More Turbulence Ahead: A Bumpy Ride during U.S.-Japanese Aviation Talks Exemplifies the Need for a Pragmatic Course in Future Aviation Negotiations

By Lick, Derek | Vanderbilt Journal of Transnational Law, November 1998 | Go to article overview
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More Turbulence Ahead: A Bumpy Ride during U.S.-Japanese Aviation Talks Exemplifies the Need for a Pragmatic Course in Future Aviation Negotiations


Lick, Derek, Vanderbilt Journal of Transnational Law


I. INTRODUCTION

As U.S. firms collectively weather the relatively hostile business climate in Japan, certain United States-based airlines have been flying above it all for years. Those U.S. airline carriers allowed to take advantage of the trans-Pacific passenger and cargo market are doing well competing against their Asian counterparts particularly on routes into and out of Japan. In 1995, U.S. airlines carried about sixty-five percent of the passengers flying between the United States and Japan.(1) This success alone generated a $5.3 billion aviation trade surplus in 1996---the only U.S. trade surplus with Japan.(2) Additionally, this trade surplus is growing at a quarter of a billion dollars annually(3) and it accounts for sixty percent of the $26 billion travel surplus the United States has with the rest of the world.(4) However, most of the revenues generated by U.S. airlines operating in the Japanese market have gone to just two passenger carriers (Northwest and United) and one cargo carrier (Federal Express).(5) This concentration of revenue is the result of a 1952 bilateral aviation treaty between the United States and Japan that provided significant access into the Japanese market only to those three U.S. carriers.(6)

After more than four decades under the treaty, the United States and Japan agreed to a major revision of the agreement's terms in 1998.(7) The new aviation agreement substantially alters the original post-World War II treaty,(8) but falls short of the initial U.S. goal of creating "open skies" between the two countries.(9) Under an open skies agreement, both countries would have opened access to international airline routes between the two countries and eliminated practically all domestic restrictions on international carriers.(10) The inability of the United States to convince Japan to accept an open skies agreement may signal trouble for future aviation agreement negotiations unless the United States maintains its pragmatic approach, reaching the optimal agreement given the economic and political climate in the countries with which the United States is negotiating.(11)

This Note analyzes the U.S.-Japanese aviation agreement and the negotiations that led to its signing. More specifically, it examines how the parties involved--including U.S. airline carriers who disagreed as to how the United States should proceed--influenced the negotiation process. Part II of the Note focuses on the current U.S. policy of expanding open skies when negotiating bilateral aviation treaties with foreign countries. Part III looks at the U.S.-Japanese aviation market and its importance for U.S. airlines. Part IV examines how the Japanese government successfully used its strategic placement in the Asian market to avoid U.S. efforts to impose an open skies agreement. In this section, emphasis is placed on the peculiarities of relations between the two countries under the 1952 agreement and how the details of the new agreement represent a middle ground that both countries hope to exploit. Part V describes the new 1998 bilateral agreement. Finally, Part VI predicts how the Japanese agreement may impact future aviation "liberalization" negotiations: did the United States compromise its bargaining position in future negotiations by "caving in" to Japan and accepting an agreement that falls short of open skies? Or did the United States correctly approach the negotiations pragmatically and with an eye toward reaching the best agreement possible given the circumstances? The Note attempts to answer these questions and proposes how the United States should conduct future aviation negotiations.

II. U.S. INTERNATIONAL AVIATION POLICY BASED ON EXPANDING "OPEN SKIES"

In an effort to better effectuate what had been an unsuccessful U.S. international aviation policy goal of promoting "unfettered operations for airlines,"(12) the Clinton administration sought to renegotiate bilateral agreements to encourage competition.

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