FAA Agrees to Limit US Exports to China; and They Admit That They Did It for Non-Safety Reasons

FAA Agrees to Limit US Exports to China; and They Admit That They Did It for Non-Safety Reasons

If you work in a repair station, then being able to obtain the replacement parts that you need is tremendously important to your day-to-day business. But a recent agreement between China and the United States sets a precedent for excluding parts for commercial (non-safety) reasons; and this sort of exclusion could put repair stations and operators in the difficult position of having no reasonable source for their parts.

The FAA has signed a new 2017 Implementation Procedures for Airworthiness (IPA) with their Chinese counterpart.  This agreement has trade effects, and stops some US parts manufacturers from selling certain parts into China when they compete with non-US manufacturers.

To understand the context of this new agreement, it is worthwhile to begin with an analysis of the history of US airworthiness agreements with China.

PMA exports to China from the US: A Quick History

In 1995, the United States signed a Schedule of Implementation Procures (SIP) with China.  This was the detailed annex to the Bilateral Airworthiness Agreement (BAA) between the US and China.  The BAA is the high-level agreement in which both authorities recognize the similarities in their systems, and their desire to work together. The SIP was the implementation document that provided the details for how the two authorities would work together. At the root of the agreement, the two authorities each agree that in certain situations, an importing authority can recognize and relay on some or all of the work done by an exporting authority. This recognition/reliance permits the authorities to share efforts, which allows them to each redirect their resources to other areas where there are true safety risks that need to be examined.

One of the areas where the SIP provides guidance is in what parts can be accepted by each authority. The SIP explains that “The importing authority shall accept the certificate of airworthiness for export of the exporting authority on parts and materials.” 

The SIP includes a caveat that the part must be documented – the language is similar to the language in other US international agreements that requires an 8130-3 tag. 

The SIP represented a reasonable set of requirements that were consistent with international norms for accepting PMA parts.  Generally, it permitted US PMA holders (and their distributors) to sell any FAA-PMA parts to Chinese customers for use on Chinese aircraft. From the Chinese side, Chinese repair stations and operators were allowed to accept PMA parts, secure in the knowledge that the Chinese government had found that the FAA’s mechanisms for issuing PMA were sufficiently robust so as to protect safety in the Chinese aerospace system.

In 2003, the FAA and CAAC signed a clarification document explaining that Chinese acceptance of parts from the United States included PMA parts.  This was an important caveat as it cleared up any doubt that PMA parts could be sold to Chinese carriers and MROs.

One thing that the SIP did not do was to permit CAAC-PMA parts into the United States. For PMA parts, the SIP was a one-way agreement, and this was largely due to the fact that there was not a significant PMA manufacturing community based in China when the SIP was signed.

The Change

In the intervening two decades since the US-China SIP was signed, China has started to develop a PMA industry of its own. Thus, in the most recent round of negotiations, the Civil Aviation Authority of China (CAAC) asked that the US begin to accept PMA parts produced under CAAC-PMA. This request was rolled into the negotiations for a new 2017 Agreement.

The 2017 Agreement is a new Implementation Procedure for Airworthiness (IPA), which is an annex to the US-China bilateral agreement.  The IPA replaces the SIP.  And in doing so, it changed the scope of PMA parts that could be sold into China. Under US law, each FAA-PMA part has at least one eligible installation. This eligible installation is part of the approval basis of the PMA part. Under the new IPA, the following new PMA parts are acceptable in China:

  • FAA-PMA parts eligible to be installed on products for which the US is the State of Design; this would include PMA parts for Boeing aircraft (a US State of Design aircraft);
  • FAA-PMA parts eligible to be installed on products for which the US is not the SoD, provided that the design approval basis is
  • STC (meaning that it was a major change to type design and it was approved under an FAA supplemental type certificate) and if the design approval for a PMA was based on an STC, then the STC must be validated in China; or,
  • Identicality under a licensing agreement with the type certificate holder;

The problem arises when the bilateral agreement is applied to PMA parts that are intended for installation on products for which the US is NOT the State of Design. This would include PMA parts for non-US aircraft from manufacturers like Airbus or Embraer. It would also include PMA parts for non-US engines and propellers, like Rolls Royce engines and Dowty propellers. Under the agreement, PMA parts for such non-US State of Design products that were approved based on test and computation, will only be accepted in China when the article’s consequence of failure has a failure condition of ‘no safety effect’ or ‘minor.’ These terms are defined in FAA advisory circulars, such as: AC 23.1309-1E, AC 25.1309-1A, AC 27-1B, AC 29-2C.

