Advocacy group to fight amendment to "Buy American" legislation which would mean modification of existing contracts

A variation on last year's unsuccessful "Buy American" legislation has been revived by the House Armed Services Committee (HASC), but with a twist. Rather than attempting to ban more US purchases of foreign defence products, the new provision takes aim at industrial offset policies.

The provision, a last-minute addition to the HASC version of the fiscal 2005 defence authorisation bill, would require foreign governments to abolish their offset policies. The penalty for non-compliance is being banned from making sales to the US Department of Defense.

The provision would also direct the DoD to modify existing agreements with foreign governments and develop a new trade policy that leads to the "elimination of offset agreements as an accepted practice in defence trade".

Entitled Defence trade reciprocity, the offset amendment has emerged as a growing political debate unfolds in an election year about the issue of outsourcing US jobs overseas. The legislation seeks to ensure that US companies "are not disadvantaged by unilateral procurement practices by foreign governments, such as the imposition of offset agreements".

US industry body the Aerospace Industries Association (AIA) intends to fight the proposal and is "cautiously optimistic" it can be defeated as the bill moves through the legislative process, says AIA vice-president of international relations Joel Johnson.

But he acknowledges that a continued jobless recovery of the US economy in an election year could complicate the industry group's ability to fight the proposal.

Last year, the original Buy American proposal was defeated only after an eleventh-hour challenge by a Senate negotiating team. That idea, which would have raised the requirement for US-made content for DoD contracts from 55% to 65%, had infuriated trading partners and alarmed the US defence industry, but still proved difficult to defeat.

AIA's lobbying effort will focus on the far-reaching effect of negating offset policies, says Johnson. In effect, if South Korea maintains its offset policy, US forces stationed in that country would be banned from "going down the street to buy oranges or kimche", says Johnson, unless the DoD's top acquisition official approves an individual waiver for each transaction.

AIA also points out that the US Congress has ordered two reports from the General Accounting Office and the DoD later this summer and next year, respectively, to analyse the offset system.


Source: Flight International