On the day that President Barack Obama made U.S. economic competitiveness the lead theme in his State of the Union speech, European aircraft maker Airbus issued a series of misleading assertions about top U.S. exporter Boeing that illustrated a key reason why it is so hard for America to compete. Having engaged in a 40-year pattern of predatory pricing behavior documented by the World Trade Organization last year, Airbus is now trying to obscure the fact that it continues to receive illegal trade subsidies. So the European company issued patently dishonest statements to the media alleging it had suffered $45 billion in damages as a result of “massive illegal subsidies” given to Boeing. In fact, WTO has found Boeing received relatively little in the way of improper subsidies over the last several decades — about one-sixth of what Airbus got — and most of the objectionable benefits Boeing received dried up or were repealed long ago.
So here’s the competitiveness issue that Airbus dissembling highlights: other countries and companies don’t adhere to the same ethical standards expected of U.S. producers. You probably already figured that out about the Chinese, but Airbus provides an older and more familiar case study in how foreign competitors rationalize unfair trading behavior. According to the World Trade Organization, illegal “launch aid” from four European governments enabled Airbus to introduce an entire family of commercial transports much faster than any purely commercial company could have, and then to price those planes much lower than a commercial player could. That’s the biggest reason why Boeing’s share of the global airliner market has declined from about 85 percent two decades ago to barely 50 percent today — and why tens of thousands of U.S. commercial aerospace workers have lost their jobs during the same period.
Some journalists accept at face value the Airbus argument that both companies have sinned and subsidies are commonplace throughout the global aerospace industry, but that claim of moral equivalence simply isn’t true. Airbus was created by European governments to displace Boeing, a private company, from its dominant role in the world market, and that has been accomplished through the systematic use of prohibited methods throughout the European company’s history. In fact, Airbus is leveraging the same methods to underbid Boeing right now in the Air Force tanker competition, offering a plane that weighs 28 percent more than the Boeing plane for roughly the same price. There’s only one way you can do something like that, but apparently the Pentagon has no problem with rewarding Airbus for its continued use of illegal subsidies.
Next week the WTO will issue its response to a European appeal of the earlier ruling finding chronic illegality. Shortly thereafter, the trade body will confirm a preliminary finding that Boeing did not get anything comparable to the improper subsidies Airbus received (in fact, Europe has never even alleged that Boeing received launch aid). So in light of what the President said in his State of the Union speech about bolstering U.S. competitiveness, the question naturally arises: what is Washington going to do about this? Are France and the other culpable European countries going to get a pass just because they sent a contingent of troops to fight in Afghanistan? Or is Washington ready to get serious about competing with countries that lie and connive to steal American jobs?
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