The Acting Secretary of State to the Chairman of the Civil Aeronautics Board ( Pogue )
My Dear Mr. Pogue: This refers to your letter of July 16, 1945 on the subject of negotiations with certain countries for bilateral air [Page 1464] transport agreements, and your suggestion that the Department endeavor to conclude such arrangements with unlimited provisions for so-called Fifth-Freedom rights, by utilizing the other requirements of these countries as bargaining power.
The Department fully appreciates your concern with this subject and wishes to assure you that a number of bargaining elements not directly connected with civil aviation were used in the negotiation of bilateral agreements already concluded, and are being used with respect to those now under negotiation. At the same time, the complex nature of this Government’s foreign relations makes it difficult and often impossible to relate a quid pro quo to each request which the Department makes of a foreign government. Admittedly the cases of Great Britain and France are special problems, and the Board already is aware of some of the steps which are being taken in an effort to work out satisfactory arrangements. However, in the case of most of the other countries with which air transport negotiations are now pending, our so-called bargaining power is not of a nature which would permit this Government to exert economic pressure in order to achieve all of its desires. As a matter of fact, the aggregate weight of this Government’s requests with respect to many nations often exceeds the economic assistance which this Government is prepared to make available.
In addition to civil air transport arrangements, the Department must consider a wide range of other matters. The reduction of barriers to international trade; the protection of American interests abroad; more liberal treatment for American exporters by foreign exchange control authorities; the wider dissemination of information; the acquisition of rights for the Air Transport Command and other military agencies; and other objectives of importance are among the many subjects which the Department and its representatives abroad are constantly discussing with foreign governments. By specifically relating each of these requests to other matters this Government would obtain some of its objectives, but it is not unlikely that its bargaining power would be depleted so that other objectives would be unobtainable. Such an approach also would embark this Government on a policy of narrow trading which might well lead to preferential treatment for certain countries and discrimination against others, which would be the very opposite of the policy which the United States has endeavored to foster in the broad field of international commerce.
In a separate reply the Department has commented on the suggestion made in the Board’s letter of July 18, 1945,11 to the effect that the proposed financial assistance from the Export-Import Bank in connection with the sale of airport equipment to Turkey be made contingent on acquisition of the unlimited air transport rights which [Page 1465] this Government hopes to obtain from that country. The Department will be glad to consider the advisability of relating financial assistance to air transport objectives when it is feasible to do so. However, the views expressed in the Department’s letter on the Turkish airport matter are likewise applicable to the Board’s recommendation in its July 16 letter that “the filling of the other requirements of the countries referred to be closely related to the conclusion of the bilateral air transport agreements”. It is true that many countries have substantial requirements in the United States, but it is equally true that American exporters are able and anxious to supply these requirements. The Board would probably agree that even a threat of withholding such exports would prejudice this country’s future foreign markets, and would be indefensible from the standpoint of overall national policy and public opinion.
The Board’s letter also mentions the proposal for allocating C–54 aircraft to the French on condition that France accept the terms of our proposed agreement. The Department does not deny that allocation of transport aircraft is an excellent bargaining point in helping to conclude such negotiations, and certainly it would not favor making any of these larger planes available to countries denying reasonable operating rights for United States trans-Atlantic services. The proposed assignment of C–54’s to France would, of course, be indirectly related to the air transport negotiations, but while the final objective is perhaps the same, the Department prefers to see any such allocation made as a fulfillment of commitments stated by this Government at the Chicago Aviation Conference, rather as an added inducement or quid pro quo for concluding the agreement itself. The latter approach might easily be taken advantage of by other countries to the extent of demanding special favors in any negotiations proposed by this Government, the results of which would soon prove the undesirability of “relating” such matters too closely.
The Board mentions the British efforts “to delay granting any operating rights” to United States air services. The Department is not seriously perturbed over the possibility that the British can or will block this Government’s acquisition of landing rights entirely. It is more a problem of obtaining these rights on an unlimited basis. The Board has indicated that it desires full Fifth-Freedom rights in each of the countries with which the Department is now negotiating on this subject. The Department is equally concerned over the reluctance of many countries to grant liberal operating privileges to United States airlines, but it believes the Board will agree that some of these countries are motivated by a sincere desire to protect their own regional traffic. As the Board is undoubtedly aware, the pre-war aviation picture in Europe was characterized by pooling arrangements, balanced [Page 1466] schedules, and other limitations on traffic and frequencies which, in the aggregate, represented somewhat less than the Fifth-Freedom concept which this Government is endeavoring to realize. It also must be remembered that the Five-Freedoms Agreement concluded at the Chicago Aviation Conference allows any participating country to “reserve out” of the Fifth-Freedom entirely.
Despite these and other considerations, and the fact that it is often impracticable or inadvisable for the Department to utilize its bargaining power for the primary purpose of obtaining unrestricted concessions in the air transport field, it is believed that substantial progress is being made. Since December 1944, bilateral agreements with full Fifth-Freedom rights have been concluded with Spain, Sweden, Denmark, Iceland and Ireland;12 and interim rights have been obtained from Italy. Pending negotiations indicate that several more countries may conclude bilateral arrangements with this Government on the same unlimited basis, and there have been further indications that additional countries might adopt an increasingly liberal view toward the Fifth Freedom. While some of the remaining countries may not see their way clear to granting completely unrestricted Fifth-Freedom rights by the time United States airlines are ready to operate abroad, there is reason to believe that the pressure of public opinion and other factors, coupled with the continuing efforts of this Government, will force a steady trend in this direction.
I wish to reassure the Board that the Department and its representatives abroad are fully aware of the importance of concluding the air transport arrangements on as liberal a basis as possible, and that the Department is utilizing as much bargaining power as is feasible under the circumstances. Needless to say, the Department will be glad to continue its close collaboration with the Board in an effort to achieve our common objectives.