52019PC0254

EUROPEAN COMMISSION

Brussels, 5.6.2019

COM(2019) 254 final

2019/0126(NLE)

Proposal for a

COUNCIL DECISION

on the conclusion, on behalf of the European Union, of the Agreement with Respect to Time Limitations on Arrangements for the Provision of Aircraft with Crew between the United States of America, the European Union, Iceland, and the Kingdom of Norway

EXPLANATORY MEMORANDUM

1.CONTEXT OF THE PROPOSAL

•Reasons for and objectives of the proposal

The Agreement with Respect to Time Limitations on Arrangements for the Provision of Aircraft with Crew between the United States of America, the European Union, Iceland, and the Kingdom of Norway (“the Wet Lease Agreement”) has been negotiated by the Commission, as authorised by the Council on 21 December 2016.

It builds on the Air Transport Agreement (“ATA”) between the EU and the United States (“US”), which was signed on 25 and 30 April 2007 1 , and confirms the establishment of clear and non-restrictive wet lease arrangements 2 involving the airlines of the Parties, thereby providing more precision to the respective provisions of the ATA.

The Wet Lease Agreement not only resolves the current dispute on the application of the relevant provisions of the ATA, it also provides clarity and legal certainty for future arrangements affecting EU, Icelandic, Norwegian and US air carriers.

•General context

The ATA between the EU and the US foresees an open wet-lease regime between the parties. The negotiating directives set out the general objective of negotiating a Wet Lease Agreement with the aim of providing precision to the relevant provisions of the ATA and abolishing time limitations for wet lease arrangements affecting the EU, Icelandic, Norwegian and US air carriers.

•Consistency with existing policy provisions in the policy area

The EU-US ATA is the most important air transport agreement in the world, providing more than 75 million seats per year, and as such a cornerstone of the EU’s external aviation policy. The Wet Lease Agreement will resolve a long-standing uncertainty concerning the application of the wet lease provisions of the ATA, and as such contribute to the well-functioning of the transatlantic aviation relationship.

The Wet Lease Agreement is in line with the EU’s overall rules on wet lease: Article 13(3)b of Regulation (EC) 1008/2008 provides for the lifting of time restrictions by means of an international agreement on wet leasing signed by the Union, which is based on an EU Air Transport Agreement signed before 1 January 2008.

•Consistency with existing provisions in the area of the proposal

2.LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY

•Legal basis

Article 100 (2) and Article 218 (6) (a) of the Treaty on the Functioning of the European Union (“TFEU”).

•Subsidiarity (for non-exclusive competence)

Not applicable – The Wet Lease Agreement falls under the exclusive competence of the EU according to Article 3 (2) of the TFEU.

•Proportionality

The Wet Lease Agreement is limited to dealing with the issue at stake and does not address other matters. By focusing exclusively on the time restrictions currently affecting the wet lease arrangements in the transatlantic market, it will bring further clarity to the wet-lease provisions in the ATA.

Furthermore, Member States will continue to carry out the traditional administrative tasks they execute in the context of approving wet leasing arrangements.

•Choice of the instrument

An international agreement is the only way to obtain the intended objective.

3.RESULTS OF EX-POST EVALUATIONS, STAKEHOLDER CONSULTATIONS AND IMPACT ASSESSMENTS

•Ex-post evaluations/fitness checks of existing legislation

Not applicable

•Stakeholder consultations

In line with Article 218(4) TFEU, the Commission has conducted the negotiations in consultation with a special committee. Stakeholders from the entire aviation value chain and social partners, including notably trade unions, have equally been consulted during the negotiations. Comments made in this process have been taken into account.

•Collection and use of expertise

Not applicable.

•Impact assessment

Not applicable.

•Regulatory fitness and simplification

Not applicable.

•Fundamental rights

Not applicable.

4.BUDGETARY IMPLICATIONS

The proposal has no implication for the budget of the Union.

