**Important legal notice**

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# 52004PC0829(01)

**Proposal for a Council Decision on the signature and provisional application of the Agreement between the European Community and the Republic of Chile on certain aspects of air services  /* COM/2004/0829 final - CNS 2004/0289 */****

Brussels, 23.12.2004

COM(2004)829 final

2004/0289 (CNS)

Proposal for a

COUNCIL DECISION

on the signature and provisional application of the Agreement between the European Community and the Republic of Chile on certain aspects of air services

Proposal for a

COUNCIL DECISION

on the conclusion of the Agreement between the European Community and the Republic of Chile on certain aspects of air services

(presented by the Commission)

EXPLANATORY MEMORANDUM

International aviation relations between Member States and third countries have been traditionally governed by bilateral air services agreements between Member States and third countries, their Annexes and other related bilateral or multilateral arrangements.

Following the judgements of the Court of Justice of the European Communities in the cases C-466/98, C-467/98, C-468/98, C-471/98, C-472/98, C-475/98 and C-476/98, the Community has exclusive competence with respect to various aspects of external aviation. The Court of Justice also clarified the right of Community air carriers to benefit from the right of establishment within the Community, including the right to non-discriminatory market access.

Traditional designation clauses in Member States’ bilateral air services agreements infringe Community law. They allow a third country to reject, withdraw or suspend the permissions or authorisations of an air carrier that has been designated by a Member State but that is not substantially owned and effectively controlled by that Member State or its nationals. This has been found to constitute discrimination against Community carriers established in the territory of a Member State but owned and controlled by nationals of other Member States. This is contrary to Article 43 of the Treaty which guarantees nationals of Member States who have exercised their freedom of establishment the same treatment in the host Member State as that accorded to nationals of that Member State.

Following the Court of Justice judgements, the Council authorised the Commission in June 2003 to open negotiations with third countries on the replacement of certain provisions in existing bilateral agreements with a Community agreement.[1]

In accordance with the mechanisms and directives in the Annex to the Council’s decision authorising the Commission to open negotiations with third countries on the replacement of certain provisions in existing bilateral agreements with a Community agreement, the Commission has negotiated an agreement with the Republic of Chile that replaces certain provisions in the existing bilateral air services agreements between Member States and the Republic of Chile. Article 2 of the Agreement replaces the traditional designation clauses with a Community designation clause, permitting all Community carriers to benefit from the right of establishment. Articles 4 and 5 of the Agreement resolve legal irregularities stemming from the infringement of Community competence. Article 4 (Taxation of aviation fuel) resolves conflicts between the existing bilateral air services agreements and Council Directive 2003/96/EC restructuring the Community framework for the taxation of energy products and electricity, particularly Article 14 paragraph 2 thereof. Article 5 (Pricing) resolves conflicts between the existing bilateral air services agreements and Council Regulation No. 2409/92 on fares and rates for air services which prohibits third country carriers from being price leaders on air services for carriage wholly within the Community.

Proposal for a

COUNCIL DECISION

on the signature and provisional application of the Agreement between the European Community and the Republic of Chile on certain aspects of air services

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European Community, and in particular Article 80, paragraph 2, in conjunction with Article 300, paragraph 2, first sentence of the first subparagraph thereof,

Having regard to the proposal from the Commission[2],

Whereas:

(1) The Council has authorised the Commission on 5 June 2003 to open negotiations with third countries on the replacement of certain provisions in existing bilateral agreements with a Community agreement;

(2) The Commission has negotiated on behalf of the Community an agreement with the Republic of Chile on certain aspects of air services in accordance with the mechanisms and directives in the Annex to the Council’s decision authorising the Commission to open negotiations with third countries on the replacement of certain provisions in existing bilateral agreements with a Community agreement;

(3) Subject to its possible conclusion at a later date, the agreement negotiated by the Commission should be signed and provisionally applied.

