Order Code RL33510
CRS Report for Congress
Received through the CRS Web
Taiwan: Recent Developments
and U.S. Policy Choices
July 1, 2006
Kerry Dumbaugh
Specialist in Asian Affairs
Foreign Affairs, Defense, and Trade Division
Congressional Research Service ˜ The Library of Congress

Taiwan: Recent Developments
and U.S. Policy Choices
Summary
Early in its tenure, the George W. Bush Administration seemed to abandon the
long-standing U.S. policy of “strategic ambiguity” on Taiwan in favor of “strategic
clarity” that placed more emphasis on Taiwan’s interests and less on PRC concerns.
Among other things, President Bush publicly stated in 2001 that the United States
would do “whatever it takes” to help Taiwan’s defense and approved, in April 2001,
a substantial sale of U.S. weapons to Taiwan, including Kidd-class destroyers, anti-
submarine P-3 “Orion” aircraft, and diesel submarines. The White House also was
more accommodating to visits from Taiwan officials than previous U.S.
Administrations, and permitted visits from Taiwan’s president in 2001 and 2003,
and from Taiwan’s vice president and defense minister in 2002. This initially
assertive posture was in keeping with growing congressional sentiment that greater
U.S. support was needed for Taiwan’s defense needs, particularly given the PRC’s
military build-up in southern China. Members undertook a number of bipartisan
initiatives to focus more U.S. attention on Taiwan and raise its international stature,
including establishing a House Congressional Taiwan Caucus in 2002 and Senate
Taiwan Caucus in 2003.
Since then, U.S.-Taiwan relations have undergone important changes, sparked
in part by the increasing complexity and unpredictability of Taiwan’s democratic
political environment. The once-ruling Nationalist Party (KMT) has been handed a
series of stunning defeats, in a series of elections losing both the presidency and its
legislative majority to the Democratic Progressive Party (DPP). Taiwan’s President,
Chen Shui-bian, has disavowed key concepts long embraced by his KMT opponents
— the “status quo” that there is only one China and Taiwan is part of it — and
instead has adopted the more provocative position that Taiwan already “is an
independent, sovereign country,” a “status quo” he promises to maintain. But many
in the electorate have appeared wary of the more strident and confrontational aspects
of President Chen’s political positions. This, combined with a series of recent
corruption scandals involving Chen administration officials and the president’s
family members, has led to record-low approval ratings for President Chen and a
growing political outcry against him. These political trends have raised anxieties
about the prospects for a future political and constitutional crisis in Taiwan that could
further complicate U.S. policy.
In response to Taiwan’s political developments, the Bush Administration
appears to have dialed back its earlier public enthusiasm for supporting Taiwan
initiatives. While still pursuing a closer U.S. relationship with Taiwan, U.S. officials
now appear to be balancing criticisms of the PRC military buildup opposite Taiwan
with periodic cautions and warnings to the effect that U.S. support for Taiwan is not
unconditional, but has limits.
This report replaces CRS Issue Brief IB98034, Taiwan: Recent Developments
and U.S. Policy Choices, by Kerry Dumbaugh. This report will be updated as events
warrant.

Contents
Most Recent Developments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Background and Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Background to Taiwan’s Political Liberalization . . . . . . . . . . . . . . . . . . . . . . . . . 2
Political Pluralization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Split Government, Competing Ideologies . . . . . . . . . . . . . . . . . . . . . . . 3
Key Current Issues in Taiwan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Corruption Scandals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
“Abolishing” Unification Council and Guidelines . . . . . . . . . . . . . . . . . . . . 5
PRC Anti-Secession Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
U.S. Arms Sales to Taiwan and Taiwan Defense Budget . . . . . . . . . . . . . . . 8
Opposition Party Visits to China . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Taiwan-Mainland Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Cross-Strait Developments in the Chen Administration . . . . . . . . . . . 10
Private-Sector Exchanges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Economic and Trade Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Taiwan’s World Trade Organization (WTO) Accession . . . . . . . . . . . 11
Avian Flu, SARS, and WHO Observer Status . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Policy Trends in the George W. Bush Administration . . . . . . . . . . . . . . . . . . . . 12
Initial Tilt Toward Taiwan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Toward a Taiwan/PRC Balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Implications for U.S. Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Legislation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Chronology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
For Additional Reading . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Taiwan: Recent Developments
and U.S. Policy Choices
Most Recent Developments
On June 28, 2006, the House of Representatives passed an amendment offered
by Representative Tancredo to the State Department Appropriations bill (H.R. 5672)
to prohibit funding to enforce long-standing regulations limiting official U.S.
contacts with Taiwan and with Taiwan officials.
On June 27, 2006, Taiwan’s legislature rejected a petition brought by the
opposition Nationalist Party to recall Taiwan’s President, Chen Shui-bian. The
petition failed to achieve the required 2/3 legislative majority. The recall effort is the
latest development in a series of corruption and fraud scandals that have enveloped
the Chen Administration in 2006 involving senior administration officials and some
members of the president’s own family. Since April 2006, allegations of fraud and
corruption have led to the arrests of a former senior aide to President Chen, arrest of
the president’s son-in-law, and the arrest or dismissal of other senior officials. In
response to the allegations, the president in June 2006 handed over “day-to-day
control” of the government to the Premier, Su Tseng-chang. Despite these remedial
actions and the failure of the recall effort, President Chen remains seriously
weakened by the continuing scandals. The possibility of a future constitutional crisis
remains should legislators decide to initiate a no-confidence vote against the
government, which would need only a simple majority to pass.
Background and Analysis
Once a U.S. World War II ally, the Republic of China (ROC) government on
Taiwan (an island also claimed by the People’s Republic of China (PRC)) remains
a key U.S. foreign policy issue. Official U.S. relations with Taiwan became a
necessary casualty of the 1979 American decision to establish diplomatic relations
with the communist PRC government as the sole legitimate government of all China.
Since then, absent diplomatic relations, the United States still has maintained
economic and security relations with Taiwan, including the sale of defensive military
weapons and services.1 But continuing political transformations in both the PRC and
Taiwan since 1979 mean that U.S. policymakers are facing more difficult policy
choices in U.S. relations with each government.
1 U.S. weapons sales to Taiwan are governed by Section 2 and Section 3(b) of the Taiwan
Relations Act, P.L. 96-8: 22 U.S.C., Chapter 48, Sections 3301-3316.

