Order Code RL30957
CRS Report for Congress
Received through the CRS Web
Taiwan: Major U.S. Arms Sales Since 1990
Updated May 5, 2006
Shirley A. Kan
Specialist in National Security Policy
Foreign Affairs, Defense, and Trade Division
Congressional Research Service ˜ The Library of Congress

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. U.S. arms sales to Taiwan have been significant. In addition, the United
States has expanded military ties with Taiwan after the PRC’s missile firings in
1995-1996. However, there is no defense treaty or alliance with Taiwan.
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. Bush also deferred decisions on 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. In February
2003, the Administration pointed Taiwan to three priorities for defense: command
and control, missile defense, and ASW. Some in the United States increasingly have
questioned Taiwan’s seriousness about its self-defense, level of defense spending,
and protection of secrets. The Pentagon also has shifted its focus from Taiwan’s
Special Budget to its regular defense budget and raising readiness for self-defense.
Blocked by the opposition-controlled legislature, the Special Budget for submarines,
P-3C ASW aircraft, and PAC-3 missile defense systems had been reduced from about
US$18 billion in 2004 to US$9 billion (for submarines only) in December 2005.
Then, in March 2006, Taiwan’s defense minister decided to withdraw the Special
Budget and requested supplemental funds out of the regular 2006 defense budget for
subs (with a design phase as supported by Representative Rob Simmons), P-3Cs, and
PAC-2 upgrades (not new PAC-3 units). (The Special Budget is not yet withdrawn.)
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 security assistance, defense
commitments, or 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. The fundamental issue is whether
the United States would go to war with China and how conflict might be prevented.
On May 3, 2006, the House Armed Services Committee reported H.R. 5122, the
National Defense Authorization Act for FY2007, after approving amendments with
relevance for Taiwan that were introduced by Representative Simmons.

Contents
U.S. Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Policy Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Broad Indicators of Arms Transfers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Military Relationship . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
“Software Initiative” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Assessments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Normalized Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Senior-Level Exchanges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
April 2001 Arms Requests and Status of Arms Sales . . . . . . . . . . . . . . . . . . 7
Amphibious Assault Vehicles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Attack Helicopters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Kidd-Class Destroyers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Aegis-Equipped Destroyers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Submarines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
P-3C ASW Aircraft . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
PAC-3 Missile Defense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Early Warning Radars . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
C4ISR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
AMRAAM and SLAMRAAM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Taiwan’s Decisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Other Possible Future Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Policy Issues for Congress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Extent of U.S. Commitment on Defense . . . . . . . . . . . . . . . . . . . . . . . 18
Jiang Zemin’s Offer on Missiles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Taiwan’s Commitment to Self-Defense and Budgets . . . . . . . . . . . . . 21
Policy Reviews and U.S. Objectives . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Visits by Generals to Taiwan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Major Congressional Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
105th Congress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
106th Congress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
107th Congress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
108th Congress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
109th Congress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Major U.S. Arms Sales as Notified to Congress . . . . . . . . . . . . . . . . . . . . . . . . . 41
List of Tables
Table 1. Taiwan’s Defense Budget . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Table 2. Taiwan’s GDP Growth in Real Terms . . . . . . . . . . . . . . . . . . . . . . . . . 24

Taiwan: Major U.S. Arms Sales Since 1990
U.S. Policy
This report discusses U.S. security assistance for Taiwan, formally called the
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.
The discussion uses a variety of unclassified consultations in the United States and
Taiwan, as well as open source citations.
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, among
the stipulations: to consider any non-peaceful means to determine Taiwan’s future
“a threat” to the peace and security of the Western Pacific and of “grave concern” to
the United States; “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” jeopardizing the security, or social or economic system of Taiwan’s
people. 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) of the White House.
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-
1 For more on this 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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makers have said that, in 1982, Washington did not agree to set a date for ending
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. The value of deliveries of U.S.
defense articles and services to Taiwan totaled $7.2 billion in the 1996-1999 period
and $4.5 billion in 2000-2003, ranking first among Asian recipients. Worldwide,
Taiwan ranked second (behind Saudi Arabia) in 1996-1999, and third (behind Saudi
Arabia and Egypt) in 2000-2003. In 2003 alone, Taiwan ranked 8th among
worldwide recipients, receiving $540 million in U.S. defense articles and services.2
Values for U.S. agreements with and deliveries to Taiwan are summarized below.
1996-1999 period
2000-2003 period
2003
U.S. Agreements
$1,700 million
$820 million
$390 million
U.S. Deliveries
$7,200 million
$4,500 million
$540 million
From worldwide sources, including the United States, Taiwan received $11.2
billion in arms deliveries in the eight-year period from 1997 to 2004 — with Taiwan
ranked fourth behind Saudi Arabia, China, and U.A.E. among leading recipients in
the developing world. Of that total, Taiwan received $7.3 billion in arms in 1997-
2000, and $3.9 billion in 2001-2004. In 2004 alone, Taiwan ranked 7th and received
$1.1 billion in arms deliveries, while the PRC ranked 3rd and received arms deliveries
valued at $2.7 billion.
Moreover, as an indication of future arms acquisitions, China ranked 1st among
developing nations in arms purchase agreements during 2001-2004, with a total value
of $10.4 billion, while Taiwan’s agreements did not place it among the top 10
recipients. In 2004 alone, China ranked 3rd in arms purchase agreements, with a
value of $2.2 billion. Taiwan was in 8th place with $600 million in agreements.3
Military Relationship
“Software Initiative”. In addition to transfers of hardware, beginning after
the crisis in the Taiwan Strait in 1995-1996 during which President Clinton deployed
two aircraft carrier battle groups near Taiwan in March 1996, the Pentagon quietly
expanded the sensitive military relationship with Taiwan to levels unprecedented
2 CRS Report RL32689, U.S. Arms Sales: Agreements with and Deliveries to Major Clients,
1996-2003
, by Richard Grimmett, compiled from U.S. official, unclassified data as reported
by the Defense Security Cooperation Agency (DSCA). December 8, 2004.
3 CRS Report RL33051, Conventional Arms Transfers to Developing Nations, 1997-2004,
by Richard Grimmett, compiled from unclassified data from DSCA. August 29, 2005.

CRS-3
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.
Also, Taiwan’s F-16 fighter pilots have trained at Luke Air Force Base, AZ,
since 1997. However, in 2004, Taiwan’s Minister of Defense surprisingly began to
consider withdrawing the pilots and fighters.5 In response, the Defense Department
stressed the value of continuing the training program to develop “mission ready and
experienced pilots” with improved tactical proficiency shown by graduated pilots
who have “performed brilliantly,” as explicitly notified to Congress.6
In July 2001, after U.S. and Taiwan media reported on the “Monterey Talks,”
a U.S.-Taiwan national security meeting that was originally held in Monterey, CA,
the Pentagon revealed it was the 7th 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.”7 Another round of such strategic talks took place in July
2002.8 The 11th round of the talks took place in late September 2005, after the Bush
Administration postponed the meeting by a couple of weeks to accommodate PRC
ruler Hu Jintao’s scheduled visit to Washington on September 7 (which was then
postponed because of President Bush’s response to Hurricane Katrina).9
These exchanges were prompted by increasing 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 said that the United States wanted to
help Taiwan’s military to strengthen civilian control, enhance jointness, and
rationalize arms acquisitions.10 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.11
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.
5 Jane’s Defense Weekly, October 9, 2004 and June 29, 2005; and author’s consultations.
6 DSCA, notification to Congress, October 25, 2005 (see list at end of this CRS Report).
7 China Times (Taiwan), July 18, 2001; Washington Times, July 18, 2001; Department of
Defense News Briefing, July 19, 2001.
8 Central News Agency, Taipei, July 17, 2002.
9 Project for a New American Century, August 26, 2005; Taipei Times, September 15, 2005.
10 Deputy Secretary of Defense Paul Wolfowitz, “Remarks to the U.S.-Taiwan Business
Council,” March 11, 2002.
11 Testimony before the House International Relations Committee, hearing on “The Taiwan
Relations Act: The Next 25 Years,” April 21, 2004.

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Assessments. The Pentagon has also conducted its own assessments of
Taiwan’s defense needs, with over a dozen studies from 1997 to early 2004.12
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.13 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.14 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.15 In January 2001, a
Pentagon team reportedly examined Taiwan’s command and control, air force
equipment, and air defense against a first strike.16 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.17 In August
2002, a U.S. military team studied Taiwan’s Po Sheng command, control,
communication, computers, intelligence, surveillance, and reconnaissance (C4ISR)
program.18 In November 2002, another U.S. team visited Taiwan to assess its
marine corps and security at ports and harbors, and reported positive findings.19 In
November 2003, a U.S. defense team visited Taiwan to assess its anti-submarine
warfare (ASW) capability and rated the overall capability as poor.20
Normalized Relations. The George W. Bush Administration has continued
the Clinton Administration’s initiative 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
12 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.
13 “U.S. Military Team Arrives in Taiwan for Visit,” Lien-ho Pao [United Daily News],
Sept. 19, 1999, in FBIS.
14 Ricks, Thomas, “Taiwan Seen as Vulnerable to Attack,” Washington Post, March 31,
2000.
15 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.
16 China Times (Taiwan), January 14, 2001; Taipei Times, January 15, 2001.
17 Taipei Times (Taiwan), September 10, 2001.
18 Taiwan Defense Review (Taiwan), August 27, 2002.
19 Taipei Times, November 21, 2002; January 1, 2003; Tzu-Yu Shih-Pao [Liberty Times]
(Taipei), April 14, 2003; Taipei Times, August 22, 2003.
20 Jane’s Defense Weekly, December 3, 2003; Taiwan Defense Review, January 12, 2004;
Jane’s Defense Weekly, June 30, 2004.

