As the current trade negotiating agenda struggles along, both at the multilateral and mega-regional levels, perhaps there are some government actions out there that could provide the basis for productive new negotiations. One area that always gets me fired up is subsidies: agriculture subsidies and export credits are big ones, but here's another:
... Emirates, Etihad and Qatar — are hard-charging relative newcomers to the battle for worldwide reach. They each envision their respective home-base airports in Dubai, Abu Dhabi and Doha as mega-hubs for international travel. (Dubai and Abu Dhabi are city-states run by absolute monarchs who operate under the umbrella of the UAE.)
All three airlines are government-owned; those governments see airlines as engines for economies made fabulously wealthy by oil, and they have been pumping money into them by the billions.
And there’s the rub.
The U.S. airlines say that money amounts to multibillion-dollar government subsidies, creating an unfair playing field on which they can’t hope to compete. They want the federal government to step in, seeking a formal consultation with the UAE and Qatar under the Open Skies agreement and freezing new routes to the United States by those airlines until discussions reach a resolution.
...
The U.S. airlines formed a coalition, the Partnership for Open and Fair Skies, that stitched together all of the available information on their adversaries, which are not subject to the same transparency demands as publicly traded companies. The result was a 55-page white paper that details the myriad ways their rivals are financially buoyed by the governments that own them:
●Billions in loans that often are interest-free, some of them ultimately forgiven or granted without any set time for repayment.
●Government guarantees that reduce interest payments for commercial loans.
●Labor costs that are lower because unions are banned.
●Exemptions from airport fees paid by other airlines landing in their home countries.
●Tax exemptions for local companies that do business with gulf airlines.
●Exemptions from customs fees paid by others bringing goods into the countries.
●Billions of government investment in airport expansion that will give one airport, Dubai’s World Central, the capacity to handle five times the traffic of Chicago’s O’Hare. Last year, World Central surpassed London Heathrow to become the globe’s busiest airport.
Of course, there are no rules as of right now on subsidies to services, but perhaps this gives us the incentive to negotiate some. Given that one of the companies is from Qatar, just for fun we could call the negotiations on this issue Doha Round II.
