Defense Committee
2022 White Paper Issues
English
The Defense Committee was formed in 2020 to gather, discuss, and disseminate members’ collective thinking on how the defense sector could better contribute to the development of the U.S.-Taiwan bilateral relationship. Given that defense is one of the pillars of that relationship, the Committee is committed to identifying specific ways by which the defense sector can help the U.S. and Taiwan governments meet their defense goals.
All the companies on the Committee have a long-term presence in Taiwan and a shared commitment to contribute positively to Taiwan’s security.
Defense spending in Taiwan has been on a strong upward trajectory in the past few years, not only through Foreign Military Sales (FMS) purchases from the U.S., but also in the form of domestic programs such as the Advanced Jet Trainer (AJT) and Indigenous Defense Submarine (IDS). Future domestic shipbuilding programs such as the indigenous corvette, as will new procurements arising from the special budget passed at the end of 2021, are poised to add opportunities for Taiwan’s defense industry ecosystem.
However, Taiwanese domestic industry participation in international defense industry supply chains is still largely limited to supplying semiconductors. The main reason is that defense industry economics are unlike most other sectors. For complex sub-assemblies, for example, order volumes can be low and sporadic as companies do not usually keep them in inventory. As a result, it can be hard to break into existing supply chains.
As noted in Suggestion 1 below, the best opportunity for Taiwanese industry will be to integrate into the supply chains of U.S. equipment of the future. Winning a place for Taiwan suppliers in U.S. defense supply chains will have the additional strategic benefit of demonstrating Taiwan’s capacity and commitment to serve as a long-term, fully trusted technology and security partner of the U.S. in the Indo-Pacific.
Taiwanese domestic industry is highly capable in some of the aspects of high-end manufacturing called for by international defense industry supply chains. The key lies in finding the economic justification to make such cooperation happen, as well as having a degree of government involvement from both the U.S. and Taiwan.
Such mutual involvement might take the form of co-production, in which Taiwanese industry could perform elements of a program in Taiwan (even under FMS), or co-development, in which local industry would partner with U.S. companies to develop solutions to either Taiwanese or U.S. requirements.
This year the Committee presents five specific suggestions for improving the general environment for the defense sector in Taiwan. They reflect the Committee’s strong support for the Taiwan government’s goal of increasing domestic participation in and indigenization of the defense industry.
Suggestion 1: Lower the local content threshold for research and development (R&D) programs with foreign collaboration.
The high local content requirement for any program designated as R&D at the National Chung-Shan Institute of Science and Technology (NCSIST) makes it difficult for the Institute to succeed in attracting the foreign collaboration it seeks for some projects. Some R&D programs at NCSIST have even had to be halted because the local content minimum could not be met. The resulting situation brings no benefit to Taiwan or Taiwanese industry.
Taiwan has for many years successfully produced weapons and developed various defense technologies on its own. But no matter how advanced or innovative these indigenous efforts may be, they could be even more effective if carried out in collaboration with specialized foreign companies.
The Tsai administration’s policy is to encourage Taiwanese industry to manufacture defense products locally. The government also aims to encourage collaboration with foreign partners to help local companies be more forward-leaning in developing their manufacturing capabilities, potentially enabling Taiwan to become a global defense supplier.
For indigenous R&D programs at NCSIST, foreign collaboration at any level can help build capacity in Taiwan and develop products and solutions not just for the Taiwanese market but the international market as well. To lower or remove barriers to further foreign collaboration with indigenous industry, we suggest that the Taiwan government consider the following measures:
- Introduce greater flexibility into the application of local content requirements for R&D programs at NCSIST, allowing them to proceed with foreign collaboration on the basis of merit. Without such a change, some significant indigenous R&D programs may languish.
- Incentivize foreign companies to collaborate with Taiwanese industry through such methods as offset multipliers and tax incentives.
- Through AmCham and the U.S.-Taiwan Business Council, provide industry with a list of technologies that Taiwan is potentially interested in acquiring. Such a list would help foreign industrial partners initiate the technology release process with the U.S. government as early as possible.
Suggestion 2: Hold regular high-level meetings to enhance beneficial relationships between the U.S. defense industry and the Taiwanese military.
U.S. defense companies with a presence in Taiwan generally have well-established relationships with Taiwan’s military services and organizations. These relationships enable the individual companies to better understand the Taiwan military’s policies, rules, and regulations, as well as to determine what action to take to meet various requirements.
The Committee represents a potential platform for collaboration between government officials and our member companies on issues affecting the defense industry in Taiwan as a whole. The Committee meets regularly to discuss how to improve the bilateral defense relationship and share our common experiences in operating in Taiwan. We also interact with visiting U.S. Congressional delegations to relate our on-the-ground experience and insights for reference in making relevant laws and policies.