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in favor of normal, routine considerations of Taiwan’s requests on an as-needed basis
— similar to interactions with other governments.21
U.S. military officers observed Taiwan’s Hankuang-17 annual military exercise
in 2001, the first time since 1979.22 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 2002.23 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.24 The U.S. and Taiwan militaries set up a hotline in 2002 to deal
with possible crises.25
In addition, in 2002, the Administration asked Congress to pass legislation to
authorize the assignment of personnel from U.S. departments (including the Defense
Department) to AIT, allowing the assignment of active-duty military personnel to
Taiwan for the first time since 1979. The objective was to select from a wider range
of personnel, without excluding those on active duty. The first active-duty attache
since 1979, Army Colonel Albert Willner, began his duty in Taipei in August 2005
with civilian clothes and a status similar to military attaches assigned to Hong Kong,
except that military personnel in Hong Kong may wear uniforms on special
occasions. The Defense Security Cooperation Agency (DSCA) also assigned an
active-duty Army Colonel to oversee security assistance programs at AIT in Taipei.26
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.)
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 an industry 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 1979.27 Tang met with
21 On the annual arms talks, see CRS Report RS20365, Taiwan: Annual Arms Sales Process,
updated June 5, 2001, by Shirley Kan.
22 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.
23 CNN.com, March 18, 2002; Author’s discussions in Hawaii in July 2002.
24 Tzu-Yu Shih-Pao [Liberty Times], Taipei, July 20, 2002.
25 Jane’s Defense Weekly, October 29, 2003.
26 Department of Defense, DSCA contract awarded to AIT to support DSCA active-duty
military and civil service personnel, September 24, 2005.
27 In December 2001, the previous ROC Defense Minister, Wu Shih-wen, made a U.S.
transit on his way to the Dominican Republic.

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Deputy Secretary of Defense Paul Wolfowitz, who also spoke at the conference.28
However, after this visit, Taiwan’s Defense Minister Lee Jye has declined to travel
to the United States. 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.29
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 1979.30 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.31 Deputy Assistant Secretary of Defense Richard Lawless and Deputy
Assistant Secretary of State Randall Schriver met with General Chen.
The Hankuang-19 exercise took place in April-May 2003, with participation by
about 20 U.S. military personnel and retired Adm. Dennis Blair, who just retired as
the Commander of the Pacific Command (PACOM). The exercise reportedly raised
questions about the military’s will to fight and ability to sustain defense before
possible U.S. support.32 Deputy Defense Minister Lin Chong-pin visited Washington
in June 2003 to respond to concerns about Taiwan’s commitment to self-defense.
The Hankuang-20 exercise included a reportedly U.S.-provided computer simulation
in August 2004 that resulted in the PLA invading and capturing the capital, Taipei,
within six days.33 Through the Hankuang-22 exercise in April 2006, Blair and
PACOM personnel attended as observers.34 Earlier that month, Taiwan’s president
and other top officials held a Yushan exercise to prepare for a “decapitation” attack
by the PRC, with no U.S. participation.35
In October 2004, Taiwan’s Deputy Minister for Armaments, General Huoh
Shoou-yeh, attended a U.S.-Taiwan defense industry conference (in Scottsdale, AZ).
In May 2005, the Chief of General Staff, General Lee Tien-yu, visited the United
States, but he was the first Chief of General Staff from Taiwan willing to make the
28 Deputy Secretary of Defense Paul Wolfowitz, “Remarks to the U.S.-Taiwan Business
Council,” March 11, 2002.
29 Reuters, September 10, 2002.
30 Chung-Kuo Shih-Pao [China Times], January 2, 2003.
31 Taiwan Defense Review, January 18, 2003; Straits Times (Singapore), January 21, 2003.
32 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.
33 AFP, August 11, 2004; Taiwan News, August 12, 2004.
34 Taipei Times, April 25, April 30, May 1, and May 30, 2006.
35 Liberty Times (Taipei), April 13 and 16, 2006; and author’s consultations in Taipei.

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biennial visit since General Tang Fei’s visit in 1998.36 In September 2005, Deputy
Minister Huoh again attended a U.S.-Taiwan defense conference (in San Diego, CA).
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,37 President Bush approved
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.38
President Bush deferred decisions on destroyers equipped with the Aegis
combat system. Bush also deferred decisions on M1A2 Abrams main battle tanks
and AH-64D Apache Longbow attack helicopters, pending a U.S. assessment of
Taiwan’s army. (The request for Abrams tanks was approved later in 2001.39)
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 was 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 2002.40 By the second
half of 2004, the Administration reportedly considered a new request for HARM
36 Lien-Ho Pao [United Daily News] (Taipei), May 26, 2005.
37 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
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.
38 Taiwan Defense Review, January 18, 2003, reported the briefing took place in late 2001.
39 Mark Stokes, “Taiwan’s Security: Beyond the Special Budget,” AEI, March 27, 2006.
40 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.

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missiles (submitted in August 2004), while a decision on JDAM guidance kits also
remained pending.41 However, in 2005, the Administration denied these requests.42)
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. United Defense
Industries obtained a contract in June 2003, and deliveries began in March 2005.43
Attack Helicopters. After deferring a decision on Taiwan’s request, the Bush
Administration, in May 2002, approved the request for attack helicopters, and
Taiwan began negotiations on 30 AH-64D Apache Longbow helicopters sold by
Boeing.44 Later, Taiwan also has considered the AH-1Z Cobra helicopters sold by
Bell.45 By 2005, Sikorsky proposed its armed UH-60 Black Hawk helicopters.46
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).47
Then, legislators conditioned funding on bargaining with the U.S. Navy on a 15%
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 200348
for delivery of the 9,600-ton destroyers ahead of schedule from October 2005 to
2006. Taiwan’s Naval Commander-in-Chief, Marine General Chen Pang-chih,
attended the transfer ceremony in Charleston, S.C., for the first two destroyers on
October 29, 2005, in the presence of Representative Henry Brown. The destroyers,
the largest warships in Taiwan’s navy, are equipped with SM-2 air-defense missiles
and a joint combat management system.
Aegis-Equipped Destroyers. The Department of Defense considered the
Kidds as platforms to provide Taiwan’s navy with the necessary operational
41 Taiwan News, October 6, 2004; Washington Times, October 8, 2004; Taiwan Defense
Review
, November 26, 2004.
42 Wendell Minnick, “U.S. Rejects Taiwan Request for HARM and JDAM Kits,” Jane’s
Defense Weekly
, January 18, 2006.
43 Jane’s International Defense Review, September 2003; Taiwan Defense Review, March
4, 2005.
44 Taipei Times, May 26, 2002; Jane’s Defense Weekly, June 5, 2002.
45 Jane’s Defense Weekly, March 10 and 24, 2004.
46 Ibid., August 24, 2005.
47 Author’s visit to Taiwan; and Taipei Times and China Post (Taipei), November 1, 2002.
48 Taipei Times, September 5, 2003; Taiwan Defense Review, March 10, 2004; Taipei Times,
September 15, 2004; Jane’s Defense Weekly, November 10, 2004.

CRS-9
experience before any possible acquisition of more advanced Aegis-equipped ships.49
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. 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.50 In
2003, Taiwan again requested four new Arleigh Burke-class, Aegis-equipped
destroyers, for delivery in 2010 and at an estimated cost of about $4.8 billion.51
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 a program for 8
boats 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 shipyard) and General Dynamics (with its
Electric Boat shipyard); 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 (now Navantia).
Although the Administration promised to help Taiwan buy submarines, not build
them, Taiwan’s China Shipbuilding Corporation also became interested in a part of
the contract, with support from some of Taiwan’s legislators. The U.S. Navy
discussed options with Taiwan’s Navy in July 2002 and initially planned to select the
manufacturer(s) to design and build the submarines in the latter half of 2003.52 On
December 6, 2002, Secretary of the Navy Gordon England informed Congress in a
Determination and Findings memo that bidding would be limited to four U.S.
companies and the diesel subs would be of U.S. origin.53 The U.S. Navy held a
second Industry Day on December 17, 2002, with General Dynamics, Northrop
Grumman, Lockheed Martin, and Raytheon interested in being the prime contractor.54
49 Consultations; and Wendell Minnick, “What Those Systems are All About,” Topics,
November 2004.
50 Discussion with Lockheed Martin executive, June 10, 2004; and U.S. Army, 32nd Army
Air and Missile Defense Command, Fort Bliss, TX, “Operation Iraqi Freedom: Theater Air
and Missile Defense,” September 2003.
51 Lien-Ho Pao, September 1, 2004; Taiwan Defense Review, December 19, 2004.
52 Central News Agency (Taiwan), July 30, 2002; Taipei Times, July 31, 2002; Defense
Daily
, September 16, 2002.
53 Gordon England, Memorandum to Congress with Determination and Findings, December
6, 2002.
54 Knight-Ridder/Tribune Business News, December 17, 2002.

CRS-10
The U.S. Navy provided the Independent Cost Estimate (ICE) on January 17,
2003.55 The ICE put the sub program at about $10.5 billion, but private sector
estimates have been said to be lower (perhaps $6-7 billion). Greater risks and costs
were factored into the ICE because of uncertainty about funding by Taiwan and the
availability of European designs.
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.56 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.57 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.58 Meanwhile, in 2003, the Bush
Administration inquired with Italy about buying eight decommissioning Sauro-class
diesel-electric submarines for the estimated cost of about $2 billion for delivery
starting in 2006, but Taiwan’s military opted for newly built submarines.59
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.60 The
U.S. team also met with some of Taiwan’s legislators, including Lin Yu-fang of the
opposition People First Party.61 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.62 The total cost of new submarines could
reach $9-12 billion,63 leading Taiwan’s political leaders to consider a controversial
Special Budget.64 (See Taiwan’s Commitment to Self-Defense and Budgets, below.)
55 Tung-sen Hsin-wen Pao, Taipei, September 28, 2005.
56 United Daily News (Taipei), April 21, 2003 and April 22, 2003; Taiwan Defense Review,
May 17, 2003 and May 30, 2003.
57 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.
58 Central News Agency, Taipei, October 16, 2003.
59 Wendell Minnick, “Submarine Decisions Show Lack of Creativity,” Taipei Times,
October 16, 2004.
60 Lien-ho Pao [United Daily News], Taipei, October 23, 2003; Central News Agency,
Taipei, October 26, 2003.
61 Taipei Times, October 31, 2003; Central News Agency, November 2, 2003.
62 Author’s discussion with Lin Yu-fang in Taipei in December 2003.
63 Lien-ho Pao [United Daily News], August 25, 2003.
64 Taiwan Defense Review, April 30, 2004.

