NDAA Contains Increased Security Assistance For Taiwan The

Taiwan

The new defense bill has authorized up to $10 billion in security assistance for Taiwan, as well as fast-tracked arms procurement for the island nation, amid continued Chinese military threats of reunification.

The bill stopped short of some of the more radical proposals by Taiwanese lawmakers, such as the imposition of sanctions on China in the event of any “significant escalation in aggression” against Taiwan by China, and a proposal to treat Taiwan as a “major non-NATO ally.”

China views Taiwan as a rogue, breakaway province which still is under Chinese government authority. In September, the Senate Foreign Relations Committee approved broader Taiwan legislation which angered Beijing, and provoked concern within the Biden administration that the bill was heightening tensions with China.

In August China increased its military activities around the island, after an official state visit to the island by House Speaker Nancy Pelosi also angered the mainland.  The visit was perceived as supporting Taiwan’s breakaway from the mainland, and was characterized by China as a foreigner trespassing on Chinese soil without permission.

On Tuesday, the Senate and House Armed Services committees revealed the $858 billion NDAA, which is expected to pass both Houses and be signed by the President later this month.

The NDAA includes within it the “Taiwan Enhanced Resilience Act,” which includes authorizations for military grant assistance for Taiwanese defense of up to $2 billion per year from 2023 to 2027, which only requires the US Secretary of State certify that Taiwan increased its defense spending.

Within the bill is a new “foreign military financing loan guarantee authority,” as well as additional measures to fast track procurement for Taiwan’s weapons purchases, and an additional training program designed to help Taiwan improve its defensive capabilities.

Democratic Senator Bob Menendez, chairman of the foreign relations committee and a sponsor of the legislation said, “Taiwan’s democracy remains the beating heart to our Indo-Pacific strategy, and the depth and strength of our commitment to the people of Taiwan is stronger than ever.”

Taiwan’s Foreign Ministry issued a statement noting it was grateful for the “continued strong support for Taiwan’s security.”

This week the U.S. State Department approved $428 million in aircraft parts for Taiwan, whose air force is under strain from a heightened operational tempo due to repeated incursions into Taiwanese airspace by Chinese military aircraft.

Taiwan’s independence is important to the global economy as the vast majority of the world’s most advanced computer chips are produced there. Given rumors the United States has arranged for the semiconductor infrastructure to be disabled in the event of an invasion, to deny China access to the highest levels of semiconductor technology, a Chinese invasion and occupation would result in the loss of manufacturing supply source for Taiwanese microprocessors. That would rapidly lead to a sudden shortage of microchips for everything from computers and routers to home washing machines and refrigerators.

The Daily Financial Trends