17, 1982 U.S.-PRC Joint Communique and the “Six Assurances” made to
Taiwan. (Also see CRS Report RL30341, China/Taiwan: Evolution of the “One
China” Policy — Key Statements from Washington, Beijing, and Taipei, by Shirley
Kan.) Despite the absence of diplomatic relations or a defense treaty, U.S. arms sales
to Taiwan have been increasingly significant. In addition, the United States has
expanded military ties with Taiwan since the PRC’s missile firings in 1995-1996.
At the U.S.-Taiwan arms sales talks on April 24, 2001, President George W.
Bush approved for possible sale: diesel-electric submarines, P-3 anti-submarine
warfare (ASW) aircraft (linked to the submarine sale), four decommissioned U.S.
Kidd-class destroyers, and other items. He also deferred approval for Aegis-
equipped destroyers and other items, while denying other requests. Since then,
attention has turned to Taiwan, where the military, civilian officials, and legislators
from competing political parties have debated contentious issues about how much to
spend on defense and which U.S. weapons systems to acquire, despite the increasing
threat (including a missile buildup) from the People’s Liberation Army (PLA), as
described in the Pentagon’s reports to Congress on PRC military power. Of those
requests approved since 2001, Taiwan has contracted for amphibious assault vehicles
and Kidd-class destroyers. In February 2003, the Administration pointed Taiwan to
three priorities for defense: command and control, missile defense, and ASW. The
Administration and others have questioned Taiwan’s seriousness about its self-
defense, defense and special budgets for arms, and protection of secrets.
Several policy issues are of concern to Congress for legislation, oversight, or
other action. One issue concerns the effectiveness of the Administration in applying
leverage to improve Taiwan’s self-defense as well as to maintain peace and stability.
Another issue is the role of Congress in determining defense ties with Taiwan or
overseeing any policy reviews. A third issue concerns whether trends in the Taiwan
Strait are stabilizing or destabilizing and how the Administration’s management of
policy has affected these trends, including any changes in security assistance. A
question arose in April 2001 when President Bush committed the United States to do
“whatever it took to help Taiwan defend herself.” While Taiwan’s president has
advocated a new constitution and cross-strait tensions rose, President Bush stated that
“the comments and actions made by the leader of Taiwan indicate that he may be
willing to make decisions unilaterally to change the status quo, which we oppose,”
in a meeting with the PRC premier in the Oval Office in December 2003.
Legislation includes the House-passed FY2005 National Defense Authorization
Act (H.R. 4200) with Sec. 1215 to require the Defense Department to send general
or flag officers and senior defense officials to Taiwan (with no similar language in
S. 2400); and H.Con.Res. 437 (on asking Taiwan to deploy its Marines to Iraq).

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Contents
U.S. Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Policy Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Broad Indicators of Arms Transfers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Military Relationship . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
“Software Initiative” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Assessments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Normalized Relations and “Major Non-NATO Ally” . . . . . . . . . . . . . . 4
Senior-Level Exchanges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
April 2001 Arms Requests and Status of Arms Sales . . . . . . . . . . . . . . . . . . 5
Amphibious Assault Vehicles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Kidd-Class Destroyers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Attack Helicopters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Aegis-equipped Destroyers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Submarines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
P-3C ASW Aircraft . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
PAC-3 Missile Defense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Early Warning Radars . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
C4ISR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
AMRAAM and SLAMRAAM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Taiwan’s Decisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Other Possible Future Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Policy Issues for Congress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Extent of U.S. Commitment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Jiang Zemin’s Offer on Missiles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Taiwan’s Commitment to Self-Defense and Budgets . . . . . . . . . . . . . 15
Policy Reviews and U.S. Objectives . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Congressional Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
105th Congress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
106th Congress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
107th Congress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
108th Congress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Major U.S. Defense Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
List of Tables
Taiwan’s Defense Budget . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

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Taiwan: Major U.S. Arms Sales Since 1990
U.S. Policy
This report discusses U.S. security assistance for Taiwan, or Republic of China
(ROC), including policy issues for Congress. It also lists sales of major defense
articles and services to Taiwan, as approved by the Administration, proposed in
Letters of Offer and Acceptance, and notified to Congress since 1990. Based on
unclassified notices and news reports, this list includes the date of notification, major
item proposed for sale, and estimated value of the defense package.
Policy Statements
The Taiwan Relations Act (TRA), P.L. 96-8, has governed U.S. arms sales to
Taiwan since 1979, when the United States recognized the People’s Republic of
China (PRC) instead of the ROC.1 The TRA specifies that it is U.S. policy “to
provide Taiwan with arms of a defensive character” and “to maintain the capacity of
the United States to resist any resort to force or other forms of coercion” threatening
Taiwan’s security, or social or economic system. Section 3(a) states that “the United
States will make available to Taiwan such defense articles and defense services in
such quantity as may be necessary to enable Taiwan to maintain a sufficient self-
defense capability.” The TRA also specifies a congressional role in decision-making
on security assistance for Taiwan. Section 3(b) stipulates that both the President and
the Congress shall determine the nature and quantity of such defense articles and
services based solely upon their judgment of the needs of Taiwan. Section 3(b) also
says that “such determination of Taiwan’s defense needs shall include review by
United States military authorities in connection with recommendations to the
President and the Congress.” The TRA set up the American Institute in Taiwan
(AIT), a nonprofit corporation, to handle the relationship with Taiwan. AIT
implements policy as directed by the Departments of Defense and State, and the
National Security Council (NSC).
There are two other elements of the “one China” policy relevant to the issue of
arms sales to Taiwan. In 1982, President Reagan issued the August 17 Joint
Communique on reducing arms sales to Taiwan, but he also stated that those sales
will continue in accordance with the TRA and with the full expectation that the
PRC’s approach to the resolution of the Taiwan issue will be peaceful. In referring
to what have been known as the “Six Assurances” made to Taipei, U.S. policy-
makers have said that, in 1982, Washington did not agree to set a date for ending
1 For more on policy, see CRS Report RL30341, China/Taiwan: Evolution of the “One
China” Policy — Key Statements From Washington, Beijing, and Taipei, by Shirley Kan.

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CRS-2
arms sales to Taiwan nor to consult with Beijing on arms sales to Taiwan. The “Six
Assurances” also included the assurance of not revising the TRA.
Broad Indicators of Arms Transfers
As for U.S. arms transfers to Taiwan, they have been significant despite the
absence of diplomatic relations or a treaty alliance. Deliveries of U.S. defense
articles and services to Taiwan totaled $4 billion in the 1993-1996 period, and $7.6
billion in 1997-2000, ranking first among Asian recipients. Worldwide, Taiwan
ranked third (behind Saudi Arabia and Egypt) in 1993-1996, and second (behind
Saudi Arabia) in 1997-2000. In 2000 alone, Taiwan received $1.2 billion in U.S.
defense articles and services.2
From worldwide sources, including the United States, Taiwan received $20.2
billion in arms deliveries in the eight-year period from 1995 to 2002 — with Taiwan
ranked second behind Saudi Arabia among leading recipients in the developing
world. Of that total, Taiwan received $14.2 billion in arms in 1995-1998, and $6
billion in 1999-2002.3 (The PRC, by comparison, received $9.3 billion in arms
during the same eight-year period.) In 2002 alone, Taiwan received $1.1 billion in
arms deliveries, while the PRC received arms deliveries valued at $1.2 billion.
However, as an indication of future arms acquisitions, China ranked first among
developing nations in arms purchase agreements, with a total value of $11.3 billion
during 1999-2002, while Taiwan’s agreements did not place it among the top 10
recipients. China ranked first in arms purchase agreements in 2002 alone, with a
total value of $3.6 billion.
Military Relationship
“Software Initiative”. In addition to transfers of hardware, beginning after
tensions in the Taiwan Strait in 1995-1996 during which President Clinton deployed
two aircraft carrier battle groups near Taiwan, the Clinton Administration quietly
expanded the sensitive military relationship with Taiwan to levels unprecedented
since 1979.4 The broader exchanges have increased attention to “software,”
including discussions over strategy, training, logistics, command and control, and
plans in the event of an attack from the PRC. These increased exchanges were
prompted by U.S. concerns about Taiwan’s self-defense capabilities. At a conference
on Taiwan’s defense in March 2002, Deputy Secretary of Defense Paul Wolfowitz
2 CRS Report RL31113, U.S. Arms Sales: Agreements with and Deliveries to Major Clients,
1993-2000, September 5, 2001, by Richard Grimmett, compiled from U.S. official,
unclassified data as reported by the Defense Security Cooperation Agency (DSCA).
3 CRS Report RL32084, Conventional Arms Transfers to Developing Nations, 1995-2002,
September 22, 2003, by Richard F. Grimmett.
4 Mann, Jim, “U.S. Has Secretly Expanded Military Ties with Taiwan,” LA Times, July 24,
1999; Kurt M. Campbell (former Deputy Assistant Secretary of Defense for Asian and
Pacific Affairs) and Derek J. Mitchell, “Crisis in the Taiwan Strait?”, Foreign Affairs,
July/August 2001.

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CRS-3
said that the United States wanted to help Taiwan’s military to strengthen civilian
control, enhance jointness, and rationalize arms acquisitions.5 In April 2004,
Assistant Secretary of Defense for International Security Affairs Peter Rodman told
Congress that the Pentagon believed Taiwan’s military needed to improve readiness,
planning, and interoperability among its services.6
Assessments. The Pentagon has also conducted its own assessments of
Taiwan’s defense needs, with over a dozen studies from 1997 to early 2004.7
Congress could inquire about these assessments and any other reports. In September
1999, to enhance cooperation, a Pentagon team was said to have visited Taiwan to
assess its air defense capability.8 The Pentagon reportedly completed its classified
assessment in January 2000, finding a number of problems in the Taiwan military’s
ability to defend against aircraft, ballistic missiles, and cruise missiles, and those
problems included international isolation, inadequate security, and sharp inter-service
rivalries.9 In September 2000, the Pentagon reportedly conducted a classified
assessment of Taiwan’s naval defense needs — as the Clinton Administration had
promised in April 2000 while deferring a sale of Aegis-equipped destroyers. The
report, “Taiwan Naval Modernization,” was said to have found that Taiwan’s navy
needed the Aegis radar system, Kidd-class destroyers, submarines, an anti-submarine
underwater sonar array, and P-3 anti-submarine aircraft.10 In January 2001, a
Pentagon team reportedly examined Taiwan’s command and control, air force
equipment, and air defense against a first strike.11 In September 2001, a Defense
Department team reportedly visited Taiwan to assess its army, as the Bush
Administration promised in the April 2001 round of arms sales talks.12 In August
2002, a U.S. military team studied Taiwan’s Po Sheng command, control,
communication, computers, intelligence, surveillance, and reconnaissance (C4ISR)
program.13 In November 2002, another U.S. team visited Taiwan to assess its
5 Deputy Secretary of Defense Paul Wolfowitz, “Remarks to the U.S.-Taiwan Business
Council,” March 11, 2002.
6 Testimony before the House International Relations Committee, hearing on “The Taiwan
Relations Act: The Next 25 Years,” April 21, 2004.
7 Statement of Assistant Secretary of Defense for International Security Affairs Peter
Rodman at a hearing on “The Taiwan Relations Act: The Next 25 Years” held by the House
International Relations Committee on April 21, 2004.
8 “U.S. Military Team Arrives in Taiwan for Visit,” Lien-ho Pao [United Daily News], Sept.
19, 1999, in FBIS.
9 Ricks, Thomas, “Taiwan Seen as Vulnerable to Attack,” Washington Post, March 31,
2000.
10 Tsao, Nadia, “Pentagon Report Says Taiwan Can Handle AEGIS,” Taipei Times, Sept. 27,
2000; Michael Gordon, “Secret U.S. Study Concludes Taiwan Needs New Arms,” New York
Times, April 1, 2001.
11 China Times (Taiwan), January 14, 2001; Taipei Times, January 15, 2001.
12 Taipei Times (Taiwan), September 10, 2001.
13 Taiwan Defense Review (Taiwan), August 27, 2002.

