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Hearing: “The Taiwan Relations Act: The Next Twenty-Five Years”
Wednesday, April 21, 2004, 10:30 AM
Committee on International Relations
U.S. House of Representatives

Prepared Statements by:
•  The Honorable Henry J. Hyde
• Representative James A. Leach
• Assistant Secretary of State James A. Kelly
• Assistant Secretary of Defense Peter W. Rodman
• William Kristol, Chairman, Project for the New American Century
• Dr. John Fuh-sheng Hsieh, Professor of Political Science at the University of South Carolina
• Dr. Richard Bush, The Brookings Institution
• Ming Wan, George Mason University

Opening Remarks of the Honorable Henry J. Hyde

Good morning, and welcome to the Full Committee Hearing on “The Taiwan Relations Act: The Next Twenty-Five Years.”

The Taiwan Relations Act, which marked its twenty-fifth anniversary of enactment on April 10th, has stood the test of time as one of the landmark pieces of Congressional legislation dealing with international relations. As one of a small group of Members remaining in the House who were actually serving at the time of the TRA’s creation, I remember well the dilemma that faced the Congress at the time. President Carter’s decision to move forward with the formalization of official relations with the People’s Republic of China, which included meeting Beijing’s demand that this Republic sever all diplomatic ties with an old ally, was a cause of great consternation for many in the Congress. How could one engage fully with a rising power, which ruled the world’s largest population, without at the same time casting aside an old friend, something which the American people and their representatives found to be unacceptable and even repugnant?

The dilemma caused by the break in diplomatic relations between Washington and Taipei – a break which, according to opinion polls, was opposed by a majority of the American people who responded at the time – was further complicated by the wording of the Shanghai Communique of 1972. This document, agreed to by President Richard Nixon and Chinese Communist Party Chairman Mao, stated that “all Chinese on either side of the Taiwan Strait maintain that there is but one China and that Taiwan is a part of China. The United States does not challenge that position.”

What was the way out of this dilemma? The way was found through the genius of the Taiwan Relations Act. The Act clearly stated in its opening paragraphs the intention “to make clear that the United States decision to establish diplomatic relations with the People’s Republic of China rests upon the expectation that the future of Taiwan will be determined by peaceful means.” Many of the great Congressional leaders, such as Senator Barry Goldwater, who met the challenge to ensure that there would be no use of force in the Taiwan Strait and that the future of Taiwan would only be determined with the express consent of the people of Taiwan, have passed into history. However, we are fortunate to have with us today one of those original leaders. Let me recognize former Congressman Lester Wolf of New York, who as Chairman of the Asia Subcommittee of the then-House Committee on Foreign Affairs, played an instrumental role in moving the TRA forward to its final passage. Mr. Wolf, when we look at the peace and prosperity which has blossomed across the Taiwan Strait in the past quarter century, it is clear that we owe you and your fellow Members an expression of thanks for taking the lead on the implementation of the Taiwan Relations Act.

Under the security umbrella provided by the Taiwan Relations Act, the people of Taiwan have been able to move forward dramatically in the past twenty-five years. The Act, by “making available to Taiwan such defense articles and defense services in such quantity as may be necessary,” assured that the people of Taiwan did not have to live in fear that a Bamboo Curtain would suddenly descend upon them through provocative military action. With that energetic drive for which the Chinese people are famous throughout the world unfettered, the people of Taiwan have produced an economic miracle which, through the presence of over 300,000 Taiwanese entrepreneurs and their families, is now being transplanted across the Taiwan Strait to the Chinese Mainland. We can only hope that, over time, the democratic fruits of Taiwan’s miraculous evolution can be transplanted to the Mainland as well.

However, one, should not underestimate the dangers implicit in the present state of cross-Strait relations, a situation which is fraught with the potential for miscalculation. The continued build-up of missiles in areas of the People’s Republic of China adjacent to the Taiwan Strait, with the number now approaching five hundred, can only be interpreted as a form of coercion, which the TRA stipulates would be “a cause of grave concern to the United States.” One purpose of this hearing is to examine whether the current package of defensive weapons made available to Taiwan, given the escalating arms build-up on the other side of the Taiwan Strait, is sufficient to meet Taipei’s defensive needs, or whether supplementary provisions are required. The Taiwan Relations Act has proven to be a source of stability in what is fast becoming the world’s most economically vibrant region. The maintenance of the status quo, until there is a peaceful evolution of conditions, is extremely vital. As President Bush famously noted, we “oppose actions to unilaterally change the status quo” by either side. The current situation is in a delicate balance, which it is in the interest of all to maintain. The interest and welfare of the people of Taiwan would not be served by any sudden altering of that balance if the result is an increased likelihood of the use of force. I do not want to leave you all here today with the impression that I am a pessimist when it comes to the ultimate resolution of cross-Strait relations. As I noted in remarks at Qinghua (CHING-WA) University in Beijing in December 2002, “after many years and great struggle, the people on Taiwan have established a stable and vibrant democracy.... I can well remember when such a thing was prophesied to be an impossibility, when the received wisdom was that democracy and Chinese culture could never be combined, that both would forever be foreign to each other. But Taiwan’s experience has demonstrated that that view was simply mistaken and without merit....Taiwan’s attainment of real democracy has established a deep and enduring bond between it and the United States.”

And this has significance for the people on both sides of the Taiwan Strait. Chinese people on the Mainland are moving increasingly away from a centrally controlled economy to one based upon free market forces, a system with deep roots in America. It is my hope that Taiwan will serve as a lighthouse for democracy off the Chinese coast which will beam a democratic political system into China as well.

As I told Chinese leaders in Shanghai during my visit there, it is my hope that, over the next twenty-five years, the expanding commercial, cultural and family ties brought about by the ever-increasing Taiwanese business community in the Shanghai area will serve to greatly alleviate those political differences which seem of such paramount importance at the present time. Given enough time – perhaps the one hundred years that Chairman Mao once promised for dealing with the Taiwan issue – there can be genuine reconciliation by the people on both sides of the Taiwan Strait. And then the Taiwan Relations Act will have served the best interests of not only the people of Taiwan but of the people in the East Asian region as a whole. I now turn to my friend and colleague, Tom Lantos, the Ranking Democratic Member, for his opening remarks.

Representative James A. Leach Chairman, Subcommittee on Asia and the Pacific

Thank you, Mr. Chairman. This month marks the 25th Anniversary of the enactment of the Taiwan Relations Act (TRA) and as you pointed out, it is appropriate to acknowledge the leadership of Lester Wolf, who helped shape the legislation and who has subsequently become the world’s leading historian on the Act. As one who was a proponent of the Act, I am proud of a small provision I authored relating to human rights and democratization. Impressively, following the leadership of Sun Yat-sen, Taiwan has developed over the past 25 years an extraordinary political democracy and, coupled with it, an opportunity oriented economy.

As demonstrated again last month by its closely contested presidential election, Taiwan is now a vibrant multiparty democracy. The miracle of Taiwan’s peaceful democratic transition is of great significance not only to the 23 million citizens of Taiwan, but also to the billion residents of the Chinese mainland who have yet to enjoy the political freedoms many Taiwanese now take for granted.

The government and citizens of the United States have an enormous vested interest in peaceful relations between Taipei and Beijing. All Americans strongly identify with Taiwan=s democratic journey and we join in celebrating the fact that the people of Taiwan now enjoy such a full measure of human freedom. More broadly, we are acutely conscious that the 20th century was the bloodiest century in world history. It witnessed wars related to traditional ethnic hatreds and desire for conquest. It also witnessed wars related to contrasting views of human nature and social organization. Hence it is in the vital interests of all parties to recognize that caution should be the watchword. Political pride must not subsume the necessity of rational restraint. Peaceful solutions to political differences are the only reasonable framework of future discourse between the mainland and the people of Taiwan. In an American historical context there is an assumption that the precepts of self-determination and independence are interlinked. For the sake of peace and security for Taiwan and the broader Asia-Pacific region, there would appear to be no credible option except to recognize that these precepts are juxtaposed on one place on the planet – Taiwan. Taiwan can have de facto self-determination – meaning the ability of a people to determine their own fate through democratic means – only if it does not attempt to be recognized with de jure sovereignty by the international community.

While clarity of national identity is psychologically attractive, there is clearly greater security for the Taiwanese people in political ambiguity. There is nothing to be gained by steps toward independence if they precipitate a catastrophic and unwinnable conflict between the mainland and island. Hence, as we make it clear to China that the U.S. is steadfastly committed to ensuring that the status of Taiwan not be altered by the use of force, we also have an obligation not to entice Taiwan through ill-chosen rhetoric of “ours” or “theirs” into a sovereignty clash with China. Substantial Taiwanese self-determination is clearly possible only if sovereign nationalist identity is not loudly trumpeted.

Together with our historic “One China” policy, the Taiwan Relations Act has made an enduring contribution to ensuring peace and stability in the Taiwan Strait and provides a sturdy framework to help ensure Taiwan's security. From a Congressional perspective, the U.S. must continue to oppose any attempt by either side to unilaterally change the status quo in the Taiwan Strait. Likewise, both sides should refrain from actions or statements that increase tension or make dialogue more difficult to achieve.

I am a firm believer in the power of people-to-people and cultural relations to bring societies together in world affairs. Rather than setting deadlines for unification, seeking to isolate Taiwan or continuing a counterproductive military buildup, Beijing would be well-advised to emphasize the “soft power” of culture and economics in its relations with Taipei. Granting scholarships, for instance, to Taiwanese students is likely to yield far greater dividends than misdirected investment in threatening missile systems. Coupled with progressive political evolution in Beijing, the increasing cultural and economic intertwining of China and Taiwan is the most credible basis for evolving, mutually acceptable accommodations.

In any regard, there should be no doubt that Congress stands together with the Administration in a common determination to fulfill U.S. obligations under the TRA. As we celebrate this Act and with it the strong bonds of friendship between the United States and Taiwan, the people of Taiwan can count on the United States to maintain a steady and constructive policy toward peace in East Asia and the Taiwan Strait area.

Statement by Assistant Secretary of State James A. Kelly

Mr. Chairman, it is a pleasure to appear before you and the other members of the Committee today. I welcome the opportunity to provide an overview of U.S. policy toward Taiwan, as well as the Administration’s assessment of relations across the Taiwan Strait, the current situation in Taiwan, and the challenges that lie ahead.

This month we mark the 25th anniversary of the Taiwan Relations Act. The TRA, along with the three U.S. China Joint Communiqués and our one China policy, form the foundation for the complex political and security interplay among China, Taiwan and the United States.

Looking back over the past three decades, I think we can congratulate ourselves on crafting a policy that has been THE key to maintaining peace and stability in the western Pacific while helping to ensure Taiwan's prosperity and security. Without denying the challenges and difficulties that remain, I can confidently report that because of the leadership of seven U.S. Presidents and active participation of the Congress, our relations with both China and Taiwan --- economic, political, cultural, and social --- are far closer and deeper than most would have ever predicted.

Equally important, our policy and the TRA have made vital contributions to easing tensions between Taiwan and the PRC and creating the environment in which cross-Strait people-to-people exchanges and cross-Strait trade are flourishing and creating, we hope, the necessary conditions for peaceful resolution of cross-Strait differences.

Core Principles It is useful to reiterate the core principles of our policy:

The United States remains committed to a our China policy based on the three Joint Communiqués and the Taiwan Relations Act;

The U.S. does not support independence for Taiwan or unilateral moves that would change the status quo as we define it;

For Beijing, this means no use of force or threat to use force against Taiwan. For Taipei, it means exercising prudence in managing all aspects of cross-Strait relations. For both sides, it means no statements or actions that would unilaterally alter Taiwan’s status;

The U.S. will continue the sale of appropriate defensive military equipment to Taiwan in accordance with the Taiwan Relations Act; and

Viewing any use of force against Taiwan with grave concern, we will maintain the capacity of the United States to resist any resort to force or other forms of coercion against Taiwan.

