WORLD TRADE
ORGANIZATIONWT/MIN(03)/ST/146
13 September 2003
(03-4915)
MINISTERIAL CONFERENCE
Fifth Session
Cancún, 10 - 14 September 2003Original:  English
WORLD TOURISM ORGANIZATION
Statement Circulated by Mr Francesco Frangialli
Secretary-General
(As an Observer)
The Ministerial Declaration adopted at Doha emphasizes development and sustainability in
the global trading system.  Tourism trade can be one of the most decisive factors to achieve such
goals - particularly in the world's poorest countries.  Now is the moment to stress what we call
"tourism liberalization with a human face" - prioritiz ing poverty alleviation along with fair trade and
triple bottom line sustainable development.  In order to do that, the Members of the World Trade
Organization must make substantial progress in the way they deal with this complex cross-sectoralphenomenon of tourism.  The World Tourism Organization is committed to assisting in that process
and as a new United Nations specialized agency will be well positioned for the challenge.
Since the adoption of the Doha Development Agenda, the United Nations, the Bretton Woods
institutions and the OECD have established concrete poverty reduction targets.  With the "Millennium
Declaration" they adopted a timeline for the achievement of these objectives.  Governments and
agencies of the United Nations family have been as ked to pool their efforts in order to attain these
goals.  Unfortunately, as the Administrator of UNDP underlined when presenting this year's
Human Development Report, it seems that we are already behind schedule and there is a real danger
that we will miss our targets.
Now is the time to consider the opportunities we have failed to seize and the instruments we
have left unused.  This is equally applicable to the Doha Development Agenda as it is to other
international economic activities.
Tourism represents one such opportunity - perhaps over the long term, the most significant
one in terms of size, scope, diversity and creative socio-economic impact.  It is from this perspectivethat the WTO-OMT views with optimism the continuously confirmed consensus that in the field of
services negotiations special attention should be paid to the sectors and modes of supply of export
interest to developing countries.  In this regard tourism, the most ubiquitous and significant sector of
world trade and a complex and crosscutting service industry equalling or outperforming agriculture,
petroleum and automobiles in world exports should be given an increased consideration.
Tourism equals other competing activities by creating added value, but is much less
destructive and disruptive to the natural and human environment as long as it is developed rationally
and respects the carrying capacity of sites.
We are aware of the fact that in the proposal phase of the negotiations, the proposals by
developing countries initially covered tourism, while in the request-offer phase among a few dozenWT/MIN(03)/ST/146
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offers submitted so far, few developing countries have identified their specific sectoral and modal
interests, including in tourism.  This reflects th e difficulty in assessing reciprocal benefits from
tourism trade liberalization and the overall balance of concessions across the whole services spectrum
in the context of the objectives of GATS Article IV.
Given these partial results of the current Doha Development Agenda (just as in Seattle and
Doha itself), the potential of the tourism sector and its real trade impact may again be overlooked, or
not properly grasped in the negotiations, particularly in relation to the objectives of sustainable
development.
From the World Tourism Organization's point of  view, three elements should be taken into
consideration:
- The specificity of the tourism sector resu lting from the distinctive treatment required
for a service which is ultimately supplied and consumed abroad, which implies the
movement of consumers across national borders, hence the importance of
"consumption abroad" measures and commitments, their transparency andmonitoring;
- the capacity of tourism to act as a powerful driver for many upstream and
downstream economic sectors, thus making tourism interdependent and
complementary to other sectors;
- tourism's comprehensive and ubiquitous nature which either results in multiple
classification, or the limited one, such as "tourism and travel-related services" in
W/120, which in turn reduces the potential for tourism trade liberalization, "hides"
some key parts of the tourism sector from the negotiators' focus or even dissociatesthem from the tourism sector in clear contradiction of the sector's everyday reality.
The strong and sustained rise of tourism over the past 50 years constitutes one of the most
remarkable economic, social and cultural phenomena of our time.  The events of September 11, the
wave of terrorist attacks, the war in Iraq, and the SARS epidemic dealt severe blows to this major
industry.  However, it is already back on the path  of growth.  The number of international tourist
arrivals has grown from 25 million in 1950 to 715 million in 2002.  This is equivalent to an averageannual growth of 7 per cent over a period of 50 years.  It demonstrates an enormous resilience and
adaptability to external shocks - including those of the recent past.
The revenues generated by these arrivals - not including airline ticket sales and revenues from
domestic tourism - reached US$480 billion in 2002, making tourism one of the largest categories ofinternational trade.
