Tourism Services Negotiation Issues

1. Tourism Services Negotiation Issues Ramesh Chaitoo, CRNM Caribbean Tourism Conference October 15, 2003

2. 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)

3. 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

4. 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

5. 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.

6. Access through 4 Modes of Supply • Cross Border trade • Consumption Abroad • Commercial Presence (Investment) • Temporary Entry (Presence of Natural Persons)

7. 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.

8. 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

9. Tourism Commitments • As of September, 1998, 112 WTO Members made commitments in Tourism under GATS * * Austria, Finland and Sweden counted separately

10. 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

11. Canada (cont’d) • Travel agency, tour operators • Travel agencies and travel wholesalers - commercial presence requirement; • Residency requirements

12. 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

13. 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

14. 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

15. 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. • .

16. 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.

17. 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 economies

18. 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.)

19. OFFERS (cont’d.) • Reduce regulatory barriers to facilitate visitors and the movement of tourism professionals in the Cbbean (visas, work permit requirements, etc.)

20. REQUESTS re Tourism #1Reduce 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”.

21. #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 one-way? #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.

22. #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.

23. #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.

24. #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

25. 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.

26. 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.

27. 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.

28. 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.

29. 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. 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. #21. Introduce specific measures to expand insurance coverage for the Cbbean tourism sector, and to reduce costs. #22.

30. 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.

31. 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.

32. 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?

33. 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.