VZCZCXRO7264
RR RUEHCN RUEHGH RUEHVC
DE RUEHBJ #2786/01 1160009
ZNR UUUUU ZZH
R 260009Z APR 07
FM AMEMBASSY BEIJING
TO RUEHC/SECSTATE WASHDC 7233
RULSDMK/DEPT OF TRANSPORTATION WASHDC
INFO RUCPDOC/USDOC WASHDC
RUEHOO/CHINA POSTS COLLECTIVE
RHEHNSC/NSC WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RUEHBS/USEU BRUSSELS
RUEHMT/AMCONSUL MONTREAL 0421

UNCLAS SECTION 01 OF 03 BEIJING 002786 
 
SIPDIS 
 
SIPDIS 
SENSITIVE 
 
STATE ALSO FOR EB/TRA/AN ENGLE AND HORWITZ 
STATE ALSO FOR CA/VO 
STATE PASS USTR FOR STRATFORD, ALTBACH, CELICO 
TRANSPORTATION FOR X1, X40 
TRANSPORTATION FOR OFFICE OF INTERNATIONAL AVIATION ? 
OPPLER AND GLANTZ 
USDOC FOR ITA/OCEA/MCQUEEN 
USDOC FOR ITA DAS KASOFF 
NSC FOR TONG, SHRIER 
TREASURY FOR OASIA/ISA ? HAARSAGER, WINSHIP, CUSHMAN 
TREASURY FOR DEPUTY CHIEF OF STAFF SMITH 
TREASURY FOR AMBASSADOR HOLMER, DANIEL WRIGHT 
MONTREAL FOR USICAO 
 
E.O. 12958: N/A 
TAGS: EAIR ECON BEXP PGOV OVIP SECRETARY PETERS CH
SUBJECT: TRANSPORTATION SECRETARY PETERS? MEETING WITH 
MINISTER OF GENERAL ADMINISTRATION OF CIVIL AVIATION OF 
CHINA YANG YUANYUAN 
 
¶1. (SBU) Summary.  Secretary of Transportation Mary 
¶E. Peters discussed a broad range of bilateral 
aviation issues during her meeting with General 
Administration of Civil Aviation of China (CAAC) 
Minister Yang Yuanyuan on April 13, 2007.  The 
meeting included a signing ceremony for a record of 
discussion on economic regulation that will broaden 
the scope of the United States-China Aviation 
Cooperation Program (ACP) in China.  End Summary. 
 
Next Steps in Advancing Aviation Liberalization 
Talks 
--------------------------------------------- ------- 
- 
 
¶2. (SBU) Secretary Peters began the meeting by 
stating that the first Strategic Economic Dialogue 
(SED) included an agreement to further liberalize 
air transport between our two countries.  Two rounds 
of negotiations have been completed since the SED, 
but more progress is needed to accomplish the 
liberalization goal.  Secretary Peters noted that 
there is another round of negotiations scheduled for 
the end of April.  Washington hopes Beijing will 
assemble a negotiating team that is fully empowered 
to make a deal.  Secretary Peters said that 
meaningful progress needs to be made this year to 
address growing criticism in the United States that 
China is dragging its feet on liberalization. 
 
¶3. (SBU) Minister Yang stated that CAAC is also 
under pressure to make progress on further 
liberalization.  CAAC will empower its delegation to 
negotiate accordingly.  Minister Yang said that 
Beijing has several concerns that it hopes 
Washington will keep in mind during the negotiations. 
First, there is an imbalance between the development 
of the two countries' airline industries; second, 
China so far lacks adequate economic regulations to 
permit full market liberalization of its domestic 
air transport industry; third, China's aviation- 
related infrastructure remains immature and needs 
further development; and finally, Beijing has safety 
concerns given that more than 400 foreign flights 
enter China daily.  Minister Yang stated that 
Beijing recognizes that further liberalization will 
help to solve some of these problems, but Beijing 
hopes Washington will demonstrate some flexibility 
during the negotiations in recognition that these 
problems cannot be solved overnight. 
 
Cooperation on Regulations, NGATS and Emissions 
Policies 
--------------------------------------------- -- 
 
¶4. (SBU) Secretary Peters thanked Minister Yang for 
CAAC's empowerment of its negotiators.  Washington 
recognizes that China's aviation industry is 
concerned about the effects of further 
liberalization and that China's economic regulations 
are still evolving.  Secretary Peters stated that 
Washington is willing to share its experience in 
deregulating the United States' aviation industry. 
United States-China Aviation Cooperation Program 
(ACP) would be a good venue to explore this 
cooperation.  Secretary Peters stated that the use 
of United States Government money to fund the 
program demonstrates Washington's commitment to the 
ACP.  Beijing and Washington should discuss 
 
BEIJING 00002786  002 OF 003 
 
 
expanding the ACP to cover other issues, such as 
economic regulation. 
 
