[Federal Register Volume 84, Number 109 (Thursday, June 6, 2019)]
[Notices]
[Pages 26399-26400]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-11902]


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DEPARTMENT OF COMMERCE

Bureau of Industry and Security

[Docket No. 190509440-9440-01]
RIN 0694-XC054


Reporting for Calendar Year 2018 on Offsets Agreements Related to 
Sales of Defense Articles or Defense Services to Foreign Countries or 
Foreign Firms

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

ACTION: Notice; Annual Reporting Requirements.

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SUMMARY: This notice is to remind the public that U.S. firms are 
required 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 firms that are subject to 
offsets agreements exceeding $5,000,000 in value. U.S. firms are also 
required to report annually to Commerce 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. This year, such reports must include

[[Page 26400]]

relevant information from calendar year 2018 and must be submitted to 
Commerce no later than June 15, 2019.

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 (2018)) 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 
Regulation). 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. 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 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 Offsets Regulation, U.S. firms are 
required to report information on contracts for the sale of defense 
articles or defense services to foreign countries or foreign firms that 
are subject to offsets agreements exceeding $5,000,000 in value. U.S. 
firms 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 (2018)). As provided by section 
723(c) of the DPA, BIS will not publicly disclose individual firm 
information it receives through offsets reporting unless the firm 
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.
    To enable BIS to prepare the next annual offset report reflecting 
calendar year 2018 data, affected U.S. firms must submit required 
information on offsets agreements and offsets transactions from 
calendar year 2018 to BIS no later than June 15, 2019.

    Dated: May 28, 2019.
Richard E. Ashooh,
Assistant Secretary for Export Administration.
[FR Doc. 2019-11902 Filed 6-5-19; 8:45 am]
BILLING CODE 3510-JT-P