5.OTHER ELEMENTS

•Summary of the proposed agreement

The Agreement consists of the main body and a Joint Declaration on the authentication of additional language versions.

2019/0126 (NLE)

Proposal for a

COUNCIL DECISION

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty on the Functioning of the European Union and in particular Article 100 (2), in conjunction with Article 218 (6) (a) thereof,

Having regard to the proposal from the European Commission,

Having regard to the consent of the European Parliament.

Whereas:

(1)The Agreement with Respect to Time Limitations on Arrangements for the Provision of Aircraft with Crew between the United States of America, the European Union, Iceland, and the Kingdom of Norway was signed on [date], subject to its conclusion at a later date;

(2)The Agreement should be approved on behalf of the Union.

HAS ADOPTED THIS DECISION:

Article 1

The conclusion of the Agreement with Respect to Time Limitations on Arrangements for the Provision of Aircraft with Crew between the United States of America, the European Union, Iceland, and the Kingdom of Norway, is hereby approved on behalf of the Union.

Article 2

The President of the Council shall designate the person empowered to proceed, on behalf of the Union, to the exchange of diplomatic notes provided for in Article 7 (1) of the Agreement, in order to express the consent of the Union to be bound by the Agreement.

Article 3

This Decision shall enter into force on the day of its adoption.

Done at Brussels,

For the Council

The President

(1) OJ L 134, 25.5.2007, p.4.

(2) Wet-lease is a leasing arrangement whereby one airline (lessor) operates the flights providing the aircraft and crew to another airline (lessee).

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EUROPEAN COMMISSION

Brussels, 5.6.2019

COM(2019) 254 final

ANNEX

to the Proposal for a Council Decision

on the conclusion, on behalf of the European Union, and on the provisional application of an Agreement with Respect to Time Limitations on Arrangements for the Provision of Aircraft with Crew between the United States of America, the European Union, Iceland, and the Kingdom of Norway

Agreement with Respect to Time Limitations on Arrangements for the Provision of Aircraft with Crew

THE UNITED STATES OF AMERICA (hereinafter, “the United States”), THE EUROPEAN UNION, ICELAND, and THE KINGDOM OF NORWAY (hereinafter, “Norway”),

Recognizing the benefit of promoting flexibility and fair and equal opportunities with respect to operating arrangements entered into by airlines pursuant to Article 10(9) of the Air Transport Agreement between the United States of America and the European Community and its Member States, signed on April 25 and 30, 2007, as amended by the Protocol to Amend the Air Transport Agreement between the United States of America and the European Community and its Member States, signed on June 24, 2010 (hereinafter, the “U.S.-EU ATA”) and applied pursuant to the Air Transport Agreement among the United States of America, the European Union and its Member States, Iceland, and the Kingdom of Norway, signed on June 16 and 21, 2011 (hereinafter, the “Four Part ATA”);

Recognizing the comprehensive aviation relationship among the parties, established by the U.S-EU ATA and the Four Part ATA and the close cooperation among the parties developed in the context of these Agreements;

Reaffirming the common objective of the Parties to ensure the highest degree of safety and security in international air transportation, as is reflected in their similar regulatory frameworks;

Acknowledging the existence of comparable social and economic conditions among the Parties with respect to international air transportation; and

Resolving to promote flexibility in operating arrangements between airlines to lease aircraft with crew as provided for by the U.S.-EU ATA, including as applied by the Four Part ATA, by reciprocally removing time limits on such arrangements, without otherwise affecting the application of those Agreements;

HAVE AGREED AS FOLLOWS:

Article 1

Definitions

For purposes of this Agreement, the term:

1.“European airlines” means airlines of the European Union and its Member States, Iceland, and Norway that are authorized to provide international air transportation pursuant to Article 4 of the U.S.-EU ATA, including as applied by the Four Part ATA.

2.“Party” means the United States, the European Union, Iceland, or Norway.