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This report focuses on current developments in Taiwan, analyzing how those
developments are affecting choices the United States makes about its policy toward
Taiwan specifically and toward the PRC more broadly. Other CRS reports provide
more details about the myriad historical complexities of Taiwan’s current situation
in U.S. policy, such as: historical background about how the ROC on Taiwan went
from a U.S. ally to a government with no diplomatic U.S. relations, including the
fundamentals governing U.S. policy toward Taiwan today (CRS Report RS22388,
Taiwan’s Political Status: Historical Background and Ongoing Implications, by
Kerry Dumbaugh); and the subtle and complicated permutations of the “one-China”
policy over three decades and its role in U.S. policy (CRS Report RL30341,
China/Taiwan: Evolution of the “One China” Policy — Key Statements from
Washington, Beijing, and Taipei
, by Shirley A. Kan).
Background to Taiwan’s Political Liberalization
Ironically, one of the key challenges for U.S. Taiwan policy has become
Taiwan’s own political liberalization and democratization since 1979. Under the
strongly authoritarian rule (and martial law) of the long-ruling KMT, Taiwan’s
political decisions from 1949 to 1979 were predictable, closely aligned with U.S.
interests, and clearly dependent on U.S. support. But several decades of political
reform and democratic development have made Taiwan politics today both more
pluralistic and more unpredictable.
Political Pluralization. Taiwan’s political liberalization began in the mid-
1980s, when the KMT first permitted formation of opposition parties (1986),
including the Democratic Progressive Party (DPP), a party whose platform advocated
Taiwan independence from China. The KMT government also ended martial law (in
1987), and for the first time opened government positions to native “Taiwanese” —
the 85% of the island’s population who predated the influx of the two million
“mainlanders” fleeing communist forces. Members of Taiwan’s legislature in the
1980s, elected on mainland China over 40 years earlier, were asked to retire, and a
new, streamlined legislature was elected in 1992. In 1996, Taiwan held its first direct
presidential election, which was won by KMT leader Lee Teng-hui, himself a native
Taiwanese. During his presidency, Lee increasingly distanced himself from his
party’s long-standing position that there was only “one China” and that Taiwan was
part of it. This posed complications for one of the fundamental tenets on which U.S.
relations with the PRC were based — the statement that “The United States
acknowledges that all Chinese on either side of the Taiwan Strait maintain that there
is but one China and that Taiwan is a part of China.”2
The uninterrupted KMT dynasty on Taiwan finally was broken on March 18,
2000, when DPP candidate Chen Shui-bian won the presidency with only 39% of the
2 This particular quote is from the 1972 Shanghai Communique issued at the conclusion of
President Richard Nixon’s landmark trip to China. A somewhat vaguer formulation — “The
[United States] acknowledges the Chinese position that there is but one China and Taiwan
is part of China.” — was part of the 1979 communique normalizing U.S. relations with the
PRC.

CRS-3
popular vote. The victory was a stunning defeat for the KMT and its unbroken 50-
year tenure in power. By the narrowest of margins, President Chen was elected to a
second (and final) term in March 2004, winning by only 29,518 votes out of a
reported 13.25 million votes cast. The KMT fall from its former political dominance
was compounded in two subsequent legislative elections in December 2001 and
December 2004, when the struggling party saw its majority of 115 seats in the 225-
member Legislative Yuan (LY) cut drastically — to just 79 seats today as a result of
the December 2004 election.3
Split Government, Competing Ideologies. With Chen Shui-bian and the
DPP’s “Pan-Green” coalition in control of the presidency since 2000, the KMT
nevertheless has managed to retain the barest control of Taiwan’s legislature by
cobbling together a working “Pan-Blue” coalition of 113 from its own remnants: 79
KMT members and 34 members of a new faction that broke from the main KMT
party, the People First Party (PFP).4 Since the two opposing coalitions have
different political ideologies and roughly equal political strength, this split
government has created significant gridlock in Taiwan’s political arena since 2000
and thus difficult political realities for U.S. policymakers.
The membership of the DPP-led “Pan-Green” coalition, to which incumbent
president Chen Shui-bian belongs, is largely native Taiwanese and is closely
identified with advocating Taiwan independence — an eventuality which Beijing has
stated it will “bear any cost” to prevent. Chen, himself a native Taiwanese, has
performed a continuing and uneven balancing act between the radical base of his
party — avid independence advocates — and the more cautious in the Taiwan
electorate who may wish for independence but who believe that antagonizing the
PRC is not in Taiwan’s interests. For a while, Chen and his advisors attempted to
finesse this contradiction by proclaiming a “new Taiwan identity” and emphasizing
maintenance of the “status quo” — which they define as Taiwan’s de facto
sovereignty and statehood. While this strategy met with a certain amount of success,
the political nuances ultimately have satisfied neither Chen’s “deep Green” political
base nor the more moderate in the Taiwan polity. Bush Administration officials have
grown increasingly concerned over the complications that the more assertive
components of Chen’s strategy create for U.S. policy toward China and Taiwan.5
On the other side of Taiwan’s political spectrum is the KMT’s opposition “Pan-
Blue Coalition.” The KMT historically is a party of mainlanders that fled to Taiwan
3 Elections for Taiwan’s Legislative Yuan (LY) are held every three years. The next LY
elections are scheduled for December 2007.
4 The “Pan-Green” is the popular name of the DPP’s political union with a like-minded
minority party, the Taiwan Solidarity Union (TSU), which itself emerged from the
December 2004 LY elections with 12 seats. The two “color”coalitions were so named
because of their respective party colors.
5 In September 2005, for example, at the U.S.-Taiwan Business Council-Defense Industry
Conference 2005, Edward Ross, Director of the U.S. Defense Department’s Defense
Security Cooperation Agency, strongly criticized Taiwan’s politicization of security issues,
saying it was reasonable to question why the United States should invest in Taiwan’s self-
defense if Taiwan itself were not willing to invest in it.

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from China in 1949. It is politically conservative and strongly anti-communist.
Although it is credited with engineering Taiwan’s vibrant economic growth and
transformation during its 50-year rule on the island, the KMT’s inability to offer a
clear and creative vision for Taiwan’s future in the 21st century ultimately made it
vulnerable to the DPP political challenge in the 2000 election.6 Since then, the KMT
has portrayed itself as a more responsible steward than the DPP for Taiwan’s future.
It criticizes the DPP’s posture toward Beijing as unnecessarily confrontational and
promises to replace it with a policy of engagement. Many KMT members have
criticized the DPP’s “new Taiwan identity” emphasis as an attempt to question KMT
political legitimacy and as a dangerous provocation to ethnic divisions. The party
also gets political mileage out of portraying Chen as insufficiently attentive to the
needs of Taiwan’s business community — as in the economic disadvantages Taiwan
business interests continue to face due to Taiwan’s restrictions on contacts with
mainland China.
This legislative-executive split in Taiwan’s government has created unique
political problems. U.S. policymakers generally have found these political processes
difficult to oppose because they are democratic but also, for the same reason, difficult
to rely on for support of U.S. interests. Domestically, the relatively even strength of
the Taiwan two coalitions has resulted in years of effective political gridlock. The
KMT/PFP legislative coalition since 2002 has been able to block or modify most of
the DPP’s policy initiatives, while President Chen has proven adept at counter-
offensive in the public debate by offering controversial initiatives affecting Taiwan’s
political status. In the most recent of these re-balancing acts, on December 3, 2005,
the opposition KMT party won an impressive victory in local city mayor and country
magistrate elections, winning a total of 14 out of 23 constituencies while the ruling
DPP won only six.7 These results were seen as a negative mid-term referendum on
the policies of Taiwan’s President Chen Shui-bian, whose popularity in December
2005 was reported to have fallen to 21%.8 KMT supporters interpreted this result as
a “no-confidence” vote for the DPP and a boost to KMT fortunes in coming
presidential elections scheduled for 2008. President Chen appears to have countered
this momentum with controversial pronouncements since January 2006 about
abolishing or amending important symbols to the “one-China” policy and PRC-
Taiwan reunification, such as the National Unification Council, unification
guidelines, and Taiwan’s constitution.
Key Current Issues in Taiwan
Corruption Scandals
In recent months, the Chen administration has suffered grievous damage from
allegations of corruption by President Chen’s family members (including unproven
6 The traditional KMT policy held that there was only one China, that Taiwan was part of
China, and that one day Taiwan would re-take the mainland and China would be reunified.
7 Five city mayor seats and 18 county magistrate seats were contested in the Dec. elections.
8 United Daily News, Dec. 4, 2005.