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CRS-4
marine corps and security at ports and harbors, and reported positive findings.14 In
November 2003, a U.S. defense team visited Taiwan to assess its anti-submarine
warfare capability and found requirements for improvement.15
Normalized Relations and “Major Non-NATO Ally”. The George W.
Bush Administration has continued and expanded the closer military ties at different
levels. In April 2001, President Bush announced he would drop the 20-year-old
annual arms talks process used to discuss arms sales to Taiwan’s military in favor of
normal, routine considerations of Taiwan’s requests on an as-needed basis — similar
to interactions with other governments.16 In July 2001, after U.S. and Taiwan media
reported on a U.S.-Taiwan military meeting in Monterey, CA, the Pentagon revealed
it was the seventh meeting (since 1997) held with Taiwan’s national security
authorities “to discuss issues of interaction and means by which to provide for the
defense of Taiwan.”17 Another round of such strategic talks took place in July
2002.18 U.S. military officers observed Taiwan’s Hankuang-17 annual military
exercise in 2001, the first time since 1979.19 The Pacific Command’s Asia-Pacific
Center for Security Studies accepted fellows from Taiwan in its Executive Course
for the first time in the summer of 2002.20 By the summer of 2002, the U.S. and
Taiwan militaries reportedly discussed setting up an undersea ASW link to monitor
the PLA Navy’s submarines.21 The U.S. and Taiwan militaries set up a hotline in
2002 to deal with possible crises.22
In addition, in 2002, the Administration requested legislation be passed to
authorize the assignment of personnel from U.S. departments (including the Defense
Department) to AIT, with implications for the assignment of active-duty military
personnel to Taiwan for the first time since 1979. Also, the Acting Under Secretary
of Defense for Acquisition, Technology, and Logistics, Michael Wynne, submitted
a letter to Congress on August 29, 2003, that designated Taiwan as a “major non-
NATO ally.” (See 107th Congress below for discussion of the Foreign Relations
Authorization Act for FY2003, P.L. 107-228.)
14 Taipei Times, November 21, 2002; January 1, 2003; Tzu-Yu Shih-Pao [Liberty Times]
(Taipei), April 14, 2003; Taipei Times, August 22, 2003.
15 Jane’s Defense Weekly, December 3, 2003; Taiwan Defense Review, January 12, 2004.
16 On the annual arms talks, see CRS Report RS20365, Taiwan: Annual Arms Sales Process,
updated June 5, 2001, by Shirley Kan.
17 China Times (Taiwan), July 18, 2001; Washington Times, July 18, 2001; Department of
Defense News Briefing, July 19, 2001.
18 Central News Agency, Taipei, July 17, 2002.
19 Chung-Kuo Shih-Pao [China Times], Taipei, July 18, 2001. The China Times (May 27,
2004) quotes Defense Minister Lee Jye confirming that U.S. military personnel observed
Hankuang-17, Hankuang-18, and Hankuang-19 exercises to evaluate Taiwan’s military.
20 CNN.com, March 18, 2002; Author’s discussions in Hawaii in July 2002.
21 Tzu-Yu Shih-Pao [Liberty Times], Taipei, July 20, 2002.
22 Jane’s Defense Weekly, October 29, 2003.

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CRS-5
Senior-Level Exchanges. The United States and Taiwan have held high-
level defense-related meetings in the United States. The Bush Administration
granted a visa for Defense Minister Tang Yiau-ming to visit the United States to
attend a private conference held by the U.S.-Taiwan Business Council on March 10-
12, 2002, in St. Petersburg, FL, making him the first ROC defense minister to come
to the United States on a non-transit purpose since 1979.23 Tang met with Deputy
Secretary of Defense Paul Wolfowitz, who also spoke at the conference.24 In
September 2002, a deputy defense minister, Kang Ning-hsiang, visited Washington
and was the first senior Taiwan defense official to have meetings inside the Pentagon
since U.S.-ROC diplomatic ties severed in 1979, although a meeting with Wolfowitz
took place outside the Pentagon.25
In January 2003, a Taiwanese newspaper leaked information that a U.S. military
team planned to participate in — beyond observe — the Hankuang-19 military
exercise and be present at Taiwan’s Hengshan Command Center for the first time
since 1979.26 On the same day, General Chen Chao-min, a deputy defense minister,
confirmed to Taiwan’s legislature a U.S. plan for a non-combatant evacuation
operation (NEO). However, the leak and confirmation reportedly prompted
annoyance in Washington and contributed to a U.S. decision to limit General Chen’s
visit to the United States in February 2003 to attendance at a private sector
conference on Taiwan’s defense in San Antonio, TX (without a visit to Washington,
DC).27 Deputy Assistant Secretary of Defense Richard Lawless and Deputy Assistant
Secretary of State Randall Schriver met with General Chen. The Hankuang-19
exercise reportedly took place in April-May 2003, with about 20 U.S. military
personnel participating. The exercise reportedly raised questions about Taiwan’s
ability to sustain defense before potential U.S. support and the military’s will to
fight.28 Deputy Defense Minister Lin Chong-pin visited Washington in June 2003
to respond to U.S. concerns about Taiwan’s commitment to its self-defense.
April 2001 Arms Requests and Status of Arms Sales
In 2001, arms sales talks took place on April 24 in Washington, DC, and Taiwan
was represented by its Vice Chief of General Staff, General Huoh Shou-yeh.
According to the Administration and news reports,29 President Bush approved
23 In December 2001, the previous ROC Defense Minister, Wu Shih-wen, made a U.S.
transit on his way to the Dominican Republic.
24 Deputy Secretary of Defense Paul Wolfowitz, “Remarks to the U.S.-Taiwan Business
Council,” March 11, 2002.
25 Reuters, September 10, 2002.
26 Chung-Kuo Shih-Pao [China Times], January 2, 2003.
27 Taiwan Defense Review, January 18, 2003; Straits Times (Singapore), January 21, 2003.
28 Lien-Ho Pao [United Daily News] (Taipei), April 16, 2003; China Times (Taipei), April
19, 2003; Taipei Times, April 25, 2003; Central News Agency (Taipei), May 9, 2003.
29 White House, press briefing, April 24, 2001; Department of Defense, news briefing, April
24, 2001;David Sanger, “Bush is Offering Taiwanese Some Arms, But Not the Best,” New
(continued...)

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CRS-6
Taiwan’s request for: 8 diesel-electric submarines, 12 P-3C Orion anti-submarine
warfare (ASW) aircraft (linked to the submarine sale), 54 Mark-48 ASW torpedoes,
44 Harpoon submarine-launched anti-ship cruise missiles, 144 M109A6 Paladin self-
propelled howitzers, 54 AAV7A1 amphibious assault vehicles, AN/ALE-50
electronic countermeasure (ECM) systems for F-16s, and 12 MH-53 mine-sweeping
helicopters. Also approved for sale were four decommissioned Kidd-class
destroyers, offered as Excess Defense Articles (EDA), not FMS. The Administration
also decided to brief Taiwan’s military on the PAC-3 missile defense missile.30
Deferred for approval were destroyers equipped with the Aegis combat system.
Also deferred for approval were M1A2 Abrams main battle tanks and AH-64D
Apache Longbow attack helicopters, pending a U.S. assessment of Taiwan’s army.
President Bush denied Taiwan’s requests for Joint Direct Attack Munitions
(JDAM) and High-speed Anti-radiation Missiles (HARM) that target radar-equipped
air defense systems. At the U.S.-Taiwan Business Council’s conference in February
2003, however, Deputy Under Secretary of the Air Force Willard Mitchell indicated
that these requests were under review. A possible basis for reviewing any renewed
requests from Taiwan is found in the Pentagon’s report on PRC military power
submitted in July 2003 to Congress, which confirmed that the PLA procured from
Israel “a significant number of HARPY anti-radiation systems.” The press first
reported on the PLA’s acquisition of the HARPY drones in 2002.31
Amphibious Assault Vehicles. Taiwan agreed to purchase the AAV7A1
amphibious assault vehicles, under a program administered by the U.S. Marine
Corps. The Administration notified Congress in September 2002. In June 2003,
United Defense Industries obtained a contract with the initial value of $64 million.32
Kidd-Class Destroyers. In October 2002, the Defense Committee of
Taiwan’s legislature engaged in a sharp partisan debate over whether to approve
funding (about $800 million) to buy the U.S. Navy’s four currently available Kidd-
class destroyers, ending with 18 lawmakers from the ruling Democratic Progressive
Party (DPP) and Taiwan Solidarity Union (TSU) voting in favor, against 16
legislators from the opposition Kuomintang (KMT) and People’s First Party (PFP).33
Then, legislators conditioned funding on bargaining with the U.S. Navy on a 15%
29 (...continued)
York Times, April 24, 2001; Steven Mufson and Dana Milbank, “Taiwan to Get Variety of
Arms,” Washington Post, April 24, 2001; Neil King Jr., “Bush Defers Sale of Aegis to
Taiwan, Will Offer Four Kidd-Class Destroyers,” Wall Street Journal, April 24, 2001; “U.S.
Refuses Taiwan Request for JDAM, HARM, and PAC-3 Missiles,” Aerospace Daily, April
25, 2001; and “U.S. Formally Informs ROC of Arms Sales Decision,” Central News Agency
(Taiwan), April 25, 2001.
30 Taiwan Defense Review, January 18, 2003, reported the briefing took place in late 2001.
31 Washington Times, July 2, 2002; Guangzhou Daily (via FBIS), July 4, 2002; Ha’aretz, Tel
Aviv, July 25, 2002; Flight International, November 5-11, 2002.
32 Jane’s International Defense Review, September 2003.
33 Taipei Times and China Post (Taiwan), November 1, 2002.

