(WASHINGTON, D.C.) – U.S. Senators Patty Murray and Maria Cantwell today spoke on the Senate floor on a resolution that calls on European governments to reject launch aid for Airbus and supports the President’s authority to take any action necessary to protect American aerospace jobs. The Senate passed the resolution by a vote of 96-0. The senators introduced the resolution based on the need to level the playing field for fair global aerospace competition.
Despite Airbus’ status as the current leading manufacturer of large civil aircraft with more than fifty percent of the market share, the company continues to receive market distorting subsidies and engage in unfair trade practices which are undermining the U.S. aerospace industry and American jobs.
“In Washington state, we know how important the American aerospace industry is to our economy and our communities – we know that these jobs are worth fighting for,” Senator Murray said. “I am proud to support this Senate resolution to send the message that the United States is going to take aggressive action to level the playing field for our industry and our workers.”
“The United States cannot stand by while the EU stalls discussions about launch aid. Our domestic companies should not have to compete against the backing of European governments, against the deep pockets of governments that distort the global marketplace. Obviously, launch aid puts our domestic manufacturers at an unfair competitive disadvantage. What we want to see in aerospace is competition that drives opportunities for the consumers,” Senator Cantwell said.
Today marked the end of a three month negotiation period between U.S. and European officials who are working to solve the recent trade dispute and avoid proceedings through the World Trade Organization. Those talks have produced no real progress to date.
Senator Murray Remarks on the U.S. – EU Aerospace Negotiations, Senate Fair Aerospace Competition Resolution
Mr. President, I rise today to join my colleagues in support of the Fair Aerospace Competition Resolution, Senate Concurrent Resolution 25. Thousands of American aerospace workers have lost their jobs in the past decade. That trend will continue unless we take action.
I would especially like to thank leaders on both sides of the aisle – Senator Frist and Senator Reid – for their help and support of this measure.
Senators Grassley and Baucus of the Finance Committee have also been of great help. And as always, I’m proud to serve with Senator Maria Cantwell, my colleague from Washington state and another strong advocate for America’s aerospace workers.
Our country invented the aerospace industry 100 years ago. Through it, American workers have done more than feed their families and pay the mortgage. They’ve made air travel safer and brought economic growth and innovation to every corner of our economy.
Mr. President, many in this body have heard me talk for years about Europe’s efforts to distort the commercial aerospace industry. In short, Airbus has done everything it can to kill our aerospace industry. Airbus has received billions in illegal launch aid. Airbus has tried to play tricks on this side of the ocean with their slick PR campaign. And Airbus will continue the unfair tactics until they completely dominate the global aerospace market.
And while Airbus is doing all these things to hurt American workers – it’s actually trying to get us to think they are a friend to the very men and women they’re putting out of work.
Unfortunately, EADS, Airbus and European governments will do and say anything to dominate the global aerospace market. I’m here today to call their bluff and show this body – once again – that Airbus is no friend of the United States or our workers, and to ensure that their double talk is exposed for all to see.
I’ve worked closely with several U.S. Trade Representatives on this over the years.
For the past few months, the U.S. has tried to negotiate with the Europeans, but it’s clear that the Europeans don’t take our concerns seriously. Those discussions appear to have broken down and the Europeans are threatening a radical escalation if we pursue our right to file a WTO case.
You would think that after all Airbus has done to kill American jobs, they would at least make a good-faith effort now that we’re finally calling them to account for their behavior. But the Airbus and European leaders have done just the opposite. They’ve pounded their chests about how their latest, subsidized plane will dominate the industry.
Instead of coming clean — or at least stopping their trade-distorting behavior – Airbus has sought to influence public opinion. They’ve pursued a deceptive public relations campaign. They’ve taken out ads in Capitol Hill publications and major newspapers around the country.
Airbus claims to be a friend of American workers – but it’s selling to America’s sworn enemies. Airbus claims to support hundreds of thousands of American jobs, but they can’t document them. And Airbus claims it wants to be a more American company, but then turns and preaches European domination when they think we’re not looking.