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allegations against his wife, Wu Shu-chen) and by government officials close to the
president. The most damaging of these to date began in early May 2006, when the
Taipei district prosecutor’s office started investigating allegations that President
Chen’s son-in-law, Chao Chien-min, had profited in an insider trading scheme
involving the Taiwan Development Corporation. Chao was arrested on May 24,
2006. The following day, the Vice Chairman of the National Science Council was
taken into custody on suspicion of a profiteering scandal involving the award of a
contract to reduce vibrations from a new high-speed railway line in Taiwan County.
The scandals have helped worsen Chen’s abysmally low approval rating, put at 16%
in one survey on May 19, 2006.9 In an effort to save his presidency, Chen on June
1, 2006, delegated authority for “day-to-day control” of the government to Premier
Su Tseng-chang and has accepted the resignations of a number of his key advisors.
Taiwan’s opposition parties, however, are calling for Chen’s resignation, and on June
27, 2006, held a vote on a recall initiative in the legislature. While Chen survived the
recall effort (it failed to get the 2/3 majority needed to pass), some opposition party
members have threatened to hold a no-confidence vote against the government,
requiring a simple legislative majority.
“Abolishing” Unification Council and Guidelines
An earlier controversy arose in Taiwan as a result of President Chen’s
announcement of his decision on February 27, 2006, that Taiwan’s National
Unification Council (NUC) would “cease operations” and the Guidelines on National
Reunification (GNR) would “cease to apply.” The NUC and GNR are two initiatives
strongly identified with the former KMT government. President Chen first
mentioned he was considering abolishing the NUC/GNR on January 29, 2006. That
statement appeared to surprise U.S. officials, who responded by publicly reiterating
the U.S. “one-China” policy, secretly sending a special envoy delegation to Taiwan
to express concerns, and reportedly privately criticizing the decision to Taiwan
officials.10 U.S. officials regarded the NUC announcement as a violation of one of
five pledges to maintain the status quo that President Chen made in 2000.11
9 This result was obtained in a survey by Shih Hsin University. According to two separate
polls conducted by the Chinese language daily the China Times and by Taipei’s United
Daily News
in late June 2006, Chen’s approval rating hovered in a 19%-22% range.
10 In a January 20, 2006 press briefing, Deputy State Department spokesman Adam Ereli
responded to a question on the statement with “we certainly weren’t expecting it, we weren’t
consulted about it, so I’d say it was a surprise.” On February 14, 2006, a White House
National Security Council official, Dennis Wilder, reportedly with State Department Taiwan
official Clifford Hart, secretly visited Taiwan to express U.S. concern and was reportedly
told that the decision could not be changed. Reuters, “Taiwan’s pro-independence Chen
Snubs U.S.: Paper,” February 22, 2006.
11 President Chen Shui-bian’s Inaugural Speech (2000), May 20, 2000. For the full text, see
[http://cns.miis.edu/straittalk/Appendix%20119.htm]. The so-called “five noes” pledge is
the following: “Therefore, as long as the CCP regime has no intention to use military force
against Taiwan, I pledge that during my term in office, I will not declare independence, I
will not change the national title, I will not push forth the inclusion of the so-called “state-
to-state” description in the Constitution, and I will not promote a referendum to change the
(continued...)

CRS-6
President Chen’s NUC statement sparked controversy and policy conflicts in
Taiwan and irritation in the United States. A senior Taiwan official in charge of
cross-strait policy initially sought to soften the edges of Chen’s January 2006
statement by saying that any decision was still a long way off.12 But President Chen
toughened his rhetoric in ensuing weeks, reportedly telling a visiting U.S.
congressman that the NUC and its guidelines were “an absurd product of an absurd
era” that should be abolished. The DPP’s Central Standing Committee voted on
February 22, 2006, to endorse the NUC’s abolishment.13 Chen reportedly made his
final decision that the NUC and GNR should “cease” at a special meeting of
Taiwan’s National Security Council on February 27, 2006.14 The softer formulation
of the language in Chen’s February 27, 2006 decision was regarded as a compromise
to strong U.S. concern over the cross-strait implications of “abolishing” both entities
— a decision that at least one PRC scholar said could result in a “non-peaceful”
response by Beijing.15 When some press accounts surrounding the announcement
quoted some Taiwan officials as saying there was no difference between the NUC
being “abolished” and its “ceasing to function,” the State Department issued a rare
written statement (March 2, 2006) saying it expected the Taiwan authorities to
“unambiguously” and publicly clarify that the NUC had not been abolished but that
it continued to exist, and that Chen Shui-bian reaffirmed his assurances to maintain
the status quo. These assurances were not given until June 8, 2006, when President
Chen issued them publicly to Raymond Burghardt, the chairman of the de facto U.S.
office for Taiwan, the American Institute in Taiwan (AIT).
Critics maintained that the NUC decision was a dangerous and unnecessary
provocation to Beijing, that it violated President Chen’s 2000 inaugural pledge of
not seeking to abolish the NUC, and that it unilaterally changed the “status quo” in
the Taiwan Strait. Supporters of the President’s statement asserted that Beijing’s
increasing missile deployments opposite Taiwan and its adoption of an “Anti-
Secession Law” (see below) violated the “no use of force” condition under which
Chen’s original pledge was made. These PRC moves, Chen’s supporters said, had
already changed the status quo in the Strait.
Long non-functional (the NUC last met in 1999), the NUC and GNR have
political significance largely as symbols of Taiwan’s commitment to eventual cross-
11 (...continued)
status quo in regards to the question of independence or unification. Furthermore, the
abolition of the National Reunification Council or the National Reunification Guidelines
will not be an issue.”
12 Joseph Wu, Chairman of the Mainland Affairs Council, at a February 2, 2006 news
conference. Magnier, Mark and Tsai Ting-I, “Taiwan official seeks to recast Chen’s
stance,” LA Times, February 3, 2006.
13 Dickie, Mure and Hille, Kathrin, Taiwan’s president labels unification body ‘absurd’,”
Financial Times, Asia, February 23, 2006, p. 2.
14 Chang, S.C. “President decides to cease NUC’s operation,” Central News Agency,
February 27, 2006.
15 Chang, S.C., “PRC scholar warns of ‘non-peaceful response’ to Chen’s NUC game,”
Central News Agency, February 23, 2006.

