We find ourselves in contentious and uncertain times. At every turn, our national and economic security is being threatened, forcing us to confront the many pressures that seem to confound us. There is no better example of these concerns than the predatory trade practices that have weakened our economic and strategic standing in the world.
Since the end of the Cold War, globalization has dramatically reshaped the world economy. Markets have become so interconnected that disentangling them and returning to a time of economic isolationism now seems an impossible task (just ask the U.K. and the EU). By and large, this interconnectedness has been a good thing. Economic interdependence and free market capitalism have lifted entire nations out of poverty, helped to steady some of the most unstable parts of the world while creating a growing middle-class of hundreds of millions of people.
Despite this progress, increased interdependence is only good if all countries adhere to fair trade principles. But the truth is, more and more countries are not playing by the rules. Some nations have been caught violating the nature and spirit of trade agreements, thereby undercutting the global economy and harming American industries. Under the current administration, more focus has been placed on convincing trading partners to level the playing field through new treaties, but the U.S. also needs to enforce existing agreements. If we don’t, there is no point in signing new agreements.
In particular, I want to discuss the need to enforce two recent agreements signed with Qatar and the United Arab Emirates.
In January 2018, President Trump successfully reached terms on an Open Skies agreement with Qatar and, more recently, signed another deal with the UAE of a similar nature. Open Skies is a web of treaties that regulate which airlines get to enter another country’s territory. The aim of these agreements was to end state subsidies to domestic airline providers, including Qatar Airways, Emirates, and Etihad, as well as to force these companies to comply with standard international accounting practices.
For years, Qatar and the UAE have propped-up their domestic airlines with an estimated $50 billion in state subsidies. Basic economic principles make it clear that when nations buttress domestic carriers with supplemental income, the subsidized carriers are not required to think about profitability the way other airliners, such as Delta, United Airlines, and American Airlines, must do. Subsidized airlines can fly unprofitable routes and provide other services that don’t correspond with market demand. By doing so, they undercut international competitors and steal market share. This forces American airliners to cut jobs and, in some cases, end services.
Despite agreeing to end state subsidies to their domestic airlines, both Qatar and the UAE have gone back on their word. For example, shortly after the announcement of the Qatar Open Skies deal, Qatar Airways purchased a 49 percent stake in Italy's Meridiana airline and rebranded the carrier as Air Italy. Air Italy then announced new flights to the U.S. This move is problematic because Qatar Airways agreed not to start new flights to America originating outside the Persian Gulf and, in almost all but name only, Air Italy is Qatar Airways. Air Italy’s extensive operating losses are covered by the Qatar Airways. The top executives are almost all former executives at the airline. Even the crew uniforms are almost identical. All of this is a clear violation of the spirit of the Open Skies agreement.
This anti-free market behavior has a direct impact on Utah’s economy. Around 15,000 employees come to work at the Salt Lake City airport every day. In addition, at peak there will be about 2,000 full-time employees working on the airport expansion project. When the Qatari and UAE governments undermine the airline industry, they threaten these jobs.8 comments on this story
Fortunately, President Trump has proven that he is willing to do the right thing for American workers and I’m grateful the administration is trying to address this issue. He has taken immediate action when our partners don’t live up to their end of the bargain, and I’m confident he will continue to fight against illegal subsidies and protect American workers.
Our commitment to free market capitalism is part of what propelled America to become the greatest nation in history. But with this position comes a special responsibility, and we must stand up to those who undermine fair trade principles. If we allow countries to take advantage of the U.S., decades of progress towards international peace and stability will be undermined.