EU Cautions The United States Against Protectionist Measures (NOC, BA)

The EU warned the U.S. against protectionism after a European-led consortium pulled out of the bidding for an Air Force, alleging that the terms of the deal were biased in favour of a U.S. company.

EADS, jointly with Northrop Grumman (NYSE: NOC) had bid for a 179 tanker order but the consortium pulled out on Monday. They said the terms of the deal appeared designed to eliminate its design in favor of a smaller jet offered by rival Boeing Co.(NYSE: BA). The announcement left Boeing as the only bidder for the project.

The EU Trade Commissioner Karel De Gucht said, “It is highly regrettable that a major potential supplier would feel unable to bid for a contract of this type. Open procurement markets guarantee better competition and better value for money for the taxpayer." The EU noted that the trade balance in defense equipment with the 27-nation EU has traditionally been heavily in favor of the American side, and that in 2008 the US exported $5 billion worth of defense materials, while importing only $2.2 billion from the European side. The statement further said that "The Commission will be following further developments in this case very closely.”

Reaction in the U.S. political circles was swift, with several U.S. lawmakers saying that they regretted the Northrop Grumman/EADS decision.