170. Current Economic Developments2

Issue No. 476

Policies and Problems in the International Aviation Field

Interest in air transport agreements which the US has with other countries and in contemplated aviation negotiations has been heightened by the investigation of the Smathers subcommittee of the Senate Committee on Interstate and Foreign Commerce. A history of US international aviation operations and the factors leading to our present policy has been presented to the subcommittee along with a complete report on bilateral agreements. This information is summarized here as of possible value to the missions abroad.

At this time the US is faced with numerous problems in the international aviation field, stemming primarily from increasingly restrictionist tendencies on the part of many other countries which wish to promote their own aviation interests. These problems take the form of requests for consultation under current agreements by countries which want additional services for their carriers to the US or which want to limit the services of US airlines to their countries. Some countries which do not have agreements with us are pressing for negotiations looking toward an agreement as they want to inaugurate services to the US or to obtain a more permanent arrangement if operations are now being carried on under special permits. In addition, there are indications that the Soviet Union has changed its long established policy of excluding all foreign scheduled air carriers from the USSR. This, along with the post-Geneva posture of the USSR, has resulted in a feeling on the part of some Western countries that the strict policy regarding aviation operations of Iron Curtain countries into the West should be relaxed. Other problems have to do with an increasing number of new regulations and taxes [Page 452] which a number of countries are inaugurating against foreign air-lines.

Background Until 1935 if an American airline wished to operate abroad it applied directly to the governments of the countries into and through which it intended to operate for whatever permits might be required. In 1929 the US exchanged notes with Colombia, which provided generally for air transport rights at Atlantic and Pacific coast ports of the two countries for their airlines. By 1935 the desire of the airlines of other countries for reciprocal permission to operate into the US made it necessary for the US Government to undertake negotiations with the governments of other countries for approval of such services. The first intergovernmental arrangement for operations on specific routes resulted from a conference held in Washington in 1935 in which the US, UK, Canada, and Ireland agreed on routes to be operated across the Atlantic by the airlines of the US and the UK.3 In 1939, aviation agreements were concluded by the US with Canada and France4 but airlines continued to make their own arrangements where no reciprocal services were required.

The development of international civil aviation and particularly the technical developments which took place between 1939 and 1943 made it apparent that air transport operations in the post-war period were going to be conducted throughout the world and would require bilateral air transport agreements between the governments of any two countries whose airlines desired to operate between those two countries or through them. Accordingly, on October 14, 1943 the Civil Aeronautics Board and the Department of State issued a joint statement5 that the Department of State would undertake any necessary international negotiations with regard to air transport operations and setting forth the respective responsibilities of the two agencies and the procedures to be followed. This statement was in line with the Civil Aeronautics Act of 19386 in which Congress recognized the power of the President to enter into Executive Agreements relating to civil aeronautics, including civil air transport services. The statement sets forth the primary interest of the Department of State from the standpoint of foreign policy and international relations, including the broad economic effects of aviation in foreign countries. It points out that the CAB is charged with the responsibility of developing policy with respect to the organizations and functioning of civil air transportation, with regard to applicants and [Page 453] determination of routes. It emphasizes that closest collaboration is necessary so that the Board may be fully apprised of the Department’s views on any international problems which might be involved and in order that State may know the Board’s views in respect of civil aviation problems as they affect foreign relations.

Standard Air Transport Agreement Form Adopted by ICAO The US wanted to have principles relative to air transport included in the Convention on International Civil Aviation at the Chicago Conference in 1944.7 However, differences in views between countries, particularly the US and the UK, prevented this. It was possible, however, to reach agreement at that time on a standard form air transport agreement to be used as a model for bilateral agreements. This form, which the US then used as a basis for its agreements, provided for reciprocal grant of air transport rights to be described in an annex, with each contracting party designating its airline or lines for agreed routes and, in turn, granting appropriate operating permission to the line or lines designated by the other contracting party. The agreement specified that operations of the airlines would be subject to the normal laws and regulations of the country entered with regard to entry and departure of aircraft and operation of aircraft in the airspace of that country, and to the customs and immigration laws.

