VZCZCXRO9756
RR RUEHAG RUEHDF RUEHIK RUEHLZ RUEHROV
DE RUEHFR #1709/01 1171640
ZNR UUUUU ZZH
R 271640Z APR 07
FM AMEMBASSY PARIS
TO RUEHC/SECSTATE WASHDC 6819
INFO RUCNMEM/EU MEMBER STATES COLLECTIVE

UNCLAS SECTION 01 OF 03 PARIS 001709 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: EAIR ECON ETRD PREL FR
SUBJECT: CODEL OBERSTAR VISIT TO FRANCE, APRIL 3-6 2007 
------- 
SUMMARY 
------- 
 
¶1. (SBU) Chairman James Oberstar and seven members of the House 
Transportation and Infrastructure Committee visited France April 
3-6.  They met with the Minister of Transportation, the Minister 
Delegate for Trade, the Director General of Civil Aviation, as well 
as CEOs from Airbus, Air France and FEDEX Express.  They heard 
positive reaction to the U.S./EU Open Skies agreement, GOF concerns 
about U.S. draft legislation on 100% freight inspection, and 
Europe's growing interest in the environmental impact of 
transportation.  Tours of the Thalys TGV, Airbus and Fedex 
facilities, and a dinner hosted by counterparts from the French 
National Assembly rounded out their program. 
 
-------------------------- 
Minister of Transportation 
-------------------------- 
 
¶2. (SBU) Minister Perben hosted the delegation for breakfast on 
April 3.  He began discussion by noting France's strong support for 
the U.S./EU Open Skies agreement recently initialed in Brussels. 
Chairman Oberstar recognized the key importance of the 
trans-Atlantic market for aviation, and observed that there had been 
a frank discussion about foreign investment and control.  The new 
agreement was an improvement, but in his view restrictions on 
investment and control in U.S. airlines would remain. 
 
¶3. (SBU) Perben also raised French concerns about proposals for 100% 
cargo inspection, noting that France had a system that sought to 
secure the entire supply chain, effectively providing 100% 
inspection, including for flights to the U.S.  Chairman Oberstar 
observed that the U.S. was moving in the opposite direction: 9/11 
had changed our approach.  The ideal would be to provide a 
harmonized system for freight, similar to that which has been 
implemented worldwide post 9/11, a point echoed by Congressman 
Costello.  Perben also warned that plans for 100% screening of 
maritime containers would have serious economic consequences. 
Chairman Oberstar replied that Congress was aware of this, but Hong 
Kong had shown that it could be done.  Greater U.S. cooperation with 
France and EU was necessary both to improve technology and to create 
additional layers of security. 
 
¶4. (SBU) Congresswoman Fallon raised the issue of the proposed EU 
Emissions Trading Scheme (ETS) for aviation.  Chairman Oberstar 
observed that the U.S. had already made considerable reductions in 
emissions compared with Europe, and that U.S. planes were in any 
case a small part of an international problem that could not be 
approached by the EU in a unilateral manner.  The best solution 
would be via ICAO, an approach the EU had supported in the past for 
noise reduction.  Perben argued that the EU approach sought to use 
market incentives to encourage airlines to invest in 
emissions-reducing technology; Oberstar agreed that technology was a 
preferred means of addressing the problem, but underlined that the 
U.S. had real problems with EU approaches to noise or emissions that 
would hinder future development of air transportation. 
 
¶5. (SBU) Finally, Perben observed that France was in a phase of 
substantial investment in infrastructure, and foresaw a funding 
increase for rail and waterways of 40% over the next 6 years. 
Chairman Oberstar observed the U.S. was moving in the same 
direction, mentioning ambitious plans for new locks on the 
Mississippi as an example.  Perben indicated France was also looking 
to the private sector to help finance projected infrastructure 
development, and was studying ways of modernizing toll collection to 
assist with this. 
 
¶6. (SBU) Attendees on the French side were: Dominique Perben, 
Minister of Transportation and Equipment, Tourism and the Sea; 
Olivia Amozig-Bellot, technical counselor; Olivier Berthelot, 
technical counselor; Didier Lallement, Director General of Civil 
Aviation; Dominique Bureau, Director of Economic and International 
Affairs MOT, Aude Vermot-Gaud, Economic and International Affairs 
MOT, Patrick Vieu, Director of Rail and Mass Transit MOT; Patrick 
Paris, Director General of Roads, MOT.  Codel Oberstar was joined 
by Ambassador Craig Stapleton, FAA Senior Representative Lirio Liu, 
and Econoff. 
 
