This will be remembered as the year of the big corporate bailout – in which the American public recoiled at how the federal government rewarded corporate scoundrels for their profound lack of business sense.
To be sure, the American public gives Congress and the White House some leeway in the financial and auto bailouts because they were trying to revitalize American businesses. But if there were ever an instance that would test the patience of the American public, it’s the idea that we would reward foreign companies who refuse to play by the rules with government contracts that amount to a de facto European bailout.
On the heels of a WTO ruling that French aerospace company Airbus used billions in illegal subsidies to steal American jobs and market share from domestic companies like Boeing, the Pentagon seems ready and willing to reward Airbus with a $35 billion contract to build the Air Force’s next fleet of tanker refueling aircraft.
Yet, Airbus’ tanker aircraft – based on the Airbus A330 – was developed using $5 billion in illegal subsidies and would be built at the cost of 44,000 American jobs, including 9,000 at Boeing and other suppliers in Washington state. If the Pentagon caves to intense lobbying pressure and again outsources the contract to Airbus – as it did in a highly controversial decision that was ultimately overturned amid scandal – public outrage may reach a boiling point.
Former French Prime Minister Lionel Jospin once described the illegal subsidies program to Airbus in blatantly protectionist terms: “We will give Airbus the means to win the battle against Boeing.” Airbus has also been implicated in bribery scandals in such countries as Saudi Arabia, even taking advantage of European government tax write-offs for its bribes.
Even as Airbus vies for the lucrative United States tanker contract, European governments have blocked Boeing from bidding on their government contracts, including a 2004 French tanker competition.
Most analysts agree that without the illegal subsidies and protectionist policies, Airbus’ tanker wouldn’t stand a chance of winning based on the merits. Boeing also has decades of experience in delivering 2,000 tankers while Airbus hasn’t delivered a single tanker with a refueling boom.
Last year, then-candidate Obama expressed dismay that the Pentagon outsourced the contract, finding it hard to believe that such a critical capability could not be built by an American aerospace industry.
And the Government Accountability Office ultimately overturned the contract award, citing the Air Force’s strange mishandling of the contract and significant miscalculations in their evaluation.
Outraged at the way Airbus effectively gamed our acquisition process, members of Congress also introduced legislation forcing the Air Force to consider illegal trade subsidies before awarding contracts to foreign companies. Given that the European Union regularly blocks access to their defense markets by U.S. firms, this seems like a modest start. At the very least, the Pentagon should adjust Airbus’ tanker bid to discount the financial advantages of their $5 billion in illegal subsidies.
The WTO ruling is the Obama administration’s chance to ensure that the tanker deal, which has been so mishandled in the past, is finally done right.
This is no time to allow Washington state’s workers to again be victimized by Airbus’ dirty tactics. The state’s unemployment rate now stands at 9.3 percent, but could rise as high as 10 percent, according to some experts, even as Federal Reserve Chairman and others have observed that the recession is technically behind us. In times like these, we have to fight for every job.
When it comes to capabilities, the economy, and fairness in international trade, the tanker decision should have been a no-brainer for Pentagon brass. But as the new Defense Department leadership prepares to rerun the tanker competition, all eyes are watching to see if it can run a clean and transparent competition that ultimately chooses the best plane for the taxpayer’s dollar. If they do that, they can’t help but choose an American-made tanker.
Malcolm Amado Uno is Executive Director of the Washington, D.C.-based Asian Pacific American Labor Alliance, an AFL-CIO affiliate.
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