US-Europe tensions rise over arms exports

Discussion in 'Americas' started by Armand2REP, Mar 11, 2010.

  1. Armand2REP

    Armand2REP CHINI EXPERT Veteran Member

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    US-Europe tensions rise over arms deals, exports
    Wed Mar 10, 2010 12:15pm EST

    By Rhys Jones

    LONDON, March 10 (Reuters) - The United States and Europe face growing tensions over restrictions on export deals involving BAE Systems (BAES.L) while European politicians protest the collapse of efforts to sell aerial tankers to the United States.

    The U.S. State Department said on Tuesday it would delay action on any new export license requests by BAE Systems (BAES.L) after the British military contractor pleaded guilty to violating several U.S. laws.

    "We understand that there has been no change to existing export licenses and agreements, and that export activities may continue under existing authorisations," BAE said in a statement, but added that it did not know when the State Department would issue any new licenses.

    The UK has also expressed its concern at the United States's handling of a military tanker contract, after EADS's U.S. partner Northrop Grumman (NOC.N) dropped out of the race to build a tanker, leaving U.S. rival Boeing (BA.N) as the sole bidder. [ID:nN08190077]

    "Given the open market to U.S. producers we have in Europe, it is very disappointing that a U.S.-led European consortium feels that the revised tanker procurement process is now so biased against them that it is not even worth making a bid," Britain's business secretary Peter Mandelson said in a statement on Wednesday.

    France's Prime Minister Francois Fillon echoed Mandleson's comments during a visit to Berlin's Humboldt University.

    "I think the attitude of the U.S. government on the matter of the air tankers is a serious breach of the rules, which are those of fair competition between our economies," said Fillon.

    "The American government, I am saying it, has obliged EADS to quit the competition for the American army's air tankers."

    EXPORT LICENSE DELAYS

    BAE Systems earlier this month pleaded guilty to conspiring to make false statements in connection with foreign arms contracts and agreed to pay a $400 million fine to settle a long-standing inquiry into its business practices. [ID:nN01102718]

    State Department spokesman P.J. Crowley said the department was studying the judgment entered in federal court in the District of Columbia and would not move forward on any export license approvals for now.

    "This may have an effect where U.S. licenses are required to sell UK products into export markets that require International Trade and Arms Regulation licenses, which the U.S. has been reluctant to give out," said Evolution analyst Nick Cunningham.

    The potential row with BAE, which is seen as the most successful European company in penetrating the world's largest defence market, due to Britain's close ties to the United States, comes after a spat between the two allies over sensitive software codes for the F-35 fighter jet.

    The Pentagon recently said it would keep to itself the software code that controls Lockheed Martin Corp's new radar-evading F-35, despite requests from co-development partners -- Britain, Italy, the Netherlands, Turkey, Canada, Australia, Denmark and Norway.

    BAE has increasingly turned its back on its European roots to foster closer business ties with the U.S and itself sold a 20 percent stake in Airbus in 2007.

    BAE last week said it had sold half of its 20.5 percent stake in Saab (SAABb.ST), the Swedish aerospace company, and also plans to offload the rest of its investment through a market placing.

    http://www.reuters.com/article/idUSLDE6292CC20100310?type=marketsNews
     
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  3. Armand2REP

    Armand2REP CHINI EXPERT Veteran Member

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    We buy far more from the US than they do from us, and most of that goes to BAE. If they are going to play these games with protectionism, perhaps we shall do the same.
     
  4. Phenom

    Phenom Regular Member

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    These things are bound to happen during recessions, politicians from both sides would posture and talk about protecting their workers, but eventually a reasonable settlement would be found.
     
  5. Armand2REP

    Armand2REP CHINI EXPERT Veteran Member

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    Only reasonable settlement is going with the original RFP set by USAF. Not the RFP set by Boeing lobbyists.
     
  6. Armand2REP

    Armand2REP CHINI EXPERT Veteran Member

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    France vows retaliation against US in air tanker dispute

    France has vowed to retaliate against the United States for allegedly shutting Europe's aviation giant EADS out of a $50bn (£33.4bn) defence contract, warning of potential damage to the Atlantic alliance.

    [​IMG]

    By Ambrose Evans-Pritchard
    Published: 7:33PM GMT 10 Mar 2010


    "This is a serious affair," said France's Europe minister Pierre Lellouche. "I can assure you that there will be consequences."

    "You cannot expect Europeans to contribute to global defence if you deny their industries the right to work on both sides of the Atlantic," he said, adding that French president Nicolas Sarkozy would take action "at the appropriate time".

    The escalating spat comes after EADS withdrew this week from a joint bid with Northrop Grumman to supply the Pentagon with A330 air refuelling tankers, alleging that the procurement terms had been rigged to favour Boeing.

    EADS had already won the contract before, offering a larger and more efficient aircraft than Boeing's 767, which is based on technology dating back to the early 1980s. The original deal was struck down after an appeal by Boeing.

    Defence disputes fall outside the ambit of the World Trade Organization so Paris is looking at other ways to strike back. "It is obvious that if we roll over and do nothing after a fait accompli by the Pentagon, it is the end of Europe's credibility," said Mr Lellouche.

    Rainer Brüderle, Germany's economy minister, has also expressed outrage, alleging that the tender "had clearly been designed to favour Boeing under political pressure."

    Joachim Pfeiffer, Bundestag spokesman for the Christian Democrats, said the Pentagon's conduct was "scandalous", a sentiment echoed by a string of politicians on Wednesday.

    The dispute casts a cloud over EADS ambitions to become a major player in the US and may have larger strategic implications, causing Europe to reshape its defence doctrines. Mr Sarkozy has been a staunch ally of the US, bringing France back into Nato and holding firm in Afghanistan, but concerns are mounting that the mercurial French leader may revert to Paris's prickly traditions.

    Germany's Bernhard Stiedl, a member of the EADS board, said Europe needs to rethink its whole approach to defence in light of the affair. There is a risk that the spat could sap goodwill towards a NATO alliance already struggling to reinvent itself after the Cold War.

    EADS had agreed to assemble the A330 tanker in Alabama, and half the jobs would have been in the US, but that was not enough to overcome deeper – if unstated – concerns about the role of rival powers in US defence procurement. EADS is perceived in Washington as a tool of French foreign policy, despite efforts by current chief Louis Gallois to tone down its Gallic image.

    http://www.telegraph.co.uk/finance/...liation-against-US-in-air-tanker-dispute.html
     

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