Event:
Chinese Reactions to Taiwan Arms Sales
Report Release & Panel Discussion
April 17, 2012
2:30pm – 4:00pm
Report Cover: Chinese Reactions to Taiwan Arms Sales
The US-Taiwan Business Council and the Project 2049 Institute have jointly produced a report – entitled “Chinese Reactions to Taiwan Arms Sales” – that examines the history of major U.S. arms sales to Taiwan since 1979, and discusses the correlation between such arms sales and Chinese reactions and retaliatory responses – if any. In addition to acting as the release event for the report, the panel discussion will examine the contents and conclusions of the report, and we will also discuss implications for future U.S. arms sales to Taiwan.
Panelists:
Rupert Hammond-Chambers, President, US-Taiwan Business Council
Randall Schriver, President and CEO, Project 2049 Institute
Location:
U.S. Capitol Visitor Center, Room SVC 209
Washington, D.C.
Note that the entrance is located on 1st Street NE & East Capitol Street. Please arrive early, allowing for sufficient time to pass through security screening.
Report Cover: Taiwan Defense & National Security Report – Q1, 2012
The year 2012 began with presidential and parliamentary elections in Taiwan, and the results will help shape the trilateral relationship between Taipei, Beijing and Washington over the next four years.
Despite his stronger-than-expected showing at the polls as he was re-elected, President Ma Ying-jeou has already begun struggling with rapidly falling popularity. Ma has also seen widespread public resentment over some difficult policy decisions – decisions that he had declined to make before the presidential election, but that he felt compelled to push forward during the period between the election and his formal inauguration in May. It remains to be seen whether this signals the shape of things to come during Mr. Ma’s second term, and how his weak political standing could impact his cross-Strait and national security policies going forward.
This quarterly analysis report will provide a brief overview of significant defense and national security developments in the past few months, and will examine some of the factors that influenced the course of events during the first three months of 2012. It will examine the political environment in Taiwan, assess cross-Strait relations, look at Taiwan defense policy and defense budget issues, and appraise the status of the U.S.-Taiwan defense relationship. The report ends with an update on the current state of affairs for select Taiwan procurement programs.
Election politics and considerations dominated the year 2011 for Taiwan in almost every conceivable way. The January 14, 2012 Presidential/Legislative Yuan (parliamentary) elections were watched not without some anxiety by interested entities well beyond Taipei. Indeed, some of the actions taken by Washington and Beijing during the past year, and in the lead-up to the elections, may even suggest the emergence of a preliminary consensus – if not yet a new paradigm – for managing the complex and often sensitive U.S.-Taiwan-China strategic relationship.
As these critical elections were successfully concluded within two weeks of the end of 2011, this report will try to analyze their results in the context of the traditional defense and security focus of this annual review. The report will also provide an overview of the significant political, cross-Strait, and defense developments during 2011, which should perhaps offer some helpful indications as we look for factors that could influence key defense and national security policy developments during the next four years.
In an important new report on behalf of the Aerospace Industries Association (AIA), economist Dr. Stephen Fuller at George Mason University concludes that the U.S. economy is at risk of losing over one million American jobs and over US$1 trillion in economic investment in the aerospace sector as a consequence of projected U.S. defense budget cuts. The report concludes that while all 50 states would be adversely affected, California, Virginia, Texas and Florida all stand to be hardest hit.
The AIA report also notes that the ripple-effect of the proposed cuts on the broader aerospace and defense industry will be immense, given the significant number of subcontractors in the sector. The very existence of some subcontractors – many of which are small and medium sized businesses – is threatened, and once lost the intellectual property and supplier base will be extraordinarily difficult to rejuvenate. This is a serious issue for the United States, and will impact our ability to project our global interests. It will also affect U.S. partners and allies, who will find American defense products less capable and more expensive.
The impending financial tsunami to hit the defense and aerospace sector comes at a time when the Taiwan government seeks to procure 66 replacement F-16C/D fighters for its aging fighter fleet – a purchase that would result in a gross investment of almost US$9 billion into the American economy and which would support over 16,000 jobs in the defense and aerospace sector.
In contrast to the dire consequences of the defense budget cuts as predicted by the AIA report, a follow-on sale of F-16s to Taiwan would have a positive economic impact around the country, generating some US$8.7 billion in gross output and sustaining approximately 16,000 direct and indirect jobs over the life of the program. This would represent a significant economic boost to states such as Ohio and Florida – where unemployment stands at 8.6% and 10.6%, respectively. If approved, the purchase is also projected to yield almost US$768.0 million in Federal tax revenues over the course of the program, as well as about US$593.7 million to various state and local governments.
Should the Taiwan sale fail to materialize, however, current orders would only sustain the F-16 production line for another two years. The closing of the F-16 production line would simply add further job losses to the sector, impacting the U.S. states already hit hard by the proposed budget cuts.
