Tourism at the Crossroads

Chalenges to Developing Countries
by the New World Trade Order
Jorg Seifert-Granzin
Werkstatt Okonomie, Heidelberg/Germany
D. Samuel Jesupatham,
Indian Social Institute, Bangalore/lndia
Equations, Bangalore/lndia
Tourism Watch, Leinfelden-Echterdingen/Germany
epd-Entwicklungspolitik: Materialien VI/99
Frankfurt am Main/Germany, 1999
Tourism at the Crossroads
Challenges to Developing Countries by the New World Trade Order
Published by:
Written by:
English translation:
Edited by:
Layout by:
Cover image by:
Cover layout by:
epd-Entwicklungspolitik, Equations, Tourism Watch (ZEB)
Jorg Seifert-Granzin (Werkstatt Okonomie, Heidelberg/Germany)
O. Samuel Jesupatham (Indian Social Institute, Bangalore/lndia)
Elaine Griffith
Christina Kamp
Christina Kamp, Jorg Seifer-Granzin
Ohanaraj Keezhara
JOrgen Ravens
This study is published in the series 'epd-Entwicklungspolitik: Materialien' as No. VI/ 99.
Frankfurt/Main, 1999
German biweekly magazine on development issues
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No. 4101200
Introduction ............................................................................................................................ 5
1. Tourism in a Global Economy: Forms, Significance and Contradictions ............. 6
1 . 1 Tourism as a Service Mix: Significance and I nterrelation with other Economic Sectors
................................................................................................ ...................................... 6
1 . 2 Key Pl ayers in I nternationally Traded Tourism Services ........ ...................................... 8
1. 3 Tourism and Development - Facts, Myths and Contradictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 2
1 .4 Concl usion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
2. Tourism in Developing Countries under the Regime of GATS ............................. 25
2. 1 The I ntegration of I nternational Trade i n Services into a New World Trade Order ..... 25
2.2 Tourism Rel ated Services under t he Verdict of Uberal isation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
3. Disregard for Human Rights in Tourism - Challenges to the World Trade Order
................................................................................................................................•... 45
3. 1 Ugl y Backyards of Tourism ........................................................................................ .45
3. 2 " Blind Dates" in Trade Regul ation: Level s and Means of I ntervention in I nternational
Trade .......................................................................................................................... 45
3. 3 The Pros and Cons of I ntroduci ng Social Cl auses: Crucial Points in the Fiel d of
Tourism ....................................................................................................................... 46
3. 4 Recommendations ...................................................................................................... 49
4. Ecological Impacts of Tourism as a Trade Issue ................................................... 52
4. 1 Shortcomings of the New Worl d Trade Order ............................................................. 52
4. 2 Who's wrong? Market Fail ure or Trade Liberal isation as a Cause of Environmental
Degradation? .............................................................................................................. 52
4. 3 Who's First? Possibl e Conflicts Between Multilateral Envi ronmental Agreements and
WTO-OMC i n the Fiel d of Services ............................................................................ 55
4.4 Taki ng Nat ure into Account - al l t he More in Tourism ................................................. 56
4.5 The Agenda of Sustainabl e Trade in Tourism Services ............................................. 60
Priorities on the Way to Sustainable Trade i n Tourism Services .................................... 62
Bibliography ......................................................................................................................... 64
Abbreviations ....................................................................................................................... 68
Appendix 1: Tou rism Dependency ..................................................................................... 69
Appendix 2: WTOIGA TS Member Countries ...................................................................... 70
The Publishers ...................................................................................................................... 71
Freedom in international trade and freedom of travel is the idea of the moment. Yet some­
times the freedom of people in the tourism destinations in developing countries is trampled
underfoot. That is because costs and benefits from tourism are often unequally distributed.
While tourism arouses great business expectations, the ensuing benefit is in reality generally
far smaller. It is also often linked with negative socio-cultural and ecological repercussions.
For years, groups critical of tourism have been confronting the consequences of a mis­
conceived tourism policy with their vision of another, acceptable and sustainable kind of
tourism: As many local people as possible are to share in the economic benefit of such
tourism and participate democratically in its planning and implementation. This would be a
tourism that respects the culture of the host country, does not damage natural resources and
offers a stimulating experience to both hosts and guests.
The emerging world trade system under the World Trade Organization (WTO-OMC) provides
a challenge of unprecedented order to the tourism-critical groups and organisations. For the
first time, trade in services, including tourism, has been subjected to the policies of free trade
doctrine, alongside internationally traded goods through the adoption of the General
Agreement on Trade in Services (GATS). Tourism Watch and EQUATIONS have therefore
initiated this study aimed at analysing the consequences of this change for tourism in
developing countries. Such an analysis would help in evolving the strategies that need to be
adopted for a sustainable and self-determined development in tourism.
This study sheds light on the legal bases of the new world trade order, documents the
progress of liberalisation in this sector, identifies its risks and makes proposals for reforms. It
takes account of the sectoral problems in developing countries in general and the Indian
experience with tourism in particular.
Three problems play a prominent role here. In the first place, GATS intervenes deeply into
areas of national and sUb-national autonomy of the countries concerned. The effect of such
intrusion is accompanied with greater problems since the structures that are vital for the
participation of all concerned are also lacking in most developing countries. Secondly, human
rights violations in the field of tourism pose a fundamental question to the new world trade
order. Thirdly, the implementation of the commitments under GATS could lead to a
disregarding of the WTO-OMC's commitment to sustainable development and conservation
of natural rescues. Reform proposals have been drawn up for all three areas. In our view
their implementation is an important precondition for the development of sustainable forms of
We thank the authors of the study, D. Samuel Jesupatham (Indian Social Institute,
Bangalore) and J6rg Seifert-Granzin (werkstatt 6konomie, Heidelberg) for this imporant
work. We also have much reason to thank Elaine Griffith for the English translation, the
Association of Protestant Churches and Missions (EMW) in Germany for their financial
support, Christina Kamp for her untiring editorial support, and last but not least the German
Protestant News Agency for publishing the study in their series 'epd-Entwicklungspolitik:
Presenting this study for general public debate we are hopeful that it will facilitate the
discussions on the coming WTO-OMC Millennium Round, and will serve as a constructive
element in the ongoing international process on tourism within the framework of the UN
Commission on Sustainable Development (CSD).
Martin Stabler / Heinz Fuchs
Tourism Watch
If relevant figures and forecasts are to be believed, the tourist industry has long become one
of the most imporant growth industries in the world. According to estimates of the World
Tourism Organisation (WTO-OMT), over a billion people will cross national borders in the
year 2010, income from tourist services will amount to over US$ 1.5 trillion (WTO-OMT
1996a). Other estimates go even further. The WEFA estimated a global turnover of US$ 3.5
trillion for the year 1987, which according to the World Travel and Tourism Council (WTTC) is
to rise to over US$ 7.1 trillion in the year 2006 ( Kirstges 1996, 46f.). While the forecasters of
global mobility are in agreement regarding the economic importance of tourism, they
disagree about the segments involved. Is building hotel complexes a way of adding value
through tourism? What grounds for travel (holidays, visits, business contacts, health,
pilgrimages, etc.) are to be included in tourism?
In India, for example, four types of tourism play a significant role:

