[Congressional Record Volume 151, Number 41 (Monday, April 11, 2005)]
[Senate]
[Pages S3403-S3406]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
AIRBUS
Ms. CANTWELL. Mr. President, I thank the Senator from Oklahoma for
yielding to my colleague, Senator Murray, and me. We are going to speak
about the resolution that the Senate passed, and passed with large
support from my colleagues on both sides of the aisle, which we are
very happy to see. The issue of a level playing field for a competitive
aerospace market is something that is critically important to the
American people and to the workforce of America. I thank our leaders,
Senators Frist and Reid, and Senator Baucus for bringing this
resolution to the Senate floor today and for moving this through the
process so that we can send a message from the Senate about how
important we think it is to have a competitive aerospace market.
My colleague has been following this issue for years and is going to
lay out some of the issues that we in the United States have been
trying to elevate to the point of awareness so we can establish a
competitive marketplace. The bottom line is, negotiations that were
begun in January of this year between the United States and the
European Union to discuss how to battle the competitive aerospace
market today that doesn't unfairly have government backing and
subsidization of major aerospace manufacturers, those negotiations have
broken down. Now we are at a point where the issues to be resolved,
specifically launch aid and the financing of the production of a new
A350 plane by the European Union, are something it is important to
address quickly.
The reason I say that is because we know when you have the financial
backing of a government juxtaposed to the financial backing of the
private sector, in the United States, when Boeing builds a plane, it
goes out and finances that with the backing of the capital markets, of
Wall Street, of the private banking institutions, and they have to
prove that plane is a success. They don't get any forgiveness on the
loan. They don't get any special rate. They don't get any discounts if
the plane is not a success. When they go to the capital markets, they
have to prove the success of the marketplace.
I can tell you now that success is happening with the 787 plane, the
newest product that Boeing launched a year ago and is out there in the
marketplace selling today. But they are competing against a plane that
is being or has the potential to be financed by the European Union. So
if you think about the A350 getting launch aid, or potentially getting
launch aid from the European Union, it doesn't matter whether the plane
is a success. It doesn't matter how many planes are sold. They have a
special arrangement so that in the backing of the financing of that
plane, the European Union becomes the deep pocket.
What does that mean to consumers who are buying these planes and what
does it mean to the workforce? It means simply this: The Americans have
a disadvantage when selling Boeing planes around the globe because they
have to meet the competitive markets of private financing while the
Europeans--it doesn't matter whether their plane is a success--get the
backing of the European Union. The whole global economy is based on a
fair and competitive marketplace in which we are going to drive down
costs to consumers--the airlines, in this particular case--and we are
going to let the best airplane win in the marketplace because they have
designed a product that the workforce, the consumers, the aviation
industry wants to see.
We don't want government making those decisions. We want the private
sector making the decisions. That is why I am so glad the
administration has taken an aggressive approach on this issue and has
pushed for the discussions that are now ending. The administration,
through the USTR office in the White House, has said if the European
Union continues to use new launch aid subsidies for the A350 plane,
then, yes, we are going to go to the World Trade Organization and file
a complaint. That is an appropriate action by this administration.
What would be better is if the Europeans would sit down at the table
and come back to this discussion that should have been part of the 1992
discussion on how to have a competitive aerospace industry. But that
didn't happen. So now in January of this year, the two sides, the
European Union and the United States, sat down at a table and said they
were going to negotiate in good faith. Part of that negotiation was to
have the parties at the table make no new government support agreements
during the time of the negotiations. Yet that is exactly what Airbus is
now coming in to talk about--subsidies and launch aid for the A350.
It is important that this body send the message it sent today, that
we are going to be behind the administration, behind USTR, behind the
White House in making sure a fair and competitive aerospace market
takes place, that we are not going to sit by and see one manufacturer
make a great product that has basically taken off in the marketplace,
getting sales, getting people to buy the plane because they built it
the old-fashioned way. They had an idea. They had the right feature
set. They had the right product. They had the right design and
customers are buying that. Yet they may have to compete against
somebody who has the deep financial backing of a government that
doesn't care whether it is the right feature set or the right product.
So we in the United States care greatly about the competitiveness of
this marketplace. We have lots of jobs in aerospace, and we certainly,
in Washington State, have benefited from that and so have many of my
other colleagues in the Senate because there are probably aerospace
manufacturing jobs all over the country.
But the point is that we have to have a competitive marketplace, not
just in aerospace but in other areas. The sooner we get back to the
table and address the issue of how unfair launch aid is as a concept,
the sooner we can get to a competitive marketplace. And the sooner we
can get a fair and competitive marketplace, the sooner the consumers
will win and the United States will continue to have a level playing
field in which our workforce, which is producing a great product that
is winning in the marketplace, will continue to win based on the
success of their results and not be basically disadvantaged because of
an unlevel playing field.
So I am glad to be here with my colleagues on both sides of the aisle
to speak enthusiastically about the resolution we just passed. I hope
it will be noticed by the European Union that we are united--Democrats
and Republicans--in getting this issue addressed and that a competitive
aerospace market that is driven by private investment backing is the
best way to go for us, not just as a nation but for true global
competition.
