Cape Town Treaty Implementation Act of 2004

Mr. Speaker, I move to suspend the rules and pass the bill (H.R. 4226) to amend title 49, United States Code, to make certain conforming changes to provisions governing the registration of aircraft and the recordation of instruments in order to implement the Convention on International Interests in Mobile Equipment and the Protocol to the Convention on International Interests in Mobile Equipment on Matters Specific to Aircraft Equipment, known as the ``Cape Town Treaty,'' as amended.

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, the Cape Town Treaty was signed by the United States on May 9, 2003, and referred to the United States Senate for ratification at the end of that year. The Senate will most likely consider ratification of the treaty in the next month or so.

Now, this action by the House today of course will not approve the Cape Town Treaty. That responsibility does lie with the other body. However, this bill takes an action to conform United States law for proper implementation of that treaty, and that is why this action today is important.

The Cape Town Treaty is vital to international commerce. It will bring the uniformity of modern commercial finance laws, already in place in the United States, to international transactions involving aircraft and also aircraft engines.

This uniformity will both greatly reduce the risks associated with aircraft and engine sales abroad, and it will also help to bring improved and newer aircraft, it will help bring them to many areas of the world that desperately need them.

The job of the Subcommittee on Aviation since I have become chairman and, even more importantly, since September 11, 2001, is to aid this industry that has been ailing. If we look at what happened since September 11, many folks refer to some 3 million jobs lost in this industry, and I can almost stand here with certainty and guarantee that half of those 3 million jobs, 1.5 million were directly related to the aviation industry. This bill is one more step in helping to revitalize that shaky industry that we have seen since September 11.

The Cape Town Treaty seeks to establish an international registry where parties having an interest in aircraft or in aircraft engine can register that interest at an international level to ensure that they remain protected.

The treaty enjoys strong bipartisan support and is also supported by the U.S. aviation industry, as well as our key government Departments, including our State Department, Department of Transportation, and Department of Commerce.

In order to fully implement the treaty and its accompanying protocol, the administration has proposed to allow the Federal Aviation Administration's Civil Aviation Registry to be the United States' so- called ``entry point'' to the international registry for relevant actions. This is a minor, but important, change in United States law, because it will ensure that upon ratification, the Cape Town Treaty and its aircraft protocol can be fully implemented. That is exactly what H.R. 4226, the Cape Town Treaty Implementation Act, proposes to do.

This is important legislation, again, that will help an industry that is still recovering from the tragic events of September 11.

In closing, I would like to thank Ambassador Ed Stimpson. Ed Stimpson is the ambassador to ICAO, which is the International Civil Aviation Organization. That international headquarters is located in Montreal, and Ed Stimpson does a great job in representing United States aviation interests on that international body. So I wish to thank him for bringing the need to implement this needed legislation before the House of Representatives and also his leadership in trying to help revitalize our industry, both that produces large aircraft and also that produces aircraft engines. So again, I say thank you to Ed Stimpson, our ambassador, for his leadership on this issue.

I also join with the full committee chairman, the gentleman from Alaska

(Mr. Young); the ranking member, the gentleman from Minnesota (Mr. Oberstar); and the Subcommittee on Aviation ranking member, the gentleman from Oregon (Mr. DeFazio), in urging immediate passage of this bipartisan bill.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I yield myself the balance of my time to close.

Mr. Speaker and my colleagues, again I ask your support in the passage today of H.R. 4226 as amended. As you heard, this is an implementation technical bill that will implement provisions of the Cape Town Treaty. As you heard in my previous comment and the comments of the gentlewoman from California, this legislation will, in fact, aid our aviation industry which has been, again, so hard hit during the past 2\1/2\ years.

This will not only create jobs in Long Beach, California, but Washington and dozens of other States that produce major aircraft in the United States and also assist us to sell engines which are produced in the United States, I believe in Ohio, but not only from Ohio will there be a good results from the implementation of this treaty, but across the United States where additional parts are produced. So it aids manufacturing, it aids the job creation.

And we urge also the other body to act expeditiously in the passage of this legislation so that the full benefits in effect of the Cape Town Treaty when fully implemented can be realized.

So, again, I urge adoption of H.R. 4226.