Our foremost concern is maintaining peace and stability in order to advance U.S. interests, spare the region the dangers of war, safeguard Taiwan's democracy, and promote China’s constructive integration into the global community as well as the spread of personal freedom in China. Because the possibility for the United States to become involved in a cross-Strait conflict is very real, the President knows that American lives are potentially at risk. Our one-China policy reflects our abiding commitment to preserve peace in the Taiwan Strait so long as there are irreconcilable differences.

“Status Quo” Message Aimed at Both Sides

The President's message on December 9 of last year during PRC Premier Wen Jiabao’s visit reiterated the U.S. Government’s opposition to any unilateral moves by either China or Taiwan to change the status quo. This message was directed to both sides.

The President and the senior leadership of this administration consistently make clear to Chinese leaders that the United States will fulfill its obligations to help Taiwan defend itself, as mandated in the Taiwan Relations Act. At the same time we have very real concerns that our efforts at deterring Chinese coercion might fail if Beijing ever becomes convinced Taiwan is embarked on a course toward independence and permanent separation from China, and concludes that Taiwan must be stopped in these efforts.

Democracy in Taiwan

The 2004 presidential election was a testament to Taiwan’s vibrant democracy. More than eighty percent of eligible Taiwan voters turned out to participate in a free and fair selection of their next President. Although the margin of victory was razor-thin --- only one-fifth of one percent --- and the attempted assassination of President Chen and Vice President Lu marred the election campaign’s final days, the people of Taiwan behaved well and with restraint. We are confident that both sides will use the established legal mechanisms to resolve any questions about the outcome of the election. This matter is Taiwan’s internal affair.

We applaud the success of democracy in Taiwan and the dedication of Taiwan's people to the rule of law. This position is consistent with the deeply held values of the American people. Taiwan is a most complex and, in some ways, inconsistent polity. Its economic participation in the mainland Chinese economy is at an unprecedented level, yet it is now undeniable that Taiwan identity has emerged as a political and social issue on the island that figures in election campaigns. However, reliable polling also consistently demonstrates that a clear majority of Taiwan residents prefer the continuation of the status quo to either independence or reunification. The U.S. strongly supports Taiwan's democracy, including the right of its people to elect their leaders and make the full range of decisions about their security, economy, foreign relations, and other issues. But we do not support Taiwan independence. A unilateral move toward independence will avail Taiwan of nothing it does not already enjoy in terms of democratic freedom, autonomy, prosperity and security. Realistically, such moves carry the potential for a response from the PRC – a dangerous, objectionable and foolish response -- that could destroy much of what Taiwan has built and crush its hopes for the future. It would damage China, too. We, in the United States, see these risks clearly and trust they are well understood by President Chen Shui-bian and others in Taiwan.

While strongly opposing the use of force by the PRC, we must also acknowledge with a sober mind what the PRC leaders have repeatedly conveyed about China's capabilities and intentions. The PRC refuses to renounce the use of force regarding Taiwan despite our consistent representations stating they should do so. PRC leaders state in explicit terms that China considers Taiwan’s future a “vital national interest” and that the PRC would take military action in the event Taiwan declares independence. While we strongly disagree with the PRC's approach, and see military coercion as counter-productive to China's stated intent to seek a peaceful outcome, it would be irresponsible of us and of Taiwan's leaders to treat these statements as empty threats.

What is more, PRC military modernization and the increasing threat to Taiwan indicate to us that Beijing is preparing itself to react in just such a possibility. We encourage the people of Taiwan to regard this threat equally seriously. We look to President Chen to exercise the kind of responsible, democratic and restrained leadership that will be necessary to ensure a peaceful and prosperous future for Taiwan.

There are uncomfortable realities, yet they are facts with which we must grapple. As Taiwan proceeds with efforts to deepen democracy, we will speak clearly and bluntly if we feel as though those efforts carry the potential to adversely impact U.S. security interests or have the potential to undermine Taiwan’s own security. There are limitations with respect to what the United States will support as Taiwan considers possible changes to its constitution. We are uncertain about the means being discussed for changing the constitution. We do no one any favors if we are unclear in our expectations or obfuscate where those limitations are. The President's policy regarding our opposition to unilateral changes to the status quo will be reinforced in this dialogue with Taiwan about its political evolution.

Taiwan is a success story for democracy in Asia and around the world. We feel strongly that others can benefit from knowing more about Taiwan's achievements. We will explore with our friends in Taiwan how they may be able to promote their story to a global audience, and how we can help to make Taiwan's instructive example available to all countries that are attempting to institute democratic reforms. We can only do this, Taiwan can only do this if it avoids unilateral steps that risk destroying all that it has accomplished.

The United States and Cross-Strait Differences

The United States is not a direct participant in the dispute between the PRC and Taiwan, but we have a strong interest in doing all we can to create an environment that is conducive to a peaceful resolution. Resuming the dialogue between the two sides is an important first step. A large part of that effort consists of our promoting a strong bilateral relationship between the United States and the PRC, and a strong unofficial relationship between the United States and Taiwan. We desire and need good relations with both, and believe this positions us best to assist the two sides in getting to the negotiating table on mutually agreeable terms. Indeed, we believe both sides desire and need good relations with one another.

The process of cross-Straits dialogue and contact has moved fitfully over the last 15 years. In the late 1980s, the prospects for cross-Strait reconciliation and dialogue began to take shape with the lifting of martial law in Taiwan and the opening up the mainland Chinese economy and society. The Nationalist government on Taiwan not only lifted the ban on visits to the Mainland for family reunions, but also allowed the distribution and publication of PRC books and initiated discussion on future cross-Strait trade and investment links. The 1990s ushered in a decade of incremental consensus-building. Both sides agreed in 1992 that there was one China, but left each side free to express their interpretation of the concept. This ambiguity and decision to reserve differences cleared the way in 1993 for the first high-level meeting in Singapore between heads of the two private intermediary organizations - Taiwan's Straits Exchange Foundation (“SEF”) and the PRC's Association for Relations Across the Taiwan Strait (“ARATS”).

Lower-level talks continued on a fairly regular basis until they were suspended by Beijing in 1995 after President Lee Teng-hui visited the U.S. The Lee visit prompted China to overreact and launch missile tests and military exercises along the Taiwan Strait. The United States responded quickly to the impending crisis, emphasizing our deep concern to Beijing in diplomatic channels and directing the movement of two aircraft carrier battle groups into the waters off Taiwan. Beijing's heavy-handed response was one factor that helped secure Lee’s win in Taiwan’s first presidential election by universal suffrage in 1996.

Unofficial exchanges resumed in 1997 through informal meetings between personnel of the two sides' unofficial representative organizations. Direct SEF-ARATS contacts resumed in April 1998, and the SEF Chairman Koo Chen-fu visited the Mainland in October 1998. Koo and ARATS chairman Wang Daohan agreed to further dialogue on political, economic, and other issues, and Wang agreed to make a return visit to Taiwan. His visit, however, was cancelled following statements made by President Lee to the Voice of Germany radio on July 9, 1999 that relations between the PRC and Taiwan should be conducted as "state-to-state" or at least as "special state-to-state relations." ARATS immediately rejected Lee’s statement and called it a serious violation of the “1992 consensus.”

In March 2000, Democratic Progressive Party candidate Chen Shui-bian became the first opposition party candidate to win the presidency. His victory resulted in the first-ever transition of the presidential office from one political party to another, validating Taiwan's democratic political system. During his May 20, 2000 inauguration, President Chen called for resuming the cross-Strait dialogue without any preconditions. President Chen stated that such talks should be conducted on the basis of the ‘spirit of 1992’. He also pledged (1) not to declare independence; (2) not to change Taiwan’s official designation as the Republic of China; (3) not to insert the ‘state-to-state’ theory into Taiwan’s constitution; and (4) no plebiscite or referendum on sovereignty issues. He also agreed not to abolish the Guidelines for National Reunification and the National Unification Council. The PRC, however, has insisted that President Chen must recognize the ‘one China principle’ before official talks can resume. Despite the differences between Taiwan and the PRC, unofficial contact between the two sides has grown significantly. Taiwan continues to relax restrictions on unofficial contacts with the PRC, and cross-Strait interaction has mushroomed. In January 2001, Taiwan formally allowed the ‘three mini-links’ (direct trade, travel, and postal links) from two small islands very close to the mainland to Fujian Province. The following year, President Chen defined the status quo as being “one country on each side of the Taiwan Strait”, once again sparking criticism from Beijing and his domestic opponents.

Our position continues to be embodied in the so-called "six assurances" offered to Taiwan by President Reagan. We will neither seek to mediate between the P.R.C. and Taiwan, nor will we exert pressure on Taiwan to come to the bargaining table. Of course, the United States is also committed to make available defensive arms and defensive services to Taiwan in order to help Taiwan meet its self-defense needs. We believe a secure and self-confident Taiwan is a Taiwan that is more capable of engaging in political interaction and dialogue with the PRC, and we expect Taiwan will not interpret our support as a blank check to resist such dialogue.

In the final analysis, the Taiwan issue is for people on both sides of the Strait to resolve. This is the only way a peaceful and durable solution can be found and it is a vital element in guaranteeing long-term peace and stability in East Asia. Taiwan faces many challenges in the years ahead, and recurring crises with Beijing can only interfere with the central tasks of promoting democracy, ensuring economic growth, advancing the popular welfare, and enabling Taiwan’s security. Beijing likewise faces daunting challenges in overcoming poverty and backwardness, establishing the rule of law, and beginning a process of political reform and opening up. China would gain nothing from a conflict. It would undermine a historic transformation through which China has become a respected member of the international community. War in the Strait would be a disaster for both sides and set them back decades, and undermine everything they and others in the region have worked so hard to achieve. We continue to urge Beijing and Taipei to pursue dialogue as soon as possible through any available channels, without preconditions.

In the absence of a political dialogue, we encourage the two sides to increase bilateral interactions of every sort. Clearly, there would be economic benefits for both sides by proceeding with direct aviation and shipping links. The increasing people-to-people contacts may also ease tensions. It is also time that the two sides begin exploring confidence building measures that reduce the chance for military miscalculation and accidents, and improve the quality of communications in the event of a crisis. Any such mutual reassurance mechanisms should be truly mutual, and not a one-way pass for the other side.

U.S. Taiwan Security Relationship

The United States is committed to make available defensive arms and defensive services to Taiwan in order to help Taiwan meet its self-defense needs. A secure Taiwan is more capable of engaging in political interaction and dialogue with the PRC. The United States has provided Taiwan with a significant quantity of defensive weapons over the last twenty-five years, and during that challenging period has been Taiwan's most reliable -- and often only -- supplier of weapons.

The PRC has explicitly committed itself publicly and in exchanges with the United States over the last 25 years to a fundamental policy "to strive for a peaceful resolution to the Taiwan question." If the PRC meets its obligations, and its words are matched by a military posture that bolsters and supports peaceful approaches to Taiwan, it follows logically that Taiwan's defense requirements will change. However, the post-1999 PRC program of military modernization, including deployment of a steadily growing number of short range ballistic missiles (SRBM) targeted on Taiwan, undermines confidence in China's commitment to deal with the cross-Strait situation peacefully and requires a measured response on our part, under the TRA, to provide appropriate defensive military equipment to Taiwan. China’s missile deployments against Taiwan are increasing by 50-75 missiles per year. As Secretary Powell stated last month during a public speech, "China's military build-up opposite Taiwan is destabilizing. We urge a posture more conducive to the peaceful resolution of existing disputes."

Taiwan’s implementation of the National Defense Law and the revised Ministry of National Defense Organization Law, which brought Taiwan's military command and administrative structures clearly under civilian control, was a signal achievement long sought by the United States. We continue to urge the full implementation of civilian control over the military and the development of civilian expertise on security and military affairs.