The Council comments on a report released by the Aerospace Industries Association on the economic impact of reduced DoD spending
The third quarter of 2011 ended with the long-awaited – as well as repeatedly and seriously delayed – U.S. Government decision on the sale of F-16 fighters to Taiwan. More precisely, the U.S. government notified to Congress its intention to provide to Taiwan a major package of mid-life modernization for its existing F-16A/B fighters – argued by the Obama Administration as being a better option than the sale of replacement F-16C/D fighters.
The U.S. side insists that they have not ruled out selling a new tranche of F-16s to replace aging equipment, and Taiwan President Ma Ying-jeou has renewed calls for the new buy. Nevertheless, the controversial Obama Administration decision spoke volumes of the complex three-way dynamic between Washington, Taipei, and Beijing, and may herald a new reality that could soon confront Taiwan’s national security establishment.
In the meantime, everything related to Taiwan – including defense issues and cross-Strait relations – continues to take a backseat to, and merely serve as backdrop for, the campaigns ahead of the next joint presidential/legislative elections scheduled for January 14, 2012. In the presidential race, incumbent Ma Ying-jeou of the Kuomintang (KMT) faces opposition Democratic Progressive Party (DPP) Chairwoman Tsai Ing-wen in what will be a hotly contested and close race. The addition of Peoples First Party (PFP) Chairman James Soong to the contest adds a complicating factor for both candidates – but particularly for President Ma.
This quarterly analysis report provides a brief overview of significant developments in Taiwan during the past three months, and examines some of the factors that influenced the course of events during the third quarter of 2011. In addition to examining the current political environment in Taiwan, the report will look at defense policy, budget, and procurement issues. It will also provide an update on U.S.-Taiwan defense relations, and a look at the current status of select programs.
The US-Taiwan Business Council welcomes the news that the Obama Administration will proceed with a commitment to upgrade Taiwan’s present inventory of F-16 A/Bs at a possible cost of US$5.3 billion, the continuation of the Luke Air Force Base training program at a potential cost of US$500 million, and a requisition for up to US$52 million in parts for Taiwan’s F-16 A/Bs, F-5s, C-130s and IDFs. The congressional notifications are attached.
The Council welcomes the Obama Administration’s partial commitment to supporting Taiwan’s efforts to upgrade and modernize its air power capabilities. As we noted in our 2010 report “The Balance of Air Power in the Taiwan Strait”, Taiwan certainly needs to implement a robust mid-life retrofit/modernization program for its existing fleet of F-16 A/Bs. The FMS programs notified to Congress today will help Taiwan address diminishing manufacturing sources and obsolescence issues, improve reliability and maintainability, improve survivability, and update aircraft capabilities to remain abreast of current mission requirements.
Upgraded F-16 A/Bs Are Not Enough to Face the Threat from China
A recent U.S. Department of Defense report states that “China has continued to develop a wide range of weapons and capabilities designed to provide credible military options in a Taiwan contingency.” The report goes on to note that the military threat posed by China to Taiwan continues to grow rapidly.
The Taiwan Air Force is therefore in dire need of a robust and modern fighter fleet in order to prepare for all possible contingencies. The upgrade of Taiwan’s F-16 A/Bs will go some way towards moving the Taiwan Air Force in the right direction, if the upgraded fighters are equipped with modern systems and munitions.
However, with the Taiwan Air Force retiring its obsolete F-5s and prohibitively expensive Mirage 2000-5s, Taiwan will still fall perilously short of the airframes it requires to maintain an adequate air defense force, even with the scheduled upgrade. This shortfall is inherently destabilizing, and if not addressed it will threaten the military balance in the Taiwan Strait and encourage Chinese adventurism in the coming years.
Unnamed Obama Administration officials have been stating – as they did in the Wall Street Journal yesterday – “Taiwan gets them quicker and they are cheaper than C/Ds”.
This is a false statement. The upgrade program is comprehensive, but spans almost 10 years with the first upgraded A/B coming as late as the 6th year of the program. If the Obama Administration were to accept a Letter of Request for 66 F-16 C/Ds now, the entire tranche of new fighters could be delivered before Taiwan receives any of its upgraded F-16 A/Bs.
Secondly, the Obama Administration is suggesting that the choice was between either the F-16 A/B upgrade or the F-16 C/Ds. Again, this is a false choice. It is not either but both programs that are required. The correct approach would have both programs running sequentially, so that as new F-16 C/Ds are delivered to Taiwan – before Taiwan starts pulling front line F-16 A/Bs out of operations – there will be no degradation of Taiwan’s fighter strength. As presently structured, Taiwan will actually see a reduction in the number of operational F-16s over the next 10 years.
The solution to this shortfall is the sale of 66 F-16 C/D fighters to Taiwan, as a follow up and in addition to the announced upgrade of Taiwan’s existing fleet of A/Bs. Together, these two programs would help Taiwan adequately fill the fighter gap, and would ensure that Taiwan has an air force capable of deterring China from provoking or attacking it. A fighter force able to handle all of Taiwan’s many contingencies.
