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“OPEN
SKIES” POLICY:
Part of the transition from
regionalization to globalization in the world economy is adaptation of
the “Open Skies” policy. Aviation accounts for $1 trillion in global
economic activity and creates 22 million jobs.
An efficient air transport system is vital for the expansion of trade
and commerce, including electronic commerce.
1.
US
“OPEN SKIES” AGREEMENTS:
In the
US
,
one night after “Open Skies” were set, nearly 200 airlines went
bankrupt. Unable to compete, they were taken over by such large airlines
as American Airlines, United Airlines, and Delta Airlines. The
US
believes that an open-skies aviation agreement must reflect the
fundamental principle that the economic interests of both countries,
including consumers, shippers, passengers and all other cargo services,
are best served through minimal government interference. The
US
has signed bilateral Open Skies agreements with 50 countries.
The following are key elements of US Open Sky agreements:
1.1
Open Routes and Designations: An unlimited number of airlines
share behind-homeland, homeland gateway, intermediate, and beyond points
with full traffic rights.
1.2
Unrestricted Routing Flexibility: Routing to points in any order,
omission of points, etc., subject only to a service nexus with homeland
(unless there is an agreement on Seventh Freedom traffic rights). Also,
allows “starburst” change of gauge.
1.3.
Unrestricted Capacity and Frequency: Choice of equipment granted
with any seating configuration.
1.4.
Open Code-Sharing: Code-sharing between carriers of both sides, and
between each carrier and third-country carriers.
1.5.
Double-Disapproval Pricing: Prices are determined solely by carriers, except
when both governments disapprove, and then only under limited and
specified conditions.
1.6.
Liberal Charter Regime: Passenger and all-cargo services have the right to
operate flights from either side’s territory using the rules of either
side (applicable consumer protection requirements still apply).
1.7.
Liberal Cargo Regime: No restriction on passenger designations, routes,
capacity or frequency.
1.8.
Safety and Security:
US
model provisions apply, including the right to suspend services if the
requirements are not met.
1.9
Liberal Doing-Business Provision: Consists of the right to
provide self-handling at airports in the other country, the convert and
remit revenues, etc.
1.10.
User Charge Provision: User fees must be fair, reasonable, and related to
the cost of providing services.
1.11.
Fair and Equal Opportunity to Compete: There must be a level playing
field.
1.12. Computer Reservation System: Airlines are allowed to operate their CRS systems
in the other side’s territory in a fair manner.
2.
OPEN SKIES IN
ASIA
PACIFIC
Because Asia Pacific is not
entirely ready for Open Sky, their Open Sky agreements bear mostly
symbolic meaning, though they do provide an important foundation for
future aviation. The multilateral Open Sky agreement reached by five
member countries (US,
Brunei
,
Chile
,
New
Zealand
, and
Singapore
)
in Asia Pacific Economic Cooperation (APEC) on November 2000 expressed
the local governments’ concerns.
Negotiators note that this Open
Sky agreement is the first step in a long process. The multilateral
agreement as it stands bears three significant advantages:
§
It provides a Competition-Enhancing Model for
Future Agreements: unrestricted international air service is allowed
between the
US
and partners.
§
It expands Carrier Access Equity Financing: the
agreement liberalizes the traditional ownership rules, which required
that substantial ownership of a designated carrier be vested in either
the carrier’s homeland government or its nations. Thus, foreign
carriers have greater access to outside investment.
§
It streamlined International Aviation Relations:
the agreement provides a single, consolidated mechanism for further
aviation opportunities, bypassing negotiation of numerous individual
bilateral agreements.
The multilateral open sky
agreement is not more advanced than the existing bilateral agreements.
Signatories must have had a prior open sky agreement with the
US
.
By changing bilateral agreements into multilateral open sky agreements
with the same rules, the
US
advances its open sky policy. Nonetheless, the Multilateral Agreement
between the five members of APEC represents a successful effort to
promote safe, affordable, and efficient air transport services
worldwide.
3.
ASEAN WITH “OPEN SKIES” PROCESS
From
February 13–15, 2001
,
civil aviation leaders of ten ASEAN countries held the Third Conference
of a working group in Air Transportation in
Brunei
.
Countries were urged to submit drafts for open-air commitments in such
service sectors as aircraft maintenance services, sale and marketing of
air products, and computer reservation systems (CRS). In addition, at
the conference, country members were required to examine new sectors for
the next round of negotiations on opening the service market, including:
1.
Wet-lease
2.
Dry-lease
3.
Package delivery services
4.
Air tourism services
5.
Air craft maintenance
6.
Cargo services
7.
Stairway services
8.
Baggage services
9.
Passenger services
10.
Radar air control
11.
Air control at airports
12.
VIP services for commercial purposes
13.
Air catering services
14.
Security services
Vietnam
committed to open its market in aircraft repair and maintenance, sale
and marketing products, CRS, and dry-lease. This commitment is based on
the current status of
Vietnam
’s
civil aviation sector.
