[Federal Register Volume 87, Number 59 (Monday, March 28, 2022)]
[Notices]
[Pages 17269-17270]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-06272]


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DEPARTMENT OF COMMERCE

Bureau of Industry and Security


Reporting for Calendar Year 2021 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 relevant 
information from calendar year 2021 and must be submitted to Commerce 
no later than June 15, 2022.

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 3876, Washington, DC 20230.'' 
Submit electronic copies to [email protected].

FOR FURTHER INFORMATION CONTACT: Emily Noel and Marina Youssef, Office 
of Strategic Industries and Economic Security, Bureau of Industry and 
Security, U.S. Department of Commerce, telephone: 202-482-4506; 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 (2022)) 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 
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. 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 Regulations, 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 (2022)). As provided by section 
723(c) of the DPA, BIS will not

[[Page 17270]]

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 2021 data, affected U.S. firms must submit required 
information on offsets agreements and offsets transactions from 
calendar year 2022 to BIS no later than June 15, 2022.

Thea D. Rozman Kendler,
Assistant Secretary for Export Administration.
[FR Doc. 2022-06272 Filed 3-25-22; 8:45 am]
BILLING CODE 3510-JT-P