Will Obama weigh in on WTO ruling, tanker contest?

Published 1:58 pm Tuesday, September 15, 2009

With the Air Force’s refueling tanker contest expected to start later this month, supporters for the main competitors are pulling out all the stops to make sure their company snags the $35 billion deal.

Just yesterday, Air Force Secretary Michael Donley said the agency does not plan to change its acquisitions strategy despite a recent World Trade Organization ruling over illegal trade subsidies.

Forty-seven members of the U.S. House of Representatives recently sent President Barack Obama a letter asking for his plan for fixing the ‘conflict’ between the country’s defense acquisitions policies and its trade policies.

Washington’s Rep. Rick Larsen is among those who insist the U.S. should not consider buying a tanker from Northrop Grumman and EADS, the duo competing against the Boeing Co. for the contract.

Northrop and EADS plan to offer the Air Force a tanker based off Airbus’ A330-200 commercial jet. In their letter, Larsen and the Representatives say the A330 is an illegally subsidized aircraft, noting the recent World Trade Organization ruling on the matter.

“Buying Airbus tankers would reward European governments with Department of Defense dollars at the same time that the U.S. Trade Representative is trying to punish European governments for flouting international laws,” the letter to the President said.

Just last week, U.S. Sen. Richard Shelby, R-Ala., lobbied U.S. Trade Representative Ron Kirk on the tanker contest, saying the WTO did NOT find that Airbus received illegal subsidies for the A330-200.

“The A330-200 was found to have received investment aid within the permissible benchmarks under WTO guidelines – meaning that the funding received was not found to be a prohibited subsidy,” Shelby wrote.

The WTO did not release its 1,000-page preliminary ruling publicly. This is the Air Force’s third attempt at replacing its KC-135 tanker fleet.

UPDATE:

Sen. Patty Murray, D-Wash., sent Defense Secretary Robert Gates a letter on the WTO-tanker issue today.

“I have serious concerns, however, that previous actions taken by the EU have tipped the scales in favor of one competitor before the competition has begun by giving Airbus illegal launch aid to subsidize its research and development of its platforms, which includes the expected offering for the KC-X,” Murray wrote.

In the letter, she also posed a series of questions for Gates, including:

“How will the WTO ruling that the practice of launch aid to one expected competitor has harmed another expected competitor be taken into account? Will the playing field be leveled so that the Air Force purchases the aircraft that not only best meets its requirements and is also a wise use of U.S. taxpayer dollars now and into the future of the KC-X procurement?”