Senate to add $10 billion in Taiwan aid, scale back arms sale reform

Bryant Harris and Joe Gould

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WASHINGTON — The Senate’s annual defense authorization bill will now include $10 billion in military aid for Taiwan — more than double the initial amount proposed — even as it scales back language intended to help address the $14 billion backlog of arms sales the Asian nation already made from the U.S.

Senate Armed Services Chairman Jack Reed, D-R.I., included a modified Taiwan defense package as part of a massive bipartisan amendment he filed last week to the fiscal 2023 National Defense Authorization Act. The full Senate is expected to vote on the NDAA, including the Taiwan defense provisions, when lawmakers return to Washington after the November midterm elections.

Reed told reporters last week that the NDAA’s defense package for Taipei remains “consistent with the Taiwan Relations Act.” The bill’s defense provisions for Taipei come from the sprawling Taiwan Policy Act, which the Senate Foreign Relations Committee advanced 17-5 last month.

The White House had expressed concerns regarding the initial version of the Taiwan Policy Act, introduced by Senate Foreign Relations Chairman Bob Menendez, D-N.J. He worked with the White House to address many of those concerns, but the NDAA only contains the defense components of Menendez’s bill while removing provisions that would upgrade diplomatic ties with Taipei, give Taiwan the same treatment as major non-NATO allies and sanction China. China considers Taiwan a rogue province and has threatened to return it under the mainland’s control, by force if necessary.

Still, the $10 billion in Foreign Military Financing — a program that allows other countries to purchase U.S. military equipment with grants and loans — marks another significant increase from the $4.5 billion proposed in Menendez’s initial version of the bill.

The Foreign Relations Committee boosted the FMF amount to $6.5 billion when it advanced the bill, and the proposed NDAA plusses that up again to $10 billion — allocating $2 billion per year through the FMF program for Taiwan through fiscal 2027.

Taiwan would be able to use $300 million of that aid per year for onshore procurement, which allows a customer to purchase weapons systems and components from its own defense-industrial base instead of the United States. Israel is the only other country that has standing permission from Congress for onshore procurement; all other recipients require a State Department waiver for that authority.

Sen. Bob Menendez, D-.N.J., makes his way to the Senate chambers at the Capitol on Aug. 3, 2022. (Kevin Dietsch/Getty Images)

It’s unclear how quickly Taiwan can procure the U.S. weapons it purchases with that money because of the unwieldy Foreign Military Sales process, which has resulted in the $14 billion backlog dating back to 2019.

The NDAA retains some measures intended to ameliorate the backlog to Taiwan, but drops a key requirement that would have required U.S. defense manufacturers to “expedite and prioritize” the production of weapons that Taiwan purchased ahead of other countries in the queue.

A Senate aide told Defense News that the provision was dropped in the NDAA because, under contract law, there’s no legal way to force U.S. defense manufacturers to bump up certain customers ahead of other countries in the queue. Saudi Arabia, for instance, remains ahead of Taiwan in the queue for certain backlogged items. But Riyadh would have to consent to letting Taipei’s weapons orders jump ahead of its own — an unlikely proposition given tension between Saudi Arabia and the U.S. over the OPEC+ oil production cuts and the former’s human rights record.

Still, the proposed NDAA text retains Taiwan Policy Act provisions intended to speed up the contracting process for arms sales to the island nation. It directs the Defense and State departments to “prioritize and expedite” foreign military sales for Taipei and prohibits both departments from delaying the sales through a bundling route, whereby a defense manufacturer would simultaneously produce weapons systems from multiple contracts.

Another provision would require both departments to develop a list of weapons systems that are “pre-cleared and prioritized for sale and release to Taiwan through the Foreign Military Sales program.”

It would also require the departments to produce a joint report on foreign military sales worth $25 million or more to Taiwan, Japan, South Korea, Australia and New Zealand, dating back to 2017. The report must detail the reasons for any delays as well as solutions for interim capabilities to fill the gap caused by any backlog.

The proposed bill also prioritizes the transfer of excess U.S. defense articles to Taiwan. It would also authorize $1 billion a year in presidential drawdown authority from existing U.S. stockpiles to transfer defense articles to Taiwan in the event of an emergency — the same authorization President Joe Biden used to send billions of dollars in aid to Ukraine as it defends itself against Russia’s invasion.

Additionally, it allows the president to establish an Asia-Pacific “regional contingency stockpile” at an unspecified location, allocating $500 million per year in funding for those stocks through 2025.

While the proposed NDAA text also drops the Taiwan Policy Act provision that would have required the U.S. to establish a comprehensive training program with the Taiwanese military, it does authorize the State Department to conduct International Military Education and Training programs for Taiwan.