News Releases

Murray on Senate Floor: "No More Illegal Subsidies for Airbus"

Jun 17 2009

As Paris Air Show continues, Murray discusses the thousands of American jobs at stake, importance of preserving strong domestic industrial base

LISTEN to floor speech | (Video available upon request)

(WASHINGTON, D.C.) – Today, U.S. Senator Patty Murray (D-WA) delivered a speech on the floor of the Senate demanding that European countries not give in to Airbus’ appeals for illegal, unfair, and trade distorting subsidies. Senator Murray also discussed the importance of preserving a strong domestic industrial base, as well as the thousands of American jobs at stake.

On Illegal Airbus Subsidies

“I am deeply troubled that Airbus is considering pursuing additional illegal, trade distorting subsidies that have caused adverse effects on the American aerospace industry at the same time the European Union is being sued in the World Trade Organization for such practices,” said Senator Murray. “Airbus is a mature company with more than half of the market for large commercial aircraft – but Europe is still treating the company with kid gloves…Launch aid for the A350 or any other form of preferential financing for Airbus is unacceptable.”

Senator Murray’s speech comes on the heels of news last week that Airbus is seeking approximately $5 billion in new illegal subsidies from four European governments to fund the development of the Airbus A350, which competes directly with the Boeing-made tanker. 

The subsidies provided to Airbus unfairly distort the international market for aerospace products, and the E.U. is currently facing lawsuits in the World Trade Organization for similar practices.  With reports indicating that the Airbus deal may be closed at the Paris Air Show on June 15-21, Senator Murray is asking that the E.U. demonstrate their commitment to fair trade with the United States by immediately ending discussion of the requested subsidies and blocking any further movement on them. 

Yesterday, Senator Murray sent a letter to European Union Commission Ambassador John Bruton expressing deep concern over reports that Airbus is seeking $5 billion in additional launch aid from four European Union countries, and urging an end to Airbus subsidies. 

On Preserving Strong Domestic Industrial Base 

“It’s time to have a real dialogue about the ramifications of these decisions before we lose the capability to provide our military with the tools and equipment they need,” said Senator Murray. “Because once our plants shut down, once our skilled workers move to other fields,  and once the infrastructure is gone – it can’t be rebuilt overnight…As a Senator from Washington state, representing five major military bases and many military contractors and suppliers, I am keenly aware of the important relationship between our military and the producers that keep them protected with the latest technological advances.” 

Senator Murray has been sounding the alarm about a declining domestic aerospace industry for years. Last month she worked to include a provision in the Defense Acquisitions Reform Act recently signed by the President that draws the attention of the Pentagon leadership to consider the effects of their decisions on our industrial base and its ability to meet our national security objectives.  

Senator Murray has questioned both Defense Secretary Gates as well as Air Force Secretary Donley on this issue, and pushed them hard to consider the domestic industrial base in their procurement decisions.

The full text of Senator Murray’s speech follows: 

“Mr. President I rise today to draw attention to an event going on across the Atlantic Ocean and how it impacts thousands of good-paying family wage jobs here in the U.S.

“Mr. President as some of my colleagues may know, the Paris Air Show kicked off yesterday.  The Air Show showcases many impressive displays of aviation, technology and innovation. 

“But there is something else that will be on display at this year’s Air Show: the fruits of some thirty-plus years of direct cash advances and illegal subsidies to the European aerospace company - Airbus. 

“For more than three decades, the European governments who created Airbus to specifically compete with the United States have aggressively funded, protected and promoted their venture.

“Since 1969, the European governments of France, Germany, Spain and the UK have supported Airbus’ commercial aircraft development with over $15 billion in launch aid – that’s high risk loans at no- or low-interest, with repayment contingent on the commercial success of the aircraft. 

“According to USTR, the amount of launch aid Airbus has received during the lifetime of the company -- if repaid on commercial terms – is well-over $100 billion dollars.  Such massive, market-distorting subsidies are today allowing Airbus to offer incentives for airlines to buy their planes.

“Mr. President, Airbus is a mature company with more than half of the market for large commercial aircraft – but Europe is still treating the company with kid gloves. 

“In fact, just last week Bloomberg news reported that Airbus is seeking approximately $5 billion in launch aid from the governments of France, Germany, Spain and the U.K. to fund the development of the Airbus A350.   And the reports indicate that the deal could be completed within the month.

“If we want to keep a strong aerospace industry in America, we can't let that happen.  Every time European governments underwrite Airbus with subsidies, American workers get pink slips.

“If we want to lead the world in commercial aerospace, our message to Europe must be strong and clear: No more illegal subsidies to prop up Airbus. Airbus must compete in the marketplace just like everyone else.

“Mr. President, I am deeply troubled that Airbus is considering pursuing additional illegal, trade distorting subsidies that have caused adverse effects on the American aerospace industry at the same time the European Union is being sued in the World Trade Organization for such practices.

“That’s why I am writing to Ambassador John Bruton urging the EU to show it is serious about pursuing fair trade practices with the United States by ending any discussion or movement forward with these subsidies.  The message sent by the U.S. government has been clear. 