Inasmuch as in the period immediately following the close of World War II the airlines of few other countries were prepared to operate extensive international air services, the initial negotiations in the immediate post-war period were less difficult than those of later years. The agreements concluded provided a basis for operation by US airlines. The routes were those determined by the CAB, after thorough consideration, to be desirable to create an air transport system to meet the needs of the US as provided by the Civil Aeronautics Act of 1938. There were some countries, such as the UK, which were prepared to offer air service to the US and thus take advantage of the reciprocity provided for in the standard agreement. The difference in philosophies between the US and UK had made impossible agreement between those two countries as to the type of air transport provisions that should be incorporated in the Chicago Convention. Consequently, when in February 1946, the US and UK met in Bermuda to attempt to conclude an air transport agreement, it was apparent it would have to contain compromises.

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Bermuda Principles The UK and the US signed an air transport agreement at Bermuda on February 11, 1946.8 The Chicago Standard Form was used as the nucleus of the negotiations and to it were added what have become known as the Bermuda Principles. These have formed the basis of subsequent US air transport agreements.

Prominent among these principles were those relating to the volume of service to be offered by the airlines of the two countries. The British had, in the first instance, desired to regulate the volume of service in order to protect UK airlines from overwhelming competition by the already-strong US airlines. The US, on the other hand, desired to establish freedom of operation in order that the natural effects of competition might provide the public with the best possible air service and at the same time provide for the healthy expansion and development of the airlines providing this service. The result was a compromise with regard to capacity provisions. The Bermuda agreement provided that there should be fair and equal opportunity for the airlines of the contracting parties to operate on any route established by the agreement and its annex. It further provided that, in the operation by the airlines of either part of the trunk services described in the agreement, the interest of the airlines of the other party should be taken into consideration so as not to affect unduly the services which such airlines might provide on all or part of the same route. It was stated that the services provided by the designated airlines under the agreement should retain as their primary objective the provision of capacity adequate to the traffic demands between the country of which the airline is a national and the country of the ultimate destination of the traffic. The right to embark or disembark on such services international traffic destined for and coming from third countries at points on the specified routes should be applied in accordance with general principles of orderly development to which both parties subscribed and should be subject to the general principles that capacity should be related to: a) traffic requirements between the countries of origin and the countries of destination; b) the requirements of through airline operations; and c) the traffic requirements of the area through which the airline passes after taking account of local and regional services.

The specification of these three principles concerning relation of capacity to traffic requirements and requirements of through airline operations were important to assure the British that US airlines would not operate services for the primary purpose of carrying traffic from one point outside the US to another point outside the [Page 455] US (so-called fifth freedom traffic). At the same time they were equally important to assure the US that its airlines would have an opportunity to carry such fifth freedom traffic on a reasonable basis since the long trunk services of the US could not economically survive if they were to carry only traffic originating in the US or destined thereto. On the other hand, it was recognized that the trunk services should not force the local or regional services out of business. It was acknowledged that on a long-haul service the long- haul passenger would be given preference by the airline, with schedules to suit his convenience as far as possible rather than that of a local passenger. The natural balance of protection for local and regional services continues to provide a way to allow healthy expansion of long trunk services without jeopardy to local and regional services. The US, like every country which has airlines operating extensive services, benefits doubly from these provisions. It benefits by having an opportunity for its long-haul services to develop soundly. It also benefits by having a protection for its local and regional services against undue competition from the long-haul services of other countries.

Another principle incorporated into the Bermuda Agreement dealt with rates. The British had desired to regulate the rates to be charged by the airlines of the two countries. The US felt the rates could be better decided by the carriers themselves and that governments should not be in the rate-making business. Moreover, under the Civil Aeronautics Act of 1938, US officials did not have authority to prescribe rates either for US airlines operating in international services or for foreign airlines operating into and through the US. In this case also a compromise was achieved. The Bermuda Agreement provided that rates should be subject to the approval of the parties within their respective powers and obligations. It was noted that the US CAB had announced its intention to approve the rate conference machinery of the International Air Transport Association (IATA). It was also understood that the rates concluded through IATA would be subject to approval by the CAB of the US. Provisions were included for situations where IATA could not agree on a rate, where IATA procedure was too slow, or where parties withdrew from the IATA machinery. As a general criterion it was stated that rates should be fixed at reasonable levels, due regard being paid to all relevant factors, such as cost of operation, reasonable profit and the rates charged by other airlines.