After years of steadily declining budgets, Taiwan’s political leadership has stated that they are committed to spending more on defense. Over the past 10 years, Taiwan’s defense budget as a percentage of GDP has dropped from 4.75% to 2.6%. Taiwan’s FY04 defense budget is NT$260.00 billion (US$7.62 billion). This is up from NT$251.5 billion in 2003. However it still does not allow purchase of “big-ticket” items approved by the U.S. for sale to Taiwan since 2001. Recent major acquisitions that Taiwan has made include the purchase of four KIDD-class destroyers in 2003. These destroyers will fill gaps in the Taiwan Navy’s fleet air defense and Anti-Submarine Warfare (ASW) capabilities. The destroyers are being refurbished now and will be delivered to Taiwan in 2005. We also just notified Congress last month of a possible sale to Taiwan of two long-planned Ultra High Frequency long range Early Warning Radar systems. The estimated cost of these radars is US$1.776 billion. The radars will give Taiwan early warning and detection of ballistic and cruise missiles, as well as aircraft. These systems will be a vital component of Taiwan’s air and missile defense architecture.

Taiwan’s Ministry of National Defense is engaged now in the process of developing a special budget request that will enable Taiwan to acquire priority capabilities in missile defense and Anti Submarine Warfare (“ASW”). Taiwan's political and military leaders have formally recognized Taiwan's military needs to reform, moving away from a military dominated by ground forces to one that emphasizes jointness and is better suited to the task of defending against the PLA's increasingly modern air and sea forces. In support of Taiwan's efforts the United States is engaged in a range of interactions with Taiwan’s defense and military leadership consistent with the framework of U.S. policy, focused on acquisition of priority capabilities in areas such as Command, Control, Communications, Computers, Intelligence, Surveillance, and Reconnaissance (“C4ISR”), air/missile defense, anti-submarine warfare (ASW), and other planning and training exchanges. Our security assistance policy and arms sales to Taiwan are helping Taiwan build and maintain a self-defense capability that is flexible, joint, responsive to civilian control, and sufficient to meet the threat from Beijing.

It is important to note that our security relationship is not limited exclusively to ensuring the security of Taiwan. Taiwan is a strong partner in war on terror, which contributes in a very direct way to U.S. and global security. We hope to conclude the Container Security Initiative agreement with Taiwan soon. We also deeply appreciate the immediate and heartfelt response of the people and the government of Taiwan after the attacks of September 11 and the contributions of Taiwan to reconstruction of Afghanistan and Iraq.

Taiwan in International Organizations

The United States continues to be a strong supporter of Taiwan's participation in international organizations, either as a member, when possible, or in an appropriate form when membership is not possible. We actively support observer status for Taiwan in the World Health Organization (“WHO”). We want to find a way forward for Taiwan’s participation in the World Health Assembly that will receive broad support among WHO Member States. In order for this effort to succeed, the focus has to be on the importance of including Taiwan as part of global efforts to safeguard public health. In that regard, we encourage Taiwan's efforts as an active player and a responsible member of the international community on health issues. During the past three years, we have worked intensively with Taiwan representatives in Washington, Taiwan, and Geneva in order to advance the goal of participation by Taiwan in the WHO. We have held annual strategy meetings, most recently in early April 2004, to hear Taiwan's plans and to work together with Taiwan on how best to advance Taiwan's legitimate interest in contributing to the work of the WHO. Taiwan's problem obtaining observer status is certainly not due to a lack of U.S. commitment. We hope the PRC will adopt a more constructive view and will join in an effort that shows genuine compassion for the people of Taiwan. Although WHO observership explicitly does not require statehood and several WHO observers are not nations, the PRC has actively lobbied to block even the placement of consideration of Taiwan's observership on the World Health Assembly agenda. This is a mistake that only alienates the people of Taiwan. The question of Taiwan's participation in the WHO deserves a full vetting by the international community, and Taiwan can certainly count on the United States to vote in favor of including the Taiwan observership issue on the World Health Assembly agenda should the issue come to a vote. We hope to move beyond that question, and look forward to supporting an appropriate resolution, and ultimately voting in favor of Taiwan's candidacy for observership.

Taiwan: A Global Economic Player

In recent decades, Taiwan has successfully weathered an enormous economic transition. Fifty years ago, the island was primarily agricultural. By the 1970's, it had become a major exporter of labor-intensive goods such as shoes, textiles, and plastics. Today, Taiwan is a world leader in information technology products and its economy is increasingly oriented towards knowledge-based services. Taiwan’s economic growth is an area which has brought the two sides of the Strait closer together and has made Taiwan a major economic player on the world stage.

During the past twenty years, per capita GNP in Taiwan has grown from about $7400 in 1980 to an estimated $13,000 today. Entrepreneurial talent, coupled with forward-looking government programs, have enabled hi-tech industries to emerge, placing Taiwan companies in the top rung of semiconductor producers and information technology product manufacturers. The majority of the world's notebook computers, for example, are made by Taiwan firms -- an industry that did not even exist 15 years ago. Taiwan is the world's third largest holder of foreign currency reserves, America's eighth largest trading partner, and the world's seventeenth largest economy. The island has achieved its economic stature despite few natural resources and a relatively small domestic market. High levels of education and a dedicated work force have been among the major drivers of Taiwan's impressive economic development.

Development of the Cross-Strait Economic Boom

Despite the outbreak of SARS and ongoing political tensions, China became Taiwan's top trading partner in 2003, even without the presence of direct cross-Strait transportation. Japan and the U.S. dropped to second and third place, respectively. Trade between Taiwan and China reached $46 billion last year, up nearly 25% over 2002. Almost one-quarter of Taiwan’s exports went to China, while PRC imports made up 8.6% of Taiwan’s total imports. Taiwan’s trade surplus with the PRC grew by 13.4% last year.

The PRC is also the number one destination for investment by Taiwan businesspeople. Taiwan's Ministry of Economic Affairs approved $35 billion of Mainland investments between 1991 and 2003. Most private analysts believe the actual figure to be around $70 billion when undeclared projects are included along with money flows from Taiwan investments channeled through third locations. In 2003, Taiwan approved investment of $4.59 billion in the PRC. Estimates of the number of Taiwan citizens living full-time in the PRC run from 500,000 to as many as one million.

These robust cross-Strait economic ties began less than two decades ago. From 1949 until 1987, Taiwan had banned trade, investment, transportation and communications with the PRC. Beginning in 1987, Taiwan residents were allowed to visit the PRC in increasing numbers, and to invest so long as they went through a third location such as Hong Kong. As wage and land costs in Taiwan were soaring, labor-intensive Taiwan industries such as textiles, footwear, and plastics began departing the island for cheaper labor and land in the PRC and ASEAN countries. Much of Taiwan’s investment in the PRC reflects the normal cycle of business transition, from import substitution to export-led growth, from labor-intensive products to more capital- and technology-intensive goods, and from doing all operations in Taiwan to moving production off-shore to take advantage of an increasingly global economy. The advantages to Taiwan businesses of working in China were obvious, given the low cost labor, land and other inputs that have also attracted other foreign investors. Linguistic and cultural affinities gave Taiwan businessmen immediate advantages compared with non-Chinese investors, while for its part, the PRC welcomed its “Taiwan compatriots” to invest and trade in the mainland.

Taiwan’s trade with and investment in the PRC soared, although it is difficult to calculate exact figures because people, goods, and finance flow across the Strait indirectly, because both sides keep different statistics, and because a proportion of Taiwan investment in the PRC continues to go unreported. Whatever the exact figures may be, the trend has been clear. According to Taiwan statistics, two-way trade reached $25.8 billion in 1999. Only $4.5 billion of that was imports to Taiwan from the PRC, since Taiwan has restricted imports from the mainland. In the mid-1990s, Taiwan launched its “no haste, be patient” and “go south” investment policies aimed at slowing the flood of Taiwan investment in the PRC and directing it elsewhere. Despite these policies, the rate of growth of Taiwan’s investment in Southeast Asia slowed steadily, and there was an increase on average of 23% per year in realized investment in the PRC in the mid-to-late 1990s. Approximately 40% of Taiwan’s outward investment is now in the PRC.

The Three Links

Taiwan and China have yet to establish the "Three Links" -- direct trade, transportation, and postal services across the Taiwan Strait -- although as the cross-Strait economic relationship grows, the economic incentives to establish direct links will grow. In 2001, the "mini links" were created to allow travel and trade between Taiwan's offshore islands of Kinmen and Matsu and China's Fujian Province. Activity via the "mini links" has grown rapidly, but it remains a small part of overall trade. In early 2003, Taiwan permitted its air carriers to ferry Chinese New Year passengers back and forth across the Strait by way of "indirect charter flights" that touched down briefly in Hong Kong or Macau. Taiwan and China did not repeat the charter flights during the 2004 Chinese New Year, in part because the two sides could not agree on the terms for meetings to discuss how PRC carriers might also participate.

In addition to concern about over-dependence on a potential adversary, Taiwan worries that direct cross-Strait links could speed the “hollowing out” of Taiwan’s economy and create problems of unemployment in Taiwan. While Taiwan’s concerns about overdependence and hollowing out cannot be dismissed, these issues need to be seen in the broader context of global interdependence. Cross-Strait trade is not occurring in a vacuum, and both sides are connected to world trade. Even though approximately 25% of Taiwan's exports go to the PRC, most of those goods end up re-exported from China to developed country markets. For example, if the PRC were to adopt economic sanctions against Taiwan business due to a cross-Strait political crisis, much of the damage would fall on China itself, not just Taiwan. According to one 1997 study by a Taiwan’s Chung-hua Institute for Economic Research, if Taiwan’s exports to China were disrupted by one dollar, China’s exports produced by Taiwan invested companies would decline by five dollars. The negative impact on regional and global supplies, particularly in IT products where Taiwan continues to be a world leader, would be devastating. These factors may have been one reason why in 1995-1996, when cross-Strait tensions erupted and the PRC launched missile tests, China did not match its military threats with economic sanctions against Taiwan businesses. As a corollary, predictions that Taiwan businessmen invested in the mainland would pressure their government to make political concessions to China in 1995-1996 and 1999-2000 have also not proven correct, although some did urge their political leaders in Taipei to be cautious.

The Global IT Highway Runs Across the Strait

The IT global supply chain offers important insight into the relationship between globalization and cross-Strait trade. The PRC surpassed both Japan and Taiwan to become the world’s second largest information hardware producer in 2002, after the United States. Much of this was due to the steady migration of Taiwan industrial investment across the Strait. Taiwan is now second only to Japan as a source of total imports to the PRC, with a 12% share. Nearly three quarters of those imports from Taiwan to the PRC are production inputs for assembly and processing that are then re-exported. While China now ranks as a major player in global IT production, according to numerous private estimates, more than 50% of Mainland China's information technology production is generated in facilities run by Taiwan companies. Thus, China’s production in the IT sector depends on Taiwan, not the other way around. Taiwan’s foreign direct investment could be said to be an important component of China’s economic development and political stability.

Taiwan’s Economic Future

Economic relations with the PRC, which have been steadily liberalized in recent years, also will be a major factor in Taiwan’s economic prospects. Diversification of foreign direct investment is always a prudent practice, as is a realistic attitude toward China’s economic potential. With these principles in mind, Taiwan investment in the PRC can be a “win-win-win” solution for Taiwan, the PRC and the world economy as a whole. The island’s role in world trade is even more critical for Taiwan’s future overall competitiveness. Taiwan has emerged as a ranking international economy and an industrial powerhouse. As one of the Asian tigers, it has benefited from good policy, sound economic fundamentals, a good educational system, an outstanding workforce, and the suppleness of Taiwan’s industrial structure, which is dominated by small- and medium-sized firms. Today, Taiwan’s leaders are looking to new sectors such as biotechnology, optoelectronics, and nanotechnology as areas where Taiwan can maintain its world-class reputation and create new opportunities for growth. Taiwan's Challenge 2008 National Development Plan calls for an additional USD $16 billion, over six years, beyond existing commitments to improve infrastructure, facilitate R&D, and create new jobs. In order for the Challenge Plan to succeed, Taiwan will have to address both international and domestic market factors. It needs to continue with reform of the financial system, improve the investment climate, and continue to implement WTO accession commitments. Taiwan’s record of IPR piracy and protectionism for domestic producers and service providers in recent years has left much to be desired. In an increasingly knowledge-based economy, Taiwan will have to do more to protect intellectual property. Taiwan also needs to do more to enhance its attractiveness as a destination for more foreign direct investment. Such changes will position Taiwan to continue to play a major role in the international economy as well as to be an important economic partner of the United States.

