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Report on Tourism and Services. Final TOURISM SERVICES NEGOTIATION ISSUES: IMPLICATIONS FOR CARIFORUM COUNTRIES August 2003 Report by Adam Dunlop, Caribbean Council, for the Caribbean Regional Negotiating Machinery (CRNM) TABLE OF CONTENTS Executive Summary……………………………………………………….. i - xii Part I An overview of CARIFORUM tourism……………………..pages 1 -8 Part II Tourism and the services negotiations at the WTO………..pages 9 -21 A summary of the GATS proposals on tourism services The responses to the GATS proposal for a new Tourism Annex An assessment of the issues in the Tourism Annex proposal Part III Negotiating options on tourism services for CARIFORUM WTO members in the GATS negotiations ………………………………pages 22-30 The three negotiating options for CARIFORUM on tourism services How should CARIFORUM respond to the requests received from WTO members? The barriers to market entry in the EU, US and Canada The WTO negotiations to agree on disciplines for services subsidies WTO negotiations to agree on guidelines for domestic regulations Part IV “Offensive” negotiating requests for CARIFORUM in the EU, FTAA, and Canada-CARICOM services negotiations ……………………pages 31-44 The scope of regional and hemispheric negotiations on tourism services The negotiating recommendations for CARIFORUM on tourism services - Horizontal requests affecting tourism services - Sector specific requests on tourism services. - Negotiating requests to implement Article IV of the GATS - Development assistance and technical cooperation reque sts. - Other requests to address some specific trading problems Part V Priority actions at the CARIFORUM level to promote the tourism sector in services trade negotiations …………………………………pages 45-50 The liberalisation of tourism inputs of goods and services in CARIFORUM states Policy recommendations to support the growth of tourism - The development of a regional policy on cruise tourism. - The development of a regional definition for tourism, to be included within the CSME and used in services trade negotiations. - The need to upgrade the statistical capacity of CARIFORUM member states to measure the impact of tourism on national economies. - The need to facilitate the movement of tourists within CARIFORUM, and of international tourism professionals entering the market on a temporary basis. Actions to promote the tourism industry in services trade negotiations Areas where further research is required Selected Bibliography............................................................................................page 51 Annex I – Model Request on Tourism and Travel Related Services................page 52 Annex II – Objectives of the Caribbean Tourism Strategic Plan ......................page 56 Annex III – Terms of Reference for Study ..........................................................page 57 TEXT BOXES Box 1.1: Breakdown of Average EU Tour Operator Package Prices……page 4 Box 1.2: The consolidation of the European tour operator market.................page 18 Box 1.3: An example of how GATS may undermine sustainable tourism development……………………………………… …page 19 Box 1.4: The 1996 WTO Reference Paper on Telecommunications: a model for tourism?…………………………………………………….page 23 Box 1.5: Responding to GATS negotiating requests: to commit or not to commit?…………………………………………………………page 24 Box 1.6: The removal of restrictions on tourism services within CARICOM for the CSME............................................................................page 26 Box 1.7: US fees and taxes on outbound travellers………………………page 36 Box 1. 8: Customs Duty Free exemptions (“duty free limits”) for the EU, US and Canada…………………………………………….page 37 Box 1.9: Should compensation from trading partners be sought for the costs incurred by CARIFORUM hospitality training institutes? ........page 38 Box 1.10: Information technology and Tourism: CRS, GDS and the Internet………………………………………………………….page 41 Box. 1.11: A proposal to increase incoming airlift into CARIFORUM states……………………………………………………………page 43 Box. 1.12: The 2002 ASEAN Regional Tourism Agreement: a model for CARIFORUM?............................................................................page 47 LIST OF ACRONYMS ASEAN Association of South East Asian Nations ACP Africa, Caribbean and Pacific group of states ACS Association of Caribbean States CAIC Caribbean Association of Industry and Commerce CARICOM Caribbean Community CARIFORUM* Caribbean Forum CAREC Caribbean Epidemiological Centre CAST Caribbean Action for Sustainable Tourism CBERA Caribbean Basin Economic Recovery Act CDB Caribbean Development Bank CHA Caribbean Hotel Association CHARMS Caribbean Hotel Association Reservation Management System CIDA Canadian International Development Agency CPC United Nations Central Product Classification Code CRS Computer Reservation