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9.
They
This is an extremely sensitive issue for the Chinese.
were unable to retaliate very effectively against the US sale of
F-16s, but a report from our Embassy in Paris suggests that their action against French trade following the sale of frigates and Mirages to Taiwan has hurt and that the French are now reviewing their whole policy (though they are unlikely to give up the Mirage deal). British defence sales could have an even more
damaging impact on our interests. Early this year we conducted a review of our defence sales guidelines for Taiwan partly in the light of pressure from some British companies and DESO's general interest in increasing sales. The existing guidelines do not permit "the direct export of defence related equipment, including parts and technology destined for the Taiwan armed forces if its
acquisition would enhance their capability". The proposed review would have permitted the export of defence related equipment, provided that it was not of a "significant" nature. Although the Secretary of State agreed to reassess the situation in the early autumn, he decided not to implement this change yet.
10. I believe that we should continue to be cautious in this
area. There is no advantage to us from contacts of which the aim
can only be to breach our established guidelines. We cannot prevent private visits by Taiwan officers, nor can we prevent contacts between them and British companies. But we can and I believe should steer the Taiwanese away from posting a military officer to the TRO (and if necessary, block his work permit), and we can resist contact between Taiwanese visitors and the MOD.
submit a draft reply to ATTC Taipei on these lines. British Aerospace have, incidentally, told us that they are not interested in the proposed joint development of a defence trainer suggested by the Taiwanese to Mr Morrice, partly because of their interests in mainland China.
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