¶5. (SBU) Minister Yang stated that China looks 
forward to working with the United States in the 
development and implementation of the next 
generation air transportation system (NGATS). 
Beijing hopes to cooperate with Washington on the 
development of the standards and regulations that 
will accompany NGATS.  Secretary Peters stated that 
NGATS is DOT's highest legislative priority in 2007. 
The United States and China can help each other and 
learn from one another as NGATS is developed and 
fielded.  Secretary Peters noted that the United 
States uses technology as a means to mitigate the 
impact of air space limitations, such as those 
resulting from military restrictions of certain 
airspace.  Washington hopes Beijing is making 
similar judgments as it manages China's air space. 
 
¶6. (SBU) Minister Yang stated that another area of 
cooperation should be in aviation emissions. 
Washington and Beijing collaborate in the 
International Civil Aviation Organization (ICAO) to 
ensure that appropriate, responsible measures are 
taken on this issu.  Secretary Peters stated that 
Washington is concerned that aviation emission 
proposals by the European Union (EU) if enacted 
would hurt aviation industry growth.  Washington 
agrees with Beijing that the ICAO assessment is the 
best way forward to address the emissions issue. 
 
Opens Skies Treaty with EU and Doing Business in 
China 
--------------------------------------------- ------- 
-- 
 
¶7. (SBU) In response to a question from Minister 
Yang, Secretary Peters explained that the recent 
signing of an Open Skies agreement with the European 
Union is a great opportunity for the aviation 
industry in the United States and Europe.  Airlines 
from both sides will have much greater access to one 
another's markets.  Secretary Peters stated an 
important aspect of the agreement is that it will 
not be enacted until March 2008.  This will allow 
the aviation sector and respective governments to 
fully prepare for implementation.  Secretary Peters 
also noted that Washington and Brussels negotiated a 
follow-on phase to the initial agreement that will 
allow for more liberalization in the future. 
 
¶8. (SBU) Secretary Peters stated that several United 
States companies have expressed concerns about their 
business opportunities in China.  Motorola would like the 
opportunity to bid on airport security projects; Boeing 
is looking to expand its aviation sales; Sabre Holdings 
would like to operate aviation services; and Mesa 
Airlines hopes that Beijing will continue to support its 
efforts to offer domestic airline service in China. 
Minister Yang stated that Beijing supports Mesa's bid to 
start this service, but for now, there are no slots 
available in Beijing.  CAAC is recommending that Mesa 
begin its service in Xian and expand to Beijing in the 
future, perhaps through slots that may become available 
at military air fields.  Minister Yang noted that 
Motorola and Boeing are both very famous brands in China 
and the Chinese Government supports the expansion of 
their respective businesses in China.  In fact, CAAC 
 
BEIJING 00002786  003 OF 003 
 
 
wants to hold a seminar between Boeing and the Chinese 
aviation industry on fleet planning requirements beyond 
¶2010. 
 
United States Participants 
-------------------------- 
 
¶9. (U) United States Government attendees at the 
Secretary's meeting on April 13 were: 
 
SIPDIS 
 
Secretary of Transportation Mary E. Peters 
 
SIPDIS 
Ambassador Clark T. Randt, Jr. 
Assistant Secretary for Aviation and International 
Affairs Andrew Steinberg 
Deputy Chief of Staff Simon Gros 
Assistant to the Secretary for Policy Jana Weir 
Assistant to the Secretary for Public Affairs Sarah 
Echols 
Special Assistant to the Secretary for Scheduling and 
Advance Brooke Evans 
Embassy Special Assistant to the Ambassador Michael Crain 
Embassy Economic Section Trade and Investment Policy Unit 
Chief Eric Madison 
Embassy Economic Officer Brian Jones (note taker) 
Embassy Economic Officer Kamal Latham 
Embassy Economic Officer Brian Klein 
Embassy Economic Officer Michael Pignatello 
 
Chinese Participants 
-------------------- 
 
¶10. (U) Senior Chinese Government attendees included: 
 
Minister of General Administration of Civil Aviation of 
China YANG Yuanyuan 
CAAC Vice Minister YANG Guoqing 
CAAC Director General of International Affairs and 
Cooperation LI Jiangmin 
 
¶11. (U) Secretary Peters? delegation has cleared this 
report. 
 
RANDT