22 U.S.C. § 2779a — Prohibition on incentive payments

(a) A United States supplier of defense articles or services sold or licensed under this chapter, or exported under a treaty described in section 2778(j)(1)(C)(i), and the supplier's employee, agent, or subcontractor, may not make an incentive payment connected with selling or exporting such an article or service to a foreign country when the purpose is to satisfy all or part of an offset agreement with that country.

(b) A person who violates this section may receive the civil penalties provided here.

(c) To enforce this section, the President may use the same powers concerning violations, enforcement, and civil penalties that the Export Administration Act of 1979 gives departments, agencies, and officials under sections 11(c), (d), (e), (f), and 12(a), under that Act's terms and conditions. Section 11(c)(2)(B) does not apply. Instead, regulations under this section may let the Secretary of State assess civil penalties and bring a civil action to collect them. Despite section 11(c) of that Act, the penalty for each violation may not exceed $500,000 or five times the prohibited incentive payment, whichever is greater.

(d) For this section: (1) “offset agreement” means an agreement, arrangement, or understanding in which a United States defense supplier agrees to buy or acquire, or to encourage other United States persons to buy or acquire, goods or services produced, made, grown, or extracted wholly or partly in the foreign country, in exchange for that country's purchase of defense articles or services from the supplier. (2) “incentive payments” means direct money paid by a United States defense supplier or its employee, agent, or subcontractor to another United States person to induce that person to buy or acquire goods or services produced, made, grown, or extracted wholly or partly in the foreign country buying the defense articles or services. (3) “United States person” means (A) a United States national or permanent-resident alien; or (B) a corporation, business association, partnership, trust, or other legal entity that is organized under United States, state, District of Columbia, territory, or possession law, or is in fact owned or controlled by people described in (A) or by an entity described in (B)(i).