United States Government Publishing Office publisher pbl distributor dst United States Government Accountability Office National Security and International Affairs Division author aut Government Organization text government publication eng GAOREPORTS Legislative Agency Publications gao legislative 2010-08-12 U.S. Government Printing Office 1994-06-22 monographic deposited born digital GA 1.13:NSIAD-94-127 https://www.govinfo.gov/app/details/GAOREPORTS-NSIAD-94-127 P0b002ee180396eec f:ns94127 DGPO 2010-08-12 2011-03-28 GAOREPORTS-NSIAD-94-127 machine generated eng fdlp REPORT GAOREPORTS-NSIAD-94-127 NSIAD-94-127 Military coproduction agreements Foreign military assistance Defense economic analysis Foreign military sales policies Offsetting receipts Foreign military sales Export regulation International trade restriction Foreign governments Department of Defense contractors DOD Foreign Military Financing Program Israel Egypt Greece Turkey M1A1 Tank Coproduction Program Letter Report NSIAD "Offsets" are industrial and commercial compensation practices provided to foreign governments and firms as inducements or conditions for the purchase of military goods and services. Israel, Egypt, Greece, and Turkey are the largest recipients of the U.S. Foreign Military Financing (FMF) Program, which provides offsets in conjunction with foreign military sales. Since fiscal year 1975, the United States has provided more than $60 billion in FMF grants and loans to these countries. The FMF Program has been justified to Congress on the basis of its role in (1) strengthening the security of friendly and allied countries and (2) benefiting the U.S. economy because the funds are generally spent on U.S. goods and services. U.S. laws and regulations, however, do not preclude offsets when recipients are making purchases with FMF funding. Using FMF funds, Israel, Egypt, Greece, and Turkey benefitted in two ways--first with the U.S. government funding or underwriting their weapons purchase with grants or loans, and then by developing their industrial bases and other aspects of their economic through offset requirements from the U.S. government or contractors. Offsets reduce the employment, defense industrial base, and other economic benefits that normally accrue to the United States from weapons exports. Some offsets have caused U.S. contractors as well as companies in nondefense businesses to lose work. Pentagon officials said that no other arms supplier provides a combination of grant aid and offsets like the United States does. GAO summarized this report in testimony before Congress; see: Military Sales: Concerns Over Offsets Generated Using U.S. Foreign Military Financing Program Funds, by Frank C. Conahan, Assistant Comptroller General for National Security and Internal Affairs Programs, before the Subcommittee on Commerce, Consumer Protection, and Competitiveness, House Committee on Energy and Commerce. GAO/T-NSIAD-94-215, June 22, 1994 (seven pages). https://www.govinfo.gov/content/pkg/GAOREPORTS-NSIAD-94-127/html/GAOREPORTS-NSIAD-94-127.htm GAO/NSIAD-94-127 https://www.govinfo.gov/app/details/GAOREPORTS-NSIAD-94-127 Letter Report GAO/NSIAD-94-127; Military Exports: Concerns Over Offsets Generated With U.S. Foreign Military Financing Program Funds; Military coproduction agreements Foreign military assistance Defense economic analysis Foreign military sales policies Offsetting receipts Foreign military sales Export regulation International trade restriction Foreign governments Department of Defense contractors DOD Foreign Military Financing Program Israel Egypt Greece Turkey M1A1 Tank Coproduction Program