System CSME CARICOM Single Market and Economy CTO Caribbean Tourism Organisation COTED Council for Trade and Economic Development EC European Commission EDF European Development Fund EPA Economic Partnership Agreement EU European Union FTAA Free Trade Area of the Americas GATS General Agreement on Trade in Services GDS Global Distribution System IFTO International Federation of Tour Operators MFN Most Favoured Nation MIF Multilateral Investment Fund of the Inter-American Development Bank NAFTA North American Free Trade Agreement OECD Organisation for Economic Cooperation and Development PUCMM Pontificia Universidad Católica Madre y Maestra QTC The Quality Tourism for the Caribbean programme SME Small and Medium Sized Enterprise TSA Tourism Satellite Account UNCTAD United Nations Conference on Trade and Development USAID United States Agency for International Development US United States USVI United States Virgin Islands UWI University of the West Indies WPDR Working Party on Domestic Regulation (at World Trade Organisation) WTO World Trade Organisation WTO-OMT World Tourism Organisation WTTC World Travel and Tourism Council * The following are CARIFORUM member states: Antigua and Barbuda, The Bahamas, Barbados, Belize, Dominica, The Dominican Republic, Grenada, Haiti, Guyana, Jamaica, St Christopher and Nevis, St Lucia, St Vincent and the Grenadines, Suriname, Trinidad and Tobago. Tourism Services Negotiation Issues: Implications for CARIFORUM - August 2003 EXECUTIVE SUMMARY This report sets out a regional negotiating strategy on tourism services in external trade negotiations, and proposes negotiating recommendations to execute this strategy. The member states of CARIFORUM1 are currently engaged in five sets of trade negotiations that have a services component: the multilateral trade negotiations at the World Trade Organisation (WTO) under the General Agreement in Trade in Services (GATS), the negotiations for a Free Trade Area of the Americas (FTAA), the negotiations with the European Union (EU) for Economic Partnership Agreements (EPAs), the bilateral CARICOM-Canada and CARICOM-Costa Rica negotiations. All apart from the EU negotiations are set to conclude by 1st January 2005, which is also the deadline for the establishment for the regional services market under the CARICOM Single Market and Economy (CSME). A. The Diversity of Tourism Within CARIFORUM States One of the main challenges facing regional negotiators seeking to develop a regional negotiating position on tourism services is the diversity of the industry within CARIFORUM states. Although the sector is led by the hotel and accommodation sub-sector, a typical tourism experience in a CARIFORUM destination can involve an almost infinite number of direct and indirect services transactions across many economic sectors. These can include transactions with airlines, hotels, guesthouses or private villas, car rental companies, water and electricity services, restaurants, retail outlets, local taxis, water-sports companies, yacht charter companies, marine transport companies, entertainers, tour guides, laundry service providers, food suppliers, local banks, and telecommunications service providers. The ability of CARIFORUM tourism destinations to compete internationally will depend on whether the entire range of these services can be provided efficiently, at low cost and in a manner the exceeds the expectations of incoming tourists. From a public policy perspective, tourism cuts across many economic sectors, and many ministerial portfolios. The sector’s diversity and fragmented nature complicates tourism public policy planning at the national and regional levels. Tourism’s crosscutting nature also means that trade negotiations in a whole range of goods and services sectors will have an impact on the industry. CARIFORUM states are a mix of emerging and developed tourism destinations. The pace of growth among them also differs considerably. Tourism growth in the Dominican Republic has outpaced its CARICOM neighbours, not least because of the lower operating costs that make it the most price competitive destination within CARIFORUM. In contrast, tour operator generated business in the Eastern Caribbean has been steadily declining. Different tourism sub-sectors are also growing at different speeds across CARIFORUM. For example, cruise tourism has displaye d an upward trend in most CARIFORUM states. In some regional destinations, tourism exhibits many of the characteristics of a commodity industry: extreme price competition and limited ability to differentiate. There is now a 1 In this report, wherever possible, and according to the terms of reference for this assignment, “CARIFORUM”, refers to the member states of the Caribbean Community (CARICOM), and the Dominican Republic.
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