Foreign Relations of the United States, Diplomatic Papers, 1944, General: Economic and Social Matters, Volume II

800.796/4–1944

Report by the Assistant Secretary of State (Berle) on Air Conversations Held at London

[Washington,] April 19, 1944.

Pursuant to arrangement with the British Government, Mr. A. A. Berle, Jr., Assistant Secretary of State, and Dr. Edward Warner, Vice Chairman of the Civil Aeronautics Board, proceeded to London to hold informal discussions with representatives of the British Government on the subject of civil air transport.

Prior to their departure, the Governments of the United States and Great Britain had exchanged ideas as to the scope of matters for discussion.

The British discussion group consisted of The Lord Beaverbrook, Lord Privy Seal; Captain The Right Honorable H. H. Balfour, Air Minister; Mr. W. C. G. Cribbett of the Air Ministry, and Mr. J. H. Le Rougetel of the Foreign Office. Mr. Richard Law, Minister of State, and Mr. Peter Masefield, Honorary Secretary of the Lamplugh Committee on Civil Aviation, although not formally designated as negotiators, also attended the discussions on the British side. The American group consisted of Mr. A. A. Berle, Jr., Assistant Secretary of State; Dr. Edward Warner, Vice Chairman of the Civil Aeronautics Board; and Mr. Livingston Satterthwaite.

The meetings opened at 11:00 a.m., April 10, 1944, at Gwydyr House, London, and continued until Thursday afternoon, April 13.⁸⁵ Lord Beaverbrook presided.

The British group proposed an informal statement of matters for discussion, attached hereto, marked “Annex A”. This was accepted subject to such changes in order as might be found convenient. All discussions were carried on upon the assumption that enemy nations would not, after the war, be allowed to engage in international aviation.

Standards of Technical Operation

Informal agreement was reached that the first four points and point seven might be discussed together. After full discussion, it was agreed that the greatest possible uniformity of practice on the technical subjects comprehended within these five items should be reached, in any event between the United States and Great Britain, and preferably on a world-wide international basis. The discussions were carried on by Dr. Warner as expert for the American group, and by Mr. Cribbett and Captain Balfour for the British group. In view of the fact that all of the subjects involved were highly technical in nature, after an understanding in principle had been reached, it was agreed:

That as soon as convenient conversations should be held between the technical representatives of the two countries with a view to agreeing on the uniformity and in respect of:

(a) Communications systems and air navigation aids.

(b) A collection of exchange of meteorological information.

(c) Rules of the air and traffic control practices.

(d) Customs and immigration requirements.

(e) Rules relating to the exemption from taxation of fuel, oil and other supplies and spare parts intended for use in transport aircraft in international service.

(f) Regulations relating to the prevention of any transmission of communicable disease by aircraft.

(g) Standards governing the licensing of operating and mechanical personnel.

(h) Requirements relative to the certification of aircraft and their equipment as airworthy.

That technicians of other members of the United Nations should meet with the representatives of Great Britain and the United States to exchange views on the subjects mentioned above.

Understanding was accordingly reached that experts in each of these fields attached to the appropriate authorities in Great Britain and in the United States would be put in touch with each other for the purpose of giving detailed application to the principle of standardization and uniformity within these fields of practice.

Air Transit Rights and Commercial Use of Ports; Cabotage

The groups then proceeded to the discussion of point twelve designed to introduce the subject frequently referred to as “freedom of the air”. The American group suggested that this phrase be not used in view of the fact that it had been so loosely used as to have become meaningless; this suggestion was agreed to. The subject accordingly was divided into three sub-heads:

(a) Sovereignty of the air;

(b) The right of innocent passage and non-traffic stop;

(c) The right of commercial outlet.

