An End to Offsets in European Defense Trade?

This post was written by Lorraine M. Campos, Alexandra A. Nelson and Peter Teare.

Governments inside and outside Europe routinely require industrial compensation or “offsets” as a condition of granting contracts for their defense and security supplies. But the days of widespread use of offsets in European defense trade appear limited. As a part of its program to promote greater international competition and transparency in defense procurement, the European Commission has signaled a willingness to challenge the imposition of offset obligations which violate the principle of non‐discrimination under EU competition law. Suppliers now have a sound legal basis to challenge offset commitments that are not directly related to the performance of the supply contract and are necessary for the protection of an essential national security interest.

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