At the conference,
Brunei
submitted a draft about the ASEAN “cross border” aviation agreement,
which is an Open Skies agreement. During the process of drafting the
document, there appeared two primary opinions:
First, a few ASEAN members
thought it was time to liberalize air transport services to stimulate
economic development in the region and in each member country. Such an
agreement could be considered initial progress in adopting the “Open
Skies Policy” in ASEAN countries.
Second, most ASEAN members,
especially
Cambodia
,
Laos
,
Myanmar
,
and Vietnam (CLMV) affirmed that a cross-border agreement under the
modernization model is currently unsuitable. There is a large gap in the
air transport development between the countries. The four countries
emphasized that agreements should be a step-by-step and continuous
process, starting at the point of cooperation between countries in the
ASEAN sub-region, then expanding to the entire ASEAN region. According
to them, ASEAN aviation cross-border agreements can only be reached
after agreements are established and operated effectively in sub-regions
like the
Indonesia
,
Malaysia
,
and
Thailand
growth triangle (IMT-GT) and the
Brunei
,
Indonesia
,
Malaysia
,
Philippines-East Asia Grow Area (BIMP-EAGA).
A draft of Memorandum of
Discussion on air cargo transport, considered a supplement to the
current bilateral air agreements between ASEAN members, was signed. The
memorandum is the first step towards an air transport policy of Open
Skies in ASEAN countries. However, much editing, particularly regarding
the CLMV provisions on loading, frequency, freedoms, and code-sharing
authority, is needed to satisfy all countries.
1.
OPEN
SKIES IN THE SUB-REGION:
CAMBODIA
,
LAOS
,
MYANMAR
, AND
VIETNAM
.
Cambodia
,
Laos
,
Myanmar
,
and
Vietnam
have agreed to cooperate and initiate the next stage of development in
the Open Skies policy in ASEAN countries. Cooperation between countries
in the sub-region ensures that their airlines will fully and effectively
engage in the international air transport market.
The “Agreement between General
Director of Civil Aviation of Cambodia,
Laos
,
Myanmar
,
and
Vietnam
on cooperation on air transportation in the sub-region” is comprised
of the following contents:
·
No limit on 3rd, 4th, and 5th
freedoms, loading supply, frequency, designated airlines, destination,
original, intermediate, and beyond points within the sub-region.
·
The Computer Reservation System (CRS) of each
country may be established in the territory of other countries in the
sub-region.
·
Application of double disapproval on fare for air
transport within the sub-region.
·
No limit on the non-scheduled activities, depending
on approval requirements of each country.
·
Code-sharing and other methods of cooperation
between designated airlines of the sub-region is encouraged.
5.
VIETNAM
AND THE “OPEN SKIES” TREND:
In the global economy, air
transport is a strategic economic sector for every country. Not only
does it fuel the development of national economies, but it also fosters
economic, political, and cultural cooperation between nations.
Vietnam
considers international cooperation and liberalization indispensable for
the development of its civil aviation sector and economy.
Therefore,
Vietnam
is progressing from protectionism towards liberalization.
In light of the gap between
developing and developed countries regarding air transport,
Vietnam
has progressed during the past few years. Due to restraints in its
competitive ability, however,
Vietnam
must continue to expand its aviation network. Hence,
Vietnam
plans to liberalize in the sub-region scope (
Cambodia
,
Laos
,
Myanmar
,
and
Vietnam
),
then to ASEAN, APEC and the world.
To iron out relevant legal
issues,
Vietnam
has adjusted numerous provisions in bilateral agreements:
·
It has incorporated the code-share provision with
airlines of third country parties into the traditional agreements.
Designated airlines of each party are allowed to have a code-sharing
contract with airlines of third country parties provided that the
bilateral agreement between the two contracting parties is not affected.
·
It has applied the new safety provision of ICAO.
The authorities of the contracting party are eligible to inspect air
safety (inspect aircraft at the airport and the air safety control
system in the territory of the other party). Operation may be suspended
if the other contracting party does not meet air safety conditions.
·
An exchange of Fifth Freedoms is possible for
competitive routes.
In short,
Vietnam
’s
attitude towards the Open Skies policy is cautious, due to the relative
weakness of the country’s civil aviation sector. As described above,
Vietnam
is not only concerned about Open Skies in ASEAN, but also about elements
of the US Open Skies policy. It
is believed that
Vietnam
needs more time to catch up with its competitors.
US-VIETNAM BILATERAL CIVIL AVIATION AGREEMENT IN THE CONTEXT
OF
VIETNAM
’S INTEGRATION INTO INTERNATIONAL ORGANIZATIONS
1.
Vietnam
and the World Trade Organization
(WTO)
1.1.