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CRS-7
price reduction. On May 30, 2003, Taiwan’s legislature finally voted to release the
funding. The U.S. Navy began reactivation and upgrade of the Kidds in July 2003,
and a U.S. company, VSE Corp., has the contract for completion by March 2007.34
Attack Helicopters. After deferring approval for Taiwan’s request, the Bush
Administration, in May 2002, approved the request for attack helicopters, and
Taiwan began negotiations on 30 Apache helicopters sold by Boeing.35 Later,
Taiwan also considered the option of the AH-1Z Cobra helicopter sold by Bell.36
Aegis-equipped Destroyers. The U.S. Navy deploys the Aegis combat
system (e.g., on the Arleigh Burke-class destroyer) for air defense and applies it in
development of a future Navy missile defense system (using SM-3 missiles). An
alternative to the Arleigh Burke that retains the Aegis Spy-1D radar, called the
Evolved Advanced Combat System (EACS) has been considered. The Aegis combat
system has the capability to track over 100 targets and to conduct simultaneous anti-
air, anti-surface, and anti-submarine operations. In 2002, Taiwan reportedly re-
submitted a request for Aegis-equipped destroyers.37 In March 2003, its defense
minister proposed a program for acquiring four Arleigh Burke-class destroyers with
Aegis systems beginning in 2009 for almost $5 billion.38 During the U.S. war in Iraq
in 2003, the Aegis combat system helped the Patriot missile defense system to detect
and intercept Iraqi missiles.39
Submarines. Despite initial press reports skeptical about the sale of
submarines (because the United States no longer manufactures diesel-electric
submarines), the Department of Defense has discussed options for the program with
U.S. and foreign companies and Taiwan. In November 2001, seven companies
submitted bids and concept papers to the Department of the Navy. Companies
interested in the contract reportedly include U.S. manufacturers, Northrop Grumman
(with its Ingalls Shipbuilding) and General Dynamics (with its Electric Boat);
Germany’s HDW; the Netherlands’ RDM (which sold its Zwaardvis-class submarine
design to Taiwan in the 1980s for two Hai Lung [Sea Dragon]-class submarines);
France’s DCN; and Spain’s IZAR. Although the Administration promised to help
Taiwan buy submarines, not build them, Taiwan’s China Shipbuilding Corporation
also is interested in a part of the contract, with support from some of Taiwan’s
legislators. The Department of Navy discussed options with Taiwan’s Navy in July
2002 and initially planned to select the manufacturer(s) to design and build the
34 Taipei Times, September 5, 2003; Taiwan Defense Review, March 10, 2004.
35 Taipei Times, May 26, 2002; Jane’s Defense Weekly, June 5, 2002.
36 Jane’s Defense Weekly, March 10 and 24, 2004.
37 Lien-Ho Pao [United Daily News] (Taiwan), October 29, 2002.
38 Taiwan Defense Review, March 12, 2003.
39 U.S. Army, 32nd Army Air and Missile Defense Command, Fort Bliss, TX, “Operation
Iraqi Freedom: Theater Air and Missile Defense,” September 2003; and discussion with
Lockheed Martin executive, June 10, 2004.

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CRS-8
submarines in the latter half of 2003.40 The U.S. Navy held a second Industry Day
on December 17, 2002, with General Dynamics, Lockheed Martin, Northrop
Grumman, and Raytheon interested in being the prime contractor.41
However, by April 2003, the sale became at risk, when the United States and
Taiwan reached an impasse over the program start-up costs estimated by the U.S.
Navy at $333 million, but offered at $28.5 million by Taiwan. On May 20-23, 2003,
Taiwan’s Navy sent a delegation led by Vice Admiral Kao Yang to Washington to
discuss the issue, but the differences reportedly remained unresolved.42 Facing the
delays in Taiwan’s commitment of funds (although it first requested submarines in
1995) and a long acquisition process, the Administration then viewed the program
as a long-term solution for Taiwan that would not meet the near-term blockade and
submarine threats posed by the PLA Navy.43 Defense Minister Tang Yiau-ming told
visiting AIT Chairwoman Therese Shaheen on October 16, 2003, that Taiwan still
placed a high priority on acquiring the submarines.44
A team from the U.S. Navy’s International Program Office arrived in Taipei in
October 2003, for further talks on whether Taiwan will procure submarines.45 The
U.S. team also met with some of Taiwan’s legislators, including Lin Yu-fang of the
opposition People First Party.46 Lin was one of the sponsors of legislation passed in
May 2002, requiring Taiwan’s navy to arrange for six of the eight submarines to be
built in Taiwan using technology transfers.47 China Shipbuilding Corporation’s
proposal, abbreviated as the “2+2+2+2” plan, calls for the first two submarines to be
completely foreign built, the second pair of boats to include one-third Taiwan
participation, the third pair to include two-thirds Taiwan participation, and the last
pair to be built completely in Taiwan. The total cost of the submarines could reach
$9-12 billion,48 requiring Taiwan’s legislature to pass a Special Budget (see
discussion of budgets below).49
Taiwan’s new demand for domestic industrial participation added another issue
and greater potential costs to the program (about $2.6 billion), which U.S. naval
40 Central News Agency (Taiwan), July 30, 2002; Taipei Times, July 31, 2002; Defense
Daily, September 16, 2002.
41 Knight-Ridder/Tribune Business News, December 17, 2002.
42 United Daily News (Taipei), April 21, 2003 and April 22, 2003; Taiwan Defense Review,
May 17, 2003 and May 30, 2003.
43 U.S.-Taiwan Business Council, Defense and Aerospace Report, Second Quarter 2003;
Bloomberg, July 10, 2003; Defense Daily, July 11, 2003; TDReview, September 19, 2003.
44 Central News Agency, Taipei, October 16, 2003.
45 Lien-ho Pao [United Daily News], Taipei, October 23, 2003; Central News Agency,
Taipei, October 26, 2003.
46 Taipei Times, October 31, 2003; Central News Agency, November 2, 2003.
47 Author’s discussion with Lin Yu-fang in Taipei in December 2003.
48 Lien-ho Pao [United Daily News], August 25, 2003.
49 Taiwan Defense Review, April 30, 2004.

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CRS-9
officials discussed with potential prime contractors at the 3rd Industry Day meeting
on December 15, 2003, in Washington.50 However, Deputy Secretary of Defense
Wolfowitz told Taiwan’s visiting legislative delegation on June 21, 2004, that the
Bush Administration approved Taiwan’s request for assistance in purchasing
submarines but is opposed to Taiwan’s new proposal to build subs in Taiwan.51
In addition to the military and political implications of selling submarines to
Taiwan’s navy, issues for Congress include potential technology transfers to Taiwan
and Europeans, and leaks of secrets from Taiwan to the PRC, that could involve U.S.
submarine secrets and implications for the U.S. military.52 In a report to Congress,
as required by the National Defense Authorization Act for FYs 1992-1993, the
Secretary of the Navy reported in May 1992 that “to the extent that a potential diesel
submarine construction project would draw on U.S. resources, it has the potential to
tap into the state-of-the-art technology used in U.S. nuclear powered submarines.”
The report also noted “the fact that the diesel submarine is not a viable asset in the
U.S. Navy” and that “construction of diesel submarines for export in U.S. shipyards
would not support the U.S. submarine shipbuilding base and could encourage future
development and operation of diesel submarines to the detriment of our own forces.”
The report also said that “it may be possible to control the release of the most
important information and specific technologies of concern, but an effective system
would also have significant costs. The problem will be more difficult, however, if
a foreign entity is present in the shipyards during submarine construction.”
P-3C ASW Aircraft. After the United States approved Taiwan’s request for
12 P-3C planes, the two sides have negotiated the proposed sale. But Taiwan
questioned the estimated cost of $300 million per plane (in part due to Lockheed
Martin’s need to reopen the production line) for a total cost of $4.1 billion (including
parts and training) and sought alternatives, such as surplus P-3Cs reduced from the
U.S. Navy’s fleet. A longer-term option is the Multi-Mission Maritime Aircraft
(MMA) under development by Boeing’s subsidiary, McDonnell Douglas, for the U.S.
Navy. Taiwan’s legislature has to pass a Special Budget to include funds for
modified P-3C ASW planes (sold as Excess Defense Articles) with possible delivery
in 2008-2011.53 (See discussion on budgets below.)
PAC-3 Missile Defense. After U.S. approval in 1992, Taiwan in 1997
acquired three Patriot missile defense fire units with PAC-2 Guidance Enhanced
Missiles. After the Bush Administration in 2001 decided to brief Taiwan on the
advanced PAC-3 hit-to-kill missile, Taiwan has considered a deal on the PAC-3
system. (The U.S. Army completed developmental testing of the PAC-3 in October
2001 and conducted operational tests in 2002. The PAC-3 has been deployed with
the U.S. Army, as seen in Operation Iraqi Freedom during March-April 2003.
50 Taiwan Defense Review, February 6, 2004 and April 30, 2004.
51 United Daily News (Taipei), June 23, 2004.
52 As for U.S. counter-espionage concerns, the FBI sent agents to Taipei to investigate
alleged compromises of security on the PRC’s behalf at Taiwan military’s Chungshan
Institute of Science and Technology, reported the Central News Agency, August 13, 2003.
53 Taiwan Defense Review, April 30, 2004.

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CRS-10
Raytheon describes its Patriot system as the world’s most advanced ground-based
system for defense against aircraft, theater ballistic missiles, and cruise missiles.)
In late 2002, the Pentagon reportedly was disappointed with Taiwan’s delay in
acquiring the PAC-3 system.54 At a private sector conference on Taiwan’s defense
in February 2003, Bush Administration officials openly stressed to Taiwan’s visiting
Deputy Defense Minister Chen Chao-min the imperative of acquiring advanced
missile defense systems. (See “Policy Issues for Congress” below.) In March 2003,
Mary Tighe, the Director of Asian and Pacific Affairs, led a Defense Department
delegation to Taiwan to urge its acquisition of missile defense systems, including the
PAC-3.55 After Chen criticized the Patriot’s performance in Operation Iraqi Freedom
in 2003, a Pentagon spokesperson, Jeff Davis, publicly corrected Chen to Taiwan’s
media on March 27, 2003.56 According to the U.S. Army, the Patriot missile defense
system (with Guidance Enhanced Missiles and PAC-3) intercepted nine Iraqi missiles
out of nine engagements.57 In April 2003, Taiwan submitted to the United States a
request for pricing and availability data in a step towards a contract, and in May
2004, the new Defense Minister Lee Jye requested six PAC-3 units and upgrade of
three PAC-2 Plus units to the PAC-3 standard.58
Despite the failure of a referendum to pass in March 2004, Taiwan reportedly
is looking to buy PAC-3 units, which would be part of a Special Budget that is under
consideration (see discussion on budgets below).59 Acquisition of missile defense
systems has been controversial in Taiwan, with some legislators supporting the
development of offensive missiles instead. Missile defense has also become
politicized, as shown in President Chen Shui-bian’s push for a referendum on buying
more missile defense systems that was held on election day on March 20, 2004, and
the failure of that referendum to be considered valid when only 45% of eligible voters
cast ballots (with 50% needed). (Out of the valid ballots cast, 92% agreed with the
proposal.) Meanwhile, China’s force of short-range ballistic missiles, believed to be
based opposite Taiwan, has grown to approximately 500 missiles (up from about 450
in 2003), and any missiles with “adequate precision guidance” could destroy key
leadership facilities, military bases, and communication and transportation nodes
54 Taiwan Defense Review, December 6, 2002.
55 Central News Agency (Taiwan), March 11, 2003.
56 Taipei Times, March 29, 2003.
57 U.S. Army, 32nd Army Air and Missile Defense Command, Fort Bliss, TX, “Operation
Iraqi Freedom: Theater Air and Missile Defense,” September 2003. For a skeptical view,
see Randy Barrett, “Pentagon Releases Candid Glimpse of Missile Defense During Iraq
War,” Space News, November 10, 2003.
58 Far Eastern Economic Review, May 15, 2003; Jane’s, July 23, 2003; Taiwan Defense
Review, June 15, 2004.
59 Central News Agency, March 3, 2004; China Times, April 13, 2004; Taiwan Defense
Review, April 30, 2004.

