[Congressional Record Volume 143, Number 124 (Wednesday, September 17, 1997)]
[House]
[Pages H7496-H7502]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]





                              {time}  1815
        AIR SERVICE NEGOTIATIONS BETWEEN UNITED STATES AND JAPAN

  The SPEAKER pro tempore (Mr. Cooksey). Under the Speaker's announced 
policy of January 7, 1997, the gentleman from Illinois [Mr. Hastert] is 
recognized for 60 minutes as the designee of the majority leader.
  Mr. HASTERT. Mr. Speaker, I am going to share some time with my good 
friend from the other side of the aisle, but before I do that, I have 
seen the previous speakers here kind of quote figures on the other side 
of the aisle and say that some folks do not believe in public 
education.
  I have to tell my colleagues, I am a product of public education. I 
taught in the public schools for 16 years. I think one of the real 
issues that these folks missed in this presentation was that people 
want to make choices for their kids, and I do not think that it is 
something that we want to decide in bureaucratic offices in Washington, 
how our kids should be taught, how our money should be spent.
  One of the things that we think might be a good idea is to send our 
money back to where those local schools are and let those local school 
boards and those local folks who run schools and State organizations 
decide what is best for those kids in those areas.
  One other thing. I heard people talking on the other side of the 
aisle, saying we want to deflate school because of vouchers. Vouchers 
give parents a choice, and if public schools are lacking, it is not up 
to the Congress to give people the confidence in the public schools. It 
is the public schools themselves that have to build confidence so that 
parents believe that their children are getting a good education, that 
they have the opportunities, and when they graduate from that school 
they are going to have the same opportunities somebody else has.
  So I would join with my friends on the other side of the aisle who 
just gave this presentation, yes, I think public schools are important, 
but I think parents ought to have choice and I think vouchers ought to 
be part of that decision. If a parent wants to send a child to a 
school, he ought to have the choice to do that. So I would say that 
there is room maybe for more bipartisanship than just the presentation 
we just saw.
  One of the reasons that I have asked for this time tonight is to 
discuss really an area of economics, far away from education, but to 
educate people about what is going on in this country especially with 
competition of major airlines, and competition with a country that has 
sometimes been a bitter competitor for us, and that is Japan.
  Japan entered into an agreement in 1952 that basically limited 
airline transportation between the United States and Japan between four 
airlines, two of those airlines from Japan and two airlines from the 
United States. One of those airlines from the United States has 
subsequently gone out of business. The other airline has been enjoying 
most of the air routes between the United States and Japan over the 
last almost 40 years plus, and as a consequence, the old story, at 
least out in the countryside where I am from in rural Illinois, about 
the farmer standing out in his field and somebody coming and saying, 
``How do you get to Wright's Corners?'' And the old farmer scratches 
his head and says, ``Son, you can't get there from here.''
  That is a problem, especially in the Midwest. If one wants to fly to 
Japan from some place like Chicago or Indianapolis or St. Louis or 
Kansas City or even Atlanta, GA, one cannot get there from there. So 
what we are saying is there ought to be a change.
  What is happening today, there are discussions, high-level 
discussions between the United States and Japan on changing the way 
that we put in the regulation on air traffic between the United States, 
the number of flights between the United States and Japan. The airline 
who has the sole, not the sole monopoly but a major monopoly of air 
traffic between the United States and Japan, the American carrier says, 
well, it is open skies or nothing. In other words, absolutely free 
regulation, or we stay the same way.
  Well, probably we are not going to get to open skies, or at least 
immediately. Open skies is certainly something that we would like to 
have, open competition. Open competition means that if one is going to 
fly as a business trip from Chicago to Tokyo or Chicago to Osaka, 
instead of paying $4,000 a ticket we may pay less than $3,000 a ticket. 
That means more people can go, more competition. We have a better 
infrastructure, interface in business and economic relationships 
between this country and Japan, and Lord knows we could use that.
  However, what happens when we limit the number of flights, especially 
from the interior of this country, we just cannot get there, so one has 
to take a train or take another flight to Los Angeles where there are 
80-some flights a week, or one has to go to Seattle or San Francisco, 
or one has to fly to the east coast to get a flight to the Far East, 
which means one would have to go west.
  So it is an issue of fairness. We need to open the skies. We need to 
have these negotiations take place, but it cannot be all or nothing. 
What we are looking for is the ability for us to start to open the 
doors, to allow a place like O'Hare Field, which has one of the largest 
airfields, at least in capacity and the number of flights that happen 
in this country. It is No. 1 in this country for domestic passengers, 
flights in and out and the number of passengers, but we are 30th in the 
number of trips overseas. So what does that mean? That means that we 
have less visitors coming from Japan.
  If we just had one more flight per day, whether it is a Japanese 
carrier or an American carrier, out of the Midwest, out of Chicago, an 
average visitor from Japan spends about $1,500 while they are a guest 
in this country for a week or 10 days. If we had one more flight a day, 
that would mean over a year's time we would have almost $15 million 
more business.
  When we start to talk about trying to balance the trade between the 
United States and Japan, we send a lot of dollars to Japan. We have a 
lot of Japanese sound equipment and electronic equipment and 
automobiles. The best thing we can do is try to bring some of those 
dollars back, and the best way we can capture those dollars is having 
Japanese tourists come back not just to Washington, DC or New York City 
or Los Angeles, but yes, to the Midwest and to the South as well.
  If we start to open up airline availability so that those people can 
fly into the Midwest and the mid-South, then we could start to get more 
people involved, we can start to bring more dollars from Japan here, 
and certainly even start to balance that imbalance in trade.
  One of my colleagues who serves on the Committee on Transportation 
and Infrastructure and is involved in airline jurisdiction is my good 
friend from the other side of the aisle, the gentleman from Illinois 
[Mr. Lipinski]. I would like to yield to the gentleman at this time and 
hear his comments.
  Mr. LIPINSKI. Mr. Speaker, I thank the gentleman. It is an honor for 
me to participate in this special order with the gentleman, but before 
I get into my comments, I would appreciate it very much if my colleague 
would yield to a fellow Chicagoan, the gentleman also from Illinois 
[Mr. Davis] on this subject.
  Mr. HASTERT. Mr. Speaker, it would be my honor.
  Mr. DAVIS of Illinois. Mr. Speaker, I thank the gentleman. I 
certainly want to thank my colleagues for putting together this 
opportunity to talk about the needs of the Midwest.
  I rise today to join my Illinois colleagues in urging the Clinton 
administration and the Japanese Government to use this historic 
opportunity to put an end to the limits on direct air service between 
Chicago's O'Hare International Airport and Asia. It is imperative that 
current negotiations with