Businessmen and women travelling as part of the international corporate world with an
increasing presence of multinational corporations in India;

foreign leisure tourists spending their holidays in India,

domestic leisure tourists mainly stemming from the new middle class in India which has
an increased disposable income as an outcome of the liberalisation process. I

the Indian pilgrim travel which might amount to the highest share according to number of
"Tourism - the biggest industry in the world?" Without a clear consensus regarding the forms
of tourism the significance of this sub-sector cannot be assessed, let alone the impact of
deregulating international trade in goods and serices.
At the beginning of the 1990s the United Nations (UN) and WTO-OMT agreed on a joint,
broad definition of tourism: "Tourism comprises the activities of persons travelling to and
staying in places outside their usual environment for not more than one consecutive year for
leisure, business and other purposes" (UNIWTO-OMT 1994, 5). This consumer-related
approach includes business trips and international and domestic tourism
. The orientation to
Domestic tourists have swelled from nearly 60 million in 1992 to over 100 million in 1995. With a
base of nearly 110 million, there is an in-built market of travelling Indians - says the Deputy Director
General of Domestic Tourism. The middle class was on the rise, particularly the upper middle and
high income groups in India, between 1989 and 1993. The lower and lower middle income
households have grown about 6 percent in number, and the middle and middle income group grew
nearly 26 percent. The Largest percentage increase was in the high income households which shot
up from 2.1 million to 3.6 million - a hike of 7 percent in the five-year period (ET 3.10.96).
The shrine of Lord Venketeshwara at Thirumala in Andhra earned a record income of Rs. 217.66
crores in 1995-96 during which it was visited by 20,518,152 pilgrims (Hindu 30.9.96).
In this context 'domestic' tourism refers to residents travelling within their own country. In the
context of national accounts it has a broader sense and refers to all activities of residents and non­
residents within a reference countr.
the consumer, i.e. the traveller, conceals the close intereaving of the tourism sector with
other (backward) service areas and support activities. To what extent, for example, do
transporation, entertainment services, or food consumption contribute to profits from
Deciding what activities are to be attributed individually to this definition is more than a
problem of definition or statistics. Generally the tourism sector is regarded as " ... already
relatively Ilberalised, although characterised by a marked absence of developing countries'
suppliers in the distribution channels ... " (Handszuh 1995, 17). Whether their weak position
can be improved at all does not only depend on the services offered in the core tourist areas
(hotels/restaurants, travel and tour operation, tourist guides' services). Support activities in
the fields of finance, technology and procurement of goods and services are gaining in
importance. In particular the access to modern distribution channels such as computer reser­
vation systems (CRS) and online advertising, and the range of on-site services (sporting
facilities, entertainment, etc.) will decide whether the tourism sector can make a higher con­
tribution to domestic value added and economic development (cf. 1.1.2).
Under Tourism and Travel-Related Services (TTRS) the service sectoral classification of
GATS covers hotels/restaurants, travel agencies/tour operators, tourist guide services and
others. Diagram 4 (cf. p. 30) shows, however, that there is hardly a single service area that is
not directly involved with tourism. The effects of the new World Trade Agreement on tourism
will thus be far greater than they appear if we look at the commitments to liberalise tourism
and travel-related services only.
A key area of the interdependence of tourism-related sectors is the close connection
between transport services and tourism. Over 80 percent of international tourists reach their
destination by plane (Madeley 1996,8). The boom in long-haul travel came about when
charer flights where linked with package tours, which resulted in a high degree of interaction
between airlines and tour operators (cf.1.2). Furthermore, all other kinds of transport play a
vital role in the tourism business: without busses, trains, (hired) cars and ferries, it would be
difficult to achieve variety in (orchestrated) holiday worlds. All forms of recreational, cultural
and sporting services are factors relevant to the location which are also of considerable
At least as imporant as the core tourist activities are the wide range of business-supporting
activities: credit card suppliers and travel insurance companies have conquered lucrative
segments of the market. In the framework of strategic alliances, airlines are expanding their
information technology infrastructure in order to use it jOintly. Amadeus (Air France, Iberia,
Lufthansa) and Apollo (Air Canada, Alitalia, British Airays, KLM, Swissair, United Airlines
and USAIR) are only two of a good dozen CRS, which handle the bulk of all air bookings.
New holiday resorts - such as all-inclusive resorts and theme parks - are planned by
experienced consulting firms, financed through investment companies and marketed by
specialised agencies. Evident backward linkages exist to food production and the building
In view of the wide range of services it may be concluded that "activities related to the
manipulation and distribution of information lie at the heart of the (tourism) industry's wealth­
creating process" (Poon 1993,214). Through special expansion strategies, individual players
succeed in controlling activities in this process and taking a leading market position.
The strategies of vertical integration play a dominant role in individual segments of the
tourism industry. Tour operators have for years been buying into the backward and forard
areas of service or production. Their backward integration includes hotels and charter air­
lines. Via a far-reaching forward integration of retail distributors and travel agencies, these
operators also control all stages of distribution, marketing and sales of package tours.
Airlines, too, operate massive forward integration, extending far into the field of primar
tourism and travel-related services via their charter airlines which have interests in tour
operators, retailers and travel agencies. By contrast, hotels and hotel chains hardly pursue
strategies of vertical integration at all.
All stages of the tourist service chain are, on the one hand, marked by strong oligopolistic
concentration and, on the other hand, by increasing competition between the providers. Air­
lines, tour operators and travel agencies are subject to an increased process of horizontal
integration, which in the recent past has raised interest through spectacular take-overs like
that of Thomas Cook by the German L TU group in 1993, or through joint ventures. The
consolidation among airlines has been in full swing since the 1980s and is imminent for travel
agencies. Estimates suggest that of the approx. 16,000 German travel agencies, at most half
will survive this selection process (Scherer 1996, 32).
The expansionist strategy of diagonal integration aims at a company becoming a provider in
as many tourism-related service markets as possible. "It is the process by which firms use
information technologies to logically combine services (e.g. financial services and travel
agencies) for best productivity and most profits" (Poon 1993, 216). A broadening of the
service range offered is intended to cut costs ("economies of scope"), make the most of
synergies between the individual markets and achieve systems gains. This includes e.g. the
joint use of CRS by carriers and travel agencies under the roof of a holding, co-operation
between credit card suppliers and tour operators or travel agencies offering the special
insurance services of a holding partner.
Even though all forms of integration continue to play an important part in relevant tourism­
related markets, there is hardly any doubt that the strategy of diagonal integration will gain in
importance as information technology (IT) develops.
