WRITTEN QUESTION E-2676/03 by Ulrich Stockmann (PSE) to the Commission. US market access for DHL Airways.
Date: 2003-09-10
Institutions: European Parliament, Provisional data
Subjects: United States, air transport, common commercial policy, market access, protectionism, restriction on competition, shareholding, trade relations, transport company

8.4.2004

EN

Official Journal of the European Union

C 88 E/429

Answer given by Mr Lamy on behalf of the Commission

(23 October 2003)

As explained in its joint reply to the Honourable Member’s written questions E-1646/03, E-1920/03 and
1921/03 (1), the Commission received a fully documented formal request for safeguard measures under the
transitional product specific safeguard mechanism (TPSSM) (2), and this was received on 10 June 2003.
Spain re-submitted the request under the general erga omnes safeguard regulations, and this was received
on 20 June 2003 (3).

Having analysed the requests and consulted with the Member States, investigations under both the general
erga omnes safeguard instrument and under the TPSSM were opened on 11 July 2003 (4). Those
investigations were pursued throughout the summer and are still ongoing. Member States are being kept
closely informed of developments.

With regard to the fact that it took more than a year since Spain’s initial contact to propose the initiation
of an investigation, the Commission would like to inform the Honourable Member that this time was
necessary to clarify a number of legal and substantive issues surrounding the case and to make sure that
the Spanish requests meet the very high standards required by World Trade Organisation (WTO) and
Community rules. As the Honourable Member may well understand, gathering up and assessing the
relevant information as well as holding a series of consultations with all the parties concerned are time
consuming steps, but -in any case- absolutely essential to establish the nature and reach of the alleged
prejudice.

The Commission would like to note that this is the first investigation carried out under the TPSSM
Regulation.

(1) See page 363.
(2) Council Regulation (EC) No 427/2003 of 3 March 2003 on a transitional product-specific safeguard mechanism for
imports originating in the People’s Republic of China and amending Regulation (EC) No 519/94 on common rules
for imports from certain third countries, OJ L 65, 8.3.2003.

(3) Council Regulation (EC) No 3285/1994 of 22 December 1994 on common rules for imports, OJ L 349,
31.12.1994, and Council Regulation (EC) No 519/1994 of 7 March 1994 on common rules for imports from
certain third countries, OJ L 67, 10.3.1994.

(4) OJ C 162, 11.7.2003.

(2004/C 88 E/0435)

WRITTEN QUESTION E-2676/03

by Ulrich Stockmann (PSE) to the Commission

(10 September 2003)

Subject: US market access for DHL Airways

Since the takeover of the international express service provider DHL by Deutsche Post World Net, UPS and
FedEx have employed various means to exclude DHL from the American market. UPS and FedEx control
the US parcels market, in a kind of duopoly, with a market share of 80 %, while DHL’s market share in the
US stands at 0,9 %. The legal and political means that UPS and FedEx have employed to partition of the US
market from foreign competitors is the rule that airlines can only be considered US carriers if 75 % of their
voting rights and 51 % of their capital shares are in the hands of US citizens. Both of these requirements
are met by DHL Airways and have been since DHL was bought by Deutsche Post AG, when DHL’s land-
based and airborne operations were split into two companies, leaving DHL International with only a 25 %
stake in DHL Airways. The US Department of Transportation (DoT) has confirmed this, rejecting
numerous complaints brought by UPS and FedEx. On 16 April 2003, however, an amendment was made

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Official Journal of the European Union

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8.4.2004

to the war budget so that airlines that are not effectively controlled by US citizens, or 50 % of whose
turnover derives from foreign companies, or that belong to a foreign state, cannot be awarded military
contracts from the budget appropriations that have now been released. This amendment affects only DHL
Airways and therefore blatantly discriminates against one single company, given that
the US State
Department and the Pentagon are major customers of DHL Airways. The anti-competitive actions of
FedEx/UPS are in stark contrast to UPS’s unrestricted business opportunities in Europe: while UPS’s market
share alone in the US is around 64 % and DHL’s is only 0,9 %, Deutsche Post (including DHL) holds a 23 %
share of the more competitive German market and UPS an 8 % share.

Is the Commission aware of this situation? How does it intend to combat this discrimination? What steps
does the Commission plan to take, particularly in the context of the negotiations on an ‘open skies’
agreement between the US and the EU, to guarantee market access to the US and to achieve full
reciprocity?

Answer given by Mr Lamy on behalf of the Commission

(14 October 2003)

The Commission is following closely any developments concerning United States market access for
European companies.

The question concerns market access for express service provider DHL in the United States. Recent
legislation in the United States sets a new restriction on ownership requirement for air carriers in order to
benefit from military contracts. More specifically Section 2710 of the Emergency Wartime Supplemental
Appropriations Act of April 2003 states that: ‘None of the funds in this Act or any other Act may be
obligated or expended to pay for transportation described … to be performed by any air carrier that is not
effectively controlled by citizens of the United States … an air carrier shall not be considered to be
effectively controlled by citizens of the United States if the air carrier receives 50 percent or more of its
operating revenue over the most recent three year period from a person not a citizen of the United States
and such person, directly or indirectly, either owns a voting interest in the air carrier or is owned by an
agency or instrumentality of a foreign state.’

In the view of the Commission these provisions went right against European interests and in particular
those of DHL. DHL needs the services of United States cargo airlines for the air transport part of its
delivery services. Since these airlines derive a huge share of their operating revenues from DHL, they
would be excluded from the military contracts under the Wartime Supplemental Appropriations Act.

However, the Commission also notes that Section 2710 gives a possibility for the Secretary of Defense to
waive the restriction: … ‘That when the Secretary of Defense decides that no air carrier holding a
certificate under section 41102 is capable of providing, and willing to provide, such transportation, the
Secretary of Defense may make a contract to provide the transportation with an air carrier not having a
certificate’. As far as the Commission knows, DHL is currently providing mail delivery services for the
Department of Defense to both Iraq and Afghanistan.

In any case, it should be noted that DHL has sold its 25 % stake in DHL Airways to United States investors.
DHL Airways has been renamed into AStar Air Cargo and is now 100 % owned by United States citizens.

The Commission is aware that United States cargo airlines are entitled to operate intra-Union flights while
Union cargo airlines are not entitled to operate domestic flights in the United States. This imbalance will
be addressed in the upcoming negotiations on a Union-United States open aviation area. The negotiations
aim at opening up the United States domestic market to Union airlines and vice versa. A key element in
this will be the removal of the special restrictions which currently apply to foreign ownership and control
of airlines.