To increase its effectiveness in that role, the Committee sees the need for more regular consultations with Ministry of National Defense (MND) leadership, specifically with the Defense Minister. When such high-level meetings have taken place in the past, they have led to extensive collaboration with major U.S. defense suppliers resulting in the development of new weapon systems to Taiwan’s benefit. Moreover, the current crisis in Ukraine highlights the importance of maximizing the communication channels between MND and the U.S. defense industry to help ensure that Taiwan can acquire exactly what it needs in the timeliest manner.
Given this need, we recommend holding quarterly meetings between Committee representatives and MND leadership and staff, as well as annual meetings with the Defense Minister. Through these meetings, Committee members will be able to better understand Taiwan’s challenges and concerns, support the U.S. government in developing appropriate solutions, and work together with MND to create more opportunities for partnerships to enhance Taiwan’s security. These meetings would aim to meet the following objectives:
1. Enhance overall collaboration between the U.S. defense industry and MND. For example, the government could pose questions to industry members on how to facilitate co-production and co-development.
2. Allow U.S. industry to raise questions about government policy on technology sharing early in a co-development process.
3. Address general trends concerning doing business in Taiwan and improve communication between the government and industry in areas such as offsets and taxation.
4. Ensure that key personnel in Taiwan are familiar with the most current U.S. government (Department of Defense and State Department) policies and assess the impact of any changes to them on the defense industry in Taiwan.
Prior to each meeting, the Committee would propose an agenda for discussion.
Suggestion 3: Prepare the groundwork for a bilateral defense industry dialogue.
In previous White Papers, the Committee recommended establishment of a U.S.-Taiwan bilateral defense industry dialogue along the lines of similar forums between the U.S. government and those of Brazil and India.
A major reason for Taiwan’s government interest in such a dialogue is to give more Taiwanese companies the opportunity to participate in international defense industry supply chains. The defense industry is not like commercial markets in that both governments and private companies play a role in deciding which new suppliers are incorporated into those supply chains. A bilateral dialogue that elevates the creation of co-production and co-development opportunities to the government-to-government level could help confirm the business case for future partnerships and supply chain relationships.
Such a dialogue could accomplish the following goals:
- Encourage Taiwan to request co-production early in the manufacturing process, even in FMS cases. The MND already tracks which programs are in the pipeline. Its ability to request co-production at a government- to-government level could help drive more economic activity into Taiwan’s domestic defense sector. The U.S. government could then approach the relevant industry players to establish what level of co-production is feasible.
- Identify future defense requirements in Taiwan that would benefit from co-development with U.S. industry, as well as pathways to execution. Taiwan’s defense companies could thus gain a role in the supply chains of the future. Since co-development programs will require co-investment by the Taiwan government and involvement by both sides in framing requirements, a degree of government-to-government dialogue will be essential.
- Identify future U.S. programs where Taiwan can add value (and investment) as a developmental partner at the very outset and design means to fund such ventures jointly. This cooperation would result in work opportunities for Taiwanese industry, and enable Taiwan to be a purchaser of the resulting platforms.
Such a dialogue could help ensure that Taiwan not only builds necessary capabilities quickly and efficiently, but also that it can maximize opportunities for its companies to grow alongside international partners.
Suggestion 4: Seek input from U.S. industry to help Taiwan achieve maximum impact from its industrial cooperation goals.
Taiwan’s system of defense offsets, or industrial cooperation, has been in effect for many years. The offset rules were updated in January 2022 to reflect a desire to maximize their impact for the MND, Taiwan’s armed services, and local industry.
The Committee recommends establishment of a consultative process between the MND and U.S. industry (represented by AmCham and the U.S.-Taiwan Business Council) ahead of future offset policy revisions. Such a process could offer a chance for industry to offer recommendations to help Taiwan get the most out of the offset program. U.S. industry as a whole has extensive experience helping other countries reach similar objectives.
Suggestion 5: Utilize U.S. industry expertise to help boost the resiliency of critical infrastructure.
The past year has seen further evidence that cyberattacks against critical national infrastructure could become an element of future asymmetric offensive military strategies against industrialized nations. This approach has many important potential advantages from a military strategy perspective: it is relatively cheap, covert and deniable, complex and expensive to defend against, and can have a significant economic and military impact. Taiwan’s geostrategic location makes it potentially vulnerable to attacks of this nature, including as a precursor to more traditional military attacks.
Following the Executive Yuan’s establishment of the Department for Cyber Security in 2016, the Taiwan government has put in place a series of standards and regulations governing cybersecurity for key infrastructure. For example, equipment used on Taiwan’s rail system must comply with National Communications Commission standards, such as telecommunications regulations and communication regulations. Communications equipment must also comply with international standards such as those developed by the American National Standards Institute (ANSI) and the Electronic Industries Alliance (EIA). Software must comply with the “Information Operation Development and Construction Standards” of the Industrial Development Bureau, Ministry of Economic Affairs.