Vietnam
’s
accession to the WTO
Vietnam
was recognized as an observer of the WTO in June 1994. On
January 31, 1995
, the Working Group on
Vietnam
’s accession to the WTO was established, and on
April 01, 1995
, the WTO received
Vietnam
’s application for membership. The Working Group conducted four
meetings, and
Vietnam
fulfilled its obligations to move to the next step. During the second
step of the WTO’s accession procedure,
Vietnam
must report to the Working Group a memorandum on its trading and legal
regime. The Working Group will inspect
Vietnam
’s answers to all questions raised by other WTO members. Topics
discussed within the Working Group are generally agriculture, customs,
import licensing, national treatment, SPS and TBT, State trading,
trading rights and TRIPS.
Vietnam
hopes for official membership to the WTO by 2005.
1.2. General Agreement on Trade in Service (GATS)
GATS is an annex to the
agreement establishing the WTO. The GATS framework consists of fourteen
obligations and disciplines aimed at promoting trade and investment.
Though GATS has not yet incorporated any Article on Air Service in its
main body, the CAAV should base its main principles on the following
GATS principles:
·
Most Favored Nation (MFN) Treatment (Article II):
requires WTO members to grant other members treatment equal to that
offered any other members.
·
Transparency (Article III): requires that
measures related to trade and investment in services be
publicized.
·
Domestic Regulation (Article VI): requires that
measures affecting trade and investment in services be conducted in a
rational, determined, and unbiased way.
·
Monopolies and Exclusive service providers:
requires members to ensure that monopolies and state companies not act
against scheduled commitments.
1.2.
GATS Annex on Air Transport Services
The Annex incorporates measures
affecting trade in air transport services, aircraft repair and
maintenance services, the selling and marketing of air transport
services, and computer reservation system (CRS) services. It indicates
that traffic rights, or services directly related to traffic rights, are
exempt from the dispute settlement procedures. Dispute settlement
procedures can only be requested by involved members. The Annex requires
the Council for Trade in Services’ periodical review on
“developments in the air transport sector.”
2.
Vietnam
AND Association of
South-East Asian Nations
(ASEAN):
On
July 28th, 1995
Vietnam
became a member of the ASEAN. At the Fifth ASEAN Summit in December
1995, in
Bangkok
,
Thailand
,
member countries signed the ASEAN Framework Agreement Services (AFAS).
AFAS’ objective is commitment for investment liberalization, market
access, national treatment, private sector involvement, and all service
sectors and sub-sectors. Aiming at liberalizing trade in services, seven
key sectors were chosen for negotiation: financial services,
telecommunications, maritime services, air transportation services,
tourism, commercial services, and construction services.
At the Sixth ASEAN Summit held
in
Hanoi
on December 1998,
Vietnam
committed to liberalize air services and other service sectors not
included in the first round of negotiations. The commitment in air
services covers aircraft fixing and maintenance, booking, and air
marketing.
At the 31st ASEAN
Economic Ministerial Meeting (AEM) in 1999, ASEAN countries agreed to
push forward negotiations aimed at liberalizing trade in services within
ASEAN, and to finalize the “Framework Agreement on Negotiations in
Services from 1999 to 2020.”
At the 32nd ASEAN,
the draft “Framework guiding the ASEAN liberalization of trade in
services” was approved. Ministers continued to work on long term
liberalization goals, determining sectors, sub-sectors, and modes of
supply to be liberalized.
At the moment, the Ministry of Planing and Investment of Vietnam is
working with other related Ministries to develop a strategy for further
negotiation of services with other ASEAN countries.
3.
US-VEITNAM BILATERAL TRADE AGREEMENT
The US-Vietnam Bilateral Trade Agreement (BTA) was signed
in
Washington
DC
on
July 13th, 2000
.
It will take approximately eighteen months to be ratified by the US
Congress, President Bush, the National Assembly of Vietnam, and
President Tran Duc Luong. The BTA addresses major trade issues between
the two countries, including market access for US agricultural and
industrial goods; increased intellectual property rights; market access
in service sectors; protection of US investments; transparency of
Vietnamese laws, rules, and regulations; and a right to appeal for US
citizens. Once the BTA comes into force, tariffs will drop from 40
percent to 4 percent for Vietnamese exported goods.
Regarding
services, the Agreement makes the following commitments:
-
US firms may operate in
Vietnam
under the form of the Business Contract Cooperation (BCC), joint
ventures, 100% foreign-owned enterprises, the Build-Operate-Transfer (BOT)
and the Build-Transfer-Operate (BTO).
-
US
companies may establish representative offices in
Vietnam
without engaging in any profit-taking activities.
-
Service providers with
US
direct-investment capital will be licensed in accordance with Chapter 3
of the Agreement.
-
Branches of US firms are required to operate under
current
Vietnam
laws and regulations.
-
Enterprises with
US
investment capital may lease land within their period of operation with
the approval of central or local authorities.
-
Measures of entry and temporary stay are applied to
mangers, executives, specialists, and service salespersons.
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