In a House Armed Services Committee hearing today, Committee member U.S. Rep. Rick Larsen (WA-02) pushed the Pentagon for answers on the Air Force’s decision announced last week to award a $35 billion tanker contract to the subsidized European company Airbus.

In the hearing, Larsen raised questions about the repercussions of this decision for U.S. trade policy. In response to questions from Larsen and others, John Young, Under Secretary of Defense for Acquisition, Technology and Logistics, stated that the Air Force did not take the illegal government subsidies provided to Airbus by European governments – the same subsidies that the U.S. government has filed a WTO case to halt – into account in making their decision.

“One estimate…puts the European subsidy for the A330 and the A340 programs at $5 billion,” said Larsen in the hearing. “While this WTO case is pending now, another branch of the same Administration would send a conflicting message by offering the European Union a $35 billion reward for the same planes that we say they have illegally subsidized, a 700% return on investment for European taxpayers.”

“So I’m wondering…if the U.S. wins this case pending before the WTO, would our government seek retaliatory action if doing so increases the cost of the tanker that our Air Force needs…this puts this Administration in a potential bind, live with the tanker decision or exercise its rights and obligations to enforce trade rules,” Larsen continued, “Do you know if the United States Air Force agrees with the President’s view that these subsidies are illegal?”

“I think I’d ask the Air Force, again, that’s a different forum and a different set of issues,” responded Young.

When Rep. Abercrombie (D-HI), who chaired the hearing, asked a question to clarify Young’s response, Young elaborated, “I do not believe it was evaluated in the proposal process that there might be tariffs and penalties.”

Larsen also raised questions about the cost of retrofitting infrastructure to accommodate the larger Airbus tanker, concerns raised by the Air Force itself in a 2002 statement that “the EADS aircraft would demand a greater infrastructure investment and dramatically limit the aircraft’s ability to operate effectively in a worldwide deployment.” 

“In the six years since that statement, the KC-30 hasn’t gotten any smaller, and the availability of longer strengthened runways around the world certainly hasn’t grown, so at what point in that process did the KC-30’s significant liabilities as a tanker become assets?” asked Larsen.

On Wednesday, March 12, Larsen will ask more questions of the Air Force in a Members-only briefing on the selection process for the refueling tanker.