--------------------------- 
Minister Delegate for Trade 
--------------------------- 
 
¶7. (SBU) Minister Delegate for Trade Christine Lagarde hosted a 
breakfast meeting April 4.  She began the meeting by providing an 
overview of the current French presidential campaign, emphasizing 
the virtues of her UMP party candidate Nicholas Sarkozy and the 
faults, as she saw them, of Socialist candidate Segolene Royale and 
centrist Francois Bayrou.  She expressed doubts about the long-term 
viability of the Socialist Party given divisions between its left 
and center, and surprise at the popularity of Bayrou given his thin 
record of accomplishment.  In response to questions, she noted that 
Iraq was not a French campaign issue and that the real problems 
 
PARIS 00001709  002 OF 003 
 
SUMMARY 
------- 
 
faced by immigrants and the poor should not be confused with 
religious questions. 
 
¶8. (SBU) Turning to international trade, Lagarde praised cooperation 
between France and the U.S. on port security, protection of 
intellectual property, and the U.S./EU Open Skies agreement.  She 
warned that many details remained to be settled in the next 6 months 
after signature of the agreement, and that the UK would bear close 
watching for signs of backsliding.  Oberstar agreed that British 
Airways was losing an extremely lucrative monopoly over its slots at 
Heathrow, but that the EU was fully aware of the problem.  Oberstar 
concluded with his view that rather than super-consolidation of the 
U.S. market to 2 or 3 carriers, what it should aim for in coming 
years was greater competition between many carriers, an approach 
that Lagarde favorably characterized as "competition with 
regulation." 
 
¶9. (SBU) Attendees for the French were Christine Lagarde, Minister 
Delegate for Trade; Stanislaus Pottier, Director of the Minister's 
Cabinet; Philippe Pgorier, Diplomatic Advisor; David Emond, 
Technical Advisor; Philippe Bouyoux, Director of Economic Policy, 
Treasury and Economic Policy General Directorate.  Codel Oberstar 
was joined by Ambassador Craig Stapleton and Econoff. 
 
----------- 
Airbus/EADS 
----------- 
 
¶10. (SBU) Codel Oberstar met with Airbus CEO and European Aeronautic 
and Space Defense (EADS) co-CEO Louis Gallois April 4.  Chairman 
Oberstar noted Congressional concern about Airbus links to European 
government, and its benefiting from subsidies currently subject to 
litigation in the U.S./EU case before the WTO.  Gallois emphasized 
that Airbus remained interested in finding a compromise solution, 
and that it had suspended reimbursable loans for the A-350 in order 
to favor such a result.  He noted that on past loans such as for the 
A-320, Airbus paid the loan back and in addition paid royalties. 
For the A-380, repayments would be due upon delivery of the 
aircraft. 
 
¶11. (SBU) Gallois also emphasized the significant U.S. participation 
in Airbus activities.  It was a partner with GE and Northrup Grumman 
in the competition for a new U.S. military tanker plane; it sourced 
46% on average of its purchases in the U.S.; while it was in favor 
of the U.S./EU Open Skies agreement as favoring overall development 
of the market for aircraft it had no strong views on ownership and 
control of U.S. airlines. 
 
¶12. (SBU) On the future market for aircraft, Gallois noted that 
there was great uncertainty in the market, with some regions opting 
for smaller aircraft, but with environmental and airport constraints 
pushing in other cases for larger aircraft such as the A-380.  He 
noted the importance of environmental considerations in Europe, and 
the potential contributions of both new engine technology and 
improvements in Air Traffic Control (ATC) and management to reducing 
emissions.  Oberstar expressed his interest in a major redesign of 
the U.S. ATC system to take advantage of modern technology. 
 
¶13. (SBU) Airbus/EADS participants were Louis Gallois, CEO Airbus, 
Co-CEO EADS ; Nicolas Naudin, EADS; Jodie Moxley, Airbus North 
America; Joel Johnson, Advisor to Airbus North America; Rob Wrigley, 
Airbus North America.  Embassy participants were Ambassador Craig 
Stapleton; Thomas White, Acting DCM; Lirio Liu, Senior 
Representative, FAA; Econoffs. 
 
----------- 
Air France 
---------- 
 
¶14. (SBU) Jean-Cyril Spinetta began by hailing the U.S./EU Air 
Transport Agreement, noting that the step-by-step approach it 
envisioned was the right way to calm fears of disruptive 
consequences.  He noted that Air-France/KLM's U.S. alliance partners 
Northwest Airlines and Delta were both out of chapter 11, and that 
Air France and KLM would soon be seeking anti-trust immunity for an 
expanded Joint Venture involving both of its U.S. allies.  Chairman 
Oberstar indicated that it was his belief that the USG was ready to 
consider such an application favorably.  Spinetta said that the 
U.S./EU agreement, by enshrining the notion of a "European Carrier" 
could provide the stable legal framework a company such as his, 
formed by the merger of French and Dutch Airlines, needed. 
 
