Termination of Section

For termination of section, see section 4564(a) of this title.

Editorial Notes
References in Text

This chapter, referred to in subsec. (d)(1)(B), was in the original “this Act”, meaning act Sept. 8, 1950, ch. 932, 64 Stat. 798, known as the Defense Production Act of 1950, which is classified principally to this chapter. For complete classification of this Act to the Code, see section 4501 of this title and Tables.

Codification

Section was formerly classified to section 2172 of the former Appendix to this title prior to editorial reclassification and renumbering as this section.

Statutory Notes and Related Subsidiaries
Report on Impact of Offsets on Domestic Contractors and Lower Tier Subcontractors

Pub. L. 108–195, § 7(a), Dec. 19, 2003, 117 Stat. 2894, as amended by Pub. L. 111–67, § 12(b)(3), Sept. 30, 2009, 123 Stat. 2022, provided that:

“(1)
In general.—
As part of the annual report required under section 723(a) of the Defense Production Act of 1950 [50 U.S.C. 4568(a)], the Secretary of Commerce (in this section referred to as the ‘Secretary’) shall—
“(A)
detail the number of foreign contracts involving domestic contractors that use offsets, industrial participation agreements, or similar arrangements during the preceding 5-year period;
“(B)
calculate the aggregate, median, and mean values of the contracts and the offsets, industrial participation agreements, and similar arrangements during the preceding 5-year period; and
“(C)
describe the impact of international or foreign sales of United States defense products and related offsets, industrial participation agreements, and similar arrangements on domestic prime contractors and, to the extent practicable, the first 3 tiers of domestic contractors and subcontractors during the preceding 5-year period in terms of domestic employment, including any job losses, on an annual basis.
“(2)
Use of internal documents.—
To the extent that the Department of Commerce is already in possession of relevant data, the Department shall use internal documents or existing departmental records to carry out paragraph (1).
“(3)
Information from non-federal entities.—
“(A)
Existing information.—
In carrying out paragraph (1), the Secretary shall only require a non-Federal entity to provide information that is available through the existing data collection and reporting systems of that non-Federal entity.
“(B)
Format.—
The Secretary may require a non-Federal entity to provide information to the Secretary in the same form that is already provided to a foreign government in fulfilling an offset arrangement, industrial participation agreement, or similar arrangement.”

[Pub. L. 111–67, § 12(b)(3), which directed amendment of section 7(a) of the “Defense Production Act Amendments of 2003 (50 U.S.C. App. 2099 note)” by striking “section 309(a) of the Defense Production Act of 1950 (50 U.S.C. App. 2099(a))” and inserting “section 723(a) of the Defense Production Act of 1950”, was executed to section 7(a) of Pub. L. 108–195, the Defense Production Act Reauthorization of 2003, set out above, to reflect the probable intent of Congress.]

Defense Offsets Disclosure

Pub. L. 106–113, div. B, § 1000(a)(7) [div. B, title XII, subtitle D], Nov. 29, 1999, 113 Stat. 1536, 1501A–500, provided that:

“SEC. 1241.
SHORT TITLE.

“This subtitle may be cited as the ‘Defense Offsets Disclosure Act of 1999’.