3.“U.S. airlines” means airlines of the United States authorized to provide international air transportation pursuant to Article 4 of the U.S.-EU ATA, including as applied by the Four Part ATA.

4.“Wet lease” means any arrangement between two airlines for the provision of aircraft with crew for international air transportation.

Article 2

Time Limitations

1.No Party shall impose, including by statute or regulation, time limitations on the operation of any wet lease pursuant to Article 10(9) of the U.S.-EU ATA, including as applied by the Four Part ATA, provided that such wet lease complies with all terms and conditions of said Article 10(9).

2.Nothing in paragraph 1 shall be understood to limit the right of a Party to otherwise apply its statutes and regulations with respect to wet leasing arrangements involving its airlines and those of countries that are not party to this Agreement.

Article 3

Consultations

Any Party may, at any time, request consultations with any other Party or Parties regarding any matter relating to this Agreement. Such consultations shall begin at the earliest possible date, but no later than 60 days from the date the other Party receives the request or, as appropriate, from the date all other Parties have received the request, unless otherwise agreed. Such consultations may be held in connection with a meeting of the Joint Committee referenced in Article 18 of the U.S.-EU ATA.

Article 4

Review

The Parties shall review, as appropriate, the implementation of this Agreement. Such review may be held in connection with a meeting of the Joint Committee referenced in Article 18 of the U.S.-EU ATA.

Article 5

Dispute Resolution

1.Any dispute arising under this Agreement that is not resolved by consultations under Article 3 may be referred to a person or body for decision by agreement of the parties to the dispute. If the parties to the dispute do not so agree, the dispute shall, at the request of one of the parties to the dispute, be submitted to arbitration using the procedures provided for in Article 19(2)-(8) of the U.S-EU ATA, except as provided herein.

2.In the case of a dispute involving:

(a) two Parties to this Agreement, the term “Party” or “Parties” in Article 19(2)-(8) of the U.S.-EU ATA shall, when applied to such a dispute under this Agreement, mean a party or parties to a dispute under this Agreement.

(b)more than two Parties to this Agreement, one or both sides may include multiple Parties for purposes of participation in a proceeding described in this Article. In the case of such a dispute under this Agreement, all references to a “Party” in Articles 19(2)-(8) of the U.S.-EU ATA shall, when applied to that dispute, mean one side to the dispute under this Agreement, and all references to “Parties” shall, when applied to that dispute, mean the two sides to the dispute under this Agreement.

3.The term “this Agreement” in Article 19(3) and (7) of the U.S-EU ATA shall, when applied to a dispute under this Agreement, mean this Agreement with Respect to Time Limitations on Arrangements for the Provision of Aircraft with Crew among the United States of America, the European Union, Iceland, and the Kingdom of Norway.

4.The reference to “Member State” in Article 19(2) of the U.S.-EU ATA shall, when applied to a dispute under this Agreement, include Iceland and Norway.

Article 6

Registration with the International Civil Aviation Organization (ICAO)

This Agreement and any amendments thereto shall be registered with ICAO by the General Secretariat of the Council of the European Union.

Article 7

Entry into Force, Provisional Application, and Termination

1.This Agreement shall enter into force one month after the date of the last note of the exchanges of diplomatic notes among the Parties confirming that all necessary procedures for entry into force of this Agreement have been completed.

2.Pending its entry into force, the Parties agree that this Agreement shall be applied provisionally by the United States and the European Union commencing upon signature by the United States and the European Union, and by Norway and Iceland commencing upon the later of the date of provisional application by the United States and the European Union and that State’s signature of this Agreement.

3.Either the United States or the European Union may, at any time, give notice in writing through diplomatic channels to the other Parties of its decision to terminate this Agreement or to end provisional application of this Agreement under paragraph 2 of this Article. A copy of the notice shall be sent simultaneously to ICAO. This Agreement shall terminate, or provisional application of this Agreement shall end, at midnight GMT 90 days following the date of the written notification, unless the notice is withdrawn by agreement of the United States and the European Union before the end of this period.