The Bermuda Agreement specified in detail in an annex the routes to be operated by the airlines of the US and the UK, setting forth the points of departure from the US, the intermediate points, the points to be served in UK territory and the points to be served beyond the UK territory. Similar specifications are set forth for the [Page 456] routes to be served by UK airlines. Provisions were made for route amendments that permitted alteration of the points served in the territory of the other contracting party only after consultation between the parties. Route changes could be made at any time with regard to the intermediate points and the points beyond the territory of the other party, but it was provided that prompt notice should be given in case of such changes. If the other party found that the interest of its airlines were prejudiced by the changes, it could request consultation and if the parties could not agree to a solution of their problem, they had recourse to the arbitration provisions of the agreement. This language has not been used in all subsequent air transport agreements as it is useful only in cases where intermediate and “points beyond” are specified and is not necessary when a route is described in general terms.

The negotiation of the routes has been the most controversial problem in negotiating all air transport agreements after the fundamental principles have been established. US airlines, of course, wish to operate widely throughout the world and to develop their services on as economic a basis as possible while at the same time providing service from the US to as many points and over as long trunk services as possible. The routes which the US attempts to negotiate for operations by its lines are for the most part routes which result from certification of US airlines after appropriate proceedings before the CAB. The US strives to negotiate route exchanges which represent an equitable exchange of economic benefits. In order to give due consideration to US airline interests, the US has followed a policy of hearing the views of the interested airlines before the beginning of negotiations of air transport agreements.

Through the years since the 1946 negotiation of the Bermuda Agreement, an increasing number of airlines of other countries have begun international operations. In many cases these operations are of a regional character and the airlines performing the services are small and struggling. The countries of which those airlines are nationals are acutely aware of the economic struggles of their airlines and in many instances the governments are called upon to give financial aid to the airlines in order to keep them flying. Consequently these countries continue to look for means by which the economic wellbeing of their carriers can be increased immediately. Many times they feel that the increase in services by US trunk lines is detrimental to the service by their regional carriers and so attempt to apply restrictions to the services offered by US airlines.

US Aviation Agreements The US has bilateral air transport agreements with 45 countries. All agreements concluded before the Bermuda-type agreement came into existence have now been amended to include Bermuda principles except those with Colombia, Czechoslovakia, [Page 457] Iceland, Ireland, Spain, Turkey and Yugoslavia. A tabulation of agreements, with the date of entry into force, follows:

Australia, December 3, 1946; Bermuda type; routes specified and operative.

Austria, October 8, 1947; Bermuda type but no rates provision. Routes for US specified but routes for Austria to be agreed later.

Belgium, April 5, 1946; Bermuda type; routes specified and operative.

Brazil, October 6, 1946 and amended December 30, 1950. Bermuda type. Routes specified but only two of the four routes granted the US are operated and only one and part of another route out of four granted Brazil are operative.

Burma, September 29, 1949; Bermuda type but no rate provision. Routes for US specified and one of the two operative but routes for Burma to be agreed upon when Burma decides to commence operation.

Canada, June 4, 1949 (superseding agreement of 1945); Bermuda type; with routes specified and virtually all operative.

Chile, December 30, 1948; Bermuda type; routes specified, but Chile’s route not operative as application is before the CAB.

China, December 20, 1946 and amended in December 1950;

Bermuda type, routes specified. (Only the route specified in the amendment—from Taipei, Taiwan—is operative due to Communist China’s control of the mainland. No routes granted to China are operative.)

Colombia, February 23, 1929; exchange of diplomatic notes with no air transport principles expressed. Routes specified and operative.

Cuba, June 30, 1953; Bermuda type; routes specified and all operative except two of the six routes granted Cuba.

Czechoslovakia, January 3, 1946, pre-Bermuda type, routes specified but currently non-operative.

