[updated:LAST EDITED ON 31-07-02 AT 04:19 PM (GMT)]US to cut miliatary aid to Taiwan if China Airlines gets 330
From This week’s (July 30-August 5, 2002) Flight International…
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Washington threatens to cut military aid to Taiwan after Airbus undercuts Boeing 777 offer by more than USD$400 million
A major political row between the USA and Taiwan is brewing after China Airlines (CAL) selected the Airbus A330 for a planned 16-aircraft order, rejecting an offer of 777s from Boeing. The airline is preparing to submit the results of its evaluation to the Taiwanese government, its majority owner, for approval.
CAL officially says the bids are “still under evaluation”, but industry sources say the internal selection has been made and a memorandum of understanding is likely to be signed with Airbus within the next two weeks. The carrier picked the A330 primarily because Airbus undercut its US competitor by more than $400 million, say industry sources.
Although some senior managers at CAL favour the 777 on technical and operational grounds, Boeing was unable to present a competitive bid because the airline insisted the manufacturer buy back its six A340-300s as part of any deal, the sources add. The buy-back was required because the carrier is trying to cut costs by reducing the number of aircraft types in its fleet.
If CAL gets a green light from Taipei it is expected to order 16 aircraft – a mix of A330-300s and smaller, longer-range -200s – and take options on six more. The A340-300s, which have commonality with the A330, will be retained. General Electric, Pratt & Whitney and Rolls-Royce are bracing themselves for what is likely to be a bruising battle for the engine business.
Washington has launched a rearguard action to overturn the Airbus selection, warning it may be forced to look at the cost of providing military assistance to help deter China, which considers Taiwan a renegade province. CAL’s selection of the A340 in 1999 caused a political storm, despite the fact Boeing simultaneously won orders for 13 747-400Fs and five 737-800s.
The American Institute in Taiwan, the de facto US embassy in Taipei, says: “We hope that Boeing will get fair treatment by CAL. We have raised our concerns with CAL, the ministry of transport and senior government officials. We expect that, before a decision is made, Boeing will be given an opportunity to put its case.”
By: yago - 7th August 2002 at 05:49
RE: US to cut miliatary aid to Taiwan if China Airlines gets 330
I am not anti-US but US government politics is sometime very insulting for the rest of the world. That’s all.
If tomorrow Europe adopts the same politics, the US govt will be the first to complain.
And I don’t think European countries have socialist or communist politics. Well, in fact none of them.
By: keltic - 5th August 2002 at 17:16
RE: US to cut miliatary aid to Taiwan if China Airlines gets 330
well guys, why do you get so surprised?. Typical protecionist measure of the Bush administration (and others) the same happened in Israel when Ms Albright called “anoyed” when El Al was considering the adquisition of Airbus. I wonder why in the seventies, sixties and before Boeing and Mc Donell Douglas, got most of the world orders ahead the British or French industry…simply political preasure.
By: mongu - 5th August 2002 at 12:27
RE: US to cut miliatary aid to Taiwan if China Airlines gets 330
Fair enough GD.
The only problem is that there is no business perspective; it is more to do with national pride, from what I can see.
All countries try to do that though!
By: greekdude1 - 4th August 2002 at 23:27
RE: US to cut miliatary aid to Taiwan if China Airlines gets 330
As controversial as I often come across, I respect what both of you have to say. You both make logical arguments, and I respect that. Again, I just had to say something given the situation. And just to reiterate, I’m not necessarily condoning what’s happening, just offering my opinion by keying in on the business side.
GD1
By: mongu - 4th August 2002 at 20:45
RE: US to cut miliatary aid to Taiwan if China Airlines gets 330
It does seem wrong, GD.
It is also against WTO rules and even if people are being ruthless, they must play by the rules. A US/EU trade war is a possibility anyway, because of the steel tarrifs amongst other things, and I am a little surprised at the US stance. It’s only going to up the ante.
It also goes against the grain of capitalism. State subsidisation of industry is a big, bad thing which the EU has been trying (sometimes successfully, sometimes not) to put an end to. The US seems to be going the other way though, and throwing money at US industry. This distorts competiton and encourages an obviously uncompetitive Boeing to continue being inefficient.
Not only wrong, but also a short term position to the detriment of long term competitiveness.
By: greekdude1 - 4th August 2002 at 00:03
RE: US to cut miliatary aid to Taiwan if China Airlines gets 330
Ok, let’s end this right now. I’m not necessarily condoning what the U.S. is doing, for the record. Naturally being the only American on here, I had to say something. I’m looking at this purely from a business point of view. Obviously there are political implications involved, as well. I’m not even going to touch those, because the point you make about “BA buying from Airbus” is a very valid one, as well. I won’t deny that. Theoretically, the U.S. could be denying aid to every country that it supports, if they buy from Airbus, not just the UK, as you mentioned. I think this is a special case with Taiwan, as they have counted on the U.S. for so long for protection from Communist China. Without that, they obviously could have been taken down when Mao Zedong was still in power. Given that, U.S. is using the ‘ace in the hole,’ so to speak, as bargaining leverage. My father owns a business, all of my uncles own businesses, my cousin who is younger than I just opened a business. In a world of competition, people are ruthless. Some of the stories I’ve heard, people will do anything and everything to keep potential, current and future customers. Roughly 90% of these tactics could be seen as coldblooded, even borderline blackmail. It’s sad Kev, but that’s business. Everybody does it, you just don’t necessarily hear about it. The U.S. gov’t in siding with Boeing here, is using business tactics. Right or wrong, world police or no world police, it’s business. They are protecting their own, as wrong as it seems.
