The Obama administration could send a formal notification by the end of 2009 to the US Congress about its intention to sell 60 Sikorsky UH-60 Black Hawk utility helicopters to Taiwan.
"This has been going on for a while, but there are some indications from Washington that a formal notification could come through before the end of the year," says a defence ministry source in Taipei.
Earlier this year, the ministry set aside an initial $230 million from its latest budget to purchase the 60 Black Hawks. Any deal is likely to raise a protest from China, which has consistently opposed arms sales to Taiwan.
Sikorsky UH-60 Black Hawk
Beijing has regarded Taipei as a renegade province since their split in 1949, and has threatened to attack if the island declares independence. However, given that this is not an offensive weapon, like fighter aircraft, it is unlikely to be a major bilateral issue, say industry sources.
The USA, which switched diplomatic ties to Beijing in 1979, is legally obliged to help Taiwan defend itself. However, it has long dithered on Taipei's biggest aim, a 2001 request to buy 66 Lockheed Martin F-16C/Ds worth $1.3 billion.
The Bush administration cleared the request for Black Hawks in 2001 as part of a wider agreement on a range of military sales. In October 2008, however, they were excluded from a $6.5 billion arms package that Washington approved.
The 2008 deal included 30 Boeing AH-64D Apache Longbow attack helicopters, upgrades to four Northrop Grumman E-2C Hawkeye airborne early warning and control system aircraft and spare parts for Taipei's Lockheed F-16A/B and Northrop F-5 fighters. Under an earlier $1.3 billion deal, Lockheed will also refurbish 12 P-3Cs that are in storage in the USA.
Taiwan is in price negotiations to buy six Alenia Aermacchi C-27J Spartans for its armed forces, with industry sources expecting the deal to go ahead in 2010.