Denmark, January 1, 1945, amended March 21, 1946 and August 6, 1954. Bermuda type; routes specified and operative.

Dominican Republic, July 19, 1949; Bermuda type, but no rates provision. Routes specified and operative.

Ecuador, April 24, 1947, amended January 10, 1951; Bermuda type but no rates provision. Routes specified but route granted Ecuador not operative.

Egypt, June 15, 1946; Bermuda type with no rates provision. Routes for US specified and operated but routes for Egypt to be determined at a later date.

Finland, April 28, 1949; Bermuda type. Routes specified but route granted Finland not operative.

France, March 27, 1946 and amended July 11, 1950 and March 19, 1951; Bermuda type. Routes specified but two of the five routes granted France not operative.

Germany, signed July 7, 1955, and will be effective on receipt by the US of notification of approval by the Federal Republic of Germany. Bermuda type, routes specified but only one of the three routes granted Germany operative.

Greece, March 27, 1946; Bermuda type, with routes to US specified and operative but route for Greece to be determined later.

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Iceland, February 1, 1945, pre-Bermuda type, routes specified and operative.

Ireland, February 15, 1945 amended June 3, 1947; pre-Bermuda type; routes specified, but route granted Ireland not operative.

Israel, June 13, 1950; Bermuda type; routes specified and operative.

Italy, February 6, 1948, amended, March 24, 1950, Bermuda type; routes specified and operative.

Japan, August 11, 1952, amended September 15, 1953; Bermuda type; routes specified and all operative except one of the three routes granted Japan.

Korea, June 29, 1949; provisional arrangement to be terminated upon conclusion of a formal air transport agreement. Grants unilateral rights to the US which are operative.

Lebanon, entered into force April 23, 1947 but operative from date of signature, August 11, 1946. Bermuda type without a rates provision. Routes specified and operated by the US but routes for Lebanon to be determined at a later date.

New Zealand, December 3, 1946; Bermuda type; routes specified but route granted New Zealand not operative.

Norway, October 15, 1945, amended August 6, 1954; Bermuda type; routes specified and operative.

Pakistan, (Pakistan accepted US–India agreement which had been signed November 14, 1946 upon partition from India effective August 15, 1949) Bermuda type. Route for US specified and operated but route for Pakistan not defined.

Panama, April 14, 1949 and amended June 3, 1952; Bermuda type with no rates provision. Routes specified and operative.

Paraguay, February 16, 1948; Bermuda type with no rates provision. Routes for US specified and one of the two operative and with routes for Paraguay to be agreed at a later date.

Peru, December 27, 1946; Bermuda type with a general rate clause but no specific rate machinery. Routes specified and US route operative but route granted Peru not operative.

Philippines, November 16, 1946, amended August 27, 1948. Bermuda type with no rates provision. Routes specified and that granted the US operative but route granted Philippines not operative.

Portugal, December 6, 1945, amended June 28, 1947 and November 11, 1952. Bermuda type without rates provision. Routes specified and all but one (to Macao and thence to Hong Kong and/or Canton) of the four routes granted the US operative and none of the three routes granted Portugal operative.

Spain, December 2, 1944, amended twice in 1946, once in 1950 and once in 1954. Pre-Bermuda type with no capacity provisions. Routes specified and operative.

Syria, April 29, 1947, Bermuda type with no rates provision. Route for US specified and operative with route for Syria to be determined at a later date.

Switzerland, August 3, 1945 and amended May 13, 1949; Bermuda type; routes specified and operative.

Sweden, January 1, 1945 and amended August 6, 1954. Bermuda type routes specified and operative.

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Thailand, February 26, 1947, Bermuda type with no rates provision. Routes specified and US route operative but route granted Thailand not operative.

Turkey, May 25, 1946, pre-Bermuda type. Route granted the US and operated but route for Turkey to be determined at a later date.

United Kingdom, February 11, 1946, amended January 27, 1947, January 14, 1948 and July 1955 (still pending). Bermuda. Routes specified, with two and part of three other of the 16 routes granted the US not operative. Four routes and portions of others of the ten routes granted the UK are not operative.