[[Page H7497]]

Japan yield an air service policy that will benefit Midwest businesses 
and consumers.
  Liberalization of Midwest air service is an important first step in 
ensuring real economic gains to our region which has been historically 
disadvantaged by current air service agreements. It is time for the 
Midwest to receive its fair share of access to the growing Asia 
markets.
  Under current air service agreements, Chicago's O'Hare, the hub of 
the Midwest and one of the most frequently-used air terminals in the 
world, is restricted to only 20 weekly direct flights to and from 
Tokyo, the gateway to Asia. This is not adequate service for the 
thousands of midwesterners who do business with companies in Asia.

  Four of Illinois's top 10 export markets are in Asia and account for 
more than $6 million in annual revenue. A new agreement would have 
enormous economic potential for our region, and would enable the 
Midwest to be more competitive in the largest and fastest growing 
economic market in the world.
  In fact, it is estimated that lifting current restrictions could 
bring as many as 2,670 new jobs to the Midwest, 1,820 of those in 
Illinois alone. Expanding current service of trans-Pacific flights will 
also provide additional access to the Midwest region for foreign 
businesses wishing to invest in our region. Unless these restrictions 
are lifted, the Midwest stands to lose up to $1 billion in Japanese 
investments in property, plants, and equipment.
  It is unfair to require our airline industry to operate under an 
antiquated post-World War II agreement which only granted limited air 
service rights to Asia for certain United States cities. As a result of 
this agreement, flights to and from Chicago are severely restricted.
  These outdated regulations do not realize the global economic 
dependency on efficient air service, nor the state-of-the-art 
technology of today's airline industry. Furthermore, a new agreement 
must provide for increased hub-to-hub connections which could provide 
lower fares for consumers. These reduced fares could generate about $16 
billion a year in tourism revenue for the Midwest region.
  Mr. Speaker, the Midwest must not be forced to compete in today's 
global economy while operating under an antiquated air service 
agreement. Therefore, I, along with my colleagues, urge the Clinton 
administration to reach an agreement and the Japanese government to 
reach an agreement which would increase Midwest-Asia air service. These 
negotiations offer an unprecedented opportunity to not only expand 
tourism, increase employment and economic growth for the Midwest 
region, but to open up enormous opportunities not only in the Midwest 
but in other major areas throughout the country.
  So I thank the gentleman from Illinois [Mr. Hastert] for giving me 
the opportunity to share my thoughts and ideas on this subject.
  Mr. HASTERT. Mr. Speaker, I thank the gentleman from Chicago, a good 
friend and certainly a supporter of economic development, not only in 
Illinois and Chicago, but also the Midwest.
  It is interesting, his comments. If I wanted to fly from Chicago or 
Atlanta or New Orleans or St. Louis and the few flights there are, the 
one flight a day or two flights a day that fly out of Chicago, if I 
cannot get on one of those flights, that means that I have to fly to 
San Francisco or Los Angeles or maybe Seattle, but probably from the 
West, either San Francisco or Los Angeles. All of those are nice towns, 
but it means one is going to sit around that airport for 2 or 3 hours 
extra before one gets on his flight or makes his connection, and the 
cost of that flight is probably going to be $1,000 or $1,500 or $2,000 
more than if there was open competition, if we let airlines fly in and 
out and let the marketplace decide what those prices are.
  So not only are we hindering the convenience of people to move from 
the Midwest and mid-South to the Far East, but we are also saying it is 
going to cost more money, by the way, and we are not going to let that 
free competition in.
  On September 22 of this year there is that meeting in Japan, in 
Tokyo, and it is important for our administration and the Japanese 
Government to try to come to an agreement or an accord. It also means 
one other thing.

