Modernizing Taiwan’s security capabilities to deter and, if necessary, defeat aggression by the People’s Republic of China

In this section, the term “appropriate congressional committees” means— The Secretary of State, in consultation with the Secretary of Defense, shall use the authorities under this section to strengthen the United States-Taiwan defense relationship, and to support the acceleration of the modernization of Taiwan’s defense capabilities, consistent with the Taiwan Relations Act (Public Law 96–8) [22 U.S.C. 3301 et seq.]. In addition to the purposes otherwise authorized for Foreign Military Financing programs under the Arms Export Control Act (22 U.S.C. 2751 et seq.), a purpose of the Foreign Military Financing Program should be to provide assistance, including equipment, training, and other support, to build the civilian and defensive military capabilities of Taiwan— to accelerate the modernization of capabilities that will enable Taiwan to delay, degrade, and deny attempts by People’s Liberation Army forces— Of the amounts authorized to be appropriated pursuant to subsection (h), not more than $100,000,000 may be used during each of the fiscal years 2023 through 2032 to maintain a stockpile (if established pursuant to section 3352 of this title), in accordance with section 2321h of this title. Not later than March 1, 2023, and annually thereafter, the Secretary of State, in coordination with the Secretary of Defense, shall submit a plan to the appropriate congressional committees describing how amounts authorized to be appropriated pursuant to subsection (h), if made available, would be used to achieve the purpose described in subsection (c). Amounts authorized to be appropriated for each fiscal year pursuant to subsection (h) are authorized to be made available after the Secretary of State, in coordination with the Secretary of Defense, certifies not later than 1 year after December 22, 2023, and not less than annually to the appropriate committees of Congress that Taiwan has increased its defense spending relative to Taiwan’s defense spending in its prior fiscal year, which includes support for an asymmetric strategy, excepting accounts in Taiwan’s defense budget related to personnel expenditures, (other than military training and education and any funding related to the All-Out Defense Mobilization Agency). The Secretary of State may waive the certification requirement under subparagraph (A) if the Secretary, in consultation with the Secretary of Defense, certifies to the appropriate congressional committees that for any given year— Amounts authorized to be appropriated for a fiscal year pursuant to subsection (h) that are not obligated and expended during such fiscal year shall be added to the amount that may be used for Foreign Military Financing to Taiwan in the subsequent fiscal year. Concurrently with the first certification required under subsection (e)(2), the Secretary of State and the Secretary of Defense shall jointly submit a report to the appropriate congressional committees that describes steps taken to enhance the United States-Taiwan defense relationship and Taiwan’s modernization of its defense capabilities. Each report required under paragraph (1) shall include— an assessment of the efforts of Taiwan to acquire and employ within its forces counterintervention capabilities, including— an assessment of steps taken by Taiwan to enhance the overall readiness of its defense forces, including— an evaluation of— a description of any challenge in Taiwan to— Concurrently with subsequent certifications required under subsection (e)(2), the Secretary of State and the Secretary of Defense shall jointly submit updates to the initial report required under paragraph (1) that provides a description of changes and developments that occurred in the prior year. The reports required under paragraphs (1) and (3) shall be submitted in an unclassified form, but may contain a classified annex. The Secretary of State and the Secretary of Defense shall jointly share any unclassified portions of the reports, pursuant to paragraph (4), with Taiwan, as appropriate. Notwithstanding section 23(c)(1) of the Arms Export Control Act (22 U.S.C. 2763), during fiscal years 2023 through 2027, the Secretary of State is authorized to make direct loans available for Taiwan pursuant to section 23 of such Act. Gross obligations for the principal amounts of loans authorized under subparagraph (A) may not exceed $2,000,000,000. In this subparagraph, the term “cost”— Amounts authorized to be appropriated pursuant to subsection (g) may be made available to pay for the cost of loans authorized under subparagraph (A). The Government of the United States may charge processing and origination fees for a loan made pursuant to subparagraph (A), not to exceed the cost to the Government of making such loan, which shall be collected from borrowers through a financing account (as defined in section 661a(7) of title 2). Amounts made available under any appropriations Act for any fiscal year may not be used to pay any fees associated with a loan authorized under subparagraph (A). Loans made pursuant to subparagraph (A) shall be repaid not later than 12 years after the loan is received by the borrower, including a grace period of not more than 1 year on repayment of principal. Notwithstanding section 23(c)(1) of the Arms Export Control Act (22 U.S.C. 2763(c)(1)), interest for loans made pursuant to subparagraph (A) may be charged at a rate determined by the Secretary of State, except that such rate may not be less than the prevailing interest rate on marketable Treasury securities of similar maturity. Amounts made available under this paragraph for interest costs shall not be considered assistance for the purposes of any statutory limitation on assistance to a country. Amounts authorized to be appropriated pursuant to subsection (g) may be made available for the costs of loan guarantees for Taiwan under section 24 of the Arms Export Control Act (22 U.S.C. 2764) for Taiwan to subsidize gross obligations for the principal amount of commercial loans and total loan principal, any part of which may be guaranteed, not to exceed $2,000,000,000. A loan guarantee authorized under subparagraph (A)— Any loan guaranteed pursuant to subparagraph (A) may not be subordinated to— Repayment in United States dollars of any loan guaranteed under this paragraph shall be required not later than 12 years after the loan agreement is signed. Notwithstanding section 24 of the Arms Export Control Act (22 U.S.C. 2764), the Government of the United States may charge processing and origination fees for a loan guarantee authorized under subparagraph (A), not to exceed the cost to the Government of such loan guarantee, which shall be collected from borrowers, or from third parties on behalf of such borrowers, through a financing account (as defined in section 661a(7) of title 2). Amounts made available under this paragraph for the costs of loan guarantees authorized under subparagraph (A) shall not be considered assistance for the purposes of any statutory limitation on assistance to a country. Amounts authorized to be appropriated to carry out this subsection may not be expended without prior notification of the appropriate committees of Congress. In addition to amounts otherwise authorized to be appropriated for Foreign Military Financing, there is authorized to be appropriated to the Department of State for Taiwan Foreign Military Finance grant assistance up to $2,000,000,000 for each of the fiscal years 2023 through 2027. Of the amounts authorized to be appropriated under paragraph (1), the Secretary of State should use not less than $2,000,000 per fiscal year for one or more blanket order Foreign Military Financing training programs related to the defense needs of Taiwan. The Secretary of State may use amounts authorized to be appropriated under paragraph (1) for the procurement of defense articles, defense services, or design and construction services that are not sold by the United States Government under the Arms Export Control Act (22 U.S.C. 2751 et seq.). Of the amounts authorized to be appropriated for Foreign Military Financing and made available for Taiwan, not more than 15 percent of the amount made available for each fiscal year may be available for the procurement by Taiwan in Taiwan of defense articles and defense services, including research and development, as agreed by the United States and Taiwan. Assistance may not be provided under this section after September 30, 2032.