“On April 11, 2005, the U.S. Senate unanimously passed Senate Concurrent Resolution 25.  That resolution called for European governments to reject launch aid for the A350.  Launch aid for the A350 or any other form of preferential financing for Airbus is unacceptable. We will not tolerate another round of subsidies that kill American jobs.

“Mr. President, in addition to the trade distorting subsidies being discussed in Paris this week, there are other distortions showing up in news accounts as well.

“Mr. President, several weeks ago I had the opportunity to question Air Force Secretary Michael Donley at a Defense Appropriations Subcommittee hearing about my concerns for the future of our domestic industrial base and how I believe the future capabilities of both our domestic work force and our military must be taken into account as we work to reform our procurement process.

“Secretary Donley agreed that the Pentagon has an interest in ensuring that our industrial base issues are taken into account.

“Well, Mr. President, that response has some of Airbus’ top executives upset and once again distorting the facts.

“In newspaper reports over the weekend, the Chief Executive of EADS – Airbus’ parent company – Louis Gallois- claims that if Airbus is selected to build the next generation of military refueling tankers that they would create more jobs than competition for the U.S. aerospace industry. That’s just a little bit hard to swallow.

“In fact, just one year ago – in June of 2008, the independent, nonpartisan Economic Policy Institute concluded that the now-overturned decision to award the tanker contract to Airbus would have actually cost the United States 14,000 jobs. 

“The truth is that Airbus doesn’t even have a plant in the U.S. and their well-documented plan is to build a tanker in Europe and ship sections to the U.S. to be assembled.

The Boeing tanker would be built in Everett, Washington and military capabilities would be added at the company’s defense plant in Wichita, Kansas.   Suppliers in states across America would be supported by this contract. A Boeing-made tanker is estimated to support and create twice as many American jobs as the Airbus plane.

“But, Mr. President, this isn’t just about jobs.  This is about the future of America’s domestic industrial strength.

“Mr. President, our government depends on our highly-skilled industries – our manufacturers, engineers, researchers and our development and science base to keep the U.S. military stocked with the best and most advanced tools and equipment available.

“Whether its scientists designing the next generation of military satellites, engineers improving our radar systems or machinists assembling our warplanes - these industries and their workers are one of our greatest strategic assets.

“But what if they weren’t available? 

“What if we made budgetary and policy decisions without taking the future needs of our domestic workforce into account?

“It’s not impossible. It’s not unthinkable. It’s happening. And it’s time to have a real dialogue about the ramifications of these decisions before we lose the capability to provide our military with the tools and equipment they need. 

“Because once our plants shut down, once our skilled workers move to other fields, and once the infrastructure is gone – it can’t be rebuilt overnight.

“Mr. President, as a Senator from Washington state, representing 5 major military bases and many military contractors and suppliers, I am keenly aware of the important relationship between our military and the producers that keep them protected with the latest technological advances. 

“I have also seen the ramifications of the Pentagon’s decisions on communities, workers and families.   And, as many of my colleagues know, I have been sounding the alarm about a declining domestic aerospace industry for years.

“The American aerospace industry has taken hits from the economic climate, but it is also being undermined by unfair trade practices and illegal subsidies, of the type that are being discussed this week in France.

“But this isn’t just about one company, one state or one industry.  This is about our nation’s: economic stability, skill base and future military capability.

“We’ve watched as the domestic base has shrunk, as competition has disappeared and as our military has looked overseas for the products we have the capability to produce from scratch – not just assemble – here at home.

“Last month I worked with my colleagues in the Senate to include a provision in the Defense Acquisitions Reform Act recently signed by the President.  My provision draws the attention of the Pentagon leadership to consider the effects of their decisions on our industrial base and its ability to meet our national security objectives. 

 “These decisions should not be made in a vacuum without regard to the long term capabilities of our industrial base and the workers who are its backbone.

“Last weekend EADS head Louis Gallois said – quote:

‘We will see at the end of the day who is creating more jobs.  We are starting from scratch in Alabama.  We have to create an industrial base.’

“Mr. President, America has a highly skilled aerospace industrial base. It took us a long time to build it. We have machinists who have passed experience and know-how down the ranks for 50 years.   

“We have engineers who know our mission and the needs of our soldiers, sailors, airmen and marines. And they have a reputation for delivering for our military. 

“Mr. President I believe that we need to move forward with a fair and transparent rebid of the tanker contract. The comments and actions coming out of France this week have been anything but.

“But this isn’t just about one contract. This is about our nation’s economic stability, our military capability and ensuring that our workers are a consideration in the decisions we are making on major defense contracts.

“It took us a long time to build our industrial base.  And it’s built on the best America has to offer our innovative spirit, our dedication to country, and most importantly our nation’s workers. We must work to preserve it and stand up against unfair and illegal trade practices – like the ones being talked about at the Paris Air Show this week.  

“Mr. President, we are in the middle of a recession.   And we are engaged in wars abroad.  These are two separate – but not unrelated challenges.  We have the ability – here in America - to provide our military with the equipment to defend our nation and project our might worldwide.

“But I fear that unless we stand up for our industrial base today, we stand to lose the backbone of our military might, some of our best paying American jobs, and our economic strength in the future.

“Mr. President, it is time to take this stand and stand up for our military and our workers.  It is critical to preserving America’s future strength.”