The World Is Building U.S. Arms
Jan. 4 -- Beginning in 2005, the F-22 stealth aircraft is expected to become the most technologically advanced, most capable fighter jet U.S. Air Force’s arsenal.
But because of a special kind of arms deal that the jet’s engine manufacturer, Pratt & Whitney, says was unavoidable, part of the aircraft’s engines will be machined in Taiwan and then shipped back to the U.S. for assembly, irking U.S. defense workers who might otherwise have done the work.
That special type of deal is called an “offset” deal and it’s become an increasingly expensive aspect of selling defense equipment to foreign governments.
The latest government data suggests several billion dollars worth of U.S. defense manufacturing work and technology and thousands of defense sector jobs annually are traded abroad through the offsets demanded by foreign governments as conditions of arms deals.
Foreign countries “want to do that more than just get the hardware from the United States,” says Pat Scott, a spokesperson for the State Department’s Office of Defense Trade Controls, which is responsible for restricting and approving defense offsets. “The trend is the desire to have U.S. technology and the ability to manufacture these items themselves, and to sell them.”
Rebates for High-Tech Weaponry
Offset deals are made when foreign countries successfully demand some form of compensation, a non-monetary rebate if you will, for purchasing armaments.
With international competition to win lucrative arms sales around the globe so fierce, the returns regularly surpass 100 percent of the value of the equipment purchased.
An offset arrangement can include sharing part of the manufacturing work of the purchased equipment. It can also involve transfers of American technology, licensed co-production of the American equipment for U.S. troops or for sales to other countries, or other types of technological or economic benefits provided by the U.S. exporter.
The phenomenon has strategic thinkers concerned America is bartering away some of its technological edge. U.S. defense workers are concerned about losing jobs. And small- to medium-sized defense contractors worry about losing sub-contracting work.
Offsets have become such a concern, lately, the government has begun treating them as a priority. A congressionally required presidential commission recently was created to study the problem.
The commission, which met for the first time in December, includes the Secretaries of Defense, State and Labor, the director of the Office of Management and Budget, and the Deputy Secretary of Commerce, as well as the heads of the two biggest defense companies and the largest defense union.
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