HAS DECIDED AS FOLLOWS:

Sole Article

1. Subject to its subsequent conclusion at a later date, the President of the Council is hereby authorised to designate the person or persons empowered to sign on behalf of the Community the agreement between the European Community and the Republic of Chile on certain aspects of air services.

2. Pending its entry into force, the agreement shall be applied provisionally from the first day of the first month following the date on which the parties have notified each other of the completion of the necessary procedures for this purpose. The President of the Council is hereby authorised to make the notification provided in Article 9.2 of the agreement.

3. The text of the agreement is annexed to this decision.

Done at Brussels,

For the Council

The President

2004/0289 (CNS)

Proposal for a

COUNCIL DECISION

on the conclusion of the Agreement between the European Community and the Republic of Chile on certain aspects of air services

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European Community, and in particular Article 80, paragraph 2, in conjunction with Article 300, paragraph 2, first sentence of the first subparagraph thereof and Article 300, paragraph 3, first subparagraph,

Having regard to the proposal from the Commission[3],

Having regard to the opinion of the European Parliament[4],

Whereas:

(1) The Council has authorised the Commission on 5 June 2003 to open negotiations with third countries on the replacement of certain provisions in existing bilateral agreements with a Community agreement;

(2) The Commission has negotiated on behalf of the Community an agreement with the Republic of Chile on certain aspects of air services in accordance with the mechanisms and directives in the Annex to the Council’s decision authorising the Commission to open negotiations with third countries on the replacement of certain provisions in existing bilateral agreements with a Community agreement;

(3) This agreement has been signed on behalf of the Community on subject to its possible conclusion at a later date, in conformity with the decision .../.../EC of the Council on [5]

(4) This agreement should be approved.

HAS DECIDED AS FOLLOWS:

Article 1

1. The agreement between the European Community and the Republic of Chile on certain aspects of air services is approved on behalf of the Community.

2. The text of the agreement is annexed to this decision.

Article 2

The president of the Council is authorised to designate the person empowered to make the notification provided in Article 9.1 of the Agreement.

Done at Brussels,

For the Council

The President

ANNEX

AGREEMENT

between the European Community and the Republic of Chile

on certain aspects of air services

THE EUROPEAN COMMUNITY

of the one part, and

THE REPUBLIC OF CHILE

of the other part

(hereinafter referred to as ‘the Parties’)

NOTING that bilateral air service agreements have been concluded between ten Member States of the European Community and the Republic of Chile containing provisions contrary to European Community law,

NOTING that the European Community has exclusive competence with respect to several aspects that may be included in bilateral air service agreements between Member States of the European Community and third countries,

NOTING that under European Community law Community air carriers established in a Member State have the right to non-discriminatory access to air routes between the Member States of the European Community and third countries,

HAVING REGARD to the agreements between the European Community and certain third countries providing for the possibility for the nationals of such third countries to acquire ownership in air carriers licensed by the Member States of the European Community,

RECOGNISING that provisions of the bilateral air service agreements between Member States of the European Community and the Republic of Chile, which are contrary to European Community law, must be brought into full conformity with it in order to establish a sound legal basis for air services between the European Community and the Republic of Chile and to preserve the continuity of such air services,

NOTING that provisions of the bilateral air service agreements between Member States of the European Community and the Republic of Chile, which are not contrary to European Community law, do not need to be amended or replaced,

NOTING that it is not a purpose of the European Community, as part of these negotiations, to increase the total volume of air traffic between the European Community and the Republic of Chile, to affect the balance between Community air carriers and air carriers of the Republic of Chile, or to negotiate amendments to the provisions of existing bilateral air service agreements concerning traffic rights.

HAVE AGREED AS FOLLOWS:

A rticle 1 General Provisions

For the purposes of this Agreement, ‘Member States’ shall mean Member States of the European Community. ‘ CLAC Member States’ shall mean Member States of the Latin American Civil Aviation Commission.

References in each of the agreements listed in Annex 1 to nationals of the Member State that is a party to that agreement shall be understood as referring to nationals of the Member States of the European Community.

