Column: Fairness is critical to states place in economy

Published 12:00 am Thursday, July 5, 2007

Niel Ritchie, Guest Column

Globalization presents serious challenges to U.S. workers and small businesses, as investment capital flows freely across borders, seeking the cheapest labor supply and fewest regulations.

However, if given a level playing field, American workers stand ready to compete every day in the global economy.

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Unfortunately, the playing field is rarely level &045; countries frequently use subsidies and tariffs to give their own companies an unfair advantage.

That&8217;s exactly what is happening now in a major defense contract competition that directly affects Minnesota &8212; ironically, French company EADS is using billions of dollars in illegal EU subsidies that undermine the U.S. economy in an effort to win a $40 billion contract to build a refueling tanker aircraft for our Air Force. To add injury to insult, EADS plans to build the tanker aircraft with little U.S. investment and few domestic jobs.

Why would the Air Force accept such a proposal? In 2003 Congress protested when the Air Force awarded a no-bid contract to Boeing to lease new tankers to replace their aging fleet. Now the Air Force has to keep the bidding process &8220;competitive&8221; at all costs. Given that Boeing and EADS are the only two bidders, EADS has a great deal of leverage and is using it to the hilt, stepping on international trade laws and keeping their manufacturing base in Europe.

Tankers are not as sexy as fighter jets, but they are the backbone of a U.S. military that is being stretched across the globe. Tankers enable jets to make long trips in a single shot, which is critical when the clock is ticking and the lives of our men and women in uniform are on the line.

The old tanker planes were placed into service in the late 50s and early 60s &8212; it&8217;s likely that the new tankers will be expected to last even longer. That&8217;s why there is little room for error. The Air Force needs to pick the best plane at the best price that also presents the best opportunities to grow the U.S. economy and create well-paying jobs.

Boeing&8217;s plane is a classic tanker, with more storage for fuel as well as troops, medical supplies and equipment, packed into a plane that is still able to land at most military bases. By comparison, EADS&8217; tanker is much larger with more cargo space but not much more for fuel.

It is so large that is cannot land at many critical military bases.

To many, EADS is a vivid reminder of European economic parochialism. The company currently employs a mere 500 people in the US. And while it promises thousands more, the company has become cryptic about whether such promises are enforceable or simply window dressing for Air Force officials charged with awarding the contract. Boeing employs around 65,000 in the U.S. today and the proposed Boeing tanker would support 44,000 jobs &8212; 500 of them right here in Minnesota.

In order to hide its limited U.S. investment, EADS has tried to put an American face on its tanker proposal by giving Northrop Grumman a minority stake in the project.

But their tanker is designed around the French Airbus A330, which was heavily subsidized by the European Union.

These ongoing subsidies &8212; estimated at $100 billion &8212; are the subject of one of the largest disputes ever brought before the World Trade Organization, where the USTR accuses the EU of attempting to undermine our commercial airline economy. EADS maintains that the subsidies issue should remain separate from the tanker competition&8212; a tough pill to swallow considering that their tanker plane directly benefits from those subsides.

Why should the Air Force award a critical defense contract to a company that offers a plane that is less flexible, keeps most jobs overseas and has systematically attempted to undermine the U.S. economy through the very illegal subsidies it is using to win the contract competition?

The answer is that they shouldn&8217;t.

Niel Ritchie is executive director of the League of Rural Voters, a nonprofit organization founded in 1985 and dedicated to increasing the representation of rural people in public policymaking.