Eight core industry players in Europe dominate the supply side in tourism. In the broader
context, national and international trade associations, national government ministries
(transport, tourism) and multilateral organisations (IMF, World Bank Group, development
banks) are influential in this sector. Besides traditional providers (airlines, hotels, travel
agencies, tour operators and on-site service suppliers) companies gain in importance if they
cover a broad range of tourist services by creating and delivering holiday "events". The most
popular among the 'holiday-makers' are all-inclusive resorts (Club Mediterranee, Club
Robinson). Fantasy resorts and theme parks (Disneyland, Centerparcs) are also active on
the market of total holiday experience. Even cruise lines are losing their old-fashioned image
and offering the safety of orchestrated holiday worlds.
The imporance of banks, insurance companies, credit card suppliers and investment fund
companies for tourism has already been pointed out. Financial service suppliers are
conquering the travel and tourism markets. At the same time, traditional players are
increasingly assuming financing functions in a process of diagonal integration and
• By contrast, incoming agents have played a rather marginal role in tourism
In the literature terms like 'diversification' and 'integration' are defined differently. Poon understands
'diversification' as the expansion of a country in a field which has no relationship with previous
corporate activities and cites the participation of airlines and car rental firms (Poon 1993, 222)
market places. They ensure quality control in service networks and operate primarily as
intermediaries between the individual players in the destinations.
In view of the high degree of interrelations in the tourist industry, one might well conclude
that a few players dominate at least individual (national) tourist markets. The complex mesh
of interests, forms of co-operation and types of tourism-related services make it difficult to
identify "market-makers".
Box 1: The TUI case
Germany's biggest hotelier (Table 1) is also the tour operator with the biggest sales in
Europe. In 1997/98 the Touristik Union International in Central Europe achieved a turnover
of DM 7.4 billion (fvw Nr. 26/98), including all domestic and foreign interests in hotels, tour
operators and on-site agencies. At the same time it is one of the most important European
providers of long-haul trips, operating from Germany and elsewhere. Through its take­
over of the leading Dutch tour operator Holland International, planned co-operations with
Austrian travel agencies and Swiss tour operators, and expansion in Eastern Europe, TUI
will probably remain the leading European operator in the long term. Yet this tourism giant
has itself become a plaything of other group strategists.
The equity structure in this group highlights the integration of airlines, financial service
suppliers, tour operators, travel agencies and on-site service suppliers; it reads like a
Who's Who of the German tourist trade. The owner of this complex group (Hapag Touristik
Union 50.1 percent, Preussag AG 25 percent and WestLB 24.9 percent) are in their turn
affiliated with other leading German and American providers of tourist services. TUI itself
has a 50 percent share in Airtours International GmbH, which is a 50 percent subsidiary of
Lufthansa Commercial Holding GmbH (cf. Box 2). Among TUI subsidiaries (cf. Table 2),
Holland International, Seetours and Airconti are themselves among the 1000 biggest
European operators.
TUI has a three-level distribution system (Liedtke 1996): a few TUI agencies and the
franchise chain TUI UrlaubsCenter with its 255 outlets sell exclusively TUI travel services.
In addition, 9,160 independent travel agencies at home and abroad are licensed as TUI
ProfitCenters and grant the group offerings a special place in their sales offering. Originally
the company sought an exclusive distribution connection between travel agencies and
package tours of TUI operators. The travel agencies were to be required to sell package
tours of the most imporant German competitors. The dispute between TUI, travel
agencies, the Federal Cartel Authority and the courts lasted six years and ended in
1994/95 with TUI "voluntarily" lifting its exclusive representation requirement.
However powerful TUI may appear as a European tour operator it is itself only one
strategic component of a group that has a firm grip on other aspects of the tourist trade. In
1993 the major bank WestLB succeeded in getting into the group by the backdoor, via
subsidiaries and holdings. WestLB wanted to establish and control the biggest tourism
conglomerate in Europe, based on two pillars: TUI with all its European subsidiaries and
L TU International Airways GmbH & Co. KG. L TU, a 34 percent subsidiary of WestLB
would have contributed not only a powerful aircraft fleet to this mammoth merger but also
other subsidiaries in the form of leading operators Thomas Cook, Tjaereborg, Jahn Reisen
and Meiers Weltreisen. But WestLB exerts major influence on the European tourist
business via its 25 percent interest in TUI and LTU, but it is not the only shark in the sea.
Other German banks are also associated with Hapag-Uoyd and deparment stores via
minority interests.
Table 1: Leading German Tour
Operators: Turnovers 1997/98
Firm Market share
TUI Germany 26.41
C & N Touristic 22.26
NUR Germany 17.05
L TU Touristic (L T) 11.63
DER Tour 6.30
HI 5.28
ITS 5.08
Alltours 4.67
Oger Group 3.69
Kreutzer Touristic 2.80
[Mill. OM]
Supposedly self-employed tour operators
turn out to be 100 percent subsidiaries of
larger tour operators; the influential
holdings themselves are not at all visible
on the consumer markets.
Oligopolistic practices in sales and
booking of travel services link travel
agencies and on-site service suppliers
with the tour operators (ct. Box 1: the TUI
case). Their investments and interest in
hotels ensure the necessary quota of
beds. "If you have the beds you have the
customers" (Scherer 1995, 83). This is
due to the decline in importance of
package tours and the rise of individual
holiday offerings.
The destinations present a similar pic­
ture. Here there are many small compa­
nies with regionalised service offerings
(boat trips, trekking tours, lodges, guided
tours, roundtrips, etc.) as well as the
large, high-capital national tour operators
Source: FVW 28/98
and travel agencies. The latter are fre-
quently associated with or entirely owned
by foreign companies via capital interests, joint ventures or co-operation agreements. They
have their own transport facilities and distribution channels. Direct contacts with customers in
the tourist sending countries give them a stronger competitive position from the outset, as
they are familiar with their customers' needs and can even initiate broad trends. On the other
hand, smaller providers adapt flexibly to the special regional conditions and are not subject to
the constraints of a standardised service range.
The competitive position taken by individual companies from these two groups can be
identified only for a specific country or region. The only generalisation possible here is that
the tourist inflow from individual sending countries is focussed on certain destinations and
that certain foreign providers probably dominate these markets. For example, the Dominican
Republic was the most important Caribbean destination for German tour operators in 1994.
About 57 percent of all overnight capacity was in the hands of foreign (not only German)
companies, through ownership or co-operation agreements (Vorlaufer 1996, 25.87). United
States citizens preferred Puerto Rico: two million, i.e. over two thirds of all incoming tourists,
came from the US (WTO-OMT 1995).
The importance of international hotel chains is easier to define, as they mainly operate under
standard international names. Madeley concludes that " ... hotels have probably the biggest
impact on developing countries. The overwhelming majority of the largest hotels world wide
are owned, operated or managed by, or affiliated with transnational corporations (TNCs).
Such hotels account for a considerably higher percentage of the total number of rooms in
developing countries than in developed countries. In developing countries with tourism
potential, hotel chains are particularly prevalent" (Madeley 1995, 9.11).
Various pOints here require elaboration:

