[Code of Federal Regulations]
[Title 15, Volume 2]
[Revised as of January 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 15CFR701.2]

[Page 106]
 
                  TITLE 15--COMMERCE AND FOREIGN TRADE
 
  CHAPTER VII--BUREAU OF INDUSTRY AND SECURITY, DEPARTMENT OF COMMERCE
 
PART 701_REPORTING OF OFFSETS AGREEMENTS IN SALES OF WEAPON 
 
Sec.  701.2  Definitions.

    (a) Offsets--Compensation practices required as a condition of 
purchase in either government-to-government or commercial sales of 
defense articles and/or defense services as defined by the Arms Export 
Control Act and the International Traffic in Arms Regulations.
    (b) Military Export Sales--Exports that are either Foreign Military 
Sales (FMS) or commercial (direct) sales of defense articles and/or 
defense services as defined by the Arms Export Control Act and 
International Traffic in Arms Regulations.
    (c) Prime Contractor--A firm that has a sales contract with a 
foreign entity or with the U.S. Government for military export sales.
    (d) United States--Includes the 50 states, the District of Columbia, 
Puerto Rico, and U.S. territories.
    (e) Offset Agreement--Any offset as defined above that the U.S. firm 
agrees to in order to conclude a military export sales contract. This 
includes all offsets, whether they are ``best effort'' agreements or are 
subject to penalty clauses.
    (f) Offset Transaction--Any activity for which the U.S. firm claims 
credit for full or partial fulfillment of the offset agreement. 
Activities to implement offset agreements may include, but are not 
limited to, coproduction, licensed production, subcontractor production, 
overseas investment, technology transfer countertrade, barter, 
counterpurchase, and buy back.
    (g) Direct Offset--Contractual arrangements that involve defense 
articles and services referenced in the sales agreement for military 
exports.
    (h) Indirect Offset--Contractual arrangements that involve defense 
goods and services unrelated to the exports referenced in the sales 
agreement.