From a new Defense Science Board report on the defense industrial base released today:
One example of the perversion of current globalization policy is the United States Air Force (USAF) tanker competition. The Boeing 767 facility must be ITAR compliant, regarding business access and US employees, so that the aircraft can be sold to the military. The Boeing 767 also required a Berry Amendment waiver, because large shares of its parts are developed offshore, including parts that are manufactured in Russia. By Contrast, the Airbus KC-30 is exempted from the Berry Amendment because the law exempts production from certain allied nations.
Interestingly, I don’t think this is true. While the KC-30B is assembled in Toulouse, this rule may apply. But when the assembly line shifts to Mobile, Alabama, I think the same laws apply.
This issue came up in the same hearing last month that I quoted in my previous post today. At the risk of quoting John Young too many times in one day, here was the exchange between Young and Represenative Todd Tiahrt, a pro-767 lawmaker from Kansas.
REP.TIAHRT: You are waiving the regulations for the Europeans, by the way you justexplained it to me. And in doing so you’ve created an unlevel playing field andan unfair advantage to one bidder over the other.
Ninetypercent of the product is built in
Europe, andthey don’t have to comply with five specific regulations — the cost accountingstandards, the Foreign Corrupt Practices Act, the International Trafficking inArms Regulations, the Berry Amendment, and the Buy American Provisions. Thoseare the five regulations that have been waived by the Department of Defense –not Congress, by you guys. Are you going to force them to comply with them justlike you do the American company? Because if you don’t American workers are putat a disadvantage.
MR. YOUNG:Both bidders, both companies must comply with all the regulations and laws youjust cited. Both of those bidders are reaching outside of their defense companyheadquarters to get commercial products. Both of those commercial productproviders are not subject to some elements of all of those regulations youtalked about.
But all thecommercial products are subject to the same regulations and then the defensecompanies that are bringing those commercial products into and modifying themto deliver the
government a tanker are fully subject to all the regulations. And we will notbe waiving regulations with regard — (inaudible). U.S.
REP.TIAHRT: You will not apply these five regulations to 90 percent of one of thetwo bids. That’s just what you’ve told me. You said the American portion –well, fine. We’ll apply the regulations equally for 10 percent of the product.But for 90 percent, we’re going to make a disadvantage for American workershere by allowing no cost accounting standards, no Foreign Corrupt PracticesAct, no International Trafficking in Arms regulations. Those are very expensiveregulations to implement, and you’re — (audio break) — implemented entirelyon one body and you’re waiving it entirely for 90 percent of another body. Thatis an unfair advantage.
MR. YOUNG:We’re implementing it uniformly to the two bidders.