Stanley's blog

Protectionist winds (3)

Fears of growing protectionist sentiment in the US are worrying (see 4 March post). The US Air force decided that the Northrop Grumman/EADS (Airbus) refuelling tanker was to be preferred to that of Boeing; a huge sum of money is at stake. The outcry against the decision continues to grow, and is now mixed up in the Presidential election campaign. Both Clinton and Obama have already criticized the decision. McCain is a more natural fee trader but is being condemned for blocking the original deal with Boeing over a corruption issue.

This has now become nasty with accusations that he or his close advisers were paid by EADS & Northrop Grumman to lobby for them. Boeing has filed a formal protest of the tanker award with the Government Accountability Office, citing “irregularities” in the contract competition. Steps may well be taken in Congress to block funding for the project.

Leaving aside arguments as to the comparative economic effects on the US of the US-EU joint bid as against the US-only bid (both tankers will be built in the US and Europe), this issue gives the wrong signals to the rest of the world. Following the blocking of the Dubai Ports bid for managing six US ports and the China National Offshore Oil Corporation bid for Unocal, this approach disqualifies Washington from criticizing China and other developing countries over protecting their home industries.

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