I yield the floor.
The PRESIDING OFFICER. The Senator from Washington, Mrs. Murray, is
recognized.
Mrs. MURRAY. Mr. President, I rise this evening, as well, to join my
colleague in support of the fair aerospace competition resolution that
passed this body 96 to 0.
Thousands of American aerospace workers have lost their jobs in the
past decade. That trend is going to continue unless we take action.
This evening I especially 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
been of great help. And, as always, I am 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
for mortgages; they have made air travel safer and brought economic
growth and innovation to every corner of our economy.
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
[[Page S3404]]
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.
While Airbus is doing all of these things to hurt American workers,
it is actually trying to get us to think they are a friend to the very
men and women they are putting out of work.
Unfortunately, EADS, Airbus, and European governments will do and say
anything to dominate the global aerospace market. I am 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
doubletalk is exposed for all to see.
I have worked closely with several U.S. Trade Representatives on this
issue over the years. For the past several months, the United States
has tried to negotiate with the Europeans, but it is very clear that
the Europeans do not 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 after all Airbus has done to kill American jobs, they
would at least make a good-faith effort now that we are finally calling
them to account for their behavior. But the Airbus and European leaders
have done just the opposite. They have pounded their chest 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 have
pursued a deceptive public relations campaign. They have taken out ads
in the Capitol Hill publications and major newspapers around the
country, just like the one behind me.
Airbus claims to be a good friend of American workers, but it is
selling to America's sworn enemies. Airbus claims to support hundreds
of thousands of American jobs, but they cannot document them. Airbus
claims it wants to be a more American company, but then it turns and
preaches European domination when they think we are not looking.
We need to stand up for this unfair competition and send a strong
signal to the Europeans that this Congress and this country will not
allow a European-subsidized company to destroy America's aerospace
industry.
They can talk out of both sides of their mouth all they want, but I
am here to lay the facts on the table and to stand up for our workers.
Mr. President, I applaud the Bush administration, and specifically
Ambassador Robert Zoellick, for the work they are doing to end unfair
trade practices in the aerospace industry. This administration entered
into negotiations in good faith. They wanted 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 committing 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, `` . . .
one result of a case would be that maximum aid would be given'' for
Airbus's new A350.
Today, this campaign is more directly than ever in Congress's line of
sight. I hope to clearly show Airbus is not an American company and
Airbus is simply continuing its policy of saying and doing anything to
get what it wants.
A week ago last Friday, 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 about the subsidies tonight, but I think it is
worthwhile to make you all understand what those subsidies actually do.
European governments give Airbus huge direct subsidies to build new
airplanes. These subsidies 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 what normal,
private companies cannot 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 if they don't make a profit, they are in trouble. That is
why Boeing ``bets the company'' when they develop a new plane. Airbus
enjoys virtually a risk-free product development, and it operates far
outside of 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 superjumbo
Airbus A380 as an example. According to a January 20 article in the
Financial Post, titled ``The Airbus 380,'' A380 subsidies are
officially at $4.3 billion. Other estimates put it at 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 is no wonder that last summer respected industrial 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 will simply
write off the costs and move on to the next one.
To make matters worse, they have 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 United States, though they have moved that number up and down over
the years. The Commerce Department can only come up with 250.
This last week, our Commerce Department released an exhaustive study
done at the request of this Congress on the U.S. jet transport
industry. That 150-page report once again comes to the same conclusion
we have heard time and time 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.
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 is simply unacceptable.
Looking at their claims in American press alone, Airbus appears to be
a pseudo-American company looking to create more jobs and helping to
grow our economy. That is not the real story. Take a look at what
Airbus proprietors say in Europe when they think we are not looking. A
few months ago, with a lot of pomp and circumstance, the latest
European Airbus product, the A380, was unveiled with four heads of
state. Their comments show Europe's true intentions.
From the Spanish Prime Minister, Jose Luis Rodriquez Zapetero:
The European Union has built the plane that is the standard
bearer for European and global aeronautics.
He went on to boast:
What we see here today is Europe cannot be stopped.
He is saying that Europe, not a company, cannot be stopped.
From the French President, Jacques Chirac:
It is a technological feat and a great European success.
When it takes to the skies, it will carry the colors of our
continent, and our technological ambitions to even greater
heights.
From the British Prime Minister, Tony Blair:
It is European cooperation at its best. Airbus demonstrates
that we can achieve more together in Europe than we ever can
alone.
[[Page S3405]]
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 does not sound like a company bent on doing anything for
American workers, but, again, that is what Airbus and its supporters
are saying and doing to get what they want.
Unfortunately, the examples only continue. I do not have to look any
further than the NBC Nightly News to find another shocking attack on
American values and workers. For years, Airbus told us they will do
anything to get a deal, and apparently they will 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 that is currently in
the pursuit of nuclear weapons, a country to which no real American
company would dare sell weapons.
NBC News was able to get a camera crew into an airshow in Kish, Iran,
and they found EADS pitching their military helicopters to Iran.
