U.S. House panel moves to shield Boeing from EADS

Just posting the article I found at reuters.com:

U.S. House panel moves to shield Boeing from EADS
Fri May 20, 2005 05:56 PM ET
By Jim Wolf
WASHINGTON (Reuters) – The House of Representatives’ Armed Services Committee said on Friday it had voted in effect to shield Boeing Co. from competition from Europe’s largest defense contractor for a projected $50 billion U.S. aerial-refueling aircraft market.

The panel neither singled out nor named EADS, which wants to offer a tanker version of its Airbus A330 to the U.S. Air Force.

Instead, it voted to bar the acquisition of a major weapons system from any foreign company that gets what the United States has protested as a government subsidy barred by the World Trade Organization, said spokesman, Josh Holly.

“This provision is included in the bill as voted out of the committee,” he said.

Chicago-based Boeing stands ready to compete for a tanker contract “under whatever terms the Department of Defense and the Air Force define,” said Douglas Kennett, a company spokesman.

A spokesman for EADS’ North America unit, Guy Hicks, said, “This is a government-to-government issue and needs to be resolved at that level.”

“EADS North America is committed to contributing to the nation’s defense and will continue to invest in the U.S. to meet that objective,” he said.

Last year, the United States filed a WTO case challenging French, German, British and Spanish government loans to Airbus for the development of new aircraft. Airbus overtook Boeing in 2003 as the world’s largest supplier of commercial aircraft.

The measure that would shield Boeing was part of the fiscal 2006 Defense Authorization bill adopted by the panel on Thursday. Approved 61-1, the $441.6 billion bill is expected to be considered on the House floor next week. The Senate version does not contain such a provision.

A 28-page press release highlighting key provisions omitted the “Prohibition on Procurement from Beneficiaries of Foreign Subsidies,” an amendment offered by the panel’s chairman, Duncan Hunter, a California Republican. The provision was first reported by Congressional Quarterly.

Last year, Congress killed a $23.5 billion Air Force plan to lease and buy 100 Boeing aircraft to start phasing out aging KC-135 mid-air refuelers after a procurement scandal.

Since then, Pentagon leaders have said they would hold a competition for any tanker purchases. The Air Force is studying whether to upgrade or replace its fleet of more than 530 tankers. The competition has been expected to start next year.

Hunter, a long-time proponent of so-called “Buy America” legislation, seems to have found a way to express his concerns about foreign dependency “that will resonate across the political spectrum,” said Loren Thompson of the Lexington Institute, an Arlington, Virginia, research group with close ties to the Pentagon and defense contractors.

“The political system is waiting for an excuse to go after Airbus,” he said.

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