Our Economic partnership

Today, Taiwan is the eighth largest trade partner of the United States. Taiwan bought $17.48 billion in U.S. goods in 2003, while the U.S. imported $25.9 billion from Taiwan last year. It is our sixth largest market for agricultural products, and ninth largest export market overall. We continue to encourage Taiwan to improve its protection for intellectual property, through strengthening both law and law enforcement, improve market access and transparency for rice imports, meet its multilateral and bilateral commitments on pharmaceuticals, and firmly establish an open market for telecommunications services. Taiwan has taken encouraging steps on IPR enforcement in the past year. While more remains to be done in all these areas, we hope Taiwan will continue and strengthen its efforts. This will in turn brighten prospects for stronger U.S.-Taiwan economic ties under our existing Trade and Investment Framework Agreement, and, if appropriate, future consideration of a possible Free Trade Agreement.


The Taiwan Relations Act has been a tremendous success, and we endeavor to make sure that success is sustained in the future. We have built a strong unofficial relationship with Taiwan that emanates from a foundation of shared values and mutual interests. Our interactions with Taiwan are to our mutual benefit in the economic sphere, in bilateral security interests, and global security. Taiwan is a good friend to the United States, as we are to Taiwan. As such, Taiwan can count on sustained US support as it addresses its many important challenges. This very much includes Taiwan's efforts to develop its democracy. And we expect Taiwan to respect our interests in stability embodied in the Taiwan Relations Act. On that basis of mutual acknowledgement of and respect for our interests, the road ahead is promising.

Thank you.

Prepared Statement of Peter W. Rodman Assistant Secretary of Defense for International Security Affairs

Mr. Chairman, Mr. Ranking Member, and Members of the Committee. I congratulate you for holding this hearing addressing the Taiwan Relations Act – the Next Twenty-Five Years. In light of the recent presidential elections in Taiwan and Vice President Cheney’s visit to China, this is an opportune time to take a close look at this important cornerstone of U.S. security policy in East Asia.

Twenty-five years ago, on January, 1, 1979, the United States normalized relations with the People’s Republic of China, terminated governmental relations with the governing authorities on Taiwan, and enacted the Taiwan Relations Act (TRA). Many changes that have occurred since then – the end of the Cold War as well as dramatic changes both on Taiwan and in China – but the framework of our overall policy has endured. This has underpinned both peace in the Taiwan Strait and a thriving democracy on Taiwan. As we look forward to the next twenty-five years, the TRA remains a crucial pillar of that policy. The TRA requires essentially two things from the United States Government: that we assist Taiwan in its defense, and that we ourselves retain the capacity to resist the use of force against Taiwan. I would like to explain how we approach these obligations.

U.S. Support for Taiwan’s Defense:

The United States Government actively engages with Taiwan to meet our commitments under the TRA. We closely monitor the security situation in the Strait, making available defense articles and services to Taiwan to ensure it can maintain a sufficient self-defense capability. We also work with Taiwan on a series of other initiatives to help Taiwan address shortcomings in its military readiness, and we maintain our own capabilities to assist in the defense of Taiwan if required.

Specifically, the TRA stipulates that “the United States will make available to Taiwan such defense articles and defense services in such quantity as may be necessary to enable Taiwan to maintain a sufficient self-defense capability.” The TRA states that “the President and the Congress shall determine the nature and quantity of such defense articles and services based solely upon their judgment of the needs of Taiwan, in accordance with procedures established by law.” The TRA further asserts that “such determination of Taiwan’s defense needs shall include review by United States military authorities in connection with recommendations to the President and Congress.” Section 2 (b) states: It is the policy of the United States… to consider any effort to determine the future of Taiwan by other than peaceful means, including by boycotts or embargoes, a threat to the peace and security of the Western Pacific area and of grave concern to the United States; to provide Taiwan with arms of a defensive character; and to maintain the capacity of the United States to resist any resort to force or other forms of coercion that would jeopardize the security, or the social or economic system, of the people on Taiwan. The United States takes these obligations very seriously. The President’s National Security Strategy, published in September 2002, calls for “building a balance of power that favors freedom.” Taiwan’s evolution into a true multi-party democracy over the past decade is proof of the importance of America’s commitment to Taiwan’s defense. It strengthens American resolve to see Taiwan’s democracy grow and prosper.

The United States remains committed to its undertakings toward Beijing – its commitment to the “Three Communiqués” of 1972, 1979, and 1982, and to our One-China policy. We encourage a peaceful resolution of the dispute, and oppose unilateral steps by either side that would change the status of Taiwan. But, especially for the Department of Defense (DoD), we cannot stress too strongly this country’s opposition to the use or threat of force. We consider that maintenance of a deterrent balance of power in the Strait is a contribution both to stability and to the incentive for a peaceful solution. This has been a bipartisan commitment. As President Clinton put it in February 2000, we “will continue to reject the use of force as a means to resolve the Taiwan question. We will also continue to make absolutely clear that the issues between Beijing and Taiwan must be resolved peacefully and with the consent of the people of Taiwan.”

Taiwan’s Challenges:
PRC Military Modernization

As it enters the 21st century, Taiwan faces significant challenges. China is growing into an economic powerhouse, and its new-found economic strength has enabled it to launch an ambitious military modernization. The PRC is steadily amassing greater military power which could be used to coerce or intimidate Taiwan into a political settlement on its (Beijing’s) terms. The PRC’s ambitious military modernization, and deployments across the Strait opposite Taiwan, raise concern about its declared preference for resolving differences with Taiwan through peaceful means. This modernization is aimed at improving China’s force options against Taiwan, and at deterring, countering, or complicating U.S. military intervention. It is focused on exploiting vulnerabilities in Taiwan’s national and operational-level command and control system, its integrated air defense system, and its reliance on sea lanes of communication for sustenance. As China seeks to provide its leadership with credible options for the use of force, Taiwan’s relative military strength will decline unless it makes significant investments in defense.

Taiwan’s Isolation

As China accelerates its force modernization, Taiwan remains isolated, especially in the area of security cooperation. In the international community, the United States stands almost alone in its willingness to assist in the security of Taiwan. Taipei’s isolation limits its choices on procurement and force modernization. Taiwan’s isolation also constrains its ability to exploit technological, organizational, and doctrinal aspects of today’s global military transformation. Finally, its isolation creates uncertainties with regard to procurement of foreign weapon systems, which in turn complicates development of a long-term, coherent force modernization strategy.

Other Challenges

Taiwan faces internal challenges in this respect as well. The difficulties it has encountered in fostering a national consensus over defense strategy, its highly charged partisan political competition, and Service parochialism, all complicate Taiwan’s force modernization. Over the last ten years, Taiwan’s defense budget has shrunk in real terms and as a proportion of its gross domestic product (GDP). We have made clear to our friends on Taiwan that we expect them to reverse this defense budget decline. Though our commitments to Taiwan are enduring, the American people and both the Executive Branch and Congress expect the people of Taiwan to make their own appropriate commitment to their freedom and security.

Overcoming Challenges:

These challenges are serious, but they are not insurmountable. The U.S. defense relationship with Taiwan seeks to reverse the negative trends in its ability to defend itself, thereby decreasing the prospects that U.S. military intervention would be necessary in a crisis. The goal is to strengthen deterrence, and to reinforce the prospects for a peaceful and just solution. For deterrence to be effective, we must be prepared to swiftly defeat any PRC use of force. The United States maintains an active dialogue with Taiwan’s defense authorities to better understand their current capabilities and future requirements, and to assist Taiwan in improving its defense.

Since 1997, DoD has conducted more than a dozen studies, reports, assessments, and surveys that have evaluated Taiwan’s legitimate defense needs. Armed with a solid base of knowledge and consistent with our legal obligations under the TRA, the U.S. is assisting Taiwan to create a professional, civilian-controlled defense establishment that is modern, joint, and able to function effectively should it be required to defend itself. Though a variety of forums and channels, DoD is supporting Taiwan in developing an integrated national security strategy; joint doctrine, and integrated capabilities for training, employing, and sustaining joint forces.

The U.S-Taiwan defense dialogue has succeeded in focusing attention on critical steps that must be taken in order to enhance Taiwan’s defense in the next three to five years. Taiwan has taken positive steps to modernize its C4ISR system and undercut the political and military utility of the PRC’s most effective means of coercion – its growing arsenal of increasingly accurate and lethal conventional ballistic missiles and ever more capable submarine force. Taiwan has invested in passive defense systems, streamlined its military force, addressed pilot shortages, and drafted and implemented a detailed plan for the recruitment and retention of civilian personnel.

While modernizing its force in a focused manner, Taiwan must redouble its efforts. Reversing the decline in its defense budgets should be a priority. We expect Taiwan to go forward with its plan to pass a “Special Budget” this summer to fund essential missile defense and anti-submarine warfare systems and programs. We urge all political parties in Taiwan to support this essential measure. We also believe that Taiwan should devote more resources to readiness, including personnel management and training. Taiwan should further strengthen its strategy and force planning processes, and develop the means to identify and correct deficiencies. We also recommend that Taiwan enhance interoperability among its Services.

China and U.S.-Taiwan Relations:

Our defense cooperation with Taiwan is consistent with our TRA obligations and reflects the serious security challenges posed by Beijing’s rapid military build-up across the Strait. The People’s Liberation Army’s growing sophistication, including its efforts to complicate U.S. intervention, calls for more cooperation between the United States and Taiwan to improve Taiwan’s ability to defend itself and reduce the danger to U.S. forces should China’s actions impose a crisis upon us. We have available a wide range of security assistance tools that are consistent with the unofficial nature of our relations with Taiwan.

The President’s National Security Strategy report stated this Administration’s goal of a constructive relationship with a changing China. But it also stated, with candor, some basic questions that remain unanswered about the path that China will follow in both its internal evolution and its military policies. The answers to these questions will be of central importance to the future of the Taiwan issue and of the TRA.

The United States has consistently made clear, since President Nixon’s historic breakthrough, that we would accept any solution freely agreed to by the parties on both sides of the Taiwan Strait. We have also being clear that we oppose unilateral efforts by either the PRC or Taiwan to change the status quo. In short, we are not the obstacle to resolution. But the United States has also consistently made clear, through every Administration since then, that a Chinese attempt to use force would inevitably involve the United States. There are a number of reasons why this is true:

First, whether an alliance or the careful articulation of the TRA, American words and the spirit behind them have a wider meaning. America’s allies and others who rely on us will be watching how we live up to our commitments.

Second, China knows that an attempt at forcible subjugation of the people on Taiwan would not only fracture the basis of the US-China relationship as spelled out in the Three Communiqués. It would also be judged around the world to be a rejection of international standards that champion peaceful solutions.

Thus, how China conducts itself in dealing with Taiwan will tell the world a great deal about how China – a rapidly emerging power – will use its growing strength. Will China continue on its peaceful course of integrating into the international system? Or will it resort readily to its growing military strength to resolve disputes? This basic question accounts for the harsh international reaction to Chinese missile launches during a Taiwan Strait mini-crisis in 1995-96. It remains an important question in the minds of all China’s neighbors.


Mr. Chairman, Mr. Ranking Member, and Members of the Committee: This is why a peaceful resolution of the Taiwan problem remains so crucial not only to the peoples of China and Taiwan, but to the international order. The Taiwan Relations Act has embodied this consistent U.S. policy for 25 successful years. The TRA, we are confident, will play the same positive role in the coming period.

Thank you.

Testimony of William Kristol Chairman, Project for the New American Century

Thank you for the invitation to appear at today’s hearing marking the 25th anniversary of the Taiwan Relations Act (TRA). As members of Congress consider issues relating to China and Taiwan, they might begin by considering something a “senior administration official” said last week about our policy on Israeli settlements and Palestinian refugees. “Eliminating taboos and saying the truth about the situation is, we think, a contribution toward peace. Getting people to face reality in this situation is going to help, not hurt” (Washington Post, April 15, 2004).

