(Washington, D.C.) – On the eve of President Bush’s meetings with European leaders, U.S. Senator Patty Murray wrote to the President urging him to speak out against further subsidies to Airbus and its parent company, EADS. Murray, the Senate’s leading critic of illegal European government subsidies to Airbus, asked the President to raise the issue this week.
"Tell Europe that the United States will not tolerate illegal subsidies to salvage the A350 or launch the A380. Tell Europe that you expect them to reach an agreement at the negotiating table and that another round of market-distorting subsidies will only inflame our relationship," Murray wrote.
Since last month, EADS’s problems have multiplied, increasing the likelihood that the company will seek illegal subsidies.
Just this week, an EADS spokesman called launch aid "indispensable" and said, "Launch aid is the only available system right now" to deal with Airbus’ floundering marketing and design models.
The A350 requires an expensive redesign, which is estimated to cost about $9 billion to $10 billion – twice as much as the cost of the current A350. EADS owes BAE Systems about $4 billion. Mr. Forgeard is under investigation for insider trading. EADS’s stock price has plummeted, and manufacturing problems with the A380 could result in canceled orders and financial penalties.
The text of the letter follows:
June 19, 2006
President George W. Bush
The White House
1600 Pennsylvania Ave. NW
Washington, D.C. 20500
Dear President Bush:
As you meet with European leaders this week, I urge you to speak out against any effort by European governments to provide illegal subsidies to Airbus and its parent company, the European Aeronautic Defence and Space (EADS). After a series of management, design and production failures, EADS is hemorrhaging in the marketplace and will likely seek government aid to salvage their position.
A clear and strong message from you will show America’s continued resolve to force EADS to play by the rules of international trade. Tell Europe that the United States will not tolerate illegal subsidies to salvage the A350. Tell Europe that you expect them to reach an agreement at the negotiating table and that another round of market-distorting subsidies will only further imperil our relationship.
Your Administration has been a strong advocate for fair play in commercial aerospace. I’ve been pleased to work with you and the U.S. Trade Representative to stand up for America’s aerospace workers. Today, however, that progress is being jeopardized by EADS’s escalating problems.
Last month, EADS Co-Chief Executive Noel Forgeard said, "If there is a solution soon, then we could think about alternative financing. But in the other event, we may consider applying for government loans."
Those so-called "government loans" are the very same market-distorting subsidies that EADS has used for years to kill American aerospace jobs.
EADS is failing, and it’s likely to seek the illegal subsidies that have propped up the company in the past. I urge you to tell European leaders that subsidies must be taken off the table.
Sincerely,
Patty Murray
United States Senator
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