seem to have much flexibility to work with other foreign suppliers.

Professor Ted Moran from Georgetown University noted that his recent study of outward direct investment shows that companies that stay at home are less competitive, have fewer good jobs, and a less favorable distribution of "good versus bad" jobs. He suggested that it is likely that a study of offsets would have the same findings.

Another member of the audience, Alan Tonelson of the U.S. Business and Industrial Council, asked whether the issue of offsets represented a massive U.S. foreign policy failure and was a demonstration of U.S. impotence. Given the U.S. defense support for Europe, Japan, and Korea and the fact that the U.S. market absorbs 40 percent of China's exports, why is the U.S. unable to wield more influence in setting the terms of trade? This is a failure of U.S. policymakers to recognize their leverage and use it to promote highly competitive U.S. workers and companies.

In response, Dr. Mowery pointed out that 50 years after the Marshall Plan, we have seen the reconstruction of Europe, the economic development of the Pacific Rim, and the end of the Cold War. Those were goals set out by the developers of that policy. Thus, the problems we are facing today, while not trivial, are the result of policy success—not failure.

Mr. Greider stated that, especially in light of the end of the Cold War, it is of concern that the issue of globalization has been shrugged off. But the issue will continue to come up. For example, a political battle is shaping up over the U.S. Export-Import Bank (Exim) in which exporters want to relax U.S. content rules required to qualify for a government-backed Exim loan. In his view, this proposal goes against the charter and purpose of the Exim, but makes sense to companies from a global operational perspective. He stated that we need to have a debate over what the national interest is in these situations. Such a relaxation of the content rules may be in the interest of the companies but that may not be the same as the national interest. Questions such as this will continue to be raised until there is a clear debate on the issue.

Mr. Trice stated that setting aside U.S. defense purchases, 70 percent of the aerospace industry's total business is international. If international sales produce jobs, then offsets may be the price of getting into the game. He said he did not see offsets as a failure of either will or of foreign or national security policy. Nor did he see the issue as among the top ten foreign policy problems.

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