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Volume 2012

01 November 2012

Volume 30, issue 21

Headlines

Main headlines from this issue

Kuwait’s ‘Mary Celeste’ is rescued – new team in charge of the National Offset Company?

In yet another round of changes the Chairman and the Board members of Kuwait’s National Offset Company tendered their resignations to the Kuwait Investment Authority (KIA). According to an informed source who is close to the Finance Minister they were persuaded to do so. The new NOC Chairman is.....

Thai MoD opts for countertrade over offset — “We don’t know how to negotiate an offset.”

The Thai MoD set up an ad hoc committee to investigate forming a formal offset policy but decided that counterpurchase suits the country better.

Rosoboronexport offers Croatia more than 400 percent in offsets

A Russian political and economic delegation has visited Zagreb to press an offer of industrial and trade cooperation if Croatia chooses Russian aircraft as replacements for worn out Mig-21s.

ECCO launches offset academy

Industry experts and academics have joined forces to establish the first Academy for Countertrade and Offset. Courses will be conducted in English at the ESSEC International Business School near Paris.

Offset consultant held by Swiss federal police

A consultant whose offices in Switzerland were raided in April by Italian authorities as part of a probe into corruption in a helicopter deal in India has been arrested.

15 October 2012

Volume 30, issue 20

Headlines

Main headlines from this issue

How the UK’s new policy of ‘Industrial Engagement’ evades directive 2009/81/EC.

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The UK has devised an ‘industrial engagement’ policy shrewdly designed to overcome the barriers on offset imposed by EU defence directive 2009/81/EC. The new policy is not linked to individual procurements......

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Saudi Arabia introduces non-fulfilment penalties

Saudi Arabia is introducing a non-fulfilment penalty. Meetings are currently under way with contractors to prepare them for changes to the offset guidelines.

ECCO conference will address offsets in China and the defence directive

ECCO the European Club for Countertrade and Offsetwill present on November 14^th-15^th a symposium that will focus on offsets in China a country that has neither formally sanctioned nor published an offset policy.

Alstom in pre-performance bid for railway contracts in Thailand

Alstom is conducting a feasibility study on establishing a plant in Thailand to manufacture electric train parts. The company expects to reach a conclusion on the proposal within a year.

Peru’s preference switches to direct offset

Peru is to change its requirement for a 40/60 percent direct/indirect fulfilment ratio to 80/20. The change reflects a reassessment of an offset policy launched only in August 2010.

01 October 2012

Volume 30, issue 19

Headlines

Main headlines from this issue

European Commission calls time – court asked to fine four member states

The European Commission has asked the Court of Justice in Luxembourg to fine Poland, the Netherlands, Luxembourg, and Slovenia for failing to fully implement Directive 2009/81/EC, the directive regulating offset practices.

American and Indian perspectives on India’s new guidelines are broadly positive – DOMW chief named

To say India moves goalposts in the middle of the game is a charitable description of what’s been happening with the offset guidelines, said Ron Somers, President of the U.S.-India Business Council. “It’s been an evolving programme.”…. The key role of Joint Secretary in the DOMW will be taken initially by…

Industry Canada introduces a demanding SME requirement

Most of the offset programmes now under way in Canada will have a 15 percent requirement for SME transactions which obligors will find difficult to sustain. Prime contractors are to provide a minimum of 5 percent of the value of their IRB activities with......

Differences over Korean offset policy reach impasse

A rather heady panel discussion on the different perspectives of the South Korean offset programme divided conference delegates into two camps; those who supported the rolling out of a chunky inventory recommending changes; and those who considered that so detailed a list placed the Koreans in a disagreeable face-saving situation.

Australia seeks Japanese submarine technology

Australia is considering the use of Japanese technology to power its new submarine fleet under a weapons technology swap deal announced by the two countries.

15 September 2012

Volume 30, issue 18

Headlines

Main headlines from this issue

The UK’S new offset policy – where ‘encouragement’ is a persuasive consideration

The MoD’s own definition of its policy relies on the same threads in the DSIEP that existed beforehand. This is what the definition says with the ‘threads’ in italics.....

Taiwan: more directs, no credit banking, and a frustrating approval process

Credit banking has been discontinued and credits can’t be transferred between the armed services. A negotiation task force has recently been set up. Pre-project approvals have started though not as yet final approvals to begin implementation.

Territorial dispute with China revives Philippines’ countertrade programme

The settling of a difference of opinion over the meaning of ‘best efforts’ and a row with China are expected to result in a surge of countertrade agreements with defence contractors selling to the Philippines.

Mexico homes in on a policy to support the aerospace sector

Mexico is preparing an offset policy to support the country’s defence and aerospace industries through technology transfers. The goal is to boost employmentand to establish the aerospace sector as a global force in exports by 2020. The plan to roll out the offset policy across the board including all federal procuring agencies has been dropped.

