APRIL 14, 1999


Mr. Chairman, good afternoon.

Thank you for the invitation to speak today as we mark the twentieth
anniversary of the Taiwan Relations Act. I welcome this opportunity to
discuss this innovative legislation and our relationship with Taiwan.

Today, I would like first to review how the Taiwan Relations Act (TRA)
has preserved our substantive ties with Taiwan and contributed to a
stable regional environment in which Taiwan has prospered and
cross-Strait ties have grown. Then I would like to give you some
thoughts about the future challenges and how the TRA will help us
address them.
The TRA -- A Resounding Success

Twenty years ago, our government faced the challenge of preserving the
long-standing friendship and common interests between the U.S. and
Taiwan in the absence of diplomatic relations. Bipartisan efforts as
well as cooperation across agencies and branches of government
produced the Taiwan Relations Act to ensure that normalization of our
relations with the People's Republic of China did not result in the
abandonment of Taiwan. Those of you in the audience who participated
in crafting the TRA know that this was not an easy task.

The TRA that emerged from this process set forth two fundamental

"...(1) to help maintain peace, security, and stability in the Western
Pacific; and

(2) to promote the foreign policy of the United States by authorizing
the continuation of commercial, cultural, and other relations between
the people of the United States and the people on Taiwan."

I am sure you would agree that the TRA has met these goals, and indeed
has succeeded far beyond the hopes and expectations of its framers.
This resounding success is a tribute to the careful, comprehensive
design of the legislation, the strong commitment on each side to make
sure that the new arrangements worked, and the strength of the
affinity between the two peoples.

Taiwan's Progress

One measure of the TRA's success is the remarkable democratic
transformation and economic prosperity achieved by Taiwan. Twenty
years ago, Taiwan was under martial law, and human rights violations
occurred with regularity. Today, Taiwan has a vibrant democracy
characterized by free elections, a free press, and dynamic political
campaigns. Taiwan's economic development on free market principles has
been no less impressive, as seen in its ranking as the 14th largest
trading economy in the world and in its success in weathering the
Asian Financial Crisis. Taiwan's experience is a powerful example in
the region and beyond.

Of course, Taiwan's people deserve the full credit for their
achievements. But the TRA helped both to ensure that the unofficial
status of our relations did not harm Taiwan's interests and to create
a stable environment favorable to Taiwan's transformation.

Consistency of U.S. Commitment

One way the U.S. government has fostered this stable environment is by
upholding the security provisions of the TRA. In close consultation
with Congress, successive administrations have implemented our
obligation under the TRA to provide articles and services necessary to
Taiwan to maintain a sufficient self-defense capability. We have
provided Taiwan with F-16s, Knox class frigates, helicopters, and
tanks as well as a variety of air-to-air, surface-to-air, and
anti-ship defensive missiles. We continually reevaluate Taiwan's
posture to ensure we provide Taiwan with sufficient self-defense
capability while complying with the terms of the 1982 U.S.-PRC

The Department of Defense's recent assessment of the security
situation in the Taiwan Strait concludes that, except in a few areas,
despite improvements in the military forces of both sides, the dynamic
equilibrium of those forces in the Taiwan Strait has not changed
dramatically over the last two decades. This assessment reflects the
effectiveness of the TRA.

As you know, the U.S. also maintains a significant forward-deployed
presence in East Asia in connection with our alliances with Japan, the
Republic of Korea, and other allies. This presence contributes
importantly to regional stability, including the area around Taiwan.

Growth of U.S.-Taiwan Ties

That the TRA has succeeded in nurturing U.S.-Taiwan ties can be seen
clearly in a number of areas. On the economic front, we have a
vibrant, mutually beneficial trade relationship, with total annual
trade of over $50 million. Taiwan is the seventh largest market for
U.S. exports and our fifth largest foreign agricultural market. For
our part, the U.S. absorbs one fourth of all Taiwan exports. Taiwan
and the U.S. passed a milestone in their economic relationship last
year with the completion of the bilateral market access agreement in
conjunction with Taiwan's application to the World Trade Organization.
Last year, we also signed a bilateral "Open Skies" agreement to expand
civil aviation links.