Firstly, the number of hotels belonging to a chain in the sending country may be very
high, or the branches broadly scattered world wide. For example, over 80 percent of all
Holiday Inn hotels are found in the United States. By contrast, the 262 Club Med centres
are scattered over all five continents. In both cases the number of company-owned
rooms says little about their market position.

Secondly, co-operation between "smaller" (inter)national chains or individual hotels can
also lead to a prominent position in the hotel trade. As shown by the 1991 joint venture
between the Indian Oberoi chain and the French Accor group, some chains based in
developing countries also operate transnationally (Box 2: Key Players in India's Domestic
Hotel Industry - being about to globalise) . Oberoi and Accor agreed to set up the Novotel
chain in India, which runs 50 hotels in other developing countries.
Box 2: Key Players in India's Domestic Hotel Industry - bein
about to globalise
The Indian Hotels, part of the Tata Grup operates 41 hotels and resors in India as well as
14 abroad. It owns 14 hotels and has a minority stake in 20 others. Most of these hotels
operate under the Taj banner. Indian Hotels has a major presence in New Delhi and
Mumbai, where it operates three hotels in each of the two cities. The company has a major
presence in the flight catering business which contributes more than 10 percent to the total
turnover. The company proposes to build 19 hotels in the next five years. Indian Hotels is
the only company to add capacity during 1995, when 11 O-room Taj Mahal, Lucknow began
operations. Operating the largest hotel chain across the country has enabled the company
to diversify risks. While hotels in New Delhi and Mumbai cater primarily to the business
travellers, the others are centred on tourists. Being a leader in the segment, Indian Hotels
is the major beneficiary of the forunes in the industry.
EIH (formerly known as East India Hotels): Apart from Indian Hotels, it is EIH which is
playing high in the stock market. EIH operates in Mumbai, and in New Delhi where the
Oberoi and Oberoi Maidens account for 80 percent of the company's total revenues. The
company also operates nine hotels in the country under the Oberoi, Trident and Novotel
banners. The company has a steady foreign exchange revenue of 60 percent of its total
Asian Hotels: The company operates the 500 - room Hyatt Regency in New Delhi. The
hotel has a high occupancy rate and also has one of the highest operating profit margins in
the industry. The focus is on the business segment. The company has planned to expand
with projects coming up in Agra, Mumbai, Calcutta and Jaipur.
Hotel Leelaventue: The company operates the Leela Kempinksi in Mumbai and the Leela
Beach in Goa. The hotel is co-operating with Kempinski grup Switzerland, which is part of
the Lufhansa Grup. Its foreign exchange earnings constitute more than 70 percent. The
Goa resort has been voted the fifth best in the world. Additionally, the company is planning
an all-suite hotel in Goa along with Four Seasons Grup, Canada.
Orental Hotels operates the Taj cormandel (Chennai), the Taj Residency
(Visakapatnam), the Taj Malabar (Kochi) and Fishermans' Cove (near Chennai). In
addition, the company is investing abroad.
However, in many sending and receiving countries there are a broad range of small and
medium-sized tourist service suppliers that have to succeed in their respective market
segments. In Germany the market share of the five major tour operators (TUI, NUR, DER,
1ST, L T group) has been under 40 percent since 1987, and that of the small ones
has on
average been over 40 percent (Kirstges 1996, 357).
, -
For a definition of the individual provider segments see Kirstges 1996, 70f.
• Thirdly, through co-operation or sales agreements with many small hoteliers tour
operators can exercise a much stronger market power.
• Lastly, given the extremely hetero­
geneous spectrum of developing
countries, the share of foreign hotel
chains in total room capacity varies
considerably. In the cases of Kenya
and Sri Lanka, for example, it is
estimated at 5-15 percent. In coun­
tries like Eritrea, which are now be­
ginning to set up a tourist infra­
structure (taz 29/30.12.96) this
share could well be much higher.
Basically, there are four typical struc­
tural features characterising the hotel
trade in developing countries (Vorlaufer
1996, 93f1.). In many countries, large
up-market hotel groups dominate the
tourism scene. Many hotels belong to
transnational and national chains, via
equity participation, franchising
accords, joint ventures or management
agreements. In many countries, state­
owned companies continue to play an
imporant role. Small and medium­
sized hotels run by local proprietors
are, however, increasing in importance.
Table 2: Leading TUI Parners 1996
share [%]
Airtours International 100
Events 100
Take off Flugtouristik GmbH 100
TUI Nederland 91
Wolters Reisen GmbH 100
TUI Austria 100
Dorfhotel 100
Dr. Degener Reisen GmbH 100
TUI Service 85
TUl lnfoTec 100
TUI ReiseCenter 67
L'TUR 51
Robinson Club 100
In 1998, international tourism receipts world wide amounted to US$ 445 billion (WTO-OMT).
Developing countries accounted for about a quarter of this sum. According to estimates by
the World Tourism Organisation, in the year 2010 over a billion people will be travelling per
year and spending US$ 1.5 trillion. In the last 20 years, there has been a clear shift in the
market share of destinations. While the share of arrivals in European destinations continued
to drop (from 68.2 percent in 1970 to 59.6 percent in 1998), East Asian and Pacific tourist
areas clearly became more attractive, with their share in arrivals rising from 3.2 percent in
1970 to 13.9 percent in 1998 (despite a 1.2 percent decline in 1997 and 1998, due to the
financial crisis in the East Asian/Pacific region).
This being the case, it is understandable that individual developing countries, national and
multilateral development agencies and tourism planners hope for considerable growth
impetus from the establishment and expansion of the tourism sector. Whether these expec­
tations, centred around the hope that tourism will generate a significant share of the national
income, will be fulfilled, depends above all on the range of services which are actually being
supplied locally, under the guidance and to the benefit of the destination countries. Against
this background, the following expectations have to be reviewed:
(1) Tourism is to make a significant contribution to domestic value added. Given the close
relationship between tourism and other industries - food, building and transportation -
tourism-induced growth can stimulate other sectors.
(2) By promoting a high level of attractiveness of the destinations international tourism is to
be intensified and thereby foreign exchange earnings are expected to increase.
(3) It is also hoped that tourism will create additional employment and that the skill level of
local staff will be improved through technology transfer between domestic and foreign
(4) Furthermore, tourism is expected to be a pull factor to building and expanding the local
infrastructure to the benefit of communities.
(5) Regional customs and traditions are considered crucial factors when it comes to realising
tourism projects. Investors therefore like to point out that the planned projects could con­
tribute to the preservation of regional cultural goods. On the other hand, following ideas
of modernisation theory, there are hopes that the expansion of this sector can foster
social change in the societies concerned and break down traditional social structures that
are felt to be obstacles to development.
(6) There are also relatively recent but very popular hopes that nature-oriented tourist
activities can make a monetary or non-material contribution to the protection of nature
and the environment.
The extent to which these goals can be actually achieved depends on the conditions in the
individual countries, the kinds of tourism infrastructure and also on reciprocal developments
in the industry. Past experience gives cause for scepticism.
Although all sub-sectors in the field of services are linked to the tourism industry, only a small
part of their production value can actually be expected to stay within developing countries. In
fact, a high percentage of the tourist expenditure is not leaving the tourists' countries of origin
in the first place. Long-haul air transport is mostly run by carriers based in the North.
Furthermore, in core areas of the tourism industry, i.e. hotels, catering, travel agencies, tour
operators and tourist guide services, as well as in the fields of on-site support services
(sports and recreation, facility leasing) "benefits" flow to a large extent into the same
direction. This is due to the fact that many services in the destinations are being supplied by
companies from the tourists' countries of origin or by their local partners.
The expected growth stimulus of upstream and downstream production areas have long
determined the development discussion. In the case of the tourist industry, there are
particular connections with other economic sectors. The food, building and entertainment
sectors can benefit from the expansion of tourism, as can transport companies. These
linkages, however, only benefit the local economy if local products and services contribute
significantly to the value added. In the case of certain forms of tourism for which there is
currently a growing demand, such as all-inclusive tourism ("A package deal- and low-cost!"),
club holidays or cruises, this hardly happens. These orchestrated holiday worlds are
generally largely isolated islands of affluence, supplied by the tour operators with products
and services from their countries of origin. Even souvenirs are being imported.
During the development of growth potential, with the transition from a growth to a consolida­
tion phase, individual upstream and downstream sectors gain in importance, while tie share
of value added in others tends to decline. Experience shows that the building industry, in
particular, is among these "losers" unless, in the growth phase, there are continuous growth
stimuli from other sectors that entail broad, stable diversification. The interrelation between
tourism and agriculture can also be an area of conflict in some countries, depending on the
conditions of agri-ecological production and the customary diet of local and tourist residents.
While in the 1970s Kenya succeeded in producing all foodstuffs required in the tourism
sector (Vorlaufer 1996, 163ft). other developing countries experienced a recession of agri­
cultural production as a consequence of growing tourist industries (German Federal Ministry
for Economic Co-operation and Development 1993, 32). Competition for production areas in­
creases where necessary resources such as water and energy are scarce (cf. 1.3.6) or
where there is no overlap in the food requirements of locals and tourists.
The GOP of individual Caribbean states mainly depends on tourism (see diagram 1). And
even if - as in the case of Haiti - income simply amounts to three percent of GOP, it can
amount to 72 percent of the value of net exports.