Historically, the failure condition has been used to gauge the level of FAA scrutiny during the approval process.  Where an article is “on the fence” or where the applicant has limited experience with that sort of part, the applicant and FAA may have agreed on a higher level of failure condition in order to drive a higher level of FAA scrutiny.  It did not matter to the future of the part, if the FAA scrutiny was higher during approval.  But now, such decisions could prohibit the export of that part to China!

The failure condition has been used to reflect the hazard conditions associated with the part. Where there is a higher level of potential hazard condition, the FAA has applied a higher level of scrutiny to the part’s design. This higher level of scrutiny mitigates the actual risk down to a lower level, so that there is a high level of confidence in the airworthiness of the PMA part.

Why Did the FAA Do This?

The decision to exclude these parts seems counter-intuitive, because the IPA excludes the PMA parts that have experienced a higher level of FAA scrutiny (and we are therefore more certain to meet applicable safety standards). And these parts, which have received a higher level of scrutiny, are the ones that are excluded from export to China.

This is contrary to the FAA’s stated international goals. The FAA has said that they will use risk-based philosophies to identify where the authorities need to remain involved, and where the authorities can rely on each other’s assessments. After decades in which the CAAC relied on FAA safety assessment of PMA parts, it seems odd that the CAAC would suddenly identify certain PMA parts as a potential safety risk for which they can no longer accept FAA approval.

With this in mind, we asked FAA executives whether China had identified any safety concerns with respect to these PMA parts. They responded that China had not. We asked FAA executives whether these PMA parts that were being excluded posed any known safety risk within the US system. Again, FAA responded that there was no known safety risk associated with these parts.

So, of course, we asked “Why? If there is no safety risk associated with these parts, and if CAAC has been accepting these PMA parts without complaint for many years, and if risk-based decision making is supposed to be guiding out bilateral safety agreements, then why did we decide to impede the export of certain PMA parts? The answer we got was shocking, considering the US’s official policies on trade.

The FAA executives told us that the reason for impeding the export of certain FAA-PMA parts to China was that the other main philosophy of our bilateral agreements is reciprocity, and the US is not yet ready to accept all of China’s PMA parts because FAA has investigated some sample CAAC PMA packages and found that they were not comfortable with the CAAC process for approving those CAAC PMA packages. Because FAA is not comfortable with the Chinese system (even though CAAC seems to have no complaints with the FAA-PMA system), the FAA decided to start accepting certain low-risk CAAC-PMA parts and to stop exporting certain FAA-PMA parts that were known to be good parts.

The obvious answer, here, should have been to begin accepting the CAAC-PMA parts that the FAA was comfortable accepting, and to NOT CHANGE the past practices for FAA-PMA parts with which CAAC was comfortable. Just because we are unwilling to accept a foreign good for safety reasons, does not mean that we agree to stop exporting our safe goods to that same country.

There is an additional problem with this limitation.  It is based on information that is not public – it is typically only known to the PMA applicant and the FAA office.  As a consequence, a third-party distributor who attempts to export a part to China may be unable to independently identify whether the PMA’s failure mode at the time of application was identified as minor or major.  And PMA parts that were approved before the issue of the advisory circulars that established these terms may have no documented failure condition.  These factors could make it very difficult for third party distributors to sell test-and-computation PMA parts into China, for lack of categorization data.

The Effect

This affects PMA parts on non-US (state of design) aircraft. Luckily this is a minority of the US PMA parts that are produced, and most PMA parts remain unaffected.

Many independent PMA parts for these non-US (state of design) aircraft, which have competed with the parts available from the non-US production approval holder, will be unable to be sold into China. 

Under this Agreement, the US has gone from being competitive with European aircraft parts manufacturers to withdrawing from the previously competitive market for these parts. This is not good policy for the United States, but it also sets a bad precedent for the global community, by using a safety agreement to exclude parts for a non-safety reason.