GD1
By: kev35 - 2nd August 2002 at 22:34
RE: US to cut miliatary aid to Taiwan if China Airlines gets 330
GD1,
I don’t think it is just a way of doing business like BA/AA do. They are just airlines, these threats have come from the US government and I believe it has potentially serious repercussions. If we are to honestly believe that an American government will abandon a friendly country just because they refused to buy Boeing products, what does that say about the American government today? America sees itself as the world’s policeman and also as a defender of the free, so how can they justify this action? Sorry, mate, but I think America is on very shaky ground on this matter as they are with their intention to remove Hussein from power in Iraq by military force.
How come the US hasn’t issued the same threats to us in the UK as our national airline operates Airbus products as well as Boeing? Isn’t that just the same situation as in Taiwan? Perhaps America is afraid that the UK would withdraw it’s services as America’s own permanently sited aircraft carrier anchored just off the coast of continental Europe?
Double standards?
Regards,
kev35
By: greekdude1 - 2nd August 2002 at 20:10
RE: US to cut miliatary aid to Taiwan if China Airlines gets 330
The U.S. will keep it’s “arrogance,” if that’s what you want to call it, as long as it practices capitalism, and doesn’t resort to communistic or socialistic business tactics.
GD1
By: yago - 2nd August 2002 at 13:35
RE: US to cut miliatary aid to Taiwan if China Airlines gets 330
How long will they keep their arrogance.
Imagine the European Union offering military aid to Taiwan.
The US would go mad.
By: greekdude1 - 2nd August 2002 at 09:03
RE: US to cut miliatary aid to Taiwan if China Airlines gets 330
[updated:LAST EDITED ON 02-08-02 AT 09:14 AM (GMT)]I wouldn’t go as far as saying the U.S. would be turning their back on Europe. If they were going to do that, they should have done so before ‘Nam, in attempting to bail out the French for seemingly the thousandth time. This whole thing has nothing to do with Europe, it has to do with the U.S. and Taiwan. I wouldn’t go to the “spoiled child” card, Kev. I’d go more to the, “We’ve been protecting you from Communist China since day 1,” card. Is this “calling your bluff” tactic by the U.S. fair, probably not. However, it’s just predatory capitalism. BA/AA do it all the time, just to use an example. Not in the same manner, but predatory nonetheless. That’s the bottom line. Use whatever means necessary in order to make the sale and make a profit.
GD1
By: kev35 - 1st August 2002 at 20:15
RE: US to cut miliatary aid to Taiwan if China Airlines gets 330
If that’s the attitude being taken by America, who are seen as world leaders, it is no example to follow is it? I presume if there is another military crisis in Europe we shall be abandoned to our fate due to the number of Airbus aircraft flying for European airlines. It’s really pathetic, like a spoilt child moaning because they can’t get their own way. Perhaps Europe should turn round and tell the Americans if you don’t give people a fair choice between Boeing, Airbus and any other manufacturer we will withdraw the right for you to deploy any American military aircraft in Europe.
Regards,
kev35
By: greekdude1 - 1st August 2002 at 19:19
RE: US to cut miliatary aid to Taiwan if China Airlines gets 330
That’s right, CAL has the right to choose the A330 as they apparantly have…..and get military aid reduced as a result. That’s leverage for you.
GD1
By: Saab 2000 - 1st August 2002 at 09:25
RE: US to cut miliatary aid to Taiwan if China Airlines gets 330
If China Airlines wants the A330 because it best suits there needs, then so be it,their choice.There is something called Free Trade, which means that the trade are not controlled by the governments, but by the market.So by Free Trade CI has the right to choose which ever aircraft it wants.
By: KabirT - 1st August 2002 at 09:03
RE: US to cut miliatary aid to Taiwan if China Airlines gets 330
i agree Pembo330….. if AIrbus won…fair enough. Taiwan is very importand allie to USA….being so near to China and they have had very good ties in the past. Air China uses mostly Boeing jetliners. This is the first time it has ordered A330/340.
By: Pembo330 - 1st August 2002 at 08:42
RE: US to cut miliatary aid to Taiwan if China Airlines gets 330
I find stories like this quite repulsive! If Airbus have won the order fair and square, then, so be it – thats business.
Its another indication that Boeing are losing their competitive edge as Airbus win more orders. And when Boeing lose, the big boys come in and start the politics – quite honestly its disgusting.
By: Hand87_5 - 1st August 2002 at 08:26
RE: US to cut miliatary aid to Taiwan if China Airlines gets 330
An other exmaple of American fair play in commercial business
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July 31, 2002 at 4:19 pm