Arms law may hurt trade talks

The Clinton administration has intensified its opposition to a new law that could expand arms deals to Taiwan while some businessmen warned it could imperil any fresh trade talks.

A State Department spokesman said despite modifications, the proposed Taiwan Security Enhancement Act could threaten regional stability and scuttle the chances of future cross-strait talks.

'The administration believes it could have serious unintended and negative consequences for the security of Taiwan as well as American interests,' the spokesman said.

'It also seems to interfere with the President's authority as commander-in-chief.' The department fears the act dramatically alters the balance created by the 20-year-old Taiwan Relations Act by creating an official defence relationship between Taipei and Washington.

The Taiwan Security Enhancement Act took a crucial step towards becoming reality on Tuesday when it passed the International Relations Committee of the House of Representatives on Capitol Hill.

The proposed act has been modified to remove specific arms deals but still seeks to generally upgrade defence sales and ties.

Passing the bill, committee chairman Ben Gilman, a Republican, warned that the Taiwan Relations Act allowed for such a build-up in the face of opposition from Beijing.

'A failure to provide for Taiwan's legitimate defence needs could lead to Beijing's misunderstanding of American interests, foster perceptions of Taiwanese defence vulnerability and ultimately lead to conflict with our nation over its adventurism,' he said.

Prominent members of the Sino-US business community expressed fears that next week's house vote could scuttle fresh hopes for new talks on China's entry to the World Trade Organisation.

'There is no question that this is going to anger Beijing and raise unwelcome tensions all around,' one executive said.