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strait unification. One of four institutions under the direct authority of Taiwan’s
president, the NUC was established in 1990 under a KMT government by executive
order of Taiwan President Lee Teng-hui, then head of the KMT. On February 23,
1991, the NUC adopted a set of Guidelines for National Unification which reaffirmed
Taiwan’s status as part of China and laid out the process by which unification with
China should be achieved. Although prospects for implementing the guidelines
seemed remote (among other things, the initial phase requires the PRC to implement
“both democracy and the rule of law” before consultations on unification can begin),
the “unification” focus of the guidelines appealed to KMT conservatives and
reaffirmed the KMT’s long-standing “one-China” policy.16
PRC Anti-Secession Law
President Chen and his supporters linked the decision to abolish the NUC/NGU
to the PRC’s adoption, on March 14, 2005, of a ten-article “anti-secession law”
aimed at reining in Taiwan independence advocates.17 While much of the new PRC
law speaks of conciliatory measures — such as encouraging cross-strait economic
and cultural exchanges and resumption of direct trade, air, and mail links — Article
8 of the anti-secession law specifically authorizes the use of “non-peaceful means”
to reunify Taiwan with China. According to Article 8:
In the event that the “Taiwan independence” secessionist forces should act under
any name or by any means to cause the fact of Taiwan’s secession from China,
or that major incidents entailing Taiwan’s secession from China should occur,
or that possibilities for a peaceful reunification should be completely exhausted,
the state shall employ non-peaceful means and other necessary measures to
protect China’s sovereignty and territorial integrity.
American observers and U.S. officials termed the PRC anti-secession law
counterproductive, particularly given improvements in a range of Taiwan-China
contacts since December 2004. Many saw the anti-secession law as a clear signal of
China’s potential rising military threat to Taiwan and feared it could significantly
raise tensions across the Taiwan strait. Critics also feared the law could be used to
harass independence advocates in Taiwan by, for example, labeling them “criminals”
and demanding their extradition from third party countries. For their part, Taiwan
authorities denounced the enactment of the law and temporarily suspended further
talks with Beijing on holding direct-charter cargo and holiday passenger flights
between the two sides. On March 16, 2005, President Chen made his first public
statement about the law, saying it would have a “severe impact” on cross-strait
relations. Chen’s 2006 decision to abolish the NUC and its guidelines appears to be
the first policy decision he has specifically linked to the 2005 PRC anti-secession
law.
16 For the full text of the guidelines, see [http://cns.miis.edu/straittalk/Appendix%2059.htm]
17 The measure was adopted by the PRC’s National People’s Congress.

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U.S. Arms Sales to Taiwan and Taiwan Defense Budget
Taiwan’s inability so far to take full advantage of a substantial U.S. military
support package approved for sale in 2001 has become an increasing irritant in
Taiwan-U.S. relations. To date, political infighting has blocked legislative
consideration of the arms procurement budget for purchasing much of the U.S. arms
package.18 In particular, members of the opposition coalition (the KMT/PFP “Pan-
Blue”) in Taiwan’s Legislative Yuan (LY) have lodged objections over: the multi-
billion (U.S.) dollar cost of the package (which the Taiwan government has pared
back on several occasions in an effort to win support); whether the types of weapons
in the package meet Taiwan’s defense needs; the compatibility of the proposed
purchases with Taiwan’s military; and whether Taiwan companies can benefit or
participate. In addition, some members in the “Pan-Blue” opposition object to
Taipei’s decision to keep submitting the procurement budget as a free-standing
“special defense” budget rather than as part of Taiwan’s overall annual defense
budget. Commenting on the stalemate on October 20, 2005, Taiwan’s President
Chen Shui-bian said that the LY’s continued boycott of the special defense budget
was jeopardizing Taiwan’s future.
Multiplying problems over arms sales have the potential to impose longer-term
damage to the unique character of unofficial U.S.-Taiwan relations. In 2002, U.S.
officials began voicing concerns over what they described as weaknesses in Taiwan’s
self-defense and a lagging pace to Taiwan’s arms purchases. According to a DOD
report, Taiwan’s self-defense deficiencies include an “opaque military policymaking
system; a ground force-centric orientation; and a conservative military leadership
culture.”19 As the defense budget stalemate in Taiwan has continued, some U.S.
officials have begun to question Taiwan’s level of commitment to its own defense,
implying that perhaps U.S. policy should be reassessed accordingly.20 Criticism also
has come from the Taiwan side, as Taiwan officials periodically have accused the
U.S. Navy of deliberately trying to subvert progress on the 2001 diesel-electric
submarine sale by over-inflation of estimated construction costs and onerous funding
requirements.21
18 In 2003, Taiwan’s legislature did approve $800 million for the purchase of the four Kidd-
class destroyers. On December 8, 2005, the first two of these (now designated Keelung
class) arrived at the Suao naval base in northeastern Taiwan after having been refurbished
in South Carolina, reportedly by a Taiwanese work crew. The two destroyers were
commissioned in a December 17, 2005 ceremony in Keelung. Taipei Times, December 19,
2005, p. 3.
19 The text of the 2003 DOD report is at [http://www.defenselink.mil/pubs/
20030730chinaex.pdf].
20 In a 2005 speech to the U.S.-Taiwan Business Council-Defense Industry Conference 2005,
Ed Ross, Director of DOD’s Defense Security Cooperation Agency, strongly criticized
Taiwan’s foot-dragging on passage of the defense budget, saying it was reasonable in such
a situation to question the level of U.S. commitment to Taiwan’s self-defense.
21 Minnick, Wendell, “Taiwan claims U.S. Navy is sabotaging SSK plans,” in Jane’s
Defence Weekly
, February 15, 2005.