“SEC. 1242.
FINDINGS AND DECLARATION OF POLICY.
“(a)
Findings.—
Congress makes the following findings:
“(1)
A fair business environment is necessary to advance international trade, economic stability, and development worldwide, is beneficial for American workers and businesses, and is in the United States national interest.
“(2)
In some cases, mandated offset requirements can cause economic distortions in international defense trade and undermine fairness and competitiveness, and may cause particular harm to small- and medium-sized businesses.
“(3)
The use of offsets may lead to increasing dependence on foreign suppliers for the production of United States weapons systems.
“(4)
The offset demands required by some purchasing countries, including some close allies of the United States, equal or exceed the value of the base contract they are intended to offset, mitigating much of the potential economic benefit of the exports.
“(5)
Offset demands often unduly distort the prices of defense contracts.
“(6)
In some cases, United States contractors are required to provide indirect offsets which can negatively impact nondefense industrial sectors.
“(7)
Unilateral efforts by the United States to prohibit offsets may be impractical in the current era of globalization and would severely hinder the competitiveness of the United States defense industry in the global market.
“(8)
The development of global standards to manage and restrict demands for offsets would enhance United States efforts to mitigate the negative impact of offsets.
“(b)
Declaration of Policy.—
It is the policy of the United States to monitor the use of offsets in international defense trade, to promote fairness in such trade, and to ensure that foreign participation in the production of United States weapons systems does not harm the economy of the United States.
“SEC. 1243.
DEFINITIONS.
“In this subtitle:
“(1)
Appropriate congressional committees.—
The term ‘appropriate congressional committees’ means—
“(A)
the Committee on Foreign Relations of the Senate; and
“(B)
the Committee on International Relations [now Committee on Foreign Affairs] of the House of Representatives.
“(2)
G–8.—

Declaration of Offset Policy

Pub. L. 102–558, title I, § 123, Oct. 28, 1992, 106 Stat. 4206, as amended by Pub. L. 108–195, § 7(c), Dec. 19, 2003, 117 Stat. 2895; Pub. L. 111–67, § 12(b)(1), Sept. 30, 2009, 123 Stat. 2022, provided that:

“(a)
In General.—
Recognizing that certain offsets for military exports are economically inefficient and market distorting, and mindful of the need to minimize the adverse effects of offsets in military exports while ensuring that the ability of United States firms to compete for military export sales is not undermined, it is the policy of the Congress that—
“(1)
no agency of the United States Government shall encourage, enter directly into, or commit United States firms to any offset arrangement in connection with the sale of defense goods or services to foreign governments;
“(2)
United States Government funds shall not be used to finance offsets in security assistance transactions, except in accordance with policies and procedures that were in existence on March 1, 1992;
“(3)
nothing in this section shall prevent agencies of the United States Government from fulfilling obligations incurred through international agreements entered into before March 1, 1992; and
“(4)
the decision whether to engage in offsets, and the responsibility for negotiating and implementing offset arrangements, reside with the companies involved.
“(b)
Presidential Approval of Exceptions.—
It is the policy of the Congress that the President may approve an exception to the policy stated in subsection (a) after receiving the recommendation of the National Security Council.
“(c)
Negotiations.—
“(1)
Interagency team.—
“(A)
In general.—
It is the policy of Congress that the President shall designate a chairman of an interagency team comprised of the Secretary of Commerce, Secretary of Defense, United States Trade Representative, Secretary of Labor, and Secretary of State to consult with foreign nations on limiting the adverse effects of offsets in defense procurement without damaging the economy or the defense industrial base of the United States or United States defense production or defense preparedness.
“(B)
Meetings.—
The President shall direct the interagency team to meet on a quarterly basis.
“(C)
Reports.—
The President shall direct the interagency team to submit to Congress an annual report, to be included as part of the report required under section 723(a) of the Defense Production Act of 1950 [50 U.S.C. 4568(a)], that describes the results of the consultations of the interagency team under subparagraph (A) and the meetings of the interagency team under subparagraph (B).
“(2)
Recommendations for modifications.—
The interagency team shall submit to the President any recommendations for modifications of any existing or proposed memorandum of understanding between officials acting on behalf of the United States and one or more foreign countries (or any instrumentality of a foreign country) relating to—
“(A)
research, development, or production of defense equipment; or
“(B)
the reciprocal procurement of defense items.”

Executive Documents
Delegation of Functions

For directive to Secretary of Commerce to prepare and submit annual report required by this section, see section 702 of Ex. Ord. No. 13603, Mar. 16, 2012, 77 F.R. 16658, set out as a note under section 4553 of this title.

