agreements reached between private parties. These "offset-like" arrangements may include a direct or indirect type of offset arrangement. While for policy purposes, a distinction as to what kind of offset is involved may be important, for workers who face their negative effects, distinctions are of little relevance. For purposes of discussion in this paper, the term "offsets" is used broadly, to include both direct and indirect offsets and offset-like arrangements "voluntarily" agreed to by private parties.

While these sophisticated offset policies and marketing schemes are increasingly utilized by other nations to promote the development of foreign aerospace industries, the United States demonstrates little interest in developing a comprehensive policy of its own. But the U.S. government can no longer afford to leave the world of offsets to the actions of other nations and private parties. The stakes are too high. Offset arrangements in the defense and commercial aerospace industry result in the loss of U.S. jobs and technology to other countries. In some cases, they can pose a threat to our national security.

Consequently, government must play a strong role in developing policies that address the rapid acceleration of offsets in the aerospace industry and their negative effects on U.S. aerospace workers. In addition to the projected loss of thousands of jobs, over time the effects of these arrangements could result in the decline of the U.S. aerospace industry, one of our greatest remaining export industries. This paper examines why the federal government must take a leadership position in setting offset policy in the U.S. aerospace industry by reviewing the health of the aerospace industry from the view of the aerospace worker; the increasing threat offsets pose to aerospace workers and the national interest; the serious lack of current and accessible information on offsets, the need for coordination of offset policy within government, and the need for coordination of offset policy between the numerous private parties that are involved either directly or indirectly with offsets.

THE PROBLEM

The U.S. Aerospace Industry Worker Faces a Gloomy Future

The impact that offsets have on the U.S. work force receives little attention from public policy makers. Periodically various labor statistics are quoted in articles about offsets. However, few people have focused on the effects that offsets are having, and will increasingly have, on the lives of real workers, their families, and the communities where they reside. The condition of these workers is especially important for a number of reasons.

First, U.S. aerospace workers are in large part responsible for building the U.S. aerospace and defense industries and for making them the leaders that they are in the world today. U.S. aerospace workers are loyal and proud of the companies they work for and the communities that they live in. They share common



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