References in each of the agreements listed in Annex 1 to air carriers or airlines of the Member State that is a party to that agreement shall be understood as referring to air carriers or airlines designated by that Member State.

Article 2 Designation, Authorisation and Revocation

1. The provisions in paragraphs 2 and 3 of this Article shall supersede the corresponding provisions in the articles listed in Annex 2 (a) and (b) respectively, in relation to the designation of an air carrier by the Member State concerned, its authorisations and permissions granted by the Republic of Chile, and the refusal, revocation, suspension or limitation of the authorisations or permissions of the air carrier, respectively. The provisions in paragraphs 4 and 5 of this Article shall supersede the corresponding provisions in the articles listed in Annex 2 (a) and (b) respectively, in relation to the designation of an air carrier by the Republic of Chile, its authorisations and permissions granted by the Member State, and the refusal, revocation, suspension or limitation of the authorisations or permissions of the air carrier, respectively.

2. On receipt of a designation by a Member State, the Republic of Chile shall grant the appropriate authorisations and permissions with minimum procedural delay, provided that:

i. the air carrier is established in the territory of the designating Member State under the Treaty establishing the European Community and has a valid Operating Licence in accordance with European Community law;

ii. effective regulatory control of the air carrier is exercised and maintained by the Member State responsible for issuing its Air Operators Certificate and the relevant aeronautical authority is clearly identified in the designation; and

iii. the air carrier is owned and shall continue to be owned directly or through majority ownership by Member States and/or nationals of Member States, or by other states listed in Annex 3 and/or nationals of such other states, and shall at all times be effectively controlled by such states and/or such nationals.

3. The Republic of Chile may refuse, revoke, suspend or limit the authorisations or permissions of an air carrier designated by a Member State where:

i. the air carrier is not established in the territory of the designating Member State under the Treaty establishing the European Community or does not have a valid Operating Licence in accordance with European Community law; or

ii. effective regulatory control of the air carrier is not exercised or not maintained by the Member State responsible for issuing its Air Operators Certificate, or the relevant aeronautical authority is not clearly identified in the designation; or

iii. the air carrier is not owned and effectively controlled directly or through majority ownership by Member States and/or nationals of Member States, or by other states listed in Annex 3 and/or nationals of such other states; or

iv. the air carrier is already authorised to operate under a bilateral agreement between the Republic of Chile and another Member State and the Republic of Chile demonstrates that, by exercising traffic rights under this Agreement on a route that includes a point in that other Member State, it would be circumventing restrictions on traffic rights imposed by that other agreement; or

v. the air carrier holds an Air Operators Certificate issued by a Member State and there is no bilateral air services agreement between the Republic of Chile and that Member State, and traffic rights to that Member State have been denied to the air carrier designated by the Republic of Chile.

In exercising its right under this paragraph, the Republic of Chile shall not discriminate between Community air carriers on the grounds of nationality.

4. On receipt of a designation by the Republic of Chile, a Member State shall grant the appropriate authorisations and permissions with minimum procedural delay, provided that:

i. the air carrier is established in the Republic of Chile; and

ii. the Republic of Chile has and maintains effective regulatory control of the air carrier and is responsible for issuing its Air Operators Certificate; and

iii. the air carrier is owned and effectively controlled directly or through majority ownership by CLAC Member States and/or nationals of CLAC Member States.

5. A Member State may refuse, revoke, suspend or limit the authorisation or permissions of an air carrier designated by the Republic of Chile where:

i. the air carrier is not established in the Republic of Chile; or

ii. effective regulatory control of the air carrier is not exercised or not maintained by the Republic of Chile or the Republic of Chile is not responsible for issuing its Air Operators Certificate; or

iii. the air carrier is not owned and effectively controlled directly or through majority ownership by CLAC Member States and/or nationals of CLAC Member States; or

iv. the air carrier is already authorised to operate under a bilateral agreement between the Member State and another CLAC Member State and the Member State demonstrates that, by exercising traffic rights under this Agreement on a route that includes a point in that other CLAC Member State, it would be circumventing restrictions on the traffic rights imposed by that other agreement.