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CRS-11
with “minimal advanced warning,” according to the Pentagon’s 2004 report to
Congress on PRC military power.60
Early Warning Radars. In 1999, some in Congress encouraged the Clinton
Administration to approve a sale of early warning radars (see “106th Congress”
below). Taiwan has not concluded a contract for this procurement, while the
Pentagon has stressed the importance of long-range early warning and tracking of
ballistic and cruise missile attacks against Taiwan. Taiwan reportedly has considered
two options: a radar similar to AN/FPS-115 Pave Paws sold by Raytheon and the LM
Digital UHF Radar proposed by Lockheed Martin.61 Despite divided opinions among
lawmakers, in November 2003, Taiwan’s legislature approved the Defense Ministry’s
request for about $800 million to fund one radar site (rather than an option for two).62
Nonetheless, on March 30, 2004, the Defense Department notified Congress of the
potential sale of two ultra high frequency long range early warning radars, with the
potential value of $1.8 billion, that would enhance Taiwan’s ability to identify and
detect ballistic missiles as well as cruise missiles, and other threats from the air, and
improve the early warning capability of Taiwan’s C4ISR architecture. The
notification pointed out that there will not be U.S. personnel assigned to the radar(s).
C4ISR. In addition, after approval in 1999, the United States reportedly has
assisted Taiwan’s C4ISR program (named Po Sheng), involving sales of datalink
systems and integration of the services into a joint command and control system.63
In July 2001, the Bush Administration notified Congress of a proposed sale of Joint
Tactical Information Distribution Systems (JTIDS)/Link 16 terminals, a basis for an
expanded program. In early 2003, the Administration signaled to Taiwan that this
FMS program (managed by the U.S. Navy’s SPAWAR command) should be given
top priority. Taiwan opted for a program costing a total of about $1.4 billion, rather
than a more comprehensive option costing about $3.9 billion.64 In September 2003,
Lockheed Martin obtained a contract with the initial value of $27.6 million.65 The
notification to Congress submitted on September 24, 2003, indicated that the total
value could reach $775 million.
AMRAAM and SLAMRAAM. In April 2000, the Clinton Administration
approved the sale of AIM-120 Advanced Medium-Range Air-to-Air Missiles
(AMRAAMs) to Taiwan, with the understanding that the missiles would be kept in
storage on U.S. territory and transferred later to Taiwan, if/when the People’s
Liberation Army (PLA) acquires a similar Russian missile, like the R-77 (AA-12)
60 Department of Defense, “Annual Report on the Military Power of the People’s Republic
of China,” May 29, 2004.
61 Jane’s Defense Weekly, March 26, 2003 and February 11, 2004.
62 Taiwan Defense Review, November 26, 2003; Jane’s Defense Review, December 3, 2003.
63 Chung-Kuo Shih-Pao [China Times] (Taiwan), July 18, 2001; Defense and Aerospace
(U.S.-Taiwan Business Council), 2001; Taiwan Defense Review, August 27, 2002.
64 SPAWAR briefing at U.S.-Taiwan Defense Industry Conference, February 12-14, 2003;
Taiwan Defense Review, July 17, 2003; Tzu-Yu Shih Pao [Liberty Times], July 14, 2003.
65 Taiwan Defense Review, September 17, 2003; Jane’s Defense Weekly, October 1, 2003.

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CRS-12
air-to-air missile, or threatens to attack Taiwan. On July 1, 2002, the Washington
Times reported that, in June, two SU-30 fighters of the PLA Air Force test-fired AA-
12 medium-range air-to-air missiles acquired from Russia. The report raised
questions as to whether the PLA already deployed the missiles. According to Reuters
(July 10, 2002), Raytheon planned to finalize production of the AMRAAMs for
Taiwan by the fall of 2003. Some in Congress urged the Bush Administration to
transfer the AMRAAMs to Taiwan after production. (See 107th Congress.)
By the end of 2002, the Bush Administration authorized delivery of the
AMRAAMs to Taiwan and briefed its air force on ground-launched AMRAAMs.66
(The U.S. Army has developed the Surface Launched Advanced Medium Range Air-
to-Air Missile, or SLAMRAAM, for cruise missile defense.) By November 2003,
Taiwan received its first delivery of AMRAAMs, and a pilot of Taiwan’s air force
test-fired an AMRAAM at Tyndall Air Force Base in Florida on November 10,
2003.67 By April 2004, the Defense Department reportedly encouraged Taiwan to
acquire the SLAMRAAM to help counter the PLA’s expected deployment of land
attack cruise missiles.68
Taiwan’s Decisions. Since the U.S. response to Taiwan’s requests in 2001,
attention has turned to Taiwan, where the military, civilian leadership, a newly
assertive legislature (Lifa Yuan), and competing political parties have debated
contentious issues. These issues include the urgency of a possible PLA attack, how
much to spend on defense, which U.S. weapons systems to buy, whether to respond
to perceived U.S. pressure, and what the defense strategy should be. The debate has
taken place as the Pentagon has warned of the PLA’s accelerated buildup in a
coercive strategy targeting Taiwan. In early 2003, the Bush Administration stressed
to Taiwan the imperatives of missile defense, C4ISR, and anti-submarine warfare.
In March 2003, Taiwan’s Ministry of Defense issued a new procurement plan
emphasizing those priorities.69 However, getting a political consensus and funding
from the legislature has remained questionable in Taiwan’s debate over defense.
Other Possible Future Sales. In addition to the major weapon systems
discussed above, possible future arms sales to Taiwan’s military include:
! signals intelligence (SIGINT) aircraft (perhaps sold by Gulfstream,
Raytheon, or Cessna) for which Taiwan reportedly requested price
and availability data in 2002;
! medium transport aircraft (perhaps the C-27J Spartan sold by
Lockheed Martin);
66 Lien-Ho Pao [United Daily News] (Taiwan), January 5, 2003; Remarks of Deputy Under
Secretary of the Air Force Willard Mitchell at the U.S.-Taiwan Business Council’s
conference in February 2003.
67 Taiwan Defense Review, November 15, 2003; Central News Agency, November 18, 2003.
68 Jane’s Defense Weekly, April 7, 2004.
69 Taiwan Defense Review, March 12, 2003.

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CRS-13
! F-35 Joint Strike Fighters (JSF), particularly the short take-
off/vertical landing (STOVL) version, under development by
Lockheed Martin and foreign partners;
! Stryker armored wheeled vehicles (sold by General Dynamics)
! upgraded engines for F-16 fighters (sold by Pratt & Whitney or
General Electric).70
Policy Issues for Congress
Since the early 1990s, and accelerated after 1999,71 the PLA has modernized
with a missile buildup and foreign arms acquisitions, primarily from Russia.72 As a
result of the PLA’s provocative exercises and missile test-firings in 1995 and 1996
that were directed against Taiwan, Congress has increasingly asserted its role vis-a-
vis the Administration in determining security assistance for Taiwan, as stipulated
by Section 3(b) of the TRA, as well as in exercising its oversight of Section 2(b)(6)
of the TRA on the U.S. capacity to resist any resort to force or other forms of
coercion against Taiwan. Congress has increasingly asserted its role in determining
arms sales to Taiwan before sales are announced.73 Policy issues center on how
effectively the Administration is helping Taiwan’s self-defense, the role of Congress
in determining arms sales to Taiwan, and whether aspects of U.S. security assistance
are stabilizing or destabilizing, and should be adjusted based on changed situations.
Extent of U.S. Commitment. Although the TRA is not a defense treaty,
some have called for a clear commitment to shore up deterrence and help Taiwan’s
self-defense, advanced arms sales, interoperability with Taiwan’s military, combined
operational training, high-level exchanges, and visits by U.S. flag and general officers
to Taiwan. Others have argued that the United States needs a cooperative China, that
trends in the Taiwan Strait are destabilizing, and that the United States should limit
security assistance as leverage to prevent provocative moves by Taiwan’s leaders.
In March 1996, President Clinton deployed two aircraft carrier battle groups
near Taiwan in response to the PLA’s provocative missile test-firings and exercises.
70 Flight International, November 25-December 1, 2003; Jane’s Defense Review, January
14, 2004; U.S.-Taiwan Business Council, Defense and Aerospace Report, First Quarter
2004; Taiwan Defense Review, May 7, 2004; Central News Agency, June 21, 2004.
71 1999 as an important decision point for PRC leaders is cited in the testimony of Assistant
Secretary of State James Kelly, at the hearing of the House International Relations
Committee, “The Taiwan Relations Act: The Next 25 Years,” April 21, 2004.
72 See the Defense Department’s reports to Congress on PRC military power; CRS Report
97-391, China: Ballistic and Cruise Missiles, by Shirley Kan, and CRS Report RL30700,
China’s Foreign Conventional Arms Acquisitions, by Shirley Kan, Christopher Bolkcom,
and Ronald O’Rourke.
73 As for all U.S. arms sales, months or years after the President’s decision on Taiwan’s
requests and Taiwan’s subsequent decisions on which sales to pursue, the role of Congress
includes review of major proposed FMS deals notified to Congress (during which Congress
may enact a joint resolution of disapproval) as stipulated under Section 36(b) of the Arms
Export Control Act (AECA) (P.L. 90-629). See CRS Report RL31675, Arms Sales:
Congressional Review Process, December 20, 2002, by Richard Grimmett.