The American group stated that the United States was unable to qualify the doctrine of sovereignty of the air over its national territories and territorial waters. Maintenance of this sovereignty did not, however, preclude the possibility of agreement on passage through such air, always subject to the sovereignty of the country, to its reasonable laws and regulations, and the need for protecting its security; an analogy being agreements under which merchant vessels of other countries are permitted to enter coastal waters, railway trains and automobiles are permitted to enter tracks and roads in other jurisdictions. Such agreements, the American group believed, were not in derogation of sovereignty if suitably drafted. The British group held substantially the same views; and note was taken of this agreement. The two Governments appeared to hold similar views with respect to the continued maintenance of the doctrine of sovereignty of the air over national territories and coastal waters.

Discussion was then opened on the right of innocent passage and technical stop. The American group took the view that this could not be separated from the right of commercial entry; that is, that the working out of agreements in respect of innocent passage and non-traffic stop must necessarily be dependent on the working out of reasonable arrangements for airport use and commercial outlet. The discussion thereupon turned to arrangements for use of airports and commercial outlet.

It was pointed out that this involved discussion of point eleven, viz: cabotage. The British group inquired the definition of the American group of “cabotage”. The reply was made that in the view of the Government of the United States cabotage consisted of traffic between any political entity and its colonies and possessions, but not between a political entity and self-governing nations affiliated with it. In respect of the United States, this would mean that cabotage included traffic between the United States and Puerto Rico and Hawaii, just as, in respect of Great Britain, it would presumably include traffic not only within Great Britain but between Great Britain and its colonies, such as Newfoundland, Jamaica, Malta, et cetera; but not traffic between Great Britain and Canada, Australia, New Zealand, South Africa, and India. The British representatives indicated that their own view corresponded to this.

Lord Beaverbrook, on behalf of the British Government, reaffirmed the position taken by the British Government and stated by him in a speech before the House of Lords on January 19, 1944. The applicable paragraph of this speech is as follows:

“In particular the question of bases has been widely canvassed. We have many bases at our disposal. They are scattered all over the Empire, and in other lands too the needs of war have caused us to construct airfields suitable for peace as well as for war. I do not of course deal today with the bases in the Dominions. These are necessarily separately dealt with, but they must and will be a subject for discussion between Great Britain and the Dominions. But as for the bases under our control, let me say at once that the Government have no desire to exclude aircraft of other nations. We demand no prescriptive right to the use of airfields for ourselves. Rather do we mean to use them for the purpose of steadily developing civil aviation throughout the world. Here it must be said that the bases are few in number at which any great volume of traffic can be collected. Just the same, it will be necessary to have international agreement oil traffic regulations and arrangements. This is an essential condition of future developments. For my part I find myself on this subject in agreement with Mr. William Burden, of the Department of Commerce in Washington. Mr. Burden, speaking in Washington on the 5th January, said:

‘Complete freedom of the air in the present state of the world might result in commercial anarchy.’

“I share Mr. Burden’s view. For our part we are prepared and ready at any time to enter into negotiations with a view to disposing of all traffic problems and arrangements that will arise.”

He indicated that he assumed like consideration would be given to adequate airports available for commercial entry in the United States.

The American group stated that the present view of the Government of the United States was that not only the United States but all other countries should be requested to designate reasonable and adequate ports at which commercial entry—that is, the discharge of passengers, freight, and mail, and the taking on of passengers, freight, and mail—might be carried out. The British Government agreed to this view.

Both groups recognized that further discussions would have to be held in relation to the designation of such ports; but these might await a later stage.

Lord Beaverbrook noted, and Mr. Berle agreed, that, under this arrangement any question of the so-called air bases, which more properly should be called airfields, built by the cooperative effort of two or more nations, would disappear. Those that were reasonably useful for commercial outlet would thus become available for use by the craft of both countries. The technical “ownership” or legal title to the base then ceased to be important. At this stage, discussion on point eight, namely, the principle that each state should be responsible for the provision and maintenance of ground facilities needed in its territories, became appropriate. The principle was expressed by both groups as corresponding with the present views of their respective Governments.

Frequencies and Traffic

In turning to the economic characteristics of air transport services the British delegation suggested that the objectives should be:

(1) To set up effective machinery to insure the maintenance of broad equilibrium between the world’s air transport capacity and the traffic offering.

