WTO won't rule on U.S. tanker conflict

PARIS, April 14 (UPI) -- The World Trade Organization said it won't intervene on behalf of the European industry in a dispute with the United States over a major U.S. tanker plane contract.

"In this case, it is military equipment and the rules of international trade do not apply," WTO Secretary-General Pascal Lamy told French TV channel Canal Plus this week.

The 153-member body has ruled on several complaints involving European plane maker Airbus and U.S. rival Boeing. The latest conflict concerns a $40 billion contract to outfit the U.S. Air Force with 179 tanker planes.

The European Commission, France and Germany have accused the United States of protectionism after Airbus parent European Aeronautic Defense and Space Co. dropped out of the bidding last month, following frustration at its U.S. project partner Northrop Grumman.

The Los Angeles company retracted the bid, arguing the bidding conditions clearly favor U.S. rival Boeing. As of now, Boeing is the only company left trying to win the contract.

EADS is looking for a new partner or altered bidding conditions after the Pentagon agreed to extend the bid submission deadline by 60 days. Companies including the United States' Raytheon and L-3 Communications, as well as Britain's BAE Systems have been linked to a new EADS bid.

Winning the contract would secure thousands of jobs in the EADS partner countries Britain, France, Germany and Spain, EADS says. Under its initial proposal, the fuselages for the planes would have been built in France and Germany, the wings in Britain and the tails in Spain. Northrop would have assembled and equipped the aircraft in the United States.

The bidding war goes back several years.

Together with Northrop, EADS submitted its KC-45 tanker for a contract to outfit the U.S. Air Force with 179 refueling tankers. Based on the Airbus A330, the KC-45 won the contract in February 2008 but the decision was overturned four months later by the Government Accountability Office after Boeing challenged it. The GAO said it found problems with the bidding and the contract is up for grabs.

Boeing is throwing an altered version of its 767 into the race, a plane smaller than the KC-45 and one favored by the bidding conditions, the Europeans claim.