VZCZCXRO4882
RR RUEHAG RUEHDF RUEHIK RUEHLZ RUEHPOD RUEHROV RUEHSR
DE RUEHBS #1876 3471439
ZNR UUUUU ZZH
R 121439Z DEC 08
FM USEU BRUSSELS
TO RUEHC/SECSTATE WASHDC
INFO RUCNMEU/EU INTEREST COLLECTIVE
RUCNMEM/EU MEMBER STATES COLLECTIVE
RUEHSW/AMEMBASSY BERN
RUEHMO/AMEMBASSY MOSCOW
RUEHOT/AMEMBASSY OTTAWA
RUEHSQ/AMEMBASSY SKOPJE
RUEHTI/AMEMBASSY TIRANA
RUEHGA/AMCONSUL CALGARY
RUEHHA/AMCONSUL HALIFAX
RUEHKW/AMCONSUL KRAKOW
RUEHMT/AMCONSUL MONTREAL
RUEHLN/AMCONSUL ST PETERSBURG
RUEHON/AMCONSUL TORONTO
RUEHVC/AMCONSUL VANCOUVER
RULSDMK/DEPT OF TRANSPORTATION WASHDC

UNCLAS BRUSSELS 001876 
 
SENSITIVE 
SIPDIS 
 
STATE FOR EUR/ERA-ROCKWELL, EEB FOR BYERLY, FINSTON, 
WALKET-TIGHE 
MONTREAL PASS ICAO 
 
E.O. 12958: N/A 
TAGS: EAIR ECON EUN CA
SUBJECT: EU AND CANADA REACH AIR TRANSPORT AGREEMENT 
 
¶1.  (SBU)  On December 9, the EU and Canada announced they 
had concluded negotiations and initialed a comprehensive air 
transport agreement. It will replace the existing network of 
bilateral aviation arrangements, liberalize direct air 
services between Canada and EU member states, allow cargo 
carriers to fly onward to third countries, and extend 
coverage to Cyprus, Estonia, Latvia, Lithuania, Luxembourg, 
Malta, Slovakia and Slovenia. The agreement will come into 
force upon formal signature sometime next year, most likely 
before the next EU-Canada summit which is expected to be held 
late in the Czech presidency, perhaps in May or June. 
 
¶2.  (SBU)  EU officials are highlighting the possibility for 
future increased foreign investment since the agreement 
structure links additional market opening to greater 
investment freedom.  Current Canadian limits on foreign 
voting equity are set at 25%, but in January Canada's 
Competition Bureau recommended raising the limit to 49% -- a 
move that can be taken without enacting new legislation and 
something the Canadian government is likely to do.  That 
moment may well be delayed by month as Canada works through 
its current political upheavals.  At that point, additional 
traffic rights will be granted including allowing cargo 
carriers to operate services to third countries from the 
other party without connecting to their point of origin. The 
agreement envisions the possibility of two additional phases 
that could lead to a full Open Aviation Area (OAA) between 
the EU and Canada, with the ability to freely invest, 
establish and control operations in each other's territory, 
but this would require changes in the Canadian legislation. 
Canada is under no commitment to do so, and it is our 
understanding that there is no intention to undertake changes 
anytime soon.  According to news reports, Canadian pilots 
adamantly oppose allowing European air carriers to provide 
domestic services in Canada and to European control of 
aviation companies in Canada. 
 
¶3.  (SBU) In line with the US-EU agreement, a joint committee 
will be set up to oversee implementation of the agreement and 
to provide a regular forum for discussion.  The EU and Canada 
have also pledged to cooperate on safety, security and 
environmental issues in the aviation sector. 
 
¶4.  (SBU)  The new air transport agreement will significantly 
expand the rights of Canadian and EU carriers to operate 
freely in the market. Despite the current economic situation, 
it is expected to facilitate growth in trade, investment, and 
tourism by providing additional opportunity, choice and 
flexibility to businesses, carriers, and consumers; and by 
increasing competition. In 2007, nine million passengers 
traveled between Canada and the EU and the agreement should 
result in increased traffic.  Given the close integration of 
US-Canada aviation, the new, more open, EU-Canada agreement 
should benefit Americans as well. 
 
¶5.  (U) Additional information is available at: 
www.ec.europa.eu/transport 
www.tc.gc.ca 
 
MURRAY 
.