There is a window of opportunity now, opened by the White House, to pull together suggestions on creating a national strategy to deal with offsets. Although a national strategy may be lacking, individual agency interests are clearly articulated, and other U.S. "players" have defined their interests as well. However, reliable data is limited and subject to differing interpretations, and there are no obvious conclusions to be drawn from current data. One suggestion would be to create a mechanism, as the European Union has, to funnel comments from industry (on a confidential basis) into a computerized database on obstacles faced in selling abroad. In the absence of a private sector consensus on what approach government should take, what actions to employ, broad government intervention is not likely. However, a variety of public interests—many of which were expressed during the conference—should be recognized and catalogued, and brought into the discussion.

Wolff noted the need for monitoring of foreign industrial policies. These policies go well beyond offsets, which are for some countries just one aspect—one tool—of a multifaceted approach to economic development. This conference demonstrates the importance of having the analytical ability to understand how those countries view such tools as industry-building measures, in order to determine what type of response, if any, the United States should take. An effective response requires consensus, and building a consensus is best attempted domestically first, and only subsequently at the international level. There is hope for creating the necessary consensus. The export credits race was greatly dampened, if not extinguished, through building an international consensus. The process, however, proved that domestic agreement was needed to present a solid U.S. front in the search for a common set of interests on the international level. The U.S. recently agreed with the European Union and countries representing 90 percent of trade in information technology products on duty-free trade in those goods. The consensus was achieved because the participants became convinced that it served their best interests to eliminate tariffs. A similar, common realization of enlightened self-interest underpins the recent agreements on trade in telecommunications services. So there is precedent for finding international concurrence on offsets, but equally so, precedents for establishing it domestically first.

In the case of offsets, this workshop has demonstrated the value of a balanced exchange of views. It has helped many of us understand the pressures industry faces in the international competition for large contracts, rich in follow-on work. We now have a better appreciation of some of the trends in countries' demands for offsets. And equally interesting questions have been raised about the cumulative and long-term consequences of these offsets, particularly when integrated with the other industrial policy tools of U.S. competitors for this and other strategic industries. The discussion has also underscored the challenge these practices and policies represent for current multilateral agreements and, more broadly, for the multilateral trading system as a whole. Integrating countries with different assumptions and priorities into the WTO is a significant challenge, and one that can only be addressed when the U.S. is able to identify its own long-term economic interests.

On behalf of the STEP Board, Wolff noted that it was the Board's hope that today's discussions represent a contribution towards a better understanding of the issues we were asked to address. This type of forum, and indeed more informal gatherings, represents one of the best means of building a consensus among the stakeholders in this industry as to what would constitute appropriate U.S. policy on offsets. At the very least, it could contribute to a better exchange of information, which seemed to be one of the principal needs emerging from today's discussion.

In closing, on behalf of the STEP Board, Ambassador Wolff thanked the panelists, the other participants from the Academy, in particular the president of the National Academy of Engineering, Wm. A. Wulf, and the project director, Charles Wessner and his able assistant, George Georgountzos. Most particularly, the Ambassador thanked all the participants in the conference for their interest, contributions, and attention over the last nine hours.



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