                              {time}  1830

  It means if we want to do business, we have to open that business up. 
We just cannot constrain that business to one airline that gets the 
majority of it.
  Mr. LIPINSKI. Mr. Speaker, will the gentleman yield?
  Mr. HASTERT. I yield to the gentleman from Illinois.
  Mr. LIPINSKI. Mr. Speaker, I thank the gentleman for yielding to me. 
I have some prepared remarks in regard to this subject. It is a subject 
that is enormously important not only to Chicago, IL, the Midwest, but 
I believe to the entire Nation. Aviation is not only the future, but 
aviation is the present and will be the future. It is something that we 
have to be involved in, involved in deeply, and we have to really have 
it be one of the vanguards of our economy.
  The bilateral agreement between the United States and Japan was 
signed in 1952, over 45 years ago. The agreement gave three airlines 
the right to fly to Japan and beyond to other points in Asia. The three 
airlines are Northwest, United, which purchased its rights from Pan 
American, and Federal Express, which purchased its rights from the 
Flying Tigers.
  Federal Express, as we all know, is not a passenger-carrying airline, 
it is a cargo airline. So actually, these two airlines, Northwest and 
United, are considered incumbent carriers. Since 1952 the United States 
and Japan have signed memoranda of understanding granting additional 
carriers such as American, Delta, Continental, and UPS limited rights 
to serve Japan. Once again, UPS is not a passenger carrier, but a cargo 
carrier, so the three additional passenger carriers we have gotten into 
Japan under a memorandum of understanding are American, Delta, 
Continental.
  These MOU carriers, as they are referred to, fly to and from Japan, 
but with frequency, capacity, and gateway limitations, and with no 
beyond rights, which means they can fly into Tokyo, but they cannot fly 
beyond Tokyo. No other place in Asia can they fly to. They have to 
return immediately to the United States.
  There have been several aviation disputes between the United States 
and Japan in recent years. Most of the tension has stemmed from Japan's 
protectionist restrictions on its market. Japan has steadfastly refused 
to open its international markets in order to protect its national 
carriers.
  Japan fears that its national carriers cannot compete successfully 
against the larger, more efficient U.S. carriers in an open skies 
market. However, for the first time in decades, Japanese negotiators 
have indicated a willingness to be flexible in regard to increased 
access for U.S. carriers.
  The United States must seize upon this rare opportunity to ease the 
restrictions in the U.S.-Japan aviation market. Obviously, an open 
skies agreement should be our ultimate goal. However, Japan is adamant 
in its opposition to open skies. Therefore, we should work on a 
bilateral agreement that will ease current restrictions in the market 
and will eventually lead to open skies. It is either a phased-in 
approach to open skies, or to status quo. The status quo will only keep 
Chicago and the Midwest isolated from Japan, causing our region to 
continue to lose a million dollars in missed opportunities.
  Right now only two carriers are incumbent carriers. One is a United 
States carrier, Northwest, and the other a Japanese, JAL, can operate 
from their primary hub airport without any frequency restrictions. 
United, although it is considered an incumbent carrier, is restricted 
to only six flights per week from its principal hub at O'Hare 
International Airport.
  Let me run that by the Members once again. Right now, only two 
incumbent carriers, one a U.S. carrier, Northwest, and the other a 
Japanese carrier, JAL, can operate from their primary hub airports 
without frequency restrictions. United, although it is considered an 
incumbent carrier, is restricted to only six flights per week from its 
principal hub at O'Hare International Airport. American, which also 
hubs at Chicago-O'Hare, is completely shut out of the Chicago-Tokyo 
market.

[[Page H7498]]

  Japan wants its other national carrier, ANA, to also have unlimited 
access between the United States and Japan from its major hubs. This is 
one of Japan's primary goals in negotiating a new agreement. In fact, 
as far as I am concerned, it is their number one goal in negotiating a 
new agreement. The United States should only grant ANA unlimited access 
normally reserved for incumbent carriers if Japan guarantees that a 
second U.S. carrier will also enjoy all the rights of an incumbent 
carrier. Then, with two carriers from each country having unlimited 
access, each community could potentially be served by four different 
carriers.
  However, if JAL and ANA, Japan's only two international carriers, 
both have unlimited access between the U.S. and Japan, the nonincumbent 
U.S. carriers would be at a great disadvantage. Therefore, increased 
frequencies and additional gateways are needed for MOU carriers so they 
can also provide service from their major hub airports. U.S. 
negotiators should not grant ANA incumbent status without also gaining 
increased access for U.S.A. MOU carriers.
  Finally, a phased-in approach to open skies with Japan should 
definitely allow code-sharing between all United States carriers and 
Japanese carriers. The aviation industry is moving in a definite 
direction of abandoning attempting to have beyond rights to relying 
upon code-sharing networks. Code-sharing networks allow U.S. carriers 
to offer the service and convenience of a foreign hub without the 
expense of a self-operating hub.
  For example, code-sharing agreements have enabled U.S. carriers to be 
effectively competitive all over Europe. In fact, all U.S. carriers now 
rely on code-sharing alliances with one or more European carrier to 
feed passengers to and from their transatlantic flights. Unfortunately, 
under the current bilateral with Japan, code-sharing alliances are not 
permitted, and as a consequence, U.S. incumbent carriers depend solely 
on their limited beyond rights to provide service beyond their Japanese 
hubs.
  Code-sharing agreements between U.S. and Japanese carriers would 
provide the service and the access to Japan and beyond that we want for 
Chicago, the Midwest, the East, and the South. In Japan's Tokyo Narita 
airport, that is the primary gateway to the rest of Asia. However, 
available space is severely constrained there. The best use of the 
limited space at Narita would result from a code-sharing agreement 
between a U.S. carrier and a Japanese carrier.
  For example, if an airline has 100 markets beyond its United States 
hub and no hub in Tokyo, 100 markets are served. But if an airline has 
a code-sharing agreement with a carrier with a hub on the other side of 
the Pacific, with 100 American markets beyond the U.S. hub and six 
Japanese markets beyond the Tokyo hub, over 600 city pairs can be 
served.
  With O'Hare's position as a hub for both United and American, any 
service from Chicago O'Hare to Tokyo Narita would provide the greatest 
number of potential city pairs, representing the best use of limited 
space at both airports. Code-sharing agreements do not equal open 
skies, but they do open the market tremendously, increasing access to 
Japan and beyond.
  In addition, once code-sharing agreements are in place, Japanese 
carriers will want antitrust immunity to maximize the effectiveness of 
their code-sharing alliances. The Government of the United States does 
not and will not grant an alliance between a U.S. and a foreign carrier 
for antitrust immunity until open skies are achieved between the two 
nations.
  Therefore, it is easy to see how our liberalized agreement now will 
lead to open skies with Japan in the future. Again, a phased-in 
approach to open skies is much better than the status quo. If the 
United States does not seize this opportunity with Japan's willingness 
to be flexible by the end of the month, we will be stuck with limited 
access to Japan and beyond, and Chicago and the Midwest will continue 
to be big, big losers.
  I thank the gentleman from Illinois [Mr. Hastert] for this time. 
There are a number of other people here to speak. I will be back in the 
future.
  Mr. HASTERT. Mr. Speaker, I thank the gentleman from Chicago. One of 
the things, just in a practical application of what the gentleman said, 
for instance, if I wanted to take a trip to Chicago's sister city, 
which happens to be Osaka, Japan, a small city in Japan, only about 15 
million people in its greater Kansai area, we could not go directly 
from Chicago to the new airport outside of Osaka.

