A year ago, one of the cornerstones of Mr. Trump’s campaign was a promise to support U.S. jobs and businesses that were up against unfair foreign competition. Now as President, Mr. Trump has a clear and non-controversial opportunity to make good on that vow. For more than two years, American Airlines, Delta Air Lines, United Airlines and a coalition of trade unions have worked to convince the U.S. Government to enforce specific trade agreements with the United Arab Emirates (UAE) and Qatar. These two countries and their three airlines – the fast-growing Emirates, Etihad Airways and Qatar Airways – are violating the terms of the “Open Skies” aviation pacts. The language in these agreements is clear: the foreign airlines get unlimited and unrestricted access to the United States, the largest market in the world, but they cannot be subsidized.
The U.S. network airlines have proven that the three Gulf carriers have received more than $50 billion in subsidies and other unfair benefits since 2004. Because the Gulf carriers are not required to submit the honest and transparent financial information that the U.S. and other governments require – and that private and institutional investors expect – it took forensic accountants and investigators who combed the globe to uncover (in mandatory submissions to foreign governments and elsewhere) the clear evidence of subsidies. When the U.S. Department of Transportation opened a proceeding in 2015 on the dispute, Emirates, Etihad and Qatar Airways provided zero hard evidence that they had not received wheelbarrows of cash from their government owners. They’ve worked hard to obfuscate the subsidy argument with thick studies of financial benefit to the U.S. economy, and by hiring apologists in Washington, like the U.S. Travel Association, who willfully misstate the positions of the U.S. carriers.
These massive subsidies have enabled the three Gulf carriers to expand dramatically in the U.S. – in just over two years they have grown by more than 50 percent – without concerns about market demand, profitability and the other realities that U.S. airlines live with every single day. The threat to 1.2 million U.S. airline jobs is not abstract. For every U.S. international flight lost to subsidized Gulf competitors, about 1,500 U.S. jobs are lost. And because airline networks are interconnected and dependent, the loss of long international flights damages the long-term viability of the domestic networks that “feed” passengers through connecting hubs like Atlanta or Chicago.
Unhappily, our economic history is full of examples of the federal government’s failure to enforce fair trade principles or, worse, established policy and rule of law. Shipbuilding is one of those cases. The numbers are stark. In 1975, U.S. companies built 77 large commercial ships; in 1990, they built just 3. Although the global economy was changing in that period, a 2015 cautionary tale noted that “one policy decision stands out” – the lack of a U.S. response to the huge subsidies that other countries – particularly Japan and South Korea – were providing their shipyards. In 2015, those two nations had a 64 percent global market share in commercial shipbuilding, while the U.S. plummeted to less than one-third of one percent. That decline resulted in a loss of hundreds of thousands of American jobs. Just ask someone from southeast Pennsylvania or at Maine’s Bath Iron Works about the old days. Those communities once thrived thanks to a healthy commercial shipbuilding industry and today rely almost exclusively on U.S. military contracts.
The U.S. steel industry is another example. Decades of government subsidies to Korean, European and other steel producers greatly damaged local production, closing mills in Great Lakes states and elsewhere, throwing thousands of American steelworkers out of work, and wreaking huge damage on local economies. Happily, the Trump administration has stepped forward in a case involving seven foreign producers of steel plate, but the impact over the years has been huge. Solar panels are yet another example, with U.S. producers unable to compete with subsidized Chinese makers.
A common, and to this observer offensive, thread across these different industries is that U.S. companies and employees are being “protectionist.” That’s an unfair and loaded word, suggesting that workers and firms want coddling or special favors. Just like shipbuilders and steelworkers, and long before the trade dispute with the Gulf carriers, U.S. airlines and their teams proved that they knew how to compete in world markets. They learned those lessons through several decades of a challenging (and often personally painful) transition that followed economic deregulation of the U.S. airline industry in 1978. But in order to compete, we need a level playing field.
Almost 300 members of Congress, Republicans and Democrats alike, have stepped forward to urge President Trump to enforce the aviation agreements with the UAE and Qatar. This week, bipartisan delegations from Arizona and Wisconsin joined lawmakers from Ohio, Illinois, Michigan, Georgia, Minnesota, Utah and Texas who earlier weighed in on the matter. The Trump administration should heed the concerns raised by a majority of the U.S. Congress and refocus on doing the right thing for the U.S. airline industry and their million-plus workers. As former U.S. Trade Representative Charlene Barshefsky recently said, “President Trump came into office saying he was going to enforce our trade agreements in a vigorous way . . . this is the test case.”