TNAG-2794-FCO40-4034-Relations-between-Hong-Kong-and-Taiwan-1993 — Page 126

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TAIWAN: DEFENCE SALES GUIDELINES

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To seek guidance from Ministers about whether to allow a huske detunee greater flexibility over defence sales to Taiwan.

RECOMMENDATION

2.

The options are either:

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or

(i)

to stick to the guidelines approved in April 1992; (ii) to amend these slightly to allow some more flexibility

but without permitting sales of major defence items (eg. frigates, fighter aircraft à la France).

Had it not been for recent events in the courts officials were inclined - despite Chinese sensitivity to Option (ii) but have concluded that Option (i) might be safer until dust from Matrix Churchill has settled. I recommend that Ministers decide between (i) and (ii) on domestic political grounds. In terms of relations with China Sir R McLaren has doubts about the wisdom of moving to Option (ii); I am more relaxed, given the very small practical difference between the two.

BACKGROUND AND ARGUMENT

3.

Our internal Defence Sales Guidelines for Taiwan were last amended in March 1992. Although they gave us more scope than the previous guidelines, they have proved somewhat difficult to administer as they still leave a large "grey area". In June the Airfield Damage Repair Equipment case highlighted this. It involved equipment, largely of a civilian nature, which by being sold to the Taiwan armed forces, would "enhance their capability", but which was unlikely to be of grave concern to

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CONFIDENTIAL