Report on Impact of Offsets on Domestic Contractors and Lower Tier Subcontractors
Pub. L. 108–195, § 7(a), Dec. 19, 2003, 117 Stat. 2894, as amended by Pub. L. 111–67, § 12(b)(3), Sept. 30, 2009, 123 Stat. 2022, provided that:
“(1) In general.—As part of the annual report required under section 723(a) of the Defense Production Act of 1950 [50 U.S.C. 4568(a)], the Secretary of Commerce (in this section referred to as the ‘Secretary’) shall—
detail the number of foreign contracts involving domestic contractors that use offsets, industrial participation agreements, or similar arrangements during the preceding 5-year period;
calculate the aggregate, median, and mean values
of the contracts and the offsets, industrial participation agreements, and similar arrangements during the preceding 5-year period; and
describe the impact of international or foreign sales of United States
defense products and related offsets, industrial participation agreements, and similar arrangements on domestic prime contractors and, to the extent practicable, the first 3 tiers of domestic contractors and subcontractors during the preceding 5-year period in terms of domestic employment, including any job losses, on an annual basis.
“(2) Use of internal documents.—
To the extent that the Department of Commerce is already in possession of relevant data, the Department shall use internal documents or existing departmental records to carry out paragraph (1).
“(3) Information from non-federal entities.—
“(A) Existing information.—
In carrying out paragraph (1), the Secretary
shall only require a non-Federal entity to provide information that is available through the existing data collection and reporting systems of that non-Federal entity.
may require a non-Federal entity to provide information to the Secretary
in the same form that is already provided to a foreign government in fulfilling an offset arrangement, industrial participation agreement, or similar arrangement.”
[Pub. L. 111–67, § 12(b)(3), which directed amendment of section 7(a) of the “Defense Production Act Amendments of 2003 (50 U.S.C. App. 2099 note)” by striking “section 309(a) of the Defense Production Act of 1950 (50 U.S.C. App. 2099(a))” and inserting “section 723(a) of the Defense Production Act of 1950”, was executed to section 7(a) of Pub. L. 108–195, the Defense Production Act Reauthorization of 2003, set out above, to reflect the probable intent of Congress.]
Declaration of Offset Policy
Pub. L. 102–558, title I, § 123, Oct. 28, 1992, 106 Stat. 4206, as amended by Pub. L. 108–195, § 7(c), Dec. 19, 2003, 117 Stat. 2895; Pub. L. 111–67, § 12(b)(1), Sept. 30, 2009, 123 Stat. 2022, provided that:
“(a) In General.—Recognizing that certain offsets for military exports are economically inefficient and market distorting, and mindful of the need to minimize the adverse effects of offsets in military exports while ensuring that the ability of United States firms to compete for military export sales is not undermined, it is the policy of the Congress that—
of the United States
Government shall encourage, enter directly into, or commit United States
firms to any offset arrangement in connection with the sale of defense goods or services
to foreign governments;
Government funds shall not be used to finance offsets in security assistance transactions, except in accordance with policies and procedures that were in existence on March 1, 1992
nothing in this section shall prevent agencies of the United States
Government from fulfilling obligations incurred through international agreements entered into before March 1, 1992
the decision whether to engage in offsets, and the responsibility for negotiating and implementing offset arrangements, reside with the companies involved.
“(b) Presidential Approval of Exceptions.—
It is the policy
of the Congress
that the President may approve an exception to the policy
stated in subsection (a) after receiving the recommendation of the National Security Council
“(1) Interagency team.—
“(A) In general.—
It is the policy
that the President shall designate a chairman of an interagency team comprised of the Secretary of Commerce
, Secretary of Defense
, United States
Trade Representative, Secretary
of Labor, and Secretary
to consult with foreign nations on limiting the adverse effects of offsets in defense procurement without damaging the economy or the defense industrial base of the United States
or United States
defense production or defense preparedness.
The President shall direct the interagency team to meet on a quarterly basis.
The President shall direct the interagency team to submit to Congress
an annual report, to be included as part of the report required under section 723(a) of the Defense Production Act of 1950
[50 U.S.C. 4568(a)
], that describes the results of the consultations of the interagency team under subparagraph (A) and the meetings of the interagency team under subparagraph (B).
“(2) Recommendations for modifications.—The interagency team shall submit to the President any recommendations for modifications of any existing or proposed memorandum of understanding between officials acting on behalf of the United States and one or more foreign countries (or any instrumentality of a foreign country) relating to—
research, development, or production of defense equipment; or
the reciprocal procurement of defense items.”
