Trade in Services Section, UNCTAD Tourism Services

Some preliminary questions for the consideration of developing countries

- What are the interests and concerns of developing countries in the tourism sectors in the context of the GATS negotiations?
- Should “implementation” of existing commitments (which has been signalled out by some developed countries as their “priority”) be interpreted in terms of making
existing developed countries commitments effective, for which the elimination of existing limitations in their horizontal commitments and access to GDS and CRS is a
pre-condition?
- How best to deal with the lists of obstacles presented, particularly the one from the US which mixes market access, national treatment and regulatory issues?
- How could the special situation of SMEs be considered?
- How would “competitive safeguards” apply in this sector?
- Should “the” issue of anti-competitive practices in the tourism sector be tackled only on a sector-specific manner (as in the case of telecommunications), or could
another alternative/complementary solution deserve consideration by developing countries, like the strengthening of Article XI of the GATS on “Business Practices”?
Dominican Rep, Honduras, El European Communities United States Canada (S/CSS/W54) Japan (S/CSS/W42)
Salvador (GC/ W/127-S/CSS/W/9) (S/CSS/W/40, W/5) (S/CSS/W/31)
Nicaragua, Panama (S/CSSW/19).
1. General Position
- Propose to negotiate an Annex on - Initiate a debate (in the CTS or a -The US proposal covers only a - Mentions that aside from In its proposal, Japan
Tourism (similar to the one subsidiary body) on broad aims for portion of the tourism sector: inbound tourism exports, states that liberalization of
established on telecom). The negotiations in this sector. Aims at hotels and lodging. States as one other tourism expertise hotel and restaurant
rationale for this: in the present GATS engaging WTO Members in of the purposes of this proposal to developed by Canada with services is important from
it is not possible to deal with the negotiations to liberalize this focus on ways to help generate the potential for export the point of view of further
specific and heterogeneous nature of sector, as defined in W/120, as investment for tourism by includes leadership in the economic growth through
tourism as a cluster; it is neither fully as possible. removing obstacles to the areas of sustainable attracting non-business
possible to monitor progressive -States that implementing the establishment and operation of development practices; and/or business tourists
liberalization nor compliance with existing commitments as well as hotels and other lodging places; by resort development and form overseas. It is also
commitments undertaken under eliminating all remaining making it easier for travellers to design; hotel management desirable not to impose
“tourism and travel-related services”; restrictions should be a very high visit and make purchases in other services; parks and golf unnecessary restrictions on
specific commitments undertaken priority. It is of the opinion that the countries; and by reducing the course development; and travel services (travel
following the “request and offer” few classification problems arising problems faced by organizers of eco-tourism. agencies services) for
approach again would fail to eliminate from the current GATS international conferences and ensuring smooth movement
the barriers to trade in tourism (and classification are not obstacles to conventions. - Mentions the importance of non-business and/or
related) services; the existing dealing with the tourism sector in a of small- and medium-sized business tourists
provisions in the GATS fail to comprehensive way. Nonetheless, business (SMEs) in this
discipline the barriers and anti- the classification does not reflect sector (Canada has made a
competitive practices in this sector, the broad dimension of this sector, separate submission on
reducing further the share of value- hence the need of a cluster “Initial Negotiating Proposal
added that is kept by developing regrouping all tourism related on SMEs”, S/CSS/W/49).
countries. (GC/W/127) services which could be used as a
checklist.
General Position: Some preliminary views on possible implications for developing countries
- The full liberalisation of tourism services should be in principle a win-win situation for all. However, the benefits of liberalization of tourism are being threatened by the
predatory practices of few dominant suppliers in the world tourism markets. The main issues affecting the viability/ sustainability of tourism in many developing countries
include: a) the impact of the “leakage” (i.e. the low retention within the host country of the revenue generated by total sales to foreign tourists), and b) the relative
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marginalization by the creation of giant industry conglomerates in Europe and the US which control a high level of market shares. Developing countries may need to
ensure the following: a) an adequate coverage and consistency of commitments in all tourism activities; b) the prevention of predatory behaviour with anti-competitive
practices by dominant integrated suppliers in the originated markets; c) effective access to and use of distribution systems and information networks on a non-
discriminatory basis; d) the implementation of an adequate framework for sustainable development in tourism; and e) preservation of the cultural heritage.1

- The implementation of existing commitments and the elimination of remaining restrictions (including all modes of supply and with emphasis in investment) appear to be
the priority in negotiations in the tourism sector for countries like Canada, the EC and Japan. The proposal by the US covers only hotels and lodging, whilst Japan’s
proposal covers hotel and restaurant services and travel agencies. Against this limited-coverage and implementation-priority kind of approaches, the proposal by the
Dominican Republic, El Salvador and Honduras to negotiate an Annex on tourism, similar to the one established on telecommunications, is no doubt much more far-
reaching and complete (whole-encompassing).