Norway remains beyond the Directive’s scope – for now

Norway is blessed; it is not a member of the European Union. The EU Commission regards Directive 2009/81 EC as relevant for Norway but the EEA committee is the body that decides and they have not yet placed the directive on their agenda.

01 September 2012

Volume 30, issue 17

Headlines

Main headlines from this issue

“Bull on the loose” at Kuwait’s NOC

Chairman tramples another CEO

The National Offset Company’s Chairman, Anwar Abdul Rahman Al-Jawdar, has fired the newly appointed CEO, Othman Al Quraishi. The warm weather putsch took everyone by surprise, occurring well within Mr Quraishi’s 100 day trial period. No reason was given.

Poland surrenders!

Polish Defence Minister Tomasz Siemoniak has confirmed that an additional five C-295M transport aircraft ordered on June 29th 2012 from Airbus Military do not have any offset arrangements.

Japan’s F-X evaluation: Defence White Paper says all three bidders fared well in industrial participation

Japan’s annual Defence White Paper dedicates several pages to explaining the decision to select the F-35A for its F-X fighter requirement. All three bidders fared well in industrial participation.

U.S. defence firms lobby for an ASEAN-wide defence offset programme

A major grouping for U.S. businesses has proposed the creation of an ASEAN-wide defence offset programme to spur technology transfer while helping to boost U.S. arms sales to the region.

EDA puts out tender to assess offset impact on EDTIB

The European Defence Agency has invited proposals for a ‘Study on the Impact on the European Defence Technological and Industrial Base (EDTIB) of Defence Offsets Requested by Third Countries.’

15 August 2012

Volume 30, issue 16

Headlines

Main headlines from this issue

UAE: Duel in the sun as passions boil over

The Tawazun Economic Council has robustly rejected criticisms raised by several prime contractors about the quality of its work. The Council has instead hit back at contractors “who are here to just sell and leave.”

Oman’s new offset policy introduces input and output credits

Revisions to Oman’s ‘Partnership for Development’ offset policy have been approved and await a Royal Decree before details are released. Oman will appoint a PFD Board of Governors under the Ministry of Commerce and Industry and create a dedicated offset organisation.

India looks to private sector to support DOMW – agency to expand

An Additional Secretary will be appointed as its head with a Joint Secretary and six full-time director-level officers under him.....

CSIS finds India’s new offset rules lacking in vision, calls for a National Commission on Offsets

Amidst all the back patting a member of one organization has looked at India’s new offset rules considered the wider picture — and found them wanting.

Opposition promises to scrap Venezuela’s oil barters

The opposition candidate in Venezuela's upcoming presidential election said he will scrap all deals that subsidize oil exports to other countries in the region or under which oil is bartered for other goods or services.

01 August 2012

Volume 30, issue 15

Headlines

Main headlines from this issue

India revises the offset policy – DOMW replaces DOFA

And finally it happened! India has addressed many of the long-standing concerns that have been troubling obligors. The MoD has introduced a revised offset policy. A single organisation is to ensure a smooth post-contract offset process; at least, that is the theory.

UK signs first industrial participation commitment under its new policy

Boeing has become the first foreign prime contractor to sign up to a new British industrial participation policy. The policy encourages overseas-based companies to make a firm commitment to continue business activities in the country for the long term....

Blenheim returns to prime time with Sharia-compliant offset solutions

Blenheim Capital is emerging from a tough year with a new source of funding that will allow it to introduce an original financial model. Terms have been agreed for a Strategic Partnership Agreement with the Qatar Islamic Bank. The deal will provide Sharia-compliant Islamic finance within Blenheim as an offset solution.

Mexico prepares to roll out a formal offset policy across the board

ProMexico, the Mexican government’s trade and investment arm and author of a detailed offset policy road map, has devolved responsibility for launching the policy to the Ministry of Economy. The ministry will be the management authority.

Malaysia: BAE’S Typhoon pitch promises a wealth of industrial benefits

The Eurofighter consortium, led by BAE Systems, is ready to invest $2bn in offset programmes designed specifically for Malaysia within the next five years if the country selects the Typhoon.

15 July 2012

Volume 30, issue 14

Headlines

Main headlines from this issue

Indonesia’s offset policy trapped by red tape

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Morocco demands more industrial participation – with a policy that lacks detail

Morocco is increasingly inserting industrial participation clauses into international tenders for both military and civil purchases. … the requirement is mandatory when mentioned in the RfP and points will be allocated as part of the qualification criteria.

European Commission says one quarter of Member States have yet to fully transpose the directive

The European Commission has informed CTO that seven member states face possible infringement proceedings. They are....

