Arms Sales Tables
Taiwan has had very impressive economic growth in the past three decades, contributing to one of the largest hard currency reserves in the world (estimated at $80 billion). Taipei's defense
budget has grown significantly since 1985 and now stands at about $7.4 billion a year.
Arms transfers to Taiwan have risen dramatically during the 1990s in terms of quality and quantity, from just $209 million in 1980 to a record high of $5.7 billion in 1997 (see chart). Taiwan has
bought advanced fighter jets, attack helicopters, and numerous missiles; future plans include a major tank procurement program and possible participation in a U.S.
theater missile defense system.
The principal issues of concern about U.S. arms supply to
Impact of U.S. Arms
Sales on Chinese-Taiwanese Relations and Regional Instability
Driving these weapons purchases is the fear that mainland
China will attempt to reunite Taiwan with it by force. Taiwan's military
always has been and always will be dwarfed by its rival's sheer manpower. Taipei
has sought to offset China's numerical superiority by buying
the most advanced weaponry on the market. But given the fact
that China is a nuclear power, it is unlikely that Taiwan could
prevent a forceful takeover if the mainland were set on it. Despite bluster
and threats, the
Chinese government has refrained for nearly 40 years from invading
Taiwan, apparently understanding that the rest of the world would
not stand by and accept a forceful takeover of the island.
Moreover, despite growing military budgets in both China and
Taiwan, cooperation between the two is at an all time high. Taiwan is
China's largest investor.
At the same time, China interprets U.S. (and European) sales
of advanced combat equipment as a hostile and destabilizing act,
which undermines such cooperation. Rather than providing stability
by balancing power between the two (which would be impossible
to balance, short of providing Taiwan with nuclear weapons),
high-level transfers of sophisticated weapons raise the level
of tension and instability between Taiwan and China. U.S. arms
sales to Taiwan also complicate U.S.-Chinese relations in several
unintended and unfortunate ways. Since former Taiwanese President Lee Teng-hui's reference to "special state-to-state relations"
and the subsequent election of pro-independence candidate Chen Shui-bian, China
has been particularly sensitive.
Assistant Secretary of State Susan Shirk, testified on April 14, 1999,
P.R.C. nor Taiwan would be served by over-emphasis on military hardware [&
]. In this age of sophisticated
weaponry, I think we are all sometimes prone to equate 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.
Unfortunately, the United States' record for supplying Taiwan with weaponry
doesn't live up to this wisdom. In fact, as a DOD official once tellingly put it, arms sales form "the fundamental basis of [the] relationship between the United States and
Taiwan": hardly a recipe for stability.
The Impact of U.S.
Arms Sales to Taiwan on U.S.-Chinese Relations
Since the communist party took over mainland China in 1949,
the United States has maintained close military relations with
Taiwan, where the exiled Nationalist Party (Kuomitang) government
fled. In 1979, however, the United States officially recognized
the government of the People's Republic of China. The PRC regards
Taiwan as a breakaway province, and in establishing formal relations
with China, the United States agreed to regard Taiwan de facto
as a part of China. Since then, Washington has walked a tight
rope in its relations with China and Taiwan, including in its
arms sales policies.
U.S. arms sales to Taiwan are governed by the 1979 Taiwan
Relations Act and a 1982 joint communiqué with China.
These two documents are not necessarily compatible. Under the
former, the United States pledged to provide those arms necessary
for Taiwan's self-defense. But in the 1982 Sino-American communiqué,
still in force, the Reagan Administration agreed that the United
States government "does not seek to carry out a long-term
policy of arms sales to Taiwan, [and] that its arms sales to
Taiwan will not exceed, either in qualitative or in quantitative
terms, the level of those supplied in recent years since the
establishment of diplomatic relations between the United States
and China, and that it intends to reduce gradually its sales
of arms to Taiwan, leading over a period of time to a final resolution."
This policy largely held until throughout the 1980s, with
annual sales to Taiwan hovering around $500 million. In 1992,
however, U.S. arms sales to Taiwan jumped over 1,000 percent,
with the sale of 150 F-16 fighter/bombers. The Chinese government
protested the sale vehemently, saying it violated the 1982 agreement.
Proponents of the $5.8 billion deal argued that the 1982 communiqué
does not have the force of U.S. law, unlike the 1979 Taiwan Relations
Act. Taiwan began taking delivery of the F-16 fighter-jets in
In protest, China withdrew in late 1992 from arms transfer
talks among the five permanent members of the United Nations
Security Council (U.S., Russia, China, Britain and France). The
talks were initiated after the 1991 Gulf War with the aim of
reducing destabilizing arms sales. China has also said that its
adherence to the Missile Technology Control Regime is conditional,
linked to U.S. restraint in arms transfers to Taiwan (Defense
News, 7-13 March 1994).
