[Congressional Record Volume 152, Number 85 (Tuesday, June 27, 2006)]
[Senate]
[Pages S6499-S6501]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                           EUROPEAN SUBSIDIES

  Mrs. MURRAY. Mr. President, in the coming weeks, we are entering an 
important crossroad in the future of commercial aerospace. I wish to 
explain this morning what is at stake for our country and for American 
workers.
  Down one road, American workers will be left to fight for their jobs 
with one hand tied behind their backs. They will face unfair 
competition, and our economy and our future could suffer. Down the 
other road, our Government will make it clear that we will fight for 
fair trade, and our economy and our workers will win as a result. That 
is the crossroad we are approaching, and which path we take will be 
determined by two things: whether Europe decides to provide illegal 
subsidies to Airbus and EADS and whether the U.S. Government works 
aggressively to keep that from happening.
  For decades, Europe has provided subsidies to prop up Airbus and its 
parent company EADS. Those subsidies have created an uneven playing 
field and have led to tens of thousands of layoffs in the United 
States.

[[Page S6500]]

  In the past few years, the United States has stood up to Europe, and 
I have been proud to work with the Bush administration in that effort, 
first under U.S. Trade Representative Robert Zoellick, then under Rob 
Portman and now, of course, under USTR Susan Schwab. We have demanded 
that Europe stop the subsidies and play by the rules.
  With the threat of a WTO trade case, we got the Europeans to the 
negotiating table, and I was hopeful that we could make progress. But 
over the past few months, Airbus and EADS have been in a tailspin over 
unsuccessful planes, production delays, and management scandals. Airbus 
is finally beginning to see how difficult it is to compete in the 
marketplace without the cushion of government subsidies. And it is 
floundering.
  But now, rather than letting Airbus compete on its own in the 
marketplace, European governments seem poised once again to rescue 
Airbus with market-distorting subsidies.
  If we want to keep a strong aerospace industry in America, we cannot 
let that happen. Every time the European government underwrites Airbus 
with subsidies, American workers get pink slips.
  If we want to lead the world in commercial aerospace, our message to 
Europe must be strong and clear: No more illegal subsidies to prop up 
Airbus. Airbus must compete in the marketplace just like everyone else.
  I first sounded the alarm on this important issue in March of 2004 
when I spoke about my concerns here on the Senate floor. For those who 
have not been following the debate, I wish to provide some background.
  Only two companies in the world make large passenger airplanes: the 
Boeing company, with its commercial air operation headquartered in 
Renton, WA, and Airbus, which is headquartered in Toulouse, France. 
Airbus is a division of the European Aeronautics Defense and Space 
Company, known as EADS.
  The distance between Airbus and Boeing's headquarters is about as big 
as the disparity between how the United States and Europe view the 
commercial aerospace industry.
  For us in America, commercial aerospace is a private industry, one 
that must respond to the needs of the marketplace and the demands of 
its shareholders. It is a difficult business, and many times 
manufacturers such as Boeing ``bet the company'' on a new airplane.
  In Europe, on the other hand, commercial aerospace is viewed as a 
job-creation program. Airbus has been shielded from the dangers of the 
marketplace by decades of government subsidies. In fact, Europe doesn't 
seem to care if Airbus loses money as long as it produces jobs and 
those jobs come at the expense of American workers.
  The history of Airbus and EADS is a history of government subsidies 
that have sheltered it from competition and real pressures of the 
marketplace. It has allowed Airbus to develop new aircraft with 
virtually no risk. This government assistance takes many forms, 
including launch subsidies, research subsidies, facilities subsidies, 
and supplier subsidies. These subsidies create an uneven playing field 
and allow Airbus to do things that normal private companies cannot 
afford to do. Because of those subsidies, Airbus has grown to become a 
market power without assuming any of the financial risk and 
accountability U.S. firms have to contend with every day.
  As a result of this government support, Airbus has been able to erode 
Boeing's market share. Airbus's market share was once in the teens, but 
today Airbus claims to supply more than 50 percent of the industry.
  But European government support of Airbus doesn't stop there. It 
includes everything from bribes to threats. There are reports of state 
airlines being promised landing rights at European airports if they buy 
Airbus planes, and we have seen countries threatened that they will not 
be let into the European Union unless they buy Airbus planes. There are 
reports of Airbus using deep discounts and guaranteeing to airlines 
that Airbus planes will hold their value.
  To date, Airbus has received more than $15 billion in launch aid. But 
despite this massive infusion of government cash, Airbus and EADS are 
still hemorrhaging money and are undergoing a crisis in leadership at 
the highest levels. In fact, if anybody was to scan the newspapers this 
week, they could read about any number of problems Airbus and EADS have 
been confronted with. The Airbus A350 model has been widely condemned 
by major airline purchasers. It requires an expensive redesign, which 
is estimated to now cost between $9 billion and $10 billion. The A380 
mega-jetliner, which Airbus spent more than $13 billion on developing, 
has secured only a small list of customers. Now it is plagued by 
delivery delays which could result in canceled orders and financial 
penalties for Airbus. In fact, according to recent reports, Airbus is 
facing the possible loss of orders worth more than $5 billion. The 
delays could reduce Airbus's annual earnings by $630 million between 
2007 and 2010.
  EADS also has a huge liability on its hands. It needs to buy out BAE 
Systems' share of Airbus, which is estimated to cost about $4 billion. 
On top of all of that, the co-chief executive of EADS, Noel Forgeard, 
is under investigation for insider trading.
  By all accounts, Airbus is struggling. It is also losing credibility 
with its customers. In fact, when news broke about the A380's 
production delay, Singapore Airlines cast a no-confidence vote in 
Airbus by ordering 20 Boeing 787 Dreamliners.
  One important customer who is taking notice is the U.S. Department of 
Defense. With Airbus's financial house of cards on the verge of 
collapse and no current U.S. manufacturing presence, it is becoming 
clear that EADS will not be able to give the U.S. Air Force the tanker 
of the future.
  I am pleased that the Air Force has asked the right questions. In its 
request for information for the tanker contract, the Air Force asked 
potential bidders to provide them with information about launch aid and 
subsidies, including details about any government support, tax breaks, 
debt forgiveness, or loans with preferential terms they might have 
received. The Air Force clearly understands the need for transparency 
and a level playing field.
  Any new subsidies to Airbus for tankers or other programs should end 
once and for all Airbus's campaign to access the U.S. Treasury.
  To protect taxpayers and national security, the Air Force must 
exercise extreme caution if it continues to consider an Airbus tanker 
proposal.
  As many of my colleagues know, my home State of Washington has a very 
proud and long history of aerospace leadership. On July 15, 1916, Bill 
Boeing started his airplane company in Seattle, WA, and since that day, 
Boeing and Washington State have shared the ups and downs of the 
commercial aerospace industry. In fact, just a few years ago, Boeing 
found itself struggling to keep up with Airbus, but through the 
sacrifice and hard work of more than 62,000 Boeing employees in 
Washington State and many more around the country, the company pulled 
itself up by its bootstraps. It recovered to once again evenly share 
the marketplace with Airbus, and it did so by producing a plane, the 
787, which was just what the marketplace wanted.
  Airbus, on the other hand, ignored the market's demand and produced a 
plane that few people wanted, and now they are being punished by the 
marketplace for their mistakes. But rather than take their lumps, they 
are likely to seek an illegal government bailout that would negate the 
hard work and sacrifice of Boeing employees.
  Recently, an EADS spokesman called launch aid ``indispensable'' and 
said, ``Launch aid is the only available system right now'' to deal 
with Airbus's floundering market and design problems. How can aerospace 
workers in America compete with a competitor that never has to face the 
consequences for its failures?
  Last week, President Bush met with EU leaders at a summit. Before his 
trip, I wrote to the President and urged him to raise the issue with 
European leaders. Time is running out. We are quickly approaching the 
Farnborough Airshow on July 17 when European Ministers are expected to 
decide whether to provide EADS with more launch aid.
  I have supported this administration's willingness to go the distance 
at the World Trade Organization in its fight for fair markets. They 
stood up

