TED Case Studies

European Commission: Silencing the Hushkits


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I. Identification

1. The Issue

To curb excessive air and noise pollution due to civil aircraft, the European Commission are considering a unilateral increase in stringent regulations which would have a detrimental effect on the US aircraft industry.  The new regulations, if they do eventually become law, could ignite a trade war between the US and the European Union, because the US House has recently passed a bill which could keep the French-British Concorde from landing in the US.  The reciprocal nature of the bill, combined with the recent banana trade war which just ended favorably for the US, could possibly launch the two countries into a new trade war.  Currently there is a delay in the proceedings, a chance for the United States and the EU to have some "breathing space" while they try to agree upon a common policy.

2. Description

The European Commission (EC), because of increasing pressures by its constituents, is considering new legislation which would limit aircraft noise much further than the international standards already in place.  This legislation, which is currently on hold for the EC representatives, comes at a time when the trade relations between the United States and the EC member states is strained.  The European Commission, which claims that the legislation is merely aimed at cutting noise and air pollution, would mainly affect the US aircraft industry and US air commerce services.

The current international noise-level standards, established by the International Civil Aviation Organization (ICAO), distinguishes between three differnt categories of aircraft based on noise pollution:  Stage 1 aircraft, Stage 2 aircraft, and Stage 3 aircraft.  (FAA Noise Standards)  Stage 1 aircraft, the loudest and most polluting aircraft category, are no longer in use.  The main aircraft in use today is the Stage 2 aircraft fitted with an aircraft silencing apparatus known as a hushkit.  When a hushkit  is installed on a Stage 2 aircraft and it meets Stage 3 noise requirements, the aircraft is generally considered to be Stage 3 aircraft, and it is implied that it would be viewed by everyone as a Stage 3 aircraft.  Although it is up to the individual countries to pass legislation regarding noise pollution requirements, the signed members of the ICAO normally recognize the standards established by the organization.

The legislation, if passed by the EC, would no longer recognize the international standards established by the ICAO.  The legislation would place a freeze on all airplanes which need hushkits to reach the Stage 3 category, which means that planes operating in Europe would not be forced out of service, but no more would be allowed to enter Europe.  The policy would phase out hushkitted planes rather than keep them from operating.  If the legislation would pass in its original form, no more hushkitted airplanes would be allowed to enter Europe after April 1, 2002.  (Financial Post, 3/13/99)

The European Commission claims that the legislation to ban the hushkitted aircraft is completely based upon environmental principles.  According to the commission, aircrafts which use hushkits do not decrease noise pollution very well, and there is an economic ramification as well.  The commission also said that, based upon an analysis of hushkitted aircraft, air pollution increases because hushkits cause the aircraft to burn 50 percent more fuel in take-offs and landings.  In the opinion of the commission, aircraft based upon newer technology, Stage 3 aircraft, burn more cleanly and produce less noise naturally.  (Aerospace Daily, 2/10/99)

The United States views the potential regulations against hushkitted aircraft as merely protectionist measures rather than an environmentally conscious Europe.  The United States, which is the monopolistic producer of hushkits, feels that the regulations are meant to help protect Europe's Airbus company from a more competitive market.  The regulations would keep such airplanes as Boeing's 727 and 737 models and McDonnell Douglas' DC-9 model from reaching the European market, either for sale, or for commerce.  (Learmount, 4/10/99)  This would also obviously put stress on American-based international delivery services, such as Federal Express.

The discussion within the European Commission of the new, potential regulations have not gone unnoticed by Congress.  The House of Representatives, in a showing of bipartisan support, voted to disallow the European-based Concorde aircraft from landing in the United States.  While this is not in effect without legislation in the Senate and  Presidential agreement, the policy does show the willingness of the two parties to support action in retaliation to a possible closure of a market.

The potential ban of hushkits from the European market following the recent trade disputes between the US and Europe is a potentially hazardous situation.  The strong views by both parties suggest that a trade war may break out if the situation is not settled in an amicable manner.  The aggressive attitudes on both sides could potentially send the economic relations into a downturn.  The two parties must settle the dispute in an amicable, mutually beneficial manner.
 
 

3. Related Cases:

AIRNOISE
SST
ECCO2
USCARTAX

Key Words:
1. Europe
2. POLA

4. Draft Author:

Nathan Kline   04/07/99

II. Legal Clusters

5. Discourse and Status:

DIS

INPROG

6. Forum and Scope:

EUROPEAN COMMISSION

MULTI

7. Decision Breadth:  2 PARTIES INVOLVED (US and EU)

8. Legal Standing:  LAW

III. Geographic Clusters

9. Geographic Locations

a. Geographic Domain: EUROPE

b. Geographic Site:  WEST

c. Geographic Impact:  EUROPEAN UNION

10. Sub-National Factors:  N/A

11. Type of Habitat:TEMPERATE

IV. Trade Clusters

12. Type of Measure:REGSTD

13. Direct v. Indirect Impacts: IND

14. Relation of Trade Measure to Environmental Impact

a. Directly Related to Product (Hushkits): No

b. Indirectly Related to Product (Hushkits): Yes

c. Not Related to Product: No

d. Related to Process: No

15. Trade Product Identification:  Airlines and Aircraft

16. Economic Data:

Export aircraft and related materials (US$, 1996):--World--32,451,000,000
Export, aircraft engines (US$, 1996)--6,798,000,000

17. Impact of Trade Restriction:

The impact of the trade restriction has been approximated, adding in global devaluation based upon inability to operate in Europe, at over $1,000,000,000 if this policy passes into law.  The United States, which is the main exporter of Stage 2 aircraft and the practical monopolist of hushkits, will face a loss in not only aircraft sold to Europe and a loss of air commerce to Europe, but a global loss in sales of aircraft due to the inability for the aircraft to fly to Europe.  A devaluation in one market will lower the global market for US aircraft which do not meet Stage 3 standards without the use of hushkits.

18. Industry Sector: EMACH and SOTH

19. Exporters and Importers:

Case Exporter:  United States
Case Importer:  European Union
 

V. Environment Clusters

20. Environmental Problem Type: POLA

21. Name, Type, and Diversity of Species:  Too great to consider; adverse effects on every organism that breathes natural air

 

22. Resource Impact and Effect:

MEDIUM

 

23. Urgency and Lifetime: N/A

24. Substitutes: LIKE (Chapter 3 engines)

VI. Other Factors

25. Culture: YES (European Environmentalism)

26. Trans-Boundary Issues:  NO

27. Rights: NO

28. Relevant Literature and Links:

Barnard, Bruce "An Industry Imperiled: US in Final Defense of Hushkits."  Journal of Commerce, March 23, 1999 (Lexis-Nexis, online)

"EU Hushkit Rules Would Violate Bilaterals, Northwest Says" Aviation Daily, January 20, 1999 (Lexis-Nexis, online)

Federal Aviation Administration. Noise Standards: Aircraft Type and Airworthiness Certification.  Online:  http:www.faa.gov/avr/AFS/FARS/far-36.txt

Leramount, David. "USA Votes Against Concorde in Hushkit Conflict". Flight International , March 10, 1999 (Lexis-Nexis, online)

US Department of State, European Affairs.  Unclassified cable, from SecState Washington, DC to American Embassy, Paris

"US Steps Up Pressure on EU to Scrap Hushkit Ban." Financial Post, 3/13/99

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