Published: Wednesday, September 16, 2009
U.S. TANKER COMPETITION
Policy conflict stands out
In the soon-to-be-renewed competition to build $35 billion worth of aerial refueling tankers for the U.S. Air Force, an inherent contradiction in U.S. policy is starker than ever.
An interim ruling issued recently by a World Trade Organization panel says that European countries have made illegal subsidies to Airbus that have injured the Boeing Co., according to several lawmakers who have been briefed on the ruling. Boeing and the U.S. trade representative have argued that point for nearly five years.
While the WTO case doesn't directly affect the tanker competition — it's about commercial airplane production — it highlights a distressing disparity between U.S. policy on trade and military procurement.
The Air Force is expected to launch a new tanker bidding competition this month between Boeing and a partnership between Airbus' parent company and U.S.-based Northrop Grumman. The latter proposes to build a tanker based on Airbus' A330 jetliner and assemble it at a new plant in Alabama. Boeing says it will counter with a tanker based either on the 767 or the larger 777, depending on the Air Force's requirements. Both of those airframes are assembled in Everett.
While we believe competition for government contracts is healthy, even essential, it also must be fair. The WTO's ruling suggests that Airbus has for decades received billions of dollars in illegal aid from European governments that has allowed Boeing's chief rival to develop new models without much of the market risk Boeing routinely assumes.
Few doubt that Boeing and its top-flight workforce can provide the Air Force with the most reliable, cost-effective tanker that can be built. Given that, it makes no sense for one arm of the U.S. government — the Pentagon — to hand the European rival of a U.S. manufacturer a business victory while another arm is making headway in an effort to show that rival has received illegal benefits.
Awarding all or part of the tanker contract to the Airbus consortium could also erode the manufacturing bases and economies of Puget Sound and Wichita, Kan., which is home to much of Boeing's military production. If Airbus builds a plant in Alabama for tanker production, it would undoubtedly serve as a platform for expanded commercial production. Europe's illegal subsidies will have paid off handsomely.
In light of the WTO ruling, members of Washington's congressional delegation, including Rep. Rick Larsen and Sen. Patty Murray, are urging the Obama administration to get its trade and defense procurement priorities on the same page. Anyone with an interest in fairness should join them.
An interim ruling issued recently by a World Trade Organization panel says that European countries have made illegal subsidies to Airbus that have injured the Boeing Co., according to several lawmakers who have been briefed on the ruling. Boeing and the U.S. trade representative have argued that point for nearly five years.
While the WTO case doesn't directly affect the tanker competition — it's about commercial airplane production — it highlights a distressing disparity between U.S. policy on trade and military procurement.
The Air Force is expected to launch a new tanker bidding competition this month between Boeing and a partnership between Airbus' parent company and U.S.-based Northrop Grumman. The latter proposes to build a tanker based on Airbus' A330 jetliner and assemble it at a new plant in Alabama. Boeing says it will counter with a tanker based either on the 767 or the larger 777, depending on the Air Force's requirements. Both of those airframes are assembled in Everett.
While we believe competition for government contracts is healthy, even essential, it also must be fair. The WTO's ruling suggests that Airbus has for decades received billions of dollars in illegal aid from European governments that has allowed Boeing's chief rival to develop new models without much of the market risk Boeing routinely assumes.
Few doubt that Boeing and its top-flight workforce can provide the Air Force with the most reliable, cost-effective tanker that can be built. Given that, it makes no sense for one arm of the U.S. government — the Pentagon — to hand the European rival of a U.S. manufacturer a business victory while another arm is making headway in an effort to show that rival has received illegal benefits.
Awarding all or part of the tanker contract to the Airbus consortium could also erode the manufacturing bases and economies of Puget Sound and Wichita, Kan., which is home to much of Boeing's military production. If Airbus builds a plant in Alabama for tanker production, it would undoubtedly serve as a platform for expanded commercial production. Europe's illegal subsidies will have paid off handsomely.
In light of the WTO ruling, members of Washington's congressional delegation, including Rep. Rick Larsen and Sen. Patty Murray, are urging the Obama administration to get its trade and defense procurement priorities on the same page. Anyone with an interest in fairness should join them.
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