Wednesday, May 14, 2008

HASC Bill Includes WTO Language

In what will be the first of many attempts to include tanker dispute language in this year's bills, the House Armed Services Committee (HASC) is directing the Air Force to review whether illegal government subsidies played any role in a contentious refueling tanker contract pending any adverse WTO rulings.

The Hill reports that this legislation though will most likely up in a clash with Senate that would rather not include the tanker dispute in their version of the 2009 Defense Authorization Bill. Also, the Hill reports that HASC Chairman Ike Skelton (D-Mo.) caveatted the inquiry in his mark:

Any inquiry would be done after the World Trade Organization (WTO) delivered its rulings on trade disputes between the United States and the European Union over illegal subsidies to Airbus and tax breaks for Boeing . The two bitter rivals on the world’s commercial aircraft market are also at the center of the tanker controversy.

Since the U.S. WTO case against Airbus will be ruled on first, the Air Force Secretary would have 90 days from that ruling to conduct its first review. The article goes on to state that:

If the Air Force determines the illegal subsidy had a “material impact” that calls into question the “fairness” of the contract award, the service leaders have the right to take “appropriate measures” to remove the impact of the illegal subsidy and make the process “fair to all,” according to the legislative language in the chairman’s mark.

But the provision leaves that to the discretion of the Secretary of the Air Force. It is unclear when the WTO would rule on either of the cases, but it could be several more months until that happens. The discussion could spill into the next presidency and a new Secretary of the Air Force with a different approach than the current secretary, Michael Wynne.

As our previous post indicated, the WTO ruling against the European Union could come as early as next month.

If the WTO ruling comes out against Airbus, we at Tanker War Blog expect Congress would not idly wait by while the Air Force review is conducted. Instead, we would hope funding for the tanker would be cut and not restored until the contract excludes the use of illegally subsidies Airbus planes.

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