CRS-11
Taiwan’s new demand for domestic industrial participation had added another
issue and greater potential costs to the program (about $2.5 billion to the total), which
U.S. Navy officials discussed with potential prime contractors at the 3rd Industry Day
meeting on December 15, 2003, in Washington.65 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 them in Taiwan.66
With U.S. opposition to Taiwan’s domestic production of submarines conveyed in
an official letter in September 2004, Minister of Defense Lee Jye estimated that the
cost of the submarine program could be reduced.67
Thus, with delays in Taiwan’s decision-making after 2001, Taiwan’s request for
and the Bush Administration’s approval of a sale of submarines have met with mixed
opinions in Taipei and Washington. In early 2003, senior officials in the Bush
Administration stressed ASW surveillance as one priority for Taiwan’s military to
consider, with the focus on static arrays and patrol aircraft to track submarines. The
Administration approved submarines but did not consider them a priority.68 In
September 2005, the Navy’s International Programs Office also had to begin to work
with interested companies to prepare a new ICE. If Taiwan restricts the funds
available, the scope of a program could be restricted to fewer than eight boats.
In early 2006, articles appeared alleging that the U.S. Navy failed to effectively
implement the diesel sub program for Taiwan, in part to protect the nuclear-powered
submarine capability.69 The Defense Department and the Navy have contended that
they support the Bush Administration’s 2001 policy decision on arms sales to
Taiwan, but that Taiwan has to commit to fund the program. The Navy and DSCA
also believe that Taiwan could submit a request for a sub design phase.70 In February
2006, Representative Rob Simmons visited Taiwan, saying that he represented his
district in Connecticut, home to General Dynamics’ Electric Boat. In a speech at the
American Chamber of Commerce (AmCham) in Taipei, Simmons suggested that the
subs should cost less, perhaps around $8 billion, and proposed an interim step to
break the impasse whereby Taiwan could procure a sub design first, costing perhaps
$225 million.71
65 Ibid., February 6, 2004 and April 30, 2004.
66 United Daily News (Taipei), June 23, 2004.
67 Lien-Ho Pao, September 8, 2004; Central News Agency, October 19, 2004.
68 U.S.-Taiwan Business Council, Defense and Security Report, 2nd Quarter 2005.
69 Wendell Minnick, “Taiwan Claims U.S. Navy is Sabotaging SSK Plans,” Jane’s Defense
Weekly
, February 15, 2006; “Come Clean on Subs,” editorial, Defense News, February 13,
2006.
70 Interviews with Navy and DSCA officials, including consultations in Taipei in April 2006.
71 News from Rob Simmons, February 17, 2006; Central News Agency, February 22, 2006;
Taipei Times, February 23, 2006; Defense News, February 27, 2006; and AmCham’s Taiwan
Business Topics
, March 2006.

CRS-12
Meanwhile, the Navy also has requested funds from Taiwan to keep an office
to manage the sub program and reportedly warned Taiwan in August 2005 that the
“pre-selection” process would stop without such funds. Through March 2006,
Taiwan paid $7.5 million to keep the office open.72
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.73 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 new 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 in 2003, such as refurbished P-3Bs or
surplus P-3Cs retired 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. Since 2004, Taiwan’s Ministry of Defense
has sought approval from the legislature of a Special Budget to include funds (about
$1.6 billion) for 12 refurbished P-3C ASW planes (sold as Excess Defense Articles)
with possible delivery in 2008-2011.74 (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.
72 National Journal, April 6, 2006; and author’s interviews in Taipei in April 2006.
73 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.
74 Taiwan Defense Review, April 30, 2004.

CRS-13
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
requesting the PAC-3 system.75 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-3.76 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, 2003.77 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.78 In April 2003, Taiwan submitted to the United States a
request for price 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 for about US$4.3 billion.79
Complicated by the failure of a referendum to pass in March 2004, Taiwan’s
military reportedly has looked to buy PAC-3 units, originally seeking funds out of a
Special Budget submitted in May 2004 (see discussion on budgets below).80
Acquisition of missile defense systems has been controversial in Taiwan, with some
supporting the development of offensive missiles instead and some preferring short-
range missile defense systems. Missile defense also became politicized, when
President Chen Shui-bian pushed for a referendum on buying more missile defense
systems that was held on the presidential election day on March 20, 2004. That
referendum became invalid when only 45% of eligible voters cast ballots (with 50%
needed). (Out of the valid ballots cast, 92% agreed with the proposal.) The
opposition KMT and PFP parties said they object to acquiring PAC-3 units for three
years, based on their interpretation that the referendum “vetoed” the question.81
75 Ibid., December 6, 2002.
76 Central News Agency (Taiwan), March 11, 2003.
77 Taipei Times, March 29, 2003.
78 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.
79 Far Eastern Economic Review, May 15, 2003; Jane’s, July 23, 2003; Taiwan Defense
Review
, June 15, 2004.
80 Central News Agency, March 3, 2004; China Times, April 13, 2004; Taiwan Defense
Review
, April 30, 2004.
81 A KMT lawmaker, Su Chi, voiced his objections to missile defense based on the
referendum’s result during the author’s visit to Taiwan in October 2004, before his election.

CRS-14
Meanwhile, China’s buildup of short-range ballistic missiles with “adequate
precision guidance” could destroy key leadership facilities, military bases, and
communication and transportation nodes with “minimal advanced warning,”
according to the Pentagon’s 2004 report to Congress on PRC military power.82 The
PRC Military Power issued in July 2005 warned that the PLA’s short-range ballistic
missiles increased to 650-730 missiles and are increasing by 75-120 missiles a year.83
Since early 2006, Taiwan’s military and lawmakers have debated whether to
upgrade Taiwan’s PAC-2 missile defense units, if missile defense systems (PAC-3)
are not purchased. Legislative Yuan President Wang Jin-pyng reportedly supports
PAC-2 upgrades, but other KMT lawmakers do not support additional purchases of
Patriot missile defense. KMT Legislator Shuai Hua-ming, a retired army lieutenant
general, prefers more cost-effective weapons and deterrent systems as priorities.84
Taiwan has not upgraded its Patriot missile defense systems (to the latest
configuration for radars and command and control with new training and hardware).
The cheaper, initial option to first upgrade Taiwan’s three PAC-2 units could cost
around US$500-600 million. In April 2006, after first rejecting Patriot upgrades,
Taiwan’s defense ministry requested U.S. price and availability data for PAC-2
upgrades and requested a supplemental budget for Patriot upgrades in 2006.85
Early Warning Radars. In 1999, some in Congress encouraged the Clinton
Administration to approve a sale of early warning radars (see 106th Congress, below),
approval that was given in 2000. The Pentagon has stressed the importance of long-
range early warning and tracking of ballistic and cruise missile attacks against
Taiwan. Taiwan reportedly 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.86 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).87 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 formal notification pointed out that
there will not be U.S. personnel assigned to the radar(s). By early 2005, Taiwan had
not contracted for the controversial program, and Lockheed Martin withdrew its
82 Department of Defense, “Annual Report on the Military Power of the People’s Republic
of China,” May 29, 2004.
83 Department of Defense, “Annual Report to Congress: The Military Power of the People’s
Republic of China, 2005,” July 19, 2005.
84 Taipei Times, April 10, 2006; and author’s interview with Shuai Hua-min in April 2006.
85 Central News Agency, February 21, 2006; Taipei Times, February 22, 2006; author’s
interview with Raytheon in March 2006; and author’s interviews in Taipei in April 2006.
86 Jane’s Defense Weekly, March 26, 2003 and February 11, 2004.
87 Taiwan Defense Review, November 26, 2003; Jane’s Defense Review, December 3, 2003.

CRS-15
bid.88 In June 2005, Raytheon concluded a contract worth $752 million to provide
one Early Warning Surveillance Radar System to Taiwan by September 2009.89
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.90
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.91 In September 2003,
Lockheed Martin obtained a contract with the initial value of $27.6 million.92 The
notification to Congress submitted on September 24, 2003, indicated that the total
value could reach $775 million. Taiwan’s Defense Ministry also decided not to
integrate U.S. communications security (COMSEC) equipment that could facilitate
crisis-management and interoperability.93 Full Operational Capability of the Po
Sheng C4ISR program is expected at the end of 2009.94
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)
air-to-air missile, or threatens to attack Taiwan. In September 2000, the
Administration notified Congress of a potential sale of 200 AMRAAMs.
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, below.)
88 Jane’s Defense Weekly, February 9, 2005.
89 Raytheon, June 23, 2005; Department of Defense, Air Force Contract for Raytheon, June
23, 2005; Wall Street Journal, June 24, 2005; CNA, June 25, 2005.
90 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.
91 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.
92 Taiwan Defense Review, September 17, 2003; Jane’s Defense Weekly, October 1, 2003.
93 U.S.-Taiwan Business Council, “Defense & Security Report,” Third Quarter 2004.
94 U.S.-Taiwan Business Council, defense conference, San Diego, CA, September 19, 2005.

CRS-16
By the end of 2002, the Bush Administration authorized delivery of the
AMRAAMs to Taiwan and briefed its air force on ground-launched AMRAAMs.95
(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,
2003.96 However, although the Clinton Administration agreed to Taiwan’s request
for 200 AMRAAMs for Taiwan’s 150 F-16 fighters, Taiwan’s Air Force actually
purchased only 120 AMRAAMs (although some U.S. observers think Taiwan needs
at least 350 AMRAAMs).97 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.98
Taiwan’s Decisions. Since the U.S. response to Taiwan’s requests in 2001,
attention has turned to Taiwan, where the military, civilian officials, and competing
political parties in a newly assertive legislature (Lifa Yuan, or LY) 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 defenses.
In March 2003, Taiwan’s Ministry of Defense issued a new procurement plan
emphasizing those priorities.99 However, there has been no agreement on priorities
even within the Defense Ministry, and getting a political consensus and funding from
the legislature has remained questionable in the politicized 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;
! C-27J Spartan medium transport aircraft (sold by Lockheed Martin);
! F-35 Joint Strike Fighters (JSF), particularly the short take-
off/vertical landing (STOVL) version, under development by
Lockheed Martin and foreign partners (including Singapore);
! Stryker armored wheeled vehicles (sold by General Dynamics);
95 Lien-Ho Pao [United Daily News], Taipei, 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.
96 Taiwan Defense Review, November 15, 2003; Central News Agency, November 18, 2003.
97 Wendell Minnick, op-ed, “Taiwan’s Military will Fire Blanks,” Taipei Times, May 25,
2005.
98 Jane’s Defense Weekly, April 7, 2004.
99 Taiwan Defense Review, March 12, 2003.