While the development of such standards and regulations is welcome, the extent to which they are complied with across critical infrastructure such as transport, power, and healthcare is not yet clear – especially as they are applied to both legacy equipment and new procurement.
The Committee welcomes the Department of Cyber Security’s announcement of its establishment of a team of cyber-experts tasked with testing the resilience of Taiwan’s critical infrastructure. We recommend the conducting of a regular dialogue between the Department and the Committee to discuss the cybersecurity of Taiwan’s critical infrastructure and whether and how U.S. expertise could assist in tackling any shortfalls in cybersecurity identified by the Department’s testing regime. The crisis in Ukraine drives home how meaningful such a regular dialogue would be.
Chinese
國防委員會於2020年成立，旨在統整、研議並分享國防企業如何加速台美雙邊關係發展。鑒於國防是雙邊關係的重要支柱，國防委員會致力於強化國防企業的貢獻，就達成台美雙方國防目標提出具體措施。國防委員會所屬企業皆於台灣經營長久，且承諾將積極貢獻，保障台灣安全。
過去幾年台灣國防支出呈現顯著成長，包含美國對外軍售及自主國防項目，例如高級教練機及自製防禦潛艦等。未來船艦國造計畫，如自製巡防艦等，及2021年底通過之特別預算衍生之採購案，均將為台灣國防產業生態注入更多的動能。
除半導體產業外，台灣本土企業參與全球國防產業供應鏈的程度仍然有限，主因為不同的產業運作模式。以「國防裝備次系統組裝」（sub-assemblies）為例，有別於其他產業，本類型廠商通常不會維持庫存，下單量較少且相對零星，此類運作模式大幅增加其餘企業進入既有國防供應鏈的難度。
因此，如本委員會以下提出之建議一，台灣企業應思考如何進入「未來」美國國防裝備的供應鏈。台灣供應商進入美國國防供應鏈附加產生的戰略利益，即展現台灣扮演美國於印太地區長期且可信任的科技與安全夥伴的能力與決心。
台灣企業在「高階製造」(high-end manufacturing)領域能力充足，高階製造正為國際國防產業供應鏈所需。因此，促成台美合作之關鍵在於「經濟合理性」(economic justification)與雙邊政府適度的涉入談判。
雙邊合作可能採取「共同製造」(co-production)或「共同開發」(co-development)的形式。透過共同製造，台灣企業可在台製造一部分的軍事裝備（也適用於政府對政府軍售管道所採購之軍用品)；共同開發則為在地企業與美國公司合作，為台美雙方研發解決方案。
本年度委員會針對改善台灣國防產業生態提出五項建議，同時也代表本委員會所有會員業者支持台灣政府增加國內企業參與國防與國防本土化的目標。
建議一：降低國內研發計畫之「本土製造比例」（local content required）門檻，加強推動國際合作
國家中山科學研究院（下稱：「中科院」）推動之研發計畫均要求高「本土製造比例」門檻，高門檻的要求使外國企業不願與中科院進行進一步的合作。事實上，中科院有些研發計畫確實因為無法達成「本土製造比例」之規定而暫停，使台灣相應產業無法從國際合作中獲益。
多年來，台灣成功地發展國防科技及自製軍事武器，然而，若能與擅長不同領域的國際企業合作，能為台灣提供更有效與全面的防衛措施。蔡政府鼓勵台灣企業自製國防軍用產品，也鼓勵在地企業與國際企業合作，提升自製能力，進而使台灣進入國際供應鏈。
有關中科院的研發計畫，國外企業的協助有助於提升台灣企業的能力，發展在地及國際市場所需的產品與解決方案。為了進一步提倡本土企業與國際合作，本委員會建議台灣政府考慮以下措施:
