How has the EU-US Open Skies Agreement Affected EU Citizenship of Germany - Essay Example

?EU Law Citizenship "How has the EU-US Open Skies Agreement Affected EU Citizenship of Germany?" Table of Contents Introduction 3 A Background to theEU-US Open Skies Agreement 4 Interests of Germany in the Involvement of the EU-US Open Skies Agreement 6 Effects of the EU-US Open Skies Agreement upon EU Citizenship of Germany 8 Conclusion 11 References 12 Introduction The EU-US Open Skies Agreement generally reflects the formation of the ‘US-EU Open Aviation Area Agreement’. It can be apparently observed in this similar concern that the deregulation of the US domestic commercial based aviation business market eventually led the policymakers to explore innovative ways for the purpose of reducing the regulation of air transportation particularly between the US and the EU. In the year 2007, both the regions i.e. the US and the EU had signed a momentous pact in order to liberalise open global transportation and air travel on their respective business markets over the Atlantic Ocean. This pact or treaty is popularly acknowledged as The EU-US Open Skies Agreement. This significant agreement intends to deregulate the concern of air traffic over the Atlantic Ocean through various ways that have been discussed in the following section. It is worth mentioning that this particular agreement has facilitated any airline belonging to the US and the EU to fly to any particular point between these two regions. Apart from lessening the increased level of regulation of air transportation between the aforesaid two regions, the agreement also tends to undertake certain significant steps specifically for normalisation of the global aviation industry (Peterson & Graham, 2008). With this concern, the essay intends to discuss the EU-US Open Skies Agreement and its implications on different EU nations along with the US. Moreover, the way in which this agreement has affected EU citizenship of Germany will also be taken into concern in the essay. A Background to the EU-US Open Skies Agreement The financial interrelation of the US and the EU has been witnessed to contribute in ascertaining greater commercial success on both the sides of the Atlantic. This can be justified with reference to the fact that the formation along with the maintenance of smooth financial interrelation between the aforesaid two nations have opened prospects for better investments, fostered trade in products or services and most vitally facilitated in enhancing the mobility of the individuals through undertaking various major initiatives. One of the initiatives in this regard can be apparently observed as the formation of the Visa Waiver Program. It is determined that the EU and the US are regarded as the two biggest air transportation markets throughout the globe. This is owing to the reason that both of these markets together account for in excess of half of all worldwide scheduled passenger travel and 71.7 percent of the globe’s freighter fleet. The formation of the EU-US Open Skies Agreement, which had been signed in the year 2007 and became effective in the year 2008, can be duly considered as a historic decision, as it not only broadly supports the aspect of trade liberalisation but also promotes the development of better international trade as well. In the context of analysing the EU-US Open Skies Agreement, it can be affirmed that aviation often plays a decisive role in driving the vital aspect of globalisation, contributing in expanding travel along with tourism and enabling the business entrepreneurs to make substantial investments. Furthermore, it also plays an imperative part in facilitating trade through bringing business people along with conducting their respective operational functions jointly and developing the products or services in relation to the respective industry. By taking into concern these valuable roles played by aviation, it can be stated that both the regions i.e. the US and the EU had signed the agreement in order to transform and enhance the existing procedure of air travel and trade throughout the Atlantic (Alford & Champley, 2007). It has been affirmed that the EU-US Open Skies Agreement tends to deregulate air travel for the purpose of liberalising open worldwide transportation and most importantly to lessen regulation especially of air transportation between the two regions through following certain effective ways. Theses ways comprise eradicating restrictions or limitations upon air fares, permitting the air carriers to fly to any destination point in a partner nation and providing consent to the air carriers in transporting passengers between various partner nations. Moreover, the other ways can be viewed as permitting airlines towards forming along with preserving alliances and rendering them much freedom towards cooperating in making various marketing arrangements that comprise leasing or other code-sharing arrangements. By taking into concern these ways of deregulating air travel and lessening regulation of air transportation, it can be affirmed that the agreement would deliver a superior level of harmonisation specifically of regulatory policies between the US and the EU regions. The EU-US Open Skies Agreement possesses certain major provisions that ultimately raise the significance of this particular agreement in liberalising aviation and promoting better development of international trade. In this regard, the provisions comprise forming Open Skies between the regions of the US and the EU along with its 27 state members, generating a cooperative joint committee for making further airline deregulation and performing various marketing arrangements such as leasing and code sharing among others effectively (Alford & Champley, 2007; Peterson & Graham, 2008). Interests of Germany in the Involvement of the EU-US Open Skies Agreement In earlier section, it has been apparently