CRS-9
Opposition Party Visits to China
In addition to the anti-secession law, PRC officials also have sought to increase
pressure on the Chen government by inviting Taiwan opposition leaders to visit
China and meet with PRC President Hu Jintao in Beijing. Both Taiwan’s Nationalist
Party (KMT) chairman Lien Chan and People First Party (PFP) chairman James
Soong accepted these invitations, making eight-day visits to China in April and May
2005. While some view the visits as a positive development for Taiwan-PRC
relations, others see them as Beijing’s effort to exploit Taiwan’s internal political
divisions and further isolate President Chen.22 Some critics — in Taiwan and
elsewhere — accused Lien and Soong of helping the PRC to more successfully “sell”
to the world its claim that the intentions of its March 2005 anti-secession law are
peaceful.23 At least half a dozen more Taiwan political groups have undertaken
unofficial visits to China since the Lien-Soong visits, and on August 16, 2005, KMT
Chairman Lien Chan further announced the formal start of grass-roots exchanges
between KMT and CCP officials from six different locations on each side, with
Taiwan party officials from Keelong, Hsinchu, Taichung, Changhua, Tainan, and
Kaohsiung; and CCP party officials from Shenzhen, Xiamen, Suzhou, Qingdao,
Ningbo, and Fuzhou. U.S. officials have warned Beijing against using the party-to-
party visits to drive a wedge between Taiwan’s political parties, and have stressed
that Beijing should be talking to President Chen and the elected Taiwan government.
Taiwan-Mainland Relations
Succeeding Taiwan governments since 1987 incrementally have eased long-
standing restrictions on contacts with the PRC. The most recent and significant of
these decisions occurred on June 14, 2006, when Taiwan and China simultaneously
announced that they had reached agreement to allow up to 168 direct annual round-
trip charter passenger flights between China and Taiwan, shared evenly between
mainland and Taiwan airlines, during four public holidays and for other special
occasions.24 The flights are expected to begin with the 2006 Mid-Autumn Festival.
In Taiwan, cross-strait policies are under the purview of the Mainland Affairs
Council (MAC), a government body, while cross-strait talks are handled by the
Straits Exchange Foundation (SEF), a private organization authorized by the
government to handle these exchanges. Corresponding bodies in the PRC are the
22 “It’s classic divide-and-conquer strategy: Assemble the most allies possible and isolate
your enemy.” Jean-Philippe Beja, senior fellow at the Center for International Studies and
Research in Paris. Cited in Magnier, Mark and Tsai Ting-I, “China Tries New Tactic with
Taiwan,” Los Angeles Times, Apr. 29, 2005, p. A-3.
23 According to Shen Dingli, a PRC foreign policy expert at Shanghai’s Fudan University,
“These invitations for Taiwanese to visit help China regain the international high ground in
cross-strait matters. And it deflects international focus from the anti-secession law.” Ibid.,
Los Angeles Times, Apr. 29, 2005.
24 The four holidays are: Lunar New Year, Tomb Sweeping Day, the Dragon Boat Festival,
and the Mid-Autumn Festival.

CRS-10
government’s Taiwan Affairs Office, while cross-strait talks are handled by the
Association for Relations Across the Taiwan Strait (ARATS). Despite substantial
and growing economic ties, the two sides have not held official talks since October
14-19, 1998, in Shanghai and Beijing. Further progress stalled in 1999, when then-
President Lee Teng-hui declared that such talks should be conducted on an equal,
“state to state” basis, which Beijing took as a statement of Taiwan sovereignty.
Cross-Strait Developments in the Chen Administration. Although
Beijing has adamantly opposed the DPP and its pro-independence statements, both
the PRC and Taiwan governments have made selected overtures and statements in
recent years that some interpret as positive signs in PRC-Taiwan relations. In
January 2001, Taiwan launched what it called the “three mini-links” — for the first
time permitting direct transport, commerce, and postal exchanges between two
outlying Taiwan islands and the south of China. In October 2001, Taiwan officials
announced they would simplify visa application procedures for professionals from
the PRC, making it easier for them to reside and work in Taiwan. In November
2001, President Chen urged the PRC to drop its opposition to negotiating with his
administration. In May 2002, President Chen announced he would send a DPP
delegation to Beijing to establish contacts between the DPP and the Chinese
Communist Party.
The PRC also has softened its position. On January 24, 2002, PRC Vice-
Premier Qian Qichen described pro-independence advocates in the DPP as only an
“extremely small number” in the Party, and he invited DPP members to visit the
mainland under a “suitable status” — a change in the PRC’s policy of not meeting
with DPP members. In an interview with Russia’s ITAR-TASS news agency on
March 14, 2002, the deputy director of the PRC’s Taiwan Affairs Office, Zhou
Mingwei, suggested that the PRC may be willing to accept the simultaneous
representation of both Beijing and Taipei in the United Nations, provided that
Taiwan acknowledges the “one-China” principle. Even so, the PRC has continued
its missile build-up along the south China coast opposite Taiwan, now deploying
about 800 missiles.
On January 29, 2005, Taiwan and the PRC launched the first non-stop (although
temporary — only during the weeks surrounding the Lunar New Year holiday on
February 9, 2005) direct charter flights flown in 55 years between the two
adversaries. With the PRC’s enactment of the anti-secession law in March 2005,
Taiwan officials put a temporary hold on further direct-flight talks. On November
18, 2005, this suspension was lifted, and Taiwan and the PRC reached agreement to
offer cross-strait flights for the Lunar New Year from January 20-February 13, 2006.
Private-Sector Exchanges. Meanwhile, unofficial Taiwan-PRC contacts
and economic ties have grown increasingly robust in the past decade. Over 13
million visits have taken place from Taiwan to the mainland. Over 250,000 mainland
Chinese experts, entrepreneurs, and others have traveled to Taiwan for consultations
and exchanges. Exchanges of PRC-Taiwan scholars and experts for consultations on
cross-strait and other issues provide, in the view of some Taiwanese officials, an
active “second track” for PRC-Taiwan dialogue. Other events in cross-strait relations
have included the decision by oil companies in the PRC and Taiwan to explore
jointly offshore areas for oil; the start of flights from Taiwan to the mainland with