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CRS-14
Another question arose in April 2001 when President Bush stated a commitment to
do “whatever it took to help Taiwan defend herself.” Supporters have viewed such
clarity as needed to prevent miscalculations in Beijing and deter attacks against
Taiwan. However, critics have argued that Bush encouraged provocations from
Taipei and weakened willingness in Taiwan to strengthen its own defense. Later,
when Taiwan’s President Chen Shui-bian advocated referendums and a new
constitution, President Bush said that “the comments and actions made by the leader
of Taiwan indicate that he may be willing to make decisions unilaterally to change
the status quo, which we oppose,” in appearing with PRC Premier Wen Jiabao in the
Oval Office on December 9, 2003.
At a hearing in April 2004, in answer to Representative Gary Ackerman’s
questions about whether President Bush’s phrase on “whatever it took to help Taiwan
defend herself” means that the United States would go to war with China if Taiwan
makes unilateral moves toward independence, Assistant Secretary James Kelly stated
that what the president said has a meaning “at the time he says it to those listeners,”
we intend to fulfill the defense responsibilities under the TRA “to the extent
necessary,” “we oppose actions that would unilaterally alter Taiwan’s status,” leaders
in Taiwan “misunderstood” if they believe that President Bush supports whatever
they do, and “decisions of war and peace are made by the president with consultation
with Congress.” Assistant Secretary of Defense Peter Rodman replied that President
Bush’s phrase was a reaffirmation of the TRA, which leaves a certain ambiguity.
Rodman also warned Beijing that its use of force would “inevitably” involve the
United States.74
Jiang Zemin’s Offer on Missiles. Moreover, there has been much interest
among U.S. academic circles and think tanks for Washington to pursue talks with
Beijing on its military buildup and U.S. arms sales to Taiwan (instead of simply
enhancing security assistance to Taiwan).75 A catalyst for this debate among
policymakers arose out of the U.S.-PRC summit in Crawford, TX, on October 25,
2002. As confirmed to Taiwan’s legislature by its envoy to Washington, C.J. Chen,
and reported in Taiwan’s media, PRC leader Jiang Zemin offered in vague terms a
freeze or reduction in China’s deployment of missiles targeted at Taiwan, in return
for restraint in U.S. arms sales to Taiwan.76 President Bush reportedly did not
respond to Jiang’s linkage. Editorials in Taiwan were divided on whether to pursue
Jiang’s offer.
74 House International Relations Committee, hearing on “The Taiwan Relations Act: The
Next 25 Years,” April 21, 2004.
75 See David Lampton and Richard Daniel Ewing, “U.S.-China Relations in a Post-
September 11th World,” Nixon Center, August 2002; David Shambaugh’s arguments at
conference by Carnegie Endowment, Stanford University, Center for Strategic and
International Studies, and National Committee on U.S.-China Relations, on “Taiwan and
U.S. Policy: Toward Stability or Crisis?,” October 9, 2002; Michael Swaine, “Reverse
Course? The Fragile Turnaround in U.S.-China Relations,” Carnegie Endowment Policy
Brief, February 2003; and David Lampton, “The Stealth Normalization of U.S.-China
Relations,” National Interest, Fall 2003.
76 Chung-Kuo Shih-Pao [China Times], Taipei, November 22, 2002; Taipei Times,
November 23, 2002.

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CRS-15
Some argued that confidence building measures, such as a freeze or reduction
in PLA missile and other military deployments, would improve the chances for cross-
strait political dialogue and lead to greater stability. They said that the United States
could explore how the PRC might reduce the threat against Taiwan, such as
dismantling missile brigades in a verifiable manner, since sales of U.S. systems are
based on Taiwan’s defense needs. They argued that Jiang’s offer represented the first
time that the PRC offered meaningfully to discuss its forces opposite Taiwan. Others
said that a freeze or redeployment of missiles would not eliminate the PRC’s
continuing and broader military threat against Taiwan (including mobile missiles)
and that the PRC still refused to hold talks with leaders in Taipei. They argued that
Jiang did not seek to reduce the PLA’s coercive threat but to undermine the
relationship between Washington and Taipei, including sales and deliveries of
weapons systems which take years to complete. They pointed out that the PLA’s
missile buildup has continued.
One issue for congressional oversight has concerned whether and how the
Administration might deal with Beijing on the question of U.S. arms sales to Taiwan.
Policy considerations include the TRA, the 1982 Joint Communique (which
discussed reductions in U.S. arms sales to Taiwan premised on the PRC’s peaceful
unification policy), and the 1982 “Six Assurances” to Taiwan (including one of not
holding prior consultations with the PRC on U.S. arms sales to Taiwan). At a
hearing in March 2001, Secretary of State Colin Powell assured Senator Helms that
the “Six Assurances” would remain U.S. policy and that the Administration would
not favor consulting the PRC on arms sales to Taiwan.77 The Bush Administration
reportedly did not respond to Jiang’s verbal offer, noting the accelerated missile
buildup, continued military threats against Taiwan, the need for the PRC to talk
directly to Taiwan, the TRA, and the “Six Assurances” to Taiwan. In April 2004,
Assistant Secretary of State James Kelly testified that if the PRC meets its stated
obligations to pursue a peaceful resolution of the Taiwan issue and matches its
rhetoric with a military posture that bolsters and supports peaceful approaches to
Taiwan, “it follows logically that Taiwan’s defense requirements will change.”78
Taiwan’s Commitment to Self-Defense and Budgets. Since 2002,
some have expressed increasing concerns about Taiwan’s commitment to its self-
defense and lack of national consensus on national security. The Pentagon’s report
on PRC Military Power submitted to Congress in July 2002 said that reforms in
Taiwan’s military were needed to achieve a joint service capability to meet the
growing challenge from the PLA’s modernizing air, naval, and missile forces, but
warned that “the defense budget’s steady decline as a percentage of total government
spending will challenge Taiwan’s force modernization.”79 The Pentagon’s report
issued in July 2003 further stressed that the relative decline in Taiwan’s defense
77 Senate Foreign Relations Committee, Hearing on U.S. Foreign Policy, March 8, 2001.
78 House International Relations Committee, Hearing on “The Taiwan Relations Act: The
Next 25 Years,” April 21, 2004.
79 Department of Defense, “Annual Report on the Military Power of the People’s Republic
of China,” July 12, 2002.

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CRS-16
budget “increasingly” will challenge its force modernization.80 In 2003, supporters
of Taiwan at the Heritage Foundation urged civilian and military leaders in Taiwan
to be “serious” about its own defense.81
Taiwan’s defense budget for 2003 was about US$7.5 billion, which accounted
for 2.6% of GDP and 16.6% of the total government budget, compared with 4.0% of
GDP and 24.3% of total spending 10 years earlier. Still, the defense budget as a
share of total spending remained at about 16.5% for the 2001-2003 period. These
relative declines took place as the Pentagon has reported an increased threat posed
by the PLA to Taiwan, the PLA has obtained higher budgets, and U.S. support for
Taiwan has increased after the 1995-1996 crisis. Some leaders in Taiwan have
argued that Taiwan’s defense spending is still significant, that the legislature in the
newly consolidated democracy has the right to scrutinize the defense budget, and that
economic challenges have constrained defense spending.
Also, Taiwan’s legislators have pointed out that Taiwan has funded defense out
of separate Special Budgets. Taiwan’s Special Budgets for defense in 1994-2003
totaled US$22.6 billion and funded procurement of fighter aircraft and military
housing construction.82 By 2003, anti-American complaints appeared in news articles
in Taiwan about perceived U.S. “pressure,” “extortion,” and untrustworthiness.83 In
June 2003, Deputy Defense Minister Lin Chong-pin and a Defense Committee
delegation led by Legislative Yuan President Wang Jin-pyng visited Washington to
reassure the Bush Administration and Congress that the government in Taipei
remained committed to defense.84 In November 2003, Taiwan’s legislature passed
a defense budget of about NT$265 billion (about US$8.0 billion) for 2004, after
political parties showed greater unified support for defense spending.85
In 2002, Taiwan’s defense ministry said that it needed the legislature to approve
NT$700 billion (about US$21 billion) over the next 10 years for arms procurement.86
Taiwan’s defense ministry has considered asking for a Special Budget of $15-20
80 Department of Defense, “Report on PRC Military Power,” July 30, 2003.
81 Peter Brookes, “The Challenges and Imperatives in Taiwan’s Defense,” Heritage Lectures,
January 9, 2003; John Tkacik, “Taiwan Must Get Serious About Defense,” Defense News,
January 27, 2003; John Tkacik, “Taiwan Must Grasp on True Defense Needs,” Defense
News, December 1, 2003.
82 Taiwan’s official defense budgets and special budgets were provided by Taiwan’s
representative office in Washington, DC.
83 United Daily News, April 21, 2003; China Times, May 8, 2003 and August 18, 2003.
84 Meeting at CRS with Lin Chong-pin and congressional staff, June 5, 2003; Luncheon at
the Heritage Foundation with Taiwan’s legislative delegation led by Wang Jin-pyng, June
24, 2003; TECRO, Taipei Update, July 22, 2003.
85 The Executive Yuan requested NT$265 billion (author’s interview at the Ministry of
Defense, Taipei, December 2003); Lin Yu-fang, Chuan-Chiu Fang-Wei Tsa-Chih,
November 1, 2003 (translated by FBIS); FBIS report, January 5, 2004.
86 Chung-Kuo Shih-Pao [China Times] (Taipei), May 17, 2002; Taiwan Defense Review,
August 30, 2002.

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CRS-17
billion to procure the PAC-3 missile defense system, submarines, and P-3 ASW
aircraft over the next 10 years or more.
In April 2004, Assistant Secretary of Defense for International Security Affairs
Peter Rodman testified to Congress that “we have made clear to our friends on
Taiwan that we expect them to reverse this budget decline. Though our
commitments to Taiwan are enduring, the American people and both the Executive
Branch and Congress expect the people of Taiwan to make their own appropriate
commitment to their freedom and security.” Rodman also stressed that “we expect
Taiwan to go forward with its plan to pass a Special Budget this summer to fund
essential missile defense and anti-submarine warfare systems and programs.87 On
May 29, 2004, the Defense Department issued the 2004 report to Congress on PRC
military power, stressing that “the principal indicator of Taiwan’s commitment to
addressing its shortfalls will be the fate of its annual defense budget” and that “the
island’s apparent lack of political consensus over addressing [its military challenges]
with substantially increased defense spending is undoubtedly seen as an encouraging
trend in Beijing.” U.S. statements appeared as Taiwan considered a Special Budget.
On May 21, 2004, Taiwan’s Defense Minister Lee Jye submitted to the
Executive Yuan (Cabinet) a request for a Special Budget for defense totaling about
US$20 billion.88 On June 2, the Executive Yuan then passed a Special Budget of
NT$610.8 billion (about US$18.2 billion), with about $4.3 billion for PAC-3 missile
defense systems, $12.3 billion for submarines, and $1.6 billion for P-3 aircraft.89
Meanwhile, Taiwan’s political leaders have considered another Special Budget of
about $15 billion for “Ten Major Construction Projects” for the 2004-2008 period,
as proposed by the Cabinet in October 2003.
It remains unclear when the Legislative Yuan (LY) will vote on the Special
Budget in 2004. The LY’s president, Wang Jin-pyng, led a legislative delegation to
the United States on June 17-27, 2004, to gain information on the weapons programs.
Under Wang’s leadership, legislators from different political parties reached a
preliminary consensus during their visit that they would seek a new cost estimate for
the submarines, with the options of a construction or maintenance role for Taiwan’s
shipbuilding industry and delivery in ten (not 15) years (after Deputy Secretary of
Defense Wolfowitz expressed U.S. opposition to Taiwan’s proposal to build
submarines domestically); and that they would consider splitting up the Special
Budget to approve funds for the P-3C aircraft and PAC-3 missile defense systems,
ahead of voting for subs.90
87 Statement before the House International Relations Committee, hearing on “The Taiwan
Relations Act: the Next 25 Years,” April 21, 2004.
88 Central News Agency, Taipei, May 26, 2004; China Times, Taipei, May 27, 2004.
89 Central News Agency, Taipei, June 2, 2004.
90 Discussion with CRS and Congress on June 22, 2004; United Daily News, June 23, 2004.

