Briefing: EU offset policy efforts still in question three years on

There are strong indications that offset excesses of the past may be declining, but the fact that most offsets are shrouded in secrecy, combined with government fears of legal retribution from Brussels, could make the practice more obscure or difficult to trace in the future, according to European Union (EU) officials.

"Most of the information about offsets is confidential - and this could be a sticking point," an EU offsets expert told IHS Jane's.

Even though initiatives such as the European Defence Agency's (EDA's) 2009 code of conduct to limit offsets has resulted in more transparent reporting on the activity across the EU countries, "we can't be absolutely sure they will report everything for fear of reprisals", said the expert. In a word, the EU will need to be more vigilant on offsets in the future.

On paper at least the EU has got off to a good start. The EDA's code of conduct limits the value of an offset deal to no more than 100% of its related defence contract. Offsets are the mandatory investments that a purchasing authority requires of a foreign defence supplier in its local economy as compensation for the budgetary outflow.