In the speech, Murray discussed the progress that's been made in the past several months to end huge European subsidies, her work with senior U.S. officials to advance talks with the European leadership, and her view on the retorts to U.S. complaints offered by some European officials.
With the talks underway, Murray called on the Europeans to address the serious issues raised by American negotiators or risk going down a path toward increased tension on both sides of the Atlantic.
Murray Responds to Hollow, Baseless Rhetoric from Europeans
EU officials said recently that Airbus will give up its subsidies if Boeing gives up subsidies as well. Today, Murray set the record straight.
- There's a big difference between the tax incentives that Washington state offered to Boeing and the launch aid - the direct cash payments from European governments to Airbus.
- Airbus never complained when they got similar tax incentives from Mississippi.
- Beyond launch aid Airbus also gets research subsidies, supplier subsidies and facility subsides.
- Both Boeing and Airbus are large defense contactors deriving similar benefits from defense work.
Murray Tells Europeans They Better Start Taking the Talks Seriously
Airbus and the Europeans seem to think America and its negotiators aren't serious about moving forward with this process. Today, Murray warned the Europeans that they need to come to the table and negotiate in good faith.
- Europe must address the issues or else they are choosing to go down a path that will increase tension on both sides of the ocean. If they choose to simply play games, point fingers and stall until after November, they will find themselves with some big problems at the WTO or under U.S. domestic law.
- The Europeans may think that our concerns are just political games. And on top of that, they think this is just a political game that's going to end November 2nd.
- This is not politics, and this is not going away. Unless the EU takes this seriously and stops Airbus subsidies, they'll face a trade case at the WTO or a dumping case under U.S. law.
Murray Renews Call for Action by Congress, Administration
- Withdraw from the 1992 US-EU Bilateral Agreement on Trade in Civil Aircraft. Today, Murray said that upon further review, she believes we do not need to give a year's notice because of the way in which Europe has blatantly violated it.
- Pass Murray legislation to create a Senate Select Committee on Aerospace to focus attention on the future of this industry.
- Agree to Murray proposal to address the ongoing discussion of Buy America laws and TransAtlantic trade in the defense market.
- Adopt many of the recommendations put forward two years ago by the Commission on the Future of the U.S. Aerospace industry.
More on Aerospace
Remarks by Senator Patty Murray to the Boeing Global Suppliers Conference
Washington Hilton Hotel Washington, DC
September 16, 2004
I'm here this morning because like you I care about what happens to the aerospace industry.
And I want the same things that you want:
- a growing global aerospace industry - that hires more people - and thrives on new technologies
But today, all of that is threatened. That's because aerospace tensions are growing between the United States and Europe.
Today, I want to show you how a trade dispute between the U.S. and Europe could affect you as suppliers. I want you to understand what's really going on behind the scenes. I should point out that our discussion this morning is especially timely. That's because -- as we meet here in Washington, D.C. -- trade negotiators from the U.S. and Europe are meeting in Brussels to discuss this same challenge.
We are at a crossroads in aerospace trade, and Europe will decide which path we take. One road leads to fair competition, growing trade, and good things for suppliers. The other road - however - leads to increased trade tension and uncertainty that will hurt your business.
So as European trade reps sit down at the table in Brussels today, they have an important choice to make.
We can move past this dispute and move toward a healthy, competitive industry. But if Europe is not serious - if European governments continue to directly subsidize Airbus with launch aid - we will face growing trade tensions.
The U.S. may be forced to file a complaint with the World Trade Organization. The U.S. could also seek to hold Europe accountable through our domestic anti-dumping and anti-subsidy laws. Either way, if Europe does not stop its direct subsidies to Airbus, the short term outlook for the aerospace industry gets real complicated, real quick.
In the past 15 years, the U.S. has lost 700,000 aerospace jobs. Workers in my state - and states throughout the country - have been forced onto the unemployment line because of Europe's unfair actions.
The bottom line is this: Airbus is a mature company, and it must stop getting direct subsidies from Europe governments. Those subsidies kill American jobs and threaten the future of our aerospace industry. Now is the time to address subsidies and the many other trade distorting tactics used by Airbus and its European state sponsors to undermine American industry and workers.
