December 12

Military Offset Agreements

No law, only public guidelines on industrial participation. The Department of Defence is responsible for the defence industry and industry, but with the Department of Trade and Industry. The minimum value of the offset contract is 10 million euros. 100% minimum of the offset requirement. Multipliers range from 0.3 to 3.0 (for Finnish exports). Technology transfer multipliers are being negotiated. Finland is focusing on its national defence industry. The contraction of military budgets has reduced the demand for military equipment and created a buyer`s market. This increased international competition allows customers to extract very advantageous offers from suppliers. Former Deputy Trade Minister R. Roger Majak told Congress in 1999: “It is a market for buyers of defence systems, and arms sellers in France, the United Kingdom and the United States are facing a steady increase in offset requirements.” In the arms trade, defence companies are aware that offsets are powerful marketing tools to motivate buying by showing additional benefits to the buying country, in addition to investing in military equipment, and offering additional benefits. [9] The position of the U.S. defence industry appears to be more practical and somewhat inconsistent with the U.S.

government`s economic or political assessment of defence compensation. In general, offsets can be considered a widespread sales technique. As such, they are not limited to the sale of arms, they are part of the trade itself, such as discounts, price-pack agreements or loyalty bonus programs. Understanding “defence compensations,” which are part of a sales technique, helps to limit the justified but excessive emphasis on their mandatory nature. In 2005, the government introduced a defence procurement procedure, which was revised in 2006, 2008, 2011, 2013 and, more recently, in 2016. [59] A new round of changes is underway (in 2018). [60] The offset policy requires foreign suppliers to spend at least 30% of the market value in India. The offset limit is now increased from 300 rs to Rs 2,000. This offset story in the United States has highlighted the impact of confidential agreements by defence firms on U.S. non-military activities, in some cases with devastating effects.

The discovery of Feingold is also revealing for the EU common market, where interference and negative effects on EU businesses are allowed by an unjustified national attitude towards confidentiality or secrecy in indirect, non-military, balanced cases.

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