Labor & Employment Law

Tanker Bid Tests Who U.S. Trade Policy Really Helps

By James Parks

If the Obama administration is serious about rebuilding America’s manufacturing base, it should start by awarding the $35 billion Air Force tanker contract to Boeing and not to a European firm that has ignored trading rules in its bid, several experts say.

The tanker contract was rebid this year after the Government Accountability Office (GAO) upheld Boeing’s protest of the original decision to award the contract to French-based EADS/Airbus and Northrup. After EADS dropped out, leaving Boeing as the only bidder, the Air Force extended the deadline for bids by 60 days and EADS submitted a new solo bid.

Sen. Patty Murray (D-Wash.) pointed out the World Trade Organization (WTO) ruled in March that Airbus had received illegal subsidies to make the A330 aircraft, which EADS will use for the tanker competition.

Holding this competition up to allow an illegally-subsidized foreign company to bid is bad for American workers, our men and women in uniform, taxpayers and our economy.  It means we are bending over backwards to include a company that has broken the rules of fair play. A competition between companies on an equal playing field is one thing. A competition where American workers have to compete with the treasuries of European countries is another.

The stakes are high. Granting the contract to Boeing would create at least 50,000 family-supporting jobs, save taxpayer dollars and protect fair trade laws.

But if EADS wins the contract, most of the jobs would be in Europe. The few thousand jobs created here under an EADS contract would be low-paid assembly jobs with no union representation.

Writing on hutchnews.com, Jack Otero, a former AFL-CIO vice president from the Transportation Communications Union/IAM (TCU/IAM), says the contract award will be a test of whether our trade policy is on the side of Americans:

At a minimum, the huge advantage of these subsidies should be discounted in Airbus’ bid to stand up for American workers. That would be a welcome “change” that President Obama and Congress can deliver on a bipartisan basis.

The government subsidies to EADS have already hurt the U.S. aviation industry, according to a new report by Loren Thompson of the nonpartisan Lexington Institute. In the report, “European Aircraft Subsidies, a Study of Unfair Trade Practices,” Thompson says European governments have given Airbus the equivalent of $200 billion to help capture the global aviation market. And it has worked. Two decades ago, U.S. aviation manufacturers like Boeing provided 85 percent of the market. Today, European companies control most of the market.

Unless the United States aggressively addresses the government subsidies to Airbus, Thompson says, we could lose our ability to compete in the global commercial aviation market. And the best place to start is with the tanker contract:

To contemplate making an award without compensating for the unfair advantage the Airbus plane has received would in effect reward bad behavior and penalize Boeing for not engaging in similar impropriety.

Full post as published by AFL-CIO NOW BLOG on April 22, 2010 (boomark / email).