Union of South Africa, May 23, 1947, amended November 2, 1953; Bermuda type. Two routes granted the US and operated; with agreement that the Union of South Africa would be granted New York on a route to be determined later.

Uruguay, signed December 14, 1946 and provisionally operative pending ratification by Uruguay. Bermuda type with routes specified for the US and operative. Routes for Uruguay to be agreed at such time as that country decided to commence operations.

Venezuela, August 22, 1953 and amended December 30, 1954; Bermuda type; routes specified and operative.

Yugoslavia, December 24, 1949, pre-Bermuda type. Routes specified for US but not operative and route specified for Yugoslavia into the zones then occupied by the US in Germany and Austria; also a statement that traffic rights to the US to be negotiated when Yugoslav plans for trans-Atlantic route have progressed.

Routes Operated in Absence of Aviation Agreements The US operates routes into the following countries, but not under the provisions of bilateral air transport agreements:

Argentina—a text of a bilateral agreement was signed by the US and Argentina on May 1, 1947 but it has not become effective since agreement has not been reached on routes. However, US airlines have been granted permits for three routes by the Argentine Government and the Argentine airline has been granted a permit for one route by the US CAB.

Bolivia—An agreement, Bermuda type without rate provisions, has been concluded with Bolivia and was signed September 29, 1948. It has not become effective, pending ratification by Bolivia. The US is granted a route to La Paz and beyond in the agreement and two US lines are now operating this route under permits granted by the Bolivian Government. The agreement provides that a route for Bolivia is to be agreed when that country resolves to conduct operations.

Costa Rica—Permits have been granted to an airline of each country by the Governments of the US and Costa Rica respectively.

Denmark—An exchange of diplomatic notes August 6, 1954 establishes routes with operations subject to the terms of the air transport agreement between the US and Denmark. The route granted the US is not operative; the route granted Denmark to Los Angeles via Greenland is operative.

El Salvador—Airlines of both countries operated on routes under permits granted by the respective governments.

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Guatemala—The US operates into Guatemala City on the basis of a permit granted the carrier in 1929 and extended in 1952.

Honduras—The airlines of both countries operate on routes under permits granted by the respective governments.

India—The 1946 air transport agreement between the US and India was terminated by India, effective January 14, 1955. US lines operate two routes to India under authority granted by the Government of India through diplomatic channels as an interim arrangement.

Mexico—Permits granted to the airlines of both countries by the respective governments allows US lines to operate on five routes and Mexican lines to operate on three routes.

The Netherlands—Permits granted to the airlines of both countries allow operations on three routes by a US carrier and on two routes by the Dutch line.

Nicaragua—An operating contract between the Government of Nicaragua and an American airline, February, 1942, authorizes transportation of mail, passengers and merchandise to Managua and beyond. Nicaragua does not fly to the US.

Norway—SAS operates from Denmark and Sweden to Los Angeles via Greenland under an exchange of notes on August 6, 1954 with operations subject to the terms of the air transport agreement between the US and Norway. The US is granted a route to Oslo and beyond via Greenland but this is not yet operative.

Sweden—SAS operates under the same provisions as above and the US is granted a route to Stockholm and beyond via Greenland through the same exchange of notes but this is not yet operative.

Aviation Problems Facing US in Europe and the Commonwealth As pointed out above, the US is currently confronted with numerous problems in the international aviation field. US carriers will soon be filing their winter schedules. In Italy and France resentment has long been smoldering against US airlines, which they feel are jeopardizing their carriers, and the filing of these schedules may possibly precipitate a request for consultations on the capacity of US airlines or on amendment to routes provided for in the bilateral agreements. Moreover, the US will be attempting to implement the CAB-approved amendment in Pan American’s route to provide service from New York via Paris and Rome to Istanbul and Ankara. We will also be attempting to negotiate the rights for TWA approved by the CAB in the European route modification case. Some of these, as well as other route requests, were discussed with the British in aviation talks last May and remain as pending issues along with the UK request to transfer Chicago to its route westward from New York through San Francisco to the Far East from one of its other routes. (See page 5, June 7, 1955 issue.9) We have asked Embassies The Hague and Bonn to estimate the acceptability of scheduled operations by Seaboard and Western which were recently authorized by [Page 461] CAB. In the meantime, Seaboard and Western’s non-scheduled authority has been extended by the CAB.

