Title 22, Foreign Relations and IntercourseRelease 119-110
§2779a Prohibition on Incentive Payments
Title 22 › CHAPTER 39 — ARMS EXPORT CONTROL › SUBCHAPTER III — MILITARY EXPORT CONTROLS › § 2779a
Summary
U.S. suppliers of defense items or services, and their employees, agents, or subcontractors, must not pay money to other U.S. people to satisfy an offset deal with a foreign buyer. People who break this rule can be fined. The President can enforce the rule using export-enforcement powers, and the Secretary of State can assess fines and sue to collect them. Each violation can be fined up to $500,000 or up to five times the illegal payment, whichever is greater. Offset agreement = a deal where the seller agrees to buy or promote goods or services from the buying country in return for the buyer buying defense items. Incentive payments = direct cash paid to a U.S. person to get them to buy those foreign goods or services. U.S. person = a U.S. citizen or lawful permanent resident, or an entity organized in or owned/controlled by such people.
Full Legal Text
Title 22, §2779a
Foreign Relations and Intercourse, Source: USLM XML via OLRC
(a)In general
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)Civil penalties
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)Presidential authority
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 of the Export Administration Act of 1979, and section 12(a) 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)Definitions
For purposes of this section
(1)
(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).
Legislative History
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.
Reference
Citations & Metadata
Citation
22 U.S.C. § 2779a
Title 22, Foreign Relations and Intercourse
Last Updated
Sep 23, 2026
Release point: 119-110