This statement applies equally to the Taiwan Strait. America’s policy toward Taiwan is ridden with taboos. In fact, one such taboo is the virtual prohibition on questioning whether our interests and those of democratic Taiwan are served by the various communiqués agreed to by Beijing and Washington since 1972. This reluctance to adjust U.S. policy to reflect changes in the strategic and political situation in the region has also meant that the TRA itself – if I am not mistaken – has never been amended.

Today, and in the coming months, we need an honest and public discussion of what we want to happen and not to happen in China and in Taiwan. We have for many years avoided such a discussion. It has been as if Taiwan’s survival as a democracy, and, for that matter China’s possible evolution into one, are not proper matters of polite conversation. Instead, we have pretended that there can be an unchanging “status quo,” that China is not seriously preparing for military action or other forms of coercion against Taiwan, and that Taiwan’s people would be amenable to unification if it were handled well.

Congress passed the Taiwan Relations Act to avert the worst consequences of President Carter’s decision in 1978 to break relations with Taipei, withdraw U.S. troops, and abrogate the mutual defense treaty. The TRA established important principles of U.S. policy – chiefly our insistence on a peaceful resolution of Taiwan’s fate, our opposition to aggression, including coercive acts such as boycotts or embargoes, and a commitment to Taiwan’s defense through the provision of defensive arms and the maintenance of America’s own ability to resist Chinese aggression against Taiwan. As you know, Congress also established a role for itself in providing for Taiwan’s defense needs and in determining any response to a danger that the president is required to report under the Act. The “one China” policy and the strategic ambiguity that came to govern U.S. policy are nowhere to be found in the law’s text. Yet, as any observer of U.S. China policy knows, the language of “one China” pervades U.S. policy. It is a mantra that every official must intone on virtually any occasion on which China or Taiwan is discussed.

The “one China” policy began as a way to defer the resolution of Taiwan’s fate until better conditions for resolving it prevailed. It purposely left the U.S. neutral about the outcome. Unfortunately, the policy has come to mean denying Taiwanese sovereignty and self-determination. Part of the problem is that the arcane and nuanced language that its advocates believe manages a complicated situation – and deters the non-expert from trying to criticize it – does not reflect the changes that have taken place on both sides of the Strait. It also invites constant pressure for revisions from Beijing. For example, over the past year, Beijing has campaigned to bring about a change in U.S. policy from “not supporting” Taiwan independence to “opposing it.” Officially, “not supporting” independence remains U.S. policy. This apparent slight difference is actually important. Not supporting Taiwan’s independence is consistent with longstanding policy of not predetermining the outcome of discussions or negotiations between China and Taiwan. Opposing independence appears to settle the matter and might give Beijing reason to believe that the U.S. might not resist China’s use of force against Taiwan, or coercive measures designed to bring about a capitulation of sovereignty.

At the same time, independence sentiment on the part of Taiwan’s people is neither frivolous nor provocative, but rather the natural manifestation of a process that the U.S. has supported. As my colleague Gary Schmitt wrote recently in the Wall Street Journal, “Taiwanese identity has grown in direct relation to the progress of democracy on the island. The people of Taiwan increasingly have come to think of themselves as Taiwanese as they have established themselves over the past decade as a self-governing people.” Viewed this way, Taiwan’s desirable democratic transformation has an unavoidable implication for U.S. policy on Taiwan – not to tilt against independence but toward it.

In short, the “one China” policy expresses neither the situation on the ground in Taiwan, nor U.S. values and interests. No one drafting a new U.S. policy toward Taiwan today would recreate the one the U.S. has pursued since the 1970s and 80s. Ever since its basic premises were set forth, the policy has been under pressure. The reason is obvious: the situation has changed. Taiwan’s people have established democracy. More importantly, they no longer claim the mainland or wish to join it. Even the Kuomintang – the Nationalist party – has abandoned its longstanding position regarding unification.

Meanwhile, across the Strait, economic growth has fueled China’s military modernization. There are at least 450 missiles pointed at Taiwan, and Beijing is acquiring other capabilities designed to help it take Taiwan, or coerce Taiwan to accept unification on Beijing’s terms. China’s leaders rely increasingly on nationalism, rather than communism, as the source of legitimacy for the regime. This will become more pronounced if, as predicted, labor unrest, the banking system, and the further collapse of state enterprises become more dire problems.

Future policy on Taiwan should be designed to reflect new realities. In the short term, we can take practical steps that reflect Taiwan’s importance as a fellow democracy, maximize its international standing, and improve U.S.-Taiwan defense cooperation.

Bilateral relations

The U.S. should reduce Taiwan’s international isolation by increasing high-level contacts. The number of visits to Taipei and to Washington by senior officials should be increased to the point that it is unremarkable. The administration must soon decide who will represent the United States at the upcoming inauguration of President Chen for his second term. It would be good to send someone of prestige and importance, especially in light of the administration’s handling of the congratulations to President Chen on his re-election. This is a perfect opportunity for the administration to signal Beijing that the future of U.S.-Taiwan relations will be more respectful of Taiwan’s democratic character. It would help if Washington sent an administration official of high rank from within the Bush administration. Serving cabinet members have visited Taiwan in the past, but none have visited Taiwan since 1998 when Secretary of Energy Bill Richardson was trapped in a high-rise hotel during an earthquake. Why shouldn’t the Bush administration send a cabinet officer to represent the U.S. at the May inauguration ceremony? Washington should also change the way it deals with the president of Taiwan. While the visits of Taiwan’s presidents have been increasingly dignified, the ad hoc nature of the policy on visits guarantees intense pressure from China and forces the U.S. to devote unreasonable amounts of effort to placating Beijing. It is frankly absurd that a democratically elected president cannot visit senior U.S. officials or even Washington, but general secretaries of the Chinese Communist Party have been to the White House. Taiwanese officials below the level of the president also need to be able to come to the U.S. and speak freely to the American public and the media. The fact that they do not may not be due to any particular policy directive. However, it is undeniably true that Taiwan’s international isolation has created ingrained habits – both here and in Taipei – that are extremely unhealthy and even counterproductive insofar as they prevent a frank sharing of views.

Defense and regional security

After the 1995 and 1996 missile volleys, the U.S. realized we were ill-prepared to coordinate defense of Taiwan with Taiwan’s own defense forces. Since that time, we have improved our preparations. These efforts should be continued, enhanced and made as public as possible to underscore our commitment to Taiwan’s defense. Greater openness about the nature and extent of America’s commitment to Taiwan’s defense would help deter Beijing and dispel ambiguity. Such openness would also benefit the people of the United States who, far from fearing America’s overseas commitments, understand the importance of America defending democratic allies.

Furthermore, Taiwan is more than just a dependent. It also cooperates with America’s security objectives. Last August, on receiving a request by the U.S., Taiwan forced a North Korean freighter to unload dual use chemicals. According to an American official, “we provided the intelligence and Taiwan stepped up to the plate.” In short, Taiwan is helping the Proliferation Security Initiative, an effort the Bush administration launched to stop nuclear proliferation. Taiwan should be allowed to join the core group of the PSI, which just recently added three new members. Incidentally, according to the State Department, the PSI is “an activity, not an organization,” so the question of statehood for membership is not an issue. By virtue of its democratic character, its strategic location, and its long history of working with the United States, Taiwan’s cooperation in regional security is imperative to U.S. interests. There is no reason that Taiwan should not be recognized not only as a participant in PSI, but also in other multilateral discussions, exercises, and operations among democratic countries in Asia.

U.S. efforts to draw Taiwan into the international community should also include a serious initiative to win Taiwan’s admission into the World Health Organization, including sponsoring its nomination for membership. Taiwan’s exclusion from the WHO vastly complicated efforts to deal with the spread of SARS. No one has forgotten the callous comment of the Chinese ambassador after Taiwan failed to win admission to the WHO as an observer last year: “The bid is rejected. Who cares about your Taiwan?” The Bush administration has expressed its support for Taiwan’s WHO membership. China, however, is uniquely talented at using leverage and threats in international fora, and the WHO is no exception. The U.S. and other sympathetic countries need to meet China’s ante and raise it.

Finally, a Free Trade Agreement between the U.S. and Taiwan would fit neatly within U.S. policy to build bilateral trade agreements. The Project for the New American Century held a conference on this idea, and found wide acceptance of the idea within the policy and business communities of both our countries. Politically, the impact would be extremely important.

With regard to China, we need to be quite clear that we expect Beijing not to attack or coerce Taiwan in any way, and that the costs to Beijing of attacking Taiwan would be more than it can bear. We also need to be clear that we look forward to China becoming a democratic country, like Taiwan. Then the people on each side of the Strait can decide their relationship and their future. When Vice President Cheney visited China last week, he made an impressive speech that spoke about democracy. But the Vice President used one key word that let China know that for now the U.S. does not consider democracy a priority for China. That word is “eventually.” Cheney said China’s people will “eventually ask why they cannot be trusted with decisions over what to say and what to believe.” “Eventually” was used with precision not only in this speech but also in President Bush’s widely praised speech establishing democracy as a foreign policy priority to the National Endowment for Democracy last November. America’s policy toward China is insuficiently directed toward democratizing China, and so long as that is true it will be more difficult to help Taiwan’s democracy survive.


Twenty five years ago, Congress checked the Carter administration’s policy on Taiwan. At the time, to quote one scholar, Beijing hoped that the U.S. withdrawal of support “would arouse a sufficient sense of vulnerability within the Nationalist government to make it more susceptible to overtures from the mainland.” Beijing decided that “[i]f Taiwan would only bow to Beijing’s sovereignty, then the Beijing government would promise to concede a very high degree of administrative autonomy to the Taipei authorities.” The famous “one country, two systems” formula that China claims to apply in Hong Kong was originally dreamed up with Taiwan in mind.

It didn’t work. Congress acted to pass the Taiwan Relations Act and China set its sights on Hong Kong. Since 1997, it has been quite clear that Beijing is not interested in or sincere about respecting autonomy under a “one country, two systems” arrangement.

Don’t misunderstand. America’s commitment to Taiwan is admirable. No other country could or would do what the United States has done. At the same time, no other country except the U.S. can hurt Taiwan or weaken it as much as the United States can.

The greatest test is still to come. China is very serious about taking Taiwan, and we have not done enough to dissuade it. Taiwan has transformed itself from a dictatorship to a democracy. That momentous change has very likely increased the chances of a conflict in the Taiwan Strait – not because Taiwan is provocative, but because China cannot abide Taiwan’s democratic character and the reality that it has become a separate, self-governing people. That is why U.S. clarity and resolve are so important.

A discussion of these and other issues needs to happen now and yield results right away. The Pentagon has estimated that the balance of forces in the Taiwan Strait will begin to tip in Beijing’s favor, perhaps as soon as next year. We need above all, therefore to deter any attack or coercion. And we need to rethink policy constraints developed for circumstances decades ago, while confronting greatly changed and still changing conditions in order to develop a new, sustainable policy for security and democracy in Taiwan and China for the present and future.

John Fuh-sheng Hsieh Professor of Political Science and Director of the Center for Asian Studies, University of South Carolina

The past twenty-five years have witnessed dramatic changes in the Western Pacific. China, in the late 1970s, launched economic reform and achieved spectacular economic success thereafter. Taiwan, in the wake of decades of successful economic development, lifted martial law in 1987 and quickly transformed itself into a full-fledged democracy. All these occurred in a peaceful international environment. Indeed, without peace and stability in the region, it is hard to imagine that changes of such magnitude would occur in short order. Many factors contributed to these remarkable changes, of course. But undoubtedly, the Taiwan Relations Act played a very important role therein. The Taiwan Relations Act conveys the message that the U.S. commitment to Taiwan and thus to peace, security and stability in the Western Pacific is credible. And since such a commitment is expressed in the form of a law passed by the U.S. Congress, it also sets the perimeters for any administration in handling the Taiwan affairs, bringing about consistency and stability in the U.S. policy toward the cross-Taiwan Strait relations. These are important ingredients in maintaining order in the region.

To be sure, the Taiwan Strait is one of the remaining flashpoints with the potential to go to war in the post-Cold War world. If not properly managed, a war may break out, which will be detrimental to all parties concerned.