CRS-17
! upgraded engines for F-16 fighters (sold by Pratt & Whitney or
General Electric);
! new or surplus F-16 fighters;100
! CH-53X minesweeping helicopters (developed by Sikorsky)
! search-and-rescue helicopters (Sikorsky or Bell)
! trainer aircraft.101
Policy Issues for Congress
Since the early 1990s, and accelerated after the Taiwan Strait crisis of 1995-
1996, the PLA has modernized with a missile buildup and foreign arms acquisitions,
primarily from Russia.102 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 increasingly
asserted its role in determining arms sales to Taiwan before sales were decided.
Referencing the TRA’s Section 2(b)(5) “to provide Taiwan with arms of a
defensive character,” policy-makers face a question of how to respond to Taiwan’s
increasing interest in offensive strike. Some see Taiwan’s strategy as inherently
defensive against the PRC. Others, such as former Deputy Assistant Secretary of
State Randall Schriver, call this desire for offensive weapons an “unhelpful
diversion,” because they are not the “short cuts” for needed upgrades in defense.103
Moreover, Section 3(c) of the TRA requires the President to inform Congress
“promptly” of any threat to “the security or the social or economic system” of the
people on Taiwan and any danger to U.S. interests, so that the President together with
the Congress shall determine the appropriate U.S. response. (In March 1996, during
the Taiwan Strait Crisis when President Clinton deployed two aircraft carrier battle
groups near Taiwan, the State Department nonetheless testified that the situation did
not constitute a “threat to the security or the social or economic system” of Taiwan
100 In spring of 2006, the Defense Ministry decided to request U.S. price and availability data
for new F-16 (not F-15) fighters (author’s interviews in Taipei in April 2006).
101 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; Flight
International
, July 13-19, 2004; Flight International, September 7-13, 2004; Flight
International
, December 7-13, 2004; Taiwan Defense Review, December 30, 2004; AFP,
Hong Kong, March 8, 2005; Jane’s Defense Weekly, May 4, 2005.
102 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: Background and Analysis, by Shirley
Kan, Christopher Bolkcom, and Ronald O’Rourke.
103 Quoted in U.S.-Taiwan Business Council, “Defense & Security Report,” 3rd Quarter
2005.

CRS-18
and therefore did not invoke Section 3(c) for a congressional role.104) Policy issues
center on how effectively the Administration is helping Taiwan’s self-defense, the
role of Congress in determining security assistance to Taiwan, and whether aspects
of U.S. security assistance are stabilizing or destabilizing and should be adjusted
based on changing conditions. Overall, the question for policy is whether to
disengage from or increase engagement with Taiwan on a number of specific issues.
Extent of U.S. Commitment on Defense. The persistent question for U.S.
decision-makers in the military, Administration, and Congress is whether the United
States would go to war with the PRC over Taiwan and the purpose of any conflict.
The TRA did not replace the Mutual Defense Treaty of 1954 that ended in 1979.
Nonetheless, 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 and planning, high-level meetings, and visits
by U.S. flag and general officers to Taiwan. Others have argued that the United
States should avoid a war with China and needs a cooperative China in a number of
global problems, 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. The question of U.S. assistance for Taiwan’s defense involves
two aspects: intention and capability to assist Taiwan’s self-defense.
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.
Another question arose in April 2001 when President Bush said that he would do
“whatever it took to help Taiwan defend herself” if China attacked.
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, even if the message was not meant for Taiwan,
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
104 Assistant Secretary of State for East Asian and Pacific Affairs Winston Lord, before the
House International Relations Subcommittee on Asia and the Pacific, hearing on “Crisis in
the Taiwan Strait: Implications for U.S. Foreign Policy,” March 14, 1996, 104th Congress.

CRS-19
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.105
In an interview with Fox News on June 8, 2005, President Bush qualified U.S.
assistance for Taiwan’s self-defense if it is invaded by saying that “If China were to
invade unilaterally, we would rise up in the spirit of the Taiwan Relations Act. If
Taiwan were to declare independence unilaterally, it would be a unilateral decision,
that would then change the U.S. equation, the U.S. look at ... the decision-making
process.”106
In September 2005, the Defense Department further clarified the mutual
obligations under the TRA and limits to U.S. ability to assist Taiwan’s defense.
Deputy Under Secretary of Defense Richard Lawless issued a speech, stressing the
TRA’s focus on Taiwan’s self-defense. He declared,
inherent in the intent and logic of the TRA is the expectation that Taiwan will be
able to mount a viable self-defense. For too long, the Taiwan Relations Act has
been referenced as purely a U.S. obligation. ... Under the TRA, the U.S. is
obligated to “enable” Taiwan to maintain a sufficient self-defense, but the reality
is, it is Taiwan that is obligated to have a sufficient self-defense. There is an
explicit expectation in the TRA that Taiwan is ready, willing, and able to
maintain its self-defense. Taiwan must fulfill its unwritten, but clearly evident
obligations under the Taiwan Relations Act by appropriately providing for its
own defense while not simply relying on the U.S.’s capacity to address a threat
in the Strait. The TRA requires both parties to do their part to deter aggression
or coercion vis-a-vis Taiwan.107
A co-chair of the House Taiwan Caucus, Representative Steve Chabot, stated
on September 27, 2005, at the Heritage Foundation that Taiwan is only one “ally”
and that it is principally Taiwan’s responsibility to defend itself. He said that it has
been “frustrating” and “disappointing” to many Members of Congress that Taiwan
delayed passage of the Special Budget on arms procurement. He warned that if
Taiwan does not pass the Special Budget, many Members of Congress will “re-
evaluate the extent of support for Taiwan.”
Taiwan’s President Chen Shui-bian announced on February 27, 2006, that he
would “terminate” the National Unification Council, again raising questions about
new tensions. Senator John Warner, Chairman of the Armed Services Committee,
told Adm. William Fallon, Commander of the Pacific Command, at a committee
hearing on March 7, 2006, that “if conflict were precipitated by just inappropriate and
105 House International Relations Committee, hearing on “The Taiwan Relations Act: The
Next 25 Years,” April 21, 2004.
106 President George W. Bush, “Your World with Neil Cavuto,” Fox News, June 8, 2005.
107 The speech was read by a DSCA official on September 19, 2005, in San Diego, CA, at
the Defense Industry Conference of the U.S.-Taiwan Business Council, while Richard
Lawless was delayed in Beijing at the Six-Party Talks on North Korea’s nuclear weapons.

CRS-20
wrongful politics generated by the Taiwanese elected officials, I’m not entirely sure
that this nation would come full force to their rescue if they created that problem.”
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).108 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 ruler 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.109 President Bush reportedly did not
respond directly to Jiang’s linkage. Editorials in Taiwan were divided on whether
to pursue Jiang’s offer.
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 that
can be re-deployed) and that the PRC should hold direct talks with leaders in Taipei
instead. 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
108 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.
109 Chung-Kuo Shih-Pao [China Times], Taipei, November 22, 2002; Taipei Times,
November 23, 2002.

CRS-21
not favor consulting the PRC on arms sales to Taiwan.110 The Bush Administration
reportedly did not counter 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. Nonetheless, 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.”111 In
May 2005, an official PRC newspaper reported that the PLA continues to debate the
question of whether to “withdraw” missiles opposite Taiwan.112
Taiwan’s Commitment to Self-Defense and Budgets. Congress has
oversight of the Administration’s dialogue with Taiwan about its self-defense and
military budgets. Congress also has discussed with Taiwan these responsibilities.
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.”113 The
Pentagon’s report issued in July 2003 further stressed that the relative decline in
Taiwan’s defense budget “increasingly” will challenge its force modernization.114 In
2003, supporters of Taiwan at the Heritage Foundation urged civilian and military
leaders in Taiwan to be “serious” about its own defense.115
Taiwan’s regular defense budget for 2004 was about US$8 billion, which
accounted for 2.5% of GDP and 16.6% of the total government budget, as compared
with 3.8% of GDP and 24.3% of total spending in 1994. These relative declines took
place even as the Pentagon has warned of an increased threat posed by the PLA to
Taiwan, U.S. support for Taiwan has increased after the 1995-1996 crisis, and the
PLA has obtained higher budgets. For 2005, Taiwan’s Ministry of Defense requested
110 Senate Foreign Relations Committee, Hearing on U.S. Foreign Policy, March 8, 2001.
111 House International Relations Committee, Hearing on “The Taiwan Relations Act: The
Next 25 Years,” April 21, 2004.
112 Qingnian Cankao [Youth Reference News], Beijing, May 26, 2005.
113 Department of Defense, “Annual Report on the Military Power of the People’s Republic
of China,” July 12, 2002.
114 Department of Defense, “Report on PRC Military Power,” July 30, 2003.
115 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.

CRS-22
a defense budget of NT$260.7 billion, a reduction of NT$3.1 billion from 2004, and
the final defense budget is NT$258.5 billion (about US$8.3 billion).116
In May 2005, Taiwan’s Defense Minister Lee Jye requested that the defense
budget increase from 2.4% of GDP to 3.0% of GDP in the next five years, but an
official in charge of the government’s budget failed to express support.117 However,
with U.S. support, President Chen Shui-bian announced on September 12, 2005, his
goal of increasing the annual defense budget to 3% of GDP. At the end of August
2005, the Defense Ministry announced a budget request for 2006 of NT$265.7 billion
(US$8.1 billion), an increase of NT$7.2 billion from 2005. However, that budget
included an initial funding request to buy PAC-3 missile defense units, after the
Ministry lowered the Special Budget by removing funds for PAC-3. Minister of
Defense Lee Jye acknowledged a major “crowding out” impact on the 2006 budget
resulting from adding the PAC-3 request to the annual budget. He lamented that he
had to cut out 53 new projects that would have invested in combat strength.118 On
January 12, 2006, the legislature voted to cut NT$11.2 billion (US$348 million) from
the annual defense budget for 2006 which would have been supplementary funds to
support procurement of PAC-3 missile defense, P-3C aircraft, and submarines, and
did not allow the funds to be used for munitions, training, or other purposes.
Meanwhile, the Department of Defense has assessed that the PRC’s public
military budget markedly understates actual defense-related expenditures (excluding
categories such as weapons research and foreign arms purchases). The Pentagon’s
2005 report to Congress on PRC military power estimated that China’s total defense
spending for 2005 could be up to $90 billion,119 which was three times the announced
amount. At that level, China has the third highest level of defense spending in the
world (after the United States and Russia) and the highest level of defense spending
in Asia (followed by Japan).
On March 4, 2006, without details, China announced a 2006 defense budget of
$35.1 billion, claiming a 14.7% increase from the previous year. Using announced
budgets, the 2006 budget is a 16% nominal increase over the 2005 budget and a
doubling of the 2001 budget. Nominally, China has raised its announced military
budget by double-digit percentage increases every year since 1989. After 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 percentage
increases every year since 1998.
116 Consultations in Taipei and Washington; and FBIS report, October 22, 2004.
117 Taipei Times, May 24, 2005.
118 Central News Agency, Taipei, August 30, 2005.
119 Defense Department, “PRC Military Power Report,” July 19, 2005. Also, the Defense
Department estimates China’s total military spending at 3.5 to 5 percent of gross domestic
product (GDP). See Secretary of Defense, Proliferation: Threat and Response, 2001.