Article 3 Rights with regard to regulatory control

1. The provisions in paragraph 2 of this Article shall complement the articles listed in Annex 2 (c).

2. Where a Member State has designated an air carrier whose regulatory control is exercised and maintained by another Member State, the rights of the Republic of Chile under the safety provisions of the agreement between the Member State that has designated the air carrier and the Republic of Chile shall apply equally in respect of the adoption, exercise or maintenance of safety standards by that other Member State and in respect of the operating authorisation of that air carrier.

Article 4 Taxation of aviation fuel

1. The provisions in paragraph 2 of this Article shall complement the corresponding provisions in the articles listed in Annex 2 (d).

2. Notwithstanding any other provision to the contrary, nothing in each of the agreements listed in Annex 2 (d) shall prevent Member States from imposing on a non-discriminatory basis taxes, levies, duties, fees or charges on fuel supplied in its territory for use in an aircraft of a designated air carrier of the Republic of Chile that operates between a point in the territory of that Member State and another point in the territory of that Member State or in the territory of another Member State.

3. Notwithstanding any other provision to the contrary, nothing in each of the agreements listed in Annex 2 (d) shall prevent the Republic of Chile from imposing on a non-discriminatory basis taxes, levies, duties, fees or charges on fuel supplied in its territory for use in an aircraft of a designated air carrier of a Member State that operates between a point in the territory of the Republic of Chile and another point in the territory of the Republic of Chile or in the territory of another CLAC Member State.

Article 5 Tariffs for carriage

1. The provisions in paragraph 2 of this Article shall complement the articles listed in Annex 2 (e).

2. The tariffs to be charged by the air carrier(s) designated by the Republic of Chile under an agreement listed in Annex 1 containing a provision listed in Annex 2 (e) for carriage wholly within the European Community shall be subject to European Community law. European Community law is applied on a non-discriminatory basis.

3. The tariffs to be charged by the air carrier(s) designated by a Member State under an agreement listed in Annex 1 containing a provision listed in Annex 2 (e) for carriage between the Republic of Chile and another CLAC Member State shall be subject to Chilean law concerning price leadership and applied on a non-discriminatory basis.

Article 6 Application of other provisions

The provisions of the agreements listed in Annex 1, other than those affected by Articles 1 to 5 of this Agreement, shall continue to apply, provided that they are not in contradiction with these Articles.

Article 7 Annexes to the Agreement

The Annexes to this Agreement shall form an integral part thereof.

Article 8 Revision or amendment

The Parties may, at any time, revise or amend this Agreement by mutual consent.

Article 9 Entry into force and provisional application

1. This Agreement shall enter in force when the Parties have notified each other in writing that their respective internal procedures necessary for its entry into force have been completed.

2. Notwithstanding paragraph 1, the Parties agree to provisionally apply this Agreement from the first day of the month following the date on which the Parties have notified each other of the completion of the procedures necessary for this purpose.

3. Agreements and other arrangements between Member States and the Republic of Chile which, at the date of signature of this Agreement, have not yet entered into force and are not being applied provisionally are listed in Annex 1(b). This Agreement shall apply to all such Agreements and arrangements upon their entry into force or provisional application.

Article 10 Termination

1. In the event that an agreement listed in Annex 1 is terminated, all provisions of this Agreement that relate to the agreement listed in Annex 1 concerned shall terminate at the same time.

2. In the event that all agreements listed in Annex 1 are terminated, this Agreement shall terminate at the same time.

IN WITNESS WHEREOF, the undersigned, being duly authorised, have signed this Agreement.

Done at [....] in duplicate, on this [...] day of [..., ...] in the Czech, Danish, Dutch, English, Estonian, Finnish, French, German, Greek, Hungarian, Italian, Latvian, Lithuanian, Polish, Portuguese, Slovak, Slovene, Spanish, and Swedish languages. In case of divergence the English text shall prevail over the other language texts.

