Taiwan: Major U.S. Arms Sales Since 1990

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). 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, deterrence, operational readiness, critical infrastructure protection, and innovative, asymmetrical advantages. Blocked by the Kuomintang (KMT) party in the Legislative Yuan (LY) that opposed the Democratic Progressive Party’s (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 and kept the arms requests. However, Ma has cut the defense budget, raising U.S. concerns. Taiwan has failed to reach its bipartisan goal of defense spending at 3% of GDP.

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 submit formal notifications for congressional review all at one time (on January 29, 2010) of five major programs with a total value of $6.4 billion and again (on September 21, 2011) of three major programs with a total value of $5.9 billion, including upgrades for Taiwan’s existing F-16A/B fighters. Like Bush, President Obama has not notified the sub design program (the only one pending from decisions in 2001) and has not accepted Taiwan’s formal request for new F-16C/D fighters (pending since 2006). Taiwan has expressed interest in two excess Perry-class frigates.

Legislation in the 113th Congress includes H.R. 419 (Ros-Lehtinen), S. 12 (Coats), H.R. 1960 (McKeon), and S. 1197 (Levin). See “Major Congressional Action” for detailed discussion.


Date of Report: July 23, 2013
Number of Pages: 61
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China-U.S. Trade Issues

Wayne M. Morrison
Specialist in Asian Trade and Finance

U.S.-China economic ties have expanded substantially over the past three decades. Total U.S.- China trade rose from $5 billion in 1981 to $536 billion in 2012. China is currently the United States’ second-largest trading partner, its third-largest export market, and its biggest source of imports. According to one estimate, China is currently a $250 billion market for U.S. firms (i.e., U.S. exports to China plus sales by U.S.-invested firms in China). Many U.S. firms view participation in China’s market as critical to staying globally competitive. General Motors (GM), for example, which has invested heavily in China, sold more cars in China than in the United States from 2010 to 2012. In addition, U.S. imports of low-cost goods from China greatly benefit U.S. consumers, and U.S. firms that use China as the final point of assembly for their products, or use Chinese-made inputs for production in the United States, are able to lower costs. China is the largest foreign holder of U.S. Treasury securities ($1.3 trillion as of May 2013). China’s purchases of U.S. government debt help keep U.S. interest rates low.

Despite growing commercial ties, the bilateral economic relationship has become increasingly complex and often fraught with tension. From the U.S. perspective, many trade tensions stem from China’s incomplete transition to a free market economy. While China has significantly liberalized it’s economic and trade regimes over the past three decades, it continues to maintain, (or has recently imposed) a number state-directed policies that appear to distort trade and investment flows. Major areas of concern expressed by U.S. policymakers and stakeholders include China’s relatively poor record of intellectual property rights (IPR) enforcement and alleged widespread cyber espionage against U.S. firms by Chinese government entities; its mixed record on implementing its World Trade Organization (WTO) obligations; its extensive use of industrial policies (such as financial support of state-owned firms, trade and investment barriers, and pressure on foreign-invested firms in China to transfer technology in exchange for market access) in order to promote the development of industries favored by the government and protect them from foreign competition); and its policies to maintain an undervalued currency. Many U.S. policymakers argue that such policies are harm U.S. economic interests and have contributed to U.S job losses. For example, one U.S. government study estimated that IPR infringement in China cost U.S. firms $48 billion in 2009.

Some Members of Congress advocate a more assertive U.S. trade policy towards China, such as increasing the number of dispute settlement cases brought against China in the WTO, where the United States has prevailed on a number of issues. During his State of the Union Address in January 2012, President Obama announced plans to create a new Trade Enforcement Unit “charged with investigating unfair trade practices in countries like China.” Some analysts caution that taking a more aggressive stance against China over its trade policies could induce it to retaliate against U.S. exports to, and investment in, China. They further contend that major economic disputes should be dealt with through established high-level bilateral dialogues, such as the Strategic & Economic Dialogue (S&ED) and the U.S.-China Joint Commission on Commerce and Trade (JCCT). Many trade observers contend that the United States should also continue to press China to rebalance its economic growth model by boosting domestic consumption and decreasing the country’s reliance on exports and fixed investment for its economic growth, which could significantly boost Chinese imports. This report provides an overview of U.S.-China commercial ties and discusses major trade disputes issues and will be updated as events warrant.


Date of Report: July 17, 2013
Number of Pages: 54
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China’s Economic Rise: History, Trends, Challenges, and Implications for the United States

Wayne M. Morrison
Specialist in Asian Trade and Finance

Prior to the initiation of economic reforms and trade liberalization 34 years ago, China maintained policies that kept the economy very poor, stagnant, centrally controlled, vastly inefficient, and relatively isolated from the global economy. Since opening up to foreign trade and investment and implementing free market reforms in 1979, China has been among the world’s fastest-growing economies, with real annual gross domestic product (GDP) growth averaging nearly 10% through 2012. In recent years, China has emerged as a major global economic and trade power. It is currently the world’s second-largest economy, largest merchandise exporter, second-largest merchandise importer, second-largest destination of foreign direct investment (FDI), largest manufacturer, and largest holder of foreign exchange reserves.