observed that the Open Skies Agreement was mainly formed between the EU along with its different member states and the US for the purpose of liberalising air travel and most vitally promoting the development of aviation sector. In this context, Germany can also be regarded as a part of this agreement, as it is recognised as one of the member states of the EU. It can be affirmed from a broader perspective that Germany’s key interest for its involvement in the aforesaid agreement was to avail economic benefits and also to enhance its international trade relating to aviation sector. Though the formation of the agreement is expected to create extensive employment, the interests of Germany were likely to be much extensive as a part of its involvement in the said agreement. In addition, it can also be viewed that the major interest for Germany in actively supporting or favouring the agreement was to generate a reliable along with effective air transportation system within the nation. The country, in this regard has strongly realised that through the generation of a reliable along with an efficient system of air transportation, productivity in the aviation sector of the nation can be raised through enhancing the efficiencies of supply chain based activities. It is worth mentioning that this particular agreement tends to generate superior level of productivity gains along with facilitating to uphold competition particularly in the aviation segment by a certain degree. This can be made in the form of generating lower airfares, producing ample direct jobs, augmenting the scope of conducting foreign direct investments (FDIs) and creating superior consumer choices among others. It can be affirmed that the agreement, through generating increased level of competition and making fare reductions, would certainly raise air travel between the US and Germany, resulting in liberalising air transportation of the nation by a greater extent (Karen & Richard, 2007). Thus, the above discussed vital aspects eventually determine the interests of Germany for being involved in the EU-US Open Skies Agreement. Under the formation of the EU-US Open Skies Agreement, any airline belonging to the EU region along with its different member states can fly from anywhere in the region of Europe to various points of the US region from the year 2008. This could be regarded as one of the chief interests of Germany to actively support the agreement. This can be justified with reference to the fact that one of the major airlines belonging to Germany i.e. Deutsche Lufthansa AG can reap significant benefits through the formation of the agreement. One of these benefits might be the prospect of smooth flying of the airline from the region of Europe to various points of the US region. However, it has been witnessed that the airline of Germany i.e. Deutsche Lufthansa AG does not possess any sort of immediate plans in order to expand its flight routes between the aforesaid regions by reaping the advantage of the agreement, which became much effective from the year 2008. According to the spokesman of Lufthansa, the airline would monitor the business market and examine numerous options for expanding its new flight routes initially and then adopt along with execute certain effective strategies for performing the same (Hromadko, n.d.). It is worth mentioning in this regard that the bilateral agreement, which has been formed with Germany and a European partner, granted the access of all US based carriers to every point in Germany. However, the loss of market share experienced by Lufthansa and its continuous worsening financial position eventually called for signing an interim arrangement between the US and Germany. This interim arrangement can be viewed to replace the bilateral agreement, which was formerly signed between Germany and a European partner, permitting the access of every US based carrier to various points belonging to Germany (Havel, 2009). Effects of the EU-US Open Skies Agreement upon EU Citizenship of Germany With regard to determining how the EU-US Open Skies Agreement has affected EU citizenship of Germany, the case law i.e. Commission v. Germany (Open Skies) can broadly be taken into concern (Craig & Burca, 2011). In this similar context, it can be apparently viewed that the European Commission (EC), under the litigation of the Open Skies Agreement, challenged the agreements related to air transport formed by numerous EU member states with the US. In relation to the above depicted case law, the commission critically argued that the agreement, which had been formed with Germany, was incompatible with the community law. This was owing to the reason that the agreement comprised a ‘limitation of benefit’ (LoB) clause, which eventually violated the ‘freedom of establishment’ as guaranteed by the EC Agreement. According to the judgment provided by the Court, the LoB clause in relation to the case law of Commission v Germany (Open Skies) can be apparently observed to create a link between the ownership and control of airlines. In this similar context, though the US was permitted to suspend, limit or withdraw the technical permissions or the operating authorisations of a particular airline, which is designated by the Federal Republic of Germany but an extensive part of effectual control and ownership was not vested in German nationals or in this member state of the EU. It can be affirmed that this particular scenario eventually violated the ‘freedom of establishment’ as guaranteed by the EC Agreement, resulting in affecting EU citizenship of Germany at large. It has been concluded by the court that the LoB clause was mainly associated with ‘direct source’ of discrimination, making it incompatible especially in terms of the ‘freedom of establishment’. It must be noted that this particular LoB clause was regarded as a sort of ‘nationality clause’, as it restricted or limited the benefits