I ask unanimous consent that the full transcript of the NBC story be
printed in the Record.
There being no objection, the material was ordered to be printed in
the Record, as follows:
European Firms Display Wares in Iran
[By Lisa Myers & the NBC Investigative Unit]
Kish, Iran.--As President Bush pressures European allies to
get tougher with Iran, NBC News got a rare glimpse inside the
country--at an Iranian air show attended by some of the
world's leading military contractors eager to do business
with America's adversary.
On the island of Kish, mullahs mixed with Ukrainian
generals amid photos of the Ayatollah Khomeini. Iran's
contempt for the United States was clear--emblazoned
underneath a helicopter, in Farsi: ``Death to America.''
It's generally illegal for American companies to do
business with Iran. But NBC News found more than a dozen
European defense and aviation firms eager to fill the void.
Some do business with the Pentagon, yet they were actively
selling their wares to Iran.
``We sell to Iran [sic] Air Force,'' said Francois Leloup
from Aerazur, a French company that markets fighter pilot
vests, anti-gravity suits and other protective gear for
military pilots.
``We sell mainly to security people like police,'' said
Arnaud Chevalier with Auxiliaire Technique, which was
representing a group of companies at its exhibition booth.
Some of the brochures on dispay showed tank helmets,
communication systems for light armored vehicles and an
``infantry headset.'' Chevalier said such equipment was ``not
for sale.''
NBC News showed our video from the air show to arms expert
John Pike, director of the nonprofit organization
GlobalSecurity.org.
``I think that the Europeans would sell their grandmothers
to the Iranians if they thought they could make a buck,''
says Pike.
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.
``The emphasis here is on our civil helicopters. We are not
offering military helicopters here,'' he adds.
Yet, prominent on the company's video in Iran--a military
helicopter.
``It says `Navy' in their own promotional videotape,'' says
John Pike. ``I guess they're hoping Iran's navy is going to
want to buy it.''
EADS says the helicopter just happened to be on the video,
and that it abides by U.S. and European rules against selling
military goods to Iran.
Another company, Finmeccanica, recently won a contract to
build a new version of the presidential helicopter, Marine
One, as part of a group led by U.S. contractor Lockheed
Martin.
It was also in Kish showing off its helicopters to Iran.
``This company is building the American president's new
helicopter, and they're trying to trade with the enemy!''
exclaims Pike.
Steven Bryen used to be the Pentagon official responsible
for preventing technology from going to countries like Iran.
Now he's the president of Finmeccanica in the United States.
Does he think Iran is an enemy of the United States? .
``I think they're our enemy at this point,'' says Bryen.
``I mean, they're behaving like our enemy.''
So why would Bryen's company trade with an enemy?
``In Europe, they don't call it the enemy,'' he says. ``If
it's a civilian item that doesn't threaten anyone, then I
don't have a problem with that.''
European subsidiaries of NBC's parent company, General
Electric, have sold energy and power equipment to Iran, but
GE recently announced it will make no new sales. (MSNBC is a
Microsoft-NBC joint venture.)
Still, even with the president now pushing hard to isolate
Tehran, European allies are likely to continue their role as
what one company called, ``a reliable partner for Iran.''
Mrs. MURRAY. I will read just a bit from that 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 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 are not supposed to take into
account embargoes from the U.S., says Michael Tripler, with
EADS.
Michael Tripler, from EADS, once again, saying and doing anything
anywhere to advance the European interests of a European company.
Airbus and EADS clearly sing one tune in newspapers in the United
States, another at media events in France, and quite a different one
while selling their products in Iran.
Taken together, the goal is clear: EADS and Airbus do not intend to
stop until they have gobbled up the entire aerospace market.
So what is 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 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, and went on to
say:
Launch aid, Airbus' 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:
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.
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 has to 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 with 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 WTO, a competitive
balance has to be restored. We in Congress have to show the Europeans
that we are serious about this action.
I thank my colleagues for supporting the resolution that was just
adopted by the Senate 96 to 0. I will continue to be a voice for
American workers. Again, I thank the Bush administration, Senator
Frist, and Senator Reid for helping us with the resolution.
[[Page S3406]]
Mr. INHOFE. Will the Senator yield for a comment before yielding the
floor?
Mrs. MURRAY. I would be happy to yield.
Mr. INHOFE. I have been listening intently, and I applaud the Senator
for all she has done. It is reminiscent that this is not something new.
Back when I was serving in the other body in the late 1980s,
Congressman Jim Oberstar and I actually made a trip to Europe--that was
before the European Union days--both to Germany and France to find out
the level of subsidy they had. At that time, we were not able to find
out, and we did an exhaustive search. They were denying that they did,
and later on they admitted they were subsidizing. With their type of
accounting, perhaps it is even worse than the figures the Senator is
expressing today. So I applaud the Senator for her efforts.
Mrs. MURRAY. I thank the Senator, and I look forward to working with
him to fight for our aerospace industry and to make sure companies in
this country have a fair playing field.
I yield the floor.
The PRESIDING OFFICER. The Senator from Oklahoma.
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