Ex. Ord. No. 13177. National Commission on the Use of Offsets in Defense Trade and President’s Council on the Use of Offsets in Commercial Trade
Ex. Ord. No. 13177, Dec. 4, 2000, 65 F.R. 76558, as amended by Ex. Ord. No. 13316, § 3(f), Sept. 17, 2003, 68 F.R. 55256, provided:
By the authority vested in the President by the Constitution and the laws of the United States of America, including Public Law 106–113 [see Tables for classification] and the Federal Advisory Committee Act, as amended (5 U.S.C. App.), and in order to implement section 1247 of Public Law 106–113 (113 Stat. 1501A–502) [set out in a note above] and to create a parallel “President’s Council on the Use of Offsets in Commercial Trade,” it is hereby ordered as follows:
Section 1. Membership. Pursuant to Public Law 106–113, the “National Commission on the Use of Offsets in Defense Trade” (Commission) comprises 11 members appointed by the President with the concurrence of the Majority and Minority Leaders of the Senate and the Speaker and the Minority Leader of the House of Representatives. The Commission membership includes: (a) representatives from the private sector, including one each from (i) a labor organization, (ii) a United States defense manufacturing company dependent on foreign sales, (iii) a United States company dependent on foreign sales that is not a defense manufacturer, and (iv) a United States company that specializes in international investment; (b) two members from academia with widely recognized expertise in international economics; and (c) five members from the executive branch, including a member from the: (i) Office of Management and Budget, (ii) Department of Commerce, (iii) Department of Defense, (iv) Department of State, and (v) Department of Labor. The member from the Office of Management and Budget will serve as Chairperson of the Commission and will appoint, and fix the compensation of, the Executive Director of the Commission.
Sec. 2. Duties. The Commission will be responsible for reviewing and reporting on: (a) current practices by foreign governments in requiring offsets in purchasing agreements and the extent and nature of offsets offered by United States and foreign defense industry contractors; (b) the impact of the use of offsets on defense subcontractors and nondefense industrial sectors affected by indirect offsets; and (c) the role of offsets, both direct and indirect, on domestic industry stability, United States trade competitiveness, and national security.
Sec. 3. Commission Report. Not later than 12 months after the Commission is established, it will report to the appropriate congressional committees. In addition to the items described in section 2 of this order, the report will include: (a) an analysis of (i) the collateral impact of offsets on industry sectors that may be different than those of the contractor paying offsets, including estimates of contracts and jobs lost as well as an assessment of damage to industrial sectors; (ii) the role of offsets with respect to competitiveness of the United States defense industry in international trade and the potential damage to the ability of United States contractors to compete if offsets were prohibited or limited; and (iii) the impact on United States national security, and upon United States nonproliferation objectives, of the use of co-production, subcontracting, and technology transfer with foreign governments or companies, that results from fulfilling offset requirements, with particular emphasis on the question of dependency upon foreign nations for the supply of critical components or technology; (b) proposals for unilateral, bilateral, or multilateral measures aimed at reducing any detrimental effects of offsets; and (c) an identification of the appropriate executive branch agencies to be responsible for monitoring the use of offsets in international defense trade.
Sec. 4. Administration, Compensation, and Termination. (a) The Department of Defense will provide administrative support and funding for the Commission and Federal Government employees may be detailed to the Commission without reimbursement.
(b) Members of the Commission who are not officers or employees of the Federal Government will be compensated at a rate of basic pay prescribed for level IV of the Executive Schedule under section 5315 of title 5, United States Code, for each day (including travel time) during which such member is engaged in performance of the duties of the Commission. Members of the Commission who are officers or employees of the Federal Government will serve without compensation in addition to that received for their services as officers or employees of the Federal Government.
(c) Members of the Commission will be allowed travel expenses, including per diem in lieu of subsistence, under subchapter 1 of chapter 57 of title 5, United States Code, while on business in the performance of services for the Commission.
(d) The Commission will terminate 30 days after transmitting the report required in section 1248(b) of Public Law 106–113 (113 Stat. 1501A–505) [set out in a note above].
[Secs. 5 to 8. Revoked effective Sept. 30, 2003, by Ex. Ord. No. 13316, § 3(f), Sept. 17, 2003, 68 F.R. 55256.]