The Netherlands has been pressing the past few months for negotiations looking toward a bilateral aviation agreement in order to put KLM’s operations to the US on a more permanent basis. We have delayed negotiations in order that they might take place at a more propitious time, but the Dutch are showing increasing signs of displeasure at the delay. Belgium has requested consultations to amend its bilateral in order that it might have another stop in the US, preferably in the mid-west. We have replied that we are ready to negotiate but there is little prospect for the request being granted since there is no quid-pro-quo which the US wants in return. We are now waiting to see if Belgium wants to undertake negotiations under those circumstances. Austrian officials indicated last May that they might want to negotiate with the US to conclude a permanent aviation agreement, rather than the interim arrangement now in effect. We have discouraged a formal approach as we do not consider this an auspicious time for such negotiations. In Portugal, delivery of new aviation equipment will cause US airlines to lose fifth freedom rights to South Africa since Portuguese lines will now be able to carry this traffic. The Lisbon-South Africa route is not contained in the air transport agreement with Portugal.

The Greek Government is attempting to find investors to take over the Greek Airline TAE. This presents a problem with regard to US support of regional airline operations as a means of meeting intensive competition from British affiliated companies in the Middle East. Regionalism may well come up at the second European Civil Aviation Conference which is scheduled for Strasbourg in November and the US must prepare a position for this eventuality.

For some time there have been indications that the USSR has changed its long-established policy of excluding all foreign scheduled air carriers, satellite as well as non-curtain, from the USSR. Since January 1 of this year the USSR reportedly has concluded bilateral air transport agreements with all European satellites except East Germany and Albania. Each of these reportedly authorizes the satellite carrier to establish service to Moscow and we understand that such service has in fact been inaugurated by the Czech and Polish airlines. In addition, the Soviets have approached Austria concerning regular air service between Austria and the Soviet Union and reportedly have invited Finland to open negotiations for a reciprocal exchange of services between Helsinki and Moscow. A similar offer to Sweden has been rumored but not confirmed. There have been indications on the part of some Western European countries that they would like to see if they could negotiate reciprocal arrangements with the USSR and other Eastern European [Page 462] countries and that it might be well to relax the aviation policy we have toward those countries. The US is studying this situation in conjunction with all east-west problems in light of the Geneva conference.

In late July New Zealand presented us with a strong aide-mémoire challenging Pan American’s right to a third flight in light of traffic needs. Statistics in support of its request have been supplied by Pan American and a decision must be made whether the airline’s operations are in line with the bilateral agreement. In accordance with a Canadian request, the US will commence aviation consultations in Washington September 19. The Canadians want to discuss transborder problems and may request a reappraisal of existing routes.

Aviation Problems with Near East Countries The thorniest aviation problem facing the US in the Near East concerns the negotiation of an aviation agreement with India. That country, which is extremely restrictionist in its aviation outlook, terminated the US-Indian bilateral of 1946 effective last January. When negotiations last broke down, an interim arrangement was agreed whereby US lines could operate to India on a slightly reduced basis until January 15, 1956. It was understood that in the meantime negotiations would take place looking toward a new agreement. It is expected that US officials will go to New Delhi for this purpose, possibly in October, and the US is now formulating its position. Negotiations will be difficult as India has not relaxed its view that it must be given the right to predetermine the capacity of US lines.

Pan American is desirous of filing for a fifth flight, through Karachi. Indications are, however, that this would result in an impasse with Pakistan over the interpretation of the air transport agreement and the US might be in an aviation position with Pakistan similar to the one we have in India. For that reason the Department has advised Pan American that we believe it would be ill advised to file for the fifth flight under existing circumstances and has referred the matter to CAB for its views.