Once the institutions of the European Union will be bound to publish all official acts in Maltese in the Official Journal of the European Union, the agreement will also be drawn up in duplicate in Maltese.

FOR THE EUROPEAN COMMUNITY.....................FOR THE REPUBLIC OF CHILE:

Annex 1

List of agreements referred to in Article 1 of this Agreement

(a) Air service agreements between the Republic of Chile and Member States of the European Community which, at the date of signature of this Agreement, have been concluded, signed and/or are being applied provisionally

-  Air Services Agreement between the Government of the Republic of Chile and the Government of the Kingdom of Belgium, signed at Brussels on 13 September 2001, hereinafter referred to as “Chile-Belgium Agreement”;

-  Air Services Agreement between the Government of the Kingdom of Denmark and the Government of the Republic of Chile, signed at Copenhagen on 27 June 2001, hereinafter referred to as “Chile-Denmark Agreement” ;

-  Agreement between the Governments of the Republic of Chile and the Republic of France concerning air services between and beyond their respective territories, signed at Paris on 6 December 1979, hereinafter referred to as “Chile-France Agreement”;

-  Air Transport Agreement between the Federal Republic of Germany and the Republic of Chile, signed at Santiago de Chile on 30 March 1964, as amended, hereinafter referred to as “Chile-Germany Agreement” ;

-  Air Services Agreement between the Government of the Republic of Chile and the Government of the Italian Republic, signed at Rome on 27 February 2002, hereinafter referred to as “Chile-Italy Agreement”;

-  Agreement between the Government of the Grand-Duchy of Luxembourg and the Government of the Republic of Chile concerning air services between their respective territories, signed at Luxembourg on 25 February 2002, hereinafter referred to as “Chile-Luxembourg Agreement”;

-  Air Services Agreement between the Kingdom of the Netherlands and the Republic of Chile, signed at Santiago de Chile on 13 July 1962, hereinafter referred to as “Chile-Netherlands Agreement”;

-  Draft Air Services Agreement between the Republic of Chile and the Kingdom of the Netherlands for air services between their respective territories, initialled and attached as Annex B to the Agreed Minutes of the Aeronautical Consulting Meeting between the Netherlands and Chile signed at Santiago de Chile on 12 April 2001, hereinafter referred to as “Draft Revised Chile-Netherlands Agreement”;

-  Agreement between the Government of Chile and the Government of Spain concerning commercial air transport services, signed at Santiago de Chile on 17 December 1974, hereinafter referred to as “Chile-Spain Agreement”;

-  Air Services Agreement between the Government of the Republic of Chile and the Government of the Kingdom of Sweden, signed in Copenhagen on 27 June 2001, hereinafter referred to as “Chile-Sweden Agreement” ;

-  Agreement between the Republic of Chile and the United Kingdom of Great Britain and Northern Ireland concerning air services, signed at Santiago de Chile on 16 September 1947, hereinafter referred to as “Chile-UK Agreement”;

-  Draft Agreement between the Government of the United Kingdom of Great Britain and Northern Ireland and the Government of the Republic of Chile concerning air services, initialled and attached as Annex B to the Memorandum of Understanding between the aeronautical authorities of the United Kingdom and Chile signed at Santiago de Chile on 31 May 2000, hereinafter referred to as “Draft Revised Chile-UK Agreement”.

