Ronald O'Rourke
Specialist in Naval Affairs
The question of how the United States should respond to China’s military modernization effort, including its naval modernization effort, has emerged as a key issue in U.S. defense planning. Admiral Michael Mullen, the Chairman of the Joints Chiefs of Staff, stated in June 2010 that “I have moved from being curious to being genuinely concerned” about China’s military programs. The question of how the United States should respond to China’s military modernization effort is of particular importance to the U.S. Navy, because many U.S. military programs for countering improved Chinese military forces would fall within the Navy’s budget.
Decisions that Congress and the executive branch make regarding U.S. Navy programs for countering improved Chinese maritime military capabilities could affect the likelihood or possible outcome of a potential U.S.-Chinese military conflict in the Pacific over Taiwan or some other issue. Some observers consider such a conflict to be very unlikely, in part because of significant U.S.-Chinese economic linkages and the tremendous damage that such a conflict could cause on both sides. In the absence of such a conflict, however, the U.S.-Chinese military balance in the Pacific could nevertheless influence day-to-day choices made by other Pacific countries, including choices on whether to align their policies more closely with China or the United States. In this sense, decisions that Congress and the executive branch make regarding U.S. Navy programs for countering improved Chinese maritime military forces could influence the political evolution of the Pacific, which in turn could affect the ability of the United States to pursue goals relating to various policy issues, both in the Pacific and elsewhere.
China’s naval modernization effort, which began in the 1990s, encompasses a broad array of weapon acquisition programs, including anti-ship ballistic missiles (ASBMs), submarines, and surface ships. China’s naval modernization effort also includes reforms and improvements in maintenance and logistics, naval doctrine, personnel quality, education, training, and exercises.
The Department of Defense (DOD) and other observers believe that the near-term focus of China’s military modernization effort has been to develop military options for addressing the situation with Taiwan. Consistent with this goal, observers believe that China wants its military to be capable of acting as a so-called anti-access force—a force that can deter U.S. intervention in a conflict involving Taiwan, or failing that, delay the arrival or reduce the effectiveness of intervening U.S. naval and air forces. DOD and other observers believe that China’s military modernization effort, including its naval modernization effort, is increasingly oriented toward pursuing additional goals, such as asserting or defending China’s claims in maritime territorial disputes, protecting China’s sea lines of communications, displacing U.S. influence in the Pacific, and asserting China’s status as a major world power.
Placing an increased emphasis on U.S. Navy programs for countering improved Chinese maritime military capabilities in coming years could lead to one more of the following: developing and procuring highly capable ships, aircraft, and weapons for defeating Chinese anti-access systems; assigning a larger percentage of the Navy to the Pacific Fleet; homeporting more of the Pacific Fleet’s ships at forward locations such as Hawaii, Guam, and Japan; increasing training and exercises in operations relating to countering Chinese maritime anti-access forces, such as antisubmarine warfare (ASW) operations; and increasing activities for monitoring and understanding developments in China’s navy, as well as activities for measuring and better understanding operating conditions in the Western Pacific.
Date of Report: October 28, 2010
Number of Pages: 78
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Bill Canis
Specialist in Industrial Organization and Business
Jeanne J. Grimmett
Legislative Attorney
Michaela D. Platzer
Specialist in Industrial Organization and Business
Brent D. Yacobucci
Specialist in Energy and Environmental Policy
In 2009, the United States, Japan, and South Korea, like many industrial countries, initiated accelerated vehicle retirement (AVR) programs. Vehicles manufactured by Japanese and South Korean companies and made both domestically and abroad, were top performers in the U.S. AVR program, also known as the “cash for clunkers” program. However, few U.S.-made vehicles were sold in comparable programs in these two countries, leading to questions about the disparity.
The United States program began in June 2009, when President Obama signed the Consumer Assistance to Recycle and Save (CARS) Act, providing $3 billion to fund a rebate program for consumers who bought certain new, higher mileage vehicles. More than 677,000 new vehicles were purchased through the program. Of these, more than 115,000 were imported from Japan and more than 73,000 from South Korea.
