Offset agreement

Abstract: : The U.S. Department of Commerce, Bureau of Export Administration (BXA), Office of Strategic Industries & Economic Security is responsible for assessing the impact of offsets in defense trade on the United States under the authority of Section 309 of the Defense Production Act of 1950, as amended. This report covers the six-year period from 1993 through 1998. In defense trade, offsets are industrial compensation practices required as a condition of purchase in either government-to-government or commercial sales of defense articles and/or defense services as specified in the International Traffic in Arms Regulations. Offset agreements are commercial contracts between a defense firm and a foreign government. Companies fulfill their offset obligations over a period of time specified in the offset agreement through a series of offset transactions. Transactions are the actual compensation towards the outstanding balance of an existing offset agreement. Over 120 countries currently require offsets of some sort. Recently, a number of countries have implemented new, formal offset polices, including Brazil, the Czech Republic and Poland; other countries have increased already established offset percentage requirements.

Abstract: Based on indonesia�s defense industries Law No. 16 of 2012, the purpose of defense industries is to ensure armed forces necessities by strengthening domestic defense industries while developing self-defense capabilities. In fact, Indonesian armed forces is still heavily dependent on foreign supplier. Therefore, the defense industries law intends to incrementally shift Indonesian foreign-centric orientation requirement to a strategy that emphasize developing domestic defense industries, by implementing offset policy. According Article 43 of Indonesia�s Defense Industry Law, the government should prioritize in using domestic arms product rather than foreign product if domestic industries meet the defense requirement, but if the local defense industries has not been able to meet the requirement, the government are allowed to buy from foreign countries. This chapter also regulates on countertrade, local content and/or offset (technology transfer) of at least 85 percent of total contract. Unfortunately, this rigid obligation is burdened not only for foreign industries but also Indonesia Government and defense industries itself. Moreover, this law raises several legal loopholes, first, the law is failed to define what is defense offset, second, form of offset and how it should be conducted related to article 1320 civil code concerning valid agreement requirement. This research aims to define defense offset and its mechanism to support developing domestic defense industries capability. It uses empirical normative legal research and analyze how the shape of Defense Offset according to Law No. 16 of 2012 and its formulation in the context of the applicability of Article 1320 of the Civil Code. This study concluded that there are 4 (four) form of offset that should be implemented such as Direct Defense Offset, Indirect Offset Related to Defense, Indirect Offset of supported, and Indirect Offset of Non-Defense. This form is associated with defense and security equipment procurement cycle. The form and mechanism of offset as an object of offset agreement, while the subject agreement covers Offset Receivers and Providers.

Abstract: : The United States of America wields unrivalled military power throughout the world in an effort to produce favorable national security objectives. One vehicle of this power brokering is the well-developed international security assistance program - oftentimes incorrectly referred to exclusively as foreign military sales. There is nothing simple about the security assistance program as it has developed today. It involves complex relationships between the United States Government (USG), defense industry (both foreign and domestic) and recipient nations. For the USG, there are many agencies influencing today's security assistance program to execute complex, integrated tasks directly impacting U.S. foreign policy. The U.S. Administration, U.S. Congress, Department of Defense (DoD) and Department of State (DoS) all view security assistance as big business. More than 10,500 DoD military and civilian employees, directly or indirectly, at home and abroad in over 120 countries, are involved in this complex, often intriguing program. Intriguing not only because of the scope and dollar value; but most importantly, due to the impact on national security. In 2002 alone, new worldwide U.S. foreign military sales were worth S 11.8 billion. The cumulative foreign military sales program is spread across more than 13,000 cases at an astounding $221 billion.