### Weekly Cabinet Report

### Week of May 21, 2001

### Susan McDermott

Deputy Assistant Secretary for Aviation

and International Affairs

### The Secretary

# ECONOMIC GROWTH AND TRADE

**European Conference of Ministers of Transport (ECMT):** On May 29-30,
Secretary Norman Y. Mineta will participate at the European Conference
of Ministers of Transport in Lisbon, Portugal. The ECMT is a forum in
which Ministers responsible for transport and, more specifically, the
inland transport sector, can co-operate on policy. Within this forum,
Ministers can openly discuss current problems and agree upon joint
approaches aimed at improving the utilization and at ensuring the
rational development of European transport systems of international
importance.

**North America Free Trade Agreement (NAFTA) Implementation:** Deputy
Secretary Michael Jackson met with Mexican Deputy Secretary for Trade,
Luis de la Calle, and Deputy Assistant Secretary for Transportation and
Communications, Dr. Aaron Dychter, to discuss a range of bi-lateral
transport issues, including implementation of NAFTA's transport access
and investment provisions. Both Mexican officials expressed satisfaction
with the direction the United States is moving on this issue but
indicated a need to further review of recently published NPRMs by the
Department that outline application and safety monitoring procedures for
new Mexican applicants.

Mexican Secretary for Transportation and Communications, Pedro Cerisola,
will meet with Secretary Mineta on Thursday, May 17, to discuss
bilateral transportation issues of mutual interest. Secretary Cerisola
is in Washington to speak at a meeting of the U.S./Mexico Chamber of
Commerce.

**European Union (EU):** A U.S. delegation will hold informal
discussions in Washington, May 31-June 1, with officials of the European
Commission. The meetings will continue discussions about possible
U.S.-EU negotiations on a broad U.S.-Europe open-skies regime. It will
also cover airport slot allocation, air traffic management,
environmental issues, and other matters of mutual interest.

2

**Japan:** On May 8, in Washington, a government-only technical meeting
on the "full payload" issue was held. The issue concerns a Japanese
proposal to require carriers using the new runway at Narita, which will
become available in May 2002, to assume a full payload of passengers and
cargo when formulating flight plans to/from the new runway. Such an
assumption would limit the amount of fuel that could be carried and, as
a result, limit the destinations that could be served from the new
runway. It now appears that the Japanese are prepared to back off from
this requirement. The delegations also discussed the timing for the next
formal round of talks. The U.S. delegation indicated it could meet in
July. The Japanese agreed to propose dates in that timeframe. The talks
will take place in Tokyo.

**South Africa:** Open-skies negotiations are scheduled May 22-24, in
Pretoria. The current agreement, negotiated in 1996, provides that the
annex covering scheduled service will be reviewed after five years to
consider modifications to promote growth in the U.S.-South Africa
market. If no agreement is reached, the annex continues in effect.

**Thailand:** Informal discussions on aviation issues were held on May
9, in Washington, between the U.S. and Thailand. The Thai indicated that
they were interested in holding formal aviation negotiations with the
U.S. to discuss liberalization of the current aviation agreement that
limits opportunities in areas such as frequencies, route rights, and
pricing freedom, and also has no provision for charter services. The
U.S. side provided the Thai with a copy of the multilateral open-skies
agreement recently signed by certain APEC members, and a copy of the
current U.S. model open-skies bilateral text. While it is not yet clear
whether the Thai are prepared to accept a comprehensive open-skies
regime, they are certainly interested in significant liberalization. The
Thai indicated that after further internal discussions, they would
communicate with us through diplomatic channels regarding the nature and
timing of formal liberalization discussions.

**U.S.-Turkey Code-Share Services:** On May 7, by Order 2001-5-4, the
Department tentatively selected Northwest Airlines and United Airlines
to expand their code-share services to Turkey via Europe under
arrangements with their foreign carrier partners. Northwest would
operate a daily service with its partner, KLM, via Amsterdam, and United
would operate a daily service with Lufthansa via either Frankfurt or
Munich. The two applicants not tentatively selected, Delta and American,
already offer twice the level of service to Turkey now offered by
Northwest and United. Objections to the Department's tentative decision
are due May 17; answers to objections are due May 22.

**Northwest and Aircraft Mechanics Fraternal Association** **(AMFA)
Settlement:** Northwest, the nation\'s fourth-largest carrier, and the
AMFA (representing 10,000 Northwest mechanics, custodians and cleaners)
had been engaged in a bitter four-year dispute over pay and benefits.
The President issued an executive order, effective March 12th,
establishing a three-member PEB. On May 9th Northwest and AMFA announced
that the AMFA membership had voted (82% in favor) to authorize its
negotiators to sign a contract agreement with Northwest Airlines.

3

# Caribbean Third Border Initiative: As part of President Bush's commitment to deepening our cooperation with our Caricom nations, the Department has been given \$400K to provide assistance to improve regional civil aviation oversight infrastructure and mechanisms, and to increase safety of air traffic for greater regional trade, commerce and tourism. The Department will also partner with the Department of Defense on some Coast Guard and Maritime activities such as law enforcement, disaster preparedness and mitigation efforts. The Department hopes to submit a one-DOT action plan to the State Department to reflect a more holistic effort and identify source funding.