- Negotiating an Annex on Tourism would seem to allow the possibility to deal with the specific and heterogeneous nature of tourism, and to fill the gap in existing
provisions in the GATS to discipline the barriers and anti-competitive practices that affect the participation of developing countries in tourism markets. It may be useful to
consider, however, that an annex in tourism would be essentially different than the existing annex on telecommunications. In the later, it is the Member scheduling
commitments who is obliged to grant as well access to the use of its public telecom transport networks and services. What is needed in tourism is that the Member
scheduling commitments (i.e. a developing country) can have in return access to distribution systems and information networks, so it can effectively use market access
concessions exchanged. Thus, access to global distribution systems (GDS) and computarized reservations systems (CRS), as well as to ancillary services to air transport
on a non-discriminatory basis, would probably need to be negotiated as conditions to be attached to market access commitments in the tourism sector, and not
necessarily as additional commitments, as in the case of the telecom annex.

1
See UNCTAD, « International Trade in Tourism-Related Services: Issues and Options fir Developing Countries”, Background note by the Secretariat (TD/B/COM.1/EM.6/2), 8 April 1998. See
also UNCTAD’s “Report of Expert Meeting on Strengthening Capacities in Developing Countries to Develop their Tourism Sector” (TD/B/COM.1/17—TD/B/COM.1/EM.6/3), 7 July 1998.
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Dominican Rep, Honduras, El European Communities United States Canada (W54) Japan (W42)
Salvador (GC/ W/127-S/CSS/W/9) (W/40, W/5) (W/31)
Nicaragua, Panama (W/19).
2. Coverage and Classification
- Propose to give a comprehensive - Could agree on a “Cluster” - Recognizes that tourism is
treatment to tourism, to include approach, so long as such an amalgam of parts of a
services which are characteristic to approach is seen as a checklist (to number of separate
tourism, as well as services be used only as an aide mémoire) industries; tourism is not
connected to tourism (travel to assist negotiators in identifying just one industry, but a
reservation services, air and other optimum proposals for effective and cross-cutting multi-industry
transportations services and other complementary liberalisation groups.
travel-related financial services). relating to the sector. (The results - Encourages Members to
- Suggest a “Cluster” approach of negotiations on “tourism related” focus negotiations on the
(based on the definition given by the services should be scheduled in the W/120 classification of
World Tourism Organization to the relevant GATS sectors other than Tourism and Travel related
Satellite Account (TSA) in the Nice tourism). services with the objective
World Conference of June 1999), in of fully implementing
order to consider all the tourism -Propose a distinction between existing commitments and
industries and tourism-related “core” tourism services (sectors and liberalizing remaining
Industries in future negotiations for sub-sectors described in W/120, restrictions to the extent
liberalization. (W/9, W/19). chapter 9) and tourism “related” possible. Suggests that
sectors, and suggest a shorter list individualized country
of tourism-related services than the checklists could be
one proposed by The Dom. Rep, El employed to deal with the
Salvador and Honduras. more comprehensive
nature of tourism as an
industry.
Coverage and Classification: Some preliminary views on possible implications for developing countries
- While the Dominican Republic, El Salvador and Honduras propose a new (broad) classification based on the definition by the World Tourism Organization, the EC
suggest a shorter new classification. The former propose a “cluster” approach to consider all the tourism industries and tourism-related industries in future negotiations
for liberalization in this sector. The EC, but also Canada, suggest using such approach so long as it takes the form of an aide memoire or “checklist” to be used as a
negotiating tool in this and other possible relevant sectors. In any case, the distinction between “core” and “related” services seems to be an issue.

- In relation to this, it may be noted that WTO Members are free to use any classification they deem appropriate in making their binding commitments. Whether some
want it or not, the Tourism Satellite Account (TSA) from the World Tourism Organization is the only classification available that has been officially recognized world-
wide. In any event, it appears that an exhausted coverage of tourism services and tourism-related services should be sought. Careful reflection is needed, however,
on the proposal of a cluster, since this could be used as a justification to use this modality in other sectors as well. It has to be beard in mind that independently of the
classification used, at the end, everything in this new round of services negotiations will need to be negotiated as a package.