(2) To provide for equitable participation by the various countries participating in international air transport.

(3) To control subsidies with a view to making air transport self supporting wherever practicable.

The American group said that the first objective seemed wholly appropriate; that the second implied a degree of control which seemed undesirable; and that the third, although certainly acceptable in principle, presented great difficulties because of the manifold forms that subsidies might assume. In this connection, the American group believed that it would be easier to control any evil consequences of subsidies than to apply a general rule with respect to the subsidies themselves. Giving specific form to the second of their three objectives, the British group then advanced the proposal that frequencies should be apportioned by international authority on the principle that each country should have the right to carry traffic originated by it, and should thus be entitled to receive routings and frequencies sufficient for that purpose. Being asked for a definition of traffic originated by it, the suggestion was advanced that this should be determined by the place at which a passenger bought his ticket, or from which mail or freight was shipped. The American group pointed out that this in substance amounted to an equal division of traffic irrespective of the circumstances of its movement; thus, since most air travelers commonly returned to their point of origin, the result would be that one half the traffic would have been originated where they started and another half would have originated where they purchased their tickets for return.

The American group believed that if there were to be any classification of traffic by national origin the place of origin of passengers should be considered as their place of citizenship or of residence. This should not be rigid, in the sense of confining nationals to their own planes. But a British or American traveler leaving his country on a British or American plane should be able, if he wished, to return by British or American plane; and the respective countries should in each case be in a position to offer requisite service by its own planes to its own nationals. The British group conceded that there was substantial force in the American position with respect to the significance of a passenger’s nationality, as contrasted with his mere place of embarkation, but the point was not developed in detail.

Uneconomic Competition

The meeting thereupon proceeded to discussion of point five, having to do with the elimination of uneconomic competition by control of rates.

The first point raised was that of control of subsidies. The British group took the position that subsidies should be controlled in some measure, lest competition in air traffic should become simply a competition in government subsidy. They expressed the view that, so far as possible, air traffic should be made to pay its own way as rapidly as situations permitted. The American group agreed with this general point of view, but pointed out the extreme difficulty of ascertaining whether subsidies had or had not been granted; and the necessity of subsidies in respect of certain services where there might be necessity for communication without passenger and freight traffic sufficient to pay the cost of the service. They surmised that the British Government might find that it needed similar service; to which the British group agreed. The British group cogently pointed out that if routes and frequencies were handled so as to correspond to national traffic, the countries which might have only a limited amount of traffic but nevertheless wished to run a service, possibly at infrequent intervals, might find it necessary to subsidize for the purpose of keeping their planes in the air at all.

After very lengthy discussion, the suggestion was finally made that in principle subsidies were legitimate for the purpose of keeping planes in the air; but that they could not be legitimately used for the purpose of forcing competing planes out of the air. Note was taken of the fact that acceptance of the principle, by itself, was by no means self-enforcing; and the meeting thereupon proceeded to discuss certain definite practices.

The British group presented the suggestion that there should be agreement upon minimum rates. The American group agreed to this view, suggesting that such agreement be had through mutual consultation between the relevant authorities of the interested Governments in respect of each route. Note was taken of the British preference for an international rate fixation body. It was pointed out that the alternative was private agreement between the airlines involved without benefit of Government authority; so that in fact some sort of rate regulation, public or private, appeared inevitable. The British representatives stated that in this respect they likewise wished to make a reservation that any understandings reached should be conditional on international control. The American group stated that they believed this was a matter for bilateral or possibly multilateral action through consultation between the interested governments based on experience; and the point was reserved.

