TPT/16/SC/CT…..
HONG KONG, CHINA

APEC TRANSPORTATION WORKING GROUP
CONCEPT PAPER
MUTUAL RECOGNITION OF AIRCRAFT CERTIFICATION AND CONTINUING AIRWORTHINESS SERVICES
NEW ZEALAND

The purpose of this paper is to:

• Outline the purpose and objectives of a model mutual recognition agreement (MRA) for aircraft certification; and
• Canvass a framework for developing such a model MRA within the Transportation Working Group (TPT-WG).

Summary

It is likely that the export of aircraft, components and products together with aircraft engineering and maintenance services is a significant revenue earner for businesses in many APEC economies. For example, in New Zealand, the aviation industry earns approximately US$200 million per annum in such "exports", the vast majority of this trade being with other APEC economies. Given the small size of New Zealand in relation to other APEC economies, it is likely that the overall value of the industry in the region could run into billions of US dollars.

However, businesses that export aviation products and services must often hold 'approvals' from various foreign civil aviation authorities, in addition to their domestic certification, depending on the requirements of the State of Registry of their clients. This involves significant compliance costs and duplication and can hinder trade in services.

New Zealand considers that a model MRA, based on the automotive model already endorsed by Transportation Ministers, should be developed by the TPT-WG so that APEC economies may enter into bilateral or multilateral arrangements for the recognition of aircraft certification and continuing airworthiness services. A useful first step would be to gather information from APEC economies about the scope of their aviation manufacturing and maintenance industries so that the importance of the sector can be measured. Then a decision can be made on whether the TPT-WG should proceed with the development of a model MRA.

Aircraft Certification

Throughout the world, aircraft manufacturing, repair and maintenance is certified on safety grounds by an airworthiness authority, usually a national civil aviation authority. At a minimum, these authorities should have in place a regulatory framework and oversight regime consistent with the requirements of the International Civil Aviation Organisation (ICAO).

Should a business also wish to export aviation products to another economy, the destination economy's civil aviation authority often needs to be satisfied that the products are safe before they may be allowed to enter the market. This involves the destination economy's civil aviation authority certifying the exporter's systems, separately from any certification the exporter may already hold from its own civil aviation authority. The same applies for the provision of a service, even one that is physically carried out in the company's base on aircraft from another economy.

Certification may cover the manufacturing of aviation product as well as services such as maintenance and repair. Examples of manufacturing aviation product would include aircraft manufacture down to components and products. With regard to maintenance, this could include foreign aircraft being serviced at an engineering base.

Multiple certification by a variety of aviation authorities imposes considerable compliance costs on the aviation industry, particularly those that export products and services to a number of different markets, each with different certification standards, and can hinder trade in services. Multiple audits can be very expensive, especially when the companies often have to pay the travel and accommodation expenses of the auditors.

These costs can be exacerbated when the certifying authority of the "exporter" economy is also carrying out regular audits. That authority might be recognised as having high standards and a rigorous approach to safety oversight, yet a foreign authority may still wish to be satisfied for its own purposes. Such duplication of activity may not be particularly cost effective for what may only be a marginal safety benefit.

A solution could be for the authorities of the interested economies to negotiate bilateral or multilateral mutual recognition agreements whereby each is satisfied of the other's systems and safety oversight and would accept the other's certifications.

APEC and WTO Linkages

The model MRA concept is consistent with the trade liberalisation objectives of various international bodies. It formally acknowledges the APEC Leaders' goals for expansion and acceleration of trade facilitation programmes consistent with the World Trade Organisation (WTO) Agreement. Specifically, the WTO Agreement incorporates the Agreement on Technical Barriers to Trade (TBT), which recognises the important contribution that international standards and conformity assessment systems can make by improving efficiency of production and facilitating the conduct of international trade. Further, the TBT Agreement calls on members to:

"Give positive consideration to accepting as equivalent technical regulations of other members, even if these regulations differ from their own, provided they are satisfied that these regulations adequately fulfil the objectives of their own regulations."

In the APEC process, the 1994 Bogor Declaration made a commitment to achieving free and open trade and investment for industrialised economies by 2010, and for developing economies by 2020. Achieving a model MRA would be an important step towards economies achieving that goal.

Further, the 1995 Osaka Action Agenda calls on economies to:

• Ensure the transparency of the standards and conformity assessment of APEC economies.
• Align APEC economies' mandatory and voluntary standards with international standards.
• Promote co-operation for technical infrastructure development to facilitate broad participation in mutual recognition arrangements in both regulated and voluntary sectors.

In 1995, Transportation Ministers directed the TPT-WG to pursue as far as possible regulatory harmonisation or mutual recognition. Ministers followed this up in 1997 with a direction for the TPT-WG to give consideration to mutual recognition measures that would:

• Promote transparency in regulations;
• Resolve differences in conformity assessment; and
• Facilitate the mobility of transport personnel.

Work towards mutual recognition of professional qualifications has commenced this year and the TPT-WG has already produced a model MRA for the certification of automotive product, intended for use bilaterally in the region.

A similar model could be developed for aircraft certification and continuing airworthiness, on a bilateral or multilateral basis within APEC economies.

Such a model MRA for would be consistent with Leaders' statements, Minister's instructions and would promote modal consistency.

Purpose of the Model MRA

The purpose of the proposed model MRA would be to allow the establishment of bilateral or multilateral agreements between APEC members to facilitate the acceptance of products and services complying with identified and agreed standards. The standards applied by the parties to the agreement need not be identical, but rather provide equivalent or higher levels of safety. Further, it is not essential that the agreed standards are mandated within a member's economy, however the MRAs would ensure that parties do not apply additional requirements restricting access of the defined product or service to its market. This approach would allow members to choose and accept products and services complying with international standards or national and regional standards even though it may not be considered appropriate to apply these requirements within their own economy.

The model MRA would be a treaty status document, involving government to government agreement.

An advantage of the model MRA is that it could be structured as either a bilateral or multilateral agreement, depending on the willingness of economies. Those economies not wishing to accept the products or services of other economies, for valid reasons, would not be forced to sign an all-encompassing agreement.

The Way Forward

A first step would be to gather information from APEC economies about the importance of their aviation manufacturing and maintenance export industries.

The principal information sought would be:

• the number of businesses engaged in aircraft certification and maintenance services for export, and the scope of services provided
• the overall value of such services to each economy,
• the impediments as identified by the aviation industry to businesses undertaking export services, and
• an estimate, if possible of revenue lost to the aviation industry owing to such impediments

New Zealand would design and distribute a questionnaire, collate and analyse the results, and report to the 17^th TPT-WG, with a new project proposal for formal consideration.

Recommendation

It is recommended that the TP-WG agree to New Zealand gathering information about the scope and value of the aircraft certification and continuing airworthiness export industry, in order to present a formal project proposal at the 17^th TPT-WG meeting.

This page was last updated on 1 Feb, 2008