Some politicians in Taiwan believe the reason to purchase weapons from the United States is to “buy insurance” (買保險) in case the island is attacked. Other commentaries assert that the United States demands that its allies raise their military spending to buy more US weapons so as to profit from gaining “protection money” or “extortion fees” and pay down its national debt. The perception that countries should purchase expensive weapons from the United States in order to guarantee that they will be rescued in a conflict is one of three myths in US arms sales to Taiwan that need to be dispelled: 1) US arms sales are an insurance policy; 2) Taiwan pays more than others for US weapons; and 3) the US sells old military equipment to Taiwan.
Taiwan has recently revealed what military capabilities it needs, and there are rumors that the United States is planning a new tranche of arms sale to Taiwan. From what is written in Taiwan’s newly released Quadrennial Defense Review and from what came out during a Legislative Yuan session on March 16 featuring Defense Minister Feng Shih-kuan (馮世寬), it seems evident that Taiwan endeavors to acquire or develop fifth generation fighter aircrafts like F-35 with vertical take-off and landing capabilities; to develop indigenous attack submarines; to improve air defense systems with mobile launchers; to upgrade surface naval combatants; to deploy smart sea mines; to create a fleet of UAVs; and to establish a new cyber warfare unit. Therefore, now is the time to find ways to meet Taiwan’s defense needs, and avoid misunderstandings about the Taiwan arms sale situation.
Myth #1: Insurance
Arms sales are not an insurance policy that guarantees the United States will protect Taiwan. On the contrary, the lives and deaths of US soldiers cannot be bought with money. There are geopolitical calculations and national interests at work that determine if the US will enter a foreign conflict.
The closest thing to “insurance”—the idea that there is a guarantee that one country will come to the aid of another country—is a mutual defense treaty alliance, which the US currently has with Japan, South Korea, NATO, and others, but which it ended with Taiwan on January 1, 1979. Therefore, there is no “insurance policy” with Taiwan, and arms sales are no substitute.
This is not to say that the United States would not help Taiwan in the event of an emergency, but it is far from being a quid pro quo exchange for Taiwan to buy US weapons. After all, the US Congress did pass the Taiwan Relations Act (TRA) into law as a show of US support for Taiwan in 1979, and President Reagan provided Six Assurances to Taiwan in 1982—both committing the US to providing weapons to Taiwan for the purpose of securing Taiwan’s livelihood and future as mentioned in TRA Sec 2.24 and Sec 3.2, and in the first of the Six Assurances.
Myth #2: Unfairly Expensive
Taiwan does not pay more for the same weapons than other countries pay. Sensationalist news articles in East Asia have mentioned that Taiwan paid more than other countries to buy Apache helicopters, and that Taiwan is the US’ ATM machine. On the contrary, Taiwan goes through the same DoD foreign military sales and State Department direct commercial sales processes as every other country. Since advanced weapons require both high expertise and great secrecy, while also featuring few competitors and almost no redundancy, they therefore demand a high cost. The arms sales market does not follow standard market economics. Arms sales dynamics follow a different logic of monopsonies (as one buyer) in relation to monopolies (as one seller) where the buyer must take into account and cover the seller’s costs. This never happens in the commercial private sector. Therefore, in arms production, costs can change each year, and they depend on economies of scale, which are tied to production costs. The same missile would have a cheaper per unit cost in a year in which 10 countries happen buy 1,000 units combined, and a more expensive per unit cost in another year in which only two countries buy 200 units. Weapons pricing depends more on production costs than on whether or not Taiwan has other buying options
Considering Taiwan’s alternatives, buying weapons from the United States is usually the most attractive option. Since designing advanced weapons requires high expertise, great secrecy (and therefore high costs), Taiwan can either design its own advanced weapons of an uncertain quality at a higher cost (due to lack of economies of scale), buy commercial-off-the-shelf from a foreign country at a cheaper cost and with more assured quality, take some hybrid mix of the previous two options, or not have the capability at all. Comparing these options essentially explains why Taiwan mostly looks to the US.
Myth #3: Only Old Equipment
The United States does not take advantage of Taiwan by selling Taiwan old equipment. National Chengchi University Professor Bernard Lai (賴岳謙) stated that the United States just wants to sell old equipment to Taiwan. PRC media outlets suggest that when Taiwan buys used naval vessels from the United States it is actually buying “scrap metal,” and other reports mention that second hand equipment will not defend against anything. While the United States does transfer some “used equipment,” it is through a special program called Excess Defense Articles (EDA). Everything else the United States sells to Taiwan is new. For EDA, the price is the key, since we are often talking about transferring used equipment at a fraction of the original cost, which is usually around five percent or higher, depending on age and condition. Furthermore, the US government tries to make “hot transfers,” meaning the equipment works well and is not obsolete. With naval vessels, the goal is for the condition to be so good that US sailors can walk off and Taiwan sailors can walk right on.
To be sure, these three arms sales myths are not reported much in mainstream media or in official government statements since they are just that: myths. However, these myths are still representative of what many people in Taiwan think, judging from my conversations with many Taiwanese people and from my review of social media and other local media as cited throughout this article.
The main point: It is important to dispel the three top myths of US arms sales to Taiwan: the false assertion that arms sales are an “insurance policy;” the questionable idea that Taiwan pays more than others for the same weapons; and the incorrect understanding that the US only sells old junk equipment to Taiwan.