The high dependence on tourism income involves risks. Countries in which tourism con­
tributes significantly to the GOP are particularly affected by global economic trends and
cyclical variations. The financial crisis has in 1998 led to a decline in tourism receipts of 3. 8
percent over the previous year in the East Asia/Pacific region (WTO-OMT).
The negative trend is above all due to a drastic decrease in tourism within the Asian region
by about 10 percent which particularly affected individual countries such as Singapore, New
Zealand and Hong
Diagram 1: Tourism as an Expor Mono-crop
Kong. The Asian
crisis also affected
tourism from Asia
to other parts of
the world, so that
WTO-OMT cor­
rected their global
growth forecasts to
the year 2001.
many countries
with similar loca­
tional conditions
compete with one
another in the
world market.
Internal political
tensions, natural
disasters or eco­
nomic fluctuations
generally lead to a
diversion of tourist
flows to countries
with comparable
supply. A temporal
downturn, as in the case of the Indian state of Kashmir where tourism broke down due to
political conflicts, can lead to a regional or even national economic crisis.
Looking at India as a whole, international tourism is still concentrated in a few regions, but
about to take over several coastal areas, sacred sites and national parks. Especially the
states of Bihar, Madhya Pradesh, Punjab and Kerala have seen an increase in the number of
visitors. With under 0.4 percent of the world's tourist arrivals and one percent of tourist
spending, the country has barely tapped its so-called 'rich tourism potential'. India attracted
about 2.1 million foreigners in 1995, only 500,000 of which can be considered genuine
tourists. According to Pradeep Madhavji, Chairman of Thomas Cook, (TOI .22 Aug. 96), the
major part of international arrivals consists of businessmen and airline crew. Domestic
tourism (which includes traditional forms like pilgrimage journeys as well as leisure tourism
following western patterns) swelled from nearly 60 million in 1992 to over 100 million tourists
in 1995. With an expected 110 million travellers, Indian domestic tourism is becoming an
important market for tourism serices.
Almost all developing countries have a positive balance in terms of net foreign exchange
earnings from the tourism sector
. According to the Approach Paper to the Ninth Five Year
Plan (1997-2002), prepared by the Planning Commission of the Indian Government,
"Tourism is presently the third largest foreign exchange earning sector in India." Travel
account balance in South Asia has in 1997 been 1, 828 million US$ in surplus. All developing
regions experienced steadily widening travel surplus in the past decade. In 1997 their total
travel surplus was US$ 62.2 billion (WTO-OMT).
This balance, however, gives little information about the actual foreign exchange effects. It
only covers payments resulting from the consumption of the travellers at the end of the
tourist service chain.
Tourism was long regarded as an easily exploitable source of foreign exchange for develop­
ing economies. Increasingly it is being realised now that " ... tourism is not the dream dollar
cow that is easy to milk" (Khin Maung Kyi, Oase oder Fata Morgana? Frankfurter Rundschau
7.3.96). Indisputably the gross foreign exchange earnings in developing countries exceed
foreign exchange income from the export of agricultural and industrial goods. However, gross
foreign exchange figures give a one-sided picture, since most probably there are also foreign
exchange leakages due to profit transfers, tourism-related imports (luxury goods, vehicles,
advances etc.), payment of foreign experts or interest payments for foreign direct invest­
ments in tourist infrastructure.
In order to properly assess the effects of tourist foreign exchange one would need to con­
sider those foreign exchange receipts and expenditures that were transacted in the course of
the import and export of goods that, in their turn, flow indirectly or indirectly into the value
added by tourism. Besides the broad range of tourism-related services (diagram 4, p. 30)
there is the advance provision of e.g. building materials, foodstuffs, equipment and energy
which are essential to maintain the tourism infrastructure of a country.
Whether a country can obtain net foreign exchange earnings from tourism depends primarily
on the development phase of tourism, on its nature and on the level of development of the
respective economy (Leffler 1992). The high capital intensity of this industry - e.g. of hotel
and sporting facilities and the necessary infrastructure - plus unfavourable tourist con­
sumption patterns, particularly regarding food, can lead to considerable foreign exchange
The balance for each countr
is the difference between international tourism receipts and
expenditure. International tourism receipts (expenditure) cover expenditure of international inbound
(outbound) visitors including their pa
ments to national (foreign) carriers of international transport.
International fare receipts (expenditure) are recorded separately
. The
cover all pa
ments of sums
owed b
non-resident visitors (persons resident in the compiling country) made to carriers
registered in the compiling countr
(UN/WTO-OMT 1994, 22).
The rate of foreign exchange leakage is hard to determine empirically - i.e. the share of
foreign exchange receipts flowing abroad to finance advance payments. For this, it would be
necessary to carefully compile and classify all foreign exchange transactions, and also all
input-output relations at all production levels of the tourism industry in the system of national
accounts. Most developing countries lack the administrative resources to do this. In addition,
a detailed accounting system covering all types of tourist services is still being developed. It
will take a while to implement the scheduled Standard International Classification System of
Tourism Activities (SICTA) in many countries. Without such a system it is very hard to come
up with consistent statements about the effects of tourism-induced foreign exchange in a
given country. Much numerical information about supposedly positive or negative net foreign
exchange effects in developing countries is based on thoroughly unreliable empirical
In general it can be said that the lower the tourism-induced import requirement of goods,
services and real, fixed and human capital in a country and the greater the local share in
production, the lower will be the foreign exchange leakages.
Given the fact that tourism is so closely linked with other industries, there are possibilities
that liberalisation of the tourism sector may intensify the transfer of technology and know­
how. Yet there is hardly evidence of the extent to which tourism has so far actually
contributed to this kind of transfer between industrialised and developing countries.
Tourism is one of the most information-intensive sectors (Poon 1993, 156). Information tech­
nology (IT) is used in the production, management, distribution, sales and delivery of the
individual service components. It is not only important in linking the different service
providers, but also contributes at all levels of the service chain to a higher use of tourist
facilities and a greater degree of customer loyalty. The latter can be a critical barrier to
market entry for small and medium-size providers if they do not participate in such an infor­
mation network. The combined booking and handling of airline tickets, accommodations,
local means of transport, excursions and guided tours, plus payment for them, can give an
edge to providers belonging to highly integrated travel conglomerates. Insiders assume that it
is common practice for a CRS to give preference to its own airlines, for example, or for
restrictive commissions to be included in contracts with travel agencies (Poon 1993, 1 89f.)
This is disturbing since the twelve leading systems are in the hands of very few airlines,
almost all of which are based in industrialised countries and newly industrialised economies
(NIEs). In addition, these systems are being increasingly extended to further upstream,
downstream, and diagonally complementary service areas. Leonardo Costanzo, general
manager of Amadeus, sets out the goal of this development. He attaches great importance to
Amadeus not being a CRS but a global distribution system (GOS) - global in the sense that
" ... it attempts to group all CRS data in one large container and, by definition, a GOS is
present throughout the world and not only in one countr" (Costanzo 1995, 91).
Another new medium is beginning to conquer the travel market: The internet and online
services are appearing as marketing instruments between customers and providers, covering
all players and destinations. Even if they cannot yet compete with catalogues as the
established medium (Mayer 1996), they are a promising platform for providers who depend
on direct marketing, due to their smaller capacities. For the providers in many developing
countries, in which the share of individual tourists is relatively high, such online services plus
the World Wide Web (www) constitute useful additions to the usual marketing channels,
provided that the technical infrastructure is available.
Box 3: Tourism Policy - the Role of India's Government
India's first Prime Minister Jawaharlal Nehru who was very keen on promoting tourism,
once gave a message to the people of India - "Welcome a Tourist - and send back a
Actually, the history of promoting India's tourism reaches back beyond the founda­
tion of the state itself. In 1945 a Tourism Committee under the chairmanship of Sir John
Sargent, Educational Adviser to the Government of India, was formed for the first time. The
committee was to survey the potential for development of tourism in India.
The report stated that tourism would be to the interests of India and it recommended that a
separate organisation for promotion and development of tourism was needed. A Tourist
Traffic Branch was set up in 1949 and was elevated to the status of Department of
Tourism in 1958. Four Regional Tourist Offices in Bombay, Delhi, Madras and Calcutta
and two overseas tourist offices in London and New York were also started.
During 1963, another Committee under the Chairmanship of L.K. Jha was formed to study
the prospects of tourism in India. The Committee recommended that a separate ministry
looks after tourism and civil aviation. It also recommended that there was a need for a
Tourism Development Corporation directly under the charge of the central Government
which was established in 1966. During 1967 a separate Ministry of Tourism and Civil
Aviation under the charge of a cabinet minister was created.
The National Committee on Tourism (NCT) was founded in 1986. The most significant
recommendations of the NCT related to (i) development of Infrastructure; (ii) provision of
incentives; and (iii) development of human resources.
Tourism now has been given status of an 'export industry.' Along the same lines, the
Department of Tourism has been following a two-pronged strategy of strengthening the
economic infrastructure at home and improving the tourist image abroad:

