./.RESTRICTEDWORLD TRADE
ORGANIZATIONS/C/W/134
10 February 2000
(00-0510)
Council for Trade in Services Original:  English
COMMUNICATIONS FROM JAPAN
Work Programme on Review of Air Transport Services
1. The Annex on Air Transport Services requires that the Council for Trade in Services should
review periodically, and at least every five years, developments in the air transport sector and the
operation of this Annex with a view to considering the possible further application of the Agreement
in this sector. To pursue this mandate, Japan would like to propose the following work programme.
A. OBJECTIVES
2. Matters regarding traffic rights and services directly related to the exercise of traffic rights
have been treated in bilateral agreements on a basis of reciprocity.  The purpose of such treatment is
to expand safe and stable international air transpor t services and ensure each countries' sovereignty
over the air space.
3. Based on the background of the long history and in light of the fact that there are a large
number of bilateral agreements on a reciprocal basis, GATS, containing MFN and National
Treatment, shall not apply to measures affecting tr affic rights and services directly related to the
exercise of traffic rights which serve international air transport services.
4. The purpose of the review, which is supposed to be pursued periodically and at least every
five years, is to examine whether the conditions wh ich created the needs for exemptions still exist and
whether it is possible to expand the application of the GATS.  Such a review should be conducted on
the basis of the decision taken on the exemption durin g the UR, taking into consideration the changes
on the overall environment surrounding international air transport services, including the development
of bilateral, regional and plurilateral agreements, and also including the progress of the activities of
ICAO which was established by the Convention on International Civil Aviation.  It is also important
to find a clear understanding on the scope of services where the GATS does not apply by analysingthe practices on the Annex on Air Transport Services, including the interpretation of its provisions.
B. B
ACKGROUND
5. International air transport services are going through considerable changes.  An increasing
number of countries are entering into "Open-Sky" agreements (bilateral agreements) with the US,
which aim at liberalising traffic rights on a bilateral basis.  Progress in the liberalization ofinternational air transport services is also seen at a regional level in such cases as EU.  In the review,
we need to examine whether and how such progress in the liberalisation in reality could be, as well as
need to be, transformed in a way which is consistent with the progressive liberalization of the GATS
with immediate and unconditional MFN principles.
6. At the same time, due to the expansion of international air transport services, we are
experiencing in a ever more serious manner such problems as the influence by the limitation of
infrastructure, e.g. airports and air transport routes, on fair competition among airlines.  Serious
attention also needs to be paid to the question whether it is necessary to introduce measures which
prevent and, if necessary, correct destructively low fares.  Besides, when common actions areS/C/W/134
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developing in the context of international alliances among airlines in such forms as coordination of
flight schedules, code-sharing, sharing lounges, frequent flyer programs and coordination of fares,
differences in regulations among countries, in particular on the application of anti-monopoly laws, are
causing difficulties.  Problems can be seen in the different conditions posed by the authorities in
approving corporate alliances.  In these situations , the current competition policies and the possibility
of the coordination of such policies need to be examined in order to find conditions which would benecessary if the liberalisation of international air transport services were to be realised and developed
under the GATS.
7. Although the purpose of the review is to disc uss the treatment of the services which are
directly related to the exercise of traffic rights, the definition of such services is not clearly
understood, as is pointed out by the sectoral note by the Secretariat (S/C/W/59). The treatment of such
services as fuelling and wet-lease (lease of aircraft with crews) need to be considered in this context.
Work is necessary to reach a clearer understanding among Members on what are the services whichthe current GATS applies and what are the services to be examined for the review.
C. S
PECIFIC ITEMS FOR THE REVIEW AT THE INITIAL STAGE
1. Classification
8. A clear understanding should be found with respect to the scope of the services which are
directly related to the exercise of traffic rights.  CTS will examine definitions and classifications ofvarious services which are contained in the international air transport services, and further consider
the need to change such classifications.
2. Examination on treaties
9. CTS will examine an overall situation of bilateral, regional, and plurilateral agreements
concerning traffic rights and/or services directly related to the exercise of traffic rights.  Attentionshould be paid to the question whether such agreements contain immediate and unconditional MFN,
freedom in market access, and national treatment.
3. Competition policies
10. Due to the limitation of infrastructure, oligopolies or monopolies tend to appear in air
transport services.  CTS, therefore, will examine current competition policies of Members and lookinto the possibility of coordinating such policies.
D. T
IMETABLE
1. Secretariat papers
11. The Secretariat should be asked to prepare a background papers on the issues, including those
mentioned above.  Such papers should be ready before starting substantial discussions, certainly by
2nd half of this year.  Discussions will take into consideration Note by the Secretariat (S/C/W/59) and
the current examinations under ICAO.
2. Involvement of experts
12. Due to the complexity of the issues, the review should involve experts of Members from their
capitals as well as relevant international organizations such as ICAO.  A special meeting should be
organized to facilitate the participation of such experts and, thereby, to encourage intensive
discussions.  For the efficiency of this exercise, Members should aim to reach some results, at least aninterim conclusion, by the end of 2001.
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