  So what we would have to do, we would have to fly to Tokyo, and 
because there are not any rights for American carriers to go beyond 
Tokyo. We would have to fly some other airline from Tokyo to Osaka, and 
hope that maybe if we wanted to fly from Osaka back to the United 
States you could do that, but you could not fly direct to Chicago, you 
would have to fly to Los Angeles, then wait and change planes, and fly 
from Los Angeles back to Chicago.
  Not only does it complicate the ability to do business or to travel 
or to make exchanges between these two countries, it makes it virtually 
impossible for people to have free and easy travel plans.
  I appreciate the comments of the gentleman from Chicago.
  Mr. LIPINSKI. Mr. Speaker, I would just like to say that we all know 
that the Japanese are extremely difficult people to deal with on all 
trade issues. One of the reasons for that is because it is a very small 
island. They are very much people who like to deal with themselves, and 
if they are actually willing to give us an opportunity to get in there 
and open up that market in some way, we should certainly take advantage 
of it.
  Mr. HASTERT. I appreciate that, Mr. Speaker. Any time we sit down and 
deal with trade, we have to sit down honestly and hope that the parties 
on the other side of the table sit down honestly and try to bargain. 
Each side will always try to get their best deal.
  Mr. Speaker, it is my great privilege to yield to the gentleman from 
Peoria, Illinois [Mr. LaHood].
  Mr. LaHOOD. Mr. Speaker, I thank the gentleman for allowing me to 
offer a few comments regarding this important issue that the gentleman 
has taken time to set aside this hour for to discuss. I have some 
prepared remarks that I would like to make, and as a member of the 
Subcommittee on Aviation of the Committee on Transportation and 
Infrastructure, our committee has discussed this issue, and there is an 
awful lot of concern about it.
  In 1952, the United States and Japan entered into a highly 
restrictive aviation agreement that to this day severely restricts the 
number of flights between O'Hare International Airport in Chicago and 
Japan. Despite being the busiest airport in the world, O'Hare ranks 
only 30th in terms of the international passenger travel. This makes no 
sense at all. Because of this restrictive 1952 agreement, all of the 
Midwest and the entire country have been hurt by the lost business 
opportunities.
  Fortunately, the U.S. and Japan are currently negotiating an 
agreement that would drastically increase the number of flights to 
Japan and all of Asia. The potential economic impact of this agreement 
cannot be overestimated. An independent study by Arthur Andersen has 
concluded that lifting the current restrictions would increase 
passenger travel between Chicago and Tokyo to more than 700,000 by the 
year 2000, bring in over 2,600 jobs to the Midwest, and result in an 
additional $80 million in spending throughout the region.
  I might add that the Midwest-Asia Aviation Coalition has stepped in 
to provide important leadership in this effort. This coalition is made 
up of a diverse group of business, trade associations, labor and civic 
organizations, and tourism groups.

                              {time}  1845

  Additionally, this group includes a very distinguished list of over 
290 individuals, including Gov. Jim Edgar of Illinois, Mayor Richard 
Daley of Chicago, and our former Republican leader Bob Michel.
  I have no doubt that through the efforts of the Midwest-Asia 
Coalition and others, that when the final negotiations are completed, 
we will all soon realize the tremendous benefit of this new aviation 
agreement. Again I wish to thank my friend the gentleman from Illinois 
[Mr. Hastert], and all of the Members who are contributing so much in 
this issue that we are discussing this evening.

[[Page H7499]]

