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F 111 OFFSET ARRANGEMENT EFFECT OF THE BYRNES AMENDMENT
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the F 111 Offset Arrangement
The Committee considered a Memorandum by the Defence Secretary on
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Effect of the Byrnes Amendment (OPD(67) 72).
THE DEFENCE SECRETARY said that the United States House of
Representatives had passed an Amendment to the United States Defense Appropriations Bill for the fiscal year 1968 (The Byrnes Amendment) precluding the expenditure of funds in the Bill on the construction of
naval vessels in shipyards outside the United States. Since this seemed
likely to have an immediate effect on bidding by British firms for building 16 ocean minesweepers for the United States Navy, he had written
to the United States Secretary for Defense, Mr. McNamara, expressing
concern about the handling of the Amendment and asking about his future
intentions in regard to the F 111 Offset Arrangement. Mr. McNamara's
reply had been reassuring; it had confirmed that the United States
Government intended to carry out its commitments to meet the targets set under the Offset Arrangement. As regards the minesweepers, the Byrnes
Amendment related only to funds for the year 1968; Mr. McNamara was
arranging that tenders for nine of the minesweepers should be invited against funds available for the fiscal year 1967 and was examining
whether the balance could be deferred until 1969. This should enable
British firms to tender for all 16 minesweepers. In the meantime contracts
for two salvage tugs would shortly be awarded to a British firm. The
Byrnes Amendment did not therefore threaten the F 111 Offset Arrangement. A much more serious threat to this, and to the supply to us of the F 111
itself and of defence equipment generally, had been eliminated when a
joint conference of the United States Senate and the House of Represen-
tatives had recently rejected an amendment to the Foreign Assistance Authorisation Bill which would have had these effects by providing that "no defence articles or defence services shall be acquired from or provided to" any country whose ships trade with North Vietnam.
In general very good progress had been made in obtaining orders for
the supply of defence equipment to the United States under the F 111 Offset
Arrangement: in eighteen months orders valued at over $150 million had been obtained against the target for the whole transaction of $325 million
and for the next few years dollar receipts in this area would exceed
outgoings. Nothing that had happened as regards the offset arrangements called for reconsideration of our plans to purchase the F 111;
he was
however, pressing Mr. McNamara for an early settlement of the outstanding matter of the supplemental ceiling for the aircraft and would take this up
with him again at a meeting later that week.
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