Boeing’s Non-U.S. Customers Subsidized: Delta Wants Bank Support Cut
Boeing and Delta are at odds over a federal export-import institution. The 80-year old trade agreement, which could soon come to an end, essentially provides guaranteed loans and other incentives to foreign buyers in order to help U.S. companies sell their products. Read on to learn how Delta is fighting back and why Boeing may not budge.
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Boeing vs. Delta Breakdown
Delta is parting clouds to shed light on the seemingly unfair and ultimately superior rates that Boeing offers its foreign buyers. Although it may seem Delta is a victim of some sort of fraud, Boeing is actually playing by the rules.
The airplane manufacturing is allowed to offer foreign buyers better rates through the Ex-Im Bank, which helps finance these foreign deals.
Neither company is budging. Yet both are fighting to get Congress’ attention as the deadline for the Export-Import (Ex-Im) Bank charter renewal looms.
Boeing and the Ex-Im Bank
Ease of foreign trade is favored by most global producers. Boeing is no exception. One of the largest airline manufacturers, Boeing is also a top U.S. exporter with customers in up to 150 countries, according to the company’s website. The Ex-Im Bank is vital to the manufacturer’s overseas trade.
According to Bloomberg’s BusinessWeek, Boeing isn’t the only U.S. company with a vested interest in the Ex-Im Bank: “The Ex-Im Bank put up $27.3 billion in 2013 to help small and large U.S. companies close deals overseas. It provided a South African company with $230 million in loan guarantees to buy 100 locomotives built by General Electric (GE) and gave a $155 million direct loan to the Republic of Ghana to finance a hospital expansion designed and built by Miami-based Americaribe.”
Delta and the U.S. Airline Industry
Delta’s chief concern is its U.S. operation. The company claims upwards of 7,500 jobs were lost in 2011 alone due to competition caused by Boeing’s relationship with the Ex-Im Bank and foreign buyers.
Delta and other American companies argue that these advantages are hurting their bottom line and significantly impacting U.S. job growth and the overall economy. Delta and critics claim that the Ex-Im Bank charter is a classic case of the U.S. government becoming too involved with business.
Although the airline is still a leader in the industry, many conservatives believe these types of trade agreements will continue to hurt U.S.-based businesses and their relationships with their fellow American business owners.
Ultimately, if Delta doesn’t receive a cut from the bank, the company will lobby not to renew the charter instead.
A Turbulent Flight for Congress
In the end, the debate comes down to what flies with Congress. Congress will need to reauthorize the trade agreement before Sep. 30. Only then we will know which company is vindicated – or rather backed by the government.
Two sides remain: Delta enlists to fight for U.S. manufacturers as it urges Congress to take action; Boeing aims to strengthen relationships and trust with foreign buyers. Each story is significant to relations throughout the global supply chain. However, the final decision could indicate government interest in either outsourcing or U.S. insourcing.
What side are you on when it comes to deals for foreign buyers and U.S. companies that want a cut? Share your thoughts in the comments below. [/show_to]
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