CONFIDENTIAL
The current justification for our policy is based on a state of war existing between the Nationalist authorities in Taiwan and the Chinese People's Government.
In May 1991 the Nationalist
authorities on Taiwan ended the "period of Communist Rebellion". They no longer consider themselves to be in a state of war with the mainland, although China has never renounced the use of force in the reunification of China and Taiwan.
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5. The biggest exporters of arms to Taiwan are the Americans, although their relationship with China and Taiwan, covered by the Taiwan Relations Act, is recognised as being different from that of EC countries. of EC countries, the French are currently the most significant exporter of military equipment to Taiwan. The French are going ahead with the sale frigates to Taiwan, and there are reports that they are considering also the sale of Mirage aircraft. The Dutch have in the past sold submarines to Taiwan (resulting in China downgrading diplomatic relations for two years) but have recently decided not to sell, for the moment, more submarines to Taiwan, after representations from China. A Dutch company is, nevertheless, contracted to supply radar for the French frigates going to Taiwan. EC countries are not keen to publicise sales to Taiwan, for fear of Chinese adverse reaction, and it can reasonably be assumed that there are other, smaller sales going on without our knowledge.
6.
The arms sales issue has been brought to a head by BAe SEMA's case, on which this department submitted on 28 January. BAe SEMA are pressing urgently for a reply from us to their request for clearance for their proposed sale. This sale would be permitted under the new proposed guidelines, since BAe SEMA are developing this product with Thomson with the hope of supplying to Chile, as well as to any future UK/France frigate project.
7. The MOD have been consulted on this proposed policy change, and have produced a letter setting out ideas for change. Most of these were discussed when the new draft guidelines were being considered, and some have been incorporated into them. The only one which was
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CONFIDENTIAL