GS(UK-US) 20: Letter to the Chairman of the Committee from Mr Ivan Lewis MP,

Minister of State, Foreign and Commonwealth Office

 

 

Following my appearance before the Committee on 16 December, I promised to write on two outstanding points that arose during the evidence session; specifically Andrew Mackinlay's question regarding the number of Ministers that have held my portfolio since 1997, and his enquiry on the subject of the aviation Open Skies negotiations.

 

In response to the first point, it is worth noting that when changes of Minister occur, there may also be some readjustment of the portfolios for which they have responsibility. With this in mind, and given the scope of this inquiry, there have been 9 Ministers prior to my assuming the portfolio in June 2009, who have covered North America. In chronological order these are:

 

· May 1997 - July 1999: Baroness Symons of Vernham Dean, appointed Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs.

· 29 July 1999 - June 2001: Baroness Scotland of Asthal QC, appointed as above.

· 11 June 2001 - 13 June 2003: Baroness Symons of Vernham Dean, appointed Minister of State.

· 13 June 2003 - 9 September 2004: Mike O'Brien MP, appointed as above.

· Sept. 2004 - May 2005: Douglas Alexander MP, appointed Minister of State for Trade.

· 11 May 2005 - 8 May 2006: Ian Pearson MP, appointed as above.

· 8 May 2006 - 28 June 2007: Ian McCartney MP, appointed as above.

· May 2007 - October 2008: Dr Kim Howells MP; (he was serving in the FCO as Minister of State from May 2005, but only took on the American portfolio from May 2007).

· October 2008 - June 2009: Bill Rammell MP; appointed Minister of State for Foreign and Commonwealth Affairs.

 

In respect of the Open Skies negotiations, it may be useful if I start with some background. On 30 March 2008 the first-ever Air Services Agreement between the EU and US entered into force. Five years earlier the European Court of Justice had ruled EU Member States' bilateral air service agreements with the US as incompatible with the Single Market. This led to the European Commission receiving a mandate in 2003 from the Council to negotiate on behalf of the Community.

 

After four years of negotiation, the deal that was struck partially liberalised the transatlantic market. It allows the airlines of one party to fly to any destination on the territory of the other. In addition, US carriers can fly between any two points within the EU, effectively offering an intra-EU domestic service (although they cannot operate between two points within the same Member State). Heathrow Airport was opened to every US carrier, whereas under the 30 year old bilateral arrangement with the UK, only two US (and two UK) airlines could operate in and out of Heathrow on transatlantic routes.

 

However it did not go far enough for the UK and EU, which was seeking a fully open agreement, allowing in particular for EU investors to own and control US carriers and vice versa. The current position is that US nationals must own 75% of voting shares and exercise actual control. Legislation will be required to change this position. The EU is ready to drop its current requirement for majority European ownership and control if the US does the same.

 

The 2008 agreement set out a clear process for moving to a fully liberalised agreement with an agenda and timetable for negotiations on a second stage. And, crucially, should Stage Two fail to produce an agreement by the end of 2010, there is a provision for the EU to withdraw rights awarded to the US in Stage One. Stage Two got underway on 15 May 2008 with the next round of negotiations in Washington 11-14 January.

 

Securing greater market access will not be easy in the face of arguments put forward by Congress and labour against further liberalisation, but we are working hard to try to influence the US in this regard. We believe that airlines should be given greater economic freedom to build viable global businesses, particularly when there are many other strategic sectors in the US where global investment has been possible without losing a proper level of national regulation.

 

You may also be interested to know that the Transport Select Committee also looked at this issue during their inquiry into the Future of Aviation. Their report was published on 7 December.

 

I hope that you find this response to the Committee's outstanding questions helpful, but please do not hesitate to ask if the Committee requires greater clarification on either of these points.

 

 

8 January 2010