- 彈性調整中科院研發計畫「本土製造比例」門檻，使該計畫得以其整體價值為考量繼續進行。如缺乏彈性，將使許多本土研發計畫難以進行。
- 提供誘因，吸引國際企業與本土企業合作，如「工合點數加乘」（offset multiplier）或賦稅優惠。
- 提供台灣期待獲得之技術清單，並透過台灣美國商會及美台商業協會轉交相關企業，促使國際企業夥伴儘
早啟動向美國政府申請科技輸出之程序。
建議二：定期召開會議，增進美國國防企業與台灣軍事單位雙邊關係
在台灣設立據點的美國國防企業，通常已與台灣各軍種及軍事單位建立良好關係，此使企業得更瞭解台灣的軍事政策、法規、規範，以及因應不同要求應採取的作為。
國防委員會是政府單位與會員企業就影響台灣整體國防產業相關議題進行合作的平台。本委員會將定期召開會議，討論如何增進雙邊國防關係、分享在地營運的共同經驗，與美國國會代表團討論、提供在地經驗與洞察，並協助改善或起草相關法規及政策。
本委員會認為，與國防部（特別是國防部長）定期進行合作性會晤有其必要性。過去，此類的高層會談，促使台灣國防單位與美國主要國防企業就新型武器系統展開廣泛合作。此外，烏克蘭危機更顯示國防部與美國國防企業應強化溝通的重要性，如此一來，台灣才能在最短時間內籌獲所需資源。定期會議旨在達成下列目標:
- 增進美國企業與台灣國防部整體合作關係，例如政府得以瞭解如何順利促成台美共同製造及開發。
- 讓美國企業在早期共同開發的過程中，瞭解台灣政府技術分享的相關政策。
- 處理、討論整體在台經營的問題，增進政府與企業就工業合作及賦稅等領域之溝通 。
- 確保台灣關鍵決策者熟悉美國政府（五角大廈與國務院）最新政策，並評估政策變遷對台灣國防企業的衝擊。
國防委員會將於每次會議前提出討論議程。
建議三：為雙邊國防產業對話打下基礎
去年白皮書中，本委員會曾建議建立台美雙邊國防產業對話機制，如美國政府與巴西、印度政府亦有類似對話機制。
建立對話機制最重要的原因是，將提供更多本土企業進入全球國防產業供應鏈的機會。與一般商業市場不同，在國防產業裡，企業與政府對於新的供應商是否可加入既有供應鏈皆享有決策權。因此，進行政府層級的雙邊對話，就共同製造與共同開發進行討論，將有助找出未來合作及供應鏈的商機。
旨揭對話期望達成下列目的:
- 鼓勵台灣儘早提出共同製造的需求，包含軍售項目，國防部可持續追蹤正在進行的專案。若在政府層級對話時提出共同製造的需求，將有助推動台灣國防產業之經濟活動。美國政府亦可繼續與產業交流，探討共同製造的可行性。
- 確認未來台灣擬與美國共同開發的項目與執行的方式，協助台灣國防企業未來進入產業供應鏈。有鑑於共同開發項目將需要雙邊政府持續投入資源與進行互動，政府層級的對話更顯必要性。
- 找到在未來美國對台軍售項目中，台灣得以共同開發夥伴身分參與或投資的機會，並為該合資企業計劃融資方式。此合作將為台灣創造工作機會，並使台灣成為國防產業中的購買方。
旨揭國防企業對話確保台灣能以最有效率且最迅速的方式獲取所需的能力，同時也為本土企業與國際夥伴共同成長提供更多機會。
建議四：尋求美國產業界意見，協助台灣發揮最大產業合作影響力
台灣的工業合作機制已運作多年，近期更頒布新的工業合作作業要點（2022年1月），顯示台灣盼透過工業合作及盡力擴大國防部、軍種及在地企業的利益。
本委員會建議，未來政府擬調整工業合作政策前，國防部應透過台灣美國商會與美台商業協會，與美國企業先行建立諮詢機制，給予企業提出建議的機會，協助台灣從工合計畫中獲得更多利益，因為美國企業在協助其他國家達成類似目標上，已具深厚經驗。
建議五：運用美國企業專長，提升關鍵基礎建設的韌性
過去一年，國家關鍵基礎建設遭受網路攻擊的案例數持續增加，儼然是未來對工業國家進行不對稱軍事攻擊的方法。以軍事戰略角度觀之，網路攻擊確實掌握若干重要優勢，包含：成本相對低廉、隱蔽性高、攻擊方亦否認、防範成本高且複雜，更可能造成經濟與軍事重大衝擊。由於台灣處地理戰略位置，台灣更易受網路以及傳統軍事攻擊。
台灣政府於2016年建立行政院資通安全處後，已建置一系列管理關鍵基礎建設資訊的安全標準及法規。舉例而言，針對鐵路系統，相關設備必須符合國家通訊傳播委員會的標準、電信法規、通訊條例，以及通訊設備必須符合「美國國家標準協會」（ANSI）及「電子工業協會」（EIA）建立之國際標準。軟體部分，則須符合經濟部工業局資訊作業開發之規格及標準。
本委員會樂見政府制定相關規定，但該等標準及法規在如何適用於關鍵基建，包含交通、能源及健保等領域，尤其是在既有及新開發的設備如何適用上，皆尚未明確。
本委員會亦樂見行政院資安處建置資安專家小組，檢測台灣關鍵基礎設施之韌性。我們建議行政院資安處與本委員會應定期會晤，討論台灣關鍵基礎建設的資訊安全，或研議美方專家可如何協助台灣改善網路安全基礎建設。最後，本委員會想再次強調，烏克蘭危機更顯示台美雙方展開定期對話的重要性。
