European Scrutiny Committee Contents

50 Air services agreements




+ ADDs 1-2

COM(10) 208




+ ADDs 1-2

COM(10) 209

Draft Council Decision, and decision of the representatives of the Governments of the Member States of the European Union, meeting within the Council, on the conclusion of the protocol to amend the Air Transport Agreement between the European Community and its Member States, of the one part, and the United States of America, of the other part

Draft Council Decision, and decision of the representatives of the Governments of the Member States of the European Union, meeting within the Council, on the signature and provisional application of the protocol to amend the Air Transport Agreement between the European Community and its Member States, of the one part, and the United States of America, of the other part

Legal baseArticles 100(2) and 218 TFEU; consent; QMV
Document originated(a) 4 May 2010

(b) 3 May 2010

Deposited in Parliament25 May 2010
Basis of considerationEM and Minister's letter of 22 June 2010
Previous Committee ReportNone
Discussion in Council24 June 2010
Committee's assessmentPolitically important
Committee's decisionCleared


50.1 On 30 March 2008 the 2007 EU-US Air Transport Agreement entered into provisional application. The agreement was a significant change to transatlantic aviation relations, providing broad new commercial freedoms for airlines and a comprehensive framework for regulatory cooperation with the US on a wide range of issues, including the opening of transatlantic markets and associated commercial freedoms, safety, security, competition, environmental protection, customs and taxation issues, pricing and subsidies. It set up a Joint Committee with the aim of increasing cooperation between the US and EU on a range of regulatory issues.

50.2 The agreement provided for a second stage of negotiations to consider agreement on a range of further matters. Those negotiations began in May 2008 and after eight rounds closed in March 2010.

The documents

50.3 The negotiators have reached agreement on a draft protocol to amend the original Air Transport Agreement. These draft Council Decisions would authorise respectively the signature and provisional application by the EU of that protocol and the conclusion of the protocol. They also clarify how certain decisions or actions under the protocol would be taken by the EU side in accordance with the EU treaties.

50.4 The draft protocol:

  • focuses mainly on the areas identified for further negotiation in the original Agreement, including the expansion of opportunities for market access and for investment in airlines;
  • significantly strengthens cooperation on actions to combat the environmental impacts of aviation (together with the associated Joint Statement on Environmental Cooperation);
  • includes some further relaxation of the so-called "Fly America" policy that would allow those employed on US Government civilian contracts to book on EU carriers;
  • enhances the remit of the Joint Committee with a view to enhancing the compatibility of the different regulatory systems; and
  • introduces new provisions on reciprocal recognition of certain regulatory decisions and on labour standards.

The Government's view

50.5 The Minister of State, Department for Transport (Mr Theresa Villiers) says that the Government and the UK aviation industry strongly supported the negotiation of a second stage agreement with the aim of securing further market opening, and in particular relaxing the existing tight limits on foreign investment in airlines. She comments that:

  • whilst the draft protocol does not go as far in this area as it would have wished, the Government recognises that relaxation of the restrictions cannot be achieved without legislative change in the US;
  • during the second stage negotiations it became clear that internal political opposition within the US to relaxing controls on foreign ownership had, if anything, hardened and that there was no prospect of securing the necessary changes to US law in the near term;
  • therefore the EU has focused on the construction of an agreement that would encourage the US to change its foreign ownership rules in the longer term and on a general recognition that relaxation of foreign ownership and control requirements should be an end-goal; and
  • these objectives have largely been attained in the negotiations — the draft protocol establishes a shared goal of further removing barriers to market access and investment, envisages an end state where each Party permits majority ownership and control of its airlines by nationals of the other party and sets out further commercial benefits that may be drawn down once the necessary changes to the internal laws and regulations of each Party have been implemented.

50.6 The Minister also tells us that:

  • in a revised environment article the Parties recognise the importance of protecting the environment and undertake to work together to reduce the impacts of aviation;
  • notably, the article provides a mechanism for ensuring consistency between market-based measures — this would provide a means of working out how any future American emissions trading system could be joined-up with the EU scheme for aviation;
  • the associated Joint Statement on Environmental Cooperation affirms the commitment of both sides to work together, both bilaterally and in international fora, in this field — it recognises the importance of the "2 degree Celcius" goal, confirms the commitment to new work on setting a global aircraft standards on carbon dioxide, noise and air quality and sets out the areas of technical cooperation between the EU and US for matters such as air traffic control, bio-fuels and aerospace technology;
  • while the "Fly America" policy still leaves valuable traffic by US government employees and defence-related contractors out of the reach of EU airlines, the inclusion of some further relaxation of the civilian contractor "Fly America" traffic is considered a valuable benefit by UK airlines; and
  • other amendments made through the draft protocol will help increase the cooperation between, and therefore the mutual compatibility of, the regulatory regimes on either side of the Atlantic in areas such as competition, security, consumer protection, and air traffic management — something that the aviation industry has strongly advocated.

50.7 The Minister concludes, in her Explanatory Memorandum, that:

  • there appears to be little further to be gained from seeking to prolong the negotiations at this stage;
  • the option to withdraw new traffic rights gained under the first stage agreement has been considered, but the Government considers this would be against the interests of UK consumers, airlines and airports and it can discern little or no support amongst UK interests for that course of action; and
  • in light of the progress made, the Government considers that the draft protocol represents a worthwhile improvement of the current agreement, incorporating both a clear direction of travel and incentives towards further change — it would enable the UK aviation industry and consumers to continue to profit from the significant benefits available under the original agreement, whilst delivering worthwhile additional benefits and maintaining the pressure for further liberalisation.

50.8 In her letter the Minister says that:

  • these documents only emerged after the Dissolution of the last Parliament and would be considered by the Council before the we (and the Lords' European Union Committee) would be in place and able to scrutinise them;
  • the Government takes its scrutiny obligations very seriously and would not lightly agree to a measure before completion of scrutiny; and
  • given, however, the substantial support that exists for early signature, the Government feels that the UK should join other Member States in supporting the draft protocol and approving its signature at the Transport Council of 24 June 2010.


50.9 We note the Government's assessment that at the moment more could not be achieved to improve the present EU-US Air Transport Agreement but that, nevertheless, the amending draft protocol brings sufficient benefit to justify supporting these draft Decisions. We have no questions to raise about this assessment and the draft Decisions and clear the documents. We also note and understand the Government's support in Council for the draft Decisions before completion of scrutiny.

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Prepared 22 September 2010