[Federal Register Volume 82, Number 110 (Friday, June 9, 2017)]
[Notices]
[Pages 26775-26776]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-11981]


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DEPARTMENT OF COMMERCE

Bureau of Industry and Security

[Docket No. 170321295-7295-01]
RIN: 0694-XC036


Reminder of Offsets Reporting Requirements for Calendar Year 2016

AGENCY: Bureau of Industry and Security, Department of Commerce.

ACTION: Notice; annual reporting requirements.

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SUMMARY: This notice is intended to remind the public that U.S. 
companies are required, pursuant to the Defense Production Act of 1950, 
as amended (DPA), to report annually to the Department of Commerce 
(Commerce) information on contracts for the sale of defense articles or 
defense services to foreign countries or foreign companies that are 
subject to offsets agreements exceeding $5,000,000 in value. Consistent 
with the DPA, U.S. companies are also required to report annually to 
Commerce information on offsets transactions completed in performance 
of existing offsets commitments for which an offsets credit of $250,000 
or more has been claimed from the foreign representative. Such reports 
from calendar year 2016 must include relevant information and must be 
submitted to Commerce no later than June 15, 2017.

ADDRESSES: Submit reports in both hard copy and electronically. Address 
the hard copy to ``Offsets Program Manager, U.S. Department of 
Commerce, Office of Strategic Industries and Economic Security, Bureau 
of Industry and Security (BIS), Room 3878, Washington, DC 20230''. 
Submit electronic copies to [email protected].

FOR FURTHER INFORMATION CONTACT: Ronald DeMarines, Office of Strategic 
Industries and Economic Security, Bureau of Industry and Security, U.S. 
Department of Commerce, telephone: 202-482-3755; fax: 202-482-5650; 
email: [email protected].

SUPPLEMENTARY INFORMATION: 

Background

    Section 723(a)(1) of the Defense Production Act of 1950, as amended 
(DPA) (50 U.S.C. 4568 (2015)) requires the President to submit an 
annual report to Congress on the impact of offsets on the U.S. defense 
industrial base. Section 723(a)(2) directs the Secretary of Commerce 
(Secretary) to prepare the President's report and to develop and 
administer the regulations necessary to collect offsets data from U.S. 
defense exporters.
    The authorities of the Secretary regarding offsets have been 
delegated to the Under Secretary of Commerce for Industry and Security. 
The regulations associated with offsets reporting are set forth in part 
701 of title 15 of the Code of Federal Regulations. Offsets are 
compensation practices required as a condition of purchase in either 
government-to-government or commercial sales of defense articles and/or 
defense services, as defined by the Arms Export Control Act (22 U.S.C. 
2778) and the International Traffic in Arms Regulations (22 CFR 120-
130). Offsets are also applicable to certain items controlled on the 
Commerce Control list (CCL) and with an Export Control Classification 
Number (ECCN) including the numeral ``6'' as its third character (``600 
series'' items). The CCL is found in Supplement No. 1 to part 774 of 
the Export Administration Regulations.
    An example of an offset is as follows: A company that is selling a 
fleet of

[[Page 26776]]

military aircraft to a foreign government may agree to offset the cost 
of the aircraft by providing training assistance to plant managers in 
the purchasing country. Although this distorts the true price of the 
aircraft, the foreign government may require this sort of extra 
compensation as a condition of awarding the contract to purchase the 
aircraft. As described in the regulations, U.S. companies are required 
to report information on contracts for the sale of defense articles or 
defense services to foreign countries or foreign companies that are 
subject to offsets agreements exceeding $5,000,000 in value. U.S. 
companies are also required to report annually information on offsets 
transactions completed in performance of existing offsets commitments 
for which offsets credit of $250,000 or more has been claimed from the 
foreign representative.
    Commerce's annual report to Congress includes an aggregated summary 
of the data reported by industry in accordance with the offsets 
regulation and the DPA (50 U.S.C. 4568 (2015)). As provided by section 
723(c) of the DPA, BIS will not publicly disclose individual company 
information it receives through offsets reporting unless the company 
furnishing the information specifically authorizes public disclosure. 
The information collected is sorted and organized into an aggregate 
report of national offsets data, and therefore does not identify 
company-specific information.
    In order to enable BIS to prepare the next annual offset report 
reflecting calendar year 2016 data, affected U.S. companies must submit 
the required information on offsets agreements and offsets transactions 
from calendar year 2016 to BIS no later than June 15, 2017.

    Dated: June 6, 2017.
Matthew S. Borman,
Acting Assistant Secretary for Export Administration.
[FR Doc. 2017-11981 Filed 6-8-17; 8:45 am]
 BILLING CODE 3510-JT-P