The Council comments on Congressional Notifications for Taiwan Arms Sales:
The Taiwan Airpower Modernization Act (TAMA) was submitted today for Congressional review and passage by Senators John Cornyn of Texas and Robert Menendez of New Jersey. The object of the Act is to assist the Obama Administration in meeting the obligations encompassed in the Taiwan Relations Act (TRA) – to provide Taiwan with weapons of a defensive nature to meet the growing threat from China. The TAMA would legislate selling 66 or more F-16 C/D fighter jets to Taiwan, and the US-Taiwan Business Council urges Congress to pass the Act.
The balance of power in the Taiwan Strait is an essential aspect of Americas’ Asia Pacific foreign policy. As China continues to invest heavily in expanding and modernizing its military capabilities, passage of the Taiwan Airpower Modernization Act would provide Taiwan with badly needed replacement F-16 fighters, thereby bringing the U.S. government back into compliance with the TRA.
Council President Rupert Hammond-Chambers said that “TAMA will enjoy broad bipartisan support in both the Senate and the House of Representatives. Both chambers recently released letters in support of the F-16 C/D sale, with significant numbers of signatories from both parties. This strong Congressional support for the sale represents the foundation for TAMA, as well as a path to passage of the Act.”
Hammond-Chambers went on to note, “this Act and this sale is a win-win for the national security interests of both the United States and Taiwan, as the new fighters would address part of the airpower imbalance by modernizing Taiwan’s fighter fleet. The sale also plays a vital role for the United States, in expanding forward-deployed capacity building with a key Asia Pacific security partner.”
The US-Taiwan Defense Industry Conference 2011 was held September 19-20, 2011 in Richmond, Virginia. This was the tenth annual event in a series of ongoing conferences addressing the future of U.S. defense cooperation with Taiwan, the defense procurement process, and Taiwan’s defense and national security needs.
The first conference in this series was the St. Petersburg, Florida event where former Minister of National Defense Tang Yiau-ming gave the keynote address in March of 2002. The second conference in the series was held in February 2003 in San Antonio, Texas, the third in October 2004 in Phoenix, Arizona, the fourth in September 2005 in San Diego, California, the fifth in September 2006 in Denver, Colorado, and the sixth in September 2007 in Annapolis, Maryland. Taiwan’s Minister of National Defense Chen Chao-min gave the keynote address at the seventh conference in the series, held in September 2008 on Amelia Island, Florida. The eighth conference was held in September 2009 in Charlottesville, Virginia, and the ninth conference was held in October 2010 in Cambridge, Maryland.
Keynote Addresses
Keynote speakers at the 2011 conference included Dr. Andrew Yang, Vice Minister (Policy) from Taiwan’s Ministry of National Defense, and Dr. Peter Lavoy, Acting Assistant Secretary for Asian & Pacific Security Affairs at the U.S. Department of Defense. US-Taiwan Business Council Chairman Dr. Paul Wolfowitz was the conference host.
Conference Program
Sessions at the US-Taiwan Defense Industry Conference featured a moderator and several speakers on the panel, and some sessions included additional commentators. Each speaker gave a short presentation on the session topic from his or her own viewpoint and expertise. Those presentations were then followed by a moderator-led discussion among the panelists, as well as a moderator-driven question and answer period with the attendees. This format offers the maximum amount of time for exchanges among the panelists, as well as between the panel and the audience, allowing the sessions to become a forum for substantial and valuable interaction and discussion.
Breakout Sessions
There were three sub-sessions within Session IV. These sub-sessions conducted discussions focusing on the Threats, Requirements & Solutions for each individual branch: Navy, Army, and the Air Force.
On August 2, Governor Rick Scott of Florida sent a letter to President Obama in support of selling 66 F-16C/D fighter jets to Taiwan. In his letter, Governor Scott said that the sale and manufacturing of F-16 aircraft supports hundreds of skilled jobs in his state, and that the sale of new aircraft to Taiwan would save 477 direct jobs and 1,446 indirect jobs in Florida.
Governor Scott reminded the President that the window of opportunity to act on Taiwan’s request for new fighters is rapidly closing, and requested that the Obama Administration accept Taiwan’s Letter of Request for F-16C/Ds.
The US-Taiwan Business Council welcomes the August 1, 2011 letter to President Barack Obama, where 181 Members of the U.S. House of Representatives stated their belief that “it is critical for the United States to sell the government of Taiwan all the F-16 C/Ds it requires.” The letter strengthens and reinforces the corresponding message in a similar letter sent earlier this year by 47 members of the U.S. Senate.
The government of Taiwan has attempted to purchase 66 new F-16 C/D model fighters from the United States since 2006, but has found itself in the precarious position of the U.S. refusing to even consider the sale. These new fighters would replace Taiwan’s aging fleet of Vietnam War -era F-5s and Mirage 2000s, which are to be retired from active service in the coming decade.
U.S. Secretary of State Hillary Clinton has committed the Obama Administration to decide by October 1 what – if anything – the U.S. is prepared to do in order to help modernize Taiwan’s air force. That includes making a decision on providing replacement F-16 C/Ds, as well as on upgrading Taiwan’s 145 existing F-16 A/Bs.
