Aviation Industry is No stranger to an Interdependent global society
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LE G I S L AT I V E
B Y J A S O N D I C K S T E I N
AEA GENERAL COUNSEL
aviation Industry is No stranger to
an Interdependent global society
R
ecent economic events have Thus, it is with some joy international But perhaps the reports are not
reinforced the homily that economists receive the news from fully accounting for trade inhibitions;
we live in a global economy. a recent World Trade Organization/ perhaps protectionism is simply tak-
Cascading bank and securities fail- Organization of Economic ing another form. Trade limits can
ures resonating across the globe have Cooperation and Development/United be overt. For example, Brazil has
shown how interdependent the econ- Nations Conference on Trade and published a list of 102 target United
omies of the world have become. Development report on protectionist States goods, upon which it intends
The aviation industry is no stranger measures. to levy punitive tariffs as punish-
to globalization. Aviation is one of The joint WTO/OECD/UNCTAD ment for U.S. non-compliance with a
the prime instrumentalities of glo- report concluded that fears of ram- WTO ruling concerning U.S. cotton
balization. Since 2001, the air cargo pant protectionism were misplaced. subsidies. The list is made up mostly
industry has hauled 326.1 million tons
of goods valued at $437 billion. Last
year alone, in a depressed economy, Since 2001, the air cargo industry
the air cargo industry still was respon-
sible for the carriage of 36 million
has hauled 326.1 million tons of goods
tons of goods valued at $49 billion. valued at $437 billion.
During the past five years (2005-
2009), this has totaled 195.7 million
tons of goods valued at $273 billion. According to the report, new import of consumer goods and automobile
During times of global recession, restricting measures by the G20 engines, so AEA members should
economists often fear protectionist nations cover around .7 percent be largely unaffected, although
reactions. Protectionism shields local of G20 imports. These numbers headphone tariffs increase from 20
economies, but inhibits the global are down from 1.3 percent of G20 percent to 40 percent. However, trade
interactions helping to facilitate inter- imports from the period of October limits can be more subtle.
national trade. Of course, those same 2008 to October 2009, which is the Countries can take “safety-related”
interactions also facilitate interna- last time a similar report was issued. actions that effectively inhibit trade,
tional interdependence, which leads The report also indicates nearly half of but are not recognized as protection-
to international cascading failures these import restrictions were related ist measures because of the claim
when one large economy is in trouble. to fuel. of a safety basis. Technical barriers
64 avionics news • may 2010The predicted compromise would permit the U.S. to enter
into bilateral agreements with other governments, such as
the current maintenance implementation procedures, and
to rely on audits conducted under those bilateral agreements
in lieu of live audits by U.S. inspectors.
like this are largely prohibited under port its program, the FAA would everyone. The U.S./European Union
the Agreement on Trade in Civil have to add inspectors to its inter- bilateral agreement still remains
Aircraft, but they are permitted when national field offices to be able to unimplemented, and while the
they relate (or are alleged to relate) support the twice yearly audits for U.S. currently has bilateral agree-
to safety. the roughly 500 “foreign” repair ments with 13 of the 27 EU nations
stations holding FAA repair station (Austria, Belgium, Czech Republic,
U.S. Initiative Impacting certificates. With no additional fund- Denmark, Finland, France, Germany,
Maintenance Globalization ing being provided to support this Italy, the Netherlands, Poland,
As I was writing this column, burden, the FAA would either have to Romania, Spain, Sweden, and the
Congress was considering an FAA tax the repair stations to pay for the UK), there are only three countries
Reauthorization Bill that would additional costs (an option permitted with MIPs in Europe: France, Ireland
impose new burdens on repair sta- under the current FAA regulations) and Germany. Repair stations in
tions outside the United States that or it would have to cut back on the other EU nations likely would need
want to hold U.S. FAA repair sta- total number of extraterritorial repair to be subject to the U.S. FAA audits
tion certificates to work on U.S.- station certificates it issues to a limit unless the U.S.-EU agreement is
registered aircraft. that can be fully supported by the implemented. And repair stations in
The proposed legislation would existing staff. nations that do not have MIPs with
require two audits a year to be con- Government is the art of the pos- the U.S. would have no recourse but
ducted by FAA inspectors. Failure sible, and the U.S. already seems to submit to the audits or lose their
to obtain such inspections would to have identified the compromise FAA certificates.
