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<< Previous   of   Next >>   ADVERTISEMENT   CONTACT THE HERALD Mike Benbow, Business Editor benbow@heraldnet.com   Published: Thursday, May 15, 2008 Illegal subsidies in Air Force tanker deal? Lawmakers may look into the role European funding played in the development of the Airbus A330, the jet that won a disputed Air Force contract for refueling tankers. By Michelle Dunlop Herald Writer EVERETT -- The U.S. Air Force may need to look at the role of alleged illegal subsidies in a controversial aerial refueling tanker contract. That is, if the chairman of the U.S. House Armed Services Committee has his way. The committee reviewed the 2009 national defense budget on Wednesday. Despite heated discussions over the tanker bid, Congress seems to be waiting for the Government Accountability Office to give its recommendation on the contract in mid-June. On Feb. 29, the Air Force selected a tanker proposed by Northrop Grumman and EADS, the parent company of Airbus, over the Chicago-based Boeing Co. Boeing, which would have assembled its tankers in Everett, had been expected to win the contract. The jet maker since has challenged the Air Force's decision with an appeal to the GAO. Several lawmakers from states where Boeing has manufacturing sites have threatened to try to block funding for a Northrop-EADS tanker, which would be assembled in Alabama. Boeing and Airbus are involved in disputes with the World Trade Organization, each alleging the other benefitted from illegal subsidies. Boeing has claimed that European governments unfairly provided funding for several Airbus commercial jets, including the A330, the jet on which Northrop and EADS' KC-30 tanker is based. Airbus has countered Boeing's allegations by saying that the tax breaks provided by the state of Washington to Boeing for its 787 Dreamliner were also government handouts. For its part, the Air Force did not consider the role of illegal subsidies in choosing the winner of the $35 billion contract. U.S. Sen. John McCain, R-Ariz., played a role in instructing the Air Force to strip WTO language from the contract. McCain has taken credit for stripping Boeing of a similar tanker contract a few years ago following revelations of unethical actions by Boeing and some Air Force officials. The Senate Armed Services committee also will review the defense budget soon.

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