An Analysis of the Impact of Offset Requirements on the U.S. and Defense Industry

The purpose of this thesis is to determine if offset agreements, as a condition of sale of military articles, have an adverse effect on the U. S. national security and the defense industrial base. The effects of offset agreements are measured from the context of their implications for defense preparedness, competitiveness of U.S. defense companies in the world's arms market, levels of foreign dependence in U. S. weapon systems and the transfer of technology to foreign countries and competitors. Additionally, offset agreements are analyzed as a contributory factor to the globalization of the arms industry and its consequences on the existing defense industrial base evaluated. It is concluded that the future arms market will consist of increased transnational cooperation , requiring the U.S. defense industry to establish strong relationships with foreign counterparts to retain access to their markets. Additionally, the increase in arms producers in the world will challenge arms control efforts and require continued technological innovation to prevent the U.S. lead from eroding further.