It's rare that the U.S. Department of Defense gets involved in trade disputes, but I guess Airbus-Boeing is such a big dispute that it's drawing everyone in. According to Reuters, as part of the Air Force's "multibillion-dollar competition for aerial refueling tankers," Boeing is competing with the team of Northrop Grumman and EADS, the majority owner of Airbus. In an initial "request for information" in April, the Air Force "asked the companies to identify any subsidies they received and explain any potential impact of the WTO dispute between Boeing and Airbus on their bids." Reuters notes that "[a]nalysts have said the Pentagon's request could force Airbus, 80 percent owned by EADS, to yield information that could be used against it in the WTO complaint."
Senators McCain and Shelby are not happy about this request, and Shelby "said he told Deputy Defense Secretary Gordon England last week that it was 'unfair' to ask bidders about the dispute before the World Trade Organization, and said the Senate should hold hearings about the unprecedented move."
The Washington Post is also reporting on this, and has some additional background.
It's hard to say at this point whether this issue will blow over or blow up, but I'll update this post with further developments as they occur.
UPDATE: As explained here and here, the Northrop Grumman team has pledged to build a tanker assembly plant in Mobile, Alabama if they win at least part of the contract, hence the involvement of Senator Shelby. Several Alabama Congressmen, including Shelby, are scheduled to meet with Gordon England today.
UPDATE II: A few more details now that Shelby and others have met with Gordon England.
UPDATE III: According to this report, the decision on whether to ask about the WTO issues has been put off until the final request for proposal is submitted:
The Air Force said the draft request for proposal doesn't directly ask companies to detail the effects of WTO disputes, as industry was asked in a request for information earlier this year. Instead, it asks companies "whether the final RFP should be modified" to include WTO concerns.
