Aviation Agreement with USA: EC Proposals (Hansard, 22 May 1995)

§ The Parliamentary Under-Secretary of State, Department of Transport (Viscount Goschen)
My Lords, we believe that it is in the best interests of the United Kingdom for the Government to conduct air services agreements on a bilateral basis with the United States of America.

§ Lord Brabazon of Tara
My Lords, I am grateful to my noble friend for that reply. Does he not agree that it is premature for the Commission even to consider conducting bilateral negotiations with anyone until we have complete liberalisanon in Europe and any airline is allowed to fly on any route, as happens in the United States; until all European airlines are in the private sector, and therefore have to stand or fall on their own financial performances, and could go bankrupt or be taken over, as is the case in the United States; and until such time as the Commission develops some expertise in that very complicated area, which it does not have at present? Does my noble friend agree that those and many other criteria must be fulfilled before that is even a possibility?

§ Viscount Goschen
Yes, my Lords, I agree with my noble friend that the Community should focus its efforts on those areas. But I believe that for the foreseeable future our interests are best served by bilateral negotiations carried out directly by the two governments.

Lord Bruce of Donington
My Lords, does that reply mean that the Government do not envisage the Commission being able to enforce its competition policy for the foreseeable future? Is the Minister aware that the Commission seems to have a marked disinclination to deal with the subsidies paid to Air France, Olympia and Iberia Airlines?

§ Viscount Goschen
My Lords, that is why the United Kingdom Government have taken the strong action that they have with regard to Air France subsidies. We believe firmly that under Community law member states remain free to negotiate air services agreements with third countries, including the United States, on a bilateral basis.

§ Lord Hailsham of Saint Marylebone
My Lords, will my noble friend forgive my ignorance and tell me exactly what is an "Open Skies" agreement and how that differs from a "Closed Skies" agreement?

§ Viscount Goschen
My Lords, an "Open Skies" agreement is a liberal agreement and any ether one is not.

§ Lord Clinton-Davis
My Lords, is the Minister prepared to say something about the current negotiations with the United States in relation to our bilateral agreement? Is it right that the United States has still not given any undertaking about restrictions on investment by European companies and that that is a critical element of any real movement in the negotiations currently taking place? Does he agree also that, as in Europe today, there should be encouragement to loosen those restrictions on foreign investment in US airlines and enable this to represent up to 49 per cent. of a US airline?

§ Viscount Goschen
My Lords, I agree with the noble Lord that there is still a considerable way to go before there is a fully liberal agreement with the United States. But we are making progress. As the noble Lord knows, we have been in negotiations with the Americans and I hope that an agreement will be concluded shortly.

§ Lord Campbell of Alloway
My Lords, how on earth is the Commission supposed to negotiate an "Open Skies" agreement when it has done nothing about the state subsidies and rampant anti-competitive practices taking place in the airlines in Europe?

§ Viscount Goschen
My Lords, the important point is that we are taking action on that. My noble friend is quite right that there are very real difficulties in relation to state aid and in all areas of air transport policy within the Community. That is why we believe that it is in the best interests of the United Kingdom that our Government should be able to negotiate bilaterally with a foreign government—in this case the United States.

§ Lord Tebbit
My Lords, will my noble friend stiffen the Government's response a little in relation to this proposal by saying that under no circumstances whatever while this Government or this Prime Minister are in office will the Commission be allowed to interfere in what is a matter between this country, this sovereign nation, and the United States?

§ Viscount Goschen
My Lords, we have already shown our resolve in this matter. We have already put down our marker by taking the very strong action that we have in regard to Air France subsidies. I have given a very stiff answer to the noble Lord and to the House, and it needs no further stiffening.

The Earl of Caithness
My Lords, is my noble friend aware that there is a very serious problem for the United Kingdom? I believe that there is as much traffic between the United Kingdom and the United States of America as there is between the total of France, Germany and Holland combined and the United States of America. Therefore, it is our industry that would suffer should there be Commission interference.

§ Viscount Goschen
My Lords, I agree with my noble friend that this area is extremely important for the United Kingdom. We already have a very strong airline industry; indeed, the strongest in Europe in terms of the amount of traffic carried between the Community and the United States. That is why it is vitally important that any deals secured are in the best interests of this country.