University at Buffalo - The State University of New York

Published: January 6, 2005

By JOHN DELLA CONTRADA
Contributing Editor

A UB expert on the commercial aircraft industry has been invited to speak next week at the 84th annual meeting of the Transportation Research Board (TRB), where he will present research analyzing subsidy claims at the heart of World Trade Organization complaints made by rival U.S. and European aircraft manufacturers Boeing and Airbus.

David J. Pritchard, a research associate with the Canada-U.S. Trade Center within the Department of Geography, will make his presentations on Monday and Tuesday at the TRB meeting, to be held in Washington, D.C. The TRB is a division of the National Research Council, which serves as an independent advisor to the federal government and others on scientific and technical questions of national importance.

In addition to his research on aircraft subsidies, Pritchard will present research on the effects of outsourcing on the U.S. aerospace industry, partly focusing on Boeing's new 7E7 Dreamliner, which he says is being built with as much as 70 percent foreign content.

"There probably will be more Japanese working on the 7E7 than Americans," Pritchard says.

Pritchard expects the Office of the U.S. Trade Representative soon to file a formal complaint against Airbus, claiming that government loans Airbus received for manufacturing passenger jets violate a 1994 WTO agreement, which prohibits receipt of government subsidies for commercial jet manufacturing.

The U.S. complaint, Pritchard predicts, will be followed by a European Union counter complaint, claiming that $6 billion received by Boeing from the United States (Washington State), Japan and Italy violates the 1994 agreement.

"I think the WTO will find both parties in violation of the 1994 agreement," Pritchard says. "Airbus will have to repay loans for the A350 and Boeing will be required to return the $6 billion it received for the 7E7.

"Airbus has said it is prepared to proceed with the A350 with or without financial assistance, but such a ruling would seriously jeopardize the future of the 7E7 and Boeing's future in the commercial jet industry as well," Pritchard says.

Boeing's midsize 7E7 Dreamliner is the first new jet the company has launched since 1990 and is scheduled to enter commercial service in 2008. The Airbus A350, a midsized wide body, is estimated to start flying in 2010.

Prtichard's research with co-author Alan Macpherson, chair of the Department of Geography, was described in the scholarly articles "Industrial Subsidies and the Politics of World Trade: The Case of the Boeing 7E7" and "Outsourcing U.S. Commercial Aircraft Technology and Innovation: Implications for the Industry's Long-Term Design and Build Capability." The articles were published in the journals Industrial Geographer and R&D Management, respectively.

The papers are available at http://www.geog.buffalo.edu/custac/current_research.html.

Aspects of Pritchard's and Macpherson's research have been reported by The Economist, BusinessWeek, USA Today, Los Angeles Times, Chicago Tribune, Seattle Post Intelligencer, Seattle Times, Associated Press, Agence France Press and Aviation Week.