Bridges Weekly Trade News Digest • Volume 5 • Number 32 • 25th September 2001

Revised Draft Annex On Tourism Services Tabled; Many Developing Countries Still Sceptical

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Revised Draft Annex On Tourism Services Tabled; Many Developing Countries Still Sceptical

The Dominican Republic, El Salvador, Honduras, Bolivia, Ecuador, Nicaragua, Panama, and Peru on 24 September issued a revised Draft Annex to the WTO’s General Agreement on Trade In Services (GATS) on Tourism (see BRIDGES Weekly, 27 February 2001, http://www.ictsd.org/html/weekly/story3.27.02.01.htm). This is the latest development in a continued effort by these proponents to rally WTO Members to the stance that an Annex on tourism is needed to address anti-competitive practices which they contend are undermining sustainable tourism, in particular in developing countries.

Changes in the Annex are minor and mainly relate to a narrower definition of relevant environmental standards and an increased emphasis on the cultural aspect of sustainability (first Draft Annex: S/C/W/127, 14 October 1999, and S/CSS/S/19, 5 December 2000). The list of organisations with which WTO Members should co-operate to achieve a sustainable development of tourism has been extended and now includes the Commission on Sustainable Development and the Convention on Biological Diversity (CBD). A change in structure has been made to stress the developmental aspect of the Annex.

Other developing country input solicited

Prior to the release of the revised draft text, comments and support were sought among other interested developing countries at an informal meeting held on 21 September by one of the proponents, the Dominican Republic. In a short introductory presentation of the rationale behind the Annex, it was stressed that while the volume of tourists is increasing, the revenues per tourist retained by receiving countries (mainly developing countries) are decreasing.

According to the proponents of the Annex, these external ‘leakages’ stem from the anti-competitive practices employed principally by tour operators based in tourist-generating countries (mainly industrialised countries) and prevent the sustainable development of international tourism. As a response to this situation, the Annex sets forth a number of anti-competitive ’safeguards’ designed to apply to a cluster of tourism characteristic products that is more comprehensive in scope than the narrowly-defined sector of tourism services in the GATS. Noting that tourism services are of major importance to virtually all developing countries in terms of foreign exchange earnings, the proponents also underscored that the Annex constitutes a means of implementing GATS Article IV, which contains language on the increasing participation of developing countries in international services trade.

Concerning the environmental component of the sustainable development aspects sought by the Annex, the presentation stressed the fact that while developing countries are generally opposed to addressing this issue within the WTO, the capacity of tourist destinations to counter the environmental impact of tourism is of crucial importance to its viability.

Responses

Participants at the informal meeting expressed varying degrees of support for the draft Annex, but said that "talks in the corridors" suggested a concern among WTO Members that the addition of yet another Annex could unravel the GATS (which already contains Annexes on Financial Services, Air Transport services, Telecommunications, etc.). Furthermore, several developing countries, including the members of the Caribbean Community (CARICOM), expressed concern regarding the "cluster" approach taken by the Annex, which they feel is too comprehensive, or "ambitious", and thus hampers their ability to negotiate on a sector-by-sector basis. Others are opposed to the inclusion in the draft of a provision regarding air transport, a sector which is explicitly excluded from the scope of the GATS. Among the most supportive participants were Morocco and Sri Lanka.

Following the general concern voiced by the participants at the meeting, the proponents agreed to remove the language ‘cluster’ from the draft; however, the underlying principle of applying safeguards against anti-competitive practices to a whole set of tourism characteristic products, as defined by the UN Statistical Commission, remains.

Among developed countries, the EU is very supportive of the Annex, mainly because Europe also suffers from anti-competitive practices within the tourism sector. Japan and Korea, on the contrary, are fiercely opposed to the proposal.

Delegates will now consult with their governments regarding the position to adopt in relation to the revised draft. One of the proponents however predicted that it would take years for Members to reach an agreement on the issue.

ICTSD Internal Files.