¶15. (SBU) Spinetta predicted further cross-border consolidation in 
the EU market, with larger carriers emerging and increasingly seeing 
themselves as global players.  He believed European consumers would 
still have considerable choice, provided all cities retained good 
network connections.  On ETS, he underlined the overwhelming 
importance of the cost of fuel, which would force airlines to renew 
fleets and thereby increase fuel and environmental efficiency. 
 
PARIS 00001709  003 OF 003 
 
SUMMARY 
------- 
 
 
¶16. (SBU) For Air France attendees were: Jean Cyrill Spinetta CEO; 
Guy Tardieu, Chief of Staff; Patrick Alexandre, Executive VP 
International Commercial; Bruno Matteu, Executive VP Marketing and 
Network Management; Dominique Patry, Executive VP International 
Affairs and Alliances; Charles Yvinec, Director of Security.  Codel 
Oberstar was joined from the Embassy by: Thomas White, Acting DCM; 
Lirio Liu, FAA Senior Representative; Nouri Larbi, TSA 
Representative, Econoff. 
 
----- 
DGAC 
----- 
 
¶17. (SBU) At DGAC Codel Oberstar was greeted by the newly named 
Director General of Civil Aviation Didier Lallement, who praised 
Franco-American cooperation on civil aviation issues, and in 
particular on aviation security, mentioning last summer's roll-out 
of new regulations on liquids and gels as a good example of the 
benefits of harmonizing approaches to aviation security. 
 
¶18. (SBU) Codel Oberstar also received a lengthy brief on the 
organization and financing of air navigation services in France. 
DGAC had two budgets: a trust fund of some 1.8 Billion Euros, and a 
general budget of 170 Million Euros.  Revenue came from passenger 
taxes, user fees, and charges to operators for Air Navigation 
Services.  DGAC was still transitioning to a system of full recovery 
of costs for safety and supervision (e.g. pilots and mechanics 
licenses), and currently recovered about 50% of costs.  It had met 
resistance due to the occasional lack of transparency of how costs 
related to services, especially from the general aviation sector. 
The Trust Fund was used to finance Air Navigation Services, with 
transfers from the general budget to compensate for services 
provided for free or at a reduced rate (e.g. to exempt military 
aircraft, or flights from overseas departments).  As the Parliament 
moved to a performance based budgeting system, DGAC's performance 
would be evaluated based on indicators such as its safety record, 
traffic delays, and benchmarking of charges with other European 
partners. 
 
¶19. (SBU) Attendees for Civil Aviation Authority (DGAC): Didier 
Lallement, Director General; Paul Schwach, Director of Strategic and 
Techical Affairs; Marc Hamy Director of Aviation Navigation 
Services; Florence Rousse, Director of Economic Regulation; Ren 
Gaudin, Director of Aeronautical Programes and Cooperation; Maxime 
Coffin, Director of Inspections and Safety Department; Jean-Michel 
Bour, European and International Affairs.  From the American 
Embassy: Stuart Dwyer, Economic Counselor; Lirio Liu, Senior FAA 
Representative; Nouri Larbi, TSA Representative; Econoff. 
 
---------------------------------------- 
Thalys, Airbus, Fedex, National Assembly 
---------------------------------------- 
 
¶20. (SBU) Codel Oberstar also had the opportunity to tour-and 
Chairman Oberstar to take the helm of-the Thalys TGV train on the 
Brussels Paris leg of their trip.  They visited Airbus Facilities in 
Toulouse April 3, where they observed the A-380 final assembly line, 
and learned about Airbus' plans to overcome the plane's 
well-publicized production delays, as well as the company's belief 
that demand for the large-capacity plane would grow due to the 
continuing growth of traffic and airport and environmental 
constraints. 
 
¶21. (SBU) April 4th Codel Oberstar visited Fedex's European hub at 
Charles De Gaulle airport, which since its establishment in 1999 has 
become the largest Fedex hub and investment outside the U.S.  Fedex 
Express CEO Charles Bronczek highlighted Fedex's plans to integrate 
operations with France's high-speed rail network, for which it has 
joined an association with other interested parties (CAREX). 
Finally, the delegation was hosted by counterparts from the French 
National Assembly (Deputies Yves Coussain and Axel Poniatowski) to a 
dinner in the President of the Assembly's residence April 4. 
 
¶22.  (U) This cable was cleared by CODEL Oberstar. 
 
STAPLETON