Mr. Speaker, I yield back the balance of my time.

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, I rise in support of H.R. 4226, the Cape Town Treaty Implementation Act of 2004.

The Cape Town Convention and related protocol on aircraft equipment known collectively as the Cape Town Treaty will extend modern commercial finance laws already used in the United States to international transactions involving aircraft and aircraft engines.

Lenders have been reluctant or are charging more to extend financing for the sale of aircraft or aircraft engines to foreign entities, particularly in developing countries, because certain countries do not recognize the right of a lender with a priority interest in an asset to repossess or otherwise dispose of it if the owner defaults on a loan. The Cape Town Treaty, when ratified, is expected to lower their financial risks and therefore the costs of such financing and bring certainty to the marketplace, thereby increasing sales in aircraft frames and engines abroad.

Importantly, the Cape Town Treaty creates an international registry in which persons with secured credit or leasing interest in highly mobile assets such as aircraft and engines will be able to put other potential lenders on notice of their interest in a particular asset.

Priority in an asset will be based on a first in time filing with the international registry. The filing of a notice of a security interest in the international registry will also facilitate a secured creditor's ability to repossess, sell, or lease a piece of equipment in the event of a default under the remedies provided by the treaty.

H.R. 4226 makes technical changes to section 44107 of title 49 governing the recordation of security interests with the Federal Aviation Administration, including designating the FAA's civil aircraft registry to be the U.S. entry point to the International Registry. This will enable the FAA to authorize filings with the International Registry related to U.S. registered aircrafts, aircraft engines, and aircraft that have received a U.S. identification number or to prospective interests in such aircraft or engines.

Filings to the International Registry would be valid only if the creditor first files with the FAA full documentation of the security interest as currently required by U.S. law and the FAA authorizes the transmittal of the filing of the notice of the secured interest to the International Registry. Also directing the FAA to immediately proscribe regulations for the registration and deregistration of aircraft and to complete the rulemaking process by December 31, 2004.

H.R. 4226 also provides that, if necessary, the provisions of the Cape Town Treaty shall apply to the registration and deregistration of aircraft until the FAA regulations are effective or by December 31, 2004, whichever occurs earlier.

In addition, H.R. 4226 states that the amendments to Title 49 made by this bill and any related regulations are effective upon the Cape Town Treaty's coming into force and do not apply to any prior registration or recordation.

To put this in a local perspective, Mr. Speaker, in my district we manufacture aircrafts and this bill opens up markets that have historically been problematic. This treaty brings uniformity to bankruptcy and commercial finance laws by extending current U.S. finance laws to international transactions involving aircrafts and aircraft engines. It lowers the risk to financial lenders and manufacturers alike to engage in new markets. To put it simply, passage of the Cape Town Treaty will help American companies compete in foreign markets. It puts manufacturers in the situation to compete for foreign contracts.

For example, the Boeing 717 built in my district of Long Beach, California, would benefit from the leasing requirements negotiated in this treaty. This translates into jobs and economic activity locally. The Boeing 717 plant in Long Beach employs 3,000 men and women and the plant also contracts with 320 suppliers. Currently, the 717 plant produces one plane a month. I have been told, however, that this plant is capable of producing 60 planes a year. If the 717 plant were to double their production to 24 planes a year, that would translate to upwards of 400 jobs created in Long Beach.

I thank the gentleman from Alaska (Mr. Young) and the ranking member, the gentleman from Minnesota, Mr. Oberstar for their strong leadership on this issue, the chairman of the subcommittee, the gentleman from Florida (Mr. Mica), and the ranking member the gentleman from Oregon (Mr. DeFazio) for their leadership.

I urge all of my colleagues to support this resolution.

Mr. Speaker, I do not have other speakers, and I yield back the balance of my time.

Madam President, I ask unanimous consent that the Commerce Committee be discharged from further consideration of H.R. 4226, and the Senate proceed to its immediate consideration.

Madam President, I ask unanimous consent that the bill be read a third time and passed, and the motion to reconsider be laid upon the table.

Mr. Speaker, I ask unanimous consent that all Members may have 5 legislative days within which to revise and extend their remarks on H.R. 4226, as amended.