mean the non-U.S. repair station solution it likely will implement. The Repair stations in countries like
would lose its FAA credentials and predicted compromise would permit Canada could be affected unless
would be unable to maintain or alter the U.S. to enter into bilateral agree- the language of the bill is changed
U.S.-registered aircraft (or the parts ments with other governments, such to preserve the current relationship
removed from such aircraft). It is as the current maintenance imple- between the U.S. and Canada (or
not the fact of the inspections that mentation procedures, and to rely on unless it is redrafted to meet the
entails the greatest burden; it is the audits conducted under those bilat- new statutory requirements). In
lack of resources for supporting these eral agreements in lieu of live audits fact, the current language of the bill
inspections that causes a problem. by U.S. inspectors.
Already strapped for cash to sup- But this solution does not help Continued on following page
avionics news • may 2010 65Legal ease the globalization equation — not even the regulated organization should
Continued from page 65 the U.S. aviation safety component of develop a formal process to identify
the equation. the causes of substandard performance
addressing “non-certificated mainte- of the SMS, determine the implications
nance organizations” would preclude Implementation of Safety of substandard performance of the
Canadian repair stations from per- Management Systems SMS in operations, and eliminate or
forming work because they are not The FAA has been promoting the mitigate such causes. It is envisioned
Part 145 organizations (they are 571 idea of safety management systems. as continuous improvements aimed
organizations). SMS is an ICAO mandate and some- at those elements of the program the
This FAA inspection burden likely thing the civil aviation authorities of safety policy identifies as being sub-
would be implemented shortly after the world have been directed to incor- standard.
the new TSA rule, which would porate into their regulations. In the Contrast this with the FAA’s SMS
require initial auditing of repair sta- United States, the momentum of the order, which talks about a continual
tions’ security programs. This rule SMS movement is making it appear improvement to the level of safety.
would permit periodic inspections, as though we must adopt some sort of Under the ICAO plan, continual
but it does not set a schedule or SMS regulation to avoid being subject improvement to the level of safety is
minimum frequency for such audits. to disparate SMS standards from each a government obligation under the
Together, the programs likely would of the foreign markets our businesses government’s state safety program, not
require about three audits each year affect — which could impede the abil- a private industry obligation under the
of non-U.S. repair stations by U.S. ity of U.S. repair stations to provide SMS. Under the ICAO-recommended
inspectors. maintenance to customers from outside paradigm, the FAA should be responsi-
What would be the likely impact? the United States. ble for periodically raising the bar. But
Some non-U.S. repair stations prob- As ICAO envisions it, SMS would such bar-raising activities are accom-
ably would decide an FAA certificate be imposed on repair stations, air plished through normal rulemaking
is not worth the burden and would carriers and manufacturers. At a para- activities that guarantee a level of due
surrender their credentials. Others digm level, SMS resembles a quality process in accordance with traditional
probably would incur significant management system with a few addi- legal norms.
expenses to submit to the additional tional features. The additional features By shifting the burden to raise the
audits. The European Parliament and include collection of data to support level of safety to make it an obligation
EASA already have plans to impose safety risk analysis, risk-based analysis of the regulated industry, the FAA cre-
reciprocal auditing burdens on U.S. of the safety data, proactive identifica- ates the potential for a regulatory sys-
repair stations holding European cer- tion of potential hazards, and a plan tem that violates due process standards
tificates, to the extent necessary to for mitigating or remedying identified by imposing changing safety standards
mirror the U.S. burdens imposed on hazards. without the formalities of rulemaking,
European repair stations. The FAA’s suggested implementa- and equal protection standards because
The timing of these U.S. efforts is tion of SMS was published in FAA companies are required to improve, so
ironic, in that the International Civil Order 8000.367. It is meant to serve they must meet ever-higher standards
Aviation Organization is considering as the template for SMS in the United unique to each company and inconsis-
proposals calling for recognition of States. But the U.S. template diverges tent across the industry.
foreign repair station certificates at in subtle, yet critical ways from the It is subtle changes like this that
face value. ICAO is the international ICAO recommendation. turn a regulation that could be easily
body charged with promoting global For example, ICAO’s SMS manual integrated into the U.S. system into a
aviation safety and cooperation. envisions a paradigm of continuous potential regulatory blank check.
Globalization is important, and the improvement of the SMS. In explana-
FAA does not always have control of tory text, the ICAO SMS manual states Continued on page 68
66 avionics news • may 2010Legal ease for the U.S. to abandon SMS as a regu- ICAO model. And these non-U.S.
Continued from page 66 latory fixture. Because of the globaliza- implementations are one of the ele-
tion of the aviation marketplace, ICAO ments driving implementation in the
Worldwide Impact: Implementing enjoys a strong influence as an arbiter United States.
SMS in the U.S. of international aviation regulatory stan- Implementation, or at least rec-
This might have some readers clam- dardization. ognition, in the U.S. of SMS has
oring to abandon the SMS paradigm. Already, a number of nations have become important for international
Some people claim it is not reasonable implemented SMS regulations on the trade reasons. If the U.S. does not
implement SMS in its regulations and
its major trading partners do imple-
ment it, then the trading partners
would be justified in insisting that
U.S. certificate holders comply with
the non-U.S. SMS provisions as a
condition of market access. This is
partly because SMS provisions are
deemed to be safety requirements.
For an avionics manufacturer
intending to sell to many markets,
this means the manufacturer must
meet all of the potentially conflicting
standards from the various markets
in which the manufacturer intends
to do business. On the other hand, if
the U.S. has its own SMS program,
the U.S. easily can assert its program
achieves the same goals and should
be subject to recognition in the for-
eign nations. Repair stations with
multiple certificates (such as FAA,
EASA, CAAC, TCCA, etc.) will
recognize the value in having simi-
lar standards the various regulatory
authorities can validate easily.
So, U.S. implementation of SMS
for repair stations and manufacturers
makes more sense as a trade issue
than as a true safety issue (for repair
stations and manufacturers already
employing rigorous quality and con-
tinuous operational safety systems,
the safety case for SMS is highly
speculative because most of the use-
ful elements of SMS already exist in
the regulatory system).
This does not mean, however, the
FAA implementation concept envi-
sioned in Order 8000.367 is the only
way to implement. Gap analyses have
68 avionics news • may 2010shown most of what SMS requires be “automatically superior” to a sys- regarding the usefulness of SMS in
already is contained in Part 21 (the tem that does not feature risk-based small organizations.
manufacturing rules) and in Part 145 analysis might be a faulty one. No This is an issue on a fast track, so it
(the repair station rules). So, the most one has yet developed sound data to will continue to deserve headlines in
painless implementation would be to support or refute such a hypothesis the months to come. q
add the elements not yet contained
in the regulations and declare vic-
tory. This likely would entail adding
clauses to Parts 21 and 145, and either
Part 119 or Parts 121/135.
The FAA has expressed a prefer-
ence for a single, uniform SMS regu-
lation that would exist in a separate
place in the regulations and be applied
to each of the certificate holders
described in its last paragraph. There
are cosmetic justifications support-
ing this approach. It would be easy
to point to a separate SMS part and
claim the U.S. is in compliance with
ICAO provisions, while the FAA Duncan Aviation has the component solutions customers expect from an
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might not serve the best interests of
One call connects you to a universe of
safety. Manufacturers, air operators and aviation services and solutions to your
repair stations are not built the same toughest aviation problems. Your
boss will think you’re a genius!
and do not operate the same. Trying
to impose a uniform SMS mechanism
on them all might be like trying to fit a
square peg into a round hole.
If we recognize safety resources are
not infinite, then we must recognize
the resources spent on implementing
an SMS system that does not work
well, might be resources taken away
from a safety system that could have
worked better. For example, resources
spent on risk analysis of low-risk
issues could have been spent on miti-
gating well-known, higher-risk issues
that do not need risk analysis to be
identified.
Thus, the assumption an SMS must
Avionics News_PCS.indd 1 avionics news • may 4/7/2010 69
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