CRS-11
only a short stopover in Macao or Hong Kong; and Taiwan’s opening to third-country
ships, and selected mainland and Taiwanese ships, to carry cargo to and from
designated ports in Taiwan and on the mainland.
Economic and Trade Issues
Taiwan’s economy grew rapidly (around 10% a year) in the 1970s and 1980s.
Growth declined to around 5-6% a year in the 1990s as the economy matured.
During the first years of the 21st century, however, the Taiwan economy experienced
a serious slowdown. GDP growth for 2001 contracted by 2.2% — Taiwan’s first
economic contraction in 26 years. Exports were down 13.6% in the first seven
months of 2001, while the unemployment rate hovered at around 5%. Experts
blamed these economic difficulties on the global economic downturn, reduced U.S.
demand for Taiwan’s information technology exports, and the sizeable transfer of the
island’s manufacturing base to the PRC.
Even with the official restrictions that Taiwan continues to maintain on
investment and trade with mainland China, Taiwan businesses are increasingly
invested across the strait, although the exact figures remain unclear. Taiwan-China
trade has also increased dramatically over the past decade, so that China (along with
Hong Kong) now has surpassed the United States as Taiwan’s most important trading
partner. According to one report, statistics show Taiwan’s total bilateral trade with
the PRC rose to $61.64 billion in 2004 — a 33.1% increase over 2003.25
This increasing economic interconnectedness with the PRC has put special
pressure on Taiwan’s DPP government to further accommodate the Taiwan business
community by easing restrictions on direct travel and investment to the PRC. But
such accommodations are worrisome to the DPP’s pro-independence political base
in Taiwan, who believe that further economic ties to the mainland will erode
Taiwan’s autonomy and lead to a “hollowing out” of Taiwan’s industrial base.26
Thus, each Taiwan decision on economic links with the PRC represents an uneasy
political compromise.
Taiwan’s World Trade Organization (WTO) Accession. After a 12-year
application process, Taiwan joined the WTO on January 1, 2002, as “the Separate
Customs Territory of Taiwan, Penghu, Kinmen, and Matsu” or, less formally,
“Chinese Taipei.” In keeping with the PRC’s wishes, Taiwan was not admitted to
the organization until after the PRC’s accession on December 12, 2001, following a
15-year application process. As a result of its WTO membership, Taiwan will have
to reduce tariffs and open a number of market sectors to foreign investment, thus
setting the stage for new opportunities for U.S. businesses. In addition, mutual
membership in the WTO is likely to have a significant impact on PRC-Taiwan
25 According to the Foreign Board of Trade, cited by Agence-France Presse in Taiwan News
online, March 3, 2005, [http://www.etaiwannews.com]. See also CRS Report RL31749,
Foreign Direct Investment in China, by Dick Nanto and Radha Sinha.
26 For instance, there are reportedly about 300,000 Taiwan citizens now living and working
in Shanghai.

CRS-12
economic and trade relations. To be in compliance with their WTO obligations, both
Beijing and Taipei will have to reduce long-standing bilateral trade restrictions,
setting the stage for direct trade links between the two governments.
Avian Flu, SARS, and WHO Observer Status
Taiwan has not escaped the new viruses that have swept Asia since 2002. By
late May 2003, Taiwan had reported 585 probable cases of Severe Acute Respiratory
Syndrome, or SARS — which first surfaced in southern China in November 2002 —
placing it behind China and Hong Kong for the greatest number of cases. Taiwan
also has been affected by avian flu outbreaks in poultry since 2004, although
apparently with a less virulent strain than that ravaging bird populations and causing
some human fatalities throughout other parts of Asia.
Because Taiwan is not a member of WHO (the World Health Organization), the
avian flu outbreaks had broader political ramifications for Taiwan’s international
position and for China-Taiwan relations. The PRC objects strenuously to any WHO
representation by Taiwan, claiming that as Taiwan is part of China, it can access
WHO’s services through the PRC government. Even as the SARS crisis was
underway, PRC leaders continued vigorously to block any international effort to give
Taiwan unofficial “observer” status in the WHO, although PRC authorities did
consent to a WHO team visit to Taiwan to investigate early in May 2003. Taiwan
authorities, in a view supported by many Members of the U.S. Congress, have used
the SARS and avian flu crises to press their argument that the rapid spread and
consequences of emerging communicable diseases demonstrate why WHO observer
status is essential for Taiwan. But Taiwan again failed to gain observer status when
WHO countries objected to considering the issue on May 22, 2006, at the annual
meeting of the World Health Assembly (WHA), WHO’s decision-making body.
Policy Trends in the George W. Bush
Administration
On June 28, 2006, the House of Representatives passed an amendment offered
by Representative Tancredo to the State Department Appropriations bill (H.R. 5672).
The amendment prohibits funding from being used to enforce long-standing
regulations limiting official U.S. contacts with Taiwan and with Taiwan officials.
When it first assumed office, the Bush Administration articulated policies in
Asia that were more supportive of Taiwan and less solicitous of engagement with
China than those of previous U.S. Administrations. But since then, although U.S.-
PRC relations have remained remarkably smooth, other factors — the PRC’s anti-
secession law, Taiwan’s internal political divisions, and what is viewed as President
Chen’s more assertive and divisive push for separate Taiwan status — have posed
growing problems for this U.S. policy approach. In the face of these complications,
Bush Administration officials at times are thought to be trying to rein in Chen and
seem to be placing more public caveats on U.S. support for Taiwan.

CRS-13
Initial Tilt Toward Taiwan. Many observers concluded in 2001 that the
newly elected George W. Bush had abandoned the long-standing U.S. policy of
“strategic ambiguity” in favor of “strategic clarity” that placed a clearer emphasis on
Taiwan’s interests and showed less concern for PRC views. In addition to approving
a major arms sales package for Taiwan, in an ABC television interview on April 25,
2001, President Bush responded to a question about what Washington would do if
Taiwan were attacked by saying that the United States would do “Whatever it took
to help Taiwan defend herself.” Since Section 3 of the Taiwan Relations Act (TRA)
addresses only arms sales and not the use of American military forces in the island’s
defense, the President’s answer caused considerable controversy over whether the
United States had changed its policy toward Taiwan’s security or was preparing to
change its position on Taiwan independence. Although State Department and White
House officials, including President Bush, later insisted that the President’s statement
was consistent with U.S. commitments in the TRA and that there had been no change
in U.S. policy, subsequent statements and actions by Bush Administration officials
in the following months continued to appear more supportive of Taiwan than those
of previous U.S. Administrations.
The Bush Administration’s support for Taiwan was in keeping with growing
sentiment in Congress in the late 1990s that the TRA was outdated and that Taiwan’s
self-defense capabilities had eroded while the PRC had grown militarily more
capable and more hostile to its smaller neighbor. These conclusions were supported
by a congressionally mandated annual report, first issued by the Pentagon in February
1999, assessing the military balance in the Taiwan Strait. The 1999 report concluded
that in light of improvements in offensive military capabilities, by the year 2005
China will have acquired the ability “to attack Taiwan with air and missile strikes
which would degrade key military facilities and damage the island’s economic
infrastructure.”
In addition to differences over security issues, the Administration also differed
from its predecessors in how it handled requests for U.S. visits by senior Taiwan
officials. Whereas earlier U.S. Administrations were either unwilling or forced by
congressional pressure to allow Taiwan officials to come to the United States, the
Bush Administration was more accommodating. The White House approved a transit
stop for new Taiwan President Chen Shui-bian in 2001 during which he visited both
New York (previously off-limits) and Houston, attended public functions and
meetings, and met with nearly two-dozen Members of Congress. Similar U.S. visits
were approved for Taiwan’s Vice-President, Annette Lu, (in early January 2002), and
for Taiwan’s Defense Minister, Tang Yao-ming (March 2002), who attended a
defense conference in Florida and while there met with U.S. Deputy Secretary of
Defense Paul Wolfowitz and U.S. Assistant Secretary of State James Kelly. In late
October 2003, the Bush Administration accommodated President Chen with a higher-
profile transit visit to New York City — a visit that received wide press coverage in
Taiwan.
Toward a Taiwan/PRC Balance. Since assuming office, however, the Bush
Administration has been reshaping its own policy articulations concerning both
Taiwan and the PRC. Administration officials now see smooth U.S.-PRC relations
as an important tool in cooperating against terrorism and maintaining stability on the
Korean peninsula. As articulated by Vice President Cheney during his visit to

