American Airlines takes on GDS charges with a new distribution model - and intermediaries fight back
9 April 2010

American Airlines wants to deal directly with corporate travel managers and is attempting to cut out the middleman by putting up pay wall for Global Distribution Systems (GDSs), Online Travel Agents (OTAs) and Travel Management Companies (TMCs) to access the content on AA.com. Predictably there is a chorus of opposition from intermediaries; but Wall Street likes it. Meanwhile, airlines around the world will be watching avidly.

"At the airline firm level, this probably seems very rational to (American)," said Business Travel Coalition (BTC) Chair Kevin Mitchell, who is leading a fight to stop Direct Connect. "It generates more revenue while lowering and shifting costs. But it also throws so much complexity and burdens the industry with so many new costs, it is irrational at the industry level. The airlines just don't get it. They want to eliminate the middle man but corporations have a very efficient and time-tested way of doing business and this will undermine that."

FULL STORY HERE: http://centreforaviation.twi.bz/b

Monday, April 5, 2010

Sen. Chuck Grassley, ranking member of the Committee on Finance, with jurisdiction over tax policy, made the following comment in response to report from the Treasury Department in support of Build America Bonds.

"The thin 11-page report from President Obama's Treasury Department released on Friday fails to mention that, according to Thomson-Reuters data, California and New York did 16 of the 17 largest Build America Bonds deals.  Taxpayers from the rest of the country are bailing out California and New York under the Build America Bonds program, which offers state aid in the form of fat checks from the Treasury Department just for issuing Build America Bonds.  California and New York get a better deal from the program than states with better credit ratings, because the program simply pays 35 percent of the non-taxpaying entity's interest costs, regardless of how high their interest rate goes.  Of course state and local governments are going to 'save' money under the Build America Bonds program ? they're being sent checks from the American taxpayers that they don't need to pay back.  Also, some analysts are pointing out that municipal debt could be the next debt crisis, so it's fair to ask whether federal policy should encourage increased municipal debt that could contribute to a meltdown.

"This report confirms that large Wall Street investment banks continue to receive higher underwriting fees on Build America Bonds deals than they receive for tax-exempt bond deals.  Also, the report is simply factually incorrect.  It states that a 28 percent subsidy rate for Build America Bonds is revenue-neutral for the federal government.  However, the nonpartisan Congressional Budget Office's analysis of President Obama's fiscal year 2011 budget stated that a 28 percent subsidy rate for Build America Bonds will cost American taxpayers an additional $8 billion over 10 years.  The large Wall Street investment banks aren't satisfied with a 28 percent subsidy rate and have stated publicly that they want more.  Fortunately for the Wall Street banks, but unfortunately for American taxpayers, the House gave in to the Wall Street banks' demands and recently passed a bill providing for a subsidy rate as high as 33 percent.  Instead of looking out for just California, New York and Wall Street banks, I'm looking out for the American taxpayers who are going to be stuck with the tab."

Finance leaders say findings could help lower barriers to key U.S. exports

Washington, DC - Senate Finance Committee Chairman Max Baucus (D-Mont.) and Ranking Member Chuck Grassley (R-Iowa) today requested a study of the market for agricultural products in China, including the effects of tariff and non-tariff barriers on U.S. agricultural exports.  In their letter to Chairman Shara L. Aranoff of the U.S. International Trade Commission (ITC), the Senators asked the ITC to cover a five-year period from 2004-2009 in its report, and to submit the report within eleven months of receipt of their letter.

"China is already the fourth largest market for U.S. agricultural products, but there is room for substantial growth if we can reduce trade barriers to our exports.  The United States is a top exporter of wheat and beef, but we face unjustified restrictions in the Chinese market," said Baucus.  "The report Senator Grassley and I commissioned today will investigate restrictions on these and other agricultural products, so we can begin to remove barriers and send more of our Montana and American-made goods to China and create jobs here at home."

"China has become a major market for American agricultural exports.  But the potential is there for China to become an even bigger market for these products," Grassley said. "We need a better understanding of the tariff and non-tariff barriers that U.S. agricultural producers face in trying to export to China.  The study that Chairman Baucus and I have requested today will help.  Specifically, beef and pork producers in Iowa and across the United States stand to benefit from the elimination of non-tariff trade barriers that have no basis in science.  This investigation will shed more light on those barriers."

The text of the Senators' letter follows below:

April 1, 2010

The Honorable Shara L. Aranoff

Chairman

U.S. International Trade Commission

500 E Street, S.W.

Washington, DC 20436

Dear Chairman Aranoff,

We are writing to request that the U.S. International Trade Commission conduct an investigation under section 332(g) of the Tariff Act of 1930 (19 U.S.C. 1332(g)) regarding competitive factors affecting agricultural trade between China and the United States.

Since it joined the World Trade Organization in 2001, China's imports of U.S. agricultural products have grown substantially. China is now the fourth largest market for U.S. agricultural exports.  Yet sales are highly concentrated in a few products?soybeans, cotton, poultry, and hides and skins accounted for more than 85 percent of Chinese imports of U.S. agricultural products in 2009.  Chinese imports of several globally competitive U.S. agricultural products, such as certain meat, feedgrains, and processed food, are limited.  With rapidly rising per capita income and resource constraints on domestic production growth, China has the potential to provide greater opportunities for expanding U.S. agricultural exports.

At the same time, several factors threaten the ability of U.S. agricultural exporters to realize these opportunities.  Chinese government policies aimed at boosting domestic production and curbing imports, non-tariff measures, including sanitary/phytosanitary measures and technical trade barriers, and increased competition from third-country suppliers, especially those with which China has negotiated trade agreements, are important factors that could weaken the competitive position of U.S. agricultural products in the Chinese market.

The Commission's report should cover the period 2005-2009, or the period 2005 to the latest year for which data are available.  In addition, to the extent possible, the report should include the following:

* an overview of China's agricultural market, including recent trends in production, consumption, and trade;

*  a description of the competitive factors affecting the agricultural sector in China, in such areas as costs of production, technology, domestic support and government programs related to agricultural markets, foreign direct investment policies, and pricing and marketing regimes;

* an overview of China's participation in global agricultural export markets, particularly in the Asia-Pacific region and in those markets with which China has negotiated trade agreements;

* a description of the principal measures affecting China's agricultural imports, including tariffs and non-tariff measures such as sanitary and phytosanitary measures and technical barriers to trade; and

* a quantitative analysis of the economic effects of China's MFN tariffs, preferential tariffs negotiated under China's free trade agreements, and China's non-tariff measures on U.S. agricultural exports to China and on imports from the rest of the world.

The Commission should submit its final report no later than eleven months from the receipt of this request.  As we intend to make the report available to the public, we request that it not contain confidential business information.

Sincerely,

Max Baucus                         Charles E. Grassley

Chairman                       Ranking Member

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