174. Memorandum of a Conversation Between Daniel M. Lyons of the Trade Agreements and Treaties Division and Paul Reiber of the Air Transport Association, Department of State, Washington, October 11, 19561

SUBJECT

  • Air Versus Trade Agreements

Mr. Reiber told me that he had little knowledge of the trade agreements field and that he was seeking information which might be of help to him in his work relating to international air transportation agreements. He explained that the United States through executive agreements trades landing rights in this country for similar privileges in other countries. He thought that the United States was being placed more and more in a defensive position on air agreements in that other countries were now beginning to make demands upon us for additional privileges in many cities while there was little they could give us in return. In particular he was concerned about the Dutch and Belgian situations but implied there were others as well.

After a short time, it became evident that what Mr. Reiber was trying to do was to establish that we were following dissimilar policies in negotiating air as opposed to trade agreements. Thus, whereas the United States obtained reciprocity for trade agreement concessions granted, we were not obtaining reciprocity in air agreements. He kept repeating that the granting of landing privileges in New York was worth far more to any foreigner than landing privileges the United States might obtain in any other city in the world. He made clear, however, that he recognized the necessity for a degree of imbalance because it would be impossible for us to gain any rights if we did not grant New York.

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I explained to Mr. Reiber that although I knew very little about air agreements it seemed to me that there are significant differences between them and trade agreements. I mentioned for example, my understanding that what we try to get in air agreements is not only a particular point in a country, but the use of that point as another part of a network leading to the establishment of economic routes through which we expand our air coverage of the world. Thus, obtaining Amsterdam from the Dutch is not solely for the purpose of carrying traffic to that point but also for servicing areas beyond. The situation was, therefore, very much different from that in trade negotiations because any tariff concessions we obtain are strictly applicable to the country from which they are obtained and have no implications or very few, for trade through that country to a third country. I also pointed out that it seemed as if in the air transport field their interests were afforded much greater protection than say, for example, the shipping interests. In the latter case, there are no restrictions which would prevent foreign vessels from calling at any United States ports. Therefore, through the device of air agreements limiting foreign rights in the United States, the domestic air interests seem to be highly favored in the transport field.

When Mr. Reiber repeated his claim that KLM was obtaining much greater revenue from its traffic on the Amsterdam route than we were, I explained that it would only seem that the Dutch were more efficiently exploiting the routes than United States carriers. So far as I could see the granting of landing privileges was like having a hunting license. One still had to bag the game. In this sense air and trade agreements were similar; when we grant tariff concessions we do not grant assurance of increased exports to this country. Such concessions only offer the possibility of greater trade if a country can produce a commodity and develop a market through competitive ability. To the extent that KLM was carrying American passengers, which Mr. Reiber stated to be eight out of every ten, the evidence seemed to indicate that the Dutch were being competitive. Mr. Reiber concluded that there appeared to be little similarity between trade and air transport agreements, but he felt that he should be able to find some basic similarities to enable him to argue that we were following inconsistent economic policies.

Mr. Reiber also made the point that air agreements were not based upon laws prescribing the procedures and standards upon which they could be concluded and thought that legislation might be an answer. He referred to the Smathers Bill which he said was not industry supported, but which had passed the Senate at the last session and said that such legislation made it imperative for the industry to take a stand. I explained to him that while sometimes legislation might be useful, he should consider the fact that frequently, [Page 472]especially in an expanding field such as he is involved in, legislation becomes outmoded very quickly. Instead of legislation granting protection to their interests, it might very well become a straight jacket preventing international negotiations of the type required in changed circumstances.

  1. Source: Department of State, Central Files, 611.0094/10–1156. Drafted by Lyons.