April 17, 2015
‘Fools rush in where angels fear to tread’ could well be an apt adage in the context of the rolling out of offsets and related counter-obligations in defence procurement rules worldwide. There has been a steadily growing clamour in many countries for imposing such requirements in big ticket government contracts. This has happened despite the fact that only a handful of the more than 100 countries that now impose such obligations in defence and civil acquisition programmes1 have been able to intelligently use offsets to invigorate domestic hi-tech production and manufacturing. Notable among these are the United States (direct offset requirements through “Buy American” and “little Buy American” provisions),2 Israel (mixed offsets as industrial cooperation),3 South Korea (mostly direct offsets),4 Canada (as industrial and regional benefits),5 Turkey (mixed offsets)6 and now Malaysia.7 In this commentary, these countries are referred to as ‘The Smarter Lot’ in terms of the design of sound offset policies.
For most other countries, ‘offsets for domestic industry development’ appears to be a merely convenient rhetoric. They have ignored the serious potential for the abuse of domestic offset partners, for instance as willing conduits to shroud fraudulent transactions in a manner that stays ‘compliant’ with anti-(foreign) bribery regulations such as the Foreign Corrupt Practices Act (FCPA) in the US and the Anti-Bribery Act (ABA) in the UK by exploiting a variety of ingenuous loopholes that are intrinsically embedded therein.
No comments:
Post a Comment