U.S. to Investigate Shift of Aerospace Work to China : Labor: Striking machinists say Boeing undermines national interests by sending jobs overseas. Boeing welcomes the study.

The Clinton Administration is investigating charges that U.S. industrial competitiveness is being seriously undermined by the shift of aerospace production to China by McDonnell Douglas and the Boeing Co. in exchange for airplane orders.

The threat posed by China’s efforts to build a domestic aerospace industry and its impact on U.S. jobs are key issues in the bitter 3-week-old strike by the International Machinists Union against Boeing.

The government decided to act after a campaign by the union, which represents 34,000 production workers now on picket lines in Seattle, Portland, Ore., and Wichita, Kan.

The Administration said Friday it has established a multiagency task force to study the matter. Participating are the U.S. trade representative, the Department of Commerce, the National Economic Council and the Department of Transportation.

Dianne Wildman, a spokeswoman for the trade representative, said the group will prepare a report that will be distributed to the Cabinet secretaries and other top officials. She said there is no deadline for the report.

China is already a major customer for McDonnell Douglas and Boeing products and is expected to purchase an additional $100 billion worth of airplanes by 2015. The world’s aerospace giants are currently engaged in a fierce competition for a piece of a $2-billion project by the Chinese government to build a 100-seat airplane.

In its letter to U.S. Trade Representative Mickey Kantor, the machinists said the Chinese government’s “blackmail” of U.S. corporations is costing the United States hundreds of thousands of jobs and the loss of key aerospace technology partially funded by the government.

The union asked the Administration to threaten bilateral trade sanctions and reconsider government financing for U.S. aircraft sales as ways to pressure the Chinese government to halt its negotiating strategy.

“This type of commercial and technological blackmail has occurred for years, but is now reaching a level to which the U.S. government must respond,” said the union’s president, George Kourpias.

The investigation comes as the United States and China are trying to patch up a bilateral relationship rocked by concerns over human rights, trade and arms control. China’s President Jiang Zemin is scheduled to meet President Clinton on Tuesday in New York after the two leaders attend the celebration of the 50th anniversary of the United Nations.

Greg Mastel, vice president of the Washington, D.C.-based Economic Strategy Institute, applauded the Administration’s decision to take on the issue.

He said the problem of forced technology transfer to China should be a top trade concern because it extends beyond aerospace to other industries such as automobiles, semiconductors and telecommunications.

In a newly-published report, Mastel suggested the United States work through multilateral organizations such as the World Trade Organization, or even consider allying with competitors in Europe and Japan to put pressure on the Chinese government to stop holding its market hostage.

“You just can’t afford to ignore the Chinese market, and the price of getting in right now is your commercial technology,” he said.

U.S. aerospace executives argue they must be able to shift production off-shore to open new markets and take advantage of lower-cost producers or lose sales to Europe’s Airbus Industrie, their chief competitor.

This is particularly true in fast-growing economies in Asia, where governments anxious to develop a home-grown aerospace manufacturing base are demanding a bigger piece of the action.

“There are a lot of countries other than China that have pressured for having some of the work that results from their purchase orders,” said Don Hanson, a spokesman for Long Beach-based Douglas Aircraft Co. “It’s not an uncommon thing.”

Boeing spokesman Russ Young said the company welcomes the opportunity to “clear the air on the issue of parts subcontracting.” He said Boeing will take part in the government discussions.