--------- JUST IN ... 01/09/17 08:10 AM EST
Our aviation trade rules with the EU unambiguously require that airlines abide by high labor standards and honor the respective labor laws on both sides of the Atlantic. NAI fails this test, and now is the time for the president to prove that his words hold weight and that commitments negotiated into trade agreements are not empty promises.
“I will not stand by when our competitors don’t play by the rules.”
Those were President Obama’s words in 2012 explaining his view of U.S. trade policy.
Following this same principle, the Obama administration negotiated a new air services agreement with the European Union (EU) which included, for the first time, a labor article to protect aviation workers on both sides of the Atlantic, and to ensure that the parties to the agreement all played by the same rules. The U.S. State Department at the time referred to that labor article (known as Article 17 bis) as “groundbreaking.”
But now, the President’s trade principles are failing a critical stress test. Late last year, the U.S. Department of Transportation (DOT) made the controversial decision to permit Norwegian Air International (NAI) to launch service into the U.S. in direct violation of this “groundbreaking” labor article.
The president’s decision on whether to intervene in the NAI case will define his aviation legacy.
The facts in the NAI case are clear and tell a chilling tale about the failures of U.S. trade policy. NAI is an Irish subsidiary of Norway-based Norwegian Air Shuttle, an airline that already has DOT authority to fly into the U.S. and currently serves several markets here. Why base NAI in Ireland you ask? Because in Ireland, NAI’s parent company can evade Norway’s tax and employment laws and escape collective bargaining obligations to its own employees. In Ireland it can instead hire pilots and flight attendants under short-term, individual employment contracts arranged by a hiring agency in Singapore.
Article 17 bis of the U.S.-EU Air Transport Agreement (ATA) was designed to explicitly bar this type of “flag of convenience” airline operation from benefiting from the agreement and gaining an unfair advantage over airlines that play by the rules. It states that “the opportunities created by the agreement are not intended to undermine labour standards,” and further states that this principle “shall guide the parties as they implement” the agreement. There could be no clearer effort to undermine labor standards than the operating scheme designed by NAI’s parent company.
Yet, in issuing the permit for NAI to begin flying to the U.S., the DOT coldly cast that provision aside stating that “Article 17 bis cannot be decisional in this proceeding.” With a quick swipe of the pen, the Obama DOT gutted the very “groundbreaking” labor protection that this administration previously championed. By ignoring NAI’s violations and refusing to enforce Article 17 bis, the DOT has defied the president’s core trade principle that declares our competitors will “play by the rules.”
So we have to ask, if Article 17 bis cannot be applied in this case, when can it be applied? In the waning days of his administration, the president has a chance to answer that question by stepping in and declaring that employee protections negotiated into trade agreements matter and will be enforced.
U.S. aviation is at a crossroads.
Decades ago our government sealed the fate of the U.S. Merchant Marine by opening the floodgates to the same type of forum shopping for low labor costs and standards that lies at the core of NAI’s business model. The result? Today, sadly, we have sweatshops at sea. Most of the ships calling at our ports are crewed by mariners working in low-wage and often dangerous conditions as global shipping giants earn billions in profits. Our maritime workforce is less than 10 percent of the size it was 50 years ago and only about 2 percent of shipping into U.S. ports is handled by U.S.-flag vessels.
Note: not coincidentally, NAI’s CEO honed his skills as a maritime lawyer.
President Obama can stop this. He can intervene and the secretary of Transportation can amend or revoke the DOT’s Dec. 3 order because it is in the public interest to do so. If President Obama fails to reverse this decision, it will be left to President-elect Donald Trump to ensure that our aviation trade agreements are fully enforced. Norwegian Air shouldn’t be rewarded for bad behavior — it should be forced to play by the same rules as every other airline in the transatlantic market.
Four years ago President Obama said he wouldn’t “stand by” when our competitors violate the rules dictated by trade agreements.
Our aviation trade rules with the EU unambiguously require that airlines abide by high labor standards and honor the respective labor laws on both sides of the Atlantic. NAI fails this test, and now is the time for the president to prove that his words hold weight and that commitments negotiated into trade agreements are not empty promises.