Prez: Press Japan To Open Its Skies
<H1>Prez: Press Japan To Open Its Skies</H1> When President Clinton meets in Tokyo for talks with Prime Minister Hashimoto, the two leaders are expected to formalize an agreement hammered out last month to open and expand the air cargo market between the United States and Japan. This success gives the President an opportunity to press Japan to begin talks on liberalizing the larger market for passenger aviation. It is an opportunity he can't afford to pass up.
The agreement that now regulates passenger air travel between the United States and Japan is woefully restrictive. Signed in 1952, it severely limits the cities and regions that may be served.
For countless businesses, scores of cities and millions of consumers in both countries, the current system imposes incredibly high costs. Flights between the U.S. and Japan cost, on average, from 25 percent to 60 more per passenger mile than flights between the U.S. and most other foreign destinations.
Among those paying needlessly high costs are the citizens and businesses of California. The artificial, regulatory limits on U.S.-Japan flights are putting a crimp into Japanese tourist visits to the state. California-bound Japanese tourists increasingly are being displaced on Japan-to-California flights by business travelers who pay substantially higher fares.
A study by Coopers & Lybrand estimates that if expanded U.S.-Japan air service lowered fares by just 10 percent, at least 129,000 more passengers would fly each year between Japan and California, increasing economic activity in the state by at least $637 million per year. If, as is plausible under a liberalized aviation market, fares dropped by 25 percent, California would gain at least $1.9 billion in annual economic activity, while 273,000 more passengers would fly between Japan and California.
Benefits of more competitive air travel between the United States and Japan would have effects throughout the U.S. economy. Japan is our second largest trading partner. The U.S., as a whole, sells as much to Japanese consumers and businesses as to Britain, France, Italy and Spain combined.
Japan is a particularly important market for many of our largest growth industries, including high technology. In this country, affiliates of Japanese companies employ hundreds of thousands of Americans and invest billions in the U.S. economy. The U.S.-Japan passenger aviation market, with more than twice the origin and destination traffic of Korea, Taiwan and Hong Kong combined, is the most important trans-Pacific market of all. Coopers & Lybrand estimates that a liberalized accord on air travel would increase U.S. economic activity by at least $9 billion annually.
President Clinton's successful new deal on air cargo with Japan is based on a simple formula: the preservation of existing rights and expansion of the market. We now have the formula and the momentum we need to put passenger issues on the table. We can preserve our U.S. carriers' existing rights in the Japan market while expanding this market, just as we did on cargo. New passenger talks now offer the best means of promoting U.S. interests in the Asia-Pacific region now and into the future.
If we do nothing, history teaches us that the U.S.-Japan aviation relationship may grow more contentious. We simply cannot afford to cling to an outdated agreement that restricts the size of the U.S.-Japan aviation market.
The passenger aviation agreement with Japan is the biggest remaining barrier to open and efficient trade and tourism between our countries. The most important achievement President Clinton could bring about in his Tokyo visit would be to launch a formal process for tearing down that trade barrier.
Consumers on both sides of the Pacific need more flights by more airlines from more cities. With additional competition and broader choice, fares will decrease and economic activity will grow.