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Dominican Rep, Honduras, El European Communities
Salvador (GC/ W/127-S/CSS/W/9) (W/40, W/5)
Nicaragua, Panama (W/19).
3. Market Access/National Treatment (NT) /Additional Commitments
- Underline the need for effective - Sought for higher qualitative and
liberalization, which can only be quantitative commitments. Thus
achieved through complementing resulting in eliminating substantially
the GATS by a Annex on tourism. remaining restrictions to trade in
Such Annex would include this sector, including restrictions on
provisions that guarantee Members foreign direct investment under the
inter alia: a)truthful information on GATS.
tourism destinations by juridical
persons; b) access to Global -Typical remaining restrictions
Distribution Systems/ Computarized include (non-exhaustive list):
Reservation Systems according to unspecified approval and licensing
transparent, reasonable and requirements; unspecified
objective criteria and on a non- economic tests; restrictions on
discriminatory basis; c) the provision equity holdings; restrictions on
on a non-discriminatory basis of forms of doing business; residency
ancillary services to air transport and and nationality requirements;
security measures. restrictions on mobility of key
personnel; limitations on the
purchase.
- On Modes 1,2 and 3, suggest
considering whether any restrictions
would be justified. Note on sub-
sector “A. Hotel restaurants and
catering”, mode 1: a commitment
on this mode of supply is not
feasible except for catering. On
mode 4, propose further
discussions. Suggest certain
exceptions regarding sub-sectors
“A. Hotels restaurants and
catering”, mode 3; and “B. Travel
Agencies and Tour Operator
Services”, mode 3.
- The EC reserve the right to
present, in due time, a formal
9 May 2001
United States
(W/31)
- Proposes that Members
that have not yet made
commitments on hotels
formulate their commitments
based on a list of obstacles
identified by the US. Invites
Members to consider
inscribing in their schedules
“no limitations” on market
access and national
treatment, as some
Members, including the US,
already have done.
- Further, to promote the
expansion of international
tourism, proposes that all
Members consider
undertaking additional
commitments relating to
travellers and international
conferences.
- Notes that this proposal is
not presented as a legal
text, but rather as a list of
obstacles identified in
reviewing this service sector.
- Some items on the list may
be market access
restrictions, or national
treatment limitations, or
both. In addition, some
obstacles, although not
limitations on market access
or NT per se, may result
Canada (W54)
- States that despite of the
fact that the tourism sector
attracted more
commitments by Members
than any other sector at the
end of the UR,
implementation of these
commitments has
sometimes fallen short and
significant restrictions still
remain.
- While this list is not
exhaustive, included
among the most common
restrictions appearing in
schedules are economic
needs tests, citizenship
requirements, size
limitations for
establishments, restrictive
licensing practices and
fixed equity limits.
Tourism Services
Japan (W42)
- The level of commitments in
this sector is higher than that
of other services. However,
many Members have not
made commitments in the
sector of tourist guide
services. A small number have
made commitments but with
various restrictions. Thus, the
level of commitments is
comparatively low in this
sector. As for mode 3, of hotel
and restaurant services and
travel agencies, some
Members maintain such
restrictions as an economic
needs test, nationality and/or
residency requirements and a
limit on the participation of
foreign capital.
- Japan expects further
improvements on the following
issues: 1) nationality
requirements on tourist guides
and/or attendants services; 2)
foreign capital and/or
numerical restrictions on hotel
and restaurant services; 3)
overall restrictions on
establishing a commercial
presence providing travel
services (travel agencies
services).
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proposal concerning horizontal from regulatory provisions
commitments listed by WTO which make it difficult for
Members. At this stage, some foreign suppliers to market
horizontal commitments can be their services. (See list in the
underlined as affecting this sector: proposal).
unspecified approval requirements;
unspecified economic needs tests;
certain limitations on the purchase
or rental of real state; restrictions on
equity holdings; residency
requirements.
Market Access/NT/Additional Commitments: Some preliminary views on possible implications for developing countries
- The US, the EC, Canada and Japan enumerate different obstacles identified in this sector, regarding market access, national treatment. The US proposal in particular
contains a long list of obstacles, not only on market access and NT, but also on “regulatory barriers”. Demands on additional commitments appear in the US proposal,
relating to travellers and international conferences.

