Tracking Number: 206133
Title: "JEC Panelists Object to Aircraft Company Sale to Taiwan."
Acting Chairman of the Joint Economic Committee of Congress Senator Jeff Bingaman has voiced opposition to the proposed sale of 40 percent of McDonnell Douglas Corp's commercial aircraft business to Taiwan Aerospace on the grounds of national security. (911203)
Author: HOLDEN, ROBERT (USIA STAFF WRITER)
Date: 19911203
Text:
*EPF208
12/03/91 *
JEC PANELISTS OBJECT TO AIRCRAFT COMPANY SALE TO TAIWAN
(Article on hearing of Joint Economic Committee) (640)
By Robert F. Holden
USIA Staff Writer
Washington -- The proposed sale of 40 percent of McDonnell Douglas Corporation's commercial aircraft business to Taiwan Aerospace for $2,000 million drew criticism from the Joint Economic Committee of the U.S. Congress December 3.
The committee's acting chairman, Senator Jeff Bingaman (Democrat of New Mexico), is already on record as opposing the sale. In a November 18 letter to President Bush, Bingaman and 17 other senators expressed "grave doubts that this transaction would be in the (U.S.) national interest."
Bingaman followed the letter by introducing a resolution, S. Res. 234, calling on the administration to review the terms of the sale, examine its long-term impact on the health and competitiveness of the U.S. aerospace industry - - including its supplier base -- explore executive options available to end foreign unfair trade practices in high technology products, and look into policies to help U.S. aerospace product exports compete against subsidized producers like Europe's Airbus consortium. The resolution was cosponsored by 17 other senators.
"I am concerned," Bingaman said, "about the prospect of transferring a tremendous amount of aerospace technology to Taiwan -- and possibly other Far East equity partners -- for a small fraction of the cost it has taken to develop that technology, the majority of which was paid for by the taxpayers of this country."
Bingaman said he also was concerned about the impact the deal would have on McDonnell Douglas' domestic suppliers, many of which also supply the U.S. Department of Defense.
Robert Hood, president of Douglas Aircraft Company, the McDonnell Douglas subsidiary subject to the sale, defended the sale on the grounds that it would keep the company competitive. "McDonnell Douglas has seen its market share dwindle from being number two to number three at the expense of a new government subsidized competitor, the European Airbus," he said.
"Our new company is the way for McDonnell Douglas to maintain leadership in the aerospace industry," Hood said. "The investment by Taiwan Aerospace, and any other potential partners, gives the new company the strength to invest more resources in research and development which
GE 2 EPF208 will benefit American industry. The new company is, and will remain, a U.S. company."
The New Mexico senator said McDonnell Douglas' decision to sell off nearly half of its commercial business to a corporation owned by the authorities on Taiwan was understandable. "Every other large industrialized nation regards its aerospace industry as a strategic industry to be nurtured by a variety of government actions," Bingaman said. "The dilemma in which McDonnell Douglas finds itself stems from a complete lack of a strategic U.S. policy on technology, manufacturing and trade issues."
Echoing that sentiment, panel witness Clyde Prestowitz of the Economic Strategy Institute called for the U.S. government to create an industrial policy. "The leaders of Congress and the president should call in the leaders of the U.S. aircraft companies along with the leaders of other related industries, such as jet engines, computers, semiconductors, telecommunications, avionics and so forth," Prestowitz said. "Industry should be told that the government of the United States prefers a domestic solution and will work to help achieve one."
Prestowitz, who served as counselor to the secretary of commerce in the Reagan administration, recommended that U.S. antitrust laws be waived and an American consortium established. The U.S. trade representative should inform the Europeans that Airbus sales in the United States will be subject to countervailing duties until the European subsidies cease, he said. "Moreover, the Department of Commerce and the Export-Import Bank of the United States should be given war chests sufficient to offset Airbus subsidies to foreign customers."
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File Identification: 12/03/91, EP-208
Product Name: Wireless File
Product Code: WF
Keywords: BINGAMAN, JEFF; TAIWAN-US RELATIONS; MCDONNELL DOUGLAS CORP; TAIWAN
AEROSPACE CORP; NATIONAL SECURITY; JOINT ECONOMIC CMTE; TECHNOLOGY TRANSFER; AEROSPACE INDUSTRY
Thematic Codes: 140
Target Areas: EA
PDQ Text Link: 206133
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