The chairman of the Senate aviation subcommittee has called on his colleagues in Congress and the entire aerospace industry to make the restoration of federal funding for aerospace research and development a national priority so that the U.S. can maintain its technical leadership.
Sen. John Rockefeller (D-W. Va) said the U.S. trade surplus in aerospace declined last year for the third year in row–from $41 billion in 1998 to just $26 billion in 2001. For the second time in three years, Airbus won more new orders than Boeing last year; the U.S. has largely missed out on the regional jet boom, with a $5 billion trade deficit in this fastest-growing segment of commercial aviation; and now there is a three-to-one trade deficit in civilian helicopters.
“These are disturbing trends for an industry that is a pillar of American economic strength and national security,” he said. “And they are trends that will accelerate if we do not act rapidly, effectively and collectively.”
R&D Funding Falling
Blaming a more than 50-percent drop in U.S. aerospace R&D funding, as well as foreign governments’ and their national carriers’ pursuit of aggressive and possibly illegal campaigns of subsidy and discrimination, Rockefeller urged that the R&D tax credit be made permanent to encourage American aerospace companies to undertake risky, long-term research.
From the late 1980s to the late 1990s, U.S. funding for aerospace R&D fell from $34 billion to $15 billion, while aerospace’s overall share of national R&D dollars shrank from almost 20 percent at the end of the Cold War to less than 10 percent now. Today, only 5- to 6 percent of government R&D funding goes to aerospace, which he called a “shocking figure” given the importance of aerospace and aviation to the country.
“Much of our aerospace and aviation infrastructure is anchored in research initiated two or three decades ago,” said the West Virginia senator. “Because of lead times involved, the current R&D shortfall may not affect our products for years. Unless we act, and act now, the day may come when we are forced to cede technical leadership in this vital field to Europe or the Pacific Rim.”
Foreign Subsidies a Problem
Speaking to the Washington Aero Club in late April, Rockefeller told the group that it is “long past time we recognize that actions by foreign governments and companies” violate the letter and spirit of international trade rules. He said that Europe–the next-largest aerospace sector–has a long tradition of governments promoting so-called “national champion” industries, which is inspiring copycats around the rest of the world.
“The core problem is government subsidies in the development and production of commercial aerospace products,” Rockefeller noted. “For a while, we deluded ourselves into thinking that this problem would go away. But in fact the opposite has happened.”
He claimed that the “flood” of Airbus subsidies, including interest, is estimated to be at least $30 billion, and that this figure will increase by at least another $4 billion as European governments subsidize the development of the new A380.
“It is time for us to start talking seriously about mounting a WTO [World Trade Organization] challenge to the [European Union’s] financial supports in aerospace,” Rockefeller said, interjecting that there was a time when taking Airbus to the WTO would have been considered a de facto declaration of trade war. “But no rational person seriously thinks the U.S. wants to drive Airbus out of business. A WTO case would simply ensure that Airbus plays by the same rules we do.”
Several weeks after Rockefeller spoke to the Aero Club, Rep. John Larson (D-Conn.) and 19 co-sponsors introduced the Aeronautics Research and Redevelopment Act, which would authorize $1.15 billion in spending for aeronautics R&D at NASA over the next five years. The bill would also provide $550 million for R&D at the FAA.