We also have extensive cooperation in science and technology,
environment, public health, and other fields. AIT and TECRO, for
example, have concluded over 100 agreements -- another indication of
the richness of the ties with Taiwan.

Clinton Administration Policy

Like its predecessors, the Clinton Administration is fully committed
to faithful implementation of the TRA. Indeed, the Administration in
1994 conducted an extensive interagency review of U.S.-Taiwan policy
-- the first such review since 1979 -- to make sure that all that
could be done was being done. On the basis of that review, the
Administration has undertaken a number of specific steps: authorized
high-level U.S. officials from economic and technical agencies to
travel to Taiwan when appropriate; expanded economic dialogue through
the Trade and Investment Framework Agreement (TIFA) talks and the
Subcabinet-Level Economic Dialogue (SLED); and supported Taiwan's
participation in international organizations where statehood is not an
Let me emphasize one aspect of the Administration's policy that is
firm and unchanging. The Administration continues to insist that
cross-Strait differences be resolved peacefully, as demonstrated in
March 1996, when President Clinton ordered U.S. carriers to the waters
near Taiwan.

Not A Zero Sum Game 

The U.S. policy framework, of which the TRA is part, allows us to
retain substantive, but unofficial relations with Taiwan, while
pursuing improved ties with the PRC. Six U.S. administrations of both
parties have engaged Beijing in order to promote U.S. interests and to
encourage a responsible PRC role in the world. The U.S.-PRC
relationship that followed the normalization decision -- for all of
its ups and downs -- has contributed enormously to stability and peace
in Asia -- an environment which is very much in Taiwan's interest.

In reviewing the past twenty years of the three intertwined
relationships -- U.S.-PRC, U.S.-Taiwan, Taiwan-PRC -- what becomes
absolutely apparent is that gains in one relationship do not dictate a
loss in either of the other two. In fact, the reverse is true: gains
in one have contributed to gains in the others. To illustrate my point
about this positive dynamic, I would like to note that the resumption
of cross-Strait discussions after a hiatus of three years occurred
simultaneously with the improvement of our relations with the PRC.

Cross-Strait Relations

Arguably, while the gains in the U.S.-PRC and U.S.-Taiwan relations
have been formidable, the Beijing-Taipei relationship has actually
experienced the most dramatic improvement. The trade, personal
contacts, and dialogue now taking place across the strait were
unimaginable twenty years ago.

Economic figures demonstrate how much things have changed. Trade
between Taiwan and the PRC totaled nearly $23 billion at the end of
1998. The PRC is Taiwan's third largest overall trade partner
surpassed only by the U.S. and Japan. Commitments of Taiwan investment
in the PRC now exceed $30 billion. With 30,000 individual Taiwan firms
having invested in the PRC, over three million mainland Chinese are
now employed with firms benefiting from that commitment of funds.
Economic ties have led to increasing personal ties. Up to 200,000
Taiwan business people now live and work in the PRC. Last year, there
were 1.7 million visits by Taiwan residents to the mainland.

This greater economic interaction is not just positive -- it is the
basis for a sense of confidence that common interests across the
Strait will motivate the two sides toward productive dialogue.
Taiwan's security over the long term depends more on the two sides
coming to terms with each other than on the particular military
balance. The economic and social ties across the Strait are a force
for stability and a basis for improved cross-Strait relations in the
political realm.

One of the most salutary developments in East Asia during the early
1990s was the emergence of a dialogue between Taiwan's Straits
Exchange Foundation, or SEF, responsible for Taiwan's unofficial
relations with the mainland, and the Mainland's Association for
Relations Across the Taiwan Strait, or ARATS. The two sides moved to
restore the formal dialogue, suspended in 1995, with the October 1998
visit to the mainland by SEF Chairman Koo Chen-fu. Koo and his ARATS
counterpart, Wang Daohan, reached a four-point consensus, which
included a return visit to Taiwan by Wang, now scheduled for Fall.
Koo's meeting with President Jiang Zemin was the highest level contact
between Beijing and Taipei since 1949. As such, it substantially
improved the climate for cross-Strait exchanges. The consensus that
was forged provides an excellent basis for developing the approaches
necessary to resolve the difficult issues between the two sides.

