Financial Express print this



A quixotic dream of free trade taking flight
Frederick Smith
11/16/2005

NEARLY 400 years ago, Miguel de Cervantes, in relating his famous tale of gentle knight Don Quixote, coined the familiar phrase "the sky's the limit", implying limitless freedom.
Sadly, the expression means the very opposite when describing the economic regulation of global aviation services. The sky, it seems, is the limit -- and what a shame. To dream of global easing of air transport regulations defines you today as being, well, quixotic. Multiple rounds of negotiations have come and gone between American and European negotiators without a liberalised aviation pact between the European Union (EU) and the US.
But why? At a time when speed of delivery defines our communication -- whether it is the instantaneous world of the internet or fast and efficient express delivery services -- why can't politicians who espouse free markets and free and fair trade really mean it?
Businesses today transcend national borders and, in fact, stretch across hemispheres. The restrictive trade barriers erected decades ago to protect national interests do not apply anymore. Actually, they do nothing but hurt the consumer by stifling competition and making international commerce artificially onerous and difficult.
In an era of razor-thin margins, companies live or die depending on how effectively they get products to market. If a supplier or manufacturer's ability to react to changing consumer demands is restricted by outdated trading rules, the entrepreneurial spirit that drives a modern market economy suffers too.
The air cargo industry is absolutely critical to the health of the world's economy. While it accounts for only about 2.0 per cent of the weight of goods moved around the world, it represents more than 40 per cent of the dollar value and is growing.
That, coupled with the explosion of the internet, has provided for the first time in history a standardised, low-cost way for people anywhere to source and sell goods without regard to time and place.
FedEx has a long, proud history of promoting free and fair trade. For years we have strongly pushed for global air industry liberalisation, a stance that had its roots in US airline deregulation as well as increased global trade. We have already seen such liberalisation provide for cargo "open skies". Our regional hubs at Charles de Gaulle Airport in Paris and Subic Bay in the Philippines -- magnets for investment and facilitators of global trade -- would not have been possible without easing of the regulation of cargo services in both countries.
Despite some encouraging advances in the EU-US talks, the dynamics and momentum of the global supply chain simply will not allow the US and European Union to harbour petty disagreements any longer. This is a time for realism, not idealism, and both sides need to ensure that consumers do not pay the price of inaction because of a fear of bold ideas.
Let us break this decades-old impasse now and embrace the US Department of Transportation's decision to allow greater foreign participation in US carriers. And, likewise, give US carriers the opportunity to work out mutually beneficial arrangements with international carriers operating in Europe. This paves the way for businesses on both sides of the Atlantic to take advantage of the undeniable benefits afforded to airlines, consumers, passengers and communities when aviation liberalisation takes hold.
To delay, criticise and drag our collective feet will make matters worse. Too much work has been done and too much is at stake for the promise of a complete Open Skies agreement between the US and EU to disappear. We hope that trade officials from both sides approach the next round of talks in Washington with a sense of urgency and a desire to deliver an agreement that global businesses, consumers and communities deserve.
Today's businesses demand fast and efficient services, with competitive rates and worldwide connectivity, to move people and goods among global markets. It is time for political leaders on both sides of the Atlantic to prove to the world that their "free markets, free and fair trade" rhetoric is genuine. As with any big change, there might be some pain, but there will also be opportunities to embrace new and invaluable economic partnerships. By taking this next step, we can prove that in this new millennium the sky is indeed the limit.
...................................
The writer is chaftman, president and chief executive officer of FedEx Corp.
FT Syndication Service