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Import-related non-tariff measure, nes

Legislation now under consideration in the U.S. Congress would reauthorize the Federal Aviation Administration (FAA). Some provisions of the 'FAA Reauthorization Act of 2009' (designated as H.R.915) are alleged to be inconsistent with provisions in two agreements between the United States and the European Union.'1' One is the U.S.-EU Air Transport Agreement that was signed in April, 2007 and entered into effect in March, 2008. Another is the U.S.-E.U. Bilateral Aviation Safety Agreement (BASA) of 2008, known more formally as the 'Agreement between the United States of America and the European Community on Cooperation in the Regulation of Civil Aviation Safety.' That agreement was signed June 30, 2008, but has not yet entered into force; the United States nevertheless has separate agreements in force with several individual EU member states (including inter alia France, Germany, Italy, the Netherlands, and the United Kingdom).
EU ambassador to the United States John Bruton has raised concerns over the pending legislation. He expressed these concerns in three separate but identical letters sent on March 18, 2009 to Secretary of Transportation Ray LaHood, Secretary of State Hillary Clinton, and Director Lawrence Summers of the National Economic Council. Those letters addressed the terms of the legislation as it then existed (i.e., before being debated, amended, and approved by the House of Representatives), but each of the provisions in question remain in the version that the House passed.
One of Ambassador Bruton's concerns focuses on section 801 of the bill, which redefines in part the meaning of 'citizen of the United States' for purposes of U.S. air commerce and safety laws. The existing definition of 'citizen of the United States' includes individuals who are citizens, partnerships of citizens, or 'a corporation or association organized under the laws of the United States or a State, the District of Columbia, or a territory or possession of the United States, of which the president and at least two-thirds of the board of directors and other managing officers are citizens of the United States, which is under the actual control of citizens of the United States, and in which at least 75 percent of the voting interest is owned or controlled by persons that are citizens of the United States.' Section 801 of the pending legislation would amend that last part to specify that 'an air carrier shall not be deemed to be under the actual control of citizens of the United States unless citizens of the United States control all matters pertaining to the business and structure of the air carrier, including operational matters such as marketing, branding, fleet composition, route selection, pricing, and labor relations.'
Ambassador Bruton's letter stated that this provision 'would hamper the implementing of the existing EU-US Air Transport Agreement ... and in particular the provisions on franchising and branding.' He also stated that it would 'dangerously impair the ability to enter into meaningful second stage negotiations' for the establishment of a reciprocal investment regime in this sector.
Section 426(e)(1) of the bill deals with exemptions from the antitrust laws for international aviation alliances. It provides that in general such exemptions 'granted by the Secretary 'of Transportation' on or before the last day of the 3-year period beginning on the date of enactment of this Act in connection with an international alliance, including an exemption granted before the date of enactment of this Act, shall cease to be effective after such last day unless the exemption is renewed by the Secretary.' Ambassador Bruton's letter objected to this provision, stating that it 'would put in question carefully constructed agreements among airlines,' and would 'prevent future alliances from forming.'
Another concern raised by the EU regards safety inspections. Section 303 of the bill would amend the existing U.S. air safety laws to require that the FAA Administrator certify to Congress that each foreign repair station certified by the FAA 'has been inspected by safety inspectors of the Administration not fewer than 2 times in the preceding calendar year.' The FAA would also be required to 'modify the certification requirements ... to include testing for the use of alcohol or a controlled substance ... of any individual performing a safety-sensitive function at a foreign aircraft repair station, including an individual working at a station of a third-party with whom an air carrier contracts to perform work on air carrier aircraft or components,' and to 'continue to hold discussions with countries that have foreign repair stations that perform work on air carrier aircraft and components to ensure harmonization of the safety standards of such countries with those of the United States, including standards governing maintenance requirements, education and licensing of maintenance personnel, training, oversight, and mutual inspection of work sites.'
Ambassador Bruton's letter stated that the provision 'contradicts the EU-US Aviation Safety Agreement and would impede its implementation.' A coalition of U.S., Canadian, and European aviation firms has similarly expressed opposition to this provision on grounds both legal (i.e., that it violates BASA) and economic (i.e., that it would lead to costly and duplicative inspections on both sides of the Atlantic).
These provisions remained in the bill as approved by the House, but the legislation now implicitly acknowledges that there have been questions raised regarding the consistency of these new requirements with the commitments contained in the BASA. It includes the following language:
With respect to repair stations that are located in countries that are party to the agreement entitled 'Agreement between the United States of America and the European Community on Cooperation in the Regulation of Civil Aviation Safety', dated June 30, 2008, the requirements 'in this bill' are an exercise of the rights of the United States under paragraph A of Article 15 of the Agreement, which provides that nothing in the Agreement shall be construed to limit the authority of a party to determine through its legislative, regulatory, and administrative measures, the level of protection it considers appropriate for civil aviation safety.'
H.R.915 has not yet been enacted into law. The House of Representatives approved the bill by a vote of 277 to 136 on May 21, 2009. It was referred to the Senate Committee on Commerce, Science, and Transportation. The Senate's version of this bill (S.1451), which was approved in committee on September 29, 2009 and awaits action by the full Senate, includes none of the provisions discussed above.

'1' It is also possible that the provisions of H.R.915 may be inconsistent with the terms of other bilateral safety agreements reached between the United States and its partners, but there are no indications in the available public record of the expression of objections from other countries.




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