In Japan, an AVR program known as Eco-Car ran from April 2009 until September 2010. In the first iteration of Eco-Car, sales of U.S. and many European cars were not permitted because only vehicles complying with Japan’s “Type Approval” process were eligible. Later, after a protest by the U.S. Trade Representative, the Japanese government modified Eco-Car so that certain U.S. and European vehicles would qualify.
The South Korean government implemented an eight-month program in May 2009 that reduced taxes on new vehicles when a pre-1999 vehicle was turned in. The South Korean program contained no provisions that excluded U.S.-made vehicles, but it did not alter existing South Korean barriers to imported vehicles, which have contributed to the fact that imports occupy only a small share of the Korean market.
Overall, neither Japan nor South Korea imports large numbers of foreign vehicles. The AVR programs do not appear to have changed this pattern. Data on sales of U.S.-made vehicles in the Japanese and South Korea AVR programs have not been released. However, imported motor vehicles accounted for about 4% of total unit sales in both Japan and South Korea in 2009, and the import penetration in both countries declined modestly from 2008. This suggests that the AVR programs reinforced preexisting market conditions in both countries, neither worsening nor improving the competitive position of imported vehicles, including those made in the United States.
Date of Report: October 26, 2010
Number of Pages: 31
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Michael F. Martin
Specialist in Asian Affairs
Burma is to hold its first parliamentary elections in 20 years on November 7, 2010. The polls raise questions about U.S. policy towards the Burmese regime, coming in the context of two decades of largely isolationist U.S. policy towards Burma. Some argue that these elections, even if far from free and fair, offer a limited opportunity for political change, even if evolutionary. Others believe that the ruling junta's restrictions on electoral activity thus far demonstrate that it has little interest in democracy or in loosening its repressive policies. These considerations weigh deeply in policy debates over sanctions and engagement with the regime—debates in which Congress has had a strong voice over the past two decades.
In 1990, the last time nationwide parliamentary elections were held in Burma, the National League for Democracy (NLD), led by prominent opposition leader Aung San Suu Kyi, won a stunning and unexpected victory. The junta's subsequent refusal to seat the newly elected parliament and its arrest of Aung San Suu Kyi were widely condemned internationally, and led to the imposition of numerous U.S. and international sanctions against the regime. This time, the circumstances surrounding the elections have been controversial from the start. The Obama Administration has repeatedly stated that it does not foresee the elections being free and fair, and the outcome will not be a genuine reflection of the will of the people of Burma. Some members of Congress have also expressed skepticism that Burma's impending elections will be a true expression of democracy.
Most observers feel that by various means and methods, the ruling military junta, the State Peace and Development Council (SPDC) and the Union Election Commission (UEC) are conspiring to ensure that the pro-junta political parties will win most of the 1,163 seats at stake. Preliminary information on the number of proposed candidates submitted by each of the political parties indicate that it would take a virtual election sweep by their candidates for the opposition parties to win a majority. The opposition parties are particularly weak in many of the state and regional parliamentary elections; an exception is in states where ethnic minorities are a large percentage of the population. Thus, it is more likely that the pro-junta parties will win a majority of the seats on November 7.
The UEC has approved 37 parties to participate in the elections, but on September 14 it announced that several political parties—including Aung San Suu Kyi's NLD—were officially dissolved. The formal campaign period for the parliamentary elections began on September 24, 2010. There have been accusations of irregularities in the campaign process, including decisions by the UEC to reject the broadcasting of some party statements, undue restrictions on campaign rallies, and intimidation of opposition party members. The SPDC has also arrested Buddhist monks and students advocating boycotting the elections.
The Obama Administration reportedly is considering the imposition of additional sanctions on Burma, in part because of the manner in which the SPDC is conducting the election. The Administration is also backing calls for the creation of a U.N. Commission of inquiry into crimes against humanity and war crimes in Burma. Ten other nations have also backed the creation of the U.N. Commission.
