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Adam Smith, the worshiped icon of free-traders, is being betrayed again in the “open skies” agreement.
1. Till now, transatlantic flights from Heathrow to the US were monopolized by two British companies and two US companies. The EU, which has a bunch of free-trade doctors reading Adam Smith’s works full time, decided to broke that monopoly. The British answered that it was not a free trade issue since, as it was, it was very profitable for them.
2. The free-trade credo includes provisions regarding freedom of investments. For instance, shares of European airlines can be bought by foreigners without limitation. The EU free-trade doctors observed that there is nothing in Adam Smith works concerning the ownership of airlines, let alone a limitation of foreign ownership, and consequently asked the US to cancel the 25% limitation they apply. Although the desire to acquire an US airline could appear quite strange, even dangerous, free-trade doctors claimed that it is a matter of principle, and that any fool enjoy, under free-trade, the irrefragable right to own US airlines. At this point of the negotiation, the US said that in airlines matters, the common law does not refer to anything or any person prior the Wright brothers (particularly Wilbur).
3. As the US airlines are now authorized to flight to all 27 European countries, the EU asked that the European airlines can have flights between US cities. The US answered that “this would not be free-trade, we can have flights in 27 COUNTRIES, you cannot have many flights in ONE country”.
4. The airline industry connection with free-trade is extremely complex, and the Free-Trade University of Bruxelles, produces regularly thesis on relevant subjects. The last one was: An original free-trade model: The airlines industry in the US. It describes how 90% of airlines spent 90% of their time under Chapter 11, how operating costs such as retirement expenses are initially normally booked, then written off and the pensions paid by the government, etc.
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