On 2 March 2007, the European Commission initialled a first-stage Air Transport Agreement with the United States, which, if approved by the Council, will replace the existing bilateral air transport agreements between individual EU Member States and the United States.

The European Commission had restarted negotiations with the United States in early 2007 after these negotiations had suffered a set-back in December 2006 with the US Department of Transportation withdrawing its rulemaking initiative to review the interpretation of US legislation on ownership and control of US carriers. Such rulemaking initiative followed a previous agreement reached by the EU and the US in November 2005.

The now initialled Agreement adds to the November 2005 agreement. The principal new elements are:

?? a new Annex on ownership, investment and control, containing commitments from the US that will create new opportunities for EU airlines and investors (among others a possibility for EU airlines to exceed 50% of total equity hold of a US airline and giving EU airlines operating to the US greater access to non-EU capital);

?? the possibility for the EU to limit US investments in EU airlines in line with the more restrictive US rules;

?? detailed provisions on franchising and branding with other airlines or companies;

?? the commitment from the US that the Air Transport Agreement will qualify EU airlines to apply for antitrust immunity for alliances with US airlines – the Agreement provides for unlimited code sharing between EU, US and third country airlines;

?? seventh freedom traffic rights for passenger services, allowing EU airlines to operate services between all members of the European Common Aviation Area and the US;

?? access for EU airlines to certain types of US Government-financed traffic under the Fly America programme;

?? a list of priority items for second stage negotiations, and a strong mechanism to ensure progress within a strictly defined timescale.

The Agreement, which the authorities consider crucial and unprecedented, would also further enhance regulatory cooperation between the EU and the US in relation to security, safety, competition (new co-operation arrangements between DG COMP and US DOT), government subsidies and support, environmental issues with a EU-US intention to work within the ICAO framework on emission trading (keeping open however options concerning future environmental measures), and technical cooperation. The Agreement will also cover issues such as access to groundhandling services and the possibility for EU CRS’s to operate in the US.

The initialled Agreement will be presented to the Council on 22 March 2007. If approved, the Agreement could be signed as early as 30 April 2007 at the occasion of the EU-US summit. The Agreement would then apply as of 28 October 2007. [5 March 2007]