Bombardier adopts new approach to Chinese market

Bombardier is trying a new approach to gaining further access to China’s rail market. The company plans to sell the blueprints as well as build the trains.

Value of offset obligations to reach $500bn by 2016

A study by Avascent a Washington DC-based service providersuggests that governments will have imposed about $500bn worth of global offset obligations on foreign aerospace and defence companies through 2016.

01 July 2012

Volume 30, issue 13

Headlines

Main headlines from this issue

Inconsistencies in Brazil’s approach to offsets examined – Navy sets penalties at 5 percent per month

Presentations at the GOCA/ADS Global Industrial Cooperation Conference in Izmir in May and the subsequent ECCO conference held during the Eurosatory exhibition in Paris in June were meant to depict an intimate relationship across Brazil’s armed forces. Instead, the conferences exposed the country’s approach to offsets as fractured and inconsistent.....

Norway approves BAE Systems contract with 100 percent offset

BAE is to initiate industrial cooperation with Norwegian industry equal to the value of the “main body” of the project.

India: Leaked document says some obligors receive gratuitous offset credits

A document leaked to India’s Business Standard newspaper suggests that the MoD is violating its offset regulations by awarding unjustified credits. The obligors identified in the document include Finmeccanica, Fincantieri, and Rosoboronexport.

EC commences infringement proceedings against Estonia

The European Commission gave Estonia two months to notify it of the measures the country is taking to transpose EU Directive 2009/81/EC on defence procurement.

Opportunity beats risk despite complex arrangements and long memories

“Have you turned down a deal because you were worried about that risk?” asked an official at the Bloomberg Government Defence Conference on Defence Globalisation. The answers were instructive.

15 June 2012

Volume 30, issue 12

Headlines

Main headlines from this issue

EC commences infringement proceedings against Poland and Austria

The European Commission has given Poland and Austria two months to notify it of the measures they are taking to transpose EU Directive 2009/81/EC on defence procurement. Austria is accused of not transposing the directive's provisions with regard to Carinthia.

Kuwait: NOC’s new GM brings strong financial background

Othman Al-Quraishi, the newly appointed General Manager of Kuwait’s National Offset Company, has acknowledged that the NOC has encountered “a period of instability\.....
His background is in finance… He is expected to bring a new professional focus to project management.

UAE: OPB turns into TEC

The UAE Offset Programme Bureau (OPB) has been renamed the Tawazun Economic Council (TEC)…. The negotiation phase would now start earlier.

Malaysia spells out civil offset process for MRT

Malaysia’s Mass Rapid Transit Corporation is opening a tender evaluation process for the acquisition of rolling stock for the Klang Valley Mass Rapid Transit line. Civil offset benefits will feature prominently in the third and fourth stages.

Czech Republic: last of the old time offset agreements nears its end on a high

The Gripen consortium, which supplied 14 fighters to the Czech military, has met its offset targets ahead of schedule. The obligation was for 130 percent of the fighters' lease price … something no longer permissible under the offset code of conduct.

01 June 2012

Volume 30, issue 11

Headlines

Main headlines from this issue

Prohibition sends offsets underground – with record turnout for offset conference

More than 400 delegates attended the fifth GOCA/ADS Global Industrial Cooperation Conference in Izmir… The EC boycotted the event, unravelling a panel discussion that focussed on the directive. Lee Furter, Snr Manager for Offsets at Ruag, valiantly stepped in at short notice to present a humdinger on EC defence procurement policy and the directive, and picked it apart.

Turkey’s IP/O policy has been hugely rewarding – but low threshold is exasperating

Murad Bayar, SSM’s Undersecretary, told conference delegates that SSM’s project portfolio has reached an impressive cumulative value of about $27bn since 2002.

Poland: can ‘Polonisation’ survive the directive?

Poland’s response to the restriction on offsets is to say: “Okay, we don’t need offsets. We could make offsets go away… as long as all products are produced in Poland.” Conference delegates chuckled, but the speaker wasn’t joking.

The loneliness of the civil offset manager

Iwan Bannwart, ABB’s Group VP for Offset and Countertrade, told conference delegates that the civil offset industry as such has little voice. “I am part of this club here, and this is defence and aerospace…. “Sometimes I feel a bit lonely.”

NATO contract for Northrop Grumman will bring IP to 13 member states

Thirteen participating NATO nations will share in an industrial participation programme for the purchase of five RQ-4 Global Hawk unmanned aircraft.

15 May 2012

Volume 30, issue 10

Headlines

Main headlines from this issue

Offset policies face legal minefield –

How to master the minecraft and comply with the directive

The European Commission declined invitations to address the GOCA/ADS Izmir offset conference, leaving many questions concerning Directive 2009/81/EC unanswered. CTO is taking this opportunity to address the directive from a legal standpoint.....

