Air Transport World

On getting from here to there. (international aviation structure is becoming obsolete)

The international aviation structure is out of date and badly needs overhauling. On that score, liberals and conservatives seem to agree. Jeffrey Shane, U.S. Assistant Secretary of Transportation for Policy and International Affairs, is no fan of the current system. ". . . The bilateral approach is, in many respects, outdated and ill-equipped to meet the requirements of the emerging global-aviation market."

Daniel Tenenbaum, director of French civil aviation, agrees. "The strictly bilateral regime ... is getting old." Where they and their colleagues disagree is (1) on what a new system should look like and (2) how to get from the present to that new regime.

There are plenty of vehicles for change. None of them is sufficiently attractive to enough people to produce near-term results. Of immediate interest, because of current negotiations, is to include aviation in a proposed general agreement on trade in services (GATS). This proposed multilateral would be the services equivalent of the General Agreement on Tariffs and Trade (GATT), which was established after World War II to reduce trade barriers for manufactured goods. A GATS is under discussion as part of the so-called Uruguay Round of world trade talks (ATW, 7/88). Through GATT, trade barriers, primarily high tariffs, are reduced through negotiation of reciprocal treatment of GATT members, commonly known as MFN, for most-favored nation. If countries think other GATT members are discriminating against their products, they complain to the organization, which tries to resolve the problem through its dispute-mechanism process. The U.S., along with many other countries, does not think that MFN or dispute mechanism works very well. Still, many countries are engaged in drawing up a services equivalent to the goods agreement.

The U.S. supported the notion of a GATS in order to reduce trade protection in sectors such as communications and financial services, where its companies are strong. In order to achieve its goals in those industries, it has had to maintain publicly that all service sectors must be included in a GATS, as have other countries with agendas for specific trade sectors.

This month, after years of work, negotiators were supposed to submit a draft of what the international negotiating community calls a "framework" agreement. It would include a description of how services are traded and the rules to be used in a GATS. Negotiators hope that sector coverage will be completed by December. How binding that coverage will be and which services will be excluded remain to be worked out.

The mere mention of GATT or a new GATS sends U.S. airlines into orbit. The U.S. Transportation and State departments have supported their airlines on this issue and there appears to be little likelihood that airline route rights will be subject to a GATS, at least not for the foreseeable future. The two agencies took the same stance when the Canada Free Trade Agreement was written despite the fact that, for home consumption, the U.S. government says that airlines are mature and should be treated like other businesses. It says the same thing abroad when arguing with its trading partners about expanding bilateral aviation opportunities. Theoretically, reducing aviation trade barriers through a global agreement is a way of extending that philosophy.

But a State Department negotiator declares: "Aviation is one of the few sectors where the U. …

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