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In comparison, the PRC’s announced military budget for 2004 is about US$25
billion, while based on Defense Department estimates, it is about $52-$75 billion.91
China has announced double-digit increases in its nominal defense budget every year
since 1989. After 1996 (the second year of the Taiwan Strait Crisis of 1995-1996),
China’s announced military budget has increased in real terms (accounting for
inflation) every year, including real double-digit increases in consecutive years since
1998. The PLA’s announced budget for 2004 increased in real terms by 11%.
Taiwan’s Defense Budget
Military
Military
% of total
Fiscal
GDP
% of
Budget
Budget
government
Year
(US$ bil.)
GDP
(NT$ bil.)
(US$ bil.)
spending
1994
258.5
9.8
244.5
4.0
24.3
1995
252.3
9.5
264.4
3.6
24.5
1996
258.3
9.5
281.7
3.4
22.8
1997
268.8
9.4
290.2
3.2
22.5
1998
274.8
8.2
267.4
3.1
22.4
1999
284.5
8.8
287.9
3.1
21.6
2000
402.9
12.9
309.5
NA
17.4
2001
269.8
8.0
281.3
2.8
16.5
2002
260.4
7.5
282.2
2.7
16.4
2003
257.2
7.5
295.1
2.6
16.6
Note: This table was compiled based on official defense budget numbers as provided by Taiwan’s
representative office in Washington and GDP data and exchange rates as reported by Global Insight.
The FY2000 budget covered the 18-month period from July 1999 to December 2000. Taiwan’s
currency is the New Taiwan Dollar (NT$).
Policy Reviews and U.S. Objectives. Congress has a role in oversight of
any reviews of policy toward Taiwan. In September 1994, the Clinton
Administration explicitly and publicly testified to Congress about a major Taiwan
Policy Review.92 Defense ties would likely be included in any policy reviews of how
to enhance leverage over Taiwan and affect the cross-strait situation, including
whether to limit defense ties, apply conditions, or strengthen ties. Policy seeks to
achieve the U.S. objectives of assisting Taiwan’s self-defense capability, preventing
91 The PRC’s announced budget of RMB 207 billion for 2004 is converted to U.S. dollars
using the exchange rate. The Defense Department has estimated the PRC’s actual military
expenditures at about 3.5-5% of GDP.
92 Testimony of Assistant Secretary of State for East Asian and Pacific Affairs Winston
Lord, “Taiwan Policy Review,” before the Senate Foreign Relations Committee on
September 27, 1994. See CRS Report RL30341, China/Taiwan: Evolution of the “One
China” Policy — Key Statements from Washington, Beijing, and Taipei, by Shirley Kan.

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CRS-19
conflict, minimizing the chance of U.S. intervention, and promoting cross-strait
dialogue. While U.S. objectives have been consistent, developments in China and
Taiwan since the 1970s have required U.S. re-assessments and responses.
In late 2002, the Pentagon reportedly conducted a policy review of cooperation
with Taiwan that examined whether its leaders have taken defense seriously, whether
defense cooperation with Taiwan has been effective, and whether U.S. policy should
change.93 (The NSC, State Department, and AIT would have input into any review
by the Administration of policy toward Taiwan.94) At the U.S.-Taiwan Business
Council’s conference on Taiwan’s defense in February 2003, in San Antonio, TX,
Deputy Assistant Secretary of Defense Richard Lawless told Taiwan’s Vice Defense
Minister Chen Chao-min and others that, while the President said that we will do
whatever it takes to help Taiwan defend itself, Taiwan “should not view America’s
resolute commitment to peace and stability in the Taiwan Strait as a substitute for
investing the necessary resources in its own defense.” At the same occasion, Deputy
Assistant Secretary of State Randall Schriver indicated a new proactive U.S.
approach to Taiwan’s defense modernization, pointing Taiwan to three priorities:
missile defense, C4ISR, and ASW.
Taiwan’s election in March 2004 brought the re-election of President Chen
Shui-bian (with disputed results) and his continued advocacy of a new constitution
for Taiwan by 2008. In April 2004, the Departments of State and Defense testified
to the House International Relations Committee, indicating a readjustment in the
Bush Administration’s policy toward Taiwan.95 Assistant Secretary of State James
Kelly clarified U.S. policy by stating that:
! The United States “does not support” independence for Taiwan or
unilateral moves that would change the status quo “as we define it”
and opposes statements or actions from either side that would
unilaterally alter Taiwan’s “status.”
! U.S. efforts at deterring PRC coercion “might fail” if Beijing ever
becomes convinced Taiwan is embarked upon a course toward
independence and permanent separation from China, and concludes
that Taiwan must be stopped.
! It would be “irresponsible” of us or of Taiwan’s leaders to treat the
PRC’s statements as “empty threats.”
! The United States looks to President Chen to exercise the kind of
responsible, democratic, and restrained leadership that will be
necessary to ensure a peaceful and prosperous future for Taiwan.
! There are “limitations” with respect to what the United States will
support as Taiwan considers possible changes to its constitution.
! We urge Beijing and Taipei to pursue dialogue “as soon as possible”
through any available channels “without preconditions.”
93 Taiwan Defense Review, January 18, 2003.
94 The Nelson Report (January 31, 2003) reported there was an interagency East Asia Policy
Review.
95 House International Relations Committee, hearing on “The Taiwan Relations Act: The
Next 25 Years,” April 21, 2004.

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CRS-20
At that same hearing, Assistant Secretary of Defense Peter Rodman also warned PRC
leaders that any attempt by China to use force against Taiwan would “inevitably”
involve the United States.
Moreover, Assistant Secretary of State Kelly argued that a premise of arms sales
to Taiwan has been that “a secure and self-confident Taiwan is a Taiwan that is more
capable of engaging in political interaction and dialogue with the PRC, and we
expect Taiwan will not interpret our support as a blank check to resist such
dialogue.” However, some observers have begun to question the continued validity
of this premise. James Lilley, former ambassador in Beijing and representative in
Taipei, warned in April 2004 that:
The implicit American premise was that a secure and stable Taiwan would be a
more willing and successful partner in dealing with China. Judicious arms sales
to Taiwan were part of this formula and in the past it has worked. ... If elements
of this broader formula are disregarded by the current Taiwan authorities,
however, then the successful historic pattern has been broken. U.S. military
support and arms sales cannot be used by Taiwan to move away from China —
they were meant to make Taiwan feel secure enough to move toward
accommodation with China. Our support should be conditional on upholding our
successful pattern.96
As for senior-level contacts, the United States and Taiwan have held high-level
defense-related meetings in the United States. U.S. policy previously restricted high-
level military contacts but changed to welcome Taiwan’s senior military officers and
defense officials to visit the United States, while not sending to Taiwan U.S. flag and
general officers or officials at or above the level of deputy assistant secretary of
defense. The Pentagon and some in Congress have sought to lift this restriction in
order to advance U.S. interests in boosting Taiwan’s deterrence capability and U.S.
leverage in Taiwan. Some have cited the NSC’s record of sending senior officials
to Taipei.97 The NSC, State Department, and some in Congress have opposed
sending senior military officers and defense officials to Taiwan as an unnecessary
change to a potentially dangerous situation in the Taiwan Strait. (See 108th Congress
below.)
Congressional Action
105th Congress. In the 105th Congress, the FY1999 National Defense
Authorization Act (P.L. 105-261) required the Secretary of Defense to study the U.S.
missile defense systems that could protect and could be transferred to “key regional
allies,” defined as Japan, South Korea, and Taiwan.98 In addition, the conference
96 James Lilley, “Strait Talk,” Wall Street Journal, April 19, 2004.
97 The National Security Council has sent the Senior Director for Asian Affairs (James
Moriarty and Michael Green) to Taiwan (Far Eastern Economic Review, May 20, 2004).
98 Department of Defense, “Report to Congress on Theater Missile Defense Architecture
Options for the Asia-Pacific Region,” unclassified version, May 1999; CRS Report
(continued...)

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CRS-21
report (H.Rept. 105-746 of the FY1999 Defense Appropriations Act, P.L. 105-262)
required a report from the Pentagon on the security situation in the Taiwan Strait, in
both classified and unclassified forms.99
106th Congress. In the 106th Congress, Representative Gilman, Chairman of
the House International Relations Committee, wrote President Clinton on April 19,
1999, urging approval for the sale of long-range early warning radars to Taiwan. He
also wrote Secretary of State Madeleine Albright on April 22, 1999, saying that if the
Administration did not approve the sale, he would introduce legislation to do so. In
the end, the Clinton Administration decided in principle to sell early warning radars
to Taiwan. The State Department spokesperson confirmed that the United States
agreed on the request in principle and acknowledged that under the TRA, “the
President and Congress determined which defense articles and services Taiwan
needs.”100 The Pentagon spokesperson also confirmed that the United States “agreed
to work with the Taiwanese to evaluate their early warning radar needs, and that will
take place over the next year or so, but there is no specific agreement on a specific
type of radar, specific sale, or specific terms of sale at this time.”101
Also, Members debated whether the “Taiwan Security Enhancement Act
(TSEA)” (S. 693, Helms; H.R. 1838, DeLay) was needed to better assist Taiwan or
was unnecessary and counterproductive in a delicate situation, as the Clinton
Administration maintained. The TSEA also increased attention to U.S.-Taiwan
military exchanges, including that on communication and training. The Pentagon
was said to have supported the spirit of the bill, although not its passage.102 The
TSEA was not enacted, although the House passed H.R. 1838 on February 1, 2000,
by 341-70.
Seeking more information from the Pentagon on which to base its
considerations, Congress passed the FY2000 National Defense Authorization Act
(P.L. 106-65), requiring annual reports on PRC military power and the security
situation in the Taiwan Strait.103 Also, in consolidated appropriations legislation for
98 (...continued)
RL30379, Missile Defense Options for Japan, South Korea, and Taiwan: A Review of the
Defense Department Report to Congress, November 30, 1999, by Robert D. Shuey and
Shirley A. Kan.
99 Department of Defense, “Report to Congress Pursuant to the FY99 Appropriations Bill,
The Security Situation in the Taiwan Strait,” unclassified version, February 1, 1999; CRS
Report RS20187, Taiwan’s Defense: Assessing the U.S. Department of Defense Report,
“The Security Situation in the Taiwan Strait,” April 30, 1999, by Robert Sutter.
100 Shenon, Philip, “U.S. Plans to Sell Radar to Taiwan to Monitor China,” New York Times,
April 30, 1999; Department of State, Daily Press Briefing, April 29, 1999.
101 Defense Department News Briefing, April 30, 1999.
102 Steven M. Goldstein and Randall Schriver (former official in the Office of the Assistant
Secretary of Defense for International Security Affairs), “An Uncertain Relationship: The
United States, Taiwan, and the Taiwan Relations Act,” China Quarterly, March 2001.
103 Department of Defense, “Annual Report on the Military Power of the People’s Republic
(continued...)