Some members of Congress view arms sales to Taiwan as a way to deliberately
antagonize the Chinese. As Sen. Jesse Helms boasted when introducing S. 693, the Taiwan Security Enhancement Act, which would mandate greater arms sales to Taiwan : "Some are going to say this is provocative. They will claim that doing these things will upset the United States' relationship with
China. This is true. The Red Chinese won't like this bill." While many like Helms support arms sales to Taiwan to inflame the PRC, others in Congress
merely feel that arms sales are their only way to express support for Taiwan,
In April 2000, Washington approved yet another package of high-tech weapons for Taiwan, including sophisticated air-to-air and anti-ship missiles and a "Pave Paws" long-range
radar system. The Pave Paws system could eventually be linked to a theater missile defense system, still in development, increasing the intensity of the ongoing arms
race with China. Taiwan didn't get everything on its wish-list; Taipei really wanted four destroyers with the powerful Aegis battle management system, capable
of tracking over 100 land, sea, and air targets. Most independent observers believe that the Taiwanese military isn't ready to handle the Aegis warships, and the
State Department feared the sale would provoke an even angrier response by Beijing.
This compromise arms deal was an attempt to balance a U.S. commitment to China not to increase arms sales to Taiwan and a Congressional mandate to
provide Taiwan with a "sufficient self-defense capability." Yet this sale, like past arms sales to Taiwan, is guaranteed to displease both sides: China feels threatened
by sophisticated additions to Taiwan's arsenal, and Congress and Taiwan's elastic interpretation of "self-defense" ensures that Taiwan's need for arms will never be
Development in Taiwan
Martial law in Taiwan, in place since the Nationalist Party
fled to the island in 1950, was lifted in 1987. Taiwan has relatively
recently transitioned from one-party (Nationalist Party) authoritarian
rule to a pluralistic democratic system. This transition culminated
in the election of Chen Shui-bian, Taiwan's first non-Nationalist Party
Chen was primarily elected on an anti-corruption platform, and arms sales
have been a source for misconduct in Taiwan. Graft associated with arms sales
was been at the center of
a scandal when Taiwanese military officers
allegedly gave arms dealers information about Taiwanese arms
procurement decisions in exchange for payments. A Taiwanese navy
captain was killed in December 1993, because he was about to
expose a "pattern of bribery" among retired and active-duty
officers and arms dealers, investigators say. In April 1994,
Adm. Chuang Ming-Yao, the head of Taiwan's navy, was forced to
step down because of this scandal, involving at least 8 other
officers and six local arms dealers. One navy commander has already
been sentenced to life in prison (Jane's Defense Weekly,
30 April 1994, 11 June 1994; Reuters, "Taiwan Scandal
Taints Generals," 24 June 1994).
Taiwan Uses Offsets
to Develop Local Industry, Future Competition
U.S. arms exports and the associated transfer of technology
are furthering the development of Taiwan's nascent aircraft industry,
both military and commercial. This will result in direct competition
for U.S. companies, as Taiwan seeks to sell its aircraft on the
A 1994 General Accounting Office report [NSIAD-94-140] says
that "authorities in Taiwan...have indicated that they are
prepared to commit billions of dollars to carry out an ambitious
agenda of aeronautics industry development." According to
the GAO, Taiwan's Aeronautical Industry Development Center (AIDC)
is regarded by experts "as one of the most complete and
sophisticated aircraft production shops in Asia."
Taiwan plans to apply knowledge, technology and production
lines derived from military projects, such as the F-16 and its
Indigenous Fighter Program, to the production of commercial aircraft.
The AIDC and the U.S. firm AlliedSignal plan to market the F124
jet engine used in Taiwan's Indigenous Defense Fighter. The Czech
Republic reportedly will use this engine in its fleet of L-159
jet trainers. British Aerospace and the Taiwan Aerospace Corporation
(partly owned by the government which subsidizes about half its
total costs) have entered into a 50-50 joint venture to produce,
market and service BAe-146 medium-range passenger jets in Taiwan.
Taiwan has offered to sell its Indigenous Defense Fighter and
AT-3 jet trainers to Indonesia.
In a more recent deal, in May 1997, General Electric and Taiwan's
AIDC agreed to make turbine engines for Sikorsky S-92 helicopters.
Taiwanese officials were especially pleased with this deal, since
it gives Taiwan access to key advanced aviation technology (AP,
20 May 1997).
Offsets associated with arms sales are driving this industrial
development. Taiwan's legislative body (the Yuan) retroactively
demanded Taiwan's first ever offset from an American firm in
connection with the F-16 sale in 1992. The Yuan blocked payments
on the package unless Lockheed provided Taiwan with technology
and production contracts related to the aircraft. In July 1993
Lockheed signed a 10-year "Industrial Cooperation Agreement"
worth $1.1 billion which ensures production of some of the aircraft
parts and creation of maintenance depots in Taiwan. For more
information on this topic, check out the Offsets