The British representatives then observed that, in their view, minimum rates should be differential, based on the type and speed of service, so that a fast service should not be permitted to charge the same rate as a slow service, et cetera. The United States representatives stated that in their view the encouragement of continuous development in aircraft was essential both for the good of the industry and for the security of the United States, and they would not care to agree to a principle which penalized the better planes in favor of the worse, or to make it advantageous to a line to have the less developed aircraft. Accordingly, they proposed that the differential in rate be based on differential in operating cost, so that, if either country were able to develop a plane which could operate at higher speed but at the same cost, it might secure the legitimate advantage due thereto. This principle appeared to be satisfactory likewise to the British representatives; the reservation made by the British representatives regarding international control, however, applying to this point also. As further clarification, it was the view of both groups that reasonable differentials should be accepted in respect of more expensive service, where the additional expense arose chiefly from greater luxury, accommodations, or the like, occasioning a greater cost. It was agreed that this might be the subject of further technical discussions at a later stage.

Proposals for International Control

Lord Beaverbrook then discussed in general terms the subject of an international agreement governing the control of international air transport. He emphasized the necessity from the British point of view of some kind of international control to direct and govern the growth and conduct of international civil aviation.

The American group presented the difficulty which the United States would have in accepting it, adding that it was by no means clear that under our constitutional practice the American Government could delegate regulatory powers to an international commission. Unlike the monarchical tradition of Great Britain, which proceeds on the theory of powers delegated by the Sovereign, our own Government was itself a government of delegated powers, deriving its authority from the Constitution. The authority of the United States Government was thus limited to making understandings with respect to the use of its sovereign powers by recognized international procedure.

Further, it seemed to the American group that the emphasis on international control was largely derived from considerations of international security. This was a separate subject, which, it was understood, was to be separately dealt with by the representatives of the Governments in respect of international security. It was understood that exchanges between our respective Governments on that subject were to take place within the next few months; and the operative points in the British contention would more properly be handled there.

The American representatives also pointed out that a newly created international commission would in any case be confronted in its initial stages with such complex problems of procedure and of developing its own practices suitable to an entirely new field of work, that it would be impossible to hope that it could competently assume large executive responsibilities, or broad responsibilities of final judicial determination, in the very first stages of its functioning. An international commission, the Americans urged, would have a far better chance of success if it started with its functions limited to study and recommendation, with its future role to be determined by actual experience and by the commission’s success in building for itself a reputation for genuine competence, impartiality, and freedom from the influences of political intrigue.

Lord Beaverbrook then proposed, on behalf of the British Government, the acceptance, in principle, of the draft convention suggested by the Canadian Government.

The British Government, he stated, considered international control essential, and thought that other commercial arrangements proposed would be difficult or perhaps wholly impractical if this were not worked out along the lines of the Canadian agreement.

The American group pointed out that in certain essential respects the United States would find difficulty in accepting all of the Canadian proposals.

The meeting thereupon proceeded to an analysis of the Canadian agreement point by point. The American group pointed out that under the Canadian scheme, an international regulatory body was given extremely broad powers, and that no principles governing the use of those powers were set forth in the document. Further, the constitution of the control machinery was still indefinite; and the only certainty was that the powers who had contributed most to the development of air traffic were certain to be in the minority. So far as the United States was concerned, this would in effect subject twenty-five years of American development of international aviation, which had been invented, pioneered, developed, established, and defended by the United States, to the unrestricted rule of an as yet undetermined international body, upon unstated standards.

Further, even the facts as to international traffic were unknown. Prior to the war the United States had originated eighty percent of all of the interoceanic traffic, and had carried an even larger percent. While this ratio could hardly be expected to continue, the war had distorted further air traffic development so that the actual necessities and development of the situation were wholly speculative. Estimates varied from that of Mr. Juan Trippe,⁸⁶ who said all trans-Atlantic traffic could be carried by nine planes, to estimates of greater optimists forecasting an immense interoceanic traffic.

The view of the United States, accordingly, was that international control at this time should be limited to those technical matters in respect of which standardization and uniformity were essential. In economic aspect, the economic body should be vested with power to receive and collect data on all of the phases discussed; to report regularly and at frequent intervals, and, if an unhealthy situation appeared to be developing, to call attention of the respective governments to the situation and stimulate their getting together through their respective aeronautical authorities to take necessary remedial measures. If the governments concerned felt that they wished to do so, the international body might be used as arbitrator, though this should rest in the discretion of each government.