  Mr. HASTERT. Mr. Speaker, I thank the gentleman from Peoria, and at 
this time I would like to introduce and yield to the gentleman from 
southern Illinois [Mr. Poshard].
  Mr. POSHARD. Mr. Speaker, I thank the gentleman for yielding to me. 
This is a very important issue to the State of Illinois, because in 
just a few days the Clinton administration and the Japanese Government 
will meet again to discuss the United States-Japan Passenger Air 
Service Agreement. This time I hope we do the right thing.
  It is time, indeed it is past time, to reach an agreement that will 
expand service between the two countries and beyond. The United States-
Japan aviation agreement is, to some extent, a relic. It was reached in 
1952, an era before jet service and before extensive commercial air 
travel between the two countries began.
  At the time, Japan was a weak economy, still recovering from World 
War II. Because it was a different era, with different circumstances, 
the two sides agreed on an aviation agreement that fit those times, but 
not today. The agreement they reached then, which has largely stood 
through the years, severely limits flights between the two countries. 
Cities and airports were handpicked by governments, not the markets.
  In recent years, the agreement has been loosened a tiny bit, yet 
there is nothing close to open access or a free market. The result is 
that only 11 United States mainland cities, only 11 cities, are allowed 
to have flights to Japan. Currently, Chicago's O'Hare Airport is the 
busiest airport in the world, yet ranks only 30th in terms of 
international travel. One of the reasons for this is that access to 
Japan is severely limited from Chicago, totaling only 20 flights per 
week. Meanwhile, Los Angeles has 87 flights per week to Japan.
  Moreover, the west coast has 160 weekly flights to Japan, while the 
central part of the country has only 59. What this means is that most 
residents in the Midwest and the East, where three-fifths of our 
population reside, are not conveniently located for air travel to 
Japan. This problem begs to be corrected when we consider that the 
Arctic Circle flight path from Chicago to Japan is the most efficient 
route for this trip.
  This is not the free market at work. In my State of Illinois, logic 
and economics demand that Chicago have more flights. Economic research 
by Coopers & Lybrand indicates that adding just seven round trip 
flights per week between Chicago and Osaka would bring traffic totaling 
60,000 to 70,000 people a year, and this would bring in as much as $503 
million a year to the economy.
  The U.S. airline industry, except for one airline, has lined up 
behind the push for more service. Northwest, which currently has a 
dominant share of the United States-Japan market, has taken a stance 
that backs stagnation and the status quo. They might be serving their 
interests but not the interests of people who live in my State and 
could benefit from the expanded service.
  A new expanded agreement with Japan would produce an additional 3,600 
new flights a year in the United States-Japan market, more additional 
flights than any of the 25 so-called open skies agreements that the 
United States has signed in the past 2 years.
  There is more. A new agreement would produce a 25-percent increase in 
competition by adding new airlines and increasing the number of cities 
in the United States that could gain service. All that would produce 
more than $10.8 billion in annual economic activity, which would 
support nearly 250,000 U.S. jobs across this Nation.
  Mr. Speaker, we should push ahead with a new United States-Japan 
Passenger Air Service Agreement. A new agreement would produce more 
flights by more airlines to more cities between the United States and 
Japan and beyond. That is real competition and it benefits all of us.
  Mr. Speaker, I wish to thank the gentleman from Illinois for giving 
me this time and opportunity on this very important issue facing our 
State.
  Mr. HASTERT. Mr. Speaker, I thank the gentleman from Illinois, and he 
brings up some very interesting statistics. One of the things I want to 
share with my fine colleague from southern Illinois is that he said if 
we open up one flight a day between Chicago and Osaka, and of course, 
Osaka is Chicago's sister city, that we affect some 700,000 people.
  But what we really do is increase the economy, Japanese yen flowing 
to the United States and the Midwest. And of course, we know we have 
that trade deficit, so the more dollars we can get, the better off we 
are. But just by opening this up, a half billion dollars just to 
Illinois, not counting what would happen in Texas and Louisiana and 
Georgia and other places.
  I think that is just an amazing piece of information, and I really 
appreciate the gentleman's effort.
  Now, Mr. Speaker, I wish to yield to the gentleman from Texas [Mr. 
Sessions].
  Mr. SESSIONS. Mr. Speaker, I thank the gentleman from Illinois [Mr. 
Hastert]. I appreciate this opportunity to speak about this very 
important subject, and I rise to offer my support also to the United 
States and Japan negotiating team who are now entering the next rounds 
of meetings to continue talks on the long-awaited air transport 
agreement between our two countries.
  I think history will look at this moment as one that is a very 
important crossroads in the future of both our countries and our 
nations as we work together, not only now but in the future.
  For the first time in almost 50 years, the United States and Japan 
will come together and agree to a new level of passenger air service 
between the United States, Japan and beyond. What is even more 
significant, though, is the economic impact that that will accord and 
the opportunities that will surely follow in the coming years.
  This agreement will provide United States air carriers with a 25-
percent increase in passenger flights to Japan. Nearly 3,600 new 
flights will be added each year. Further expansion can be expected as 
other carriers begin this service to the region, which I believe can 
only breed more competition in the marketplace. And the best part is 
that is only the beginning.
  This agreement will have an enormous economic impact to our economy. 
At present it is estimated that this agreement will generate almost 
$10.8 billion in direct and indirect economic impact. More importantly, 
this accord will open additional routes for United States carriers in 
growing Asian markets and certainly beyond Japan. That factor alone 
could inflate an additional $1.6 billion for U.S. air carriers.
  Clearly the biggest gain in this agreement can be felt in access to 
markets for American business men and women. The unprecedented increase 
in commercial and passenger air traffic will open a new day for each 
and every one of our business men and women as they wish to do business 
in Asian export sectors. We cannot underestimate the power that these 
new emerging markets will bring and the opportunities that are before 
us.
  Likewise, these increased opportunities will enhance Japanese 
investments in our country. The anticipated increase in cargo and 
tourism and traffic will enhance our own marketplaces and our economy. 
The possibilities are almost endless for a person from Texas to think 
about. Not only will it help our economy and our country, but it will 
bring new and expanded tourism to Texas and the United States.
  In closing, I would like to say that I agree with what has been 
stated here today; it is the marketplace, it is economics at its very 
best, and it is economic development. And I would like to thank my 
colleagues from Illinois, and in particular [Mr. Hastert] for taking 
the time to discuss this important development and support for our 
negotiators as they enter into these important agreements.

  Mr. HASTERT. Mr. Speaker, I thank the gentleman from Texas. And when 
we talk about what happens and, of course both United and American tend 
to hub and do hub in Chicago, but American has a big hub in Texas, and 
so the dynamics we talk about and how that brings economic activity 
certainly to the Midwest, certainly happens in the Midwest, in the 
Texas area and the Southwest, and certainly in the Mid-South.
  Mr. SESSIONS. Of course it does. We have many, many people who have 
come to our country with not only opportunities for their lives but 
have

[[Page H7500]]