to airlines that were owned by the German nationals in a bulk manner. This notion of ‘nationality clause’ also represents the prevention of ‘national treatment’ in the host member state i.e. Germany, when the airline companies belonging to other member states tend to establish themselves in Germany. Specially mentioning, the LoB clause, which can also be recognised as ‘nationality clause’, affects EU citizenship of Germany in the form of raising extensive level of discrimination amid the German nationals and restricting in keeping pace with the worldwide trends that are followed towards air liberalisation. Moreover, the LoB clause also affects EU citizenship of Germany through rendering limited financial benefits, raising job losses and failure towards developing the aviation sector among others (Informa UK Ltd, 2008). In this similar perspective, certain other case laws also revealed that the EU-US Open Skies Agreement was incompatible with the EC Treaty in various respects that eventually affected EU citizenship of the Netherlands and the United Kingdom. In this regard, the case law concerning Commission v. Netherlands, which is also acknowledged as the ‘Dutch Open Skies Case’ portrayed that, the Netherlands-U.S. Air Transport Agreement was incompatible with the EC Treaty, affecting EU citizenship of Netherlands at large. This can be justified with reference to the fact that the commission alleged about the conduct of breach of EU law by Air Transport Agreements (ATAs) of the member state with the US. According to the commission, the EU law was mainly breached due to certain reasons that eventually affected EU citizenship of the Netherlands. These reasons were that the ATAs formed in the Netherlands engaged certain areas that fall within exclusive competence of the EU region and these agreements comprised LoB clauses that violated the EC Agreement principle of ‘freedom of establishment’. This particular principle and the LoB clause denote the exclusion of the member state i.e. the Netherlands from reaping the benefits of gaining enhanced ownership clause and greater airlines control among others, which in turn resulted in affecting EU citizenship of Netherlands by a certain degree (O’Shea, 2007). The other case law i.e. Commission of the European Communities v. the United kingdom of Great Britain also depicts the effect of the EU-US Open Skies Agreement upon the EU citizenship of the UK. This can be justified with reference to the fact that the taxation rules relating to ‘outbound dividend’ of the UK were questioned about their incompatibility with the community law prevailing in the nation. In relation to the case law, the commission identified the LoB clause i.e. failure to grant tax credits especially at the time when dividends are paid by an UK based company to other company belonging to various EU member states to be one of the vital factors affecting EU citizenship of the UK (O’Shea, 2007). Thus, by considering several case laws that have been discussed above, it can be apparently observed that the emergence of LoB clauses and the violation of EU based principles eventually affected EU citizenship of various EU member states such as Germany, the UK and the Netherlands among others. Conclusion From the above analysis, it can be affirmed that the prime intention for the formation along with the execution of the EU-US Open Skies Agreement was to liberalise worldwide aviation segment. This agreement appeared in the year 1997 and became much effective in the year 1998. This particular agreement eventually opened up business markets, wherein an airline belonging to the EU along with its diverse member states can fly to different points of the US. It has been observed that the formation of the aforesaid agreement not only supported in liberalising aviation segment, but also facilitated to develop international trade concerning airline industry by a considerable level. Specially mentioning, the agreement imposed considerable impact upon developing the overall airline industry in terms of generating effective air transportation system and enhancing the efficiencies relating to supply chain among others. However, apart from the favourable results obtained from the said agreement, it can also be viewed that the agreement affected EU citizenship of Germany through violating the principle of ‘freedom of establishment’ as guaranteed by the EC Agreement. Besides, a substantial portion of airline control along with ownership was not vested upon the German nationals, which can also be duly regarded as the other critical factor affecting EU citizenship of Germany. Similar perspective can also be viewed by taking into concern certain case laws, which portrayed that along with Germany, the EU-US Open Skies Agreement also affected EU citizenship of other EU member states such as the UK and the Netherlands at large. References Alford, E. & Champley, R., 2007. Overview. The Impact of the 2007 U.S.-EU Open Skies Air Transport Agreement, pp. 1-13. Craig, P. & Burca, G. D., 2011. EU Law: Text, Cases, and Materials. Oxford University Press. Hromadko, J., No Date. Market Watch. Story. [Online] Available at: http://www.marketwatch.com/story/lufthansa-says-no-plans-yet-for-new-routes-under-open-skies-deal [Accessed November 21, 2013]. Havel, B. F., 2009. Beyond Open Skies: A New Regime for International Aviation. Kluwer Law International. Informa UK Ltd, 2008. Limitation on Benefit (LoB) Clauses and the EU. International Tax Report, pp. 1-7. Karen, M. & Richard, T. S. J., 2007. The Impact of the EU-US Open Skies Agreement on International Travel and Carbon Dioxide Emissions. Working Paper, pp. 1-18. O’Shea, T., 2007. Netherlands-U.S. Air Transport Agreement Won’t Fly, ECJ Says. Tax Notes International, Vol. 46, NO. 8, pp. 1-5. Peterson, E. B. & Graham, T., 2008. Introduction. Open Skies: An Assessment of the US-EU Open Aviation Area Agreement, pp. 1-41. Read More