EU-ASEAN agreement on air transport to boost economic recovery and tourism

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The EU and ASEAN signed the first historic bloc-to-bloc air transport agreement to increase inter-regional connectivity. It will be a vector for the economic recovery of Southeast Asia and the relaunch of post-Covid tourism

ASEAN and the European Union concluded negotiations on the Comprehensive Air Transport Agreement (AE CETA) during the extraordinary meeting of their respective senior transport officials, held virtually on 2nd June 2021. The signing of the agreement comes after eight rounds of negotiations that began in 2016 and were led by Singapore and the European Commission. The negotiations lasted a long time, as air rights are a sensitive issue: airlines are often regarded as external projections of respective nations, as many of them enjoy direct support from national subsidies. The AE CETA is the world's first air transport bloc-to-bloc agreement, thanks to which ASEAN and EU airlines will enjoy more opportunities to operate passenger and freight services between the two regions and on trans-regional routes. Adina Valean - European Commissioner for Transport - said that the agreement provides essential guarantees of fair competition for our airlines and European industry while strengthening our mutual trade and investment prospects.

The agreement aims at increasing the competitiveness of the respective air transport services. Indeed, respective companies will be able to carry out any number of services between the territories of the European Member States and Southeast Asia, and up to 14 weekly passenger services and any number of cargo services. Strengthening relations between the European Union and ASEAN will bring about a series of concrete benefits: the efficiency of the respective sectors will improve, market access will be facilitated, new business opportunities will be created based on the principles of fairness and transparency, as well as a more homogeneous regulatory framework for the labour market. The European Commission estimated that in the first seven years after entry into force, the agreement could create up to 5,700 new jobs and generate up to € 7.9 billion in economic benefits.

The AE CETA is a further sign of the intensification of inter-regional relations between Europe and Southeast Asia and contributes to enhancing their political and economic relations. The agreement is part of other initiatives such as the regional integration support program (ARISE Plus) and the commitment to strengthen cooperation on climate change (which includes the carbon offsetting and reduction scheme for international aviation, the EU-South East Asia Aviation Partnership). Dato Lim Jock Hoi - ASEAN Secretary General - commented on the agreement by saying that with $ 10.5 billion in foreign direct investment flows and $ 226.2 billion in trade in goods in 2020, the EU is already the third source of investment and the third trading partner for ASEAN The agreement would significantly strengthen air connectivity between ASEAN and Europe and bring the two regions even closer.

The deal will provide more connections and better prices for passengers. In this regard, increasing connectivity between the two regions will also reinvigorate the tourism sector, which has been hit hard by recent containing measures imposed due to the Covid-19 pandemic. The president of the Cambodian section of the Pacific Asia Travel Association, Thourn Sinan, said that one of the shortcomings in the tourism sector is that air connections are still limited. “In the past, we relied heavily on the countries around us (...) I see it, if the government could connect Cambodia to Europe or major European cities with direct flights, it would be a godsend for Cambodia, given the huge EU market, with the potential for agricultural and industrial products Cambodians”, he added. As reported by The Star, tourists are a great asset to the economies of Southeast Asia. Suffice it to say that leisure and business travel accounts for around 5-10% of national GDP in countries such as Malaysia, Singapore and Thailand.

Singapore Transport Minister S. Iswaran enthusiastically welcomed the conclusion of the agreement. Indeed, negotiations were led by representatives of the Asian city-state. He said: "The successful conclusion of the ASEAN-EU global air transport agreement It is a historic achievement and a milestone in our bilateral ties. It is the first such region-to-region agreement and a declaration of commitment by ASEAN and EU Member States to work together to overcome the current crisis of Covid-19, reconnect and resume cross-border travel".

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