In his Union Budget '97-98 speech, the Minister of Finance proposed to give a 50 per­
cent tax reduction on profits for ten assessment years with respect to new hotels set up
in hilly or a rural areas, places of pilgrimage or of tourist importance. Additionally, these
hotels will also be exempted from the levy of expenditure tax. Furthermore, he pro­
posed to reduce the import duty on specified equipment required for hotels from 50
percent to 25 percent.

The tourism development board is promoting India in the world market. The Indian
Tourism Development corporation is focusing on 32 countries as key countries of origin
including ten European countries, four African nations, the Commonwealth of
Independent States (CIS) and Gulf countries. The primary tourist generating markets of
India are west Europe and North America. These two regions taken together
accounted for more than 51 percent of the total arrivals during 1994.
The Department of Tourism cleared as many as 2,964 foreign investment proposals, for a
total of Rs.30,OOO crore, from August 1991 to February 1995. Though the investments in
Indian Trade and industries have increased from $ 150 million in 1991-92 to $ 5 billion in
1994-95. According to the Department of Tourism the priority investment areas continue to
be a wall writing - air seat capacity, international airports, domestic air seat capacity, tourist
centres, hotel rooms and highways. Therefore, the Government of India set up a Tourism
and Finance Corporation in 1989 to develop tourism related services.
The tourism sector offers considerable potential for technology transfer. This particularly
applies to sales, marketing and distribution in the fields of hotel and transport management
and to their respective relevant instruments (CRS, online marketing, etc.). Since the
devel opment costs of systems are hi gh - est i mated at US$ 400-490 mi l l i on for Gal i l eo and
Amadeus - and si nce usi ng them requi res a rel i abl e technol ogi cal i nfrastruct ure and hi gh­
l evel trai ni ng, t he gap between touri sm provi ders i n i ndustri al i sed and devel opi ng countri es i s
probabl y greatest at thi s poi nt.
As l ong as there i s no i nsti tuti onal i sed framework for measures to ensure technol ogy transfer
on a di fferent basi s t han the purel y commerci al one, t he exi sti ng di chotomy between a broad
l ess qual ifi ed cl ass of ( non-) empl oyees worki ng i n touri sm rel ated i ndustri es on the one hand
and a few wel l -pai d external l y educated staff members on the other hand wi l l be perpetuated.
Transnati onal compani es coul d serve as a bri dgehead i n devel opi ng the necessary human
capi tal and i mpl ementi ng such a framework. They coul d use t hei r i nfrastructure wi th its
branches, co-operati on agreements and j oi nt ventures. However, t hi s woul d requi re a t rade
l aw framework, taki ng account of the speci al i nterests and weaker market posi ti on of
devel opi ng countri es i n terms of technol ogy.
However, for many devel opi ng countri es the questi on al so is whi ch technol ogi es wi l l actual l y
benefit touri sm and other sectors. There i s a danger of compl ex technol ogi es devel opi ng a
sucti on effect , assi mi l at i ng thei r envi ronment and l eadi ng the countri es i nto a new de­
pendence on costl y technol ogy transfer from t he North. Thi s fear is substanti ated by the
devel opment of the ai rport operati on market. Amsterdam Ai rport Schi phol , for exampl e,
wants t o capi tal i se its know-how and experti se gai ned i n ai rport operati on and i s al ready
acti ve t hrough j oi nt-ventures and strategi c al l i ances wi th ai rport operators i n Netherl ands
Ant i l l es, I ndonesi a and Chi na. As l ong as the appropri ateness of such technol ogi es i s not
bei ng questi oned, a repeat performance of the mi stakes made i n devel opment co-operati on
back i n t he 1 970s becomes l i kel y.
At fi rst si ght, touri sm i n I ndi a seems to be strengt hened through the presence of McDonal ds,
Pepsi , and Coca-Col a - brand names that have become synonymous wi th a hi gh l evel of
touri sm devel opment. Lei sure and entertai nment groups such as ' Thank God I t's Fri day' and
' Warner I nternati onal ' wi l l soon take up operati ons i n I ndi a. Gol f courses, ski resorts and
amusement parks are bei ng set up, revi ved or moderni sed i n the count ry.
The hopes that touri sm becomes a catal yst for the devel opment of i nfrastruct ure i n so-cal l ed
peri pheral areas and hel ps reduce regi onal di spari ti es are cl osel y rel ated to those concerni ng
sound technol ogy transfer. They i ncl ude t he use of al l ki nds of i nformati on technol ogy, trans­
port capaci ty, water and energy suppl y systems and waste treatment. The di l emma i s
evi dent: What mi ght be useful for a j ust-i n-t i me touri st t ransport ( hi ghways, oversi zed hi gh­
end ai rports) may be far from needs of l ocal communiti es who may want to parti ci pate i n the
benefi ts of touri sm.
As I ndi an experi ences are showi ng, touri sm ori ented i nfrastructure devel opment tends to i n­
crease t he gap between the " haves" and the "have nots". The shacks, owners of smal l er
restaurants and accommodati on faci l i ti es, ori gi nal l y started wi th touri sm servi ces at Goa. But
now the organi sed touri sm i ndust ry di sengages them from t he si tes. The taxi dri vers i n
Koval am/Keral a were di spl aced by t he organi sed sector of t he operators. I n areas marked for
touri sm devel opment i n the southern state of Tami l Nadu, i t has become obvi ous that the
Land Acqui si ti on Act i s wi del y used to appropri ate l and from the poor and margi nal i sed
farmers i n the name of dubi ous " publ i c i nterest".
1 8
Di agram 2: I ndi a' s Share of Vi sitors from Abroad 1 994
1 %
East Asi a!
Mi ddl e East 6%
Paci fi c
1 3%
Europe 39%
Sour c e: WTO- OMC 1 996 di agr am: wer kst at t oekonomi e
The land thus forcefully
taken away from local peo­
ple at a pittance and some­
times without any compen­
sation is handed over to
hotel chains and other
tourism service suppliers at
a throwaway price.
To cite the Approach Paper
of the Indi an Planning
Commission again, "the
State will have to focus on
development of basic infra­
structure such as transport
facilities and amenities, and
to play a facilitating role in
the provision of accommo­
dation and other facilities
for all classes of tourists,
both domestic and inter­
nati onal. " But obviously,
lopsided priorities exist in
the promotion of domestic
