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ACS Okays Transport Agreement

The Greater Caribbean This Week
Norman Girvan (1)

The 7th Intersessional Meeting of the Association of Caribbean States Ministerial Council was held in Port of Spain on July 10-11, 2003. The meeting provided a useful opportunity to evaluate progress in building the Greater Caribbean region as a Zone of Cooperation, as the ACS looks toward its 4th Summit later this year.

One of the significant decisions of the meeting was to recommend that the ACS Air Transport Agreement (ATA) be open to signature at the upcoming Summit. The ATA has been under negotiation for the past four years. It is a basic instrument for liberalising air services among member countries. The objective is to encourage regional airlines to provide more intra-regional services at lower cost; stimulating more intra-regional travel for trade, investment and tourism. Multi-destination tourism would be another spin-off.

There have always been two major sticking points to a region-wide multilateral air agreement. One is the very idea of granting rights multilaterally instead of holding a series of bilateral negotiations among the parties. A multilateral agreement saves time and money in the negotiation process and is consistent with the worldwide trend towards air services liberalisation.

But some countries prefer a bilateral negotiation framework, seeing it as better suited to protecting their national interest. Or they may also find that a multilateral agreement is inconsistent with their obligations with other parties. Mexico is an example of the first; while France (an Associate Member of the ACS) is an example of the second. Both countries have participated in the ACS negotiation meetings, providing technical advice, but have signalled that they will not be Party to the ATA right now.

This is not a problem, as the ACS Convention does not require universal participation of member countries for agreements to be made. Wisely, Article 20 of the Convention explicitly provides that “… a number of Member States may undertake initiatives and conclude integration agreements among themselves……Any such agreement or initiative may be open to any other Member State which is able and willing to participate therein”.

This flexibility allows for a group of countries within the ACS membership to make an agreement without requiring all members to adhere. At present account, the expectation is that as many as 24 of the 25 ACS members and two of the Associate members will sign the ATA.

The second difficulty, which is linked to the first, has been the multilateral grant of “fifth freedom” rights. These are the rights of an airline to operate routes that do not originate or terminate in its own home country. Within the Greater Caribbean region, the exercise of fifth freedom rights by regional airlines would be a big step towards creating a single air transport space. But some routes are well traveled and highly lucrative. Governments with a financial stake in national airlines - - notably some CARICOM countries -- are wary about granting them multilaterally in the ACS ATA.

So negotiators came up with a compromise. Under the ATA, countries can choose either to grant fifth freedom rights multilaterally, or to grant them on a ‘bilateral and reciprocal’ basis, by indicating which of the two options it has selected at the time of signing. It can also shift subsequently from the bilateral to the multilateral mode merely by providing the appropriate legal notification.

The hope is that most countries will feel comfortable and confident enough to end up with the multilateral Option 1.

As airlines in the region talk consolidation to meet the challenges of a difficult world situation, the possibility of having an ACS ATA by the end of the year must be welcome news.

1.) Professor Norman Girvan is Secretary General of the Association of Caribbean States. The views expressed are not necessarily the official views of the ACS.

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July 21, 2003

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