Cablegate: Members of Transport Committee Appear Hostile To

This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS OTTAWA 001374

SIPDIS

STATE FOR WHA/CAN - ALAN HOLST, EB/TRA - JON BYERLY

STATE PASS USTR FOR SAGE CHANDLER

TRANSPORTATION FOR OST/IA (EDDIE CARAZO, MARY STREET, SUSAN
MCDERMOTT)

COMMERCE FOR 4320/MAC/WH/ONIA (BASTIAN, WORD)

FAA FOR LEEANN HART

TSA FOR SUSAN WILLIAMS

SIPDIS

E.O. 12958: N/A
TAGS: EAIR EINV CA
SUBJECT: Members of Transport Committee appear hostile to
liberalization

REF: 2004 Ottawa 3144

1. On May 4 Canada's Commissioner of Competition, Sheridan
Scott, addressed the House of Commons Standing Committee on
Transport as part of that Committee's on-going examination
into the liberalization of civil aviation in Canada. Emboff
was surprised at the extent to which MPs on the committee
opposed liberalizing the aviation industry.

2. Scott was responding to reference questions posed to the
Competition Bureau by Transport Minister Lapierre. The
Bureau endorsed and presented the case for competition.
Scott noted that the Competition Bureau supports the
elimination of all ownership restrictions, with a good first
step being to raise the current 25% limit on foreign
ownership to 49%. The Competition Bureau also supports
"rights of establishment," i.e. allowing carriers to be
established within Canada by foreign investors, as well as
reciprocal Cabotage. Scott said that the current air
services agreement with the USA has led to important
benefits and substantial growth. At a minimum, she said,
the GOC should seek "a U.S.-style open skies agreement
including cargo co-terminalization." Competition Bureau
support for liberalization is not new; these policy
prescriptions have been a consistent message from the
Competition Bureau since 1999.

3. MP's from all four parties responded with more or less
hostile questions, and none seemed persuaded by the
witnesses' replies. Indeed it appeared that foes of
liberalization had won the day on shaping the MP's opinions
on the matter. Conservative Jim Gouk asked "Can you protect
us from another Jetsgo experience? How will you stop
airlines from selling tickets below cost right before they
cease operating?" The Bloc Quebecois MP Caroline St-Hilaire
and New Democrat Bev Desjarlais were concerned about
potential loss of service from smaller cities and towns and
also, asked how liberalization would help airlines that are
already in financial difficulty. Liberal Raymond Bonin
posed the question "What's so wrong with having a dominant
player?", and added, without irony "It's good for
consumers."

4. Comment: The Committee MP's apparent disdain for
liberalization may not matter in the larger scheme of things
since political pundits prognosticate that this Parliament
has only about 2 weeks left to live before an election is
called. If an election is called, this session of
Parliament ends, all legislation before Parliament dies, and
all Committees disband (and no air liberalization report
will be produced). Nevertheless, we found the level of
skepticism surprising; the next Transport Minister may have
his work cut out for him persuading MPs of the virtues of
open skies. End Comment.

Dickson

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