4.Either Iceland or Norway may, at any time, give notice in writing through diplomatic channels to the other Parties of its decision to withdraw from this Agreement or to end its provisional application of this Agreement under paragraph 2 of this Article. A copy of the notice shall be sent simultaneously to ICAO. Such withdrawal or cessation of provisional application shall be effective at midnight GMT 90 days following the date of written notification, unless the notice is withdrawn by agreement of the Party giving written notice, the United States, and the European Union before the end of this period.

5.Notwithstanding any other provision of this Article, if the U.S.-EU ATA is terminated or the parties to that agreement cease to provisionally apply it, this Agreement shall terminate simultaneously.

6.Notwithstanding any other provision of this Article, if the Four Part ATA is terminated pursuant to Article 3(1) of that agreement, or the parties to that agreement cease to provisionally apply it, or if that agreement is terminated with respect to Norway or Iceland pursuant to Article 3(3), this Agreement shall terminate with respect to Norway and/or Iceland on the same date that cessation or termination becomes effective for that Party or Parties.

7.Notwithstanding any other provision of this Article, if Norway and/or Iceland withdraws from the Four Part ATA pursuant to Article 3(2) of that agreement, this Agreement shall terminate as to the Party or Parties withdrawing from the Four Part ATA on the same date withdrawal from the Four Part ATA becomes effective for that Party or Parties.

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

Done at __________ in quadruplicate, in the English language, on ____________ 2019.

For the United States of America: For the European Union:

For Iceland: For the Kingdom of Norway:

Joint Declaration

Representatives of the United States, the European Union, Iceland, and Norway confirmed that the Agreement with Respect to Time Limitations on Arrangements for the Provision of Aircraft with Crew, to be signed in English only, is to be authenticated in other languages, as provided by an exchange of letters among the Parties.

This Joint Declaration is an integral part of the Agreement.

For the United States of America: For the European Union:

For Iceland: For the Kingdom of Norway:

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EUROPEAN COMMISSION

Brussels, 5.6.2019

COM(2019) 254 final

ANNEX

to the Proposal for a Council Decision

Memorandum of Consultations

1.On March 8, 2019, delegations of the United States (U.S.), the European Union (EU), Iceland, and Norway reached agreement, ad referendum, on the text of an agreement with respect to time limitations on arrangements for the leasing of aircraft with crew (the “Agreement,” appended as Attachment A), which they intend to submit to their respective authorities for approval. A list of the members of the delegations is appended as Attachment B.

2.The U.S. delegation and the EU delegation expressed their view that the drafters of the Air Transport Agreement between the United States of America and the European Community and its Member States, signed on April 25 and 30, 2007, as amended by the Protocol to Amend the Air Transport Agreement between the United States of America and the European Community and its Member States, signed on June 24, 2010 (“U.S.-EU ATA”), intended to promote flexibility in operating arrangements between airlines pursuant to Article 10(9). The U.S. delegation, the EU delegation, the Icelandic delegation, and the Norwegian delegation also expressed their view that the drafters of the Air Transport Agreement among the United States of America, the European Union and its Member States, Iceland, and the Kingdom of Norway (“Four Part ATA”), which applies the provisions of the U.S.-EU ATA to Iceland and Norway, intended to promote corresponding flexibility.

3.The U.S. delegation noted its concerns that the application of Regulation (EC) No. 1008/2008 hinders the exercise of commercial rights for U.S. airlines under the U.S.-EU ATA, including as applied by the Four Part ATA, and that it has worked through the Joint Committee since 2014 to ensure that airlines that wish to enjoy the commercial leasing markets as provided in Article 10(9) may do so. The U.S. delegation recalled the significant efforts undertaken by the U.S. Department of Transportation (DOT) to create new market opportunities for the leasing of aircraft with crew, culminating in the notice of revised guidance in February 2008, as published in Volume 73, Number 41 of the Federal Register. The U.S. delegation further stated that its decision to engage in negotiations and drafting of the Agreement and to submit the text of the Agreement for approval were without prejudice to its position on the above-mentioned Regulation.