Under current federal law, President Obama has the authority to impose certain types of financial sanctions without seeking approval from Congress. However, he must inform Congress if and when he imposes new sanctions.
Date of Report: October 6, 2010
Number of Pages: 11
Order Number: R41447
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Emma Chanlett-Avery, Coordinator
Specialist in Asian Affairs
William H. Cooper
Specialist in International Trade and Finance
Mark E. Manyin
Specialist in Asian Affairs
The post-World War II U.S.-Japan alliance has long been an anchor of the U.S. security role in East Asia. The alliance facilitates the forward deployment of about 36,000 U.S. troops and other U.S. military assets in the Asia-Pacific, thereby undergirding U.S. national security strategy in the region. For Japan, the alliance and the U.S. nuclear umbrella provide maneuvering room in dealing with its neighbors, particularly China and North Korea.
U.S.-Japan relations have been adjusting to the Democratic Party of Japan’s (DPJ) landslide victory in the August 30, 2009, elections for the Lower House of Japan’s legislature. With the resignation of the DPJ’s first prime minister, Yukio Hatoyama, the United States must now adjust to the leadership of Naoto Kan, the new premier. While most members of the left-of-center DPJ are broadly supportive of the U.S.-Japan alliance and the general thrust of Japanese foreign policy, in the past the party has questioned and/or voted against several features of the alliance, including base realignment and Japan’s financial payments for U.S. forces stationed in Japan. The party has put forward a foreign policy vision that envisions greater “equality” in Japan’s relations with the United States, in part through deeper engagement with Asia and a more United Nationsoriented diplomacy. The DPJ’s victory appears to mark the end of an era in Japan; it was the first time Japan’s Liberal Democratic Party (LDP) was voted out of office. The LDP had ruled Japan virtually uninterrupted since 1955.
After the DPJ victory, bilateral tensions arose over the 2006 agreement to relocate the controversial Futenma Marine Air Station to a less densely populated location on Okinawa. The move is to be the first part of a planned realignment of U.S. forces in Asia, designed in part to reduce the footprint of U.S. forces on Okinawa by redeploying 8,000 U.S. Marines and their dependents to new facilities in Guam. After months of indecision and mixed messages from Tokyo, the Hatoyama government agreed to honor the original agreement, much to the dismay of the many Okinawans opposed to the base. Kan has voiced his intention to honor the agreement, although many concerns remain about its implementation.
Japan is one of the United States’ most important economic partners. Outside of North America, it is the United States’ second-largest export market and second-largest source of imports. Japanese firms are the United States’ second-largest source of foreign direct investment, and Japanese investors are the second-largest foreign holders of U.S. treasuries, helping to finance the U.S. deficit and reduce upward pressure on U.S. interest rates. Bilateral trade friction has decreased in recent years, partly because U.S. concern about the trade deficit with Japan has been replaced by concern about a much larger deficit with China. One exception was U.S. criticism over Japan’s decision in 2003 to ban imports of U.S. beef, which have since resumed, but on a limited basis.
However, the economic problems in Japan and the United States associated with the credit crisis and the related economic recession will likely dominate the bilateral economic agenda for the foreseeable future. Japan has been hit particularly hard by the financial crisis and subsequent recession. Japan’s gross domestic product (GDP) declined 1.2% in 2008 and 5.3% in 2009 and is forecast to grow 3.0% in 2010. At the same time, the United States is showing signs of recovery. The value of the yen has appreciated and has hit 15-year highs in terms of the U.S. dollar, which could adversely affect Japanese exports to the United States and other countries, contributing to the downturn in Japanese economic growth.
