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CHICAGO: September 27, 2018. Speaking at the annual American Bar Association and Space Law Forum this week, FedEx founder, chairman and CEO Fred Smith reiterated his view that open skies and free trade drive global prosperity:

“As you know, this year marks the 40th anniversary of the passage of the Airline Deregulation Act. This policy has helped create a vibrant arena of global trade and cultural exchange.

“Open Skies provides opportunities for customers across the world in the same way domestic deregulation provided opportunities for US customers. Today the US has open skies agreements with more than 120 partners.

“These agreements create tremendous benefits for America. They create U.S. jobs particularly in aerospace, travel, and tourism. The US Department of Commerce has estimated that every $1 billion In aircraft orders supports about 6,000 American jobs

“It’s predicted that over the next 10 years, open skies cargo services will create almost 350,000 new jobs and add US$900 billion to our economy.

“By the way, FedEx, UPS, and Atlas directly employ over one million people and the economic activity generated by their market connectivity creates more related jobs as well.

“Exporters benefit from Open Skies connectivity. US cargo carriers use Open Skies rights to connect exporters to new markets.

“Made-in-America manufacturing benefits too. Open Skies agreements have prompted overseas carriers to buy American products. The three Gulf carriers, for instance, have over 300 Boeing aircraft in use or on order. Without Open Skies, those airplane orders could easily have gone to Airbus, shipping thousands of US manufacturing jobs to Europe.

“Travellers enjoy lower fares on routes affected by Open Skies agreements. Economists have noted that airfares have fallen 32 percent on such routes as compared to regulated markets. It’s been estimated that Open Skies agreements have generated at least US$4 billion in traveller cost savings.

“Beyond America, liberalized aviation has opened the world. The US State Department reports that since liberalization, countries with agreements have experienced traffic growth of between 12 and 35 percent. In some situations, growth exceeded 50 percent.

“Here’s another tidbit from the State Department: A simulation of the likely results of liberalizing 320 country pair markets not in open skies mode was conducted. The simulation found that those 320 agreements would create 24.1 million full-time jobs and generate an additional US$490 billion in GDP. That’s an economy almost the size of Brazil.

“Upholding existing agreements and seeking out new opportunities is exactly how the US will be able to realize the economic benefits of Open Skies and continue leading the world in aviation.

“I’m confident we also agree that retreating from Open Skies would have the opposite effect: it would stymie American leadership and economic growth, while also sending the wrong signal to our trading partners.

“Turning our back on Open Skies would empower other countries such as China to retreat from opening their markets, and ultimately lead to the unraveling of the Open Skies regime around the globe.

“Of course, the importance of Open Skies is much greater than the economic growth of a single country, be that the United States or China or Germany. The principles of Open Skies permeate all facets of the world economy, particularly global trade.

“History demonstrates that people have always wanted to travel and trade. Their doing so propelled global growth and lifted millions out of poverty.

“Despite the current tension, trade will continue because people will demand it. As incomes rise people will want access to more goods and services and greater economic opportunity.

“People talk a lot today about unfair trade relationships and the need for reciprocity. Fairness and reciprocity are important goals. And there are some practices and barriers that are unjustified and need to be stopped. Countries should adhere to the WTO commitments they made.

“But trade liberalization has always been a series of compromises. Every country has sensitive, protected industries, including the US If you want examples just look at our protections on sugar, cotton, apparel, and trucks.

“We should not judge the entire value or fairness of our trade relationships by focusing only on the relatively small number of protected sectors.

“We should instead focus on the thousands of tariffs and non-tariff barriers that can be reduced or eliminated, and the enormous economic value that 
could result. That value will far outweigh the few sectors that continue to 
receive political protection.

“That’s not to say we shouldn’t push to reduce some of those difficult 
barriers, but let’s not let the perfect be the enemy of the good.

“The great news is that global trade imbalances are declining. The US trade 
deficit as a percentage of GDP is 2.4 percent, down from its recent peak of 5.8 percent in 2006.

“China’s trade surplus is 1.4 percent, down from 9.0 percent in 2007. This will continue as China and other developing economies become more consumer and service oriented

“The innovations and improvements in the transportation and communications sectors have dramatically changed the nature of trade. Today, anyone can order something from their phone and receive it within a few days or even the same day.

“Consumers and exporters, especially small businesses, are reaping the benefits of global e-commerce. An article in Business Insider says that 81 percent of small businesses believe that online sales are critical to their companies’ success.

"And worldwide e-commerce is projected to grow from US$2.8 trillion this year to US$4.9 trillion in 2021, only three short years away.

In the U.S., e-commerce will comprise 17 percent of all retail by 2022, up from about 10 percent in 2017.

“In summary, there’s no question that open skies and free trade drive prosperity in our industry, our country, and our world. FedEx has a long history of supporting these policies, and they in turn have helped us grow significantly over the years. I hope the organizations represented here today will stand with FedEx as being ‘all in’ for practices that create a more accessible world for everyone.”

Other sponsors of the two-day conference included UPS and Delta Air Lines.

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