Still Neutral

Defense Secretary Robert Gates told House appropriators Wednesday that the WTO’s ruling on Tuesday against European aircraft-maker Airbus does not affect the Air Force’s KC-X tanker competition—yet—even as Airbus’ parent EADS contemplates entering the competition as a prime offeror (see No Changes above). “My lawyers tell me that the WTO case … gives us no basis on which to make a judgment,” he said. The Pentagon has thus far kept the KC-X recapitalization out of the US-European trade spat over subsidies for large commercial aircraft. However, senior defense officials have maintained that the KC-X contract would be structured so that the US taxpayer would not bear the cost if any penalties are imposed on the tanker contractor. There’s still one shoe yet to drop on this issue: The WTO is expected to rule this summer whether Boeing has similarly received unfair financial help.