Tourism Services
Negotiation Issues
Ramesh Chaitoo, CRNM
Caribbean Tourism Conference
October 15, 2003
1
Why pay attention to Services
Negotiations in WTO & FTAA?
They can affect market access in tourism
 They affect other services that are important
(finance, telecoms) to tourism
 Several countries have made proposals
regarding tourism services in the WTO (DR,
El Salvador, Honduras, Panama, EU, US,
Canada, Japan, Colombia, Switzerland,
Mercosur, Costa Rica, Cuba)

2
Negotiating Theatres
WTO – General Agreement on Trade in Services (GATS);
new Doha round
 FTAA – Services chapter & market access commitments
 (Caricom & DR) – European Union (under Cotonou)
 Bilateral Free Trade Agreements (FTAs)
 Regional market for services nearing completion as part of
CARICOM Single Market and Economy (CSME)
Most deadlines converging around Jan. 2005. Critical to
develop negotiating positions for tourism in all forums

3
What does GATS do?

GATS now sets the “global rules of the game” for services
trade, including tourism, between 148 WTO member
governments.
- “Progressive liberalisation of services” through
successive negotiating “rounds”.
- GATS 1994 resulted in no real liberalisation – (status
quo) – no real market access impact on Caribbean
tourism. But this is changing in current negotiations.
- Ongoing Requests and Offers process
4
Market Access in GATS




States offer market access (only in sectors listed )
by binding their commitments in national
schedules – with limitations
Grant national treatment to foreign firms and
suppliers – with limitations
MFN treatment – to all WTO Members (with
exemptions)
Remove restrictions on investment, movement of
persons, etc.
5
Access through 4 Modes of Supply
Cross Border trade
 Consumption Abroad
 Commercial Presence (Investment)
 Temporary Entry (Presence of Natural
Persons)

6

Tourism defined narrowly in GATS.
9. “Tourism and Travel-Related Services”
composed of :
A. Hotels and restaurants, including
catering; (CPC 641-643)
B. Travel agencies and tour operator
services; (CPC 7471)
C. Tourist guides services; (CPC 7472)
D. Other.
7

CPC 641 - Hotel and other lodging services
CPC 6411 (Hotel lodging services),
CPC 6412 (Motel lodging services)
CPC 6419 Other lodging services (holiday camp
services, youth hostels, etc.)

CPC 642 Food serving services
CPC 6421 full restaurant services
CPC 6422 self-service facilities
CPC 6423 catering services
CPC 6429 other

CPC 643 Beverage serving services for consumption on
the premises
CPC 6431 services without entertainment
CPC 6432 with entertainment
8
Tourism Commitments

As of September, 1998, 112 WTO Members
made commitments in Tourism under
GATS *
* Austria, Finland and Sweden counted separately
9
Barriers in US & Canada
United States:
 Tour guides: The number of concessions available
is limited
Canada:
 Hotels, Restaurants & Bars
 Residency requirements
 Citizenship requirements
 Differential land transfer tax
10
Canada (cont’d)
Travel agency, tour operators
 Travel agencies and travel wholesalers commercial presence requirement;
 Residency requirements

11

Dominican Republic - Tourism Annex to
the GATS
Broader definition of Tourism - Support

The need for competitive safeguards
for tourism to prevent anti-competitive
practices (CRS, GDS) Support
The need for new provisions to
promote sustainable tourism
development Support
But most countries found the list of
services too extensive and too liberal

12
 Negotiating

approach
The “offensive” priorities
• Secure concessions for tourism
from trading partners in trade
negotiations (WTO, FTAA, EU,
Canada)
• Use trade negotiations to lower
costs of goods and services tourism inputs
13
The “defensive” priorities
The preservation of some tourism
activities for regional services
suppliers. But which ones?
• New GATS rules could reduce
policy flexibility for Caribbean
governments as they regulate their
tourism sectors e.g. subsidies
14


The need to improve the definition of
tourism
• Support, but only after a regional
definition for tourism has been agreed

Should cruise ships be re-classified from
maritime transport services to tourism
services?
• Support. But also clarify where
regulatory authority lies under WTO
rules.
.
15

Two further areas to watch!

WTO negotiations re disciplines for services
subsidies, including tourism
Cbbean has tourism subsidies – hotels

WTO negotiations re disciplines on domestic
regulations for services. Can improve actual
market access.
16
RECOMMENDATIONS

General
1. Encourage public/private sector collaboration
in trade negotiations at the technical level
2 Regular dialogue - Tourism Ministers and
Trade Ministers
3. Develop a regional definition of Tourism to be
used in trade negotiations
4. Regional policy on cruise tourism
5. Introduce Tourism Satellite Accounts to better
measure the impact of tourism on national
17
economies
OFFERS
Liberalize services (inputs) where it
improves competitiveness of tourism in
long term (telecoms, electricity, insurance)
 Reduce tariffs on inputs that will reduce
cost of tourism services (specialty foods,
wines and spirits, kitchen equip., etc.)