France battles UK and Germany over EC’s juste retour proposal

The European Commission has adopted a draft regulation to allow EU public bodies to exclude certain bids from outside the EU where such tenders comprise a significant element of non-EU goods and services. The adoption of the proposal gave rise to contentious discussions and intense negotiations.

Bulgaria relegates its offset department

Bulgaria’s Ministry of Economy, Energy and Tourism (MEET) has transferred responsibility for offsets to another body, the Department for Investment, Innovation and Entrepreneurship.

India’s offsets: $4.27bn and counting

India’s defence offset policy has achieved more than $4.27bn in benefits from arms contracts signed since October 2007, Defence Minister AK Antony declared in a written reply to Parliament.

South Africa: DTI makes an admission

Trade and Industry Minister Rob Davies has acknowledged that usual departmental practice was widely flouted in calculating offset credits awarded to contractors in the South African Strategic Defence Procurement Programme.

Welcome back!

CTO Newsletter

Volume 2012

Main headlines from this issue

Kuwait’s ‘Mary Celeste’ is rescued – new team in charge of the National Offset Company?

Thai MoD opts for countertrade over offset — “We don’t know how to negotiate an offset.”

Rosoboronexport offers Croatia more than 400 percent in offsets

ECCO launches offset academy

Offset consultant held by Swiss federal police

Main headlines from this issue

How the UK’s new policy of ‘Industrial Engagement’ evades directive 2009/81/EC.

Saudi Arabia introduces non-fulfilment penalties

ECCO conference will address offsets in China and the defence directive

Alstom in pre-performance bid for railway contracts in Thailand

Peru’s preference switches to direct offset

Main headlines from this issue

European Commission calls time – court asked to fine four member states

American and Indian perspectives on India’s new guidelines are broadly positive – DOMW chief named

Industry Canada introduces a demanding SME requirement

Differences over Korean offset policy reach impasse

Australia seeks Japanese submarine technology

Main headlines from this issue

The UK’S new offset policy – where ‘encouragement’ is a persuasive consideration

Taiwan: more directs, no credit banking, and a frustrating approval process

Territorial dispute with China revives Philippines’ countertrade programme

Mexico homes in on a policy to support the aerospace sector

Norway remains beyond the Directive’s scope – for now

Main headlines from this issue

“Bull on the loose” at Kuwait’s NOC

Chairman tramples another CEO

Poland surrenders!

Japan’s F-X evaluation: Defence White Paper says all three bidders fared well in industrial participation

U.S. defence firms lobby for an ASEAN-wide defence offset programme

EDA puts out tender to assess offset impact on EDTIB

Main headlines from this issue

UAE: Duel in the sun as passions boil over

Oman’s new offset policy introduces input and output credits

India looks to private sector to support DOMW – agency to expand

CSIS finds India’s new offset rules lacking in vision, calls for a National Commission on Offsets

Opposition promises to scrap Venezuela’s oil barters

Main headlines from this issue

India revises the offset policy – DOMW replaces DOFA

UK signs first industrial participation commitment under its new policy

Blenheim returns to prime time with Sharia-compliant offset solutions

Mexico prepares to roll out a formal offset policy across the board

Malaysia: BAE’S Typhoon pitch promises a wealth of industrial benefits

Main headlines from this issue

Indonesia’s offset policy trapped by red tape

Morocco demands more industrial participation – with a policy that lacks detail

European Commission says one quarter of Member States have yet to fully transpose the directive

Bombardier adopts new approach to Chinese market

Value of offset obligations to reach $500bn by 2016

Main headlines from this issue

Inconsistencies in Brazil’s approach to offsets examined – Navy sets penalties at 5 percent per month

Norway approves BAE Systems contract with 100 percent offset

India: Leaked document says some obligors receive gratuitous offset credits

EC commences infringement proceedings against Estonia

Opportunity beats risk despite complex arrangements and long memories

Main headlines from this issue

EC commences infringement proceedings against Poland and Austria

Kuwait: NOC’s new GM brings strong financial background

UAE: OPB turns into TEC

Malaysia spells out civil offset process for MRT

Czech Republic: last of the old time offset agreements nears its end on a high

Main headlines from this issue

Prohibition sends offsets underground – with record turnout for offset conference

Turkey’s IP/O policy has been hugely rewarding – but low threshold is exasperating

Poland: can ‘Polonisation’ survive the directive?

The loneliness of the civil offset manager

NATO contract for Northrop Grumman will bring IP to 13 member states

Main headlines from this issue

Offset policies face legal minefield –

France battles UK and Germany over EC’s juste retour proposal

Bulgaria relegates its offset department

India’s offsets: $4.27bn and counting

South Africa: DTI makes an admission