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May 20 2010

Smith Pushes DOD to Consider Impact of Illegal Subsidies on Tanker Competition

WASHINGTON, D.C. - Today, Air and Land Forces subcommittee Chairman and local Congressman Adam Smith (WA-09) offered an amendment to the National Defense Authorization Act for Fiscal Year 2011 that will help shine a spotlight on the impact of illegal foreign subsidies on American defense industry workers and companies. The move pushes the Department of Defense to report on the impacts of illegal subsidies related to the KC-X tanker competition and whether such subsidies provided an unfair competitive advantage.  

"We cannot allow illegally subsidized foreign companies to take jobs and contracts away from American workers and companies through an unfair advantage,” said Congressman Adam Smith. “For example, if it turns out that Airbus is able to offer a lower bid than Boeing on the KC-X Tanker contract because they were illegally subsidized, then we should push the Department of Defense to take those subsidies into account. My amendment offered today will do just that."

The FY2009 National Defense Authorization Act required the Department of Defense (DOD) to review the impacts of subsidies related to the KC-X tanker contract after the World Trade Organization (WTO) releases its ruling and submit a report to Congress. Currently, DOD must initiate a review 10 days after WTO’s ruling is made public, which is expected this June. However, DOD is not required to complete its review until 90 days after the appeals process is final, and will not report to Congress until 30 days after completing the review. This means that any report on the impact of subsidies will not be made until after the KC-X tanker contract is awarded this fall.

To ensure that DOD considers the impact of subsidies this year, the amendment would require an interim report be submitted 60 days after DOD initiates the review required by current law. The interim report from the Secretary of Defense is directed to contain detailed findings on the impacts of illegal subsidies related to KC-X and whether such subsidies provided an unfair competitive advantage. The report must be submitted 60 days after the WTO’s ruling is released in June.

The amendment was adopted by a voice vote. Amendment language attached here

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