Policy Implications and Recommendations to the Government and Industry

It was premised in Chapter 1 that formulating an international air transport policy is a binary consideration of domestic economic circumstances and international issues. International air transport policy is thus not established in isolation and is evidently a fragment of a nation’s overarching trade policy. Under the parameters of the WTO, trade is meant to absolve discriminatory and preferential practices and ensure fair market access. Similar parameters are not substantively entrenched in international air transport. Evidently, to the extent that the economic and commercial traffic rights have been subject to bilateral negotiation in air transport, there has generally been a greater propensity for nations to use air transport as a medium through which to exert leverage in their overarching national trade policy and even in relation to their geopolitical objectives. For example, concerted efforts by the USA to liberalise with China’s peripheral neighbours exert a similar liberalisation force on China. While it is true that China had been slow to open and liberalise in comparison with other major air transport markets, the CA AC’s dominance for decades as the agency of record for administering China’s international air transport policy has enabled it to develop a cohesive policy stance which fulfils the respective national objectives as set by the central government.

The structure of China’s political economy has been typified by waves of reform which have encouraged its air transport policy to be non-fragmented, gradual, and iterative. For the most part, China’s international air transport policy has been cohesive across the counterparts examined. This has emerged from the autonomy which the CAAC has enabling it to ensure a cohesive policy. With respect to trade in other services, such as financial services, cohesiveness in trade policy would be maintained through the dictates of the country’s international obligations. A counterpart nation would reasonably expect fairness and equity in market access, and through supranationally agreed dispute mechanisms, can appoint onto itself the right to challenge a member state’s policy where that counterpart nation suspects it is being disadvantaged by preferential or discriminatory treatment. For example, in 2012, Panama lodged a complaint with the WTO asserting that provisions established in Argentina’s domestic law targeted at services and providers from jurisdictions which did not exchange information with Argentina was discriminatory. Inter alia, the measure imposed additional financing, registration, and taxation requirements. The essence of this reference in relation to the discourse herein is typified through the recourse available to the aggrieved nation which perceived its rights to fair and equitable market access were infringed.

Without the adoption of a supranational agreement which facilitates a principle akin to that of the most favoured nation principle in international trade which enshrines practices of fair trade, nation states also afford onto themselves the liberty to determine the extent of their accessibility in their international air transport policy. Even in a context where international air transport policy is fashioned on the basis of reciprocity, it still remains within the state’s domain to determine the scope of its liberalism even if the bilateral partner is committed to absolving all restrictions to its own market. This is often reflected in traffic limits applied in key/hub cities.

In the context of the negotiations examined, China’s approach and the autonomy of the CAAC serve as internal barometers to preserve the integrity of its internal air transport policy position regardless of the counterpart nation. From China’s perspective, this could enhance its ability to ensure that it does not bind itself to an international air transport agreement in relation to one nation that is less favourable than others because of vacillations in prior policy positions driven by excessive extraneous influences. When there is interference or decision-making is too pluralistic, equality is undermined. For example, where international air transport serves as a trade-off towards another diplomatic end, this does not mean that ceteris paribus, the same outcome could be achieved.

International aviation policy in China has thus far principally developed in keeping with how the CAAC interpreted its mandate to enable the national development objectives as set forth by the central government. This is important for understanding how the commercial policy adopted by the central government can be executed cohesively when channelled through a single entity. Trade policy in aviation is applied conversely to other industries since it is applied at the bilateral level. In cases like this, the less pluralistic the decision-making, the more cohesive the application of the trade policy.

Decision-making is an art rather than a science. Process affects substance (Cohen et al., 2003). By identifying the factors that have an influence on the policymakers, and examine how these factors have affected the policy goals, we attempt to unwrap the black box of China’s international air transport policy-making and approach to liberalising its international air transport market. The following recommendations are made to the government and industry:

• The policymaking process needs to be systemised and institutionalised.

A set procedure needs to be developed with clear guidelines available for stakeholders to follow. The set procedures would help to avoid any arbitrary decisions;

  • • Lobbying channels need to be formalised to allow various views and opinions to be lodged. The formalised channels would provide a platform for debate for the best possible policy outcome;
  • • Industry and stakeholders should approach policymakers through official channels. It would avoid the situation where voices are conveyed through personal contacts which might produce biased personal preferences;
  • • In presenting the case, industry and stakeholders should base their arguments more on objective and comprehensive market research to best reflect their interests rather than be simply responding to the central government’s call. This could avoid the unnecessary waste of resources.
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