Sarkozy scolds Obama on protectionism

While Barack Obama attempts to reset trade relations back on normal footing, Nicolas Sarkozy blasts him for protectionism in relation to a defense contract gone awry. This issue predates Obama’s term in office, but the new rules for a refueling tanker aircraft bid forced Northrup Grumman to pull out of the bidding contest last Monday. Sarkozy accused Obama of stealth protectionism through these rule changes:

President Nicolas Sarkozy of France accused Washington on Friday of setting the wrong example on protectionism, suggesting there had not been a level playing field in the race for a $50 billion refuelling plane contract.

U.S. defence contractor Northrop Grumman and its European partner EADS withdrew on Monday from a renewed competition to supply tankers to the U.S. Air Force, saying the rules favoured rival bidder Boeing, the top U.S. exporter. …

Asked what he thought of the issue during a joint press conference with British Prime Minister Gordon Brown, Sarkozy delivered a scathing attack on how the United States had handled the tender.

“I did not appreciate this decision … This is not the right way to behave,” Sarkozy said.

“Such methods by the United States are not good for its European allies, and such methods are not good for the United States, a great, leading nation with which we are on close and friendly terms,” he said.

The prior contract award went to Northrop Grumman and EADS, but an appeal to the GAO effectively stripped them of it in June 2008 when questions arose about the contract process.  That was after questions arose about the original contract process, in which its competitor Boeing was accused of corrupt practices.  This third round intended to get a clean contract award, but the specs changed for the plane as well.  Northrop and EADS accuse the Pentagon of changing them to favor the American-made Boeing, and pulled out after claiming that they couldn’t fairly compete for the project.

So, justification for blaming the problem on Obama seems rather thin.  Besides, as Dan Spencer wrote at the Washington Examiner, Northrop/EADS didn’t drop out because of political pressure, but because they offered a bad deal.  A pending WTO ruling may also have scared them off:

Northrop had been hinting for months before last week’s announcement that it might not bid on the tanker deal. One of the key reasons Northrop mentioned was that they felt the specifications for the tanker in the RFP were biased in favor of Boeing. Northrop was planning to offer an Airbus plane that was simply too big and ill equipped for what the Air Force needs. Northrop’s French partner actually began a campaign to criticize the U.S. Military for those specs — something reminiscent (and not in a good way) of the long history of French criticism of U.S. defense policies.

What’s more, the Northrop/Airbus partnership was beginning to unravel under the weight of a preliminary finding by the World Trade Organization that the Airbus plane offer had benefited from illegal EU subsidies, something that would in all likelihood have disqualified the plane from the bidding process when the finding is made permanent in a coming final WTO report.

Regardless of whether this was intentional protectionism, favoritism for an American bidder, or a clean process in the final round, there is plenty of embarrassment for all concerned.  Considering the lengthy and extended process involved in this debacle, placing the blame on Obama seems to be a big stretch.  While conservatives might be tempted to climb onto Sarkozy’s bandwagon, in this case the US appears to have acted to enforce free and fair trade rather than curtail it, and Sarkozy may be engaging in a little pre-emptive blame-throwing to cover his political bases at home.  Take it with a very large grain of salt.

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