One has to wonder what all the conservative pundits who decry the Obama Administration’s supposed anti-business bias think about the President’s recent visit to Boeing in Everett, Wash., and his pledge to in effect use the ExIm Bank to support domestic sales of 737s. In the realm of civil aircraft this marks the first time either side has threatened to break what became known as the home market rule since the U.S. and Europe entered into a so-called “gentleman’s agreement” under which neither Boeing nor Airbus could benefit from export credit agency support for sales to airlines based within their respective countries of manufacture.
“Today, the President will announce that the Administration will actively employ its existing authorities so that the Export-Import Bank can provide U.S. firms competing for domestic or third-country sales with matching financing support to counter foreign non-competitive official financing that fails to observe international disciplines,” said a White House briefing paper distributed before the event. “The President will not allow U.S. companies and workers to lose out on valuable business due to unfair export financing—and will use the Administration’s full powers to ensure that they are competing on an even footing.”
Until Bombardier introduced the C Series, the “gentleman’s agreement” between the U.S. and Europe didn’t need to extend to other countries. Now, following the signature of a new Aircraft Sector Understanding (ASU) negotiated under the auspices of the Organization for Economic Cooperation and Development (OECD) in 2010, Canada has said it will not observe the home market rule and use all means available to it to support the sale of C Series airplanes to U.S. airlines.
In fact, the new ASU, which takes effect in 2013, contains a proviso for export credit support in the case of competition involving the C Series, largely because of ambiguity centering on the classification of the product as a big airplane or a regional jet.
Obama’s pledge to authorize U.S. ExIm Bank support of Boeing sales to domestic airlines signals an intention to apply “competitive matching” for the first time on behalf of Boeing in the more than 20 years Europe and the U.S. had, in effect, instituted the home market rule.
It should come as little surprise that Boeing CEO Jim McNerney sits on the President’s Council on Jobs and Competitiveness, as do many of the business leaders who curry favor with the Administration. So the next time someone accuses Obama of some anti-U.S., anti-big-business bias, remember his efforts to place Boeing “on a level playing field” with a company from Canada that barely registers as a blip on the Chicago-based aerospace giant’s proverbial radar.