CAB148-30-Defence and Oversea Policy Committee Meetings Relating to 1967 Disturbances-1967 — Page 276

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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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