It should be recalled that over the past decade, the annual growth of tourist arrivals in
developing countries has been higher than the world average.  The related strong growth in their
international tourism receipts demonstrates a potential competitive advantage in their favour.Developing economies and those in transition enjoy a surplus in their tourism trade balance with
OECD countries, something that can be said about very few other segments of their services sector.
In all developing countries, tourism has shown itself to be a highly labour-intensive activity
that opens up opportunities for the small businesses that are engaged in or provide products andservices to the tourism industry.  Its impact is particularly strong in the local farming and fishing
industries, handicrafts and even the construction industry.  In these countries, tourism constitutes
exceptionally fertile ground for private initiative and job creation.  It serves as a foothold from which
the market economy can expand and flourish.WT/MIN(03)/ST/146
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Furthermore, in all of these countries, we can observe the crucial contribution of
tourism-generated foreign exchange receipts to the balance of payments.  Such revenues reduce
countries' foreign debt and their dependence on a single export sector, in most cases a raw material
with low value and fluctuating price.
Specifically, the tourism receipts of the least-developed countries (LDCs) more than doubled
during the 1990s.  At the same time, tourism has become the main source of foreign exchange
revenues for the forty-nine LDCs, not counting the oi l industry, which in any case is concentrated in
only three of these countries.  Taking all the activities together, tourism accounts for more than a sixth
of their non-petroleum exports, far surpassing their second and third largest export earners (raw cotton
and textiles).  Tourism has become one of the main components of these countries' GDP, or, in manycases, the largest one.
With very few exceptions, LDCs possess remarkable potential for tourism.  The central
questions are whether this potential can be harnessed to contribute to poverty alleviation and whether
progressive, negotiated, balanced and equitable trade liberalization can contribute to this objective.The initial signs indicate that these outcomes are indeed possible.
As with every human activity, optimal growth in the sector and its contribution to
development pose substantial challenges, in which trade negotiations can help if the potential of
tourism is objectively assessed and the critical issues properly addressed in the overall negotiations -particularly from the viewpoint of poor counties.  These issues include:
- The reliance of tourism on other services, in particular infrastructure-related,
business, environmental and telecommunications services which may be weakly
organized or lacking, yet which are pivotal for developing countries' tourism;
- deficiencies in the organization of public services, lack of new information
technology skills or the need for enhanced human resource development;
- the insufficient diversification of certain economies, especially in the case of island
countries;
- inadequate attention to genuine sustainability in areas where tourism growth is
significant or where natural, cultural and heritage conditions are particularly
vulnerable.  This point was underscored in Johannesburg last year, where, for the first
time, tourism was clearly included in the agenda and in paragraph 43 of the Plan of
Implementation adopted by the Summit;
- excessive leakages attributable to the unreasonable repatriation of profits or induced
imports, which prevent the full benefits of the tourism spending multiplier effect from
materializing.
To date, despite its coverage in the GATS and the impressive content in national schedules of
specific commitments as the result of the Uruguay Round and the accession of new Members to
WTO-OMC, tourism has not played a significant part in the trade negotiations.  Rather than
effectively liberalizing, the process is seen as merely binding some of the liberalization measures
already in place.
The reality is that the instrument is not yet effectively working for the sector or for the
economy at large.  The consumer of tourism services has to move to the place of consumption and
while "consumption abroad" is a recognized compone nt of the framework, the rules have not beenWT/MIN(03)/ST/146
Page 4
adequately developed to ensure that this is done in a way which is fair and equitable for suppliers and
consumers of the service.  Nor have the essential interfaces with related sectors been effectively
identified and structured.  Finally, these aspects have not been specifically tailored to prioritize
development and sustainability.
Certain developing states and private sector organizations, in cooperation with the
WTO-OMC, WTO-OMT and UNCTAD secretariats, have worked together to underscore the
relevance and to explore the idea of an Annex on Tourism to the GATS, or other approach to reflect
both the specificity of the product and its complex interrelationship/crossover with other sectors.  But
little progress has been made until now.  Considering the speed with which the tourism industry is
developing all over the world and the potential of developing countries in general, and that of LDCs
in particular, WTO-OMT is convinced that these issues should no longer be left on the periphery ofthe negotiations.
