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AIA Testifies on Aerospace Industrial Base

WASHINGTON, D.C., March 20 - Citing a shrinking trade balance in aerospace products--$26 billion in 2001, compared to $41 billion in 1998-AIA President and CEO John W. Douglass told the House Armed Services Subcommittee on Military Procurement that U.S. companies are not playing on a 'level field" with their competitors overseas. In testimony today on the challenges facing the U.S. aerospace industrial base, Douglass said that industry is being pressured to reduce costs, and assume increased risk and responsibility for product design, while facing increased competition from companies overseas who receive both direct and indirect subsidies from government sources.

Pointing to the trade statistics made available today by AIA, Douglass said that although exports grew $3.8 billion in 2001, imports rose $4.5 billion to an astonishing $32 billion. From 1985 to 2000, he said, the U.S. share of the global commercial market dropped from 72 percent to 52 percent. He added that some believe the U.S. share could drop below 50 percent in the near future. "Without a change, our industry will continue to lose commercial market share. Not only will the U.S. economy be damaged in short order, but our defense industrial base will be damaged as well."

Defense issues, he said, should not be considered independently from policies and programs affecting the civil aviation and space sectors of the industry. And he added that defense procurement and defense research and development must be developed in harmony with the commercial sector.

Douglass also described the impact of current U.S. export and trade policies on the industry's ability to compete in the global marketplace. He presented a letter from more than 40 CEO's to President Bush on obstacles presented by the current export control regime and reminded the committee that "our industry is not asking for a reduction in controls necessary for national security. What we are asking for is a system that is efficiently administered and that only restricts the flow of military technologies to countries posing a realistic national security concern."

He told the committee that the industry needed rapid passage of an updated Export Administration Act, and said that AIA was especially disappointed with the committee's decision to strike language transferring export license jurisdiction for commercial satellites and components from the State Department back to the Commerce Department. "If the decision is not reversed," he said, "we risk the loss of a large share of the global market for commercial satellites and components-particularly sales to our NATO allies- without a measurable level of additional protection."

Read the testimony.

P.A. Rel 2002-16

03.20.02

-AIA-

Contact: Matt Grimison, AIA
(202) 371-8548
matt.grimison@aia-aerospace.org