The global economic crisis that began in 2008 greatly affected China’s economy. China’s exports, imports, and FDI inflows declined, GDP growth slowed, and millions of Chinese workers reportedly lost their jobs. The Chinese government responded by implementing a $586 billion economic stimulus package, loosening monetary policies to increase bank lending, and providing various incentives to boost domestic consumption. Such policies enabled China to effectively weather the effects of the sharp global fall in demand for Chinese products, while several of the world’s leading economies experienced negative or stagnant economic growth. From 2008 to 2012, China’s real GDP growth averaged 9.2%. However, the economy has shown signs of slowing. Real GDP grew by 7.8% in 2012 and is projected to grow at the same level in 2013.

Some economists forecast that China will overtake the United States as the world’s largest economy within a few years. However, the ability of China to maintain a rapidly growing economy in the long run will depend largely on the ability of the Chinese government to implement comprehensive economic reforms that more quickly hasten China’s transition to a free market economy; rebalance the Chinese economy by making consumer demand, rather than exporting and fixed investment, the main engine of economic growth; and boost productivity and innovation. China faces numerous other challenges as well that could impede future economic growth, such as widespread pollution, growing income disparities, an undeveloped social safety net, and extensive involvement of the state in the economy. The Chinese government has acknowledged that its current economic growth model needs to be altered. In 2006, the Chinese government formally outlined a goal of building a “harmonious socialist society” by taking steps to lessen income inequality, improve the rule of law, enhance environmental protection, reduce corruption, and improve the country’s social safety net (such as expanding health care and pension coverage to rural areas). In addition, the government has announced plans to rebalance the economy and boost innovation.

China’s economic rise has significant implications for the United States and hence is of major interest to Congress. On the one hand, China is a large (and potentially huge) export market for the United States. Many U.S. firms use China as the final point of assembly in their global supply chain networks. China’s large holdings of U.S. Treasury securities help the federal government finance its budget deficits. However, some analysts contend that China maintains a number of distortive economic policies (such as protectionist industrial policies and an undervalued currency) that undermine U.S. economic interests. They warn that efforts by the Chinese government to promote innovation, often through the use of subsidies and other distortive measures, could negatively affect many leading U.S. industries. This report surveys the rise of China’s economy, describes major economic challenges facing China, and discusses the implications of China’s economic rise for the United States.


Date of Report: July 23, 2013
Number of Pages: 43
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Human Rights, Civil Unrest, and Political Reform in Burma in 2013

Michael F. Martin
Specialist in Asian Affairs

An accurate and objective assessment of the status of human rights, civil unrest, and political reform in Burma is critical to congressional oversight of the Obama Administration’s conduct of U.S. policy towards the country, as well as any congressional examination of U.S. policy towards Burma. CRS Report R43035, U.S. Policy Towards Burma: Issues for the 113th Congress, examines the discernible shift in the conduct of U.S. policy towards Burma that has taken place over the last two years. CRS Report R42939, U.S. Sanctions on Burma: Issues for the 113th Congress, summarizes the existing U.S. economic and political sanctions imposed on the country, including the conditions with respect to human rights and democracy necessary to terminate those sanctions.

The Obama Administration and many other observers have focused their analysis on the apparent progress that has been made since Burma’s military junta transferred power to a new, quasicivilian government in 2011. These analyses highlight the country’s political reforms and human rights improvements, while acknowledging that the situation remains fragile and reversible.

This approach implicitly assumes that Burma’s political leaders, particularly President Thein Sein, are committed to making further political reforms designed to establish a democratic government that respects the human rights of its people. To date, neither Thein Sein nor the nation’s other political leaders, including Aung San Suu Kyi, have provided a fully detailed vision of post-reform Burma or a clear roadmap for continuing political reforms or addressing the grievances of ethnic minorities. One critical question for U.S. policy is how to address conditions in a country that has begun a process of political reform, but where substantial human rights abuses continue. Given current conditions, many observers believe it is unclear whether future political reform in Burma will be fully consistent with the goals established in U.S. laws that form the basis of U.S. policy in Burma.

This report examines the current situation in Burma from the implicit perspective shaped by U.S. laws setting policy toward Burma, and discusses the challenges of responding to reforms in a nation in political transition which has gone only part way to dealing with human rights abuses. In general, these laws establish a set of standards or thresholds to achieve before the sanctions are lifted and bilateral relations are normalized. Based on the criteria enumerated in laws, this report concludes: (1) prospects for an end to internal inter-ethnic conflict and national reconciliation appear slim in the short-run; (2) the critical political forces in Burma do not currently share a common vision of or path towards a democratic civilian government; and (3) human rights abuse remain a serious problem in Burma, and most civil liberties are subject to major restrictions.

With respect to specific criteria mentioned in sanctions laws—ending the nation’s ethnic conflicts, protecting human rights, and establishing a democratic civilian government based on the rule of law—the report recounts that (1) The ceasefire negotiations between the Burmese Government and various ethnic organizations appear to have stalled at a preliminary stage; (2) Ethnic and religious tensions have erupted in various parts of the country, leading to the deaths of dozens of people and the creation of thousands of internally displaced persons; (3) Reports of serious human rights abuses appear in the media on a regular basis, particularly accounts of the Burmese Army abusing non-combatants in conflict areas; (4) Hundreds of political prisoners remain in detention; (5) The status of the 2008 constitution is a pivotal issue for political reform and national reconciliation; and (6) The views of the Burmese military about the nation’s reforms remain unknown. This report will be updated as circumstances warrant.


Date of Report: June 20, 2013
Number of Pages: 36
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