As the close of a suitable transition period during which time the actual facts of the case had been adequately developed, further conference might take place to determine what, if any, further action should properly be taken. Particularly if understandings had been reached on the underlying principles by the governments concerned, it was thought that the international body could function usefully, without endowing it with super-sovereign powers which it would find extreme difficulty in using and enforcing.

The British representatives pointed out with great earnestness that we were now entering a new and unchartered field. Transportation was entering a third dimension. None had suffered more than the British from the abuse of aviation; that civil air transport had been used by Germany to develop within herself the material for the Luftwaffe; planes had been used for combined military and political as well as commercial reasons; the handling of civil aviation throughout the world had been as much a matter of politics as of economics; and the possibility of leaving this potentially dangerous instrument to unregulated competition was a point which the British Government would find extreme difficulty in accepting. Thus, the various views which they had accepted in respect of economic matters must be subject to the existence of overriding controls adequate to prevent them from becoming dangerous.

For this reason they urged the creation of a body with powers substantially similar to those set out in the Canadian document.

Matters having reached an impasse, the discussion was carried forward at a meeting with the British Civil Air Transport Committee especially convened for that purpose.

At this meeting the British view in favor of internationalism was forcibly presented by several members, and the whole subject was reviewed in approximately the terms indicated above.

After adjournment, the British representatives announced that they wished to withdraw the Canadian document and to propose in lieu thereof a new document, a copy of the so-called “Balfour Report” (attached hereto, marked “Annex B”). This document had proceeded from the conference between the British Commonwealth Nations, held in October 1943. The American group requested time for examination of this document.

Having completed their examination, the American representatives stated that, in the light of the views previously expressed and on which a wide measure of agreement had been had, the American representatives felt that the document did in fact constitute an adequate basis of discussion affording the possibility of agreement between our respective Governments. They pointed out that such agreement would probably not be possible if the interpretations of principles enunciated in the Balfour document were the same as those set out in the Canadian draft convention. But within the scope of the wording of the Balfour document, an international body could be set up and might be assigned functions similar to those which corresponded to the present views of the Government of the United States.

In particular, the American group referred to the following provisions: Paragraph 2 (IV), “Schedule of international air routes subject to international control. Such routes to be reviewed as necessary”; Paragraph 2 (V), “Establishment of machinery to determine frequencies on international routes; the allocation of quotas to countries operating international services; rates of carriage in relation to standards of speed and accommodation”; Paragraph A (a) “Voting powers should be determined on an equitable basis to be worked out”; and related paragraphs, as being ambiguous, and noted the necessity of an acceptable interpretation in order that the Balfour report might in fact be able to cover a result which could be accepted as satisfactory. Especial note was made of the fact that the Balfour report did not, as did the Canadian document, assign by its terms power to the international body.

The British group indicated that they felt that on this basis agreement could be had within the scope of the reasonable negotiations which might take place prior to an international civil air transport conference; and that it would be possible, accordingly, to harmonize the views of the British Government with those of the Government of the United States.

Arrangements for A Civil Air Transport Conference

The possibility of arrangements for a civil air transport conference was then discussed. The United States expected to have discussions with a Soviet delegation in the near future; the British representatives stated that they had requested that this delegation, after discussing matters in Washington, might proceed to London. The American representatives said that they would welcome such a step.

The American representatives felt that it was opportune now to engage in further bilateral discussions with the other powers who wished to enter the air, setting out the views which have been expressed in these discussions. It was agreed that this method might be profitably employed by both Governments, each keeping the other informed as to the progress of discussions. When it appeared that there might be ground for general agreement, an exchange of views would take place as to the desirability of calling a United Nations civil air transport conference.

