The transatlantic open skies talks are starting to get serious, with Europe turning down the USA's opening offer of a mini-deal. What that has revealed in the process is the gulf that still remains between Europe's grand vision and what may be practicably achievable in a US election year
The transatlantic open skies have got off to a predictably difficult start. Washington has urged an "early harvest" mini-deal and Brussels has turned it down. Depending upon which side of the Atlantic you sit, either Brussels is asking for too much or Washington is trying to get away with offering too little. But that begs the question of exactly what balance should be struck between keeping sight of the big vision and keeping in touch with the achievable.
For its part, the European Commission (EC) has come a long way in the last few years. For all its ambitions, Brussels had no authority to negotiate and Europe had little by way of a shared vision. But led by the ever-energetic Transport Commissioner Loyola de Palacio, the EC has now worked itself into a position where it can indeed sit down on something like equal terms with Washington and has a coherent policy position to match that of US open skies.
There, perhaps, is the rub. The European vision to build a transatlantic open aviation area is just the sort of grand project that plays well in Brussels, which has after all spent the best part of two decades completing a single air market of its own. Such visions play less well across the Atlantic to those bound up with the realities of Washington politics and still keen to sign up the world to its tried and tested open skies formula.
So while the US response to the EC's ambition has been enthusiastic in tone, it has looked more pedestrian in vision. While Europe wants to begin building a new liberal framework - which in time will free up ownership, cabotage and more - the US has bargained for a quick deal that it thinks it can deliver.
The latest US offer is more than a mini-deal, say US negotiators, but less than a crowning achievement. It would effectively sign up a transatlantic open skies pact - so allowing any European carrier to fly anywhere in the USA from anywhere in Europe. It has also agreed to urge Congress to accept an increase in foreign ownership limits from 25% up to 49.9%. In return, Europe would deliver an end to any remaining bilateral restrictions, crucially including the limits set on US access to London Heathrow.
Europe frets that such deal-making will do little more than tidy up the current tangle over existing open skies deals, leaving the US negotiators with little motivation to take those big next steps. If true, that would indeed be a worry. This is the best chance in decades to rewrite the rules that have left aviation in the dark ages. Simply to shuffle the papers at this stage is hardly enough.
Yet at the same time, it is impossible to ignore the realities of the political calendar. The US presidential race, in full steam early this time around, has already cast a long shadow over the talks. Not only has it set the clock ticking, but it has also seen trade become a real issue in the campaign. Democratic challenger John Kerry, who will fight President George Bush in the autumn, has staked out a tough stance on all trade talks. He has already gained political momentum through his charges that multilateral pacts such as NAFTA have taken away US jobs. Kerry has also raised suspicion of foreign ownership of US companies and of those US corporations that move production offshore.
The Bush administration has already begun to mute its support of free trade, and the president who had been willing to go to the rustbelt of abandoned steel mills to defend trade pacts, is picking his venues and his rhetoric more carefully. Even if Bush remains a free trader, the fact is that a second administration would see a new transportation secretariat and a new set of policy advisors, who would take the best part of a year to get in place, if the second Clinton term's timetable is a gauge.
Paul Gretch, who directs the DoT's office of international aviation and is a veteran champion of the open skies policy, insists that an incremental deal has strong merits in an election year. What is needed, he argues, is to break the ice by taking that first important step. "A first step is just that and will not foreclose further negotiations," he says, warning that the alternative is to risk having to start over with a new administration. That would be true no matter which party wins the White House in November. The cast of characters in Brussels is also about to change when the EC reshuffles later this year.
What the two sides need is not necessarily something as dramatic as the EC would like, but a step which shows an intent to cross the point of no return. This could be the difference, perhaps, between an ownership limit of 50.1% rather than 49.9%. Congress may not be quite ready for that yet, but it will have to lay clear ground for such a move. As one EC official said in rejecting the last US package, the steps must fit together into a staircase that leads somewhere.
Source: Airline Business
