The Taiwan Relations Act (TRA) was initiated by Congress and signed into law by President Carter. US-Taiwan diplomatic relations had been terminated three months earlier. The US Congress found it necessary to enact the TRA. The TRA created the American Institute in Taiwan (AIT) - a private corporation to handle "unofficial relations" between Taiwan and the US. Important clauses in the TRA are: It is the policy of the US 1) to declare that peace and stability in the area are in the political, security and economic interests of the United States, and are matters of international concern; 2) to make clear that the United States decision to establish diplomatic relations with the PRC rests upon the expectation that the future of Taiwan will be determined by peaceful means; 3) to consider any effort to determine the future of Taiwan by other than peaceful means ... a threat to the peace and security of the western Pacific area and of grave concern to the US; 4) to provide Taiwan with arms of a defensive character; PRC leaders see the TRA as aimed at "preventing China's reunification" and have demanded its revocation. * Importance: The US vows that the US decision to establish diplomatic relations with the PRC rests upon the expectation that the future of Taiwan will be determined by peaceful means. The TRA played an important role in March 1996, when the US sent aircraft carriers to the Taiwan Strait in the midst of Chinese war games aimed at Taiwan.