-199- FAIR COMPETITION, SUBSIDY, AND STATE AID CLAUSES IN INTERNATIONAL AIR SERVICES AGREEMENTS by Sean McGonigle  S YNOPSIS SYNOPSIS .......................................................................................................199 ABSTRACT .....................................................................................................199 RÉSUMÉ ..........................................................................................................200 I. INTRODUCTION ...............................................................................200 II. TRADITIONAL FAIR COMPETITION CLAUSES ........................201 A. BACKGROUND .......................................................................201 B. THE FAIR COMPETITION CLAUSE IN A PRE- DETERMINED BILATERAL AGREEMENT ........................201 C. OPEN SKIES AND FAIR AND EQUAL COMPETITION ........................................................................205 III. POTENTIAL EFFECT OF STATE AID AND SUBSIDY ON FAIR AND EQUAL COMPETITION ...............................................208 A. INTRODUCTION .....................................................................208 B. THE EU RESPONSE: REGULATION 868/2004 ..................209 C. ASSESSMENT ...........................................................................213 IV. DEALING WITH STATE AID AND SUBSIDY IN AIR SERVICES AGREEMENTS ................................................................215 A. THE US-EU AGREEMENT .....................................................215 B. THE EU- CANADA AGREEMENT .......................................217 C. THE UK APPROACH TO THE SUBSIDY ISSUE ................219 V. CONCLUSION ....................................................................................221 A BSTRACT This article considers developments in the "fair and equal opportunity to compete" clauses found in many traditional air services agreements, and considers the rationale for, and effect of, such clauses in both pre-determined and open-skies agreements. The article then  The author holds an LL M from the Institute of Air and Space Law, McGill University. The views expressed herein are entirely the author's own.