Clearly it is important that the processes of the Development Round are structured, to
capitalize on the strengths of tourism - to amplif y them wherever possible and to address and
minimize the weaknesses.  Of particular importance in this respect are the following:
- The need to eliminate all barriers to tourism growth affecting the total supply chain,
as identified in the United Nations statis tical classifications and the "tourism satellite
account".  Here the very definition of tourism employed in the negotiations is
deficient and must be addressed;
- the need to ensure that liberalization creates fair conditions of competition ensuring a
level playing field for growth of all countries' tourism services and effective safety
nets for developing markets;
- the importance of including in the assessmen t of trade in services the identification
and mitigation of so-called "leakages" of revenue to origin market travel companies,
since the leakage phenomenon results in inequitable returns for destination service
suppliers and minimizes the positive effects of tourism on economic and social
development.  Their reasonable reduction by corrective measures and the
development of linkages to other support services and goods, have to be undertaken;
- the need to remove all unjustified obstacles to cross-border movements of tourism
consumers, create equal tourism promotion opportunities for all, and address the issue
of Government "travel advisories" on tourism destinations, all of which possibly
could be dealt with under mode 2 of "consumption abroad";
- to recognize, irrespective of services classification, the vital reliance of tourism on
liberalization commitments favouring free-flowing transport systems, full and fair
access to distribution networks and information channels, and ensuring provision of
adequate infrastructure and systematic elimination of barriers to efficient operations;
- to specially recognize the dependence of developing states' tourism on air services:
the impact of different regulatory treatment for air service liberalization and the
importance of providing incentives for investment or commercial presence in air
service, distribution and infrastructure in developing markets.
These themes are encompassed in our concept of "Tourism Liberalization with a
Human Face" that WTO-OMT has developed and pres ented at the WSSD in Johannesburg last year.WT/MIN(03)/ST/146
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We take note that specific services sectors, such as tourism, are not singled out in the
Draft Cancún Ministerial Text.  However, given all the arguments and expectations in favour of this
tourism, WTO-OMT and the whole tourism sector would appreciate it if it were referred to in the case
of services negotiations and LDCs in the final text, thus establishing a good basis and incentive for
our future work.
Under the concept of "liberalization with a human face", WTO - OMT stands ready to support
the accelerating evolution of trade in tourism services - particularly in respect of development,
sustainability and poverty alleviation.
First and foremost, within the framework of the Doha Development Agenda itself, to work
even more closely with WTO-OMC to address the underlying pivotal issues identified above -through a structured review of their relevance to development and sustainability.  We stand ready to
join forces with WTO-OMC in 2004 to undertake a structural evaluation of the role of tourism in
services trade, and to come up with an adequate instrument seeking to remove the remaining obstacles
to a balanced development of trade in this sector.
Second, by working with other inte rested institutions such as:
- The World Bank and the Regional Development Banks that are capable of using
tourism as a weapon in the fight against poverty and in favour of sustainable
development through the agreements already in place or under preparation betweenthese institutions and WTO-OMT;
- UNDP, where we have expanded our traditional "executing agency" activities -
particularly in the case of post-conflict regions and in relation to sub-Saharan Africa
where most LDCs are situated.  WTO-OMT considers unacceptable the fact thatAfrica, with its potential, receives only 3 per cent of international tourist arrivals and
just 2 per cent of receipts, and that half of this 3 per cent and 2 per cent is captured by
just three countries of the continent.  Our specific programme for sub-Saharan Africa
is aimed at removing some of the most serious obstacles to the tourism development
of African destinations, especially with regard to image, product marketing, and air
services;
- UNCTAD, with which in 2002 we signed an agreement to implement the STEP
(Sustainable Tourism for Eliminating Poverty) initiative.  The strategy adopted in
STEP consists of harnessing new funds, promoting linked social science and
industrial research so as to seed fund replicable pilot projects based on our
Organization's experience in the most disadvantaged countries;
- ITC, with which we are jointly developing  tools for capacity-building for the public
and private sectors in developing markets with an emphasis on promotion of tourism
as a services export;
- ICAO, in relation to key transport and related infrastructure issues - where we have
already embarked on detailed joint study of the application of traditional industrial
safety net mechanisms to foster what we call "Essential Tourism Development
Routes";
- The European Union, which finances our activities in the fight against sexual
exploitation of children in tourism.WT/MIN(03)/ST/146
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Third, by strengthening our established programmes to ensure that they incorporate the
concept of "Tourism Liberalization with a Human Face" and the principles of the United Nations
Millennium Development Goals and our 1999 Global Code of Ethics for Tourism.  On the basis of
these two instruments, WTO-OMT is ready to provide an analysis of positive support measures for
WTO-OMC, to facilitate progressive liberalization in the sector with an emphasis on development andsustainability.
The transformation of the World Tourism Organization into a specialized agency of the
United Nations, which is currently in progress and which is expected to be completed by the end of
the year following the "green light" given by ECOSOC, will represent an opportunity to reaffirm two
of the aims enshrined in the Organization's statutes and in the new agreement to be concluded
between WTO-OMT and the United Nations, namely to pay particular attention to the contribution ofinternational tourism to the economies of developing countries and to underscore the vital importance
of sustainable development.
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