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U.S. confirms approval of three arms sales to Taiwan

2010/08/25 18:04:11

Washington, Aug. 24 (CNA) The U.S. Department of State confirmedTuesday that it had notified Congress of its decision to allowU.S. companies to sell Taiwan defense articles and services tosupport and upgrade its existing air defense radar systems.

Philip Crowley, assistant secretary of state for public affairs,said during a regular news briefing that the State Department hadnotified Congress as required under the Arms Export Control Act ofthe proposed direct commercial sales (DCS) between Taiwan and privateU.S. companies.

Under the DCS program, Crowley said, the foreign customer entersinto a direct relationship with a private U.S. company, which mustthen apply for an export license from the State Department inaccordance with U.S. law.

The decision to approve these export licenses will allow thecommercial export to Taiwan of defense services, technical data anddefense articles to support Taiwan's existing air defense radarsystem and improvements to existing radar used in Taiwan's Ching-kuoindigenous defense fighter aircraft, Crowley said.

He further said the authorizing of the export licenses is fullyconsistent with Washington's "one China" policy based on threeU.S.-China joint communiques and the Taiwan Relations Act.

Asked whether the latest arms sales to Taiwan will draw strongprotests from Chinese authorities, Crowley said that he will "letChina react to this as they see fit."

Rupert Hammond-Chambers, president of the U.S.-Taiwan BusinessCouncil, said during a visit to Taiwan in June that the StateDepartment had been forced to defer three arms sales to Taiwan underChinese pressure.

However, the council, which groups U.S. companies with interestsin Taiwan, said Tuesday that the U.S. administration notifiedCongress Aug. 12 of its decision to approve the sales.

The council further said it believes the latest State Departmentdecision will contribute to returning to normal U.S. arms sales toTaiwan.

In the past, the United States usually sold arms to Taiwan underits Foreign Military Sales (FMS) system, with the U.S. governmentsupervising bidding, production and delivery of the defense articles,services and technological data.

Under the FMS system, the U.S. government is responsible forenforcing the sales contracts. The model operates as if it is theU.S. government procuring the items from private contractors andreselling them to the foreign customer. The FMS system is more costlyfor the procuring countries because they have to foot the U.S.government's administrative bill, but the deal is less risky andoffers greater guarantee of success.

In contrast, the DCS system is more flexible and costs less forthe procuring country. However, it is also less transparent and lesssecure. As export licenses issued under the DCS system remain validfor only four years, procuring countries face higher risks of anydeal going into default.

State Department studies show that only 50 percent of approvedDCS deals are actually substantiated and delivered.

According to statistics compiled by the Center for InternationalPolicy -- a U.S. think tank -- about 52 percent of U.S. arms dealsstruck between 1986 and 1996 were brokered under the DCS system.

The think tank said foreign countries that opt for the DCS systemtend to be familiar with the U.S. defense industry and capable ofdirectly negotiating prices with U.S. defense contractors. Taiwan onthe other hand has seldom used the DCS system.

Both the DCS and FMS systems require the U.S. administrativebranch to notify Congress of each approved arms deal worth more thana specified amount of money. The deal will automatically take effectif Congress does not pass a resolution against the deal within 30days.

As the executive branch tends to reach consensus with Congress onspecific deals before serving formal notice, there is little in theway of precedent in which Congress has voted against such deals.

However, it remained unclear why the State Department referredthe Taiwan arms sales during the Congress recess rather than thenormal practice of submitting the referral during the Congresssession.

(By Zep Hu and Sofia Wu)