The nature of the conflict between China and Taiwan has changed over the years. In the early days, it was an ideological conflict between a Communist China and an anticommunist Taiwan. However, things are different lately. On the one hand, China launched economic reform by reintroducing market mechanism. The Communist ideology gradually lost its salience. On the other hand, with democratization, national identity becomes the dominant cleavage underpinning Taiwan’s party configuration. Thus, on the island, there are people who believe that Taiwan should be an independent country separated from China for good. There are also those who insist that Taiwan should be unified with the mainland. There are still others who favor the status quo that is neither independence nor unification. So there are competing nationalisms in Taiwan—or competing nationalisms across the Taiwan Strait as well since the call for Taiwan independence is in direct contradiction to China’s claim that there is but one China with Taiwan being an integral part of it. Such conflicting claims are highly emotional, and may turn out to be explosive.

However, I am cautiously optimistic about the prospect for peace and stability across the Taiwan Strait. With the Taiwan Relations Act continuing to provide a credible, consistent, and stable commitment to the people of Taiwan, it will dissuade China from taking drastic actions against Taiwan. After all, economic development is on top of the Chinese leadership’s agenda now, and to develop China’s economy, a peaceful international environment is imperative. Accordingly, unless China really feels that Taiwan is drifting away, it is doubtful that it will take military actions against Taiwan.

As for Taiwan, the majority or close to a majority of the population supports the status quo as shown in various surveys. In this context, it is hard to believe that any Taiwanese leader would risk losing popular support by changing the status quo. If change means the declaration of independence, this will almost surely lead to war and the loss of the Chinese market which will have a devastating effect on the well-being of the people of Taiwan. It is unthinkable that any Taiwanese leader would choose this option and disturb peace and stability in the region.

The situation between China and Taiwan is certainly delicate. The Taiwan Relations Act, I believe, has served the U.S. national interests by providing an effective mechanism in maintaining peace and stability in the Western Pacific.

Richard Bush, The Brookings Institution

Key Points

In passing the Taiwan Relations Act twenty-five years ago, Congress helped fortify a Taiwan that was reeling from the shock of de-recognition and the end of the mutual defense treaty. In the subsequent quarter decade, the TRA has grown in importance as an element of U.S. policy, and as a symbol of American resolve.

The TRA has been effective because it has always been reinforced by a strong and continuing political commitment by the Congress and the American public. It is law and political commitment combined that have helped keep Taiwan secure and free and will do so in the future.

The recent election in Taiwan offered a clear choice to Taiwan voters between the pan-Blue camp, which favors a more conciliatory policy towards China and the pan-Green camp, which emphasized Taiwan identity and reform of the political order. China views President Chen with deep suspicion and believes that his political agenda is tantamount to the permanent separation of Taiwan from China, and therefore a fundamental challenge to Chinese interests. That perception may well be incorrect. Ensuring that Beijing does not over-react will require careful management on all sides.

The TRA has been an admirably flexible and effective instrument of U.S. policy and mechanism for the conduct of U.S.-Taiwan relations. It will remain so if the U.S. political commitment to the island remains strong, and fosters a policy consensus between the Congress and the executive branch. Because the U.S.-Taiwan relationship is a partnership – a partnership of democracies – the United States will best honor its TRA obligations if Washington and Taipei work together and maintain good communication.


Twenty-five years ago this spring, the Congress passed the Taiwan Relations Act (TRA). Members acted because they believed that President Carter struck a bad bargain in establishing relations with the People’s Republic of China. They felt that by giving into Chinese demands that he terminate diplomatic relations with Taiwan and end the mutual defense treaty, Carter had left the island profoundly vulnerable. They also were angry that the administration had pursued its China initiative without proper consultation with the Congress. They therefore used the TRA to shore up Taiwan’s position and demonstrate their desire to play their proper role in the making of foreign policy.

A lot has changed in a quarter-century. China was relatively weak militarily at the time that Congress worked to fortify Taiwan through the TRA. Now it is steadily modernizing its armed forces and acquiring the ability to project power on its periphery. Several hundred PRC missiles are just one way that the Chinese threaten Taiwan’s security.

Twenty-five years ago, Taiwan and China had no economic interaction whatsoever. But as labor costs on Taiwan escalated and China realized that it had to join the global economy to create prosperity and stability at home, Taiwan companies found the mainland to be a good place to re-locate their production facilities. China has received almost $100 billion in Taiwan investment and has replaced the United States as the island’s leading trading partner.

In 1979, Taiwan had an authoritarian system where it was a crime, for example, to advocate the total independence of Taiwan from China. Now Taiwan is a full, and sometimes rambunctious, democracy. The political spectrum is divided among those who favor some accommodation with China, some who are cautious, and others who want outright independence. For Beijing, this democracy creates a fear that Taiwan will slip away and turn its dream of unification into a nightmare.

Does the Taiwan Relations Act have any relevance in 2004, twenty-five years after it was written? I think it does. Although circumstances have changed, the law still reflects a strong political and legal commitment to Taiwan. Because China’s military power is growing, the U.S. security role is far more important today than it was in 1979. Because Taiwan is a democracy, Washington’s task of balancing political values and security interests is more complex. And because Taiwan is more complicated, its own actions can shape how America fulfills its TRA commitment. But the TRA still provides sound policy direction to the executive branch.

The Taiwan Election

The recent presidential election on Taiwan provides a useful context for assessing U.S. interests and the current relevance of the TRA. The election confirmed that there is a basic parity within the Taiwan electorate. On one side are those who favor a conciliatory policy towards China. These people vote for the pan-Blue coalition made up of the Nationalist Party (Kuomintang, KMT); the People’s First Party, and the New Party. The other side is made up of those who are more skeptical about China’s intentions and those who favor total and permanent separation. These people favored the pan-Green coalition composed of the Democratic Progressive Party and the Taiwan Solidarity Union. It is important to emphasize, however, that all political forces agree that Taiwan or the Republic of China is a sovereign state, and that China needs to accept that reality.

In winning re-election, President Chen increased his share of the vote from around 40 percent in 2000 to 50 percent this time, a remarkable achievement. This reflects his political skill and that of his party, the continuing growth of Taiwanese identity, and the fact that supporters of former President Lee Teng-hui, who cast their votes for Blue candidates in 2000, cast them for President Chen in 2004.

President Chen exercised his authority under Taiwan’s referendum law to call for two so-called defensive referenda, one on missile defense and one on the conduct of cross-Strait relations. These were held on election day, but the results were invalid because less than 50 percent of eligible voters cast ballots. In my view, this does not necessarily mean that the Taiwan public in principle rejected referenda as a mechanism for registering the public will. Rather, most pan-Blue voters declined to vote in the referenda because their leaders judged that President Chen had exceeded his authority in calling them. As far as I can tell from a distance, this was a clean election. Voters had a clear choice between policy alternatives. Taiwan has an excellent system for casting and counting ballots. No electoral system is perfect, of course. But if there is a recount, I am confident that it would accurately reflect the people’s choice.

I do believe that the election and its aftermath have created stresses on Taiwan’s institutions. The courts and the election commission are facing unprecedented demands concerning a recount. The police have had to cope with both demonstrations and the need to investigate the shooting of President Chen and Vice President Lu on the day before the election. It remains to be seen how the legislatures, which the pan-Blue barely controls, can perform effectively in a climate of parity and some polarization. And the pan-Blue coalition is facing its own challenge. It was less effective, in my view, in representing its constituency than President Chen was in mobilizing his. It must re-engineer itself if it is going to do a better job of reflecting the interests of the half of the population that supports it.

These stresses on institutions are certainly common in consolidating democracies. I am confident that Taiwan’s institutions can cope and improve. But there is work to be done. The Taiwan people have too much at stake. They deserve strong and effective political order.

That Taiwan’s democratic institutions are not fully consolidated is one of the reasons that President Chen has advocated constitutional reform and the use of referenda to register the public will. I believe that he will continue to pursue this agenda with determination. But he does face a major obstacle. He wishes to have the draft of a new constitution ratified through a referendum, but the current referendum law does not give him that authority. So he needs to amend that legislation. Hence, the legislative elections at the end of the year are pivotal. If the pan-Blue loses its majority, then it will be easier for President Chen to change the referendum law to allow him to call a referendum to approve a new constitution. If, on the other hand, the pan-Blue is able to retain control and maintains firm opposition, it will be able to block him from carrying out his initiatives.

President Chen’s proposal for constitutional revision raises a couple of questions. First of all, will the Taiwan public regard the process that he has laid out to be legitimate, since the current constitution lays out a different one? Second, will China see a new constitution approved by a referendum as a provocative challenge so serious that it demands a strong, even forceful response? Specifically, will China interpret constitutional revision as closing the door forever and completely on unification, which is its fundamental objective? There is, I am afraid, the possibility that China will misinterpret President Chen’s intentions and miscalculate in fashioning its response.

The Cross-Straits Paradox

The electoral conflict between the pan-Green and pan-Blue reflects the larger paradox of cross-Strait relations. Economically and socially, Taiwan is being pulled into China’s orbit. The island’s companies have little choice but to take advantage of the incentives that the mainland has to offer if they are to survive. Globalization dictates that if Taiwan companies—even high-tech companies—are to remain competitive, they must locate some of their activities in the PRC. As former Premier Vincent Siew has asserted, cross-Strait relations are critical to Taiwan’s medium- and long-term development. “Taiwan,” Siew said, “cannot afford to ignore the immense mainland market.”

At the same time, Beijing and Taipei have been at loggerheads over the terms and conditions under which a political reconciliation might take place. The PRC has insisted on its formula of one-country, two systems. First Lee Teng-hui and now Chen Shui-bian have rejected that formula and insisted that Beijing treat their government as an equal, sovereign entity with rights of participation in the international system, and that it renounce the use of force.

To make matters much worse, Beijing has reacted to Lee’s and Chen’s resistance by building up its military forces to have the ability to counter any move by Taiwan that it would interpret as an irreversible separation, such as (but not confined to) a declaration of independence. According to the estimate of a private, expert panel, “the PLA currently has the ability to undertake intensive, short-duration air, missile, and naval attacks on Taiwan, as well as more prolonged air and naval attacks.” Increasingly, it can inflict costs on U.S. forces that might intervene to defend Taiwan. And within a few years, its capabilities will have improved significantly. In one assessment, China can attain in the 2007-2010 time frame three significant power-projection capabilities that are relevant to a Taiwan scenario:

1. Attack a wide range of civilian and military targets with as many as 1,000 ballistic missiles and with several hundred medium-range bombers armed with conventional ordinance and cruise missiles;

2. Transport one to two divisions by sea and air transport as far as Taiwan;

3. Conduct limited air and sea denial operations up to 250 miles from China’s continental coastline (that is, keep U.S. forces away from Taiwan).

Which trend will win out? Will growing economic interdependence foster a political accommodation? Or will the PRC’s military buildup and a stronger Taiwan identity produce a conflict that may draw in the United States? I do not know the answer to those questions, but I know they are the questions that must be addressed.

It is worth noting that not everyone in Taiwan regards the growing interaction with the mainland to be an unalloyed blessing. The island’s growing economic dependence in particular fosters fears about growing PRC leverage in three possible forms. The first is the “hostage effect,” the possibility that Beijing might impose economic sanctions on Taiwan to achieve political purposes, or that a significant downturn in an unstable China would automatically hurt Taiwan. The second is the “hollowing out” effect, whereby the economy on the island becomes progressively weaker because manufacturing migrates to the mainland, and simultaneously, China becomes more technologically proficient and economically competitive because of Taiwan help. The third is the “fifth column” effect, in which Taiwan businessmen with a presence in China might promote their interests in ways that are biased in favor of Beijing, or Chinese agents and saboteurs might take advantage of economic and social interaction in order to infiltrate Taiwan. Even if PRC leverage is in fact less than some Taiwan people fear it (as is probably the case), the fact of the fear has become a political reality on the island.

