Multilateral Trade Agreement for Civil Aviation

Abstract

Emirates Airlines wants greater access to Canada than is currently permitted under the existing Air Services Agreement between Canada and the United Arab Emirates. Thus far, the Government of Canada has legitimately refused the requests. The dispute between Canada and the United Arab Emirates (UAE) over air traffic rights boils down to two fundamental issues that transcend both countries: 1. The importance of the civil aviation sector (airlines, airports, and support services) to the economies of both countries; and 2. The importance of a level playing field for competition between the domestic carriers of each country and between the major hub airports of each country. It is time to have a serious debate on the future regulatory structure for the global civil aviation industry. The resolution of the second issue necessitates that we revisit the current regulatory structure for the airline industry and consider moving away from bilateral Air Services Agreements to a multilateral framework for the industry. There are at least three different ways to proceed to address the issues related to subsidies, capacity dumping, and safeguards for the airline industry. While the multilateral approach is the preferred option, it is unrealistic to assume that there will be sufficient support to move quickly to multilateral negotiations. Nevertheless, it is important to begin to move in this direction, not only to resolve disputes such as the one between Canada and the UAE but also to be prepared to resolve future disputes that inevitably will arise. While Emirates Airlines executives have focused on the importance of consumer interests, there are many more stakeholders involved, and even consumer and taxpayer interests might not be best served by subsidies, capacity dumping, and arbitrary decisions to retaliate.