For all the spin back-and-forth Monday (Jan. 31) on the final, but still confidential, ruling on illegal subsidies to Boeing, little was said about the long-running (and overly-politicized) effort by Boeing and its supporters to have Congress force the USAF to take into consideration the previous WTO ruling on illegal Airbus subsidies for the KC-X competition.
Before we start our discussion today, let’s remind readers of our long-standing position that the USAF can’t do so for a variety of practical reasons and one major one: countries can only do so after the WTO authorizes sanctions, and unless the USAF postpones a decision on the tanker contract (or, more likely, screws it up yet again), the award date will come years before any WTO authorization is granted. We need not recount all our reasons nor the process; we’ve done this many times and a search of our Archives will yield postings from recent times on this.
Having stated this disclaimer, one of our reasons for opposing the effort by Boeing and its supporters was that the final Boeing decision had not yet been issued.
The decision is done, even if it is yet confidential for a few more months pending translation. However, with a final decision, the US Trade Representative could share a definitive ruling with the USAF for calculation.
Again, setting aside all the objections, here’s the interesting part that nobody has yet focused on, including Boeing (and this is really inexplicable):
- Alleged subsidies for the Boeing 767, on which Boeing’s KC-767 is based, were not part of the EU’s complaint against Boeing and therefore there is no valuation to assess against the Boeing tanker;
- Airbus claims the true subsidy valuation for the A330-200, on which the EADS KC-45 is based, is $54m, not the $5bn claimed by Boeing and its supporters. Just as the absence of hammering home Point #1 is inexplicable, so is Airbus hammering home Point #2.
For all the coverage we’ve given the subsidy issue on tankers, we don’t remember Boeing or its supporters discussing Point #1. We do now recall being briefed previously by Airbus on Point #2 but in the absence of repetitive messaging by Airbus, we forgot about it while Boeing has been extremely effective in touting the $5bn figure. But this figure is not in the Airbus WTO report.
There have been, through December 2010, 1,104 A330s orders. If $54m in illegal subsidies is all that is identified in the Airbus WTO report, this amounts to a mere $48,913 per airplane. If true, let USAF figure this in–who cares?
And Boeing gets $0.00 figured in because the alleged illegal subsidies for the 767 predate the period covered by the WTO-Boeing case.
The underlying questions are: Why hasn’t Boeing touted the 767’s status and why hasn’t Airbus and EADS (1) undertaken an aggressive campaign to set the record straight (as they see it) and (2) if all we’re talking about here is $48,913 per airplane, concede the assessment and move on.
Once more, this underscores the entire silliness of the WTO complaints with respect to the tanker issue.
And, of course, our readers know well that we think the WTO itself is meaningless; it has no enforcement powers and any sanctions ultimately authorized don’t have to be placed on the offending products or industrial sector–they may be placed on entirely unrelated industries. And this, more than anything else, is why we have disdain for the World Trade Organization.