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Agreement For Offset

The main concern of offset agreements is the lack of transparency and confidentiality of their content. Of course, these compensation agreements can serve legitimate and beneficial purposes, such as. B the promotion of growth and development in emerging countries. However, internal controls need to be strengthened by public authorities and by companies themselves. Close monitoring must be carried out to ensure that compensation agreements remain legitimate and are not used as a front for bribes and that the obligations arising from such agreements (e.g. B to promote the economic progress of a country) are respected. Controls such as due diligence should also be carried out in order to detect and resolve conflicts of interest. Offset agreements must be highlighted by codes of conduct and justify a dedicated directive. The Minister of Defence`s directive on contrapartdas (offsets) was adopted in 2002. Decree-Law 153/2006 and 154/2006 governs Portuguese contrapartdas.

The Standing Committee on Offsets (CPC) is a government authority that reports to the Ministries of Defense and Economy and is responsible for negotiating and monitoring offsets. The threshold is €10 million and the minimum demand for compensation is 100%. In 2006, multipliers between 1 and 5 were set. Direct or indirect offsets are not preferred. In 2005, the Portuguese government signed a contract worth €364 million to acquire 260 armored Pandur II from General Dynamics. The Portuguese Pandur II contains an offset agreement worth EUR 516 million. Patria, General Dynamics` only competitor, was excluded for technical reasons in 2004. Patria unusually appealed the Portuguese government`s decision to the courts[71] and complained that General Dynamics` offset package was a forgery, which is decisive for the award of the contract. The Portuguese tender was the first in a series of them in a European trade war between Patria and General Dynamics, which took place almost exclusively on offsets and ended in 2008 with the arrest of Jorma Witakorpi,[72] CEO of Patria, in the Patria case in Slovenia. 2) U.S. funds that have been allocated by the United States Foreign Military Financing (FMF) and that may be linked to Foreign Military Sales (FMS) cannot be used for any type of offsets if they are non-repayable funds. On the other hand, fmf funds can be used to cover compensation costs if they are loans.

In any case, “U.S. government agencies must not enter into offsetting agreements or require U.S. companies to do so.” [37] Ministry of Defense – General Directorate of Armaments and Materiel (DGAM) – Agency for Industrial Cooperation of Spain (ICA) is responsible for the negotiation and monitoring of offsets. The guidelines on compensation are not public, but are published by the Minister of Defence through internal and confidential procedures. The general question is 100% of the value of the order. Multipliers range from 2 to 5 [46] In order to increase transparency within clearing agreements, the recommendations are: no official policy. The Ministry of Defence is competent, but compensation goes through UKTI, UK Trade & Investment, under the Ministry of State for Trade, Investment and the Economy. In 2007, the Prime Minister announced a change and transferred responsibility for defence trade from the Defence Export Services Organization (DESO) to UK Trade and Investment (UKTI). Since April 2008, UKTI DSO (Defence & Security Organization) has been responsible for supporting defence and security exports.. . .