In my previous articles on Taiwan’s defense industry, I proposed a model that fits Taiwan’s unique economy and outlined exactly which countries would buy weapons from Taiwan. In this article, I will take the next step, discussing what Taiwan could sell based on its repertoire of indigenously-developed weapons systems and its broad electronics technology industries.
In the aerospace industry, Taiwan famously developed its indigenous F-Ching-kuo (經國) fighter aircraft in collaboration with other foreign defense companies. The technology and capabilities are decades old, so it is unlikely that advanced countries, such as those in NATO would be interested. Yet, many countries in Southeast Asia, South Asia, South America and Africa would see this aircraft as an upgrade to their current military order of battle. These countries are also sensitive to cost, so there are opportunities for Taiwan to provide a capable but affordable solution. As I mentioned in my previous article, arms exports would be more promising and Taiwan would face fewer political barriers if Taiwan started with its diplomatic allies in the South Pacific, Latin America, and Africa.
In addition to aircraft, Taiwan also produces a range of missiles such as the Hsiung Feng II (雄風) anti-ship missile, the Hsiung Feng III long-range missile, Sky Bow (天弓) surface-to-air missiles, and more. Although Taiwan’s Chung Shan Institute of Science and Technology unveiled a number of missiles and missile defense systems at the 2015 Taipei Aerospace and Defense Technology Exhibition, it has not officially announced whether it would consider exporting these items. In addition to the aerospace industry, Taiwan also produces naval and army equipment to include the indigenous AOE-530 Wu-yi (武夷) naval vessel, land equipment such as the Clouded Leopard (雲豹) Armored Vehicle, the CM-12 tank and more. Taiwan could consider exporting these items too.
However, exporting arms that could be used in an attack raises question of accountability. If a buyer of Taiwan’s missiles uses it to attack another country, would Taiwan be held at least partially or indirectly responsible? Export of such surface-to-air missiles and surface-to-surface missiles are especially politically sensitive and blame can be indirect, as we have seen with the missile that brought down the passenger Malaysian Airlines flight 17 as it flew over Ukraine in 2014. That passenger airline was shot over an area in Ukraine held by pro-Russian separatists, using Russia-manufactured missiles, so many felt that Russia was at least indirectly to blame (though Russia blamed the Ukraine government in Kiev). In addition to intentional use, accidents can occur, such as during the military exercise in July 2016, when one of Taiwan’s corvette naval vessels launched an anti-ship missile in China’s direction by mistake, hitting a Taiwanese fishing boat and accidentally killing the boat’s captain. What if that missile had hit a PRC naval vessel, or a PRC land target by accident? Would China have retaliated? For Taiwan there are multiple risks associated with increasing arms production and export. Therefore, Taiwanese officials should consider China’s views, the opinions of its neighbors, and thoroughly consult with the United States government, as it carefully moves forward in this direction.
To maintain popularity abroad, Taiwan should abide by international standards in weapons dealing. For example, the informal and voluntary Missile Technology Control Regime (MTCR) restricts proliferation of missile and UAV technology capable of carrying above 500 kg for more than 300 km. Will Taiwan’s missiles fall into this weight and range category, and if they do not, would international opinion turn against Taiwan for making such exports? Though Taiwan is not technically a signatory of MTCR, it should acknowledge and strive to adhere to this international regime that has been signed by countries such as the United States, Australia, Germany, India, Japan, South Korea and many others. Taiwan already voluntarily abides by several nuclear and biological weapons treaties to demonstrate that it is a responsible stakeholder in the international system, so keeping with the MTCR would be continuing the same admirable practice.
As a general rule, Taiwan should offer platforms and components that contain its own intellectual property (IP). Some of Taiwan’s military air, land, and naval equipment is imported from abroad or produced in Taiwan under licensed manufacturing agreements, for which Taiwan does not own the IP rights. Therefore, it should not export these technologies without the requisite licenses.
In addition to dedicated military technologies, Taiwan could use its broad technological base to develop products that cross over into civilian use. This would fit well with the government’s new plans to establish its own version of the U.S.’ Defense Advanced Research Projects Agency (DARPA) that would build up innovative and groundbreaking technologies for national defense and broader economic development. Taiwan has a “first mover” advantage and the potential to profit in certain new technologies, such as augmented reality that can be suitable for both military and civilian markets. For instance, Taiwan’s HTC company manufactures virtual reality (VR) 3D goggles and holds a major share of this market. One promising use for this technology is to develop maintenance VR training programs for military aircraft, as well as naval and land platforms. Virtual reality can significantly lower maintenance training costs by having students use headsets to peer under virtual aircraft or other platforms to learn to inspect, change components, change fluids, etc. Instead of having actual aircraft and live instructors at every step, now the military can save time and costs by using real aircraft and live instructors only during the final testing phase of instruction. The VR training programs can also be sold to other countries. In addition to military applications, Taiwan’s augmented reality companies can work with auto manufacturers to provide VR training for car mechanics and even extend this to other civilian technical fields.
What would an arms industry mean for Taiwan’s domestic manufacturing base? Many of Taiwan’s electronics companies have set up manufacturing facilities in the PRC in recent decades, but arms production would bring the manufacturing process back to Taiwan for security and political reasons. If a Taiwanese company uses a facility in the PRC to manufacture arms and then sells it to a third country, it is unclear whether it would be considered a transfer from Taiwan to that country or from China to that country. The PRC could even prohibit Taiwan from establishing arms manufacturing facilities, or block this type of transfer through PRC customs on the back end. Not to mention that China would learn the intimate details of Taiwan’s weapons systems. Producing weapons in Taiwan will fulfill one of President’s Tsai’s goals of using defense as an innovative industry and creating jobs in Taiwan. Indeed, the Democratic People’s Party has mentioned that it expects its defense industry plan to generate $7 to $12 billion dollars along with 8,000 new jobs.
My next article will address the policy and geopolitical considerations if Taiwan decides to export its indigenously produced missiles, naval vessels and other platforms to foreign countries. As mentioned in previous articles, the alternative decision to integrate Taiwan’s electronics and other hardware components into NATO+4 platforms built by foreign companies such as Lockheed Martin, Raytheon, or others would be a less sensitive decision since it would defer the geopolitical calculations to NATO+4 governments instead.
The main point: Taiwan could develop its indigenous arms export industry by selling its F-Ching-kuo fighter aircraft, Hsiung Feng II and III missiles, naval vessels, military land vehicles, high tech VR training equipment, small arms and ammunition, but it will need to be mindful of geopolitical considerations.