Before I go into detail, I recognize that many of you don't know me, so I'd like to say a few words about my background, and my interest in commercial aerospace. I was born and raised in Seattle, Washington - so like most of my neighbors - the airplane industry is in my bones. It has contributed greatly to the state I love - supporting 50,000 jobs at Boeing and at least another 125,000 jobs that are related to Boeing.
We also have more than 1,000 Boeing suppliers in Washington state - big companies like Honeywell and Crane Aerospace and smaller companies like Insitu and Nu Element.
I know we have some Washington state suppliers here today, and I want to welcome you.
So I've been working on this for a long time. I've tried to get our government to fight for Boeing and our aerospace industry for a long time.
I've drawn attention to Airbus' PR campaign to get members of Congress to see this foreign company as an American company.
I've exposed Airbus' false claims about their impact on America's economy. They even lied about the number of suppliers Airbus works with in the United States.
I am fighting Airbus' campaign to unravel the Air Force lease of Boeing refueling tankers. Airbus wants desperately to build these tankers in Europe.
And I have made several proposals, including the creation of an aerospace commission, revision of our "Buy America" laws, and indicating our intent to withdraw from the 1992 civil aircraft agreement.
The good news is that the debate I been calling for is now fully under way. The trade distorting direct subsidies to Airbus are now front and center before the U.S. government and the world trade community. Our U.S. Trade Representative, Ambassador Robert Zoellick, is doing an excellent job of understanding the challenge and conveying America's commitment to ending Airbus subsidies.
He understands, as I do, what Europe has been doing and why it must end. The truth is Europe has aggressively distorted the global commercial marketplace for commercial aircraft for years. This behavior must end.
Europe and Airbus team together to distort aerospace and particularly commercial aircraft trade in two important ways -- first in the development of aircraft and second in the sale of aircraft.
On the development side, European governments give Airbus huge direct subsidies to build new airplanes. These subsides take the form of launch aid, supplier subsidies, R&D subsidies, and facilities subsidies.
These subsidies create an uneven playing field and allow Airbus to do things that normal, private companies can't afford to do. I know all of you make expensive and risky investments in new products.
Wouldn't it be nice to be able to develop new products risk-free? That would be a great deal for you as suppliers. Any company in America would love to have that power.
But imagine how hard it would be to compete against a competitor who risks nothing to compete in the marketplace?
Imagine how hard it would be for you to beat a competitor who could develop new products without any risk. It would be tough - and that's what Boeing faces everyday.
One company - Boeing - is playing by traditional business norms - borrowing money at commercial rates, being responsible to shareholders, and knowing that if they don't make a profit, they're in trouble. That's why Boeing "bets the company" on every new plane they develop. But its biggest competitor -- Airbus - enjoys virtually risk-free product development, and it operates far outside the bounds of fair competition. All of this comes at the expense of U.S. companies and American workers.
But it doesn't end there. When it comes time to sell planes, Airbus again can do things that normal companies cannot.
For example, when Airbus goes to sell a plane, they offer steep discounts - sometimes far below the cost of production. They can sell their planes below cost because they get subsidies that other competitors don't get. When Boeing walks away from a sales competition because it won't match Airbus' below the cost of production price, Boeing suppliers and American workers lose out.
Airbus is not above using bribes and corruption to get foreign governments to buy airplanes. In 2003, the Economist magazine ran a story titled, "Airbus' secret past - Aircraft and bribery." The article details Airbus sales campaigns in India, Syria, Canada, Saudi Arabia and Kuwait that all involved corruption and bribes.
And it gets more outrageous.
Up until a few years ago, Airbus was allowed by French law to take a tax deduction for bribes. Again - Airbus is operating far outside the normal boundaries of fair competition.
Let me give you a few other public examples of the tricks Airbus uses to sell airplanes.
European governments offer landing rights at airports to airlines that buy planes from Airbus. That is something that only Airbus can offer. European governments also threaten other countries with trade retaliation unless they buy Airbus airplanes.
Today, there is no such thing as real competition in the sale of large commercial aircraft because whatever American companies do - Airbus and other European companies always have another card to play, another inducement to offer, another trick up their sleeves because of the vast support they get from European governments.
Finally, for the first time, I feel like the United States is responding to Europe.
Today in Brussels, U.S. and European trade negotiators are sitting down at the table to talk about Airbus subsidies.