CRS-14
Shanghai in April 2004, the White House judges that “the areas of agreement
[between the United States and the PRC] are far greater than those areas where we
disagree...”27
Taiwan’s unpredictable and volatile political environment has posed special
challenges for this White House balancing act. During Taiwan’s presidential and
legislative campaigns in 2004, the Administration continued to balance criticisms of
the PRC military buildup opposite Taiwan with periodic warnings to the Taiwan
government to avoid provocative actions and cautions that U.S. support for Taiwan
is not unconditional.28 Administration officials are thought to have been particularly
miffed by the National Unification Council controversy in the spring of 2006, which
caught U.S. officials by surprise and raised new concerns for the White House about
the credibility of the Chen administration. The uncharacteristically pointed language
in the State Department’s written March 2, 2006 statement directed at Taiwan
appears to validate this view.29
Implications for U.S. Policy
For much of the past 25 years, Taiwan and PRC officials generally maintained
that the United States should remain uninvolved in issues concerning Taiwan’s
political status. That appears to be changing, and U.S. officials have been under
subtle but increasing pressure from both governments to become directly involved
in some aspects of cross-strait ties. PRC officials late in 2003 began quietly urging
the United States to pressure Chen Shui-bian into shelving plans for an island-wide
referendum. In 2004, they pressed U.S. officials to avoid sending the “wrong
signals” to Taiwan — defined as those encouraging independence aspirations.
Members of the Taiwan government have begun suggesting to U.S. officials that the
Taiwan Relations Act needs to be strengthened or reevaluated and have sought U.S.
27 From the Q & A session with Vice President Cheney following his speech at Fudan
University in Shanghai, broadcast by Beijing CCTV in English, found in FBIS, Apr. 15,
2004.
28 “There are limitations with respect to what the United States will support as Taiwan
considers possible changes to its constitution.” Testimony of Assistant Secretary of State
James A. Kelly before the House International Relations Committee, Apr. 21, 2004.
29 The March 2 statement reads: “We have seen reports that senior Taiwan officials have
said, with respect to the National Unification Council, that there is no distinction between
‘abolish’ and ‘ceasing activity’ and that the effect of Taiwan’s action earlier this week was
to abolish the Council. We have been informed, however, that the reports misquoted
Taiwan officials. We expect the Taiwan authorities publicly to correct the record and
unambiguously affirm that the February 27 announcement did not abolish the National
Unification Council, did not change the status quo, and that the assurances remain in effect.
Our understanding from the authorities in Taiwan was that the action Taiwan took on
February 27 was deliberately designed not to change the status quo, as Chen Shui-bian made
clear in his 7-point statement. Abrogating an assurance would be changing the status quo,
and that would be contrary to that understanding. We believe the maintenance of Taiwan’s
assurances is critical to preservation of the status quo. Our firm policy is that there should
be no unilateral change in the status quo, as we have said many times.”

CRS-15
support for Chen’s constitutional reform plans. In the month between Chen Shui-
bian’s January 2006 statement that he would consider “abolishing” the National
Unification Council and his February 2006 announcement that the NUC would
“cease” its operations, several rounds of meetings and talks between U.S. and Taiwan
officials were credited with the subtle but politically important rhetorical change.
Taiwan’s supporters within the U.S. Congress continue to press for more
favorable U.S. treatment of Taiwan and for Taiwan’s inclusion in some capacity in
international organizations like the World Health Organization. Congressional policy
initiatives have included the formation of the Congressional Taiwan Caucus on April
9, 2002, and the formation of the Senate Taiwan Caucus on September 17, 2003.
Both of these bodies have strongly bipartisan memberships. Congress also continues
to consider legislative measures seeking to reinforce or expand on U.S.-Taiwan ties.
Most recently, the House passage of the Tancredo Amendment on June 28, 2006
(see Legislation below) is the strongest signal in recent years that congressional
sentiment appears to be leaning toward more direct and less secretive U.S.-Taiwan
interactions.
Faced with competing pressures and with continuing transformations in both the
PRC and Taiwan systems, U.S. officials may be facing new and more difficult policy
choices concerning Taiwan in the next few years. In addition to raising the risks of
political and economic instability, growing political polarization in Taiwan could
erode the quality of U.S.-Taiwan contacts and create fractures and divisiveness
within the sizeable U.S. Chinese-American community. Pressure from multiple
sources could continue to build for U.S. officials to take any number of actions: to
reassess all the fundamentals of U.S. China/Taiwan policy in light of changing
circumstances; to reinforce American democratic values by providing greater support
for Taiwan and possibly support for Taiwan independence; or to abandon Taiwan in
favor of the geopolitical demands and benefits of close U.S.-China relations. U.S.
officials are likely to face mounting pressure to adopt a more pro-active mediating
role in the cross-strait relationship. Finally, any policy developments that affect
Taiwan have direct consequences for U.S.-China relations and could involve crucial
decisions among U.S. officials about the extent of U.S. support for Taiwan’s security.
In the coming two years, it appears that actors from across the political spectrum —
including governments, interest groups, political parties, and individuals — will
continue efforts to push the United States into greater commitments and clarity on
various questions involving Taiwan.
Legislation
H.R. 5672 (Wolf). Science, State, Justice, Commerce, and Related Agencies
Appropriations Act, 2007. The House Appropriations Committee reported an
original measure on June 22, 2006 (H.Rept. 109-520). On June 28, 2006, the House
passed the Tancredo amendment (H.Amdt. 1124) to prohibit the State Department
from spending funds to enforce long-standing “guidelines” for official U.S.-Taiwan
relations. (The 1979 guidelines in general prohibit U.S. Executive Branch officials
from meeting with Taiwan officials in U.S. federal buildings or from corresponding
directly with Taiwan officials unless through the American Institute in Taiwan