brought high-technology abilities to our country. They want to make 
sure that we are selling our products overseas. They want to make sure 
it is easy for us to do business. They do not want to have two or three 
stops before they get to Japan.
  So it is not only faster and better service, but it is a real boom as 
we near the 21st century.
  Mr. HASTERT. Another interesting thing the gentleman brings up, he 
talks about a $10 billion increase in economic activities. That just 
does not accrue to any one area in this country. It certainly accrues 
across the board.
  If cities, and especially important cities in Texas and important 
cities in Illinois and Louisiana and other places, have the ability to 
get involved and to partake in this, that certainly spreads out. Again, 
as we talked about, it starts to level out that imbalance of trade that 
we have.
  I really appreciate the gentleman's participation and being here 
tonight. And at this time, Mr. Speaker, I would like to introduce and 
yield to one of the youngest members of the Illinois delegation but 
certainly one of the hardest working, the gentleman from Chicago, IL 
[Mr. Blagojevich].
  Mr. BLAGOJEVICH. Well, Mr. Speaker, let me thank my colleague from 
Illinois [Mr. Hastert], and I want to comment briefly, piggybacking on 
some of my predecessors speaking here today, principally those from 
Illinois, but also the gentleman from Texas [Mr. Sessions] and agree 
with them that we need to urge the negotiators from the White House to 
try to do what they can to free up our skies and make our skies more 
available for American carriers to fly to Asia.
  Closed skies are not friendly skies, they are unfriendly skies. It is 
probably not realistic to think we are going to have completely open 
skies, but it is important to realize we need to make an incremental 
approach and to gradually open the skies and increase routes to Asia 
from the United States.
  Now, much has been said about the 1952 agreement that governs the 
present rules that decide aircraft flights from the United States to 
Asia. Let me put that in perspective, if I may. Back in 1952, there was 
no rock and roll. That is how long ago this was. We were operating 
under an agreement that is so dated rock and roll had not even existed 
yet. Elvis was only a junior in high school when this was entered into. 
Nobody in the NBA dunked back in 1952. Virtually everybody in the NBA 
dunks.
  These are changing times. We live in a changing world. The Baltimore 
Orioles did not exist in 1952. I think my other colleague from Illinois 
[Mr. Lipinski] is an expert on this. They were the St. Louis Browns, am 
I right?
  Mr. LIPINSKI. The gentleman is correct.
  Mr. BLAGOJEVICH. I am right. So we have seen a great deal of change 
not only in cultural and social developments but a great deal of change 
in more important things, like technological changes and changes in 
trade and the like.

                              {time}  1900

  So we have seen a great deal of change in other societies, in fact in 
the world, since 1952. We have an agreement that governs the policy 
with regard to aircraft flights from the United States to Asia that was 
agreed to in 1952, yet the world has seen a great deal of changes.
  Technological changes have been rapid and continue to change with 
every passing day. International trade is different today. In fact, the 
Asian market back in 1952 is not the Asian market that exists in the 
United States. Over the past two decades, U.S. foreign trade and 
foreign investment with East Asia has soared, increasing faster than 
economic ties with any other region.
  Between 1978 and 1996, U.S. exports to East Asia grew 620 percent, 
while during the same period U.S. exports to all of Europe increased by 
around 246 percent. Back in 1952 Europe was the chief trading partner 
with the United States. That is a fact that is no longer as relevant as 
it once was.
  In 1996 the value of total U.S. exports to Asia surpassed that of 
exports to all of Europe. So Asia is a major, major place in the world 
and is a very, very important region in the world with regard to United 
States and our economic health and vitality.
  Today Japan, for example, is the second largest international 
destination for United States travelers after the United Kingdom. In 
fact, by the year 2015 the Asian Pacific region is expected to 
represent 40 percent of total air travel between North America and any 
international destination, surpassing the volume of air travel between 
North America and Europe.
  So it seems to me we ought to scrap this 1952 agreement, bring it 
into the modern era, and apply routes and have a more open sky so that 
American carriers can reach Asia and American business can enjoy some 
of the fruits and benefits of those expanding and emerging markets in 
and throughout Asia.
  With regard to technological changes, let me just point out that air 
travel is different today in 1988 than it was in 1952, when most 
aircraft flights came out of the West Coast because you could not fly 
directly from New York to Japan or from New York to Tokyo back in 1952. 
Forty-five years have transpired. Aviation technology has made it 
possible to fly directly between Chicago and Japan.
  In fact, between 1952 and 1998 we were actually able to fly to the 
moon, which we did in 1969 for the first time. So there is a great deal 
of technological change; and, therefore, this agreement needs to be 
renegotiated so that it fits the times and the era in which we live.
  There are advocates who believe we ought to have one or the other, we 
ought to have only open skies or not change the 1952 agreement, and I 
would submit that those advocates are either totally erroneous or 
disingenuous.
  The fact of the matter is that the Japanese Government has said 
publicly that they will not entertain any discussions about completely 
opening the skies. Therefore, I think it is important that we again try 
to make incremental gains and slowly approach opening the skies so that 
the Japanese Government becomes more comfortable with Japanese carriers 
in more direct competition with American carriers, who would generally 
have a better record of being able to succeed in a nonregulatory free 
market environment.
  So I hope we can have more flights to Asia. I hope more cities 
throughout the United States can have more access to Asian flights, in 
particular to Japan. I hope we can expand some of the buy-on rights 
agreements, and I would urge the negotiators to continue in their 
efforts in developing some of the co-chairing efforts that they have 
been doing.
  One final point. As we open access to American airports and access to 
Asian and Japanese airports and air traffic, I would hope that the 
Midwest is properly represented. And I would urge that we take a 
serious look at Chicago, which has historically been a transportation 
hub in the United States, with rail, with trucking, with air travel, 
and with sea and lake travel.
  Chicago historically has been the center of transportation. Chicago 
O'Hare International Airport is among the busiest in the world. It has 
a built-in infrastructure that would work perfectly with more flights 
from Chicago directly to Japan. Chicago would also be able to service 
other parts of the Midwest.
  Three out of five Americans live east of the Mississippi River, yet 
the region's airports can only offer one out of five weekly flights to 
and from Japan. There are 87 flights per week between Los Angeles and 
Asia. There are only 20 flights per week between Chicago and Asia.
  As the gentleman from Illinois [Mr. Poshard] noted moments earlier, 
there are 160 flights per week to and from Asia which originate from 
the Western United States. There are only 59 flights per week to and 
from Asia which originate from the Central United States.
  So we should have more air travel from the Midwest United States and 
Central United States to Asia. I would argue that since O'Hare Airport 
is a perfect place to fly that has a built-in infrastructure, those 
flights, many of them, should come out of Chicago's O'Hare 
International Airport.
  One last point, if I may. There are financial considerations, as 
well. Fifteen different Japanese banks have branches in Chicago. So 
when you consider the business aspect, it is very convenient for those 
who want to do business from Chicago to Japan or Asia to be able to