CRS-23
Table 1. Taiwan’s Defense Budget
Military
% of total
Military budget
budget
government
Fiscal year
(NT$ bil.)
(US$ bil.)
% of GDP
spending
1994
258.5
9.8
3.8
24.3
1995
252.3
9.5
3.5
24.5
1996
258.3
9.5
3.4
22.8
1997
268.8
9.4
3.3
22.5
1998
274.8
8.2
3.2
22.4
1999
284.5
8.8
3.2
21.6
2000
402.9
12.9
2.9
17.4
2001
269.8
8.0
2.9
16.5
2002
260.4
7.5
2.7
16.4
2003
257.2
7.6
2.6
15.5
2004
264.1
7.9
2.5
16.6
2005
258.6
8.3
2.4
16.1
2006
252.5
7.9
2.2
Sources: This table was compiled using data on the regular defense budgets provided by the ROC’s
Ministry of National Defense, supplemented with data on GDP and exchange rates reported by Global
Insight and other reports. The Defense Ministry also requested supplemental funds in 2006.
Notes: The currency is the New Taiwan Dollar (NT$). The FY2000 budget covered the 18-month
period from July 1999 to December 2000.
Some legislators in Taiwan have argued that Taiwan’s defense spending has
been 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. (See table on Taiwan’s real GDP growth below for data.)
Taiwan’s officials and legislators have pointed out that Taiwan has funded defense
out of separate Special Budgets in addition to the regular (annual) defense 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.120 By 2003,
anti-American complaints appeared in news articles in Taiwan about perceived U.S.
120 Taiwan’s official defense budgets and special budgets were provided by Taiwan’s
representative office in Washington, DC.

CRS-24
“pressure,” “extortion,” and untrustworthiness.121 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 self-defense.122
A former official in the Pentagon involved in arms sales decisions wrote in early
2006, that the impasse over Taiwan’s defense spending does not symbolize a lack of
commitment to self-defense. Mark Stokes contended that the Bush Administration’s
policy on arms sales to Taiwan was right, but it came at the wrong time.123
Table 2. Taiwan’s GDP Growth in Real Terms
2000
2001
2002
2003
2004
2005
2006
5.8
-2.2
4.2
3.4
6.1
3.7
3.5
Source: Global Insight, February 7, 2006.
Special Budget Proposed in 2004. In 2002, Taiwan’s Ministry of
National Defense said that it needed the legislature to approve NT$700 billion (about
US$21 billion) over the next 10 years for arms procurement.124 Taiwan’s Defense
Ministry has considered a Special Budget of $15-$20 billion to procure the PAC-3
missile defense system, submarines, and P-3 ASW aircraft over 10-15 years. As
discussed above, in 2003, Taiwan’s military received the U.S. cost estimate for new
submarines as well as price and availability data for PAC-3 missile defense systems
and refurbished P-3C planes. In May 2003, Minister of Defense Tang Yiau-ming
sent a letter to U.S. Deputy Secretary of Defense Wolfowitz that Taiwan planned to
submit later a Special Budget to the legislature to procure the three weapon systems.
However, Tang allegedly had doubts about the Special Budget’s passage, while
looking to the regular defense budget to fund items of priority to the Army.125
As Taiwan considered a Special Budget, the Pentagon encouraged decisions.
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
121 United Daily News, April 21, 2003; China Times, May 8, 2003 and August 18, 2003.
122 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.
123 Mark Stokes, “Taiwan’s Security: Beyond the Special Budget,” AEI, March 27, 2006.
124 Chung-Kuo Shih-Pao [China Times] (Taipei), May 17, 2002; Taiwan Defense Review,
August 30, 2002.
125 U.S.-Taiwan Business Council, “Defense and Security Report,” 3rd Quarter 2005.

CRS-25
and anti-submarine warfare systems and programs” [emphasis added].126 On May 29,
2004, the Pentagon 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.”
On May 21, 2004, Taiwan’s Defense Minister Lee Jye — a retired Naval
Admiral personally committed to procuring new submarines — submitted to the
Executive Yuan (Cabinet) a request for a Special Budget for defense totaling about
US$20 billion.127 On June 2, the Executive Yuan, controlled by the ruling
Democratic Progressive Party (DPP), 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.128 Taiwan’s
legislators have had the options of procuring all three systems, procuring one or two
items, alternatives, or none. However, Taiwan’s priorities have remained unclear.
Taiwan’s Legislative Delegation to the United States. The Special
Budget was not passed in 2004, although the United States urged passage and
welcomed the LY’s president, Wang Jin-pyng of the KMT, who led a multi-party
delegation to the United States on June 17-27, 2004, to gain direct information on the
weapons systems. The LY delegation visited Pearl Harbor Naval Base, HI;
Washington, DC; and Fort Bliss, TX. Under Wang’s leadership, legislators from
different political parties reached a preliminary consensus in support of the Special
Budget during their visit to Washington, where they met with Members of Congress
and defense officials. They said 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 10 (not 15) years (after Deputy Secretary of
Defense Wolfowitz personally expressed to the delegation U.S. opposition to
Taiwan’s more expensive 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 considering the subs.129
However, politicians in Taiwan made the Special Budget into a controversial
political issue in gearing up for elections for the Legislative Yuan (LY) on December
11, 2004. Opposition parties of the “blue coalition,” the Kuomintang (KMT) and
People First Party (PFP), called for drastic cuts in the Special Budget and retained
their majority in the LY.
Rising U.S. Frustrations. In a speech in October 2004, Deputy
Undersecretary of Defense Richard Lawless urged Taiwan’s legislature to “vote in
126 Statement before the House International Relations Committee, hearing on “The Taiwan
Relations Act: the Next 25 Years,” April 21, 2004.
127 Central News Agency, Taipei, May 26, 2004; China Times, Taipei, May 27, 2004.
128 Central News Agency, Taipei, June 2, 2004.
129 Discussion with CRS and Congress on June 22, 2004; United Daily News, June 23, 2004.

CRS-26
favor of Taiwan’s national security.”130 In a strong tone, he warned that the Special
Budget was a “litmus test” of Taiwan’s commitment to its self-defense and that
“inability” to pass the Special Budget would have “serious long-term consequences”
(for foreign support, further intimidation from Beijing, and perceptions of Taiwan as
a “liability”). Lawless also called for Taiwan to expand its efforts from “national
defense” to “national security,” including countering coercion and managing crises
by protecting critical infrastructure (national command facilities,
telecommunications, utilities, media, computer networks, etc.).
Raising frustrations in the Bush Administration and Congress that Taiwan has
not placed a priority on self-defense, it became increasingly doubtful in 2005 that the
LY would vote on the Special Budget and fund it at the full level, even if it is
considered. Meanwhile, the United States has increased concerns about and shifted
focus to the regular defense budget and other questions about Taiwan’s self-defense.
Cutting the Special Budget in 2005. In January 2005, President Chen
Shui-bian told visiting Representative Tom Lantos that PFP Chairman James Soong
changed his position on the Special Budget after visiting Washington where he met
with Deputy Under Secretary of Defense Richard Lawless and Deputy Assistant
Secretary of State Randy Schriver.131 The following month, Lawless warned that
Taiwan’s failure to approve the Special Budget signaled that it lacked seriousness
about its own security, raising questions about whether U.S. support has been
necessary or not.132 In February 2005, the Defense Ministry announced that the
Special Budget’s figure dropped to NT$590 billion (after appreciation of the NT
dollar relative to the U.S. dollar) and that the request would be reduced to NT$480
billion (US$15.5 billion) (after removing certain costs, including an estimated
US$2.3 billion associated with producing submarines domestically in Taiwan).133
The reduced figure also factored in moving some infrastructure costs to the annual
defense budget, but that budget has faced cuts. The Cabinet approved the new
request on March 16 and submitted it to the LY.134 Two days earlier, the PRC’s
National People’s Congress adopted its “Anti-Secession Law,” warning that the
government in Beijing “may” use force against Taiwan.
However, Chen and Soong issued a “Ten-Point Consensus” on February 24,
2005, that did not mention the Special Budget. Indeed, the PFP raised another
objection, saying that the major items should be funded out of the annual defense
130 Richard Lawless, Deputy Undersecretary of Defense for Asian and Pacific Affairs,
Keynote Address, U.S.-Taiwan Defense Industry Conference, U.S.-Taiwan Business
Council, October 4, 2004, Scottsdale, AZ. One of the ROC’s Deputy Ministers of Defense,
General Huoh Shou-Yeh, attended the conference.
131 Agence France Presse, Hong Kong, January 17, 2005. The author also confirmed
Soong’s meeting with Lawless with the KMT/PFP’s representative in D.C.
132 Taipei Times, February 26, 2005; Lawless gave a speech that was not publicly released,
apparently at a meeting in Washington of the U.S.-Taiwan Business Council.
133 Taipei Times, February 16, 2005; February 23, 2005.
134 Ettoday, Taipei, March 16, 2005 (via FBIS).

