The Trump administration is holding off on retaliating for the allegedly unfair subsidies that airlines in Qatar and the United Arab Emirates receive from their governments — but it has warned that such steps may be coming if it doesn’t see "sufficient progress" soon.
At issue is whether state-owned Persian Gulf airlines are being unfairly subsidized by their governments as most major U.S. airlines and their labor unions allege. For now, the U.S. will undertake informal discussions with the two nations, but if that doesn't yield fruit the administration could reopen or possibly even rip up its aviation agreements with them — a step that could further roil U.S. relations in the region at a moment of geopolitical turmoil.
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The State Department outlined its plans in a Tuesday morning meeting with industry and labor groups. POLITICO separately obtained an internal summary of a September meeting with top administration officials that shows the administration is prepared to take much more aggressive actions than informal discussions if necessary.
The summary document notes that "additional steps" may be taken "if sufficient progress is not made by a date certain." No specific date is specified, but a U.S. official told POLITICO that the informal phase will last a couple of months before moving forward with stronger steps.
The Trump administration's preliminary decision to talk informally mimics the approach employed by former President Barack Obama — namely, continuing informal discussions, rather than opening more formal "consultations." However, sources close to the U.S. airline industry said it views the Trump administration as much more serious about a resolution favorable to its side, pointing to Secretary of State Rex Tillerson’s involvement.
The Air Line Pilots Association, which represents pilots at most major domestic carriers, echoed that praise for the administration's "preliminary action."
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"It is our expectation that this action will lead to the full enforcement of our Open Skies trade agreements, and an end to these unfair trade practices that have hurt the U.S. economy and American workers,” the union said in a statement.
The preliminary decision caps months of speculation over how the Trump administration will approach so-called Open Skies agreements with the UAE and Qatar. Major airlines like Delta Air Lines, United Airlines and American Airlines have been pressuring the administration to take action, arguing they can’t compete with the Gulf carriers’ service. Some U.S. carriers stand in opposition, however — including JetBlue.
The Open Skies agreements — which the U.S. has signed with dozens of countries — allow airlines to operate internationally with limited interference. U.S. carriers had hoped the administration would reopen the agreements in a bid to stop the UAE and Qatar from allegedly subsidizing their carriers.
The September document, which summarized a meeting in the Situation Room among top administration officials, says the officials agreed the U.S. should “seek disciplines on subsidies, transparency and state-owned enterprises” as well as a better understanding of Gulf carriers’ plans for additional routes.
According to the document, the officials said the best approach to these talks is through bilateral discussions rather than through the International Air Traffic Fair Competitive Practices Act, which would allow the Transportation Department to take action in response to anti-competitive behavior.
“Deputies agreed that it is necessary to provide the State Department with maximum leverage during these bilateral discussions,” the document says. “Deputies agreed that if sufficient progress is not made by a date certain (e.g., the end of the year), additional steps should be considered, which could include Article 15.”
Article 15 of the Open Skies agreement refers to taking steps to terminate the deal. Another option on the table, according to sources: Article 13, which initiates the "consultations" process, whereby the treaty can be renegotiated.
During the informal discussions, the Trump administration plans to discuss with the UAE and Qatar issues like state subsidies and how they can hurt competition, transparency in finances and other international service issues, according to sources briefed on the issue.
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Attendees at Tuesday's meeting included officials from U.S. airlines, the Air Line Pilots Association, the Association of Flight Attendants-CWA and the U.S. Travel Association.
The Obama administration informally discussed Open Skies with the two Persian Gulf nations last year. Those technical discussions did not result in action, and lobbyists tracking the issue were already raising concerns that the UAE and Qatar have little incentive to come to the table and rethink their approach to their state airlines.
Senior Trump administration officials have been meeting for months to chart a path forward. According to the document, White House trade adviser Peter Navarro and Everett Eissenstat, the deputy assistant to the president for international economic affairs and a top official on the National Economic Council, are leading the discussions.
The State Department and the White House did not immediately respond to a request for comment.
