§2779a — Title 22 Foreign Relations and Intercourse | U.S. Code

Summary

U.S. defense suppliers and their employees, agents, or subcontractors must not pay money to encourage other U.S. people to buy goods or services from a foreign country as a way to meet an offset deal tied to a sale or export of defense articles or services. If someone breaks this rule, they can be fined. The President can use enforcement powers like those under the Export Administration Act, and the Secretary of State may assess fines and sue to collect them. The fine for each violation may not exceed $500,000 or five times the amount of the prohibited incentive payment, whichever is greater. Definitions: offset agreement — a deal where a U.S. supplier agrees to buy or push others to buy goods or services made (even partly) in the buying foreign country in return for that country buying defense items; incentive payments — direct money paid by the U.S. supplier or its people to a U.S. person to get them to buy such foreign-made goods or services; United States person — a U.S. citizen or lawful permanent resident, or an entity organized in the U.S. or owned/controlled by such people.

Title 22, §2779a

Foreign Relations and Intercourse — Source: USLM XML via OLRC

(a)No United States supplier of defense articles or services sold or licensed under this chapter or exported pursuant to a treaty referred to in section 2778(j)(1)(C)(i) of this title, nor any employee, agent, or subcontractor thereof, shall, with respect to the sale or export of any such defense article or defense service to a foreign country, make any incentive payments for the purpose of satisfying, in whole or in part, any offset agreement with that country.

(b)Any person who violates the provisions of this section shall be subject to the imposition of civil penalties as provided for in this section.

(c)In the enforcement of this section, the President is authorized to exercise the same powers concerning violations and enforcement and imposition of civil penalties which are conferred upon departments, agencies and officials by subsections (c), (d), (e), and (f) of section 11 11 See References in Text note below. of the Export Administration Act of 1979, and section 12(a) 1 of such Act, subject to the same terms and conditions as are applicable to such powers under that Act, except that section 11(c)(2)(B) of such Act shall not apply, and instead, as prescribed in regulations issued under this section, the Secretary of State may assess civil penalties for violations of this chapter and regulations prescribed thereunder and further may commence a civil action to recover such civil penalties, and except further that notwithstanding section 11(c) of that Act, the civil penalty for each violation of this section may not exceed $500,000 or five times the amount of the prohibited incentive payment, whichever is greater.

(d)For purposes of this section—

(1)the term “offset agreement” means an agreement, arrangement, or understanding between a United States supplier of defense articles or defense services and a foreign country under which the supplier agrees to purchase or acquire, or to promote the purchase or acquisition by other United States persons of, goods or services produced, manufactured, grown, or extracted, in whole or in part, in that foreign country in consideration for the purchase by the foreign country of defense articles or defense services from the supplier;

(2)the term “incentive payments” means direct monetary compensation made by a United States supplier of defense articles or defense services or by any employee, agent or subcontractor thereof to any other United States person to induce or persuade that United States person to purchase or acquire goods or services produced, manufactured, grown, or extracted, in whole or in part, in the foreign country which is purchasing those defense articles or services from the United States supplier; and

(3)the term “United States person” means—

(A)an individual who is a national or permanent resident alien of the United States; and

(B)any corporation, business association, partnership, trust, or other juridical entity—

(i)organized under the laws of the United States or any State, the District of Columbia, or any territory or possession of the United States; or

(ii)owned or controlled in fact by individuals described in subparagraph (A) or by an entity described in clause (i).

Notes & Related Subsidiaries

Editorial Notes

References in Text

This chapter, referred to in subsecs. (a) and (c), was in the original “this Act”, meaning Pub. L. 90–629, Oct. 22, 1968, 82 Stat. 1321, which is classified principally to this chapter. For complete classification of this Act to the Code, see

Short Title

note set out under section 2751 of this title and Tables. The Export Administration Act of 1979, referred to in subsec. (c), is Pub. L. 96–72, Sept. 29, 1979, 93 Stat. 503, which was classified principally to chapter 56 (§ 4601 et seq.) of Title 50, War and National Defense, prior to repeal by Pub. L. 115–232, div. A, title XVII, § 1766(a), Aug. 13, 2018, 132 Stat. 2232, except for section 11A, 11B, and 11C thereof (50 U.S.C. 4611, 4612, 4613). section 11 and 12 of the Act were classified to section 4610 and 4614, respectively, of Title 50 prior to repeal.

Amendments

2010—Subsec. (a). Pub. L. 111–266 inserted “or exported pursuant to a treaty referred to in section 2778(j)(1)(C)(i) of this title” after “under this chapter”. 1999—Subsec. (a). Pub. L. 106–113, § 1000(a)(7) [title XII, § 1246(a)], inserted “or licensed” after “sold” and “or export” after “sale”. Subsec. (c). Pub. L. 106–113, § 1000(a)(7) [title XIII, § 1303], inserted “section 11(c)(2)(B) of such Act shall not apply, and instead, as prescribed in

Regulations

issued under this section, the Secretary of State may assess civil penalties for violations of this chapter and

Regulations

prescribed thereunder and further may commence a civil action to recover such civil penalties, and except further that” after “except that”. Subsec. (d)(3)(B)(ii). Pub. L. 106–113, § 1000(a)(7) [title XII, § 1246(b)], inserted “or by an entity described in clause (i)” after “subparagraph (A)”.

Executive Documents

Delegation of Functions Functions of President under this section delegated to Secretary of State by Memorandum of President of the United States, July 26, 1994, 59 F.R. 40205, set out as a note under section 2370a of this title.

§2779a Prohibition on incentive payments

Summary

Title 22, §2779a

Notes & Related Subsidiaries

Editorial Notes

References in Text

Short Title

Amendments

Regulations

Regulations

Executive Documents

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