By and large, people on Taiwan understand the importance of China economically to Taiwan’s prosperity. Economic interdependence certainly creates an aversion among the Taiwan electorate to a needless provocation that would change the fundamental status quo of cross-Strait relations. The problem, of course, is that there is an intense debate over what aspect of the status quo is fundamental and therefore what should not be changed. Provocation is often in the eye of the party that feels provoked. For example, many in Taiwan believe that it is China undermining what is fundamental about Taiwan through a strategy of economic and political attrition.

I was asked to comment on the political role of the Taiwan business community. This is an interesting issue, both in general and in the recent election in particular. Taiwan businessmen who operate in mainland China are at the center of this paradoxical situation of economic interdependence, political stalemate, and militarization. But I am struck by how limited their role was in the March election. Taiwan companies no doubt were a source of campaign contributions for both camps. Taiwan businessmen living and working on the mainland returned in larger numbers to vote, and on balance cast more votes for the pan-Blue than for the pan-Green. A few prominent businessmen made clear their political preferences. Yet the business community as a whole did not seek to steer the electorate in one direction or the other.

Taiwan companies of course depend on peace. The international economic system depends on peace in the Taiwan Strait because Taiwan firms are the middle links in global supply chains. The turmoil created in the IT sector after the September 1999 earthquake on Taiwan provides some indication of how global markets would be shaken by a war. Could Taiwan businessmen who operate in China play a significant, restraining role in a time of growing tension and potential conflict? It is difficult to know. My guess, however, is that they have more influence with their own government than they do with Beijing. Whether they would do so is another question, but I cannot rule it out.

U.S. Policy and the Taiwan Relations Act

In this situation of economic interdependence, political stalemate, and militarization, a context far different than that twenty-five years ago, how does the United States protect its equities? Is the TRA still relevant? The United States has a variety of interests concerning Taiwan. Our economic ties with the island are rich and mutually beneficial. The United States supported Taiwan’s democratization and has insisted that any arrangement between Beijing and Taipei be acceptable to the Taiwan people. And as I have suggested, a further consolidation of Taiwan’s democracy would better ensure that political institutions clearly reflect the people’s will.

The United States, I believe, has an interest in Taiwan’s participating more fully in international organizations, including those that are confined to states. That in no way violates our one-China policy. We support the PRC as the sole representative of the state called China in those organizations where China is already or might be a member. What Taiwan seeks is participation, which is broader than membership. Taiwan would certainly have a lot to contribute to the work of these institutions. With goodwill and creativity all round, it would be easy to craft a role for Taiwan that was less than membership, such as observership in the World Health Assembly. The practical problem, however, is that goodwill is lacking on China’s part. For a variety of reasons, Beijing wants to keep Taiwan out of international organizations as much as possible. It can – and does – exert a lot of influence over the other members of those organizations where the PRC is already present. As long as other countries dance to China’s tune, there is little more that the United States can do about PRC dominance. In the process, of course, China alienates the very constituency to which it is supposedly trying to appeal, the Taiwan public.

The United States’ abiding interest is that the Taiwan Strait issue be resolved peacefully and without intimidation. It was this interest that the TRA clarified and reinforced. At stake are both the security of the people of Taiwan and their democracy but also American credibility. The United States also has an interest in a good, mutually beneficial relationship with China. The most important dimension of that relationship is the emerging cooperation between the two countries on key foreign policy issues, such as counter-terrorism, South Asia, and Korea.

These various interests are not always mutually consistent. Balancing them requires sound principles and skillful execution. In the current situation, I believe that the proper role for the United States is to work with both Taiwan and China in order to ensure that conflict does not occur through misperception and miscalculation, which is the most likely way it will occur. Although circumstances have changed in the last quarter decade, I do not believe that revision of the TRA is necessary. The Act has proved to be a remarkably flexible and effective policy instrument. It mandates a policy direction that remains as sound today as it was in 1979. Grounding U.S. policy on the principles of peace, stability, and the free choice of the people of Taiwan will never go out of fashion.

Some will argue that a new context requires that the TRA’s policy language be more specific and more binding, in order to ensure Taiwan’s security against a China that might use force to achieve its political objectives. I would argue that what has made the TRA successful up until now – and what will make it successful in the future – is the sustained political commitment behind the text, by the Congress and the American public. More than anything else, it is that political commitment that will guarantee that the policy direction of the TRA remains relevant as new conditions emerge.

One way for the Congress to manifest that commitment is to conduct regular, public oversight of Taiwan policy. Based on my own experience at AIT, when the executive branch knows that the legislature is paying attention – through today’s hearing, for example – it becomes a powerful check against bad ideas. More important in my mind, the Congress must conduct a continuing dialogue with senior officials of the executive branch on how to operationalize U.S. interests at any point in time, and on the steps that are necessary to promote those interests. Inter-branch consensus is the best guarantee of sound policy. The biggest danger I see in an effort to revise the TRA would be that the executive branch would regard a congressional effort to make the policy prescriptions of the TRA more specific and more binding as a challenge to its constitutional power to conduct foreign policy. It would oppose the effort not because the policy ideas were necessarily bad but because it saw its power being stripped. An open conflict over Taiwan policy in the United States would foster profound concern on Taiwan, because it would be read as a weakening of the American political commitment. It would also be welcomed by China.

If good coordination between Congress and the executive branch is the best way to solidify the American commitment to Taiwan’s security, good communication between Washington and Taipei will help us better fulfill that commitment. This partnership of democracies and the welfare of the island’s twenty-three million people are too important to be hurt by missed signals or divergent assumptions. The institutional mechanism that the TRA established – the American Institute in Taiwan– has generally worked well, in tandem with its Taiwan counterpart, to foster good communication. Yet the experience of the last eighteen months, which culminated in President Bush’s statement on December 9, 2003, indicates the need for improvement. And I think it is proper for Members of Congress to be part of the communications between Washington and Taipei.

I was asked to comment on the U.S.-Taiwan security relationship. Taiwan understands in a general way that China’s military power is growing and that Taiwan needs to catch up (although some discount the threat because of the mutual interests that come with extensive cross-Strait economic interaction). There is less comprehension of the specifics of the island’s defense posture. The fact is that if Taiwan were attacked, and even if the United States made a decision to intervene, the island’s armed forces would have to hold on for a few weeks before an American rescue occurred. Thus, Taiwan needs sophisticated military equipment both to deter a PRC attack and to provide strategic endurance should deterrence fails.

The United States has agreed to provide much of what Taiwan needs, but Taiwan’s political system has been slow to mobilize and allocate the resources for those weapons systems. I see some sign that a corner has been turned, that priorities are being set, and a funding mechanism will be created. Yet a divided polity may still obstruct decisions that are in the best interests of Taiwan. Institutional reform (in the areas of command and control, doctrine, personnel, training, logistics, and so on) must accompany procurement advances. Software must improve with hardware. Here too, the progress has been slow, primarily because the challenges are daunting. Yet continuing effort will be required to ensure that, within the limits of Taiwan’s resources and the parameters of its democratic system, the armed forces will be strong.

To sum up, in passing the Taiwan Relations Act twenty-five years ago, Congress helped fortify a Taiwan that was reeling from the shock of de-recognition and the end of the mutual defense treaty. In the subsequent quarter decade, the TRA has grown in importance as the framework for U.S. policy, and as a symbol of American resolve. The TRA has been effective because it has always been reinforced by a strong and continuing political commitment by the Congress and the American public. It is the law and this political commitment combined that have helped keep Taiwan secure and free. By sustaining that commitment, by ensuring good communication with our democratic partner, Taiwan, and by minimizing the risks of misperception and miscalculation across the Taiwan Strait, the United States can ensure peace and stability in the future.

Testimony of Ming Wan Department of Public and International Affairs, George Mason University

Mr. Chairman and Members of the Committee: Thank you for this opportunity to talk to the committee about the Taiwan question. It is truly an honor to be here today.

The Taiwan issue has been recognized rightly as complex and potentially explosive. Mainland China and Taiwan have opposing goals regarding the future of Taiwan and have demonstrated willingness to take high risks to achieve their respective objectives.

Beijing sees unification with Taiwan as an all-important national objective for which it would be willing to “pay any price.” The People’s Republic of China government means it. Chinese officials may differ on how best to achieve unification, but that basic goal is unchallenged. For Mainland Chinese, the Taiwan issue is at the core of Chinese identity. It is about the destiny and aspirations of 1.3 billion people. While hoping for a peaceful solution, the Chinese government has refused to rule out use of force as a last resort to defend what it considers to be China’s sovereignty over the island. Although we do not have precise surveys to examine the depth of Chinese public’s commitment to unification with Taiwan at all costs, all signs point to a strong public support for unification. In fact, with rising nationalism in China, there is frequent criticism from Chinese citizens, particularly on the Internet, that the government has adopted weak measures to confront what Chinese see as major provocations from the government in Taiwan.

Over the past few years there has been a subtle shift from unification to prevention of independence as the short-term, realistic objective for the Chinese government. That shift has taken place because it is inherently difficult to achieve unification under any circumstances. But more important, Beijing knows that with a growing Taiwanese identity and the growing strength of the pro-independence Democratic Progressive Party, there is a decreasing willingness to support unification among Taiwanese. Beijing also knows that it does not have good options to achieve unification. For one thing, the Taiwan Relations Act means that the United States will assist Taiwan’s defense if Beijing resorts to force.

Taiwan does not want to unify with the People’s Republic of China. That position has been clear from the beginning. What is significant now is a shift of national objectives from eventual unification to independence. Taiwanese nationalism is on the rise. The DPP government both takes advantage of public sentiment and encourages a Taiwanese identity distinct from China in rhetoric and policy. To the government and public in Taiwan, the Taiwan issue is about their survival. It is about the destiny and aspirations of 22.6 million people in Taiwan. And it is about democracy.

Taiwan President Chen Shui-bian and his predecessor Lee Teng-hui have been talking about a Taiwan that is already “independent and sovereign”. Chen has promised to hold a referendum on a new constitution in 2006 and implement the new constitution in 2008.

The Beijing government does not trust Chen and sees his plan for a referendum and a new constitution by 2008 as “virtually a timetable for Taiwan’s independence” (remarks by a spokesman of the State Council’s Taiwan Affairs Office). Once the dust over the election controversy settles, the Chinese government faces a difficult question of what to do with the second-term Chen Shui-bian government. Will the Chinese government swallow hard and restrain the instinct to have a showdown in the Taiwan Strait, as it feels that it has done for the past four years? There is a serious danger that the Chinese government may feel compelled to “pay any price” now to stop Taiwan’s movement toward independence. If Beijing decides to take action, it is unlikely to repeat the massive military exercises it staged in 1995-1996, which did not really work as the government recognized privately. There is now a distinct danger that the People’s Liberation Army will simply go to war.

The United States has an opportunity to shape future developments in the Taiwan Strait. It is in a pivotal position in the triangle among the U.S., China and Taiwan. The United States is the world’s lone superpower and its military power relative to other major powers has increased. More important, the two sides of the Taiwan Strait each want to involve the United States to achieve their respective goals.

The fact that Taiwan depends on the United States for its survival is nothing new. What is new is that the Chen government apparently believes that it can challenge the One China principle that the U.S. government has been upholding since 1972, that it can move toward independence under U.S. protection, and that the United States would have to defend Taiwan’s democracy no matter what the Taiwan government does.

The Chen Shui-bian government is not seeking to ensure Taiwan’s physical survival, which is not currently threatened, but to “walk Taiwan’s path” toward a de jure sovereign nation. Taipei’s discussion of threat from the mainland is mainly meant to urge the U.S. government to do more to help deter China. If Taipei really felt threatened, it would not have reduced its defense budget for the past decade and it would have modernized its military more urgently.

Beijing’s effort to enlist U.S. support over the Taiwan issue is a new development in its relations with the United States and its Taiwan policy. After all, the Chinese government spent two decades framing the Taiwan issue as China’s internal affair and characterizing foreign intervention as one of the justifications for Beijing to use force against Taiwan.

