Bloomberg News

Obama Finds Better Business Ties With Boeing in Asia Pacific

November 28, 2011

Nov. 21 (Bloomberg) -- President Barack Obama traveled to the Asia-Pacific region and found something that’s eluded him at home: accolades from the business community.

While Boeing Co. is at the center of a high profile labor case that Obama’s Republican critics say demonstrates the administration’s anti-business regulatory policies, both the aerospace company and the president this put aside friction in favor of potential profits.

The president’s nine-day trip to the region began with a forum in Hawaii alongside Boeing’s chief executive Jim McNerney and wrapped in Indonesia with the announcement of what would be a record aircraft sale for the Chicago-based company. Obama promoted it as a milestone for his trade agenda.

“This is an example of a win-win situation where the people of the region are going to be able to benefit from an outstanding airline,” Obama said Nov. 18 in Bali, alongside executives from Boeing and its customer, Indonesian carrier Lion Air. “Our workers back home are going to be able to produce an outstanding product made in America.”

With stops this week in Honolulu at the Asia-Pacific Economic Cooperation summit, in Australia and in Indonesia for meetings with Southeast Asian leaders, Obama has repeatedly highlighted the need to boost exports to Asian markets to accelerate the U.S. economic recovery and bring down the 9 percent unemployment rate.

The Boeing deal with Lion Air involves the purchase of 230 airplanes valued at about $22 billion with options for another 150 aircrafts valued at $14 billion. The White House says it expects the agreement to support more than 110,000 U.S. jobs at Boeing and at suppliers in 43 states.

‘Strategic Decision’

In a Nov. 17 speech to Australia’s Parliament, the president said he’s made a “deliberate and strategic decision” that the U.S. must have a long-term role in Asia, which accounts for half of the global economy.

“I don’t think the business community has fully understood the comprehensiveness of your approach out here,” McNerney told Obama during Nov. 12 multinational CEO summit at the Asia- Pacific Economic Cooperation forum in Honolulu. “It all does link together -- security, business environment, bilateral trade facilitation.”

The U.S. exported $326.4 billion in 2010 to the Pacific Rim in goods and services, according to U.S. Census Bureau data, up from $254.6 billion in 2009. That exceeded American exports to the European Union or to Canada. From 2000 to 2010, exports to the Pacific Rim rose 71.5 percent.

Appreciation

McNerney, who is chairman of the President’s Export Council, said at the Honolulu summit that many companies have benefited from the administration’s “steadfastness” in supporting enforcement measures at the World Trade Organization. “We appreciate it,” he said.

McNerney also said Obama has “made more of an effort than any administration in recent memory” to ease export controls on items that have civilian and military uses, which would benefit defense contractors such as Boeing and Lockheed Martin Corp.

A week’s worth of such mutual displays of respect isn’t likely to fundamentally alter the dynamic between the Obama administration and the U.S. business community, nor will it likely win over the president’s critics.

“These contract announcements, while positive overall, are usually developed independent of big meetings,” said Douglas Paal, an Asia specialist on President George H.W. Bush’s National Security Council who is now vice president for studies at the Carnegie Endowment for International Peace in Washington. “I don’t think the deals are informative about Obama’s relations with business.”

Critics From Business

While Obama’s administration approved fewer regulations during his first 22 months in office than his Republican predecessor, George W. Bush, in the same time period, his overhaul of the health-care system and financial regulations are among the chief sources of complaints from businesses.

Critics including the U.S. Chamber of Commerce, executives such as Verizon’s Ivan Seidenberg and Republicans in Congress argue the regulatory environment is creating uncertainty that holds back companies from making investments that would spur hiring.

An example cited by congressional Republicans and business groups led by the Chamber of Commerce is a complaint brought by the National Labor Relations Board against Boeing in April. The NLRB, the majority of whose members were appointed by Obama, contends Boeing it violated labor laws by deciding to build a 787 Dreamliner plant in South Carolina. The board argues the company did so to retaliate against unions that staged strikes at its manufacturing hub in Washington state.

Chilling Message

McNerney has said NRLB suit sends a chilling message to business and if successful would discourage international investment in the U.S. The case is being heard by an administrative law judge in Seattle.

Obama has largely avoided weighing in on the case, saying the NLRB is an independent agency. Asked about it at June news conference refused to get into specifics.

“As a general proposition, companies need to have the freedom to relocate,” he said. “What I think defies common sense would be a notion that we would be shutting down a plant or laying off workers because labor and management can’t come to a sensible agreement.”

While the deal announced in Indonesia won’t settle differences over the NRLB complaint, it demonstrates the administration and a multi-national corporation still can work for a mutually beneficial outcome, according to one business executive who regularly works with the White House and declined to be identified.

Obama said his administration was critical to facilitating the agreement and thanked officials for their “dogged” efforts to complete the deal.

The president also paid tribute to Boeing, which makes the plane that serves as Air Force One.

“I want to congratulate Boeing for making outstanding planes,” he said. “Including the one that I fly on.”

--With assistance from Margaret Talev in Bali, Indonesia, and Michael Forsythe in Beijing. Editors: Joe Sobczyk, Justin Blum

To contact the reporter on this story: Julianna Goldman in Bali, Indonesia, at jgoldman6@bloomberg.net

To contact the editors responsible for this story: Mark Silva at msilva34@bloomberg.net


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