CRS-27
budget instead of a Special Budget.135 The Defense Ministry began to consider
asking for funds for the PAC-3 missile defense systems out of the annual defense
budget, with submarines as the top priority rather than missile defense stressed by
the Bush Administration.136 In April-May 2005, the chairmen of the opposition
parties, KMT’s Lien Chan and PFP’s James Soong, made historic visits of
reconciliation to mainland China, meeting with Hu Jintao, Communist Party General-
Secretary, Central Military Commission Chairman, and PRC President. These visits
to the PRC further dampened prospects that the Special Budget would be passed.
Congressional Appeals. On May 24, 2005, the LY’s Procedure Committee
failed to place the Special Budget on the legislative calendar, blocking consideration
before the session’s end on May 31. On May 27, Representative Rob Simmons and
32 other House Members wrote to KMT chairman Lien Chan, urging him to help
expedite passage of the Special Budget in May. They warned that “failure to pass the
special budget has raised concerns in the United States about Taiwan’s ability to
defend itself against potential aggression.”137 However, Lien responded in a three-
page letter by making partisan attacks on the DPP and President Chen Shui-bian, and
criticisms of the Special Budget although the KMT used special budgets in the
1990s.138 Moreover, KMT and PFP members of the LY’s Defense Committee
refused to attend a luncheon on June 9 with the top U.S. representative, AIT’s
Director Doug Paal, while his strained relationship with the DPP apparently required
Deputy Director Dave Keegan to host the DPP lawmakers who showed up to discuss
the arms sales.139 There was no special session in the summer as the ruling DPP
requested. On July 16, 2005, the KMT overwhelmingly elected Ma Ying-jeou
(Taipei’s Mayor) instead of Wang Jin-pyng (LY’s President) to replace Lien Chan
as KMT Chairman, prompting some to ask whether Ma would show leadership in
considering the Special Budget. However, he focused on the city and county
elections on December 3, 2005, when the KMT won 14 out of 23 seats.
On August 1, 2005, three co-chairs of the House Taiwan Caucus wrote to Ma
Ying-jeou as the new KMT chairman. They urged him to “lead efforts in Taipei to
ensure that the Legislative Yuan quickly passes a special arms procurement package
or increases its annual defense spending.” They also invited Ma to visit
Washington.140 Ma responded as the Mayor of Taipei on August 18 (one day before
becoming KMT Chairman), by blaming the DPP administration for “procrastinating
for three years,” “negligence,” and “lack of leadership,” with no mention of Wang
Jin-pyng’s LY delegation in June 2004. Ma promised to focus his attention on the
issue and to “work closely with the KMT caucus” in the LY after taking over the
KMT chairmanship. He also declined to visit in September, writing that the LY will
135 Lien-ho Pao [United Daily News], Taipei, March 21, 2005.
136 Tzu-yu Shih-pao [Liberty Times], Taipei, March 21, 2005; China Post, March 22, 2005.
137 Rep. Rob Simmons, et al., letter to Chairman Lien Chan, Kuomintang, May 27, 2005.
138 Lien Chan, Chairman of the KMT, letter to Rep. Simmons, et al, June 8, 2005.
139 Taipei Times, June 10, 2005.
140 Letter from Representatives Robert Wexler, Steve Chabot, and Sherrod Brown (without
Dana Rohrabacher) to Ma Ying-jeou, KMT Chairman, August 1, 2005.

CRS-28
“address tough bills like the arms procurement bill.”141 However, after PFP
Chairman James Soong met with Ma on September 7, he announced that the KMT
and PFP party caucuses will continue to “consult each other” on whether to advance
the Special Budget for consideration in the LY.142 Meanwhile, Ma set up a KMT task
force to study the arms issue away from politics, and there have been questions about
whether the KMT would support certain arms purchases and incur rising differences
with its weakening coalition partner, the PFP, after the December 2005 elections.
Before the LY’s session began on September 13, 2005, the Defense Ministry
submitted a new Special Budget to cover submarines and P-3C aircraft, moving the
request for PAC-3 missile defense to the regular budget (so that the Special Budget
was about half of the original amount). LY President Wang Jin-pyng of the KMT
acknowledged the reduction as a goodwill gesture and said that “it is time to address
the issue.”143 On August 31, 2005, the Executive Yuan approved a Special Budget
of NT$340 billion (US$10.3 billion), after removing NT$140 billion (US$4.2 billion)
for PAC-3s. On September 28, 2005, the Defense Ministry issued details on its latest
funding request for 8 submarines: about NT$288 billion (about US$8.7 billion) in the
Special Budget and NT$10.1 billion in the regular budget for a total of US$9
billion.144
Defense Department Warns of Limits to U.S. Help. When asked about
the LY’s delay in deciding to purchase U.S. weapons, Secretary of Defense Donald
Rumsfeld said in August 2005 that under the TRA, the U.S. obligation is “to work
with Taiwan” on security assistance, but it is up to Taiwan make its own decisions.145
On September 19, 2005, Deputy Under Secretary of Defense Richard Lawless issued
another strong speech, this time directed at Taiwan’s people and saying that he was
not urging the passage of the Special Budget because it has become a political
“distraction.” Lawless applauded the goal of increasing the defense budget to 3% of
GDP. He warned of the danger that “Taiwan’s steadily declining defense budgets,
and the resulting erosion in its own defense capabilities, also adversely affect the
status quo,” in addition to the PLA build-up. He expressed the U.S. expectation that
Taiwan has the “collective will to invest in a viable defense to address a growing
threat and be in a position to negotiate the future of cross-strait relations from a
position of strength.” He criticized the military for “short-changing itself on reserves
of critical munitions” and inadequate “hardening” for defense. Lawless stressed that,
under the TRA, Taiwan also has an obligation for its self-defense. He warned that
the time of reckoning is upon us.... The U.S. ability to contribute to Taiwan’s
defense in a crisis is going to be measured against Taiwan’s ability to resist,
defend, and survive based on its own capabilities.... As the lone superpower, our
141 Letter to the Taiwan Caucus from Ma Ying-jeou, Mayor of Taipei, August 18, 2005.
142 Chung-kuo Shih-pao [China times], Taipei, September 7, 2005.
143 Central News Agency, Taipei, August 24, 2005; Taipei Times, August 25, 2005.
144 Tung-sen Hsin-wen Pao, Taipei, September 28, 2005.
145 Secretary of Defense Donald Rumsfeld, news briefing, August 23, 2005.

CRS-29
interests are plentiful and our attention short. We cannot help defend you, if you
cannot defend yourself.”146
Separately, the Commander of the Pacific Command (PACOM), Admiral
William Fallon raised questions in press articles and interviews about his assessment
of whether Taiwan should prioritize its limited defense resources on “defensive”
weapons rather than submarines, given Taiwan’s urgent need to effectively upgrade
its self-defense. Admiral Fallon reportedly raised this question with Taiwan’s Chief
of General Staff, General Lee Tien-yu, who recently had visited Hawaii. Admiral
Fallon also told the United Daily News his concern that if he is to be able to maintain
the U.S. commitment to assist Taiwan’s defense, then Taiwan should have a strong
self-defense capability.147 On October 26, 2005, eight Members, led by
Representative Simmons, asked Admiral Fallon to explain his discussions with
Taiwan on submarines. Admiral Fallon responded that he has not tried to discourage
this purchase. He added, however, that PACOM has “strongly and consistently
encouraged [Taiwan] to acquire capabilities that would have an immediate impact
on [its] defense,” and “while submarines would provide Taiwan with significant
capabilities, a lengthy period of time would be needed to fulfill this long-term
acquisition program.”148
On October 29, 2005, at the transfer ceremony for the first two Kidd-class
destroyers, Marine Brigadier General John Allen, Principal Director for Asian and
Pacific Affairs in the Office of the Secretary of Defense, gave a speech, saying that
“it is imperative that the people of Taiwan hold their leaders of all political parties
accountable for reaching a consensus to increase defense spending,” while it is not
appropriate for the United States to tell Taiwan what “budgeting mechanism” to use.
The U.S. role, he said, is to provide the “assistance necessary” to help Taiwan’s
strategy for stability, “but at the end of the day, it is Taiwan that must decide its fate.”
In the first notification to Congress on arms sales to Taiwan since March 2004,
the Defense Department in October 2005 put a new stress on the TRA’s objective,
which is to assist Taiwan to provide for its “own self-defense.”
Like Lawless, the Director of DSCA, Air Force Lt. Gen. Jeffrey Kohler, also
highlighted Taiwan’s inadequate attention to its stocks of air-defense missiles and
other munitions as well as pending decisions on defense spending, in an interview in
December 2005.149
146 Speech issued on September 19, 2005, in San Diego, CA, at the Defense Industry
Conference of the U.S.-Taiwan Business Council, while Richard Lawless was delayed in
Beijing at the Six-Party Talks on North Korea’s nuclear weapons. Edward Ross, a DSCA
official, delivered the speech for Richard Lawless.
147 Japan Times, September 26, 2005 [reprinted in Washington Times, October 8, 2005];
Liberty Times [Chinese-language newspaper in Taipei], October 12, 2005, which named
General Lee Tien-yu; Associated Press, October 14, 2005 [reprinted in Taipei Times,
October 16, 2005]; and Lien-Ho Pao [United Daily News in Taipei], October 18, 2005.
148 Letter to Representative Simmons from Admiral William Fallon, November 8, 2005.
149 Jim Wolf, “Pentagon Official Says Taiwan Short on Weapons,” Reuters, Dec. 7, 2005.

