What does it tell you about a company’s culture when its representatives repeatedly mislead the public about a matter material to its future business prospects? Does it indicate they are a worthy partner or supplier? Does it suggest they will bargain in good faith in disputes where deception and subterfuge might gain them a competitive advantage? Maybe it’s time for members of Congress to start asking themselves such questions about the European commercial-transport company Airbus, which last week issued its latest barrage of misleading statements concerning what recent World Trade Organization (WTO) rulings have revealed about its business practices.
The occasion for this latest episode of misinformation was a WTO ruling confirming that competitor Boeing has received about $3 billion in improper subsidies from the U.S. government, giving it in an unfair advantage in competing with Airbus to sell airliners. You’d think Airbus would have been content to simply say, “We won.” Instead, what company executive Rainer Ohler told the Financial Times was that, “Comparing the core claims made by both sides, the net outcome is clear: Boeing’s cash grants are fundamentally illegal, while the system of loans to Airbus by European governments is legal and may continue.”
That is how Airbus describes a series of World Trade Organization rulings that found none of the company’s planes would have been developed without prohibited government subsidies; that said subsidies have enabled the company to steal market share from Boeing and other U.S. companies worth hundreds of billions of dollars; and that as a result, many thousands of U.S. workers at big and small companies alike have lost their jobs. Boeing says it will comply with the WTO ruling against it, no doubt recognizing that $3 billion in subsidies over a multi-decade period had little bearing on its performance as a business. Airbus, on the other hand, asserts it has done nothing wrong when in fact the trade body’s rulings state the company has systematically victimized American companies and their workers.
The problem here isn’t just that Airbus received illegal trade subsidies many times larger than Boeing’s rather paltry violations. The bigger issue is that Airbus won’t admit the truth about its business strategy, because it knows without subsidies it would not be able to compete against the U.S. company. The entire history of the Airbus enterprise is one big market distortion, a story that never could have unfolded if European governments had stuck to a common-sense definition of what free trade means. Nobody should be surprised when the Obama Administration or its successor finally levies severe trade sanctions against Europe for the harm it has caused to America. The howling you hear from Airbus on that occasion will be the sound of a perennial offender finally being brought to justice.
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