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What Issues Does the Czech Republic Face Concerning Offsets in the Context of Military Purchases?

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Master's thesis

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The word offset in the broadest sense represents reciprocal trade advantages that result from economic agreements. However, as a result of increasing competition among suppliers due to the reduced global defense market and declining military budgets, buyers are able to influence the conditions under which major defense programs are obtained. The word offset is used predominantly to describe the variety of industrial, commercial, and political arrangements under which foreign suppliers implement specific policies aimed at partially or fully compensating the buyers procurement costs. Nowadays, most buyers, including the Czech Republic, demand these concessions in full for the direct cost of procuring major defense programs. Offsets vary with the type of trade involved. Attempts to improve economic infrastructure, health services, and social aspects of a particular country are usually behind the implementation of various offsets. Fulfillment of offset agreements is usually achieved through various projects implemented in the buying country, very often together with third parties, and often in the form of technological transfer and licensing. Labor unions, defense industries, trade associations, and the European Union EU are all involved. The Czech Republic as a member of the EU has to follow its rules, even though the views and policies of the two entities regarding offsets might be different. The objective of this project is to examine what issues, if any, the Czech Republic faces concerning offset implementation in the global defense market. The study briefly discusses the history of the Czech Republics participation in offsets, and its current policy towards using offset practices. The author then examines whether there is any connection between the Czech governments policies and EU policies regarding offsets, and what should be done in future offsets implementation.

Subject Categories:

  • Economics and Cost Analysis
  • Government and Political Science
  • Logistics, Military Facilities and Supplies

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