Select Committee on European Union Thirty-Sixth Report

CHAPTER 4: UK Negotiating Objectives

20. The Committee was given access to the Government's negotiating objectives. We therefore asked the witnesses to confirm whether or not they believed that these objectives had been met. Appendix 3 contains a supplementary evidence note from the Department for Transport which sets out how the Department believes these objectives have been met.

Phased negotiations and safeguards

21. The Committee is grateful to the Department for this explanation but we felt that there was still some uncertainty relating to phased negotiation. In his evidence, Mr Smethers said

"I think there are two safeguards. One is… that we are free to negotiate with the United States but if we come to any sort of agreement, we have to go through the Commission procedure before we could finalise it. That applies so long as the Community and the Commission on behalf of the Community is actively negotiating with the United States. If the Community were no longer actively negotiating with the United States because the talks had run into deadlock or an impasse, then the Community procedure would be lighter and we would have more freedom to make our own arrangements. That is the first safeguard. The second safeguard is that we have written into the mandate that if the Commission comes back to the Council and says "we want to do a phased agreement with the United States", there must be mechanisms to ensure that you do in fact move from phase 1 to phase 2 and to phase 3. Those are the safeguards" (Q34).

22. We asked what safeguards could be written into an agreement to ensure that, for example, if one phase was successful we could guarantee that successive phases would be negotiated and brought to successful conclusions. In his response, Mr Smethers said

"I think that is a difficulty. One could envisage phase 1 coming into operation and then ceasing to operate if phase 2 did not come into operation or something along those lines. That is not impossible. I'm not disputing that that would be a difficult point of negotiation to find the right mechanism to ensure you did move on. There might be other commitments between the two sides that would effectively be safeguards".

23. To which the Minister, Mr McNulty added

"……at least the general mechanism is there for saying that if there is phasing there should be necessary progression to subsequent phases".

24. The Committee, nevertheless, felt that, given the time that it would take to negotiate a fully liberalised open aviation agreement with the United States, the danger to UK interest would continue throughout the negotiating period. The threat to UK interests could, paradoxically, come from progress in negotiation of the overall mandate (see para 27). The current bilateral UK/US ASA is sufficiently robust to protect UK interests in other circumstances. We put this again to the witnesses (Q41). In reply, Mr Baker, Divisional Head of International Aviation Negotiations, Department for Transport, said

"When we have been negotiating bilaterally with the United States, we have thought about the phased agreements. The difficulty there is that some of the things we are asking the Americans to do require legislation so they cannot happen instantaneously. What I have been urging on European colleagues is not to rush into phases, and the dangers of that, because in some ways it is very difficult to get a balanced agreement. If you are going to have three phases because you might not move from phase one to phase two or might not move from phase two to phase three, you have to ensure that each phase is balanced and that trebles the difficulties if you have three phases".

25. We asked the Minister how the Government thought that balance could be achieved. Mr McNulty said

"We would be fully behind the comprehensive, not the so-called "Open Skies" view, but the open aviation area in view of all those elements, not least as implied earlier, that full and proper access to the American hinterland would seem to be the international aim".

The UK position vis à vis other EU Member States

26. We asked if this position was shared by other Member States or would differences in interests lead to different approaches to a phased negotiation. Mr Smethers said

"Many of the States already have so-called open skies agreements, so that that would be the first phase for us, would it not? It would not actually be anything for them one way or the other in moving to that because they are there already. By the same token, there might be less worry about moving there for us because if the Commission came back and said, "We are going to open skies for all countries", rather than 11 or 12 as it is at the moment, for them it is a matter of some indifference, is it not? From that point of view, we would probably develop a more intense interest in some of those countries."

27. The Committee did not find this a reassuring answer. If anything, it emphasised the danger we saw inherent in this negotiation. Clearly, it must be attractive to the Commission to bring all Member States into a similar starting position because this would make negotiation easier. An obvious first step might be to require all Member States which did not currently operate "Open Skies" agreements with the USA, to do so. The Committee's fear is that whereas "Open Skies" ASAs with all individual Member States would secure US objectives, it would not secure the EU's objectives of a fully liberalised agreement. The US might simply lose interest in continuing the negotiation at this point. Were this to happen, and were the UK to agree to a Commission proposal to surrender Bermuda 2 for an "Open Skies" ASA with the US, then UK interests will have suffered a reverse: currently, through Bermuda 2, we are able to control US airline access to Heathrow; with an "Open Skies" agreement, we could not continue to do so and our bargaining hand with the US in re-negotiating changes in Bermuda 2 would be weakened. We therefore recommend that the Government consider carefully before moving to a form of "Open Skies" regime as part of a phased negotiation with the USA.

Other issues raised in the Department's evidence

A "mini-deal" over access to Heathrow?

28. In our earlier Report (para 95), we flagged up rumours of a "mini deal" between the United Kingdom and the United States which would have permitted the American freight carrier, FedEx, access to Heathrow, and BMI British Midland, access to an Atlantic route. On the Department's interpretation of the Council mandates, it seemed to us, that the present mandate made this unlikely. In response, Mr Smethers said "any such agreement would have to be subject to a Community proceeding and so I think you can draw your own conclusions" (Q30).


29. In our Report, we noted the important role played by the shortage of take-off and landing slots at certain airports, notably Heathrow and Gatwick[9]. During the examination of the witnesses on 23 June we re-iterated our concern about the possible weakening of the negotiating leverage represented by the demand for slots at Heathrow (QQ45-60). The UK dilemma, that we recognised in our Report, remains: the leverage represented by the current excess demand over supply of slots at Heathrow and Gatwick will probably weaken as the Commission negotiates traffic rights on the one hand, and attempts to regulate the allocation of slots at Community airports on the other. We note that the Minister intends to return to this issue.(Q59) We welcome this.

9   See Box 5 on page 25 of the original Report and a more detailed account in the additional supplementary memorandum by the Civil Aviation Authority, pages 34 and 35 Back

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