Gates: WTO ruling on Boeing, Airbus won't affect tanker deal

Mar 24, 2010, 19:37 GMT

Washington - The World Trade Organization's ruling in the subsidy dispute between rivals Boeing and Airbus will not impact the Pentagon's competition for the contract to build the next generation of aerial refuellers, US Defence Secretary Robert Gates said Wednesday.

'My lawyers tell me that the WTO case gives us no basis on which to make a judgment,' Gates told the budget committee in the House of Representatives.

Airbus's parent company, EADS, has expressed renewed interest in competing with Boeing for the hefty 35-billion-dollar contract to build 179 of the tanker planes, dubbed the KC-X.

EADS had fallen out of the competition earlier this month when its American partner, Northrop Grumman, withdrew after accusing the Pentagon of tailoring the requirements for the plan to Boeing's advantage. The Pentagon has insisted the requirements were fair for both sides.

EADS has said it could be interested in submitting its own bid and has asked the Pentagon to push back a May 10 deadline to give the firm more time to prepare. Gates said that request is under consideration.

Boeing at the moment is the only company that has announced plans to bid, exposing the Pentagon to possible critics of awarding such a massive contract without a competing bid.

The WTO decision on Tuesday upheld some of Boeing's allegations that Airbus has received subsidies in violation of international trade practices. Boeing alleges the subsidies give Airbus and unfair advantage in the global market for commercial airliners and hurts the job market in the United States.

Both manufacturers claimed victory in the dispute, with Airbus saying most of Boeing allegations were not backed by the WTO. Boeing contends that a sufficient amount were and called the ruling a 'powerful, landmark judgment.'

The Northrop-EADS partnership had originally won the tanker contract, but Boeing successfully protested the decision with the Government Accountability Office, the investigative arm of Congress, and the Pentagon formally reopened the competition last month.

Boeing's proposed airliner is based on the 767, while EADS would use the Airbus 330.