The U.S. Department of State confirmed Tuesday that it had notified Congress of its decision to allow U.S. companies to sell Taiwan defense articles and services to support and upgrade its existing air defense radar systems.
Philip Crowley, assistant secretary of state for public affairs, said during a regular news briefing that the State Department had notified Congress as required under the Arms Export Control Act of the proposed direct commercial sales (DCS) between Taiwan and private U.S. companies.
Under the DCS program, Crowley said, the foreign customer enters into a direct relationship with a private U.S. company, which must then apply for an export license from the State Department in accordance with U.S. law.
The decision to approve these export licenses will allow the commercial export to Taiwan of defense services, technical data and defense articles to support Taiwan’s existing air defense radar system and improvements to existing radar used in Taiwan’s Ching-kuo indigenous defense fighter aircraft, Crowley said.
He further said the authorizing of the export licenses is fully consistent with Washington’s “one China” policy based on three U.S.-China joint communiques and the Taiwan Relations Act.
Asked whether the latest arms sales to Taiwan will draw strong protests from Chinese authorities, Crowley said that he will “let China react to this as they see fit.”
Rupert Hammond-Chambers, president of the U.S.-Taiwan Business Council, said during a visit to Taiwan in June that the State Department had been forced to defer three arms sales to Taiwan under Chinese pressure.
However, the council, which groups U.S. companies with interests in Taiwan, said Tuesday that the U.S. administration notified Congress Aug. 12 of its decision to approve the sales.
The council further said it believes the latest State Department decision will contribute to returning to normal U.S. arms sales to Taiwan.
In the past, the United States usually sold arms to Taiwan under its Foreign Military Sales (FMS) system, with the U.S. government supervising bidding, production and delivery of the defense articles, services and technological data.
Under the FMS system, the U.S. government is responsible for enforcing the sales contracts. The model operates as if it is the U.S. government procuring the items from private contractors and reselling them to the foreign customer. The FMS system is more costly for the procuring countries because they have to foot the U.S. government’s administrative bill, but the deal is less risky and offers greater guarantee of success.
In contrast, the DCS system is more flexible and costs less for the procuring country. However, it is also less transparent and less secure. As export licenses issued under the DCS system remain valid for only four years, procuring countries face higher risks of any deal going into default.
State Department studies show that only 50 percent of approved DCS deals are actually substantiated and delivered. According to statistics compiled by the Center for International Policy — a U.S. think tank — about 52 percent of U.S. arms deals struck between 1986 and 1996 were brokered under the DCS system.
The think tank said foreign countries that opt for the DCS system tend to be familiar with the U.S. defense industry and capable of directly negotiating prices with U.S. defense contractors. Taiwan on the other hand has seldom used the DCS system.
Both the DCS and FMS systems require the U.S. administrative branch to notify Congress of each approved arms deal worth more than a specified amount of money. The deal will automatically take effect if Congress does not pass a resolution against the deal within 30 days.
As the executive branch tends to reach consensus with Congress on specific deals before serving formal notice, there is little in the way of precedent in which Congress has voted against such deals.
However, it remained unclear why the State Department referred the Taiwan arms sales during the Congress recess rather than the normal practice of submitting the referral during the Congress session.