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CRS-22
FY2000 (P.L. 106-113), Congress required a report on the operational planning of
the Department of Defense to implement the TRA and any gaps in knowledge about
PRC capabilities and intentions affecting the military balance in the Taiwan Strait.104
Concerning Congress’ role before the Administration’s decisions on arms sales,
the 106th Congress passed language, introduced by Senator Lott, in the FY2000
Foreign Operations Appropriations Act (in Div. B of P.L. 106-113), requiring the
Secretary of State to consult with Congress to devise a mechanism for congressional
input in determining arms sales to Taiwan. Again, in the FY2001 Foreign Operations
Appropriations Act (P.L. 106-429), Congress passed the Taiwan Reporting
Requirement, requiring the President to consult on a classified basis with Congress
30 days prior to the next round of arms sales talks. (Those required consultations
took place on March 16, 2001.)
107th Congress. In the 107th Congress, some Members opposed the sale of
Aegis-equipped destroyers, because they could be interpreted as offensive rather than
defensive sales and could involve significant interaction with the U.S. military, as
Senators Feinstein and Thomas (chairman of the Foreign Relations Subcommittee on
East Asian and Pacific Affairs) wrote in the Washington Times on March 28, 2001.
Other Members — 83 in the House (led by Representatives Cox and Wu) and 20 in
the Senate (led by Senators Helms and Torricelli) — wrote letters to President Bush
on April 3, 2001, urging approval of the sale of those destroyers. A March 2001 staff
report to Senator Helms of the Foreign Relations Committee called for meeting
Taiwan’s defense needs, particularly for submarines and destroyers.105
In addition, some in Congress urged the Administration to deliver AMRAAMs
to Taiwan after the Washington Times on July 1, 2002, reported that, in June, two
SU-30 fighters of the PLA Air Force test-fired AA-12 medium-range air-to-air
missiles acquired from Russia. The report raised questions as to whether the PLA
already deployed the missiles, meeting one of the conditions by which the United
States would deliver the AMRAAMs to Taiwan — rather than keep them in storage
— as approved for sale by the Clinton Administration in 2000. On July 16, 2002,
Senators Kyl, Helms, Bob Smith, and Torricelli wrote Secretary of State Colin
Powell, urging the Bush Administration to allow the transfer of AMRAAMS to
Taiwan “as soon as they are produced” rather than “quibble over whether the AA-12
tests mean that China has an ‘operational’ capability.”
The National Defense Authorization Act for FY2002 (P.L. 107-107), enacted
on December 28, 2001, authorized the President to transfer (by sale) the four Kidd-
class destroyers to Taiwan (Sec. 1011), under Section 21 of the AECA. Also,
Section 1221 of the act required a new section in the annual report on PRC military
103 (...continued)
of China,” unclassified version, June 2000 and July 2002.
104 Department of Defense, “Report to Congress on Implementation of the Taiwan Relations
Act,” unclassified version, December 2000.
105 Senate Foreign Relations Committee, “U.S. Defense Policy Toward Taiwan: In Need of
an Overhaul,” a Staff Trip Report to the Committee on Foreign Relations, S. Prt. 107-26, by
James Doran, printed April 2001.

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CRS-23
power (as required by P.L. 106-65) to assess the PLA’s military acquisitions and any
implications for the security of the United States and its friends and allies. The scope
of arms transfers to be covered was not limited to those from Russia and other former
Soviet states, as in the original House language (H.R. 2586).106
The Foreign Operations Appropriations Act for FY2002 (P.L. 107-115),
enacted on January 10, 2002, brought unprecedented close coordination between the
Executive and Legislative branches on arms sales to Taiwan. Section 573 required
the Departments of State and Defense to provide detailed briefings (not specified as
classified) to congressional committees (including those on appropriations) within
90 days of enactment and not later than every 120 days thereafter during FY2002.
The briefings were required to report on U.S.-Taiwan discussions on potential sales
of defense articles or services to Taiwan.
Some Members called for ensuring regular and high-level consultations with
Taiwan and a role for Congress in determining arms sales to Taiwan, after President
Bush announced on April 24, 2001 (the day of the last annual arms sales talks), that
he would drop the annual arms talks process with Taiwan in favor of normal, routine
considerations on an “as-needed” basis.107 Due to the absence of diplomatic relations,
successive administrations used a process in determining arms sales to Taiwan that
was institutionalized in the early 1980s as annual rounds of talks with Taiwan
defense authorities consisting of several phases leading up to final meetings usually
in April.108 In overseeing the new process, factors or implications to consider
included the following:
! Congress’ role in decision-making and ability to exercise oversight
! role of arms sales talks in the broader long-range and joint defense
strategy for Taiwan (vs. a narrower focus on specific requests)
! role of arms sales in U.S. diplomatic and defense policies (including
various elements of the “one China” policy)
! U.S. objectives for the Taiwan military
! nature of the U.S.-Taiwan military relationship
! extent of high-level U.S.-Taiwan military exchanges
! effect of an annual high-profile controversy on U.S. interests
! usefulness to Congress and Taiwan of a deadline for decisions
! influence of various interest groups in a more defused process
! changes in high-level, intensive attention given by the White House
and its coordination of the inter-agency debates
! changes in the Pentagon’s basis for recommendations
! Taiwan’s desire to receive similar treatment given to others
! consultations with allies, including Japan.
106 Still, the Pentagon’s report, issued on July 12, 2002, discussed China’s military
acquisitions from states of the former Soviet Union, and not other countries (e.g., Israel).
107 Milbank, Dana and Mike Allen, “Bush to Drop Annual Review of Weapons Sales to
Taiwan,” Washington Post, April 25, 2001.
108 See CRS Report RS20365, Taiwan: Annual Arms Sales Process, October 21, 1999,
updated June 5, 2001, by Shirley Kan.

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CRS-24
The Foreign Relations Authorization Act for FYs 2002 and 2003 (H.R. 1646),
passed in the House on May 16, 2001, contained provisions on arms sales to Taiwan.
First, H.R. 1646 included authority (in Section 851) for the President to sell the four
Kidd-class destroyers to Taiwan. Second, as proposed by Representative Brad
Sherman in the House International Relations Committee, Section 813 sought to
require that Taiwan be treated as the “equivalent of a major non-NATO ally” for
defense transfers under the AECA or the Foreign Assistance Act, while the language
stopped short of designating Taiwan as a major non-NATO ally. According to the
Member’s office, the provision would show tangible support for Taiwan’s defense,
provide it with status similar to that given to Australia, New Zealand, and Argentina,
offer it the “right of first refusal” for EDA, and treat it with enhanced status for anti-
terrorism assistance, cooperative research and development projects in the defense
area, and expedited review in satellite licensing. Third, Representative Gary
Ackerman introduced Section 814 to require the President to consult annually with
Congress and Taiwan about the availability of defense articles and services for
Taiwan. The consultations with Taiwan would occur at a level not lower than that
of the Vice Chief of General Staff and in Washington, DC — as has been the case.
Finally enacted as P.L. 107-228 on September 30, 2002, the Foreign Relations
Authorization Act for FY2003 authorized — at the Bush Administration’s request
— the Department of State and other departments or agencies (including the
Department of Defense) to detail employees to AIT (Section 326); required that
Taiwan be “treated as though it were designated a major non-NATO ally” (Section
1206); required consultations with Congress on U.S. security assistance to Taiwan
every 180 days (Section 1263); and authorized the sale to Taiwan of the four Kidd-
class destroyers (Section 1701).109 Section 326, amending the Foreign Service Act
of 1980, has significant implications for the assignment of government officials to
AIT, including active-duty military personnel for the first time since 1979.
(Employees have been separated from government service for a period of time in the
name of “unofficial” relations, but personnel issues have affected AIT and its
contractors. Defense Department personnel, including those supporting security
assistance, have been civilian staff and retired or resigned military personnel.)
In signing the bill into law on September 30, 2002, President Bush issued a
statement that included criticism of Section 1206 (“major non-NATO ally”). He said
that “Section 1206 could be misconstrued to imply a change in the ‘one China’ policy
of the United States when, in fact, that U.S. policy remains unchanged. To the extent
that this section could be read to purport to change United States policy, it
impermissibly interferes with the President’s constitutional authority to conduct the
Nation’s foreign affairs.”
Nonetheless, the Acting Under Secretary of Defense for Acquisition,
Technology, and Logistics, Michael Wynne, submitted a letter to Congress on August
29, 2003, that designated Taiwan as a “major non-NATO ally” under Section 1206.
The are implications for defense industrial cooperation with Taiwan, under Section
65 of the Arms Export Control Act (P.L. 90-629).
109 For more details on proposed House and Senate language, see “Arms Sales to Taiwan,”
in CRS Report RL31046, Foreign Relations Authorization, FY2003: An Overview.

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CRS-25
The FY2003 National Defense Authorization Act, passed in the House on May
10, 2002, contained Section 1202 seeking to require the Secretary of Defense to
implement a comprehensive plan to conduct combined training and exchanges of
senior officers with Taiwan’s military and to “enhance interoperability” with
Taiwan’s military.110 The language was similar to that of Section 5(b) in the “Taiwan
Security Enhancement Act” proposed in the 106th Congress. The Senate’s version,
passed on June 27, 2002, did not have the language. The Washington Times reported
on August 9, 2002, that the Department of State opposed the language as unnecessary
(given U.S. support under the TRA).
As Members worked out differences in conference, Deputy Defense Secretary
Paul Wolfowitz wrote in a letter to the House and Senate Armed Services
Committees on September 27, 2002, that “while we welcome Congress’ support for
the U.S. commitments under the Taiwan Relations Act and for the President’s
commitment to the defense of Taiwan, we believe that the objectives of Section 1202
are best achieved by preserving the traditional statutory role of the Secretary to
exercise authority, direction, and control over the Department of Defense to conduct
such activities as are needed to support those commitments, including his authority
to preserve the confidentiality of those activities.” The Pentagon “strongly
recommends that this provision be deleted, although we would not object to language
that would call upon the Department to brief the Congress periodically on progress
we are making to meet our commitments to Taiwan security,” Wolfowitz wrote. As
enacted on December 2, 2002, the FY2003 National Defense Authorization Act
(P.L. 107-314) contained a revised section (1210), requiring a Presidential report 180
days after the act’s enactment (due May 31, 2003) on the feasibility and advisability
of conducting combined operational training and exchanges of senior officers with
Taiwan’s military. (U.S. policy has allowed Taiwan’s senior military officers and
defense officials to visit the United States, while not sending U.S. flag and general
officers to Taiwan, or senior officials.)
108th Congress. On March 26, 2003, Representative David Vitter introduced
H.R. 1454 to establish policy to provide missile defense systems capable of
defending Taiwan, Israel, Japan, Republic of Korea, and NATO countries against
ballistic missile attacks; and to seek burden-sharing agreements with them.
Representative Robert Andrews introduced H.Con.Res. 232 on June 26, 2003, to
express the sense of Congress on Taiwan’s security. Calling Taiwan an “ally,” the
legislation would call upon the President to affirm with PRC leaders that there will
not be a quid pro quo between any dismantlement of missiles aimed at Taiwan by the
PRC and U.S. arms sales to Taiwan. The language also said that if the PRC does not
dismantle the missiles, the President should authorize a sale of the Aegis system to
Taiwan. On July 15, 2003, Representative Andrews offered the language as an
amendment to H.R. 1950, the Foreign Relations Authorization Act for FYs 2004 and
2005, and on July 16, 2003, the House passed the bill with the language on Taiwan’s
security in Section 737.
110 For an argument for enhancing interoperability with Taiwan, see Justin Bernier (staffer
for the House Armed Services Committee) and Stuart Gold, “China’s Closing Window of
Opportunity,” Naval War College Review, Summer 2003.