We need to stand up to this unfair competition and send a strong signal to the Europeans that this Congress and this country will NOT allow a European subsidized company destroy America’s aerospace industry.
They can talk out of both sides of their mouth all they want – I’m here to lay the facts on the table and stand up for our workers.
Context on the Breakdown of Talks
Mr. President, I applaud the Bush Administration and specifically Ambassador Robert Zoellick for the continued work to end unfair trade practices in the aerospace industry. The Administration entered into negotiations in a good faith effort to restore balance and fairness to the commercial aircraft trade.
Unfortunately, Europe has never taken these talks or this issue seriously. Our willingness to seek a negotiated settlement has been greeted by more arrogant entitlement from Airbus and its European backers. While publicly committed to negotiations, Airbus and European leaders have been working behind the scenes to continue subsidies to Airbus in spite of U.S. threats to file a WTO case.
Now, European Commission Ambassador John Bruton is saying that, "…one result of a case would be that maximum aid would be given" for Airbus’ new A350.
Today, this campaign is more directly in Congress’ line of sight than ever. I hope to clearly show that Airbus is not an American company, and that Airbus is simply continuing its policy of saying and doing anything to get what it wants.
American Press
On April 1st, European Union trade commissioner Peter Mandelson wrote an eye-popping piece in the Washington Post. He once again restated baseless accusations against Boeing in an effort to justify billions of dollars in illegal Airbus launch aid.
The issue Mandelson correctly identifies as central to American concerns is the massive subsidies in the form of launch aid, landing rights and other giveaways that European governments give to Airbus. Now, the Europeans would like you to think that we offer similar subsidies to Boeing — but the facts simply don’t line up. I don’t need to talk at great length – again – about the subsidies. But I do think it’s worthwhile to make all of you understand what those subsidies actually do.
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. They develop new products without any risk.
One American company 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" when they develop a new plane. 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.
What does that mean in real terms? Let’s take the new Super-jumbo Airbus A380 as an example. According to a January 20th article in the Financial Post titled "The Airsub 380," A380 subsidies are officially $4.3 billion. Other estimates put it far over $6 billion.
The same day, the Independent newspaper said, — — “To break-even on its own investment, Airbus needs to sell 250 of the A380. To repay the four governments it needs to shift to 700. To count as a real commercial success, Airbus needs to sell twice that number. So far it has firm orders for 149.”
It’s no wonder that last summer respected industry analyst Richard Aboulafia of the Teal Group called the plane a "bloated airborne welfare queen."
No other company in the world would be able to handle such huge cost overruns. But Airbus can, because if the plane fails they’ll simply write off the costs and move on to the next one.
To make matters worse, they’ve been making outlandish claims in this country for years. First, they claim Airbus has created and supports 120,000 jobs in this country — the Commerce Department can only document 500.
Airbus says it subcontracts with as many as 800 firms in the U.S., though they’ve moved that number up and down over the years. The Commerce Department can only come up with 250.
Just this past week the Commerce Department released an exhaustive study – done at the request of this Congress – on the U.S. Jet Transport Industry. This 150 page report once again comes to the same conclusion we’ve heard time and again – Airbus is not an American company, and Airbus does almost nothing to support the hundreds of thousands of American workers who depend on this important industry.
Mr. President, Airbus and EADS are not helping America’s aerospace industry. They are destroying it. In 15 years, 700,000 American workers have lost their jobs while Europe keeps adding new workers to the EADS and Airbus payroll. That’s simply unacceptable.
European Press
Looking at their claims in American press alone, Airbus appears to be a pseudo-American company looking to create more jobs and help to grow our economy.
Of course, that’s not the real story. Just take a look at what Airbus’s proprietors say in Europe, when they think we’re not looking.
A few months ago, with much pomp and circumstance, the latest European subsidized Airbus product – the A380 — was unveiled with four heads of state. Their comments show Europe’s true intentions.
From the Spanish Prime Minister:
“The European Union has built the plane that is the standard bearer for European and global aeronautics,” Spain’s Jose Luis Rodriquez Zapetero said. He went on to boast, “What we see here today is Europe cannot be stopped.
