Opportunities and Challenges for Further Expansion of US-Taiwan Space Cooperation

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David An is a senior research fellow at the Global Taiwan Institute and was previously a political-military officer at the US Department of State.

With the upcoming launch of Formosat-7 satellite constellation by SpaceX on June 24, it is timely to examine the promises and pitfalls of further enhancements in US-Taiwan cooperation in space. Referring to Taiwan’s Formosat-7, President Tsai Ing-wen (蔡英文) said that it will collect even more weather data than what is currently possible, which will also serve national defense and disease prevention purposes. Considering President Tsai’s remarks about the importance of cooperation, what drives such high-tech space cooperation, what holds it back, and how can both sides foster greater cooperation in this area? While the United States and Taiwan work together to develop satellites, what keeps Taiwan from developing space launch capabilities?

This article identifies key challenges to greater US-Taiwan space cooperation such as tight export control, the question of international demand, and intellectual property concerns. Yet, there are also plentiful opportunities for further expansion of US-Taiwan space cooperation due to Taiwan’s talented workforce, affordable wages, and trust between the United States and Taiwan due to inherent political compatibility with Taiwan as a vibrant constitutional democracy aligned with US values and interests. [1]

Key Challenges: MTCR Norms, US Export Control, and Scaling Up

While the United States and Taiwan already have a track record of working together to produce satellites and satellite components, one key challenge to improving the space launch aspect of US-Taiwan space cooperation is that Taiwan is discouraged from manufacturing and launching rockets capable of reaching space. Such space launch vehicles are “dual use:” for the purposes of space launch and nuclear proliferation. The same rockets that launch payloads or passengers to space can also be used to deliver nuclear warheads over long distances.

For this reason, the United States supports the Missile Technology Control Regime (MTCR) of 1987 that discourages others that do not already have long range missile capabilities from acquiring them. Specifically, the MTCR limits the transfer of ballistic and cruise missiles that have the inherent capability to deliver 500 kilogram warheads to 300 kilometers. It limits the potential for US cooperation with Taiwan on space launch, though both sides could still continue to collaborate on producing satellites together.

The United States has a practice of holding Taiwan and other partners and countries and partners such as South Korea to the norms of the MTCR. For Taiwan, adhering to MTCR is supporting a norm since Taiwan is not legally bound to it as a signatory, unlike the United States, which is a signatory of the MTCR. Taiwan is aware that the US government does not support any efforts for Taiwan to acquire long range missile and space launch capabilities. Taiwan expert Fu Mei mentioned in a 2018 Global Taiwan Institute article:

These [missiles], with tactical ranges of 270-370 km, could afford Taiwan a measure of capability for suppressing Chinese air defenses from standoff distances and/or engaging high-value, time-critical targets […] The lack of US support for Taiwan acquiring such capability, in addition to the usual China concerns, has been further compounded by MTCR (Missile Technology Control Regime) proliferation issues.

Furthermore, the Arms Control Association (ACA) further ties MTCR with Taiwan’s lack of space launch capabilities. The ACA’s discussion of MTCR mentions: “Diplomatic efforts built around MTCR standards are widely seen as having had a number of successes, including: Taiwan’s abandonment of its dual-capable satellite launch program in 1990.” The association elaborates in a separate report: “The MTCR has been credited with slowing or stopping several missile programs by making it difficult for prospective buyers to get what they want or stigmatizing certain activities and programs. Argentina, Egypt, and Iraq abandoned their joint Condor II ballistic missile program. Brazil, South Africa, South Korea, and Taiwan also shelved or eliminated missile or space launch vehicle programs.”

If Taiwan were to improve cooperation with the United States in producing satellites or conducting a space launch, another challenge for Taiwan would be the need to find abundant international customers to break even or make a profit. In doing so, Taiwan would likely be less successful in competing in public tenders for satellite components or space launch services than well-established defense and space companies such as Lockheed Martin, Northrop Grumman, or SpaceX. The latter group of major international defense and space companies have a greater variety of products, longer track record, and full backing of their home governments.

While Taiwan is only starting to produce space satellite equipment, it already makes a strong push to sell its conventional defense equipment through international arms trade shows such as the Abu Dhabi Defense Expo 2019, and International Defense Industry Fair 2019. Ramping up production and selling to international customers would presumably follow these same sales channels since aerospace and defense industries intersect. In essence, scaling up production and finding customers could be another constraint to Taiwan’s space ambitions.