(b) Air service agreements and other arrangements initialled or signed between the Republic of Chile and Member States of the European Community which, at the date of signature of this Agreement, have not yet entered into force and are not being applied provisionally

[ Annex 1b is intentionally left blank .] Annex 2

List of articles in the agreements listed in Annex 1 and referred to in Articles 2 to 5 of this Agreement

(a) Designation by a Member State:

-  Article 3 of the Chile-Belgium Agreement;

-  Article 3 of the Chile-Denmark Agreement;

-  Article 4 of the Chile-France Agreement;

-  Article 3 of the Chile-Germany Agreement;

-  Article 3 of the Chile-Italy Agreement;

-  Article 3 of the Chile-Luxembourg Agreement;

-  Article 3 of the Draft Revised Chile-Netherlands Agreement;

-  Article 3 of the Chile-Spain Agreement;

-  Article 3 of the Chile-Sweden Agreement;

-  Article 4 of the Draft Revised Chile-UK Agreement;

(b) Refusal, Revocation, Suspension or Limitation of Authorisations or Permissions:

-  Article 4 of the Chile-Belgium Agreement;

-  Article 4 of the Chile-Denmark Agreement;

-  Article 5 of the Chile-France Agreement;

-  Article 4 of the Chile-Germany Agreement;

-  Article 4 of the Chile-Italy Agreement;

-  Article 4 of the Chile-Luxembourg Agreement;

-  Article V of the Chile-Netherlands Agreement;

-  Article 4 of the Draft Revised Chile-Netherlands Agreement;

-  Article 4 of the Chile-Spain Agreement;

-  Article 4 of the Chile-Sweden Agreement;

-  Article 4 of the Chile-UK Agreement;

-  Article 5 of the Draft Revised Chile-UK Agreement

(c) Regulatory control:

-  Article 6 of the Chile-Belgium Agreement;

-  Article 14 of the Chile-Denmark Agreement;

-  Attachment C to the Protocol between the aeronautical authorities of the Federal Republic of Germany and the Republic of Chile, signed at Berlin on 2 April 1998 – as applied provisionally in the framework of the Germany-Chile Agreement;

-  Article 6 of the Chile-Italy Agreement;

-  Article 6 of the Chile-Luxembourg Agreement;

-  Article 6 of the Draft Revised Chile-Netherlands Agreement;

-  Article 14 of the Chile-Sweden Agreement;

-  Article 14 of the Draft Revised Chile-UK Agreement;

(d) Taxation of Aviation Fuel:

-  Article 9 of the Chile-Belgium Agreement;

-  Article 6 of the Chile-Denmark Agreement;

-  Article 10 of the Chile-France Agreement;

-  Article 6 of the Chile-Germany Agreement;

-  Article 9 of the Chile-Italy Agreement;

-  Article 15 of the Chile-Luxembourg Agreement;

-  Article III of the Chile-Netherlands Agreement;

-  Article 15 of the Draft Revised Chile-Netherlands Agreement;

-  Article 5 of the Chile-Spain Agreement;

-  Article 6 of the Chile-Sweden Agreement;

-  Article 8 of the Draft Revised Chile-UK Agreement

(e) Tariffs for Carriage within the European Community:

-  Article 12 of the Chile-Belgium Agreement;

-  Article 10 of the Chile-Denmark Agreement;

-  Article 9 of the Chile-France Agreement;

-  Article 8 of the Chile-Germany Agreement;

-  Article 12 of the Chile-Italy Agreement;

-  Article 14 of the Chile-Luxembourg Agreement;

-  Article 14 of the Draft Revised Chile-Netherlands Agreement;

-  Article 8 of the Chile-Spain Agreement;

-  Article 10 of the Chile-Sweden Agreement;

-  Article 9 of the Chile-UK Agreement;

-  Article 7 of the Draft Revised Chile-UK Agreement

Annex 3

List of other states referred to in Article 2 of this Agreement

The Republic of Iceland (under the Agreement on the European Economic Area) ;

The Principality of Liechtenstein (under the Agreement on the European Economic Area) ;

The Kingdom of Norway (under the Agreement on the European Economic Area) ;

The Swiss Confederation (under the Agreement between the European Community and the Swiss Confederation on Air Transport).

[1] Council decision 11323/03 of 5 June 2003 (restricted document)

[2] OJ C , , p. .

[3] OJ C , , p. .

[4] OJ C , , p. .

[5] OJ C , , p. .