18
OFFERS (cont’d.)

Reduce regulatory barriers to facilitate
visitors and the movement of tourism
professionals in the Cbbean (visas, work
permit requirements, etc.)
19
 REQUESTS
re Tourism
#1
Reduce costs and facilitate access to visas for
the temporary entry of tourism professionals
wishing to enter the EU, US and Canadian markets
to supply services.
#2
Include tourism professionals, with tertiary
level hospitality qualifications from UWI, PUCCM
and national hospitality institutes, within criteria
established for the temporary entry of
“professionals” or “business visitors”.
20
#3.
Establish programmes within the EU, US and
Canada to recognise tourism professional qualifications
and credentials developed in Caribbean states. Should
these be Mutual Recognition Programmes or just oneway?
#4
Review EU, US and Canadian legislation
relating to health and safety standards in the
hospitality sector that are applied to hoteliers (too
onerous?) – a Mode 1 request.
21

#5. Introduce tax incentives for EU and
Canadian businesses holding conferences or
conventions in Cbbean countries – Mode 1
request.
#6. Mechanism to compensate Cbbean hoteliers
and tour operators from losses due to insolvency
of foreign tour operators
#7 Reduce travel taxes imposed on EU, US, and
Canadian tourists travelling to Cbbean to consume
tourism services. Mode 2 request.
22
#8. Increase duty-free allowances for EU, US and
Canadian returning residents, and make
information available to all tourists, including
cruise
ship passengers, making purchases in
Cbbean states for personal or household use. A
Mode 2 request.
#9. The negotiation of regional Hospitality
Service Providers Programmes with the EU, US
and Canada - A Mode 4 request.
23

#10.
Facilitate visas for Cbbean tourism
students entering the EU, US and Canada on
hospitality internships or stagier programmes –
Mode 4 request.

#11
Request that EU, Canada, and US
approve portability of health insurance schemes to
include Cbbean spa and medical facilities
24
Anti-Competitive Practices in Tourism



Discriminatory use of information networks
(including through unreasonable access charges),
ancillary services to air transport, predatory
pricing, or the allocation of scarce resources.
Abuse of dominance through exclusivity clauses,
refusal to deal, tied sales, quantity restrictions, or
vertical integration; and
Misleading or discriminatory use of information
by any juridical person.
25
Examples:

Industry observers have indicated that some
cruise ships operating within Cbbean direct
their passengers only to those retail outlets
where they will receive a negotiated percentage
of the sales. There are also concerns that some
Cbbean hotels linked to international tour
operators are discounting rates below market
value in order to guarantee volume bookings.
This represents unfair competition for Cbbean
small, independent hotels.
26

Development-oriented Requests (GATS Art.
IV)
#10. The introduction of market access contact points for the Mode 4 export
of Cbbean tourism services in the European, US and Canadian
markets.
#11. Provide small airline carriers from tourism-dependent regions with
affordable access to European and US Computer Reservations Systems
(CRS) and Global Distribution Systems (GDS).
#12. Enhance interface possibilities of Cbbean reservation systems such as CHARMS and the Do it Caribbean online booking engine - with
GDS and online reservation systems, and increase their visibility in the
tourism internet marketplace.
#13. The establishment of websites to identify market access opportunities in
tourist-generating markets for small hoteliers and tourism services
suppliers.
#14. Establish government-to-government consultation mechanisms to ensure
that Cbbean governments are consulted prior to the issuance of
travel warnings.
27

Development assistance and technical cooperation
requests
#15.
A programme of assistance for internet marketing strategies for
small hotels.
#16.
Technical and financial assistance to Cbbean states to
introduce Tourism Satellite Accounts (TSA).
#17.
Provide technical support to Cbbean services providers
wishing to establish commercial presence in the EU, US and
Canadian markets
#18.
Encourage partnership programmes between Cbbean hospitality
training institutes and their counterparts in the Europe, the US and
Canada.
28

Other requests to address some specific
trading problems
#19.
Establish a programme with unallocated EDF resources to
increase air services to small, tourism-dependent states within
Cbbean.
#20.
#21.
Request that the US exercises stronger oversight control over US
food exports for the Cbbean tourism industry to ensure that old
stocks are not being dumped on Cbbean tourism markets.
Introduce specific measures to expand insurance coverage for the
Cbbean tourism sector, and to reduce costs.
#22.
29
Section Four: Recommendations on tourism policy
within Cbbean on issues arising from study

Using trade negotiations to reduce the costs of tourism
inputs in terms of both goods and services
 Recommendations on goods: tariff reductions on
furniture and linen, pasta, wines and spirits, kitchen
equipment (e.g. chillers and freezers) and specialty
meats, fish and shellfish
 Recommendations on services: Further liberalisation of
electricity services, telecommunications services,
environmental services, insurance Services.
30

The trade-related policies within Cbbean that constrain
the growth of tourism





The lack of a regional policy towards cruise ships and the tourism
sector.
The sector has yet to agree on a regional definition for tourism.
Should this be included as part of the CSME?
The need to facilitate the movement of tourists within Cbbean, and
of tourism professionals entering the market on a temporary basis.
The need to upgrade the statistical capacity of Cbbean member
states to measure the impact of tourism on national economies.
Tourism is not viewed as an export industry, and is not treated as
such in national taxation policy.
31
Section Five – the way forward – a plan of
action for external negotiations

How do we move the process forward?





Reaching a public-private consensus
A plan of action ?
A public/private negotiating committee ?
Should reference to trade negotiations be included in
the Caribbean Tourism Strategic Plan?
Should Cbbean tourism ministers be included in
COTED discussions relating to the international
negotiations to liberalise trade in services?
32

How should the Caribbean respond to the
GATS negotiating requests received on
tourism?

The EU has presented tailored negotiating
requests on tourism to each Caribbean WTO
member. Benign. But EU “horizontal requests”
include more aggressive proposals.

The US presents the same standardised request
on tourism to all Caribbean WTO members.
Aggressive.
33