It was further agreed that the conversations thus begun might be continued very informally through the diplomatic channel or by the sending of representatives from either Government to the other to continue to engage in conversations as the bilateral conversations progressed.

The Halifax Agreement on Non-Discrimination⁸⁷

The American group then brought up the fact that the American and British Governments were both proceeding under the terms of an understanding embodied in the so-called Halifax note, by which each Government agreed that it would not enter into understandings with other governments exclusive of or discriminatory against each other. The American group pointed out that this understanding was to exist until such time as conversations were had between the two Governments. Since these conversations were now in process of being accomplished, they hoped that the understanding might be continued, in any event until the meeting of a civil aviation conference. Mr. Le Rougetel explained that in the view of the British Foreign Office, the Halifax note should be completed by a further exchange of documents and that it would be desirable to put the matter into somewhat better form. It was understood that such an exchange would take place through diplomatic channels.⁸⁸

The United States group then expressed their hope that as a part of the general settlement it might be understood that no government would enter into arrangements exclusive of the other, nor permit such arrangements by private treaty. It appeared that, in the contingency that suitable agreement could be had on international arrangements, the British delegates held much the same view. The suggestion was made that in any convention accepted by the proposed civil aviation conference, such clause might appear.

Just prior to closing the sessions, Beaverbrook noted that the BOAC proposed to use three of its Boeings for limited service across the South Atlantic to Rio to carry non-fare paying traffic. Their real objective was to establish communications with Argentina, but considered that this could not be done until the political situation with Argentina was better than at present.

Closing Remarks

As the sessions closed, Mr. Berle expressed, on behalf of the American group, their very deep appreciation of the many courtesies and kindnesses shown them by their British colleagues, and their gratitude for the frankness and directness with which views had been exchanged, and for the reasonableness which the British representatives had shown in meeting the various matters in respect of which difference might ensue. A final communiqué (attached, marked “Annex C”)⁸⁹ was drawn up and agreed to by both groups, and thereupon was released.

Lord Beaverbrook very graciously expressed the kindly feeling which the British Government had had in entertaining the American representative, and expressed the belief that these conversations would be the foreruner of closer contacts as time went on. The meetings were then adjourned.

A. A. Berle, Jr.

[Annex A]

British Informal Statement of Matters for Discussion

(1) Safety regulations, such as rules of the air, airworthiness, licensing of personnel and aircraft, ground signals, meteorological procedure, prohibition of carriage of dangerous goods, etc.

(2) Standardisation, so far as possible, of radio equipment and technique, ground services and meteorological facilities.

(3) Customs procedure, passenger formalities and sanitary regulations.

(4) Conditions for the exemption from taxation of fuel and oil.

(5) Elimination of uneconomic competition by control of rates and competitive practices, e.g., by the regulation and adjustment of frequencies of service and rates in relation to speeds and standards of passenger accommodation.

(6) Control of subsidies: collection, review and exchange of information about services maintained, operational costs, nature and extent of subsidies, rates of carriage, landing fees, etc.

(7) Arrangements for licensing of international air operators: denial of facilities to any unlicensed operator.

(8) Establishment of the principle that all States should be responsible for the provision of the ground facilities needed in their territories in accordance with prescribed international standards. Financial arrangements to deal with countries unable or unwilling to provide the necessary facilities.

(9) Provision for arbitration machinery.

(10) Designation of routes or services and airports of entry.

(11) Reservation of cabotage and definition of territory of a State.

(12) Definition of whatever doctrine of freedom of the air is generally acceptable in the context of a satisfactory International Agreement governing the control of international air transport.

(13) International Operating Agencies.

(14) Security.

(15) Arrangements for International Conference.

[Annex B]

Draft Outline of an International Convention and International Authority For Its Administration⁹⁰

1. An International Convention must provide for international cooperation in air transport on international trunk routes. Equitable participation for all nations concerned is thus secured. Unfettered competition, rate warfare and other devices must be checked.