[[Page H7501]]

fly directly from Chicago to Asia, and having more flights available I 
think helps with regard to that. There are in fact more Japanese banks 
and branches in Chicago than any other foreign banks and branches 
represented in Chicago from other countries.
  And one last thing. Chicago is the international leader in the 
trading of commodities, stock options and currency. Chicago is the home 
of five major exchanges. It makes perfect sense to have direct travel 
from Chicago to Asia. As I close, 80 percent of the world's commodities 
are traded through three of Chicago's exchanges.
  So having said that, I hope the negotiators listen to what I hope are 
words of wisdom. I know that whenever the gentleman from Illinois [Mr. 
Hastert] speaks, those are words of wisdom, and I am less confident 
about my own words.
  Mr. HASTERT. I thank the gentleman from Illinois [Mr. Blagojevich]. 
Just, you left out the Chicago Bulls. I do not know how we did that.
  Mr. BLAGOJEVICH. If the gentleman will yield, I do not want to be 
parochial.
  Mr. HASTERT. Mr. Speaker, I yield to the gentleman from Illinois [Mr. 
Weller], who also represents Chicago and parts of down-State Illinois.
  Mr. WELLER. I thank the gentleman from Illinois [Mr. Hastert], my 
friend and the chief deputy whip and one the leaders in our House. 
Also, I want to recognize the gentleman from Illinois [Mr. Lipinski], 
who represents the neighboring district, for his leadership on aviation 
issues. And of course, I echo the words of my friend, the gentleman 
from Illinois [Mr. Blagojevich], on why improving aviation 
opportunities, particularly the connections between the Midwest and the 
United States and Japan, what it means in jobs for the folks in the 
Chicago region, which I have the privilege of representing.
  I believe it is time that we move forward with negotiations to 
improve and open more skies to flights for American carriers, 
particularly between Chicago and the Midwest and Japan.
  Today, Chicago O'Hare is the world's busiest airport. We have quite 
the privilege. Chicago is considered America's second city. It is a 
global financial center. It is a world class city, and it is also home 
to the world's busiest airport. More flights come in and out of 
Chicago's airspace than any other place in the world.
  But the surprising thing is that we rank 30th, Chicago O'Hare ranks 
30th overall in international flights and international passengers. Now 
if we were to change that and improve opportunities for American 
carriers to fly between Chicago and Japan, it would have a big impact 
financially and economically for working, middle-class families right 
in the Chicago region.

  In fact, according to one study which I have read, one additional 
flight between Chicago and Japan could generate over one-half a billion 
dollars in additional economic benefits to the Chicago region. One-half 
of a billion dollars would benefit from just one more, one additional 
flight between Chicago and Japan.
  As I have always said, when we improve transportation, we create 
jobs. That is why these negotiations have been underway, and we need to 
make an even greater effort to open the skies between Japan and the 
United States, because in doing so we are going to create jobs for 
working, middle-class families in Chicago, in the Midwest, and also 
throughout the United States.
  It has been said, according to studies, the economic impact of 
lifting the current restrictions on nonstop Chicago-Japan flights could 
bring over 2,600 new jobs to the Chicago region just in the next 2 
years. Our own Governor, Jim Edgar, stated recently that greater access 
to the expanding economies of Asia will mean more investments, more 
trade and more jobs for the people of Illinois and the Midwest.
  That is why business and labor and politicians of both political 
parties have joined together in the Midwest-Asia coalition, working 
together to emphasize how important opening the skies between the 
United States and Japan is to working folks right here in the United 
States, particularly in our home area, in the Chicago area.
  Some would say, ``Well, what would happen if we do nothing, if 
nothing changes? What happens if we are unable to expand our current 
agreement with Japan?'' Recent study found that the current 
restrictions on air travel between the United States and Japan cost the 
Midwest thousands of jobs and millions of dollars in salaries and 
probably at least $1 billion in lost investment in the Midwest and in 
the Chicago region, $1 billion in lost investment because of the 
current restrictions.
  Think about what that would mean to the folks in the Chicago area, 
working middle-class families who would benefit from increased economic 
opportunity, more jobs and more opportunity.
  My colleagues, I stand in strong support of the negotiations that are 
currently underway. I stand in strong support, as I know the folks back 
home do as well, of opening the skies between Japan and the United 
States. Because, as these negotiations move forward, I think it is 
important that our negotiators know that we stand behind them and that 
we are looking to them to open the skies, because by opening the skies, 
bringing in additional flights between Chicago and Japan will bring 
jobs to the Chicago region, more jobs, more opportunity. And frankly it 
is going to be in the best interest of the working folks, the middle 
class, in the Chicago region.
  I yield back my time to the gentleman from Illinois, and again thank 
the gentleman from Illinois [Mr. Hastert] for the opportunity to speak 
on this important issue.
  Mr. HASTERT. Mr. Speaker, I include for the Record two editorials 
from Midwest papers:

                [From the Chicago Tribune, July 3, 1997]

