If they were thinking like savvy businessmen and women, the Pentagon and the US Trade Representative could have worked together to leverage the tanker deal by telling EADS that if they wanted the tanker contract, they would have to pay back the illegal subsidies, and promise to stop taking them in the future. But instead, the Pentagon gave EADS a free pass, simply ignoring their blatant violation of international trade rules.
European governments have long subsidized EADS because they have wanted to establish and support a domestic European aerospace industry. While we may certainly understand why Europe would desire its own aerospace and defense industries, it is maddeningly difficult for Americans to understand, much less accept, why our own government would play along, disadvantaging American firms who are playing by the rules in order to support European firms who are not.
Free trade is good for American businesses, large and small. But for them to support free trade policies, voters need to be confident that at the very least, Washington will demand that competitors for US government contracts must obey the rules of free trade. That’s why the Pentagon’s decision to willfully ignore the US Trade Representative’s warning about EADS trade violations -- coming as it does in a political climate that is challenging the very future of free trade -- is such a monumental mistake.