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AIRLINE VIEWS ON THE PROPOSED GATS TOURISM ANNEX SYMPOSIUM ON TOURISM SERVICES WTO/OMC Geneva, 22-23 February 2001 Richard Smithies Director, Policy Analysis Government & Industry Affairs - IATA AIR TRANSPORT & GATS TODAY Annex on Air Transport Services

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AIRLINE VIEWS ON THE PROPOSED GATS TOURISM ANNEX

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AIRLINE VIEWS ON THE PROPOSED GATS TOURISM ANNEX

SYMPOSIUM ON TOURISM SERVICES

WTO/OMC

Geneva, 22-23 February 2001

Richard Smithies

Director, Policy Analysis

Government & Industry Affairs - IATA


AIR TRANSPORT & GATS TODAY

  • Annex on Air Transport Services

    • excludes traffic rights and all services directly related to their operation

    • but covers CRS, Marketing & Selling, Maintenance & Repair of aircraft

    • CTS to review developments & coverage every 5 years

  • Bilateral system of Agreements

    • basis for exclusion

    • States can control liberalisation process

      • maintain principles of reciprocity and fair and equal opportunity to compete

    • offer procedures for handling disputes


INDUSTRY VIEWS ON THE GATS

  • GATS is not the vehicle for fundamental reform

  • ICAO is best-qualified international agency

    • to take account of AT particular characteristics

  • Handle air transport on a sectoral basis

  • Review offers opportunity to clarify

    • scope and coverage of services directly related to the operation of air traffic rights

  • Belief that a hybrid system can de developed

    • permit multilateral & bilateral arrangements to co-exist

    • depending on regional preferences and needs


BASIS FOR THE TOURISM ANNEX

  • Tourism & Travel Related Services(Cat. 9)

    • covers hotels & catering

    • travel agencies & tour operator services

    • tourist guide services

    • other services

  • Tourism Satellite Account system adds

    • air, sea, rail & road passenger transport

    • certain financial services

    • navigational aids

    • tourism information services


WHY INCLUDE AIR TRANSPORT IN A TOURISM ANNEX?

  • WTO-Tourism & UNCTAD meetings

    • neither body has direct responsibility for air transport

    • only sources for this argument

  • Arguments include:

    • need to focus on tourism sector as a whole

    • anti-competitive practices in network services

    • developing countries at the mercy of abuses of a dominant position


WHAT ARE THE CONSEQUENCES?

  • Air transport in a Tourism Annex

  • Would destroy Air Transport Annex

    • take out 2 of 3 services covered

  • Split GATS coverage of air transport

    • passenger and freight

    • remove common services

  • Marketing & Selling only service covered

  • Need to re-examine GATS legal framework


AIRLINE INDUSTRY CHANGES

  • Consequences of liberalisation

    • more competition

    • airline restructuring

  • Changes include:

    • development of hubs,

    • alliances & commercial arrangements

    • revenue management systems

    • evolving distribution systems

    • growing reliance on e-commerce

  • Changes are limited by:

    • airport & airspace congestion

    • environmental considerations

    • foreign ownership restrictions


LIBERALISATION & COMPETITION LAW

  • Competition authorities

    • under liberalisation they assume a more important role

    • airlines comply with relevant competition laws

  • Antitrust immunity / exemptions needed

    • for airlines to agree on standards & interline fares

    • to maintain a coherent multilateral framework

  • Global network of services

    • taken for granted

    • ensures service to every country


DISPUTE SETTLEMENT

  • GATS Air Transport Annex

    • GATS dispute settlement procedures can only be invoked

      • where commitments have been made

      • when multilateral & bilateral mechanism have been exhausted

  • Bilateral air service agreements

    • contain articles relating to:

      • anti-competitive practices

      • dispute resolution

  • CRS practices - two considerations:

    • existing regulations or codes of conduct

    • some commitments for CRS exist under the GATS


CONCLUSIONS

  • A Tourism Annex is an important undertaking

    • include all interested parties in the drafting process

  • If the proposed Tourism Annex is put in place,

    • it should not include any part of air transport

  • IATA supports the review of the GATS Air Transport Annex

    • conducted by the Council for Trade in Services

    • in informed & transparent manner


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