What is offset policy and why its banned in WTO ?

Even though this term “offset policy” was banned from WTO. But it’s crucial important for a nation to defense itself from any war and also supported the economic growth of its own country. Meanwhile Defense Economics in SEA countries with compare numbers of Budget proportion of Defense R&D budget from year 2013 – 2033 as following:

Vietnam 43 to 103, Thailand 39 to 74, Singapore 312 to 517, Philippines 1 to 7, Myanmar 6 to 4, Malaysia 0 to 16, Indonesia 60 to 91, Brunei 11 to 9 [USD millions per year].

Average R&D budget for offset policy or military defense of nation has budget around 3% of their nation budget, while in Thailand show just 0.5% of nation’s budget to invest on this research.

Let’s check the percentage budget from developed country: South Korea 12%, China 18% and U.S. 22%. They able to increase the budget in meanwhile downsized their personnel (HR) to less. (Even though U.S. Public Health Service is terrible).

The number shows The World’s Biggest Arms Exporters: U.S. 41.7%, France 10.9%, Russia 10.5%, China 5.8%, Germany 5.6%, Italy 4.3%, U.K. 3.7% and Spain 2.7%.

The interest of arms (army / weapon) exporter is to co-produce their stuff / join research and development, example U.S. & South Korea. But why they willing to give their supposed secret data, the reason is if components know more knowledge the commercial can happened. The cycle of commercial exists from 30 years ago such, U.S. > South Korea > Thailand. Example Advances Jet / Aircraft from KAI.

Then how would it effect to economic growth of nation? South Korea, Daewool Engineering > Hanwa Ocean Cost > 16,000-million-baht battleship from South Korea to Thailand and name after our beloved King 9 (เรือหลวงภูมิพล)

While the comparison shows each nations has its own strength and weakness diversity of each category such, Land, Sea, Air, C4SR, Missiles. It has shown that Thailand in level of moderate-weak to weak on defensing the nation, when compared to South Korea when its level at moderate-strong toward strong.

The cycle of defense industrialization. Defense R&D: Military-Industrial-Bureaucratic Technology Group. University, Public or Private Laboratories. > Defense Industries: Factories, Raw Material Production, OEMs, or Foreigner and Domestic Suppliers. > Defense Users: Department of Army, Navy or Air Forces, foreigner and domestic.

Defense policy and strategy: Prototype > Test, Evaluates and Standard > Requirement, Feedback. [ICA / IA] [Drone Detector] [Weapon + Technology … & complexity] [DTI: Defense Technology Institute]

Malaysia: STRIDE (Science Technology Research Institute for Defense)

South Korea: ADD (Agency of Defense Development) DAPA (Defense Acquisition Programs Administrator) Cycle = SNU > Hyundai, DSMG, KAI, Samsung, LIG > Aircraft, Tank, > SNU

India: DRDO (Defense R&D Organization) *India co-joint with Russia and have one BrahMos missile project. India ship-to-ship missiles / sonic which very fast and hard to track and already acquired by Philippines and request offset policy from both Russia and India country.

Singapore: MINDEF > EMC – Electromagnetic Compatibility, OPCW – Chemical Detection, HSI – Hyperspectral Imaging, MMIC – Microwave Intergrated. DSTA, DSO, NANYANG U., NUS > ST Engineering, Kinetics, Electronics, Marine, Aerospace > Tank, Aircraft, Battleship > 4 Institutes. (conceptualized, proof concept).

ASEAN defense country as middle power while have small public spending. The following question is Should we join the force? or at least co-invest or corroborative? or remain peace follow UN policy same as Switzerland country?

Thailand now just started finish draft offset law and have longest act in the world for 85 articles. Which required above 1 billion baht to triggered offset program. Madam Tank has market overseas as well. 300 to Malaysia, 200 to Indonesia and 200 to Pakistan.

Offset: Direct offset vs Indirect offset. Arms-exporting country use of offsets in some form meant to compensate (offset). Compared to EU/Western region countries, this knowledge on offset policy is very old for 50 years while in Thailand just started. Thailand Innovative on Drone and Bomb. WTO allow for national safety objective. #internationalrelationandmanagement Example, offset policy from Sweden to Thailand is IKIA (Griffin Aircraft). Japan = Electronic Factories in Eastern provinces. U.K. = English Teaching Program, British Council (36% of Aircraft).

WTO allow only developing country to have offset law. ROK still have offset law even tough developed country because remain only the defense program. Treasury quota on value cost should be high enough to trigger offset. Example Grippin 20,000 MB Vandover promise quota set by Thai law 30% (compensation package = 6 billion baht to invest in other section). The threshold = Quota.

Accessible to classified information and high technology. South Korea exported 8 submarines to Indonesia and got three-times salary than Thailand.

The possibility for offset policy between Thailand and Korea:

UAV $300,000 – $700,000 with 6 – 12 hours delivery with 20 – 50 kilograms. Can reach the amount to 10.529 billion as South Korea have to consider wartime with North Korea as nuclear base and UAV from Thailand is very cheap compare with its quality and function flexibility. (Round about 10 billion baht already exceed offset indirect policy for 3 billion integrations economic supported between Thailand and South Korea). The possibly indirect policy such as: Smart City Project, Tourism Projects in Thailand, OTOP Projects and Foreigner Factories aim for FDI in Thailand. Low-skilled labor from Thailand to work in South Korea on agricultural industry and construction site.

Reference to LCDR.DR. Bodin September 27, 2025 Chula KSIM