Ex. Ord. No. 13177. National Commission on the Use of Offsets in Defense Trade and President’s Council on the Use of Offsets in Commercial Trade

Ex. Ord. No. 13177, Dec. 4, 2000, 65 F.R. 76558, as amended by Ex. Ord. No. 13316, § 3(f), Sept. 17, 2003, 68 F.R. 55256, provided:

By the authority vested in the President by the Constitution and the laws of the United States of America, including Public Law 106–113 [see Tables for classification] and the Federal Advisory Committee Act, as amended ([former] 5 U.S.C. App.) [see 5 U.S.C. 1001 et seq.], and in order to implement section 1247 of Public Law 106–113 (113 Stat. 1501A–502) [set out in a note above] and to create a parallel “President’s Council on the Use of Offsets in Commercial Trade,” it is hereby ordered as follows:

Section 1. Membership. Pursuant to Public Law 106–113, the “National Commission on the Use of Offsets in Defense Trade” (Commission) comprises 11 members appointed by the President with the concurrence of the Majority and Minority Leaders of the Senate and the Speaker and the Minority Leader of the House of Representatives. The Commission membership includes: (a) representatives from the private sector, including one each from (i) a labor organization, (ii) a United States defense manufacturing company dependent on foreign sales, (iii) a United States company dependent on foreign sales that is not a defense manufacturer, and (iv) a United States company that specializes in international investment; (b) two members from academia with widely recognized expertise in international economics; and (c) five members from the executive branch, including a member from the: (i) Office of Management and Budget, (ii) Department of Commerce, (iii) Department of Defense, (iv) Department of State, and (v) Department of Labor. The member from the Office of Management and Budget will serve as Chairperson of the Commission and will appoint, and fix the compensation of, the Executive Director of the Commission.

Sec. 2. Duties. The Commission will be responsible for reviewing and reporting on: (a) current practices by foreign governments in requiring offsets in purchasing agreements and the extent and nature of offsets offered by United States and foreign defense industry contractors; (b) the impact of the use of offsets on defense subcontractors and nondefense industrial sectors affected by indirect offsets; and (c) the role of offsets, both direct and indirect, on domestic industry stability, United States trade competitiveness, and national security.

Sec. 3. Commission Report. Not later than 12 months after the Commission is established, it will report to the appropriate congressional committees. In addition to the items described in section 2 of this order, the report will include: (a) an analysis of (i) the collateral impact of offsets on industry sectors that may be different than those of the contractor paying offsets, including estimates of contracts and jobs lost as well as an assessment of damage to industrial sectors; (ii) the role of offsets with respect to competitiveness of the United States defense industry in international trade and the potential damage to the ability of United States contractors to compete if offsets were prohibited or limited; and (iii) the impact on United States national security, and upon United States nonproliferation objectives, of the use of co-production, subcontracting, and technology transfer with foreign governments or companies, that results from fulfilling offset requirements, with particular emphasis on the question of dependency upon foreign nations for the supply of critical components or technology; (b) proposals for unilateral, bilateral, or multilateral measures aimed at reducing any detrimental effects of offsets; and (c) an identification of the appropriate executive branch agencies to be responsible for monitoring the use of offsets in international defense trade.

Sec. 4. Administration, Compensation, and Termination. (a) The Department of Defense will provide administrative support and funding for the Commission and Federal Government employees may be detailed to the Commission without reimbursement.

(b) Members of the Commission who are not officers or employees of the Federal Government will be compensated at a rate of basic pay prescribed for level IV of the Executive Schedule under section 5315 of title 5, United States Code, for each day (including travel time) during which such member is engaged in performance of the duties of the Commission. Members of the Commission who are officers or employees of the Federal Government will serve without compensation in addition to that received for their services as officers or employees of the Federal Government.

(c) Members of the Commission will be allowed travel expenses, including per diem in lieu of subsistence, under subchapter 1 of chapter 57 of title 5, United States Code, while on business in the performance of services for the Commission.

(d) The Commission will terminate 30 days after transmitting the report required in section 1248(b) of Public Law 106–113 (113 Stat. 1501A–505) [set out in a note above].

[Secs. 5 to 8. Revoked effective Sept. 30, 2003, by Ex. Ord. No. 13316, § 3(f), Sept. 17, 2003, 68 F.R. 55256.]