And acting Commerce Secretary Rebecca Blank says the administration expects to notify Congress of its changes to the export control list in the fall.
Another complication is what happens on the backend of a deal. While foreign sales for the U.S. are a money-making venture, they are also a diplomatic tool to deepen ties between nations. And foreign governments have long used the deals as a way to bolster local economies.
The practice has been around for ages. To sell F/A-18s to Spain, Boeing's predecessor, McDonnell Douglas, helped establish a Domino's Pizza franchise in Barcelona.
But the practice is growing. Between 2005-16, governments will have imposed $500 billion in such agreements on foreign companies, according to a study conducted by data-analysis company Avascent and Fleishman Hillard.
Despite their importance on the frontend of the deal, most companies pay little attention to offsets at a high level, says Avascent partner Jon Barney. But with increasing global competition, foreign customers are becoming more sophisticated about their offset policies. And with the possible public-perception downsides to offsets, companies should pay more attention, Barney says.
Companies can set themselves apart from the competition by making offsets a strategic priority for senior executives, building internal support for offsets, increasing their visibility and planning for them financially. “With sellers expected to incur an estimated $500 billion in offset obligations through 2016, government officials in purchasing countries have an unprecedented opportunity to create jobs, attract investment and promote sustainable growth at no extra cost to the treasury,” states a white paper on the study.
A strategic plan could help address growing concerns among second- and third-tier suppliers that often don't have the resources to produce offsets for their primes. One supplier said this is a concern moving forward; he fears that his company will be at a disadvantage because it lacks the global reach to produce offsets on a large scale for a prime contractor.
In some cases, a prime will forgo a U.S. supplier in order to meet offset requirements. “The primes are actively looking for foreign supply partners for offsets instead of us,” said one U.S. contractor. “It's going to get messy.”
In other cases, U.S. companies establish joint-venture relationships to fulfill foreign sales requirements. “There will be a transfer of technology that leads to a one-time gain for us,” the contractor said. “If [foreign officials are] buying a product, they are expecting more than just the product. They want a lasting relationship that supports their indigenous industry.”
Just finding direct jobs in-country is not always an option, even for a large prime contractor. “It is not a sustainable business,” says Chris Chadwick, president of Boeing Military Aircraft, who says that Boeing's approach is to establish long-term business relationships with partners abroad. “It is not just about the sales, but being part of the fabric of that industry.”