The Week in Europe

By David Jessop

 

Like it or not, tourism is the Caribbean’s largest industry. Highly labour intensive, it is in many countries the major source of employment. It generates tax revenues and is in various Caribbean nations the leading source of foreign exchange. Well integrated with other economic sectors, it can stimulate a wide range of activities from agriculture to manufacturing.

 

The industry faces many common problems and obstacles. Most destinations are constrained by a lack of affordable finance, inadequate tourism infrastructure, insufficiently developed public/private partnerships, expensive airfares and excessive foreign exchange leakage. 

 

Despite the industry’s size and value to the region, its potential as a force in development remains poorly understood. Its representative institutions are relatively weak and its voice is hardly ever heard in trade negotiations. Why this should be merits a column of its own. 

 

The relative disinterest in the Caribbean’s largest industry was apparent during the post-Lomé negotiations. Then Caribbean negotiators, with the support of senior European officials had to struggle to ensure that the industry was mentioned in the text of the Cotonou Convention. 

 

Unfortunately two years on and this is again evident in the preparation for both the EU/ACP negotiations on Economic Partnership Agreements that begin in Brussels on September 27 and in the services negotiations at the World Trade Organisation (WTO). In both arenas the hospitality industry still seems to have a very low priority. So much so that tourism, the world’s largest industry and the service sector more generally (financial services, shipping, aviation, the professions etc) has yet to figure in the thinking or rhetoric of many ministers whether they are from the region or from the ACP group as whole. Instead the emphasis, as in the past, is on important but older, less economically significant industries.

 

In order to try to remedy this, Caricom will meet on September 9th in Trinidad. There, representatives of the Caribbean services sector and officials will try to determine a basis for an all embracing Caricom services position. 

 

This is welcome, most especially in respect of the services negotiations in Geneva, which are already well underway. Although the general negotiating stage is virtually over it is still possible to insert a Caribbean position. Individual countries and groups of countries have just begun the process of making the requests and offers that determine the extent to which any nation will open its market.

 

To understand how important are the issues at stake, how brutal this bargaining process between WTO members can be and why there is a need for a common regional approach, one only has to look at the fate of the Dominican Republic’s proposal on tourism and that of the Ambassador himself.

 

The Dominican Republic had proposed a new WTO services annex specifically for tourism. While many WTO members had praised the Dominican Republic's work on this issue, few including the European Union and the United States were willing to agree to a specific annex. Powerful WTO members swept aside the progress the Dominican Republic has been able to bring about. 

 

Moreover it seems that the Dominican Ambassador himself was a casualty in this process. According to sources, the Ambassador - who to the annoyance of certain nations had been making real progress on a range of issues in Geneva - was relieved of his post after the US made clear that this was one of a number of costs for US agreement to the Dominican Republic’s entry into a Free Trade Agreement between the US and Central America. 

 

Caricom countries have recently received formal requests from the US, the EU, Japan, Canada and others to open up the Caribbean services market. These requests deal with tourism as well as other services. By way of example, the EU has requested that Trinidad open its catering sector to European catering companies and Japan has requested that Trinidad allow foreign tour operators to establish offices in Trinidad a market currently closed to foreign tour operators.

 

Trinidad will no doubt respond, but there is no reason why the region should not also be demanding that these developed nations and others make concessions that enhance the region’s market access in the services sector.

 

For instance, in the area of tourism the region might promote guidelines that prevent anti-competitive practises by tour operators, tourism multinationals or cruise ships. There is a need to ensure that any services agreement contains a sufficiently broad definition of tourism and tourism services and promotes the sustainable development of tourism, particularly in
developing countries. There might also be language that establishes safeguard, to ensure that equitable trading conditions exist for developing countries in relation to, for instance, electronic booking systems or the ability of Caribbean owned tour operators and travel agencies to establish themselves in the region’s primary markets. There are also a host of issues relating to air transport, shipping, the free movement of labour and professional services of interest to the region.

 

Much is at stake. Many states in which tourism is the largest or a most significant contributor to GDP have not yet considered how tourism development and the interests of their tourism industry should be factored into international trade negotiations. Worse it seems that both the biggest players in tourism in the region such as the Caribbean airlines and large hotel groups and the smallest interests such as exist in the entertainment or ground transport industry are not fully engaged in the process.

 

Caricom is now trying to establish a formal position on the issues to be discussed in Geneva and Brussels. If services negotiations are not to become a one-way street for the Caribbean it will be vital that a detailed regional position is deployed rapidly to counter the positions that have already been taken by developed nations.

 

David Jessop is the Director of the Caribbean Council and can be contacted at [log in to unmask]

September 6th, 2002




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