studies that indicate that offsets continue to have a negative, and possibly increasingly negative, impact on aerospace production workers. Although some note that currently there is job growth, the current economic boom could turn down rapidly as a result of the Asian crisis. In addition, the gains made in the past few years still have not compensated for all the jobs lost earlier. The issue of employment—and the pain of dislocation—is still very real for those workers who have lost their jobs or who have found new jobs in other industries at lower wages and with fewer benefits.
As Dr. Rosen pointed out earlier, the aerospace industry is important because it makes a large contribution to the U.S. economy. The administration understands the importance of preserving and assisting the industry. Maintaining the health of the aerospace industry is clearly in the national interest.
Certainly other countries believe that having an aerospace industry is in their national interest. Countries such as Japan, China, and the Western European nations, have well-defined offset policies. As NATO expands, Eastern European countries are now engaging in the offsets game. Many of these countries are using offsets to develop their aerospace industry, in particular China.
As a result, there is concern over the widespread employment effects of offsets on both the prime contractors and the subcontractors, as well as on those who are caught in the draft of indirect offsets. Technology transfer is also a concern, including the possibility of taxpayer-funded research being shipped abroad to increase the strength of our competitors. As mentioned earlier, this simply worsens the problem of global overcapacity. National security concerns are also important. It is very hard to distinguish when a technology is transferred to a country such as China whether that technology will be contained in the commercial sector or used for military purposes. This was especially well described in a presentation at the June 1997 meeting.
There is a concern regarding prime contractors versus sub-tier suppliers. A presentation earlier in the symposium described what is happening to the aerospace sub-tier industries. The process of sub-tier companies being squeezed out of the business has a real effect on jobs. Mr. Herrnstadt then read three comments from sub-tier producers quoted in the most recent Commerce Department report on offsets as to the negative impact of offsets on their business and employment.
In addition to conflicts between private sector entities, there is a lack of coordination between public entities. For example, the FAA developed a proposed regulation concerning fees on the production of "complex parts and subassemblies outside of the United States." One of the purposes stated for the proposed