The Caribbean Hotel Association (CHA) has called upon CARICOM to use the various trade negotiations to lower the cost of tourism inputs, chiefly through reduced tariffs, and urged its Regional Negotiating Machinery (RNM) to lobby the World Trade Organisation (WTO) to redefine the cruise ship industry as a tourism service.
In its response to the CARICOM RNM’s report on the tourism services negotiations, the CHA called upon the body to use trade negotiations as a means to attract more foreign direct investment into the region’s tourism industry, in addition to introducing competitive safeguards.
Focusing on the WTO and Free Trade Area of the Americas (FTAA), the CHA called upon the RNM to press the former to redefine cruise ships from their current classification as a maritime transport service to a tourism service under the General Agreement on Trade in Services (GATS).
“CHA believes that this should be corrected at the WTO given the increasing importance of cruise ships to Caribbean tourism economies, and the impact of their activities on land-based tourism sub-sectors (eg; hotels, tours, attractions and entertainment etc),” the document said.
“Cruise ships compete directly with the land-based hotel and accommodation sub-sector. They also control access to the tourist for many services and goods suppliers in Caribbean states, either by selling goods and services onboard, or by directing passengers to preferred retail outlets or service providers onshore.
“Clearly, cruise tourism is a key element of the Caribbean tourism economy. It should be recognised as such with external services trade negotiations, starting at the WTO.”
Addressing cruise ship tourism with regard to the Caribbean Single Market and Economy (CSME), the CHA called for the development of a regional policy for this industry, with any strategy geared to maximising benefits for the Caribbean.
“In particular, it should seek to: maximise the opportunities for local provisioning to cruise ships and trading opportunities for local retailers; achieve the optimal rate of development of cruise tourism and increase the conversion of cruise tourists to stay-over arrivals; minimise the adverse impacts of cruise tourism to the Caribbean socio-cultural and natural environment; increase the employment opportunities for Caribbean nationals on cruise ships; and establish a regional scholarship fund for Caribbean tourism students,” the CHA said.
The CHA’s concerns are similar to those of many Bahamas-based participants in the cruise ship industry, who were concerned that the cruise lines were also using their lobby and bargaining power to keep prices charged by Nassau-based tour and excursion operators low, allowing the lines to sell tour tickets on to cruise ship passengers at high mark-ups.
Meanwhile, the CHA response said the high price of the Caribbean tourism industry’s input goods and services was worrying, “given the extreme price competitiveness of the industry”.
It added that trade negotiations should be used to lower such prices, and the CHA would welcome import tariff reductions on furniture and linen; pasta; wines and spirits; kitchen equipment; speciality meats; fish; and shellfish, plus further liberalisation of telecommunications, transport services and insurance services.
However, the Caribbean hotels body warned that replacing import duties with increases in taxes such as Value Added Taxes (VAT) to maintain government revenues would negate any benefits from tariff reductions. This is likely to cause concern in the Bahamas, given that James Smith, minister of state for finance, has indicated the Government is moving towards installing VAT to compensate for tariff reductions.
“Any benefits to the tourism industry from tariff reductions on the goods listed above will be lost if these are offset by increases in domestic taxes such as VAT to maintain revenue neutrality for governments,” the CHA said.
“Reducing costs for the regional tourism industry must be one of the main objectives of external trade negotiations. Substituting one form of taxation for another will not achieve this objective, and is not acceptable to the tourism industry.”
The CHA document called upon the RNM to advocate that trade agreements should include measures to protect Caribbean tourism suppliers if international tour operators or travel agents fell into bankruptcy, arguing that the bond schemes protecting consumers in European markets should be extended to cover suppliers in this region.
For instance, the UK tour operator MyTravel, which lost £358.3 million in its 2003 financial year, is forced to lodge a bond with two UK regulators to serve as financial protection for consumers if the firm ceased trading.
However, the CHA added that Caribbean hotels that received advanced bookings through MyTravel would not be protected, and “such financial exposure could be terminal”.
The CHA also urged service trade negotiators to press for a review of the European Union (EU) legislation and standards for hotels, as the cost of compliance with tour operators standards was a “major issue”. It added that any review could help Caribbean hotels avoid making unnecessary alterations to their property.
Finally, the CHA said that through the WTO and FTAA talks, the RNM should introduce competition safeguards to counteract the possibility of collusion and anti-competitive practices between large companies in tourist-originating and tourist receiving countries, a product of market consolidation and ownership concentration.
The CHA said: “Caribbean suppliers are particularly vulnerable to anti-competitive behaviour on account of their weak bargaining power and small size.”
On the CSME, the CHA called for the development of a single regional tourism market, plus a definition of tourism. It added that a list of tourism activities to be preserved solely for national and regional companies be formed.
“This would act as the foundation for intra-Caribbean business and linkages, and help to counter the onslaught of fully integrated international tour operators who control the travel agent, wholesale tour operator, air service, ground handling, tours-entertainment and the hotel room,” the CHA said.
Source: Neil Hartnell, The Tribune
