suppliers, such as defense and aerospace.) Second, their use as leverage to force technology transfer from private suppliers raises difficult policy questions about the extent to which private interest fully captures the public interest in technologies funded out of public coffers. Third, use of offset requirements is a backdoor challenge to the GATT vision of open global markets.
The obvious alternative in military aerospace that addresses both the big issue of unrestrained exports of advanced military capabilities and the smaller issue of offsets (one tool used to pry open greater technology transfer) is to work through some sort of system of industrial and technical cooperation with major U.S. allies (Europe and Japan). Some arrangement would be needed that would maintain access by U.S. defense producers to these important markets while permitting U.S. allies to maintain core defense systems capabilities and restrain the unchecked proliferation of advanced military exports. The United States—as the only nation that can maintain an economically affordable advanced defense sector without relying on exports—must play a leadership role in constructing such a system. The massive investment by the United States in military technology—which in effect underwrote the development of allied industrial capabilities in the first place—continues to provide us with enormous leverage that can be utilized for this purpose.