Offset Trade Agreement

Nation P controls not only the delivery of military systems or services, but also the implementation of offsets in accordance with the offset agreement, which includes or is bound to the main delivery contract. This control is the responsibility of the Minister of Defence and/or the Ministry of Economy and Finance or the Ministry of Industry and Trade. Often, nations that import weapons create special agencies to track defence compensation. [16] The revised GPA repeats the definition of compensation found (almost literally) in the previous agreement, although it places it in the formal definition of the agreement. Footnote 25 As in the 1994 GPA, the revised agreement prohibits financial compensation in the following language: “With respect to covered markets, a party, including its contracting entities, must not seek, take into account, impose or impose compensation.” Footnote 26 There is also an exception for developing countries, with a similar condition that the developing country, which imposes compensation, must make it clear that compensation is applied in the proposed market notice and that it must be applied in a manner that is not discriminatory between the other signatories. Footnote 27 In other words, if a developing country ever signs the GPA, it may impose compensation as long as they do not favour the goods or services of one signatory country over another, in practice limiting the most favoured countries. Support for the child industry should be used as an instrument of development and not as a means of respecting preferences on the basis of political alliances between states. B, such as those based on earlier colonial ties. Given the extent of compensation allowed by developing countries, the treatment of compensation by the revised GPA may indeed equate some easing of the compensation rules compared to the previous agreement.

The 1994 GPA`s request that compensation should only be used for qualification to participate in the contracting process and not as contracting criteria was abandoned. Simply put, a public body cannot, under the 1994 GPA, ask foreign suppliers to offer as high a compensation obligation as it can and then award the offer to the supplier that offered the highest compensation value. Nevertheless, it is likely that, even under the new GPA, the way in which developing countries can benefit from financial compensation will be negotiated with other parties to the GPA, along with their specific treatment package. Footnote 28 Second, to be considered a subsidy, the measures must meet the specificity requirement. Footnote 51 It is unlikely that the award of compensation will also meet this test. WTO jurisprudence has established that specificity is established where the public body explicitly limits access to a subsidy to certain companies. Footnote 52 As part of a move, this could mean that the purchase of goods (the subsidy) was only available to businesses using local inputs. Footnote 53 But that is not what “special companies” means, as stated in the next subsection; Specificity will not exist, where, as stated in Article 2.1, point b), of the SCM, “objective eligibility criteria or conditions” for the grant [for example. B the use of local inputs], eligibility is automatic [if they comply with the compensation requirement they have received], and that the “conditions are strictly respected” [no preference or bribes, etc.], which have been understood by the appeal body to show open access to subsidies. Footnote 54 These cumulative criteria, which characterize traditional compensation agreements imposed not only at the national level, but also on all businesses, would almost certainly remove them from the scope of the MCS.