Trade Offsets in Foreign Military Sales
NSIAD-84-102
Published: Apr 13, 1984. Publicly Released: Apr 13, 1984.
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Highlights
In response to a congressional request, GAO reviewed arrangements wherein U.S. industry shares production of foreign military sales (FMS) items with sources within a foreign country to offset an established percentage of the cost of the procurement. Specifically, GAO was asked to determine: (1) what the national policy was on these offsets; (2) which federal agency has responsibility for monitoring offset activities; (3) how agencies coordinate the administration of offsets; (4) to what extent offsets are used in FMS and commercial transactions; and (5) what type of database exists to track offset activities in order to determine their effect.
Recommendations
Matter for Congressional Consideration
| Matter | Status | Comments |
|---|---|---|
| The Committee may wish to consider the need for Congress to direct that the administration institute a policy to resist offset demands by foreign governments when FMS credits or grants are involved in the sales. Exceptions to this general rule might be made for foreign policy considerations. | Congress required, in the 1984 Defense Production Act Amendments (section 309), that the administration report to it by October 1985 on the impact of offsets on the defense preparedness, industrial competiveness employment, and trade of the United States. This could be a first step in determining to what extent offsets result from FMS sales. |
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Accounting proceduresAgency missionsDatabasesEconomic stabilizationForeign military salesInteragency relationsInternational tradeMonitoringNational policiesOffsets (accounting)