The WTO and the Tanker

Last week’s WTO ruling that Airbus has for decades received billions in illegal subsidies from European governments was a major victory for Boeing, for American workers, and for Washington State. But, its impact on the ongoing Air Force aerial refueling tanker contract saga remains uncertain.

I’m sure by now most of you have read the headlines and stories—surprisingly consistent in both U.S. and international media—that Airbus was found to have benefited from massive government subsidies that violated international trade agreements and unfairly allowed the company to develop its product line and gain market share. The WTO ruling called upon European governments to withdraw all prohibited subsidies without delay.

However, despite the WTO’s unambiguous findings and the significant harm illegal export subsidies have caused the U.S. aerospace industry and U.S. workers over the past forty years, there is currently no requirement that the value of Airbus subsidies be taken into consideration in the award of the upcoming U.S. Air Force Refueling Tanker Contract. In fact, Pentagon officials have thus far remained firm in stating that the impact of subsidies will not be a factor in choosing between Boeing and EADS/Airbus.

Of course, considerable efforts are underway to reverse that stance and ensure a level playing field for American workers and businesses:

1. Last month Congress overwhelmingly (410-8) passed an amendment authored by Rep. Jay Inslee requiring that illegal subsidies be considered in the tanker bid process. Similar legislation is expected to be offered in the Senate later this session.

2. Rallies are being organized around the U.S.—including here in Everett on July 9th—to show support for Boeing’s tanker bid (officially due at the end of the week) and the jobs and economic activity it would generate. I’d be willing to bet that calls to action to consider the illegal subsidies received by Airbus will be highlighted at each of these events.

3. And, as noted in previous blogs, leaders from the many states across the country that will be impacted by the tanker decision have been working together for months to build awareness of the economic and national security advantages associated with Boeing’s proposal and have long pointed out how illegal Airbus subsidies have hurt U.S. industry.

For now, though, the WTO ruling—a landmark victory for the U.S.—officially remains outside the scope of the tanker contract decision making process.

PSRC President, Mayor Ray Stephanson, addressed the issue in a recent statement available here.

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