and international tourism.
On the one hand, the New Delhi - Jaipur road is being converted into a four lane highway
and expected to become India's first tourism highway with a string of hotels, motels, country
clubs, amusement parks and golf courses along the road. On the other hand, following a
recent judgement of the Chandigarh High Court, the Punjab Urban Planning and
Development Authority has ordered the removal of all "illegal structures and encroachments
on the side of scheduled roads in the state". This euphemistic formulation is aiming at local
eating places in between the informal economy which offers food and shelter and caters to
those who travel at low cost, e.g. pilgrims.
There is little doubt that the tourism industry has positive effects on employment, reducing
unemployment in the destinations. Employment effects occur not only in the tourist industry
but also in other sectors closely linked to tourism. Studies show that a direct employment
effect (hotel, transpor, travel agencies) can be generally assumed in a ratio of 0. 8 to 1.5 jobs
per hotel bed. The coefficient of indirect employment (other goods and services) is 1 : 2.75,
significantly higher than that of investment-related employment (building industry) (Leffler
1992, 10f. ).
Of course, employment coefficients say nothing about the types of jobs and the working con­
ditions. Unskilled, insecure and poorly paid jobs are typical. In a study, the International
Labour Office (ILO) concluded that " .. . in many parts of the world, the remuneration of
employees in hotels and restaurants seems to be at the lower end of the salary spectrum"
(ILO 1990, quoted by Madeley 1996, 1 8). In many developing countries (i.e. Kenya,
Mauritius, Seychelles, Caribbean countries, Thailand) and individual regions, it may have
really been possible to compensate for seasonal fluctuations in employment (i bid.). In other
regi ons, cl i mati c condi ti ons i n the di fferent seasons l ead to jobs i n touri sm cl earl y bei ng re­
stri cted to certai n seasonal peri ods (Vorl aufer 1 996, 30ff ; BMZ 1 993, 31 f. ) . I n some countri es
at l east , empl oyment i n core segments of touri sm i s subj ect to consi derabl e seasonal
fl uct uati on.
Looki ng onl y at devel opi ng countri es, one mi ght negl ect t he di fferences i n empl oyment
effects i n t he touri sm i ndustry as compared to t he northern countri es of ori gi n. It is quite re­
markabl e that several studi es have been underaken to measure empl oyment effects i n
touri st dest i nati ons; but up t o now evi dence i s l acki ng whet her these effects are si mi l ar i n the
North and i n the South.
It must al so be consi dered that besi des t he formal empl oyment contracts i n hotel compl exes,
transport and travel agenci es, a wi de range of servi ce provi ders operate as "one man/one
woman compani es" i n the i nformal sector. Thei r worki ng condi ti ons ar e somet i mes much
worse that those of thei r counterparts i n the formal sector. Accordi ng to est i mates, i n
i ndi vi dual countri es up t o 50 percent of t he peopl e empl oyed i n touri sm actual l y work i n the
i nformal sector (Vorl aufer 1 996, 1 23) . Experi ence from I ndi a shows that women, i n parti cul ar,
but al so mi nors are forced to seek smal l busi ness act i vi ti es i n the i nformal touri st i ndustry,
due t o the l ack of formal empl oyment opport uniti es ( Stock 1 996; Bl ack 1 995) .
Even if accurate data has been l acki ng so far, t he I LO assumes a hi gh share of chi l d l abour
i n hotel and cateri ng ( Bl ack 1 995) . Worl d wi de there are est i mated t o be between 1 3 and 1 9
mi l l i on mi nors worki ng as shoe-cl eaners, fl ower-sel l ers, baggage-carri ers, room cl erks,
ki tchen workers or smal l vendors i n the touri sm i ndustry - not count i ng the touri sm-rel ated
acti vi ti es of chi l dren i n the i nformal sector ( Pl Oss 1 996) .
Goi ng beyond the consi derati ons of j ob creati on i n t he formal and i nformal sector, one has to
l ook at the even more seri ous boom of the sex i ndustry and bonded l abour , parti cul arl y wi th
regard to chi l d prosti tuti on, whi ch i s al so growi ng due to i ncreased touri sm. As recent studi es
have shown, 1 5 percent of the prosti tutes i n I ndi a are under the age of 1 5, and 24, 5 percent
between the ages of 1 6 and 1 8. As the case of the dhaba boys i l l ustrates, there i s a cl ose
connecti on between poverty i n rural areas, the breakdown of fami l y rel ati ons there, mi grati on
to the ci ti es and chi l d l abour i n touri sm. Juveni l e mal es, aged between ei ght and twel ve, who
are recrui ted from rural areas, are worki ng i n cheap hotel s and restaurants. As an I LO report
states, some are " . . . empl oyed i n condi ti on of great depri vati on equi val ent to bondage. "
Empl oyment of chi l dren i s not l i mi ted t o l ow standard accommodati ons. On t he contrary,
most of it takes pl ace i n hotel s of the grade I I and I I I category, or i n ungraded establ i sh­
The I LO report makes i t cl ear that there i s a cl ose connecti on between materi al hardshi p -
parti cul arl y poverty i n rural areas - the breakdown of fami l y rel ati ons, mi grati on to the citi es,
chi l d l abour i n touri sm and chi l d prost i tuti on. There i s al so an undefi ned area of partl y forced,
partl y "vol untary" occasi onal prosti tuti on by young hotel empl oyees.
I n t he u rban areas of the Nort h, di fferent forms of sexual expl oitati on of chi l dren and young
peopl e are equal l y wi despread. I n New York there are sai d to be about 30, 000 chi l d
prosti tutes, i n Pari s 1 0, 000 to 1 5, 000 ( Le Monde Di pl omati que, 1 6. 8. 96) .
I n the touri sm di scussi on there i s no subj ect more controversi al than the effects of touri sm on
the soci al struct ure, val ue system and cul tural i dent i ty of t he host popul at i on. Whi l e some
argue that - despi te t he admi tted i ncrease of (chi l d) prosti tuti on - t he soci o-cul tural effects of
touri sm are sl i ght ( Leff l er 1 992, 1 1 ) . Others note " . . . that the negati ve i mpact of touri sm out­
wei ghs t he posi ti ve in the non-economi c fi el d" ( BMZ 1 993, 34) . Both posi ti ons can appeal to
a host of soci ol ogi cal case studi es. They share t he di l emma that i n thi s context there is not
one type of touri sm i n devel opi ng countri es.
The di scussi on of soci o-cult ural i mpacts concentrates on t he fol l owi ng causes and effects
( BMZ 1 993; Madel ey 1 996; Vorl aufer 1 996; Scherer 1 995) :

