Showdown builds as legislators move to make Department of Defense manage industrial compensation deals with foreigners
A new showdown on US defence trade policy is building in the US Congress, fuelled by a growing backlash over offset requirements.
Opposition to the industrial compensation deals often imposed on US defence companies by foreign customers has become a bipartisan issue, with US Senator Christopher Dodd, a Democrat, and Representatives Duncan Hunter and Henry Hyde, both Republicans, pursuing separate strategies for reform.
Dodd's proposal, filed as an amendment to the fiscal 2005 defence authorisation bill, would require the US Department of Defense (DoD) to create and manage an industrial offset policy for the first time. Under Dodd's legislation, the USA would require an offset package from an offshore company that is equivalent to the offset requirement in its home country.
The full text of the legislation had not been introduced into the bill as Flight International went to press.
Meanwhile, the House of Representatives has overwhelmingly passed a version of the defence authorisation bill. It includes anti-offset language introduced by Hunter, who led an unsuccessful campaign last year to raise the "Buy American" threshold on US military procurement programmes.
Hunter's proposal, called "defence trade reciprocity", is also championed by Hyde, chairman of the House Foreign Relations Committee. The measure would punish countries that impose offsets on US contractors, barring the DoD from buying equipment and services in countries with existing offset deals.
Both strategies in the House and Senate are widely seen as spin-offs of last year's failed "Buy American" proposal, but are now set against the backdrop of a national election and a so-called "jobless recovery" of the US economy.
The proposals are at odds with Bush administration trade policies and are also opposed by the Aerospace Industries Association.
STEPHEN TRIMBLE / WASHINGTON DC
Source: Flight International