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At a hearing of the House Armed Services Committee on March 9, 2006, in
response to Representative Rob Simmons’ question about the submarine sale to
Taiwan, Admiral William Fallon expressed the dilemma for PACOM regarding
Taiwan. Fallon said that he is
in bit of a box here, because I’m committed to defend this country in the event
of any military aggression should that occur from the PRC, and yet the history
is that they have not been forthcoming in investing in their own defense. ... What
I’d like to see is some steps being made, some investment by Taiwan to actually
acquire some of these capabilities and to boost their own readiness and ability to
provide for their own defense.
Special Budget Blocked in Legislature. On December 13, 2005,
opposition lawmakers in the Procedures Committee voted for the 41st time to block
the statute governing the Special Budget, keeping it from the LY’s agenda since it
was first introduced in 2004. However, at the Procedures Committee meeting on
December 20, the DPP and its allied lawmakers called a vote at a moment when they
had a majority, and the committee voted 12-5 to report the statute to the LY. On the
eve of full LY consideration, the KMT and PFP chairmen, Ma Ying-jeou and James
Soong, met and announced their joint opposition to a “wealthy fool’s arms deal.”
The Ministry of Defense announced it will move the request for P-3s and reduce the
Special Budget to one request of NT$299 billion (US$9 billion), about half of the
original Special Budget, for submarines. Meanwhile, Representatives Rob Simmons
and Tom Tancredo issued statements, saying the Special Budget was “critical for the
defense of Taiwan” and applauded its passage out of the Procedures Committee.
Representative Simmons also said that “blocking this arms package tells the United
States — correctly or not — that Taiwan’s leadership is not serious about the security
of its people or its freedom. The American People have come to the aid of foreign
countries in the name of freedom many times in our history; but Americans will not
in good conscience support countries that are unwilling to defend themselves.”150
When the LY convened on December 23, 2005, to consider the Special Budget,
KMT and PFP lawmakers proposed to end the meeting before debating the bill.
Taiwan’s lawmakers voted 113-100 to end the meeting 20 minutes after it began.
This move effectively sent the bill on the Special Budget back to the Procedures
Committee, which then voted as before to block its progress on December 27, 2005,
January 3, and January 10, 2006, the 45th time that opposition lawmakers in the LY
blocked the statute on the Special Defense Budget after its introduction in 2004.
Waiting for Ma Ying-jeou’s KMT Defense Policy. While the House
Taiwan Caucus, in August 2005, invited KMT chairman Ma Ying-jeou to visit, he
scheduled a trip to Washington for March 22-23, 2006, while Congress is in recess.
Meanwhile, LY president Wang Jin-pyng visited Washington on January 24-25 and
promised a KMT policy on defense, including the arms sales issue, in February or
March. Unlike his visit in 2004, Wang’s highest-level interlocutors in the Pentagon
were Deputy Assistant Secretary of Defense Mary Beth Long and the Principal
Director for Asian and Pacific Affairs, Brigadier General John Allen. There were no
150 Rep. Rob Simmons, “U.S. Congressman Congratulates Taiwan on Defense Spending Bill
Progress,” news release, December 21, 2005.

CRS-31
results from this visit. In February, Representative Henry Hyde, Chairman of the
House International Relations Committee sent a letter to Ma, citing “deep concern”
in Congress about the LY’s failure in the past two years to pass a special budget and
about significant cuts in other defense spending that would improve readiness. Hyde
also wrote that Americans are left wondering whether Taiwan’s legislators have the
resolve to meet the challenges in providing for Taiwan’s own defense.151 Also, in
February, Representative Rob Simmons visited Taipei and suggested a lower cost for
the submarine sale (perhaps $8 billion) and an interim step for Taiwan to procure a
sub design (perhaps $225 million). In a March 7 letter, Ma responded to
Representative Hyde by blaming the DPP administration and promising his policy
in the near future. Ma failed on March 14 to gain his party’s approval to issue a long-
awaited policy on defense and arms procurement, despite his visit to Washington on
March 22-23, 2006 (during a congressional recess). Ma had no details on his defense
priorities during his visit (with the private sector and the Bush Administration).
Supplemental Funds Instead of Special Budget. When the LY
reconvened on February 21, 2006, the Procedures Committee blocked the statute on
the Special Budget for the 46th time and has continued to do so in every vote.
However, in a March 20 special report to the LY, Defense Minister Lee Jye decided
to withdraw the Special Budget and request procurement of subs and P-3s through
supplemental funds in the regular 2006 defense budget: NT$200 million (about
US$6.3 million) for work towards source selection of subs and NT$1.7 billion (about
US$53.1 million) for P-3C aircraft. The Defense Ministry then decided also to
request supplemental funds of NT$3.7 billion (about US$115.6 million) for PAC-2
upgrades. The supplemental request for the 2006 budget for these three weapon
systems totals NT$5.6 billion (about US$175 million). Moreover, this amount for
the three proposed programs is included in a broader supplemental request of
NT$13.7 billion (about US$428 million) for 74 programs. The Defense Ministry
submitted its request to the Executive Yuan (Cabinet), which has to decide on timing
and final amount for submission to the Legislative Yuan.152
Policy Reviews and U.S. Objectives. With Taiwan’s politically-motivated
delays in funding for self-defense, a former Pentagon official warned that if Taiwan
does not pass the Special Budget and there are not expected improvements in self-
defense, the United States would be more hesitant to approve future requests for
weapons systems and possibly conduct a review of policy toward Taiwan.153
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.154 Defense ties would likely be
151 Letter from Henry Hyde to Ma Ying-jeou, Chairman of the KMT, February 15, 2006.
152 CNA, March 20 and April 4, 2006; Special Report of the Ministry of Defense, March 20,
2006; and author’s interviews in Taipei in April 2006.
153 Interview with Mark Stokes, retired Air Force Lieutenant Colonel and Country Director
in the Office of the Secretary of Defense, in Taipei Times, April 24, 2005.
154 Testimony of Assistant Secretary of State for East Asian and Pacific Affairs Winston
(continued...)

CRS-32
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 promotes the U.S. objectives of assisting Taiwan’s self-
defense capability, preventing conflict, minimizing the chance of U.S. intervention,
dispelling dangerous misperceptions, 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.155 (The NSC, State Department, and AIT would have input into any review
by the Administration of policy toward Taiwan.156) 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 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.157 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
154 (...continued)
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.
155 Taiwan Defense Review, January 18, 2003.
156 The Nelson Report (January 31, 2003) reported there was an interagency East Asia Policy
Review.
157 House International Relations Committee, hearing on “The Taiwan Relations Act: The
Next 25 Years,” April 21, 2004.

CRS-33
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.”
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.158
On February 19, 2005, Secretary of Defense Donald Rumsfeld and Secretary of
State Condoleezza Rice along with Japan’s Ministers for Defense and Foreign
Affairs issued a Joint Statement of the U.S.-Japan Security Consultative Committee
(“two plus two” meeting). They declared that a common strategic objective is to
“encourage the peaceful resolution of issues concerning the Taiwan Strait through
dialogue.” China, nonetheless, objected to the alliance’s mention of Taiwan.
Visits by Generals to Taiwan. As for senior-level contacts, the United
States and Taiwan have held high-level defense-related meetings in the United States,
as discussed above. U.S. policy previously restricted high-level military contacts but
158 James Lilley, “Strait Talk,” Wall Street Journal, April 19, 2004.

CRS-34
changed to welcome Taiwan’s senior military officers and defense officials to visit
the United States, shifting the question to their willingness to make the visits. At the
same time, the State Department’s policy has avoided sending to Taiwan U.S. flag
and general officers or officials at or above the level of Deputy Assistant Secretary
of Defense or State. For a hearing in 1999, Assistant Secretary of State Stanley Roth
responded to a submitted question on this issue by writing that “following the 1994
policy review, the Administration authorized travel by high-level officials, including
cabinet officers, from economic and technical agencies. However, restrictions
remained at the same level for visitors from military or national security agencies at
or above the position of Deputy Assistant Secretary and at the rank of one-star flag
officer or above. This policy is based on the determination that visits of such
officials would be inconsistent with maintaining an unofficial relationship.”159
Under the Bush Administration, the State Department has continued the policy
to ban official travel to Taiwan for State or Defense Department officials above the
level of office director or for uniformed military personnel above the rank of 06
(colonel, navy captain).160 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. Senior-level exchanges could help to
understand Taiwan’s crisis-management capabilities and limitations. Some have
cited the NSC’s record of sending senior officials to Taipei.161 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. Congress considered the restrictions but did not vote
to change the policy. (See 108th Congress and 109th Congress, below.)
Major 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.162 In addition, the conference
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.163
159 Senate Foreign Relations Committee, hearing on “United States-Taiwan Relations: the
20th Anniversary of the Taiwan Relations Act,” March 25, 1999.
160 Department of State, “Guidelines on Relations with Taiwan,” February 2, 2001.
161 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).
162 Department of Defense, “Report to Congress on Theater Missile Defense Architecture
Options for the Asia-Pacific Region,” unclassified version, May 1999; CRS Report
RL30379, Missile Defense Options for Japan, South Korea, and Taiwan: A Review of the
Defense Department Report to Congress
, by Robert D. Shuey and Shirley A. Kan.
November 30, 1999.
163 Department of Defense, “Report to Congress Pursuant to the FY99 Appropriations Bill,
(continued...)

CRS-35
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.”164 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.”165
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.166 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.167 Also, in consolidated appropriations legislation for
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.168
Concerning Congress’ role before the Administration’s decisions on arms sales
and formal notifications, the 106th Congress passed language, introduced by Senator
163 (...continued)
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”
, by Robert Sutter.
164 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.
165 Defense Department News Briefing, April 30, 1999.
166 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.
167 Department of Defense, “Annual Report on the Military Power of the People’s Republic
of China,” unclassified version, June 2000 and July 2002.
168 Department of Defense, “Report to Congress on Implementation of the Taiwan Relations
Act,” unclassified version, December 2000.

CRS-36
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.169
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 (Section 1011), under Section 21 of the AECA. Also,
Section 1221 of the act required a new section in the annual report on PRC military
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).170
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
169 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.
170 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).

CRS-37
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.171 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.172 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.
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,
171 Milbank, Dana and Mike Allen, “Bush to Drop Annual Review of Weapons Sales to
Taiwan,” Washington Post, April 25, 2001.
172 See CRS Report RS20365, Taiwan: Annual Arms Sales Process, October 21, 1999,
updated June 5, 2001, by Shirley Kan.

CRS-38
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).173 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).
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.174 The language was similar to that of Section 5(b) in the “Taiwan
173 For more details on proposed House and Senate language, see “Arms Sales to Taiwan,”
in CRS Report RL31046, Foreign Relations Authorization, FY2003: An Overview, by Susan
B. Epstein, co-ordinator.
174 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
(continued...)

CRS-39
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 May 20, 2004, the House passed H.R. 4200 (FY2005
National Defense Authorization Act) with Section 1013 to authorize the sale to
Taiwan of a dock landing ship (Anchorage) as an Excess Defense Article and Section
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 was 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 part of Asia. On May 19, 2004, Senator Sam Brownback
submitted for the record a similar amendment intended to be proposed to the Senate’s
bill (S. 2400). However, on June 23, 2004, the Senate passed S. 2400 without
considering or voting on such language. During conference, the House receded, and
the conference report did not contain Section 1215 (H.Rept. 108-767, issued on
October 8, 2004). President Bush signed H.R. 4200 into law (P.L. 108-375) on
October 29, 2004.
109th Congress. In January 2005, eight Members led by Representative Rob
Simmons wrote to Secretary of State Condoleezza Rice to express concerns that the
174 (...continued)
Opportunity,” Naval War College Review, summer 2003.