Beijing’s effort to seek U.S. support over Taiwan reveals at least three Chinese strategic preferences. First, Beijing’s actions reveal a strong Chinese preference to avoid conflict with the United States. China has essentially traded some loss of autonomy for greater security. What Beijing has done is to hand a key to the United States to the puzzle of Taiwan, which gives the Americans some control over how the Taiwan situation plays out. Beijing’s thinking appears to be that if the United States does not want to get into a military conflict with China, it has an opportunity to do something to prevent that.

Second, Beijing’s actions reveal its greater emphasis on prevention of independence than realization of unification at present. It would be unrealistic for Beijing to believe that it could get the United States to help it achieve unification. Beijing clearly hopes to maintain the status quo even though its missile deployment and military modernization also contribute to the instability of the region.

Third, Chinese actions reveal that Chinese foreign policy is becoming more pragmatic, which suggests that there is room for negotiation and compromise even on the most sensitive issue.

Beijing’s greater willingness to “internationalize” the Taiwan issue entails costs. Once internationalized, China cannot control how other major powers will choose to get involved in the issue. A case in point: U.S. arms sales to Taiwan have weakened Beijing’s ability to force Taiwan to the negotiation table. At the same time, now that the Chinese government is asking the U.S. government to prevent the Taiwan government from upsetting the status quo, it is more difficult to criticize U.S. arms sales to Taiwan, which have served the goal of preserving the status quo in the Taiwan Strait.

The United States obviously has tremendous stakes in the Taiwan issue including avoiding a conflict with a major nuclear power and preserving its position in East Asia and its reputation as a reliable protector.

What should the United States do about the Taiwan question? As a highly contentious issue and given the grave consequences of any policy shift over Taiwan, it is impossible to make a value-free analysis of the situation. The Taiwan issue is all about values. As mentioned earlier, the Taiwan issue is about the destinies and aspirations of 1.3 billion people in Mainland China and 23 million in Taiwan. The Taiwan issue is also about what the United States stands for.

Since 1972, the U.S. policy regarding the Taiwan question has been driven by two values, namely peace and democracy. And that should continue to be the case. Peace and democracy ultimately go hand-in-hand. Peace is most sustainable among democracies. At the same time, the relative weight of each value is not always equal. Peace should be emphasized sometimes and democracy should be emphasized at others. One must guard against “peace at all costs” or “democracy at all costs.” Peace at all costs may lead to appeasement and ironically encourage aggressive behavior that undermines peace. Democracy at all costs may jeopardize peace and create conditions that damage democratization. There is not a ready formula to determine how much a tradeoff one has to make at a given time. It depends on the circumstances, but preserving the delicate balance between these two core values is likely to be a central element of U.S. policy in the Taiwan Strait in the next five years.

Tradeoffs between peace and democracy have been made in U.S. policy regarding Taiwan in the past. The Taiwan Relations Act, enacted in 1979, should not be viewed in isolation. Rather, it should be viewed together with the 1972 Shanghai Communiqué signed by President Nixon and Premier Zhou Enlai and the 1979 Joint Communiqué that established diplomatic relations between the U.S. and the PRC. After all, the Taiwan Relations Act would not have been necessary but for the fact that the United States severed diplomatic relations with Taiwan to establish diplomatic relations with Beijing to advance U.S. strategic interests in the strategic triangle with China and the Soviet Union. The Taiwan Relations Act, which focuses on the rights of Taiwan and U.S. obligations to Taiwan, is a balance on the “One China Principle” conditionally pledged by the United States in the two documents.

Peace in East Asia and strategic advantage over the Soviet Union was a dominant concern for the U.S. government through the 1980s. The 1972 Shanghai Communiqué stated the positions of the United States and China separately. The U.S. position began with “peace in Asia and peace in the world” as a principal U.S. objective for improving relations with China. The U.S. side talked about U.S. support for individual freedom, but the big picture is that the U.S. and Chinese sides recognized differences in their political systems and agreed not to intervene in each other’s internal affairs.

The strategic bargain between China and the United States at Taiwan’s expense played an important role in stabilizing East Asian international relations. While not meant to advance the cause of democracy, the U.S.-China strategic bargain also contributed to the democratization process across the Taiwan Strait.

China’s new relationship with the United States enhanced its external security, which was a necessary if not a sufficient condition for allowing Deng Xiaoping to launch economic reform and opening to the outside world. Deng’s reform and opening would change the nature of U.S.-China relations. A case in point, while President Nixon and President Reagan did not address China’s human rights and democracy directly in their visits to China in 1972 and 1984, Vice President Cheney recently did so frankly on Chinese television. Cheney talked about the need for China to adopt genuine political reform. This positive development in China came more from an improved bilateral relationship than from U.S. pressure.

America’s severing of diplomatic relations and continuous protection of Taiwan as well as its concern for human rights in Taiwan combined to contribute to political change in Taiwan. The Taiwan Relations Act makes it clear that “the preservation and enhancement of the human rights of all the people on Taiwan are hereby reaffirmed as objectives of the United States” (Sec. 3301c). This section on human rights, as I read it, implied that the Taiwan government needed to ensure the human rights of the inhabitants in the island to ensure continuous U.S. support. Democratization necessarily means Taiwanization since a majority of the inhabitants in Taiwan are Taiwanese who had been dominated by mainlanders who moved to Taiwan with the Chinese Nationalist Government at the end of the Chinese Civil War.

The strategic environment that conditioned the Taiwan question has changed fundamentally since the end of the Cold War. The Soviet Union is no more. China has changed. More important, Taiwan has changed. It is becoming increasingly clear that a majority of Taiwanese wants to shape a distinct Taiwanese identity and certainly do not accept the one China principle or Beijing’s formula of “one country, two systems.” Taiwan has become a full-fledged democracy. As a democracy, some in Taiwan argue that Taiwanese have the legitimate right to determine Taiwan’s destiny and the United States should understand this and defend Taiwan.

The change in Taiwan removed the basis for the original American rationale for accepting the one China principle. The 1972 Shanghai Communiqué said clearly, “the United States acknowledges that all Chinese on either side of the Taiwan Strait maintain there is but one China and that Taiwan is a part of China.” The former Kuomintang Government in Taiwan used to acknowledge the one China principle although it considered the Republic of China rather than the People’s Republic of China to be the sole legitimate government of China. Now fewer and fewer people in Taiwan consider Taiwan to be a part of China. That necessarily makes the one China principle more a unilateral notion from the Chinese side than an ideal shared across the Taiwan Strait.

The change on the ground in the Taiwan Strait makes it necessary to ask whether the old institutional framework regarding the Taiwan question should be adjusted as well. This is not an academic question. The old institutional framework is no longer adequate to ensure peace in the Taiwan Strait when the Taiwan government is steadily forging a unique Taiwanese identity and legally forming a separate state from China and when the PRC government is preparing to act forcibly to stop that process.

It is time to examine the whole Taiwan policy carefully in light of U.S. values and interests and in light of the changes across the Taiwan Strait. A meaningful reassessment of U.S. policy should include a critical review of both the Taiwan Relations Act and of the one China Principle articulated in the joint communiqués with the PRC government. After all, they are part of the same institutional framework.

As a foundation for the U.S. policy toward Taiwan and China, the Taiwan Relations Act has contributed to peace and stability in East Asia. But the Taiwan Relations Act now also shows some inadequacy. The inadequacy of the legislation lies in the fact that the law spells out clearly U.S. obligations to Taiwan but not Taiwan’s obligations to the United States. It made sense in the end of the 1970s when one would be more concerned about Mainland China attacking Taiwan than Taiwan taking risky moves. The Nationalist Government in Taiwan was not seeking independence. Now that the objectives of the government in Taiwan have changed, a serious moral hazard problem has emerged. Common sense tells us that someone who has obligations to another party but no reciprocal rights will end up suffering the consequences of actions by the other party.

It appears that the government in Taiwan has largely brushed aside warnings regarding referendums by the White House in recent months: all the more reasons that any revision of the Taiwan Relations Act should include clear references to U.S. expectations of Taiwan.

The United States has been supporting Taiwan democracy and should continue to do so. But that should not mean that the U.S. government must support unconditionally any particular policy of any particular duly elected government in Taiwan.

While democracy should be an important objective for U.S. policy in the post-Cold War era, a tradeoff between peace and democracy still needs to be maintained. It continues to be the case that peace is a value in and of itself and peace ultimately promotes democracy across the Taiwan Strait and in East Asia as a whole.

Peace in East Asia is important for the United States. The country is engaged in war on terrorism. Terrorists want to destroy the Western way of life, not just democracy. This is a fundamental challenge. The United States needs support from major countries such as China and has received support. On top of that, China is embracing globalization. There are surely disputes in the bilateral relationship, but the two governments can sit down and talk about them as civilized nations.

Peace promotes democracy in China. Based on past experience, perceived external threats and accompanying nationalism have generally jeopardized the prospect of democracy in China by lowering the relative importance of democracy in Chinese debates. So tension over Taiwan will jeopardize the nascent process of political opening in China.

People might argue that China is not becoming more democratic in any case. It is the case that the Chinese government has not shown interest in genuine democratic reform. However, one should recognize the economic forces such as the market economy and the social forces such as the rise of a middle class that are emerging in China. These forces are creating favorable conditions for democracy in China down the line. If one wants to see sustainable democracy in China, the U.S. relationship with China will continue to be critically important, as it has been to date.

At the same time that the U.S. would be advised to spell out its expectations of Taiwan more clearly, the one China principle should also be adjusted. The principle has been unduly constraining for Taiwan. If China continues to insist on the one China principle, it is hard to see how the Taiwan dispute will not end up in military conflict eventually.

Looking at the dynamics of the Taiwan Strait, the only conceivable compromise is “one China, two governments” or “one China, two states.” The Chinese government has adamantly opposed these two choices. In the 1972 Shanghai Communiqué, the Chinese government stated that “the Chinese government firmly opposes any activities which aim at the creation of ‘one China, one Taiwan,’ ‘one China, two governments,’ ‘two Chinas,’ ‘independent Taiwan” or advocate that ‘the status of Taiwan remains to be determined.’” While the Chinese government has shown flexibility in approaches to Taiwan, it has not shown any meaningful flexibility in the basic principle of one China, one province.

Beijing’s inflexibility has contributed to Taiwan’s move toward independence, which is of course the worst possible choice in the list of things the Chinese government opposes. It is time for the Chinese government to adjust its basic goal regarding Taiwan. Beijing still has some opportunity to shape its relations with Taiwan in a win-win situation since the Taiwanese identity that is emerging is yet to be fully entrenched. Beijing should realize that “one China, two governments” or “one China, two states” based on a shared Chinese identity is far better than an independent Taiwan based on a separate Taiwanese identity. Otherwise, the Chinese government may find itself shortly in a situation where it has to choose between two stark options of an independent Taiwan or a war with the United States. It is not in the U.S. interest to have China in that position either.

The United States should adopt a pro-active policy over Taiwan. It would not be wise to abandon the one China principle unilaterally. But the U.S. could help to steer discussions toward finding compromises between the two sides of the Taiwan Strait. In fact, on the lower level of the Chinese government, some are already exploring alternatives to the old position that “there is only one China in the world, which is the People’s Republic of China.” It is not possible for new thinking on Taiwan to have traction in China unless influential people in the government feel that they have to rethink about the whole Taiwan issue.

In return for a good faith attempt to discourage Taiwanese independence, the United States should encourage the People’s Republic of China to negotiate with the Republic of China as two equal entities without pre-conditions. As a good will gesture, the Chinese government should also be encouraged to stop blocking Taiwan’s observer status in certain international organizations such as the World Health Organization. Taiwan needs more international space to avoid feeling cornered.

With a restructure framework of one China, two states, the PRC would prevent a further strengthening of Taiwanese identity, which is the ultimate block to eventual unification, and the Republic of China would gain higher international status and respect.

It will not be easy for the United States to persuade China to relax on the one China principle to engage in a political talk with Taipei on a basis of equality and it will not be easy to dissuade Taiwan from seeking independence in a legal fashion. The alternative will be far more serious, however. Without greater diplomatic effort from the United States, the Taiwan Strait could explode by 2006 or 2008, ruining both peace and democracy in East Asia.

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