Breakfast Event at the
EUROPEAN INSTITUTE

Jacques Barrot
European Commission Vice President

Washington, 22 March 2005

Opening remarks

First of all, I would like to thank the European Institute for organising this event and for inviting me to speak here today.

I said when I took over this job that one of my top priorities would be to come to Washington, and so I am very pleased to be here.

The main purpose of my visit is to meet members of the US Administration. I want to develop closer co-operation in the field of aviation with the United States. Yesterday, I met FAA Administrator, Marion Blakey, and later today I will be meeting Secretary Mineta. I will also be meeting Deputy Secretary Michael Jackson at the Department of Homeland Security.

For Europe, our relationship with the United States is crucially important – in political terms and in economic terms. When President Bush visited Brussels last month, he called for a new era of transatlantic unity. Of course this partnership has a significant political dimension – we have much to gain from acting together on many issues confronting the world.

But there is also an enormous economic dimension. The scale of the economic relationship between the EU and the US is staggering. We are each other’s largest trade and investment partners. The total amount of investment between us amounts to over $1.5 trillion. Millions of jobs on each side of the Atlantic rely on trade and investment between the EU and US.

I want to concentrate my remarks today on aviation. An efficient air transport system is vital for the success of our economic relationship. It enables our companies to do business. It enables our goods and services to flow freely between us.

I will first say a few words about how aviation policy in Europe is developing. Then I will make some remarks about the aviation negotiations between the EU and US. In particular, I want to explain why I believe it is paramount that we make these negotiations a success.

I. My priorities for the development of the European aviation market

At European level, the European Union’s role in the air transport market has increased considerably. There has been an internal market in aviation since 1993. This dynamic market is the equivalent of the US market – and shows the same trends such as the growth of low-cost airlines and alliances and mergers between traditional companies. We are now faced with five main challenges:

1. First, the establishment of our European Air Safety Agency in 2002 illustrates the European Union’s desire to ensure uniform safety standards across our continent. It also illustrates the desire to simplify regulations by replacing 25 national procedures and systems by just one. We are currently holding discussions with the US to establish cooperation between the Federal Aviation Administration and the European Air Safety Agency in order to further simplify the life of manufacturers and carriers, while guaranteeing a high level of safety. Our aim is to obtain a specific agreement on safety between Europe and the USA.

2. Second, in the air traffic management sector the “single sky” legislation has launched an ambitious programme for restructuring European airspace to rationalise it and make its use more efficient. Here again, our problem is the existence of 25 systems within the borders of the European Union. In this respect, I would like to mention the SESAME project for the modernisation of our air traffic management system. Again, we are discussing ways and means of improving cooperation with the US on subjects which are important to us both.

3. Our third priority is to make our air transport system more efficient. How do we plan to do this? Above all, by using our infrastructure more effectively. This will involve more liberalisation of ground handling services; careful examination of our airport capacity and charges; reform of the legislation on slots; and a general simplification of our regulations. This reform will benefit not only European airlines and passengers, but also American and foreign companies that use our airports.

4. Fourth, we must continue to ensure that our rules on State aid and competition are strictly applied, focusing on strict control of aid for the restructuring of companies. We believe this is a healthy attitude that will ensure the sustainable growth of the European aviation sector. How do you tell companies that are good performers that their competitors are allowed to survive thanks to the generosity of governments? I will make no secret of the fact that the financial support which US airlines receive is a cause of concern for European companies. These are in direct competition with American carriers and, if financial support is given to some carriers, this distorts the terms of trade for others.

5. Last, but not least, adequate protection is needed for consumers. I recently launched a proposal to increase the protection for passengers with reduced mobility. The USA is also developing rules on these issues and we must make sure our respective standards do not conflict! I also want to guarantee the right of passengers to know the name of the companies carrying them.

II. My priorities for external relations

Let me turn now to the question of external relations. The rules governing civil aviation at international and global level are outdated. In today’s world economy, international aviation is too embedded in national law, and this makes life complicated for airlines. Since November, I have met with the chairmen of many airlines and aviation organisations and have noted a broad consensus in favour of reforming international aviation.

Barely a week ago, the Commission adopted an ambitious agenda for Europe’s external relations in the field of aviation. First of all, I want to create a common airspace with Europe’s neighbours in the Mediterranean and along our eastern border by 2010. This space will require common rules on safety and security and will create new economic opportunities throughout the region. The Commission is currently negotiating air agreements with Morocco and the countries of the western Balkans.

Secondly, the Commission recommends opening negotiations with China and Russia on air agreements which would set the seal on unprecedented and substantial relations between the European Union and 2 major partners. Seventy-five percent of all passenger traffic from Russia is bound for the European Union. China, with its great potential for growth, is in the process of opening up its air market.

I hope also that the preliminary agreements we have negotiated with New Zealand and Chile will provide the basis for more ambitious agreements.

The Commission wants to open up the world markets gradually and fairly. This strategy is clearly in the interests of the European economy and of passengers and air carriers in Europe.

Europe’s capacity to build new markets, in relationships of trust with its partners, should also provide a major boost both to air traffic worldwide and to the modernisation of the international rules on aviation.

In this context, I believe our relations with the United States are paramount. They are a core priority in my work. The United States is Europe’s leading aviation partner and vice-versa. A study carried out for the European Commission at the end of 2002 estimated that an agreement creating an open aviation area would generate some 17 million extra passengers a year and consumer benefits of over 5 billion dollars a year, not to mention new jobs on both sides of the Atlantic. There can be no doubting the benefits of opening up the North Atlantic aviation market. That is why, right at the start of my term at the European Commission, I announced my intention to come to the United States to lend new impetus to the negotiations.

The Europeans and the Americans met on 6 occasions between October 2003 and June 2004 to work on an overall air agreement. The work was intense. Unfortunately, we were unable to conclude a first-step agreement in June 2004.

As I see it, there are basically 3 issues at the heart of these negotiations. The first is regulatory cooperation between the Europeans and the Americans. We have to make sure that the rules affecting airlines, and therefore passengers’ journeys, neither conflict nor diverge. We do not want a single, uniform set of rules, but we do need to come to an agreement so as to enhance our cooperation.

The second issue is market access. We have both, in our respective markets, seen the positive results of deregulation. It is only logical that our 2 markets should pursue the route of greater deregulation.

The third is working together to relax the rules which are preventing the creation of open aviation markets and hampering the development of the economic sector and the business world. We need to normalise the aviation sector and do away with the rules constricting its growth.

A few hours from now, I will for the first time be taking these issues up with Transportation Secretary Norman Mineta. I firmly believe there is no alternative to the conclusion of an agreement between the world’s 2 largest aviation partners.

Closing remarks

Let me finish by saying a few words in English.

The transatlantic aviation market is today already highly competitive. But economic barriers to free competition still remain – barriers to free market access, barriers to free investment and barriers arising from different rules being applied on each side of the Atlantic.

We in Europe want to remove these barriers. We have a free market in Europe and we want to extend it to create a transatlantic area. This, we believe, is the best way to ensure a prosperous and competitive industry. I believe I should be preaching to the converted on this point, here in Washington, DC.

We need to deepen our relationship. We cannot turn backwards. We believe a comprehensive EU-US agreement would reinforce our partnership. It can lead the way to the future, and show other nations the way forward for the future of international aviation.