                    Phasing in Open Skies With Japan

       O'Hare International Airport is the world's busiest in 
     terms of passenger volume, yet it ranks only 30th in 
     international business. Its overseas volume is less than half 
     that of New York, Los Angeles and Miami--the top three 
     international airports.
       A broad-based, clout-heavy group of Midwest businesses and 
     civic leaders--headed by Gov. Jim Edgar, Mayor Richard Daley 
     and former U.S. Rep. Robert Michel--wants Washington to do 
     something to help O'Hare. The administration should take the 
     group's advice and act accordingly.
       Specifically, the Midwest-Asia Aviation Coalition wants 
     United States negotiators to reach a deal with Japan that 
     would adopt a phased-in approach to competition, gradually 
     allowing more flights between the two countries and 
     permitting marketing agreements between U.S. and Japanese 
     airlines.
       A bilateral pact that immediately establishes open trade, 
     or ``open skies,'' would be preferable and should be the 
     first, and ultimate, goal, but the Japanese government so far 
     has refused, arguing the U.S. won't open its domestic market 
     to foreign airlines. Japan, however, would accept phased-in 
     competition.
       United Airlines and American Airlines, which operate hubs 
     at O'Hare, are coalition members and favor a phased-in 
     approach like that taken with Germany and Canada. 
     Minneapolis-based Northwest Airlines wants unrestricted 
     access to Japan, with no limits on the rights of U.S. 
     carriers to fly to other Asian destinations. Japan is willing 
     to phase in open skies if there are limits on flying on to 
     other countries.
       International flights at O'Hare are restricted by the 
     aviation pact between the U.S. and Japan. It gave United, 
     Northwest and Federal Express the right to fly to Japan and 
     beyond, but American and other airlines are allowed only 
     limited service. At O'Hare, United has only six flights a 
     week to Japan, while American can't even fly between Chicago 
     and Tokyo. Northwest, with hubs in Detroit and Minneapolis, 
     has almost as many weekly flights from the U.S. to Japan as 
     the rest of the domestic airlines combined.
       The coalition is just being realistic; Northwest is being 
     protectionist. The choice doesn't have to be between 
     immediate open skies or the status quo. The U.S. and Japan 
     can allow more flights and new alliances that will promote 
     business and growth.
       A recent study by Arthur Andersen concluded that the number 
     of passengers flying through O'Hare to Asia would more than 
     double if sufficient flights were available. The increased 
     traffic would add jobs and foreign investment in Illinois and 
     the Midwest.
       Gradual liberalization doesn't mean the goal of open skies 
     should be abandoned. In fact, as the benefits of greater 
     competition and service are realized, the resistance to open 
     skies will dissolve. Meantime, some progress is better than 
     none.
                                                                    ____


               [From the Chicago Sun-Times, July 2, 1997]

                         More Flights to Japan

       As a Trivial Pursuit question, it is a lock for Chicagoans: 
     What's the busiest airport in the world? O'Hare of course.
       But where does O'Hare rank in international flights?
       A surprising 30th. O'Hare's international volume is less 
     than half that of New York, Los Angeles or Miami.

[[Page H7502]]

       An opportunity to help rectify that comes as negotiators 
     from the U.S. and Japan meet to retool a 1952 pact governing 
     flights between the two countries. Under the outdated rules 
     Chicago is artificially held to about 20 flights to and from 
     Tokyo a week.
       Some in the airline industry are pushing for ``open skies'' 
     legislation, essentially allowing an unfettered flow of air 
     traffic between the two countries. Negotiations, however, 
     should not be allowed to collapse into an ``all-or-nothing'' 
     conclusion. While we favor open skies just a liberalized 
     stop-gap measure featuring a phase-in approach would be 
     acceptable. Such a moderate approach is backed by a broad 
     coalition of Midwest business, labor, trade, civic and 
     tourism groups.
       Economics demand it. currently, Japanese businesses may 
     find the Chicago and Midwestern economic climate attractive, 
     but the hassles of getting here send them searching for other 
     American locales. If restrictions were dropped, the number of 
     trans-Pacific passengers could double by 2000, says the 
     Midwest-Asia Aviation Coalition. The coalition estimates that 
     increased air service could result in 2,670 jobs to the 
     Midwest and $52 million in additional salaries.
       The current system, as Department of Aviation commissioner 
     Mary Rose Loney says, ``has put Chicago at a competitive 
     disadvantage with other cities.'' Chicago is too important an 
     economic engine for the Midwest to be hamstrung by 
     regulations written 45 years ago in the pre-commercial-jet 
     age.

  Mr. Speaker, I yield to my colleague on the Subcommittee on Aviation, 
who also serves with another Illinois colleague who could not be here 
tonight and talk. The gentleman from Pontiac, IL [Mr. Ewing], certainly 
has been a leader in this country. The gentleman has served with great 
distinction and has been a very active advocate of getting these talks 
in place and done so that we can start to open up our trade and air 
trade, aviation trade with Japan, and certainly hope that this would be 
expedited, especially in these talks that are going on this month and 
next week, September 22.
  Mr. Speaker, I yield to my good friend, the gentleman from Chicago 
[Mr. Lipinski].
  Mr. LIPINSKI. I thank the gentleman from Illinois [Mr. Hastert] for 
yielding.
  The American and Japanese negotiators are on the verge of replacing 
this outmoded 1952 agreement with a new accord which would dramatically 
increase air service between our two countries. Eventually such an 
agreement can lead to total deregulation or open skies.
  I hope that Japan is not posturing. I hope that we are not posturing. 
I hope that we can use common sense and really make progress. I urge 
the administration to complete an agreement with Japan this month which 
liberalizes air service. We really cannot afford to wait. We have 
waited far too long already.
  We have been asking both sides to put aside symbolic differences in 
the spirit of achieving real gains for consumers and business, not only 
in Chicago, IL, the Midwest, but really throughout this Nation. Opening 
up air travel with Japan just will give us enormous economic benefits, 
not only in this Nation but in Japan also.
  Liberalization is a very important first step. The next step in 
ensuring that the Midwest historical disadvantage in air service to and 
from Asia is corrected with significant gains in the number of flights.
  Mary Rose Loney, the city of Chicago aviation commissioner, said a 
new agreement is sorely needed even if it stops short of complete open 
skies. Dogmatic insistence on open skies may forgo present-day 
opportunities for a greater liberalized regime between the United 
States and Japan.
  I recognize that open skies with Japan is not on the immediate 
horizon. The United States may need to accept a phased-in approach so 
our agreements would be like Germany or Canada, ones that started out 
very slowly but have expanded tremendously.

                          ____________________