CRS-16
(AIT).) The amendment passed by voice vote on June 28, 2006, and the House
passed the bill on June 29, 2006 (393-23).
P.L. 109-102 (H.R. 3057). Appropriations for Foreign Operations, Export
Financing, and related programs for FY2006. The House version provided
presidential authority for NATO allies, major non-NATO allies, and Taiwan to waive
the prohibition of Economic Support Funds for signatories to the International
Criminal Court who do not have exempting agreements with the United States.
Introduced in House June 24, 2005 (H.Rept. 109-152). House passed the bill,
amended, by a vote of 393-32 on June 28, 2005. Referred to the Senate Committee
on Appropriations on June 29, 2005 and ordered reported, amended, on June 30,
2005 (S.Rept. 109-96). The Senate passed the bill, amended, on July 20, 2005 (98-
1), and asked for a conference. Conference Report H.Rept. 109-265 was filed on
November 2, 2005, including the Taiwan provisions above. The House adopted it
on November 4, 2005 (358-39) and the Senate on November 10, 2005 (91-0). The
bill became P.L. 109-102 on November 14, 2005.
H.Con.Res. 76 (Miller). Expressing the sense of Congress that the United
States should strongly oppose China’s anti-secession law with respect to Taiwan.
Introduced on February 17, 2005, and referred to the House Committee on
International Relations.
H.Con.Res. 98 (Hyde). Expressing the “grave concern” of Congress about
China’s passage of an anti-secession law aimed at Taiwan. Introduced March 15,
2005. The measure passed on March 16, 2005, by a vote of 424-4.
H.Con.Res. 219 (Andrews, R.). Expressing Congress’s grave concern over
China’s continued deployment of ballistic missiles opposite Taiwan. The bill also
expresses Congress’s sense that the President should: seek from China a renunciation
of the use of force against Taiwan; abolish all restrictions on high-level military visits
to Taiwan; authorize the sale of the Aegis system to Taiwan. The bill was introduced
on July 27, 2005, and referred to the House International Relations Committee.
H.R. 1815 (Hunter) (P.L. 109-163). Authorizing appropriations for the
Department of Defense for FY2006. Introduced April 26, 2005. H.Rept. 109-89.
The final Act was the result of a conference. Sec. 535 provides incentives to cadets
and midshipmen to study key languages, including Chinese; Sec. 1211 prohibits the
Secretary of Defense from procuring any goods or services from a “Communist
Chinese military company,” except on a waiver for national security reasons;
Sec.1234 states the sense of Congress that the White House should “quickly” present
to Congress a comprehensive strategy to deal with China’s economic, diplomatic, and
military rise, including specific mention of what areas such a strategy should address.
In conference, the House receded on several key measures in its bill: on a measure
to mandate “at least” one class field study trip annually to both Taiwan and the
People’s Republic of China (PRC) by military education classes of the National
Defense University; on a measure to require regular senior U.S. military exchanges
with Taiwan military officials; and on a measure to prohibit the Secretary of Defense
from procuring goods or services from any foreign person who knowingly sells to the
PRC items on the U.S. munitions list. House action: After Committee and
Subcommittee mark-ups, reported (amended) by the House Armed Services

CRS-17
Committee on May 20, 2005. Referred to the House on May 25, 2005, and passed
by a vote of 390-39. Referred to the Senate Armed Services Committee on June 6,
2005. Senate action: On November 15, 2005, the Committee was discharged, the
Senate considered the bill under unanimous consent, and the Senate passed the bill
after incorporating the language of S. 1042. Conference action: Conferees filed a
conference report on December 12, 2005 (H.Rept. 109-360), and the House passed
it on December 19, 2005 (374-41). The Senate agreed to the Report by voice vote
on December 21, 2005, and the President signed the bill into law on January 1, 2006,
with a clarifying statement ([http://www.whitehouse.gov/news/releases/2006/01/
20060106-12.html]).
Chronology
06/28/06
The House agreed by voice vote to the Tancredo Amendment to H.R.
5672, prohibiting funds from being used to enforce long-standing
guidelines on U.S. official relations with Taiwan.
06/27/06
An insufficient 2/3 majority having voted in the affirmative, Taiwan’s
legislature rejected a recall petition for President Chen Shui-bian.
06/08/06 — The State Department issued a press statement expressing U.S.
pleasure at President Chen Shui-bian’s “public reaffirmation” on June
8 of his promises to the United States to make no changes in the
status quo and to exclude any sovereignty measures in a revision of
Taiwan’s constitution. The statement said the United States “attaches
profound importance” to the pledges.
06/07/06
Raymond Burghardt, chairman of the American Institute in Taiwan
(AIT), arrived in Taiwan for discussions concerning Taiwan’s
political situation.
03/22/06
In a 10-day U.S. visit, KMT chairman and Mayor of Taipei City Ma
Ying-jeou visited Washington, unveiling his “five do’s” proposal for
improving cross-strait ties.
03/02/06
State Department spokesman Adam Ereli issued a written statement
saying that the United States expected the Taiwan authorities to
unambiguously and publicly clarify that the NUC had not been
abolished, the status quo had been maintained, and that Chen Shui-
bian’s assurances were still in force.
02/27/06
Chen Shui-bian announced his decision that the NUC would “cease
operations” and the NGU would “cease to apply.”
01/01/06 — In his New Year’s Day address, Taiwan president Chen Shui-bian
announced that strengthening the island’s separate identity would be
his top priority for the remainder of his term, along with devising a
new constitution for Taiwan.

CRS-18
12/08/05
The first two (out of four) U.S. Kidd-class destroyers sold to Taiwan
arrived at Suao Naval base in northeast Taiwan. The destroyers were
delivered to the Taiwan navy on October 29th from a Charleston,
South Carolina, shipyard.
12/03/05
The DPP was soundly defeated in Taiwan’s local elections for city
mayors and county magistrates, retaining only 6 out of 23
constituencies, while the opposition KMT won 14.
10/20/05 — Speaking in Washington DC during a two-week U.S. trip, former
Taiwan President Lee Teng-hui called on the international community
to recognize Taiwan as an independent country.
09/25/05
Thousands of Taiwan citizens marched through Taipei to protest the
legislature’s delay in passing the “special arms budget” to purchase
American weapons. Estimates of participants ranged from 15,000-
50,000.
09/20/05 — Edward Ross, a senior Pentagon official, said it was reasonable to
question whether the United States should continue to provide for
Taiwan’s self-defense “if Taiwan is not willing to properly invest in
its own self-defense.”
08/18/05
China and Russia began an eight-day joint military exercise off the
Shandong Peninsula — their largest joint military exercise in modern
history, involving nearly 10,000 troops.
08/17/05
Taiwan’s army and navy conducted joint military exercises designed
to counter a PRC amphibious invasion and blockade.
08/16/05
KMT Chairman Lien Chan announced the formal start of grass-roots
exchanges between the KMT and the CCP.

06/07/05 — By a vote of 248-23, Taiwan’s antiquated National Assembly
approved constitutional changes, including a change calling for future
constitutional amendments to be decided by an island-wide
referendum.

03/14/05
The National People’s Congress (NPC) enacted an anti-secession law
authorizing “non-peaceful” means to resolve the Taiwan question.
For Additional Reading
CRS Report RS22388, Taiwan’s Political Status: Historical Background and
Ongoing Implications, by Kerry Dumbaugh.
CRS Report RL30957, Taiwan: Major U.S. Arms Sales Since 1990, by Shirley Kan.