Ethnocentric vs. Regiocentric Consolidation in the Aerospace and

airline. 146 Despite the clear business focus of Airbus and the considerable operational independence
enjoyed by its partners, the consortium’s administrative structures revealed the close links between
European governments and their Airbus aerospace companies. For the definition of its political
orientations, for instance, Airbus reported to the so-called Intergovernmental Committee (IGC),
composed of representatives from the different ministries responsible for the Airbus project. The
IGC also provided the institutional link between the founding nations of Airbus and the European
Commission (EC), which plays a key role in transatlantic disputes over trade and industrial policy.
“Essentially Airbus represented a bargain struck between aerospace firms and governments.
Governments would back the consortium with money and political support. Airbus, for its part,
undertook to develop a commercially credible product.” 147 Airbus was founded as a public-private
partnership designed to preserve the independence and autonomy of the European aerospace
industry vis-à-vis the crushing dominance of the American competitors.
Between 1972 and 1977, US aerospace manufacturers continued to dominate the global commercial
aircraft market. In 1977, however, Airbus had a major strategic breakthrough and sold 23 A-300 to
its first American customer, Eastern Air Lines. On the political front, Congress and the Carter
administration exerted pressure to discourage American carriers from buying Airbus or any other
non-US aircraft for that matter. 148 149 Washington’s political leaders argued that US airlines should
“Buy American” in order to save jobs in the US aerospace industry. At one point, the Carter
administration even threatened to impose countervailing duties on all Airbus imported into the US
in an effort “to protect domestic manufacturers from foreign competition backed by government
finance”. 150 It is clear, though, that during the 1970s, both Boeing and MDC wanted to avoid a
transatlantic trade war and did not call on the US administration / Congress to impose import
restrictions or other trade remedies vis-à-vis Airbus. 151 152 As the 1970s progressed, however,
Airbus increasingly began to put its US rivals on the defensive. By 1979, the European consortium
146 “Airbus was also lucky in that fuel price increases of the mid-1970s made a large twin-engined airliner more
attractive when the A-300 was the only one available.” Hayward (1987-1988) p. 20
147 McGuire (1999) p. 39
148 Eastern Air Lines’s A-300 order and Pan Am’s purchase of the UK-manufactured TriStar 500/RB.211 triggered a
House hearing, and there was “little doubt in Washington that a major Congressional investigation would have resulted
if United Airlines had decided to buy $1,000 million-worth of Airbus A-300-10s instead of Boeing 767s” in 1978.
Flight International (1978)
149 In 1961, Mohawk Airlines purchased four British-made BAC 1-11 aircraft, and American Airlines ordered 15 such
aircraft in 1963, triggering a storm of protest from US aircraft makers and Congress.
150 Flight International (1978)
151 “The Carter administration was concerned about creeping subsidies in civil aviation, but no countervailing duties or
other retaliatory measures were imposed. Instead we negotiated an agreement, in the context of the OECD
[Organisation for Economic Co-operation and Development] Gentleman’s accord on export credits that brought some
discipline to aircraft financing. In the 1970s and 1980s, Boeing didn’t want to trigger a trade war, for lots of good
commercial reasons.” Hufbauer (2009).
152 “Since Boeing and [MDC] were profitable and export-dependent and had extensive overseas connections, both could
be expected to oppose any closure of the American market.” (Milner & Yoffie, 1989) p. 256
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