4.In response, the EU delegation, the Icelandic delegation, and the Norwegian delegation stated that they did not share the U.S. delegation's concerns regarding the application of Regulation (EC) No. 1008/2008 and that they consider that the imposition by the United States of time limitations on the operation of wet leases between European airlines as defined in Article 1(1) of the Agreement would hinder the exercise of commercial rights for European airlines under the U.S.-EU ATA, including as applied by the Four Part ATA. These delegations further stated that their decision to engage in negotiations and drafting of the Agreement and to submit the text of the Agreement for approval were without prejudice to their position regarding the above-mentioned Regulation and U.S. practice.

5.Particularly in light of the comprehensive aviation relationship among the Parties to the Agreement, the EU delegation, the Norwegian delegation, and the Icelandic delegation stressed their position that this Agreement does not constitute a precedent for negotiating an equivalent agreement between the EU, Iceland, or Norway, and any other country.

6.In response to a question from the U.S. delegation regarding the application of Regulation (EC) No. 1008/2008 and this Agreement by Iceland and Norway, the Icelandic delegation and the Norwegian delegation confirmed that Regulation (EC) No. 1008/2008 is applied by Iceland and Norway through incorporation of that regulation into the Agreement on the European Economic Area ("EEA Agreement"). Furthermore, the Icelandic delegation and the Norwegian delegation noted that the Agreement will constitute an agreement under public international law, binding upon Iceland and Norway.

7.The EU delegation noted that under EU law, and in particular Article 216(2) of the Treaty on the Functioning of the European Union (“TFEU”), the Agreement, which will form part of EU law, will be binding on the Member States, although they are not parties to the Agreement as a matter of international law; consequently, the Member States will be prevented, by virtue of EU law, from acting in contravention of the Agreement, such as by imposing time limitations on wet leases that are incompatible with the Agreement.

8.The EU delegation further noted that the EU has exclusive competence, to the exclusion of the Member States, to conclude the Agreement, in accordance with Article 3(2) TFEU.

9.In this connection, the EU delegation noted that if a Member State were to act in contravention of the Agreement, such as by imposing time limitations on wet leases that are inconsistent with the Agreement, and, as the Agreement forms part of EU law, thereby fails to fulfill an obligation under EU law, the European Commission is the EU institution responsible under the TFEU for the enforcement of EU law and may bring an action against the Member State before the Court of Justice of the European Union under Article 258 TFEU. It further noted that if a Member State were to act in contravention of the Agreement, the EU would be responsible under the Agreement for such an act and would be subject to the procedures referred to in Articles 3 and 5.

10.In this context, and in response to a question from the U.S. delegation, the EU delegation confirmed that the European Commission does not have powers under EU law, and in particular under the EEA Agreement, to ensure the application of the Agreement by Iceland and Norway. A possible violation of the Agreement by Iceland or Norway would be subject to the procedures referred to in Articles 3 and 5. The Icelandic delegation and the Norwegian delegation confirmed these statements.

11.The U.S. delegation noted that the Agreement is to be provisionally applied by the United States in accordance with Article 7(2) thereof.

12.In response to a question from the U.S. delegation about provisional application of the Agreement and the EU’s ability to ensure such application by the Member States, the EU delegation noted, first, that, in accordance with Article 218(5) TFEU, the Council of the EU, on a proposal by the European Commission, is to adopt a decision authorizing the signing of the Agreement and, in accordance with Article 7(2) thereof, its provisional application, and that such a decision, under Article 288 TFEU, is binding in its entirety. It further noted that, pursuant to Article 216 (2) TFEU, the Agreement, including the provisions on provisional application in Article 7(2) thereof, will be binding on the Member States as a matter of EU law, and referred to the procedure provided for under Article 258 TFEU to ensure compliance by the Member States of their obligations under EU law.