The Government of Ceylon is anxious to conclude a bilateral aviation agreement with the US. We have recommended to the CAB that negotiations take place and are awaiting the Board’s views. If the Dutch Airline KLM makes a deal in Ceylon to operate a Ceylonese international airline, it may make it more difficult for us if the negotiations are delayed.

The Department has solicited the views of the Civil Aeronautics Board concerning proceeding with a negotiation with Iraq in an attempt to get a Bermuda type aviation agreement and route description without Baghdad (at which point the Iraqis will not grant regional fifth freedom rights). Our chances of getting a Bermuda [Page 463] type agreement with Iraq are likely to diminish as Iraqi Airways is getting Viscounts and may take a greater interest in Basra–Cairo traffic. Moreover, the recent agreement Iraq negotiated with India is highly restrictive. On the more positive side, it appears that it may be possible to reach agreement with Iran on a bilateral and negotiating sessions are being scheduled for October. The Department and CAB have studied the Iranian draft and have authorized alternative language if it is impossible to obtain Iranian agreement to the language in the US draft.

Meanwhile, our Air Attaché in the Middle East notes increasing tendencies on the part of local businessmen and airlines to attempt to diminish American aviation influence in the area.

Aviation Problems in the Far East For some time the interpretation of the air transport agreement with Japan has been a point at issue, with Japan insisting on predetermination of frequencies. Formal consultations with that country, which were scheduled for July, were postponed until a more auspicious time without prejudice to the position of either party in a future consultation. Meanwhile an interim arrangement was agreed for an additional weekly frequency for Northwest Orient Airlines. (See page 11, July 5, 1955 issue.) While the problem is quiescent for the moment, it is not solved and will be raised again.

There have been informal indications from Korean officials from time to time that they would like to negotiate a bilateral aviation agreement with the US. So far, we have been able to forestall any formal request on the basis that an agreement should first be reached between the two countries on a treaty of Friendship, Commerce and Navigation.

Aviation Problems in Latin America Negotiations for a bilateral have been going on for the past two months with Colombia but are at a standstill pending consideration by the US Civil Aeronautics Board of carrier comments and formulation of a definite US negotiating position on routes. We have also been consulting with Chilean officials regarding their request for an amendment to the route annex of the bilateral agreement to provide a West Coast route from Chile to the US. Chile considers that its right to a West Coast route was recognized in 1947 and that its deferment was solely on grounds of economic justification. The CAB has requested a temporary delay in negotiations pending reappraisal of the US position which was not in favor of the West Coast route since the US does not desire any new routes to Chile and it was felt a West Coast route for Chile would create an imbalance in the agreement. The Haitians have requested negotiations looking toward an air transport agreement and the Department has requested views of the Civil Aeronautics Board on this matter.

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We have a number of problems with Brazil, which might become crucial at any moment. The Brazilians want capacity limitations on US airlines and request that Pan American stop at Belem. It may also be necessary for Braniff to give up the Lima/Sao Paulo route when the central route through Manaus to Rio de Janeiro is declared operative. The Cubans have asked for regulation of Havana–Miami traffic. A CAB official visited Cuba in May and apparently the Cubans feel that the CAB should come up with a proposal for voluntary capacity and frequency limitation by the US carriers.

[Here follow sections on unrelated topics.]

  1. Source: Department of State, Current Economic Developments: Lot 70 D 647. Secret. Regarding Current Economic Developments, see Document 25.
  2. For documentation on negotiations in 1935 for the establishment of a transatlantic air transport service, see Foreign Relations, 1935, vol. I, pp. 510 ff.
  3. For information on these agreements, see ibid., 1939, vol. II. pp. 347 and 558, respectively.
  4. For text, see Department of State Bulletin, October 16, 1943, p. 265.
  5. For text of the Act, enacted June 23, 1938, see 52 Stat. 973.
  6. For documentation on this conference, see Foreign Relations, 1944, vol. II, pp. 355 ff.
  7. The text and details of the Bermuda agreement are printed in Department of State Bulletin, April 7, 1946, p. 584. For documentation on the Bermuda Conference, at which the agreement was negotiated, see Foreign Relations, 1946, vol. i, pp. 1450 ff.
  8. Not printed.