The summer quarter was a remarkable period in the evolution of Taiwan-China-U.S. relations. A number of events transpired that just a year ago might have led to the brink of a cross-Strait war, but this year raised only mild reactions in Beijing. Taiwan President Chen Shui-bian’s August remarks on Taiwan “walking its own road,” First Lady Wu Shu-chen’s highly publicized visit to the United States, and several well reported exchanges of military delegations – particularly Vice Minister of National Defense (MND) Kang Ning-hsiang’s early September visit – all evoked only muted responses from China. Beijing, apparently, is fully focused on its leadership transition in the lead-up to the 16th Party Congress, while Washington continues with the war on terrorism, Afghanistan, and preparations for a potential conflict in Iraq.

Against this backdrop, China steadily continues its modernization program which is producing a visible increase in military capabilities. In turn, Taiwan is carrying out a modernization program that places priority on streamlining and reducing costs, with questionable results in terms of operational capabilities. To close the triangle, the U.S. marches forward with arms sales and enhanced military-to-military relations across the board with Taiwan. This quarterly report will attempt to clarify this complex picture as we look at future developments in the arms sales area and in the cross-Strait political dynamic.

Executive Summary: Taiwan Defense & Security Report – Q3, 2002

The US-Taiwan Business Council’s Defense Summit in March 2002 was an important event that signaled some changes in the way the US-Taiwan defense relationship is conducted. The conference also raised a number of important issues that will continue to attract our interest over the next few years. This quarterly report will explore developments in the military-to-military relationship after the conference, and present updates on major defense system sales and programs.

This report will also provide some background information on a critical aspect of the arms sales program approval process known as the “national disclosure policy”, and will identify changes in the key players involved in the relationship between the U.S. and Taiwan. Finally, we will identify some upcoming events in China that are of interest to those living and working in the cross-Strait arena.

Executive Summary: Taiwan Defense & Security Report – Q2, 2002

It has been projected that Taiwan will spend in excess of US$26 billion over the next ten years on its defense needs, and the defense industry is also one of the largest sectors represented in the US-Taiwan Business Council’s membership. To better serve those members, the Council hosted a defense conference entitled the “US-Taiwan Defense Summit” in Saint Petersburg, Florida, in early March of 2002. The objective of the event was to bring together all of the principals in the US-Taiwan defense relationship, both from U.S. and Taiwan industry and from both governments.

Unlike in most other industries, the defense relationship between Taiwan and the U.S. is one that is highly sensitive. Because of that sensitivity, the Council determined that the entire event should be considered off-the-record, and the event was also off-limits to the media. We wanted all of our attendees to feel comfortable talking about these sensitive issues, and to focus on issues related to furthering the commercial relationship between our two economies.

Rather than discussing specific arms sales, the focal point of the event was on the process itself, as we wanted to bring clarity and transparency to the often-complex defense procurement process. That is not, of course, a task that could be accomplished with one conference. In fact, the Council feels that this event was merely the beginning of a long road towards normalizing defense procurement so that less attention will be paid to it, with less media hype, hopefully resulting in a more efficient and productive process.

The planning for this conference began more than a year ago with the decision to invite Taiwan’s Minister of National Defense to speak. It was to be the first time since 1962 that a Minister of National Defense from Taiwan would visit the United States for anything other than a transit stop. In addition, Taiwan’s Premier Yu Shyi-kun tapped Chief of the General Staff General Tang Yao-ming to be the new Minister of National Defense only a matter of weeks before the scheduled start of the conference. This made for a fortuitous meeting, as Minister Tang could benefit from being introduced to U.S. industry leaders so soon after his appointment.

The purpose of this analysis is to focus on what took place during those three days in Florida. We will attempt to clarify the objectives of the conference, while summarizing the four main topics of the meeting, including Taiwan’s defense procurement process, offset requirements, Taiwan’s defensive position and military strategy, and the outlook for future military sales to Taiwan.

Executive Summary: Taiwan Defense & Security Report – Q1, 2002