[[Page S6501]]

for American aerospace workers after it became clear that negotiations 
with the Europeans were going nowhere. As a result, the WTO is now 
considering the subsidies case through its dispute settlement body.
  The Senate is on record against Airbus subsidies. On April 11, 2005, 
the Senate unanimously passed S. Con. Res. 25. That is a resolution 
which called for European governments to reject launch aid for the A350 
and for President Bush to take any action that he ``considers 
appropriate to protect the interests of the United States in fair 
competition in the large commercial aircraft market.'' The resolution 
also specifically encouraged the U.S. Trade Representative to file a 
WTO case unless the EU eliminates launch aid for the A350 and all 
future models.
  The production of large civilian aircraft is now a mature industry in 
both the United States and Europe. It is now time that market forces--
market forces, not government aid--determine the future course of this 
industry.
  That crossroad I mentioned is coming up on us quickly. One road will 
leave American workers in a fight for their jobs, with the game stacked 
against them. The other road will give us a fair playing field where 
American workers can win through their hard work and American 
ingenuity. I hope for our country's future that we choose the right 
course, and it begins by sending a clear message from our government to 
Europe that the United States will not tolerate another round of 
illegal subsidies that kill American jobs. The clock is running, and 
the choice is ours.

  Mr. President, I yield the floor, and I suggest the absence of a 
quorum.
  The ACTING PRESIDENT pro tempore. The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Mr. JEFFORDS. Mr. President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The ACTING PRESIDENT pro tempore. Without objection, it is so 
ordered.

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