WTO Supports Liberalized Air Cargo

The International Air Cargo Association (TIACA) joined government authorities from 150 countries at a WTO meeting that was reviewing the Annex to the General Agreement on Trade and Services (GATS) which allows WTO members to negotiate access to their trading partners' markets.

"We consider it valuable for air cargo operators to be able to share their experience in doing business abroad in order to assist WTO members in understanding the degree of market openness and the barriers to market access that exist in the global market for air cargo transport services," said the WTO.

TIACA's Ulrich Ogiermann, vice chairman of TIACA and president and CEO of Cargolux Airlines, told the gathering that the current bilateral system is far from perfect. The need to obtain explicit approval by governments for every operation is a lengthy process and is not necessarily compatible with the economic requirements of trading countries or carriers' business flows. The current practice, he continued, is mainly driven by passenger traffic considerations and is often influenced by "national" carriers.

An urgent overhaul is needed for a system that dates back to Chicago Convention of 1944 - a time when regulations were driven by a desire to control competition in a post-war environment, he commented. The principles of the 1944 Convention with regard to entry, price, and capacity are "out of place and time," continued Ogiermann.

The bilateral system works for developing markets, he noted. But developed markets require evolved versions of this bilateral regulatory system. Ogiermann pointed to the case of China and the manner in which the bilateral system helped strike what he termed a difficult balance between opening up market entry points and protecting fragile local airlines. On the other hand, developed trading blocs such as the US domestic market and the European Union have liberalized and are pursuing open skies agreements.

Rapid change must come by separating cargo from bilateral agreements, said Ogiermann. Regional trading blocs must encourage multilateral agreements between their members, he added.
Alluding to the importance of air cargo in trade, Ogiermann cited the fact that 30% of world trade by value or 2% by volume is carried by air each year. Those cargoes account for a value of $2.5 trillion per year.

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