The British government is pressuring British Airways to purchase UK-made products in the interests of British jobs, the Times reports. “Government ministers and officials are understood to be urging Willie Walsh, chief executive of BA, to ‘buy British’ by supporting Rolls [engines] and Airbus, both of which have large manufacturing operations in the UK.”
I can’t even begin to go into how backward this is, but I’ll try: First, if Airbus and Rolls Royce offer products superior to their competitors’ (they are both certainly right up there with their competitors), then the decision would require no intervention. Second, BA is a mostly-Boeing airline, although the Times article fervently pushes a scenario in which BA might need to buy the A380. But it doesn’t make sense for BA to buy Airbuses unless it gets a good deal, which is something it needs to negotiate with Airbus. For the British government to get involved in a pricing deal with a private company would be illegal.
That’s right, illegal! The World Trade Organization’s Uruguay Round Agreement on Trade in Civil Aircraft forbids member countries from intervening in the aircraft purchasing process. Look at article 4:
4.1 Purchasers of civil aircraft should be free to select suppliers on the basis of commercial and technological factors.
4.2 Signatories shall not require airlines, aircraft manufacturers, or other entities engaged in the purchase of civil aircraft, nor exert unreasonable pressure on them, to procure civil aircraft from any particular source, which would create discrimination against suppliers from any Signatory.
4.3 Signatories agree that the purchase of products covered by this Agreement should be made only on a competitive price, quality and delivery basis. In conjunction with the approval or awarding of procurement contracts for products covered by this Agreement a Signatory may, however, require that its qualified firms be provided with access to business opportunities on a competitive basis and on terms no less favourable than those available to the qualified firms of other Signatories.
4.4 Signatories agree to avoid attaching inducements of any kind to the sale or purchase of civil aircraft from any particular source which would create discrimination against suppliers from any Signatory.
It’s pretty crystal-clear: if Britain elevates its reported pressure on BA to obligation, it would be opening itself up to a complaint in the WTO. I hope the government isn’t dumb enough to pull something like this–it would be a big setback for the cause of rooting nationalism out of this most nationalist sector. It might also open the door for similar action by China or Russia.
And why didn’t the Times mention these legal details in the article? The correspondent manages to quote analysts galore, but checking to see if the British government could really make BA buy British–“the aviation sector is heavily regulated and BA’s future growth will depend on government support for new infrastructure such as additional runways at Heathrow, Stansted and Gatwick”–would have added a little factual balance to the story.