The TRA in the Future 

The Taiwan Relations Act has guided us successfully through the last
twenty years. Looking forward, I believe the TRA provides the
comprehensive framework for dealing with future challenges. We should
be extremely cautious about any adjustments to this Act which has
worked so well.

As I have said, insisting on peaceful resolution of differences
between the PRC and Taiwan will remain U.S. policy. Our belief is that
dialogue between the PRC and Taiwan fosters an atmosphere in which
tensions are reduced, misperceptions can be clarified, and common
ground can be explored. The exchange of visits under the SEF/ARATS
framework, currently rich in symbolism but still nascent in substance,
has the potential to contribute to the peaceful resolution of
difficult substantive differences.
Clearly, this will not be easy, but this Administration has great
confidence in the creativity of the people on Taiwan and the people on
the mainland to give the dialogue real meaning. Imaginative thinking
within this dialogue might result in new understandings or confidence
building measures on any number of difficult topics. But, only the
participants on both sides of the strait can craft the specific
solutions that balance their interests while addressing their most
pressing concerns.

Neither the PRC nor Taiwan would be served by over-emphasis on
military hardware while neglecting the art of statesmanship. From the
PRC's perspective, it should think twice about whether development or
upgrade of any one type of weapons system will contribute to the PRC's
security, or, conversely, whether it might actually detract from that
security by fostering tension, anxiety, political instability, or an
arms build up in the region. At the heart of this calculation is the
reality that the PRC cannot expect to pursue its defense policy in a
vacuum. Its decisions on military modernization will generate
responses from other actors.

Or, as Secretary Albright recently said in Beijing: 

"Nothing would better serve China's interest than using its developing
dialogue with Taiwan to build mutual confidence and reduce the
perceived need for missiles or missile defense."

From Taiwan's perspective, the TRA's continuing guarantee that Taiwan
will not suffer for lack of defensive capability enhances Taiwan's
confidence and counterbalances anxieties over PRC military
capabilities. There has been a lot of attention focused on potential
U.S. provision of theater missile defense to Taiwan. This is
premature. High-altitude TMD is still in development and is therefore
not going to be provided to anyone in the immediate future. Down the
road, as with our consideration of sale of other defensive
capabilities, our decisions on provision of any sort of missile
defense will be based on an assessment of Taiwan's legitimate defense
needs. As we consider these needs, we will certainly take into account
the security situation in the Strait, including PRC deployments, the
pace and scope of dialogue between the PRC and Taiwan, and the overall
regional security picture.

In this age of highly sophisticated weaponry, I think we are all
sometimes prone to equating security with military capability. But a
durable peace will rest less on arms than success in addressing
differences through dialogue on a mutually acceptable basis. Thus,
whereas missiles and missile defense systems ultimately cannot in
themselves secure peace and prosperity, dialogue and creative
compromise can do so.

Dialogue and compromise cannot be wedded to an imposed timetable. Good
faith is required of, and in the interest of, both sides. The
provisions of the TRA and general U.S. policy in the region will
continue to contribute to an environment conducive to dialogue and
therefore to finding a lasting resolution to differences across the
Taiwan strait.


U.S. relations with the PRC and the people on Taiwan are likely to be
one of our most complex and important foreign policy challenges for
many years to come. This Administration, like the five Republican and
Democratic Administrations before it, firmly believes that the future
of cross-Strait relations is a matter for Beijing and Taipei to
resolve peacefully.

There is no shortage of good ideas to resolve differences, and there
is no unique solution. There are many ways that the two sides can
enhance trust and reduce tension. They have made a start, and the
channel of communication is open.

Our role should not be as a mediator but instead as a contributor to
an environment in which the two sides can take good ideas and build on
them. This role has three elements: having sound relationships with
Taiwan and the PRC; maintaining stable, consistent, and predictable
policies in the region so that both Taiwan and the PRC focus energies
on engaging one another directly rather than trying to pull us over to
their side; and adhering to the overall China policy framework that
has served our interests well.

For the U.S. to play this role effectively and instill confidence,
agreement between the legislative and executive branches on policy in
the region is essential. And we must have a policy that will be
supported by the American people. The experience of the TRA over the
past twenty years provides a useful model for us to follow.