Customs Deal Gives Big Advantage to UAE Over U.S.
Administration says the pact is about national security, but the Emirates called the shots in a way that could seriously wound U.S. airlines and jobs.
July 10, 2013 - 9:16 pm
Despite an effort last month in the House to block it, the U.S. and the United Arab Emirates moved forward with a security-data exchange deal last week to pave the way for controversial U.S. Customs and Border Protection pre-clearance for passengers flying to America from Abu Dhabi International Airport.
“This agreement falls in line with both parties’ commitments to protect their borders from any risks, whereby we seek to strengthen theses two countries’ positions as safe destinations for travel and business,” Director General of Abu Dhabi Customs Saeed Ahmed Al Muhairi said after inking the data-sharing pact with Kevin K. McAleenan, acting deputy commissioner of CBP.
“…This enables the realization of both parties’ common interests which then would contribute in supporting customs work, the process of border security and in facilitating the flow of legitimate trade across borders.”
An amendment offered by Rep. Patrick Meehan (R-Pa.) to prohibit the use of funds for pre-clearance operations in Abu Dhabi was approved by voice vote on June 5. It was added to the Department of Homeland Security appropriations bill, which has been sitting in the Senate since mid-June.
But the objection to the pre-clearance facility, which would speed up the customs process for international travelers, isn’t so much about security as it is about disgruntled U.S. airlines and accusations that the Obama administration is helping a foreign government corner the international travel market.
“The logic seems to be simple. Clearing travelers abroad before they reach U.S. soil reduces the threat of terrorism, costs to the United States’ taxpayers for processing troublesome travelers,” House Foreign Affairs Subcommittee on Terrorism, Nonproliferation, and Trade Chairman Ted Poe (R-Texas) said at a hearing to study the facility plan Wednesday.
“If terrorists are gonna be smart enough to pull off a terrorist attack against us, they’ll be smart enough to go to a nearby airport that doesn’t have a pre-clearance facility like Dubai, so the national security benefit seems to be unclear at the moment,” he added.
“What seems to be clear is that a pre-clearance facility comes across as hurting United States air carriers.”
Meehan, Rep. Peter DeFazio (D-Ore.) and 148 other members from both parties wrote Homeland Security Secretary Janet Napolitano in April to question why the U.S. would pick Abu Dhabi for pre-clearance status when, unlike any other nation that enjoys the convenience of a CBP facility, no American air carrier services the UAE capital.
“This move would be a clear benefit for Etihad Airways – a company wholly-owned by the UAE – in its goal to transform Abu Dhabi Airport into a global hub whose annual passenger capacity will increase from 12.5 million to 30 million by 2017,” Meehan and DeFazio wrote. “What is less clear is why the Department – knowing that no U.S. carriers currently serve Abu Dhabi – would agree to provide this obvious competitive advantage to a foreign carrier at the expense of the domestic airline industry and its over 500,000 workers.”
“As strong proponents of competition and the free market, we strongly object to the government’s proposal to create an uneven playing field for market participants. We further object to the fact that in this instance, the government has so obviously chosen to intervene in support of a foreign government over the interests of a vital U.S. industry and workforce.”
Poe said at the hearing “the United States government wants to contribute to competitive advantage over U.S. air carriers.”
“One airline tells me it gets 90 percent of its profits from international travelers, in fact that’s where it makes money. It then uses the profit margins from international travel to offer low prices on domestic travel. Generally speaking, domestic travel is not profitable for American airline industry,” the chairman said. “So, if the Abu Dhabi pre-clearance facility moves forward, it’s hard to see how this doesn’t lead to higher prices for domestic U.S. flights and Americans losing their jobs.”
DHS told lawmakers it first suggested Dubai, the UAE’s largest city and glittering resort and business hub, for a pre-clearance facility, but it was the UAE that in turn suggested Abu Dhabi. U.S. airlines fly in and out of Dubai.
“There is now no guarantee that even if U.S. carriers wanted to serve Abu Dhabi UAE would let it,” Poe said.
Ranking Member Brad Sherman (D-Calif.) said the pre-clearance facility would subject just three planes a day to extra scrutiny.
“It is understandable that an agency of the federal government subject to sequester, subject to furloughs, subject to waiting times that deter economic activity and tourism to the United States would say, well, gee, can’t we get another source of revenue?” Sherman said of the UAE offering to chip in 80 percent of the CBP facility’s costs.
“But, if the net effect of this is to diminish the number of people who fly on U.S. carriers and to give an unfair advantage to the airline based in Abu Dhabi then what looks like a good deal for American taxpayers may in fact not be.”
McAleenan, testifying before the panel, said one reason Abu Dhabi was chosen is “to shut down different routes” for terrorists in the region.
“DHS and CBP engaged many governments in this region in response to the emerging aviation security threat from al-Qaeda in the Arabian Peninsula over the last several years there’s been ongoing conversations,” the CBP official said. “…A lot of these flights from source countries for extraneous activity are coming through the Arabian Peninsula. They are coming through the UAE and Abu Dhabi. We’d like to close off one of those outlets with our most strongest security program that we can project abroad.”
Lawmakers noted that it doesn’t stop terrorists from simply avoiding the pre-clearance outlet.
Sherman said he thinks the security benefit is “very slight.”
“It’s not like this person, if they chose to go to Lagos or Frankfurt on the way to the United States, would be subjected to that pre-clearance,” he said. “…So I think we have to evaluate this on an economic basis.”
The head of the trade association for U.S. airlines, Nicholas Calio of Airlines for America, told the committee “it doesn’t matter that CBP’s claiming a national security — it’s also a matter of economic security, and they play into each other.”
“What we have here basically is the United States government picking winners and losers in the international aviation business, and the winners are the international competitors of U.S.-based airlines,” Calio said. “…For the UAE this is not a national security issue, it’s a commercial play. It’s about diverting traffic that otherwise would fly on American metal to their own planes for which they don’t have the population to fill.”
He noted that the UAE has on order twice as many new wide-body jets than the U.S. carriers have combined — and is looking for a way to fill them.
“These governments and their airlines have made clear publicly, repeatedly that their goal is to make airports like Abu Dhabi the world hub. They’ve further made clear that an integral part of the plan, in fact, the indispensable part of the plan is to do this by skimming international passengers from U.S. carriers,” Calio continued. “…So what we have here basically is the United States government facilitating the business strategy of these foreign governments and their airlines.”
President Obama called UAE Crown Prince of Abu Dhabi Mohammed bin Zayed Al Nahyan on Tuesday; the White House said the leaders focused on Egypt and “the strong partnership and friendship between the United States and the UAE.”
Lawmakers contend that partnership is blossoming at the expense of Americans.
“We have every confidence that U.S. airlines can be marketplace global leaders in commercial aviation – but that we cannot possibly expect them to succeed when this Administration helps foreign national carriers at the expense of domestic airlines,” said the Meehan-DeFazio letter to Napolitano.
“Providing explicit support for a government-owned foreign competitor by opening a CBP Preclearance facility in Abu Dhabi is wrongheaded, and we strongly urge you to abandon this agreement.”