CRS-40
Bush Administration has delayed notifications to Congress on the three major items
until after LY decided on the Special Budget. The State Department responded that
it supports the President’s decision of April 2001 to make available to Taiwan P-3s,
PAC-3s, and submarines, but that it does not believe “notification at this time will
have any influence on the Taiwan Legislature’s decision.”175 At issue are the Bush
Administration’s effectiveness in encouraging Taiwan to boost its self-defense,
extent of U.S. leverage in Taiwan, and risks in relations with Beijing.
On May 20, 2005, the House Armed Services Committee reported its National
Defense Authorization Act for FY2006 (H.R. 1815, H.Rept. 109-89), again
proposing language to change U.S. policy to allow U.S. flag and general officers and
senior officials at or above the level of deputy assistant secretary of defense to visit
Taiwan (Section 1203). Such visits would reciprocate visits by senior military
officers and officials from Taiwan that already take place in the United States. Also,
Chairman Duncan Hunter’s press release noted that the Defense Department
exchanged with the PLA over 80 senior-level visits in the 1990s and about 14 in
recent years.176 The bill added new language that would ensure that Capstone classes
at the National Defense University (for new general and flag officers) conduct trips
to the PRC and Taiwan (Section 528). The House passed H.R. 1815 on May 25
without debate on the Taiwan-related language. The bill reported by the Senate
Armed Services Committee on May 17, 2005 (S. 1042) did not contain similar
sections. On December 18, 2005, the conference committee filed its report for H.R.
1815 (H.Rept. 109-360), after the House receded on the two Taiwan-related sections.
The House passed the conference report on December 19, and the Senate agreed on
December 21. The President signed it into law (P.L. 109-163) on January 6, 2006.
As mentioned above on the impasse over the Special Budget, on May 27, 2005,
Representative Simmons and 32 other House Members wrote to KMT chairman Lien
Chan, urging him to help expedite passage of the Special Budget in May. They
warned that “failure to pass the special budget has raised concerns in the United
States about Taiwan’s ability to defend itself against potential aggression.”177 On
August 1, 2005, three co-chairs of the House Taiwan Caucus wrote to Ma Ying-jeou
as the new KMT chairman. They urged him to “lead efforts in Taipei to ensure that
the Legislative Yuan quickly passes a special arms procurement package or increases
its annual defense spending.” They also invited Ma to visit Washington.178
On July 27, 2005, Representative Robert Andrews introduced H.Con.Res. 219
to express the sense of Congress that the President should abolish restrictions on
175 Letters between the State Department and Representatives Rob Simmons, Lane Evans,
Roskoe Bartlett, Chris Smith, John Hostettler, Madeleine Bordallo, Trent Franks, and Jeb
Bradley, January 31 and February 15, 2005.
176 CRS Report RL32496, U.S.-China Military Contacts: Issues for Congress, by Shirley
Kan.
177 Rep. Simmons, et al., letter to Chairman Lien Chan, Kuomintang, May 27, 2005.
178 Letter from Representatives Robert Wexler, Steve Chabot, and Sherrod Brown (without
Dana Rohrabacher) to Ma Ying-jeou, KMT Chairman, August 1, 2005.

CRS-41
visits by senior U.S. military officials to Taiwan and should authorize the sale of the
Aegis combat system to Taiwan (among other stipulations).
As mentioned above on Pacific Commander Admiral Fallon’s questions about
Taiwan buying submarines, eight Members of Congress led by Representative Rob
Simmons wrote a letter in October 2005 to ask Admiral Fallon to explain his
discussions with Taiwan on submarines.179 Also discussed above, in February 2006,
Representative Simmons visited Taiwan and suggested a lower cost for the subs and
an interim design phase to break the impasse over whether to procure U.S.
submarines.
On May 3, 2006, the House Armed Services Committee reported H.R. 5122, the
National Defense Authorization Act for FY2007, after approving amendments with
relevance for Taiwan that were introduced by Representative Simmons. The
language would make it U.S. policy to make available to Taiwan plans and options
for design work and construction on future diesel electric submarines and would
require the Navy to report to Congress on its dealings with Taiwan on the submarine
sale. Other provisions would again seek to change policy to authorize general and
flag officers to visit Taiwan (reciprocating Taiwan’s senior-level visits to the United
States and balancing exchanges with the PLA); require at least one CAPSTONE visit
to Taiwan every year (and one to the PRC); and restrict procurement by the Defense
Department from foreign firms that supply weapons to the PRC.
Major U.S. Arms Sales as Notified to Congress
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 formally 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 programs. Major FMS are notified
to Congress as required by Section 36(b) of the Arms Export Control Act (AECA),
P.L. 90-629.180 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
179 Letter to Admiral William Fallon, Commander of the Pacific Command, from
Representatives Rob Simmons, Dan Burton, Robert Andrews, Henry Brown, James
Langevin, Phil Gingrey, Thomas Tancredo, and Patrick Kennedy, October 26, 2005.
180 As with all U.S. arms sales, months or years after the President’s decisions on Taiwan’s
requests and Taiwan’s subsequent decisions on which sales to pursue, the role of Congress
includes informal and formal 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 AECA. See CRS Report RL31675, Arms Sales: Congressional Review
Process
, by Richard Grimmett.

CRS-42
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.

CRS-43
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
$1,300
(MADS) fire units181
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 aircraft182
$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-
$103
based air defense missiles
1994
08/01
(80) AN/ALQ-184 electronic counter measure (ECM)
$150
pods
09/12
MK-45 Mod 2 gun system
$21
1995
03/24
(6) MK-75 shipboard gun systems,
$75
(6) Phalanx Close-In Weapon Systems
06/07
Supply support arrangement
$192
181 Commercial sale. Opall Barbara and David Silverberg, “Taiwanese May Soon
Coproduce Patriot,” Defense News, February 22-28, 1993; Military Balance 1999-2000.
182 Flight International, September 1-7, 1993.

CRS-44
Value of
Date of
Major item or service as proposed
package
notification
(usually part of a package)
($ million)
1996
05/10
Improved Mobile Subscriber Equipment
$188
communications system
05/10
(30) TH-67 training helicopters,
$53
(30) sets of AN/AVS-6 night vision goggles
05/23
(465) Stinger missiles,
$84
(55) dual-mounted Stinger launcher systems
06/24
(300) M60A3TTS tanks
$223
08/23
(1,299) Stinger surface-to-air missiles,
$420
(74) Avenger vehicle mounted guided missile launchers,
(96) HMMWVs (high-mobility multi-purpose wheeled
vehicle)
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,
$81
(114) TOW launchers, (100) HMMWVs
07/24
(21) AH-1W Super Cobra helicopters183
$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
1998
01/28
(3) Knox-class frigates,184
$300
(1) MK 15 Phalanx Close-In Weapons System (CIWS)
06/01
(28) Pathfinder/Sharpshooter navigation and targeting
$160
pods for F-16 fighters185
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
183 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).
184 In 1992, the Bush Administration submitted legislation that Congress passed to lease
three Knox-class frigates to Taiwan. Reports say that Taiwan leased a total of six (and
subsequently bought them in 1999) and purchased two in 1998 (plus one for spares).
185 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.

CRS-45
Value of
Date of
Major item or service as proposed
package
notification
(usually part of a package)
($ million)
05/26
(5) AN/VRC-92E SINCGARS radio systems, (5)
$64
Intelligence Electronic Warfare systems, (5) HMMWVs
07/30
Spare parts for F-5E/F, C-130H, F-16A/B, and
$150
Indigenous Defense Fighter (IDF) aircraft
07/30
(2) E-2T Hawkeye 2000E airborne early warning
$400
aircraft186
2000
03/02
Modernization of the TPS-43F air defense radar
$96
to TPS-75V configuration
03/02
(162) HAWK Intercept guided air defense missiles187
$106
06/07
(39) Pathfinder/Sharpshooter navigation and targeting
$234
pods for F-16 fighters
06/07
(48) AN/ALQ-184 ECM pods for F-16s
$122
09/28
(146) M109A5 howitzers, 152 SINCGARS radio
$405
systems
09/28
(200) AIM-120C Advanced Medium-Range Air-to-Air
$150
Missiles (AMRAAMs) for F-16 fighters
09/28
(71) RGM-84L Harpoon anti-ship missiles
$240
09/28
Improved Mobile Subscriber Equipment (IMSE)
$513
communication system
2001
07/18
(50) Joint Tactical Information Distribution Systems
$725
(JTIDS) terminals (a version of Link 16) for data links
between aircraft, ships, and ground stations
09/05
(40) AGM-65G Maverick air-to-ground missiles for F-
$18
16s
10/26
(40) Javelin anti-tank missile systems
$51
10/30
Logistical support for spare parts for F-5E/F, C-130H,
$288
F-16A/B, and IDF aircraft
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,
$174
radar systems, AMRAAMS, and other systems
09/04
(182) AIM-9M-1/2 Sidewinder air-to-air missiles
$36
186 Northrop Grumman delivered the first one on August 10, 2004, at St. Augustine, FL.
187 On June 23, 2000, the Pentagon notified Congress of a sale of 156 excess HAWK air
defense missiles to Taiwan for about $7 million.

CRS-46
Value of
Date of
Major item or service as proposed
package
notification
(usually part of a package)
($ million)
09/04
(449) AGM-114M3 Hellfire II anti-armor missiles to
$60
equip AH-1W and OH-58D helicopters188
10/11
(290) TOW-2B anti-tank missiles
$18
11/21
(4) Kidd-class destroyers
$875
2003
09/24
Multi-functional Information Distribution Systems
$775
(for Po Sheng C4ISR data link upgrades)
2004
03/30
(2) Ultra High Frequency Long Range Early Warning
$1,776
Radars
2005
10/25
(10) AIM-9M Sidewinder and (5) AIM-7M Sparrow air-
$280
to-air missiles; continuation of pilot training and
logistics support for F-16 fighters at Luke AFB, AZ
188 On January 4, 2005, Lockheed Martin announced a letter of agreement worth about $50
million for more than 400 Hellfire missiles.