Last week, I meet with our negotiators, and I know the seriousness that the United States places on today's talks. We want to work with the Europeans to ensure aerospace trade goes forward in a manner where global competitors fight for business on price, technology and productivity rather than through politicians and governments.
I hope that Europe takes this opportunity seriously, but frankly I'm not encouraged by what I've seen so far.
I've seen the recent quotes from EU officials. We're seeing the same old European approach - pointing fingers and playing games. The CEO of Airbus' parent company actually said the Boeing subsidies are the issue, that Airbus doesn't receive any subsidies. This is foolish rhetoric that indicates Airbus and Europe are not serious about tensions in aerospace trade.
Empty rhetoric that seeks to confuse the issue, deny the problem or delay the dispute will only bring uncertainty to the global aerospace industry from Boeing to Airbus, to every supplier they work with, to every worker in the industry.
There's a big difference between the tax incentives that Washington state offered to Boeing and the launch aid or the direct cash payments from European governments to Airbus. Boeing has never received a cash advance to build a new plane.
Airbus already receives numerous local inducements like the Washington state package for the 7E7.
Airbus didn't mind when they got similar tax incentives from Mississippi for a facility that employs a few Americans to finish European manufactured helicopters.
And while there's a big difference between Airbus' $15 billion cash advance to build new planes and the Washington state 7E7 package, there is no difference between Boeing and Airbus on the issue of defense subsidies. This is more empty rhetoric from Airbus.
The truth is both Airbus and Boeing are major defense contractors. In fact, Airbus actually states that it does more defense business than Boeing. The fact is Airbus and its two parent companies - EADS and BAE - do virtually the same amounts of defense work. Yet, somehow according to Airbus, only Boeing derives any benefit from this work. Airbus defense subsidy charge is preposterously untrue and ignores Airbus's status as a major defense contractor.
But the larger point is that Europe is making false claims instead of taking these talks seriously. The Airbus rhetoric makes nice copy in the newspapers, but it will not avert a trade dispute that will have serious ramifications for the global supplier community.
Europe must address the issues or else they are choosing to go down a path that will increase tension on both sides of the Atlantic. If they choose to play games, point fingers and stall, the current tensions will escalate.
The Europeans may think this is just a political game that's going to end November 2nd. Well I've got news for them. This is not a political issue. This is not about Democratic jobs or Republican jobs. This is not about campaigns in our country, but rather Europe's successful campaign to buy, bribe, and cajole global leadership in aerospace.
My message to Europe is simple: This is not a game. This is not politics, and this is not going away.
I understand this is the last thing the global supplier community wants to hear.
Which brings me to the final section my speech - what you can do.
Many of you are on the front lines of competition in aerospace - whether you are a Boeing supplier, an Airbus supplier or both. You have a lot to lose if Europe pushes us to a costly trade dispute.
Because you have so much at stake, I want to encourage you to help us create and sustain a truly competitive global aerospace market. There are a couple things you can do when you leave this conference and go home to your business.
First, reject Airbus' campaign to manipulate suppliers into pressuring the Boeing Company and the United States to back off. I think you all want to see two successful manufacturers of large commercial aircraft. We're in danger of losing that, and if we do, more and more supplier work will be done in Europe. Already, Airbus is under tremendous pressure to create and sustain jobs at home. The intolerable status quo in aircraft trade hurts Boeing a great deal and it ultimately hurts all of Boeing's suppliers.
Second, join me in sending a message to Europe today and as the issue moves forward. The message from suppliers to Europe should be - fix this issue before things get worse. That's the message that will bring more business and more certainty to you as run your business, seek to create new jobs, and contribute to your communities.
Tell Europe that if they allow this to go forward, it will wreak havoc on the supplier base.
None of us want a trade conflict - and as the global supplier community you have a voice in what Europe and Airbus do.
I want to again thank you all for coming to Washington, D.C. And, I apologize for not being able to stay longer this morning. I have about 45 minutes to catch -- one of the most successful commercial products ever marketed by an American company, a product that has created and sustained thousands of jobs throughout the country, and a product that remains at the forefront of technology.
Of course, I am talking about a Boeing 737.
I have an event with the Secretary of Transportation later today in Seattle and I've got to run. Thank you all and enjoy the conference.