AGREEMENT

between the European Union and the Government of the People's Republic of China On certain aspects of air services

THE EUROPEAN UNION

and

THE GOVERNMENT OF THE PEOPLE'S REPUBLIC OF CHINA

hereinafter referred to as ‘the Parties’,

NOTING that the Court of Justice of the European Union has found that certain provisions of bilateral agreements entered into by several Member States with third countries are incompatible with European Union law,

NOTING that a number of bilateral air services agreements have been concluded between several Member States of the European Union and the Government of the People's Republic of China containing similar provisions and that there is an obligation on Member States to take all appropriate steps to eliminate incompatibilities between such agreements and the EU Treaties,

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

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

HAVING REGARD to the agreements between the European Union and certain third countries providing for the possibility for the nationals of such third countries to acquire ownership in air carriers licensed in accordance with the European Union law,

RECOGNISING that consistency between European Union law and provisions of bilateral air service agreements between Member States of the European Union and the Government of the People's Republic of China will provide a sound legal basis for air services between the European Union and People's Republic of China and preserve the continuity of such air services,

RECOGNISING that where a Member State of the European Union has designated an air carrier whose regulatory control with regard to safety oversight is exercised and maintained by another Member State of the European Union, the rights of the People's Republic of China under the safety provisions of the agreement between the Member State that has designated the carrier and the People's Republic of China shall apply equally in relation to that other Member State,

NOTING that it is not an objective of the European Union in this Agreement to increase the total volume of air traffic between the European Union and the People's Republic of China, to affect the balance between European Union air carriers and air carriers of the People's Republic of China, or to prevail over the interpretation of the provisions of existing bilateral air service agreements concerning traffic rights,

REAFFIRMING their intentions that the recognition of the right of establishment and the adoption of the principle of EU designation are not to be intended or construed as enabling circumvention and would not prevent the refusal of traffic rights in such case of circumvention,

HAVE AGREED AS FOLLOWS:

Article 1 General provisions 1. For the purposes of this Agreement, ‘Member States’ means Member States of the European Union and ‘EU Treaties’ means the Treaty on the European Union and the Treaty on the Functioning of the European Union. 2. References in each of the agreements listed in Annex I to nationals of the Member State that is a party to that agreement shall be understood as referring to nationals of any of the Member States. 3. References in each of the agreements listed in Annex I 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. 4. The granting of traffic rights will continue to be carried out through bilateral arrangements between the People's Republic of China and each individual Member State.

Article 2 Air carrier designation, authorisations and permissions, refusal, revocation, suspension or limitation of authorisations or permissions 1. The provisions of paragraphs 2 and 3 of this Article shall supersede the corresponding provisions of the articles listed in Annex II(a) and (b) respectively, in relation to the designation of an air carrier by the Member State concerned, the authorisations and permissions granted to it by the People's Republic of China, and the refusal, revocation, suspension or limitation of such authorisations or permissions, respectively. 2. On receipt of a designation by a Member State, the People's Republic of China shall grant the appropriate authorisations and permissions with minimum procedural delay, provided that: (a) the air carrier is established in the territory of the designating Member State in accordance with the EU Treaties and in compliance with the laws and regulations on establishment of the designating Member State and has a valid Operating Licence in accordance with the European Union law; (b) 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; (c) the air carrier has its principal place of business in the territory of the Member State from which it has received the valid operating licence; and (d) the air carrier is owned, directly or through majority ownership, and it is effectively controlled by Member States and/or nationals of Member States, and/or by other States listed in Annex III and/or nationals of such other States. 3. The People's Republic of China may refuse, revoke, suspend or limit the authorisations or permissions of an air carrier designated by a Member State where: (a) the air carrier is not established in the territory of the designating Member State in accordance withthe EU Treaties or does not have a valid Operating Licence in accordance with the European Union law; (b) 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; (c) the air carrier does not have its principal place of business in the territory of the Member State from which it has received its operating licence; (d) the air carrier is not owned, directly or through majority ownership, or it is not effectively controlled by Member States and/or nationals of Member States, and/or by other States listed in Annex III and/or nationals of such other States; (e) the air carrier is already authorised to operate under a bilateral agreement between the People's Republic of China and another Member State and that, by exercising traffic rights under this Agreement on a route that includes a point in that other Member State, including the operation of a service which is marketed as, or otherwise constitutes a through service, it would be circumventing restrictions on the third or fourth or fifth freedom traffic rights imposed by that other agreement; or (f) the air carrier designated holds an Air Operators Certificate issued by a Member State with which the People's Republic of China does not have a bilateral air services agreement and that Member State has denied traffic rights to the People's Republic of China. 4. The rights and obligations under this Article shall not be exercised in a manner that would discriminate between European Union carriers on the grounds of nationality.

Article 3 Safety 1. The provisions of paragraph 2 of this Article shall complement the corresponding provisions of the articles listed in Annex II(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 People's Republic of China under the safety provisions of the agreement between the Member State that has designated the air carrier and the People's Republic of China 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 Compatibility with competition rules 1. Bilateral air service agreements concluded between Member States and the People's Republic of China shall be without prejudice to the competition rules of the Parties. 2. The provisions listed in Annex II(d) shall be deleted and shall cease to have effect.

Article 5 Annexes to this Agreement The Annexes to this Agreement shall form an integral part thereof.

Article 6 Entry into force 1. The Parties shall notify each other in writing through diplomatic channels about the completion of their respective internal procedures necessary for the entry into force of this Agreement. This Agreement shall enter into force on the date of the later notification. 2. This Agreement shall apply to those agreements and arrangements listed in Annex I which are in force.

Article 7 Review, revision or amendment 1. The Parties shall monitor and regularly review the implementation of this Agreement. Such reviews shall in particular assess any unforeseen negative effects of this Agreement, as perceived by either Party. 2. If requested by either of them, the Parties shall hold consultations in order to discuss appropriate responses to the unforeseen effects mentioned in paragraph 1. 3. The Parties may, at any time, review, revise or amend this Agreement by mutual consent.

Article 8 Termination 1. In the event that an agreement listed in Annex I is terminated, all provisions of this Agreement that relate to the agreements listed in Annex 1 concerned shall terminate at the same time. 2. In the event that all agreements listed in Annex I are terminated, this Agreement shall terminate at the same time.