2. States should subscribe to an all-embracing Convention, which would include provisions covering:

(i) Regulations governing safety standards, aircraft and ground organisation, health, etc. Internal national services do not come within the Convention. It is hoped that States would voluntarily adopt international standards for their internal systems.

(ii) Definition of State territories. The reaffirmation of National Sovereignty of the Air.

(iii) Obligation to provide, or to permit provision by the International Authority referred to below, of the airfields and ground organisation necessary for international services. The location of such facilities would be decided by the State concerned.

(iv) Schedule of international air routes subject to international control. Such routes to be reviewed as necessary.

(v) Establishment of machinery to determine frequencies on international routes; the allocation of quotas to countries operating international services; rates of carriage in relation to standards of speed and accommodation.

(vi) Provision of machinery for arbitration on matters in dispute and for sanctions for offences.

(vii) Definition of “Freedom of the Air”, to be granted subject to acceptance of other provisions of Convention:

(a) the right of innocent passage;

(b) the right to land for emergency, refuelling, etc.

(c) the right to disembark passengers, etc. from the aircraft’s own country of origin;

(d) the right to embark passengers, etc. for the aircraft’s own country of origin.

3. An International Air Transport Authority will be established to administer the Conventions.

A. International Air Transport Authority

(a) Constitution

To consist of Government representatives of all the States subscribing to the Convention.

Voting powers should be determined on an equitable basis to be worked out. (Traffic interest might be the test or one of the tests, in which case periodic review would be required.)

(b) Functions and Powers

(i) To administer the regulatory provisions of para. 2(i) above,

(ii) To prescribe standard requirements for international aerodromes and ancillary facilities to be provided by contracting states;

(iii) To ensure provision of areodromes and ancillary facilities for international services in cases where the States concerned are unable to do so.

B. Operational Executive of I.A.T.A.

An Operational Executive of the I.A.T.A. will be set up:

(a) Constitution

Its constitution is a matter of policy. Possible alternative methods are:

(a) members to be nominated in the Convention

(b) election of members by the I.A.T.A.

(c) nomination of members by the major air powers.

(b) Functions and Powers

(i) To exercise, subject to delegation to Regional Panels, the functions in para. 2 (iv) and (1), viz., matters arising from:

(a) schedule of international air routes subject to international control.

(b) determination of frequencies on international routes; the allocation of quotas to countries operating international services; rates of carriage in relation to standards of speed and accommodation.

(ii) To review and, after hearing interested parties, to modify, if necessary, the decisions of the Regional Panels.

In the light of fluid post-war conditions the proposals in this paragraph should be for a limited period, say five years, and subject to review during this period.

C. Regional Panels

(a) Constitution

Membership would be confined to Governmental representatives of the States agreed by the Operational Executive as having an interest in international routes in the areas concerned.

(b) Functions and Powers

The functions to be exercised in relation to operating zones to be defined in the Convention would be:

(i) To consider the needs of air transport within the zone; to determine frequencies and quotas for services within the zone.

(ii) To determine tariff rates, having regard to standards of speed and accommodation.

(iii) To collect information and cost statistics relating to external operations. External operating costs should be segregated, so far as practicable, from internal operating costs.

Note: International Routes would be defined in a schedule to the Convention and would be subject to review as necessary. The definition of “internal” services is difficult. It is necessary to consider the wishes of certain countries to make regional arrangements. In considering this problem it should be noted that Article I of the 1919 Convention defined the territory of a State as “including the national territory, both that of the Mother country and of the Colonies and the territorial waters adjacent thereto.”

85. The dates are incorrect. According to the official minutes, which were transmitted to the Department in despatch 15217, April 25, 1944, from London, the discussions opened on Monday, April 3, and closed on Thursday, April 6 (800.796/826).
86. President of Pan American Airways.
87. See Foreign Relations, 1942, vol. iv, pp. 18 ff.
88. See vol. iii, pp. 162 ff.
89. Not attached to file copy.
90. Drawn up at the conference between the British Commonwealth Nations in October 1943, and known as the Balfour report.