- It may be useful to note that tourism is the sector with the highest level of binding in the GATS. However, while most developing countries have consolidated their
commitments without conditions (particularly on mode 3), specific commitments by many developed countries are nullified by conditions included in their horizontal
commitments. This is definitely the case of the EC: in its horizontal commitments on mode 3, the EC maintain the exclusive rights granted to private operators. As
regards mode 4, limitations are maintained, inter alia, in the form of economic needs tests (ENTs).

- New negotiations should grant recognition to unconditional liberalization made by developing countries and should lead to the dismantling of conditions that
developed countries maintain in their horizontal commitments, particularly on mode 4. How to improve and facilitate the movement of natural persons (including, but
not restricted to, “specialized” and skilled” personnel) for the provision of services may be a priority issue for some developing countries. While obtaining further
commitments on market access and national treatment (NT) in the tourism sector in general may an important objective for developing countries in these negotiations,
it may be equally relevant to them to address the obstacles and limitations contained in the horizontal commitments of developed countries, as well as the de facto
obstacles created by the anti-competitive practices of their transporters, tour operators, travel agencies, CRS and GDS.

- In accordance with Articles IV and XIX of the GATS, developing countries may wish to consider attaching to possible further market access concessions on their part,
conditions such as: reinvestment of profits by investors; participate in enhancing domestic capacity to produce goods and services required by tourism; comply with
domestic competition policies; access to CRS and GDS, etc. In any event, the “positive approach” for negotiating and scheduling of commitments should be preserved,
to ensure gradualism and flexibility in liberalization by developing countries

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Dominican Rep, Honduras, El European Communities United States Canada (W54) Japan (W42)
Salvador (GC/ W/127-S/CSS/W/9) (W/40, W/5) (W/31)
Nicaragua, Panama (W/19).
4. Regulatory/ Competition/ Other Issues
- The proposed Annex also includes - Considers that some regulatory - Regulatory-related
provisions on: a) “Competitive issues raised by The Dominican obstacles are included in the
Safeguards”, for the prevention of Republic, El Salvador and US list of obstacles.
anti-competitive practices in the Honduras are more generic issues
tourism cluster, including by that could be addressed in the - In relation with this, the US
suppliers of air transport services WPDR, and that others will note that governments may
and travel distribution systems (the doubtless be considered in the wish to take account of
proposal provides a definition of review of the Air Services Annex. sustainable development
anti-competitive practices); and on However, believe that two issues and environmental goals as
b) “Consumer safeguards” (details could be considered in the context they define their approach to
are also provided). of an examination of the tourism addressing certain of those
- The proposed Annex include other sector: a) tourism and sustainable obstacles.
chapters, such as one on development (the importance of
“Cooperation for sustainable access to high-quality - Finally, the US proposal
development”, under which the environmental services should be states that a reference paper
following issues are addressed: a) stressed), and b) competitive would be drafted to address
participation of developed and safeguards (would be useful to problems faced by travellers
developing countries suppliers of air, examine whether and if so which and organisers of
land and maritime infrastructure competitive safeguards would be international conferences
construction and management necessary complements to and conventions to make it
services, and other entities, in the commitments in “core” tourism easier for travellers to visit
development programs of services). In this connection, and make purchases in
international and regional recommends to start an other countries; and to
organizations; b) cooperation efforts assessment of the relevance of the reduce the problems faced
for the sustainable development of basic telecommunications by organizers of
tourism; c) provision of information additional commitments and international conferences
on technologies required in the especially their relevance to the and conventions. Some of
sector; d) equitable and pro- “core” tourism sector. the problems are identified
competitive trading conditions; and - While aiming at reducing in the list of obstacles.
e) compliance with internationally- unnecessary trade distortive
recognized environmental and barriers, the EC notes that this
quality standards. should not affect the quality of
services, protection of consumers,
public safety, as well as
safeguarding the rule of law.
Regulatory/Competition/Other Issues: Some preliminary views on possible implications for developing countries
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- The competition issue and the treatment of anti-competitive behaviour seem to be at the core of the problems of efficiency, viability and sustainability of tourism in
many developing countries. There is a real need for establishing appropriate legal frameworks governing competition in developing countries, as well as creating
enforceable multilateral pro-competitive disciplines within the GATS. The proposal by the Dominican republic, El Salvador and Honduras tackles this problem via the
establishment of provisions on “competitive safeguards” (to be included in the proposed annex). Another possibility that could be considered for addressing this
problem is the strengthening of Article IX on Business Practices. This latter possibility may well deserve the attention of developing countries, in view of the fact that the
problem of anti-competitive practices is not exclusive of the tourism sector, but it concerns many other services sectors as well.

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