Date of Report: October 6, 2010
Number of Pages: 26
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Shirley A. Kan
Specialist in Asian Security Affairs
This report, updated as warranted, discusses U.S. security assistance to Taiwan, or Republic of China (ROC), including policy issues for Congress and legislation. Congress has oversight of the Taiwan Relations Act (TRA), P.L. 96-8, which has governed arms sales to Taiwan since 1979, when the United States recognized the People’s Republic of China (PRC) instead of the ROC. Two other relevant parts of the “one China” policy are the August 17, 1982, U.S.-PRC Joint Communique and the “Six Assurances” to Taiwan. U.S. arms sales to Taiwan have been significant. The United States also expanded military ties with Taiwan after the PRC’s missile firings in 1995-1996. However, the U.S.-ROC Mutual Defense Treaty terminated in 1979.
At the last U.S.-Taiwan annual arms sales talks on April 24, 2001, President George W. Bush approved for possible sale diesel-electric submarines, P-3 anti-submarine warfare (ASW) aircraft (linked to the submarine sale), four decommissioned U.S. Kidd-class destroyers, and other items. Bush also deferred decisions on Aegis-equipped destroyers and other items, while denying other requests. Afterward, attention turned to Taiwan, where the military, civilian officials, and legislators from competing political parties debated contentious issues about how much to spend on defense and which U.S. weapons to acquire, despite the increasing threat (including a missile buildup) from the People’s Liberation Army (PLA). In 2003, the Bush Administration pointed Taiwan to three priorities for defense: command and control, missile defense, and ASW. The Pentagon also has broadened its concern from Taiwan’s arms purchases to its defense spending, seriousness in self-defense and protection of secrets, joint capabilities, operational readiness, critical infrastructure protection, and asymmetrical advantages. Blocked by the Kuomintang (KMT) party in the Legislative Yuan (LY) that opposed the Democratic Progressive Party (DPP)’s president (2000-2008), the Special Budget (not passed) for submarines, P-3C ASW aircraft, and PAC-3 missile defense systems was cut from $18 billion in 2004 to $9 billion (for submarines only) in 2005. In March 2006, Taiwan’s defense minister requested a 2006 Supplemental Defense Budget (not passed) in part for submarine procurement, P-3Cs, and PAC-2 upgrades (not new PAC-3 missiles). In June 2007, the LY passed Taiwan’s 2007 defense budget with funds for P-3C planes, PAC-2 upgrades, and F-16C/D fighters. In December 2007, the LY approved $62 million to start the sub design phase. After the KMT’s Ma Ying-jeou became President in May 2008, he resumed cross-strait talks while retaining the arms requests. But he has cut the defense budget.
Attention also turned to U.S. decisions on pending arms sales. In 2008, congressional concerns mounted about a suspected “freeze” in President Bush’s notifications to Congress on arms sales. On October 3, 2008, Bush finally notified Congress. However, he submitted six of the eight pending programs (not a “package”) for a combined value of $6.5 billion. Despite the concerns in 2008, President Obama repeated that cycle to wait to decide on submissions for congressional review all at one time (on January 29, 2010) five programs with a total value of $6.4 billion. Like Bush, President Obama did not notify the submarine design program (the only one pending from decisions in 2001) and has not accepted Taiwan’s formal request for F-16C/D fighters (pending since 2006). Legislation in the 111th Congress include: National Defense Authorization Act (NDAA) for FY2010, P.L. 111-84; H.Res. 733 (Gingrey); H.Con.Res. 200 (Andrews); H.R. 4102 (Ros-Lehtinen); and H.Res. 927 (Barton). Moreover, Senators Cornyn, Inhofe, and Lieberman stressed to Defense Secretary Robert Gates the NDAA’s directive for an assessment of Taiwan’s air defense forces, including its F-16 fighters. Submitted in February, the assessment found that Taiwan has diminished ability to deny the PRC air superiority. On May 12, 136 Representatives sent President Obama a letter to urge a sale of new F-16 fighters. In contrast, Senators Feinstein and Specter spoke in June and September against such arms sales as irritants to Beijing.
Date of Report: September 28, 2010
Number of Pages: 69
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