The threat of a transatlantic trade war in aerospace after America’s decision to exclude EADS from a $50 billion (£33 billion) Pentagon contract has been raised by the European Trade Commissioner. Political tension is rising in European capitals over Washington’s decision to tilt the scales towards Boeing in a military procurement contract to build a fleet of aerial refuelling tankers.Good grief. Is adopting a more unified approach to military procurement via the creation of EU standards a possible non-tariff barrier being thrown in the way of America? The rest of the article discusses how long-awaited decisions on the Boeing-Airbus countersuits at the WTO will be coming down the pike soon, so stay tuned.
“There will be a reaction,” Karel De Gucht, the Commissioner, said. “My impression is that Paris is not pleased.” This month, Northrop Grumman, the partner of EADS in the bid for the Pentagon aerial tanker contract, withdrew its bid, complaining that the terms of the tender clearly favoured the American aerospace giant. The Commissioner pointed to the annual trade gap between Europe and the US in military hardware, with Europe purchasing €5.5 billion (£5 billion) of equipment from America, while its imports from the EU totalled only €2.2 billion.
“If you had added the [tanker] deal, it would have been a balanced situation,” Mr De Gucht said, calling for a more unified European approach to military procurement. “One of the possible answers is to adopt EU standards for military equipment.”
Well, here is proof that it's not just my fervid imagination behind a recent post saying just the same thing. Again, I am utterly befuddled as to why other trade or IPE commentators haven't paid more attention to this issue as big, big money is at stake alongside transatlantic trade relations. Just yesterday, I attended an LSE talk where new EU Trade Commissioner Karel de Gucht spoke about evolutions in EU trade policy. While not talking directly about the lost opportunity of supplying the US Air Force with tens of billions' worth of air refuelling tankers, de Gucht made many allusions as to how the trade climate is affected by US policy. In diplomat-speak, it's as close as you can get to--pardon the expression--Yankees suck! It turns out that, somewhere else, he has expressed further thoughts on how transatlantic trade ties are not going too smoothly--especially in the realm of defence procurement: