Announcement

24 May 2007

U.S. and China Initial Aviation Liberalization Agreement:

-- Civil-aviation negotiators from the United States and China have reached
agreement in principle to amend their bilateral air services agreement to allow significantly expanded air service between the two countries. The new, phased agreement, expected to receive final approval by the two governments soon,
will:

* Add ten new daily passenger flights that U.S. carriers may operate to the
Chinese gateway cities of Beijing, Shanghai and Guangzhou over 2008-2012,
doubling the number of such flights they may now operate.

* Allow unlimited U.S. cargo flights to any point in China and allow an
unlimited number of U.S. cargo carriers to serve the market as of 2011.

* Increase from six to nine the number of U.S. passenger carriers that may
serve the Chinese market by 2011.

* Expand opportunities for U.S. carriers to code-share on other U.S.
carriers' flights to China.

* Commit the U.S. and China to launch Open Skies negotiations in 2010.


Negotiators initialed the agreement in Washington on the eve of the second
Ministerial meeting of the U.S.-China Strategic Economic Dialogue (SED). The
U.S. Department of State and the Civil Aviation Administration of China
co-chaired the four rounds of negotiations, which lasted more than one year. U.S. Secretary of Transportation Mary Peters and Chinese Aviation Minister Yang Yuanyuan agreed to the final structure of the agreement in a bilateral meeting May 21, and Secretary Peters announced the agreement at the SED on May 22.

The new agreement will bring significant economic benefits to the U.S. aviation industry, passengers, shippers and local communities. It is an important step
to facilitate trade, investment, tourism, and cultural exchanges between the
U.S. and China.