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CRS-26
On May 20, 2004, the House passed the FY2005 National Defense
Authorization Act (H.R. 4200) with Sec. 1013 to authorize the sale to Taiwan of a
dock landing ship (Anchorage) as an Excess Defense Article and Sec. 1215 to require
the Defense Department to send general or flag officers and officials at or above the
level of deputy assistant secretary of defense to Taiwan (as proposed by
Representative Jim Ryun). After a floor debate about whether Representative Ryun’s
amendment is necessary or dangerous, the House passed it by 290-132. Supporters
cited the Defense Department’s support for this policy change and challenges in
Taiwan’s military in integrating new acquisitions and prioritizing self-defense needs
against the PLA. Opponents cited resistance by the NSC and State Department, the
TRA as existing authority for security assistance, and the need for caution in a tense
area in Asia. On May 19, 2004, Senator Sam Brownback submitted for the record
a similar amendment to be proposed to the Senate’s bill (S. 2400). However, on June
23, 2004, the Senate passed S. 2400 without voting on such an amendment.
Also on May 20, 2004, Representative Dana Rohrabacher (and Representative
Ryun as co-sponsor) introduced H.Con.Res. 437 to urge President Bush to ask
Taiwan to deploy its Marines to the war in Iraq. (This bill generated controversy in
Taiwan, with President Chen Shui-bian saying he would not send troops to Iraq, and
a statement on May 24 by the State Department, clarifying that Taiwan did not offer
to send troops to Iraq and that the United States did not ask for such cooperation.)
Major U.S. Defense Sales
The following table provides information on U.S. sales (not deliveries) of major
defense articles and services to Taiwan, as approved by the President, proposed in
Letters of Offer and Acceptance, and notified to Congress since 1990. Based on
unclassified notices and news reports, this list includes the date of notification, major
item or service proposed for sale, and estimated value of the defense package. The
list was compiled based on unclassified notifications to Congress or announcements
by the Administration as well as press reports. These were primarily government-to-
government FMS. Major FMS are notified to Congress as required by Section 36(b)
of the AECA. Not all of these approved sales were necessarily purchased by Taiwan.
There have been other transfers of U.S. defense articles and services not included in
this list (that amounted to billions of dollars), including sales and technical assistance
with smaller individual values not required to be notified to Congress, those with
classified notifications, and other direct commercial sales licensed for export by the
Department of State and notified to Congress under Section 36(c) of the AECA (but
subject to the confidentiality requirements of Section 38(e)). There have also been
leases of naval vessels and other equipment. Moreover, each year, hundreds of
Taiwan’s military personnel at different levels receive training and education at U.S.
military colleges, academies, and other institutions or units.

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CRS-27
Value of
Date of
Major Item or Service as Proposed
Package
Notification (usually part of a package)
($ million)
1990
07/26
Cooperative Logistics Supply Support
$108
09/06
(1) C-130H transport aircraft
$45
1991
01/07
(100) MK-46 torpedoes
$28
07/24
(97) SM-1 Standard air defense missiles
$55
09/13
(110) M60A3 tanks
$119
11/18
Phase III PIP Mod Kits for HAWK air defense
systems
$170
1992
05/27
Weapons, ammunition, support for 3 leased ships
$212
05/27
Supply support arrangement
$107
08/04
(207) SM-1 Standard air defense missiles
$126
09/14
(150) F-16A/B fighters
$5,800
09/14
(3) Patriot-derived Modified Air Defense System
(MADS) fire units111
$1,300
09/18
(12) SH-2F LAMPS anti-submarine helicopters
$161
1993
06/17
(12) C-130H transport aircraft
$620
06/25
Supply support arrangement
$156
07/29
(38) Harpoon anti-ship missiles
$68
07/30
Logistics support services for 40 leased T-38
trainers
$70
08/
(4) E-2T Hawkeye airborne early warning aircraft112
$700
09/08
Logistics support services for MADS
$175
11/04
(150) MK-46 Mod 5 torpedoes
$54
11/09
Weapons, ammunition, and support for 3 leased
frigates
$238
11/23
MK-41 Mod (short) Vertical Launch Systems for
ship-based air defense missiles
$103
111 Commercial sale. Opall Barbara and David Silverberg, “Taiwanese May Soon
Coproduce Patriot,” Defense News, February 22-28, 1993; Military Balance 1999-2000.
112 Flight International, September 1-7, 1993.

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CRS-28
Value of
Date of
Major Item or Service as Proposed
Package
Notification (usually part of a package)
($ million)
1994
08/01
(80) AN/ALQ-184 electronic counter measure
(ECM) pods
$150
09/12
MK-45 Mod 2 gun system
$21
1995
03/24
(6) MK-75 shipboard gun systems,
(6) Phalanx Close-In Weapon Systems
$75
06/07
Supply support arrangement
$192
1996
05/10
Improved Mobile Subscriber Equipment
communications system
$188
05/10
(30) TH-67 training helicopters,
(30) sets of AN/AVS-6 night vision goggles
$53
05/23
(465) Stinger missiles,
(55) dual-mounted Stinger launcher systems
$84
06/24
(300) M60A3TTS tanks
$223
08/23
(1,299) Stinger surface-to-air missiles,
(74) Avenger vehicle mounted guided missile
launchers,
(96) HMMWVs (high-mobility multi-purpose
wheeled vehicle)
$420
09/05
(110) MK-46 MOD 5 anti-submarine torpedoes
$66
1997
02/14
(54) Harpoon anti-ship missiles
$95
05/23
(1,786) TOW 2A anti-armor guided missiles,
(114) TOW launchers, (100) HMMWVs
$81
07/24
(21) AH-1W Super Cobra helicopters113
$479
09/03
(13) OH-58D Kiowa Warrior Armed Scout
helicopters
$172
11/09
Pilot training and logistics support for F-16 fighters
$280
11/09
Spare parts for various aircraft
$140
113 Taiwan reportedly ordered 63 AH-1W helicopters, 42 of which were delivered by early
2000, and Taiwan may order an additional 24 helicopters (Defense News, March 6, 2000).

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CRS-29
Value of
Date of
Major Item or Service as Proposed
Package
Notification (usually part of a package)
($ million)
1998
01/28
(3) Knox-class frigates,114
(1) MK 15 Phalanx Close-In Weapons System
(CIWS)
$300
06/01
(28) Pathfinder/Sharpshooter navigation and
targeting pods for F-16 fighters115
$160
08/27
(58) Harpoon anti-ship missiles
$101
08/27
(61) Dual-mount Stinger surface-to-air missiles
$180
08/27
(131) MK 46 Mod 5(A)S anti-submarine torpedoes
$69
10/09
(9) CH-47SD Chinook helicopters
$486
1999
05/26
(240) AGM-114KS Hellfire II air-to-surface
missiles
$23
05/26
(5) AN/VRC-92E SINCGARS radio systems, (5)
Intelligence Electronic Warfare systems, (5)
HMMWVs
$64
07/30
Spare parts for F-5E/F, C-130H, F-16A/B, and
Indigenous Defense Fighter (IDF) aircraft
$150
07/30
(2) E-2T Hawkeye 2000E airborne early warning
aircraft
$400
2000
03/02
Modernization of the TPS-43F air defense radar
to TPS-75V configuration
$96
03/02
(162) HAWK Intercept guided air defense
missiles116
$106
06/07
(39) Pathfinder/Sharpshooter navigation and
targeting pods for F-16 fighters
$234
06/07
(48) AN/ALQ-184 ECM pods for F-16s
$122
114 In 1992, the Bush Administration submitted legislation that Congress passed to lease 3
Knox-class frigates to Taiwan. Reports say that Taiwan leased a total of 6 (and
subsequently bought them in 1999) and purchased 2 in 1998 (plus 1 for spares).
115 The sale of the navigation/targeting pods excluded the laser designator feature, but the
Pentagon notified Congress on May 16, 2000, that 20 sets would be upgraded to include the
feature.
116 On June 23, 2000, the Pentagon notified Congress of a sale of 156 excess HAWK air
defense missiles to Taiwan for about $7 million.

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CRS-30
Value of
Date of
Major Item or Service as Proposed
Package
Notification (usually part of a package)
($ million)
09/28
(146) M109A5 howitzers, 152 SINCGARS radio
systems
$405
09/28
(200) AIM-120C Advanced Medium-Range Air-to-
Air Missiles (AMRAAMs) for F-16 fighters
$150
09/28
(71) RGM-84L Harpoon anti-ship missiles
$240
09/28
Improved Mobile Subscriber Equipment (IMSE)
communication system
$513
2001
07/18
(50) Joint Tactical Information Distribution Systems
(JTIDS) terminals (a version of Link 16) for data
links between aircraft, ships, and ground stations
$725
09/05
(40) AGM-65G Maverick air-to-ground missiles for
F-16s
$18
10/26
(40) Javelin anti-tank missile systems
$51
10/30
Logistical support for spare parts for F-5E/F, C-
130H, F-16A/B, and IDF aircraft
$288
2002
06/04
(3) AN/MPN-14 air traffic control radars
$108
09/04
(54) AAV7A1 assault amphibious vehicles
$250
09/04
Maintenance of material and spare parts for aircraft,
radar systems, AMRAAMS, and other systems
$174
09/04
(182) AIM-9M-1/2 Sidewinder air-to-air missiles
$36
09/04
(449) AGM-114M3 Hellfire II anti-armor missiles
for use on AH-1W and OH-58D helicopters
$60
10/11
(290) TOW-2B anti-tank missiles
$18
11/21
(4) Kidd-class destroyers
$875
2003
09/24
Multi-functional Information Distribution Systems
(for Po Sheng C4ISR data link upgrades)
$775
2004
03/30
(2) Ultra High Frequency Long Range Early
Warning Radars
$1,776

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