EU, USA Launch Second Phase of Open Skies Talks in Slovenia

Text of report in English by Slovene news agency STA

Brdo pri Kranju, 15 May (STA) – US and EU officials were optimistic as they kicked off a fresh round of talks on the liberalization of transatlantic air transport in Slovenia on Thursday. But the negotiations look set to be long and tough, as the US seeks to broaden Open Skies to other countries and the EU wishes to deepen the existing accord first.

The talks on the first phase of liberalization took nearly five years, hopefully the second stage will take less time, Zoltan Kazatsay, deputy director-general at the European Commission’s Directorate General for Energy and Transport, told the press at Brdo pri Kranju today.

The first stage of the liberalization, which took effect at the end of March, means that any EU airline can fly from anywhere in the EU to any point in the United States, and then on to a third country. This also applies to US carriers flying into the EU.

As Boyden Gray, US special envoy for EU affairs, pointed out, the first round of liberalization was “the most sweeping deregulation of airlines ever”.

The second stage will focus on investment, as the EU has been looking to scrap rules that limit foreigners’ voting rights in US airlines to 25 per cent. The current limit in the EU is 49 per cent, but the EU could lower it if the two sides fail to make headway in the current negotiations.

It had been expected that the US would be reluctant to pry open this door, but US officials surprised analysts by announcing this week that the US would seek a far wider agreement to lift investment barriers by forgoing access restrictions on airlines from more than 60 countries based on the nationality of airline owners (the so- called nationality clause).

“The EU and US should lift barriers on cross-border investment. This is as much a key to the future of our two economies as trade across the Atlantic,” Gray said.

According to him, the nationality clause should be waived in bilateral agreements that EU member states and the US have with other countries and the two sides should draft a multilateral agreement, open to signature by other countries, that waives the nationality clause among all the participants.

“Working together, the EU and US can deepen as well as broaden the liberalization achieved in the first stage,” Gray said. He pointed out, however, that nobody should expect results overnight. “Nothing worth doing has been achieved in haste.”

Whereas the US is seeking to broaden the accord, the EU wants to deepen the existing agreement first.

“We would like to concentrate on the deepening of the existing agreement…Broader multilateral initiatives cannot replace a bilateral removal of this type of restriction, however if the benefits of this agreement are enjoyed by a wider circle, it would also help,” Kazatsay said.

One thing that both sides agree on is that the first phase of the liberalization has been very useful in commercial terms.

According to the European Commission, the number of US-bound flights from Europe will have increased by 8 per cent year-on-year in the summer, the number of US-bound flights from London’s Heathrow Airport is already up 20 per cent and EU airlines are operating flights to the US from non-domestic countries for the first time.

Daniel Calleja, the chief EU negotiator for the Open Skies agreement, said transatlantic traffic could increase 50 per cent over the next five years, there would be EUR 12bn in benefits and an extra 80,000 jobs on both sides of the Atlantic. “But this is not enough for Europe, we want the second stage, which should go even further.”

Gray added that these figures will probably be exceeded in practice. But what is even more important is the example that transatlantic deregulation gives to liberalization in other fields.

Originally published by STA news agency, Ljubljana, in English 1140 15 May 08.

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