I
106TH CONGRESS
1ST SESSION
H. R. 2652
To increase monitoring of the use of offsets in international defense trade.
IN THE HOUSE OF REPRESENTATIVES
JULY 29, 1999
Mr. TIERNEY introduced the following bill; which was referred to the Com-
mittee on International Relations, and in addition to the Committee on
Ways and Means, for a period to be subsequently determined by the
Speaker, in each case for consideration of such provisions as fall within
the jurisdiction of the committee concerned
A BILL
To increase monitoring of the use of offsets in international
defense trade.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Defense Offsets Disclo-
sure Act of 1999’’.
SEC. 2. FINDINGS AND DECLARATION OF POLICY.
(a) FINDINGS.—Congress makes the following find-
ings:
(1) A fair business environment is necessary to
advance international trade, economic stability, and
development worldwide, is beneficial for American
workers and businesses, and is in the United States
national interest.
(2) In some cases, mandated offset require-
ments can cause economic distortions in inter-
national defense trade and undermine fairness and
competitiveness, and may cause particular harm to
small- and medium-sized businesses.
(3) The use of offsets may lead to increasing
dependence on foreign suppliers for the production
of United States weapons systems.
(4) The offset demands required by some pur-
chasing countries, including some close allies of the
United States, equal or exceed the value of the base
contract they are intended to offset, mitigating much
of the potential economic benefit of the exports.
(5) Offset demands often unduly distort the
prices of defense contracts.
(6) In some cases, United States contractors
are required to provide indirect offsets which can
negatively impact nondefense industrial sectors.
(7) Unilateral efforts by the United States to
prohibit offsets may be impractical in the current
era of globalization and would severely hinder the
competitiveness of the United States defense indus-
try in the global market.
(8) The development of global standards to
manage and restrict demands for offsets would en-
hance United States efforts to mitigate the negative
impact of offsets.
(b) DECLARATION OF POLICY.—It is the policy of the
United States to develop a system for monitoring the use
of offsets in international defense trade, to promote fair-
ness in such trade, and to ensure that foreign participa-
tion in the production of United States weapons systems
does not harm the economy of the United States.
SEC. 3. SENSE OF CONGRESS.
It is the sense of Congress that—
(1) the executive branch should pursue efforts
to address trade fairness by establishing reasonable,
business-friendly standards for the use of offsets in
international business transactions between the
United States and its trading partners and competi-
tors;
(2) the Secretary of State, the Secretary of
Commerce, and the United States Trade Represent-
ative, or their designees, should raise with other in-
dustrialized nations at every suitable venue the need
for transparency and reasonable standards to govern
the role of offsets in international defense trade; and
(3) the United States Government should enter
into discussions regarding the establishment of mul-
tilateral standards for the use of offsets in inter-
national defense trade through the appropriate mul-
tilateral fora, including such organizations as the
Transatlantic Economic Partnership, the Wassenaar
Arrangement, the G–8, and the World Trade Orga-
nization.
SEC. 4. DEFINITIONS.
In this title:
(1) APPROPRIATE
CONGRESSIONAL
COMMIT-
TEES.—The term ‘‘appropriate congressional com-
mittees’’ means—
(A) the Committee on Foreign Relations of
the Senate; and
(B) the Committee on International Rela-
tions of the House of Representatives.
(2) G–8.—The term ‘‘G–8’’ means the group
consisting of France, Germany, Japan, the United
Kingdom, the United States, Canada, Italy, and
Russia established to facilitate economic cooperation
among the eight major economic powers.
(3) OFFSET.—The term ‘‘offset’’ means the en-
tire range of industrial and commercial benefits pro-
vided to foreign governments as an inducement or
condition to purchase military goods or services, in-
cluding benefits such as coproduction, licensed pro-
duction, subcontracting, technology transfer, in-
country procurement, marketing and financial assist-
ance, and joint ventures.
(4) 
TRANSATLANTIC
ECONOMIC
PARTNER-
SHIP.—The term ‘‘Transatlantic Economic Partner-
ship’’ means the joint commitment made by the
United States and the European Union to reinforce
their close relationship through an initiative involv-
ing the intensification and extension of multilateral
and bilateral cooperation and common actions in the
areas of trade and investment.
(5) WASSENAAR
ARRANGEMENT.—The term
‘‘Wassenaar Arrangement’’ means the multilateral
export control regime in which the United States
participates that seeks to promote transparency and
responsibility with regard to transfers of conven-
tional armaments and sensitive dual-use items.
(6) WORLD TRADE ORGANIZATION.—The term
‘‘World Trade Organization’’ means the organization
established pursuant to the WTO Agreement.