Trade dispute affects tanker competition

WASHINGTON — An international trade dispute between Boeing Co. and Airbus SAS has begun affecting the politics of a multibillion-dollar competition to build the Air Force’s next fleet of refueling tankers.

Deputy Defense Secretary Gordon England decided that companies competing to build the new tanker would be asked about the potential impact an aircraft trade dispute now before the World Trade Organization might have on their bid. The United States and the European Union have accused each other of illegally subsidizing their flagship aircraft manufacturers, Boeing and Airbus.

The measure could prove troublesome for a team that includes European Aeronautic Defence and Space Co., which owns Airbus and has announced plans to compete against Boeing for the work tanker project.

EADS has been attempting to keep the military contract separate from the international dispute; Boeing supporters have argued that the pending WTO case shouldn’t be ignored.

The dispute broke into the open this week after Sen. John McCain, R-Ariz., vice chairman of the Senate Armed Services Committee, called England’s position “unprecedented” and said it could limit competition for the tanker.

Replacement of the Air Force’s aging fleet of tankers, which refuel fighters and other planes in midair, has become a three-year-long saga for the defense industry.

The Air Force says it will release a draft version of its request for a proposal, which would officially launch the competition, by the end of the month.