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close this bookThe Courier N 156 - March - April 1996 - Dossier: Trade in Services - Country Report : Madagascar (EC Courier, 1996, 96 p.)
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close this folderTrade in services
View the document(introduction...)
View the documentA trailblazing project for services in Africa
View the documentServices potential in the Caribbean
View the documentWhat do ACP nations have to win or lose from global liberalisation of services?
View the documentImplications for developing countries of liberalised financial services
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View the documentGlobal tourism
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Global tourism

by Narcisse Banze Mukalay

Analysts are in agreement that the tourist trade is rapidly expanding worldwide, not only in terms of numbers of travellers, but also of amounts spent overseas. Governments, international organisations (including the World Tourism Organisation) and those monitoring talks on trade in tourism under the General Agreement on Trade in Services (GATS), concur that the industry is an important component of many developing nations' economies.

According to the World Tourism Organisation (Worid Tourist Market Trends 1994, WTO, Madrid), tourist arrivals worldwide rose to 537 million in 1994, representing a 5% increase over the previous year.

Greater inter-regional movements, particularly in Asia and Europe, and more long haul travel by European and US tourists are key aspects of this upward trend. In most of the world's regions, national tourism authorities have stepped up their promotional activities, which are now better targeted at the consumer. In 1994, over $2 billion was spent on promotion and advertising.

Tourism and the GATS

A WTO study on the Agreement on Trade and Tourism (The GATS and Tourism, WTO, Madrid 1995) highlights the aims of the GATS for the sector. Based on the principle that the free interplay of market forces is the best way to give the consumer the best possible product at the best possible price, it sets up a system which should lead to the progressive removal of certain obstacles to growth in tourism such as restrictions on the recruitment of foreign staff. It also aims to make it easier to create management units and set up franchising agreements.

In a nutshell, The GATS philosophy is that the easier it is for companies to compete and do business, the more trade will develop and the better will be the prospects for economic growth. The agreement's objective is to lift restrictions on trade in services by setting the same rules for all commercial partners, be these domestic or foreign, and by granting most-favoured nation (MFN) status to all GATS members and clamping down on any policy changes which hinder trade.

In the past, discriminatory practices, protectionism and a lack of transparency have greatly hampered international trade in all services. For tourism, the list of restrictions includes the posting of staff to a foreign country (transfer within companies), setting up and managing branches abroad, making payments and currency transfers and use of trademarks.

The 20 African countries with the highest income from tourism International tourism income (excluding transport).

GATS aims at streamlining trade in tourism in three ways. These are firstly, by providing a clear definition of general commercial rules and obligations (notably access to markets, domestic practices and MFN), secondly by defining ways of providing services or types of tertiary sector transactions to which the rules apply and finally by requiring governments to define their specific undertakings under general rules in the light of the universal scope of the agreement which applies to the whole range of services, including tourism.

Worldwide International Tourism arrivals and income: 1985-1994 (millions of arrivals, income in bn $, and %)

In future, signatories to the GATS accord will be obliged to give providers of foreign services complete access to their domestic market and will have to treat them on an equal footing with domestic service providers. For tourism and travel companies, this means that tour operators, hotel businesses and other companies involved in tourism and travel in one country will be able to operate in other countries. For example, in the hotel sector, GATS will facilitate franchising, management contracts and technical assistance agreements and make it easier to obtain licences and register patents.

Article IV of GATS advocates the increased participation of developing countries. This is of particular relevance to tourism where there is an imbalance in terms of revenue and cumulative economic advantage between developed and developing nations.

Under GATS, the need for developing countries to strengthen their domestic capacity to provide efficient and competitive services is recognised. They must offer better market access, improve their participation in distribution and information networks, and take advantage of the freer access to markets in those areas where they could be in a position to provide individual services. All these improvements can be negotiated through undertakings and the agreement calls on parties to begin contacts before December 31 1996 so that developing nations can achieve these objectives more easily.

Tourism trends in ACP countries

According to the World Tourism Organisation, 20 of the 50 countries on the African continent account for nearly 94% of tourist arrivals in the region. Ten of the top 20 country destinations are found in the continent's Eastern and Southern regions. A similar picture emerges if one looks at it in terms of revenue, which is heavily concentrated in certain geographical areas. The top 20 nations account for more than 95% of the continent's total tourism receipts.

The Caribbean: classification of tourist destinations in 1994

Regional Tourism

October 1995 saw the launch of the Regional Tourism Organisation of Southern Africa (RETOSA), as the tourism wing of the 12-member Southern African Development Community (SADC - Angola, Botswana, Lesotho, Malawi, Mauritius, Mozambique, Namibia, South Africa, Swaziland, Tanzania, Zambia and Zimbabwe). The public sector, non-governmental organisations, quasi-state bodies, the private sector, airlines and other companies involved in tourism and travel are all represented in this Lesotho-based organisation, which is the fruit of two years of joint talks between the European Union and SADC. Its aim is to coordinate and facilitate tourism on a regional basis.

Future forecasts for Africa (again according to the WTO) are an annual increase in travel of 5.5% a year and annual income growth of up to $24.3 million in the period up to the year 2000. The opening decade of the 21st century should see a 4% per annum rise in the number of tourists and increased revenue of $36 million a year.

By way of conclusion, the words of WTO Secretary General, Antonio Enriquez Savignac, seem to fit the bill. At the Organisation's eleventh General Assembly in Cairo in October 1995, he stated: 'Tourism is, by its very nature, a translational activity. In order to make it work as well as possible, we need to be able to operate across frontiers. Only in this way can it bring prosperity, respecting both man and the environment and making a contribution to peace.'