” From the French President:
“It is a technological feat and a great European success,” Jacque Chirac said. “When it takes to the skies it will carry the colors of our continent, and our technological ambitions to even great heights.”
From the British Prime Minister:
“It is European cooperation at its best,” said Tony Blair. “Airbus demonstrates that we can achieve more together in Europe that we ever can alone.”
And finally the German Chancellor, when asked about subsidies to Airbus, said:
"We have done that in the past, we are doing it now, and we will do so in the future." This doesn’t sound like a company bent of doing anything for the American worker. But again, this is Airbus and its supporters saying and doing anything to get what they want.
Outside the US/Europe
Unfortunately, the examples only continue. I didn’t have to look any further than the NBC Nightly News to find yet another shocking attack on American values and workers. For years Airbus has said anything to get a deal. Apparently they’ll also sell to anyone. Not long ago, NBC News uncovered direct evidence of Airbus’ efforts to sell military aircraft to…
- a country focused on destabilizing and undermining American interests in the Middle East,
- a country currently in pursuit of nuclear weapons,
- a country no real American company would dare sell weapons to.
NBC News was able to get a camera crew into an air show in Kish, Iran, and they found EADS pitching their military helicopters to Iran. I’ll ask that the full transcript of this NBC story appear in the record, but I’d also like to read just a bit from the piece:
Also exhibiting at the show — European Aeronautic Defence and Space Company (EADS) and its subsidiary Eurocopter — which has launched a campaign in the United States to get a bigger share of Pentagon contracts, featuring ads that wrap the company in the American flag.
But if the company is so pro-American, why is it ignoring U.S. policy to isolate Iran?
"As a European company, we’re not supposed to take into account embargoes from the U.S.," says Michel Tripier, with EADS.
Once again, saying and doing anything, anywhere, to advance the European interests of this European company. Airbus and EADS clearly sing one tune in newspapers in the US, another at media events in France, and quite a different one while selling their products in Iran. But taken together, the goal is clear – EADS and Airbus do not intend to stop until they’ve gobbled up the entire aerospace market.
What’s Next for Airbus
So what’s next for Airbus?
Any question of their intentions was answered as we tried to work out an amicable solution to the dispute this past January. On a day that could have been a turning point in the process Airbus CEO Noel Forgeard said he would seek new launch aid from European nations for the Airbus A350.
While in one breath Airbus says that it does not need launch aid to build the A350, they have nevertheless applied for, and European governments are prepared to provide, $1.7 billion in new launch aid.
To once again paraphrase German Chancellor Schroeder: They have done that in the past, they are doing it now, and they will do so in the future.
But again, no need to take my word alone on the illegality of the launch aid or their central role in the ongoing dispute. The Financial Times – a European newspaper — called the plan to subsidize the A350 and Forgeard’s announcement "unwise" and "deeply unhelpful."
They went on to say that, "launch aid, Airbus’s unique subsidy, is an especially blatant violation of the principles of fair competition. The EU should let it go. State support for private companies, even those with long lead times and big development costs, becomes indefensible as they mature. Infant industries must grow up."
In a Business Week commentary from the same week, Stanley Holmes writes that, "The U.S. should call the Europeans’ bluff, let the facts speak for themselves, and resolve this dispute at the WTO."
Months ago I made the same suggestion. And although there appeared to be hope of avoiding that fate within the past few weeks, I now believe we must work through the WTO and hold our line.
Conclusion
With the Europeans bent on keeping their subsidies it is time to take bold action to protect our workers and send a strong message to Europe that enough is enough. Europe must understand that continued attempts to undermine our aerospace industry and its workers will not stand.
The need to restore a competitive balance to the aerospace industry is not going away. Thousands of American jobs have been lost in the last decade and thousands more are at risk due to continued direct subsidies to Airbus.
I will continue to work closely with the USTR and the Bush Administration to protect American jobs and ensure the future strength of the American aerospace industry. Whether through the continuation of these negotiations or through a trade case at the World Trade Organization, a competitive balance must be restored. And we in Congress must show the Europeans that we’re serious about this action. Supporting this measure is an important step in that direction, and I urge my colleagues to vote yes.
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