13. In response to a question from the U.S. delegation about provisional application of the Agreement as regards Iceland and Norway, the Icelandic delegation and the Norwegian delegation confirmed that the Agreement will be provisionally applied from its date of signature in accordance with Article 7(2) thereof.

14.In responding to a question from the EU delegation, the U.S. delegation provided information on the U.S. regime for long-term wet lease licensing. Airlines applying for such authority are required to conform to the requirements specified in Part 212 of Title 14 of the U.S. Code of Federal Regulations (14 C.F.R. Part 212). These regulations define long-term wet leasing to mean such leases that either a) last more than 60 days, or b) are part of a series of such leases that amount to a continuing arrangement lasting more than 60 days. The U.S. delegation noted that DOT issues statements of operations for wet lease services if all requirements have been met and it determines that the authorization is in the public interest. The public interest conditions are specified in 14 CFR 212.11(b) and discussed in the Regulatory Guidance issued on February 15, 2008 (73 Fed. Reg. 10986). In this connection, the U.S. delegation confirmed the statements regarding the application of the public interest analysis made in paragraphs 27, 28, 29, and 31 of the 2007 Memorandum of Consultations accompanying the U.S.-EU ATA.

15.The U.S. delegation noted that, as a matter of long established practice, DOT consistently approves applications for wet lease arrangements filed by carriers of the EU, Iceland, and Norway. All delegations noted their expectation for this practice to continue in a manner consistent with the Agreement and the U.S.-EU ATA, including as applied by the Four Part ATA.

16.The delegations noted that the Joint Committee referenced in Article 18 of the U.S.-EU ATA has a mandate to review the implementation of the U.S.-EU ATA, including as applied by the Four Part ATA, and is comprised of parties to the Four Part ATA, which include non-parties to the present Agreement. However, given that all the Parties to the present Agreement are members of the Joint Committee, and that the EU Member States are bound by the Agreement under EU law although they are not parties to the Agreement, the delegations expressed their expectation that any consultations under Article 3 of the Agreement, or review under Article 4, would be held in connection with regular or special meetings of the Joint Committee referenced in Article 18(1) of the U.S.-EU ATA. In the case of any such consultations, the delegations expressed the hope that the nature of the forum would help the Parties to the Agreement to come to a resolution.

17.The delegations also noted that the Agreement does not affect the mandate of the Joint Committee to address issues relating to wet leasing arrangements under Article 10(9) of the U.S.-EU ATA, including as applied by the Four Part ATA.

18.The U.S. delegation and the EU delegation acknowledged the linguistic regime of the EU. In that regard, the EU delegation recalled that, pursuant to EU law, the EU is obligated to draw up the Agreement in the Bulgarian, Croatian, Czech, Danish, Dutch, Estonian, Finnish, French, German, Greek, Hungarian, Italian, Latvian, Lithuanian, Maltese, Polish, Portuguese, Romanian, Slovak, Slovenian, Spanish, and Swedish languages. The EU delegation stated its position that these additional language versions should be authenticated by application of the procedure provided for in the Joint Declaration (appended as Attachment C) with all authenticated versions being of equal value. The Icelandic and the Norwegian delegations stated their position that versions in Icelandic and Norwegian should be authenticated in the same way. The U.S. delegation took note of the EU, Icelandic and Norwegian delegations’ position and, while noting that the Agreement does not require authentication of additional language versions, confirmed its commitment to work constructively with the EU, Icelandic and Norwegian delegations to address requests for the authentication of additional language versions of the Agreement through the procedure provided for in the Joint Declaration.

For the Delegation of the For the Delegation of the

United States of America: European Union:

Terri L. Robl Carlos Bermejo Acosta

For the Delegation of For the Delegation of Iceland: Kingdom of Norway:

Una Særún Jóhannsdóttir Øyvind Thorstein Ek

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