EADS/Airbus Government Ownership, Protection, Intervention & Subsidies: The Effect on American Free Enterprise and National Security

EADS/Airbus Government Intervention

Not content with merely protecting its industry, EADS’ government owners have used coercion and actively intervened to ensure other countries purchase EADS and Airbus products. The U.S. Commerce Department reports that U.S. aerospace companies have routinely have lost sales to foreign competitors whose governments seek to influence purchase decisions with political or economic pressure. The following examples of EU political intervention and extortion in support of EADS/Airbus are listed in a 2005 International Trade Administration report:³³

Czech Republic: In a 2002 report on countries seeking accession to EU, the European Commission admonished the Czech Republic for eliminating a tariff differential that favored Airbus. The report implies that the accession of the Czech Republic to the EU (now completed) could have been impeded unless the Czech Republic imposed a higher tariff on imported Boeing aircraft than on imports of comparable Airbus aircraft. This publicly available report stated, “The Czech Republic has unilaterally applied a suspension of MFN tariffs levied on imports of 12 civil aircraft products. Despite the Commission’s strong opposition, this exceptional measure, introduced in 2000, and due to end in 2001, was prolonged until December 2002. The Czech Republic will need to ensure that this tariff suspension will not be prolonged beyond 2002.” In the same document, the Commission praised the Czech Republic for taking steps to quickly suspend tariffs on imports in other sectors.

Russia: According to various press reports, the French government sought leverage over the Russian government approval of Airbus sales to Aeroflot by offering Russia the use of a space-launch facility, assisting Russia in a visa dispute with the European Commission concerning Kaliningrad, and easing aircraft noise restrictions for Russian aircraft landing in Europe.

Turkey: Several press articles link Turkish Airlines’ (THY) purchase of Airbus aircraft, announced at the July 2004 Farnborough Air Show, with pressure on Turkey from European governments in connection with Turkey’s pending accession to the European Union. According to one article, in June 2004, German Foreign Affairs Minister Fischer told a member of the Turkish Parliament to “let 80 percent of the airplanes you purchase be Airbus.” THY’s aircraft order announced at the Farnborough Air Show was split by value 80 percent for Airbus and 20 percent for Boeing. Additional reported cases of EADS’ government owners’ retaliation over aircraft sales include the following

Taiwan:  During the heated 2002 airplane sales competition in Taiwan, the government of France threatened to terminate its satellite cooperative program if purchases of Airbus aircraft were not made.³⁴ France claimed a verbal commitment to Airbus had been reached and hypocritically claimed that U.S. political interference had sunk the deal. The Taiwanese government countered that the most probable reasons were that it might wish to replace its fleet of planes with aircraft from the same manufacturer to simplify maintenance work and Taiwan’s history of major contracts with France had all ended in litigation or scandal.³⁵

Pakistan: In 2003 Pakistani business leaders claimed that the EU member states retaliated against Pakistan International Airlines (PIA) purchase Boeing 777s instead of Airbus planes.³⁶ The EU reportedly denied previously approved Pakistani textile export quotas and later implemented anti-dumping duties on imports of bed lines from Pakistan.³⁷ The anti-dumping duties were reduced in May 2006 as PIA took delivery of EADS built ATR aircraft from Toulouse, France.^38,39 In March 2009, just prior to  a report that PIA was finalizing a new long-term “Business Plan” including purchase of new aircraft, the EU dropped the anti-dumping tariffs completely.⁴⁰

EADS’ owners have no shame in their “buy Airbus” agenda as illustrated by their conduct after the deadly 2004 Indian Ocean Tsunami. While aid workers were arriving and nations around the world were sending help to rebuild disaster-struck Thailand, the European Commission (EC) was sending it threats to complete a purchase of six A380 Airbus aircraft.⁴¹ The deal was allegedly on hold over EC discrimination against Thai seafood and poultry exports.⁴² Five days after the Tsunami, the EC raised the stakes and enacted billions of dollars in additional tariffs. The British aid group Oxfam called the action criminal. Faced with the possibility of even more taxes on its exports, the Thai government made the planes-for-EUmarket access swap. Thai Airlines is schedule to take delivery of its A380s in 2012.