Major Opportunities: Taiwan’s High-Tech Economy, Work Force, and Political Compatibility

There are also many drivers of increasing US-Taiwan cooperation in the space industry. US cooperation with Taiwan on a cutting edge field such as space makes sense because both the United States and Taiwan have high-tech economies. The United States is the home to top research and development (R&D) talent in the technology industry with companies such as Apple, Google, IBM, and many others. Taiwan has the high tech industrial base to take its R&D plans and produce items such as iPhones from Apple’s designs, and provide secure locations in Taiwan for Google’s data centers.

Taiwan’s high-tech economy had a head start compared to others in the region since Taiwan is historically considered one of Asia’s four tigers. The four tigers was a designation for the rapid industrialization of economic powerhouses Taiwan, South Korea, Hong Kong, and Singapore from the 1960s to 1990s. This is the precedent and foundation for Taiwan’s modern high-tech economy.

Taiwan’s high-tech economy is based on its highly educated populace as its workforce, which is relevant for a high-tech field such as the space industry. Basic education through high school or vocational high school up until age 18 is compulsory. There is an abundance of higher education options in Taiwan as well, with 158 universities in Taiwan enrolling 1.3 million students. The traditional Confucian culture that pervades Taiwan also drives young people toward academic achievements.

Another reason that US-Taiwan space cooperation to produce satellites makes sense is the affordable wages of Taiwan’s top talent. An early-mid career aerospace engineer in the United States would expect take-home pay of at least $100,000 US dollars a year. That is around $50 dollars an hour net take-home income, but with overhead costs of office space, health benefits, and matching 401K it can be upwards of $100 dollars gross per hour. For a US engineer to work an extra long 10 hour day could cost $1,000 with overhead costs included($1,000 US dollars is around $30,000 NTD for one day of work). The same early-mid career engineer in Taiwan would cost between $60,000 to $90,000 NTD per month, which is the equivalent to the US engineer working for two or three days. To rephrase this, a Western engineer working for two or three days costs the same as an equally talented engineer in Taiwan working for a month. This shows the significant cost savings of choosing Taiwan engineering talent.

The cost savings of working with Taiwan’s affordable top talent is a driver for even more US cooperation with Taiwan on space and other high tech fields, with the prime example of how Taiwan was set to deliver a moon lander to NASA for $46 million US dollars before the mission was cancelled. The cost/price of $46 million US dollars is incredibly affordable in the aerospace and outer space industry. In the aerospace context, a new F-16 fighter aircraft costs around $50 million to $60 million US dollars, and F-35 Joint Strike Fighter costs even more at around $80 million US dollars. The moon lander would have cost less than either of these fighter aircrafts, even though a moon lander would have been a bespoke custom item that normally costs far more. The fighter aircraft are produced on assembly lines that minimize labor costs and save money due to large scale production. Taiwan was set to build a lunar lander for an incredibly low price.

In addition to possessing a highly educated workforce and affordable wages, the United States is working with a constitutional democracy with strong rule of law when it cooperates with Taiwan. This is in contrast to other governments with systems diametrically opposed to the United States. A common democratic system and rule-of-law in Taiwan and the United States means there is more trust between the two partners. This aspect is becoming increasingly important in the current geopolitical context.

While US-Taiwan space cooperation is promising in terms of jointly producing satellites, it is less realistic for Taiwan to pursue space launch due to MTCR and export control restrictions. Despite those challenges holding Taiwan back from any space launch ambitions, Taiwan continues to be an attractive high-tech partner for the United States in producing satellites and satellite components. Taiwan’s advantages are its highly educated workforce, rule of law, and constitutional democracy compatible with the United States’ political system. These explain why there has been this track record of successful US-Taiwan cooperation in the Alpha Magnetic Spectrometer, ISS computer, Formosat-5 in 2017, and the upcoming June 24 launch of the Formosat-7 weather satellite cluster.

The main point: For the prospects of even greater US-Taiwan space cooperation in the future, the challenges for Taiwan include US export control, the Missile Technology Control Regime, and the difficulty in scaling up Taiwan’s space industry. However, opportunities arise from Taiwan’s highly educated talent pool, affordable wages, and compatible goals and values leading to even greater US-Taiwan space cooperation in the future

[1] In my first article on Taiwan’s indigenous space industry, I mentioned Formosat-5 as Taiwan’s indigenously produced satellite. In the second article on US-Taiwan space cooperation, I examined the US-Taiwan co-produced Formosat-7 satellite. I also addressed US-China cooperation through the alpha magnetic spectrometer and international space station computer.