New Defense Battle Looms

Posted June 17, 2003 at 4:22pm

As President Bush works to soothe post-war tensions in Europe, Members of Congress have launched their broadest effort to date to punish countries that opposed war in Iraq.

But far from simply changing the name of french fries in House cafeterias, lawmakers are pushing a sweeping provision that would redirect billions of dollars in defense spending from foreign companies to U.S. manufacturers.

House Members last month quietly added language to a $400 billion bill to reauthorize the Defense Department that would effectively prevent the Pentagon and the U.S. defense industry from purchasing important parts overseas.

The idea, championed by Rep. Duncan Hunter (R-Calif.), is to protect U.S. jobs and ensure that the U.S. military remains free from dependence on foreign countries.

“I am concerned about losing the domestic source for a number of the critical parts of our national defense,” said Hunter, the chairman of the Armed Services Committee.

The measure is strongly supported by labor unions, many U.S. manufacturers and the shipbuilding industry.

But it is opposed by some of the nation’s largest defense contractors, including Lockheed Martin Corp. and the Boeing Co., which rely on cheap foreign labor to keep prices low for the Pentagon.

Seeking to keep costs low and re-establish diplomatic relations, the White House says the measures are “burdensome, counterproductive and have the potential to degrade U.S. military capabilities.”

The fight over the defense provisions, which will begin as early as this week in a House-Senate conference, is the latest in a series of similar skirmishes that have been waged in Washington since several European countries questioned U.S. military action in Iraq, stirring nationalistic feelings on Capitol Hill.

A small Missouri company has also gotten a provision added to the defense bill that would bar the military from purchasing MREs that use any foreign-made products. And Goodyear Tire & Rubber added language banning military airplanes, trucks and cars from riding on foreign tires.

Not surprisingly, each of the efforts is led by U.S. companies that stand to profit by driving out competitors.

Missouri’s Smurfit Stone Flexible Packaging hopes to get a leg up on its main competitor, Indiana-based AmeriQual Packaging, which seals its MREs with a specialized film purchased in Switzerland. Goodyear’s move would damage France’s Michelin Tires.

The latest of the so-called Buy America provisions has similar roots.

Rep. Don Manzullo (R-Ill.), the chairman of the Small Business Committee and a leading backer of the Buy American provision, has a manufacturing-based district that would stand to gain.

Still, the latest of the so-called Buy American provisions is the most far-reaching to date and has sparked the fiercest lobbying counterattack.

“It’s counterproductive pandering that does nothing but make a name for politicians with xenophobic voters,” said Richard Aboulafia, a defense analyst with the TEAL Group.

The language would “effectively make costs skyrocket for the Department of Defense,” added Janet Neale, a spokeswoman for the Aerospace Industries Association, which is leading the effort to strip the provision from the underlying bill. “If you make everything here in the U.S. the costs will be so prohibitive.”

Lobbyists working against the measure also say it would damage the U.S. military in the long run by jeopardizing some of the Pentagon’s most advanced projects, such as the military’s newest fighter jet, the planned Joint Strike Fighter.

Lockheed Martin plans to rely heavily on foreign parts and subcontractors in assembling more than 3,000 strike fighters for the Pentagon.

“This is remarkably far-reaching and ignores the realities of how multinational companies bid for contracts,” said Todd Malan, the executive director of the Organization for International Investment, which represents the U.S. subsidiaries of foreign companies.

However, supporters of the provision say fighter jets, cruise missiles and other military supplies should be produced domestically so that the Defense Department is not dependent on products made overseas.

Hunter said the supply of a key weapons system — Boeing’s Joint Direct Attack Munitions — was threatened during the Iraqi war when a Swiss company refused to turn over a central component due to its opposition to U.S. policy in Iraq.

“That’s the whole idea of maintaining your critical parts,” Hunter said.

Hunter’s allies admit it doesn’t hurt that keeping military production within U.S. borders helps to safeguard American jobs.

“The preservation of the U.S. defense industrial base should be a core objective in national security planning,” said William Hawkins of the U.S. Business and Industry Council, a group of 1,000 small and medium-size manufacturers leading the defense of the measure.

Hawkins said U.S. jobs are “getting wiped out by outsourcing to foreign companies.”

During a time of escalated U.S. nationalism and rising fears about U.S. job loss, supporters and opponents alike agree that the provisions stand a good chance of becoming law.

“It may have some legs this time also because of the anti-foreign feeling growing out the Iraqi war,” said former Sen. Bennett Johnston (D-La.), now a lobbyist for Boeing and Northrop Grumman.

Added Aboulafia: “If you wrap yourself in the flag, it is difficult not to get your agenda achieved these days.”