Touri sm contri butes to soci al change and tri ggers acculturati on effects.

As touri sts encounter l ocal resi dents, there can be a "demonstrati on" effect ; certai n
paterns of consumpti on are f el t to be attracti ve by one group and consci ousl y or un­
consci ousl y i mitated.

Soci al and verti cal mobi l ity can be tri ggered or accel erated by touri sm.

Touri sm devel opment can change t he gender-speci fi c behavi our of men and women i n
t he desti nati on regi ons.

Touri sm i nf l uences esteem for materi al goods and non- materi al cult ural commodi ti es.
Al l t hese connecti ons can be i l l ustrated by total l y contradi ctory experi ences. It seems
pl ausi bl e that i n one and the same connecti on the assessment of soci o-cultural effects can ·
change as t i me passes. Ul t i matel y, it wi l l need to be anal ysed whi ch of the di mensi ons l i sted
pl ays a rol e at the l evel of communi ti es, regi ons and countri es. Pl anners of touri sm proj ects
shoul d take due account of the (possi bl y opposi ng) expectati ons of the peopl e l i vi ng in the
dest i nati ons, and pay attenti on to t hei r opi ni on about soci o-cult ural i mpacts.
I n the case of I ndi a, some negati ve i mpacts are quite obvi ous. At most of the I ndi an sacred
si tes, l ei sure touri sm has become a seri ous threat to t radi ti onal pi l gri mages. Peopl e' s own
festi val s and ri tual s now have been taken over and managed by touri sm promoti on. As the
cases of the Brahadeeswarar Templ e of Raj a Raj a Chol a and tradi ti onal el ephant marches
( Gaj amel a) show, t he i ntri nsi c val ue of cul t ural symbol s for the communi ty i s overl ooked and
deni grated to the l evel of showpi eces. Fi rst decl ared as Worl d Heri tage Monument by
UNESCO, Tami l Nadu touri sm pl anners deci ded to i nstal l a sound and l i ght show at the
templ e. I n pl aces l i ke Thri ssur, l ocal peopl e who ori gi nal l y cel ebrated Gaj amel a on thei r own
are now forced to pay i n order to catch a gl i mpse of t hei r own feast, as the el ephant march i s
hel d for a few forei gn touri sts excl usi vel y i n t he Muni ci pal ity Stadi um. The shi ft from ri tual arts
to modern t heatri cal i ty does not al l ow peopl e to parti ci pate in t hei r own cul t ural cel ebrati ons
Nat ure touri sm denotes a speci al segment of demand characteri sed by nature-rel ated
acti vi ti es carri ed out i n attracti ve nat ural surroundi ngs - preferabl y i n nat ure reserves.
Beauti f ul scenery has been a popul ar reason for travel si nce t he fi rst reports on pl easure
tri ps by the Roman phi l osopher Seneca (di ed 65 A. D. ) . Nat ure as a l ocati on factor has
di rected the paths of travel l ers over the cent uri es. I n t he age of mass touri sm the touri sm i n­
dustry i tsel f threatens the very producti on factor on whi ch i n is especi al l y dependent.
Touri st centres and the hi gh number of travel l ers threaten fragi l e ecosystems. I n devel opi ng
countri es, scarce resources such as water or energy ar e often overused i n touri st centres
and usual l y no sui tabl e systems of waste management exi st. Natural areas are devel oped,
used i ntensi vel y for touri sm and, f i nal l y, "worn out. " Al l thi s is not new. It has been an i ssue i n
t he cri ti cal touri sm debate si nce t he 1 970s and has al so contri buted t o touri sm promoti on
di sappeari ng from the agenda of devel opment co-operati on i n many countri es i n the Norh.
What i s rel ati vel y new, however, i s that t he pl ayers i n the t our i sm i ndust ry have di scovered
the topi c of envi ronmental protecti on and "ecotouri sm as an i nstrument of nat ure protecti on" -
to quote the ti tl e of a research report of the German Federal Mi ni stry for Economi c Co-
operation and Development (Ecotourism Working Group 1995). Tourism is sneaking in again
through the back door of development co-operation.
Box 4: Tourism and Protection of Biological Diversity in I ndia
In India, the protected area network has increased more than five times in the last two
decades. In 1970 there were 10 national parks and 127 sanctuaries in an area of 25,000
• In 1993 the protected area network increased to 1, 320,000 km
. India has 500 pro­
tected areas including natural parks and sanctuaries, a lot of them being intensively used
by tourism: Safaris are offered in the state of Rajasthan, hang gliders in the state of
Himachal Pradesh, mountaineering in the Himalayas, trekking in Garwal and Kumaon,
river rafting in the Alakhananda, scuba diving in Lakhshwadeep, skiing in Gulmarg, heli­
skiing in Kashmir, sailing and surfing in Srinanagar and Goa.
The government plans to conserve biodiversity in seven protected areas with the help of
the World Bank. It is known as the Eco-Development Project. The plan is to be imple­
mented initially in seven protected areas. These are the Buxa Tiger Reserve in West
Bengal, the Palamau Tiger Reserve in Bihar, the Pench Tiger Reserve in Madhya
Pradesh, the Periyar Tiger Reserve in Kerala, the Ranthambore Tiger Reserve in
Rajasthan, the Nagarahole National Park in Karnataka and the Gir National Park in
A case study about a hamlet was reported in Statesman. A tiny hamlet called Tabo is
situated in the Spiti Valley in the state of Himachal Pradesh. It has a population of 410
people. People here live in a close community culture of ancient origins. They are a self­
sufficient tribe, untouched by Western influences. A travel agent found out that a certain
Buddhist monastery in the village would be completing 1000 years. Hordes of tourists
descended on the place. It is not known whether the tourists were Buddhists or whether
they were interested in Buddhism and its teachings. The 410 natives were found lost in a
crowd of 25, 000 tourists. The District administration failed miserably to provide even basic
necessities like sanitation, drinking water and wood for fuel. The desolate landscape lost
whatever little vegetative cover it had to the demands of the tourists, and signalled the end
for the precious livestock of the semi-nomadic population. Foreigners clogged the toilets
with toilet paper which eventually found its way to the Spiti river, a source of drinking water
for several villages downstream.
The Tobo disaster is just one of a series of tourism ventures that have backfired. Western
Nepal, parts of Himachal Pradesh, Jammu and Kashmir and Palamou - have witnessed
similar atrocities jeopardising a delicately balanced environment and throwi ng it into com­
plete disarray. Several remote areas become extremely popular with foreign tourists in
search of narcotic plants which grow in abundance and their derivatives, exposing the
vulnerable population to the dangers of addiction. There have also been instances where
people failed to recognise the imbalancing effect on the inflated market economy causing
upward pricing trends for commodities of daily necessity like food and fodder ( Kishore
Chauduri, Emerging Trends and Problems of Eco-tourism in Indian Context) .
I n other countries of the world, efforts have been undertaken to build up a database for
nation-wide site management to regulate the flow of tourists in order to have a check on
the fragility of the site. But in India it is imperative to have an advanced digital system to
monitor the ecological consequences and environmental costs. Priorities should be given
to implement new methods of measuring, evaluating and monitoring the changes in the
state of our natural and environmental resources.
International environmental associations such as the World Wildlife Fund for Nature (WWF),
the International Union for Conservation of Nature and Natural Resources (IUCN) and others
are striving towards a cautious tourist use of nature protection areas in Africa, Asia and Latin
America, to benefit local communities. To quote a definition of the Ecotourism Society
( Ecotourism Working Group 1 995. quoted in Gustedt 1 996, 42; ) , ecotourism covers " ... all
forms of nature tourism that responsibly

seek to minimise environmental effects and socio-cultural changes,
• contribute to financing protected areas, and

create income opportunity for the local population".
Practical experiments in this direction testify to the difficulty of balancing ecological socio­
political goals at the level of the individual protection project. Beyond the eco-Iabel that tour
operators attach to themselves, the implementation of socially, ecologically and economically
sustainable forms of tourism has only just begun. While many catalogues of tour operators
are full of references to ecologically and socially sustainable tourism, in Germany TUI is the
only big operator so far to have employed a Director for Environment and become involved in
the discussion. As part of its environmental management system, TUI organises
environmental destination checks and the removal of inorganic waste (Liedtke 1 996;
Vorlaufer 1 996, 2 1 0) .
The bulk of (mass) tourism in developing countries, however, has so far remained untouched
by these kinds of efforts and the over-use of ecosystems and their resources continues.
Where there are conservation efforts in place for the sake of tourism, they are seldom to the
benefit and often at the cost of the l ocal people affected.
Nagarahole National Park, located between Kodagu and Mysore in the south of India, can
serve as an example of the possible contradictions in ecotourism efforts. Having declared the
area a national park in 1 972, the government shifted the local communities of Adivasis away
from their native places, as no human habitat is allowed to be situated inside the park

Despite this regulation, the government built jungle lodges inside the park area to increase
wildlife tourism and leased them out to the Taj Group of Hotels which announced an eco­
friendly use of the resorts. The result is that communities who had cared for the forest for
hundreds of years have been displaced to open the stage for tourism supposed to generate
income in order to save a fragile ecosystem which is being threatened by the tourists'
presence itself.
The extent of market concentration to which tourism is subject in the individual sending and
receiving countries is concealed through the host of tour operators and on-site service
suppliers. The expansion of (trans)national hotel chains is, of course, the visible sign of
globalisation of tourism services. Yet the formation of oligopolistic structures is disturbing,
particularly the mesh of interests between financial service suppliers, airlines, tour operators
and travel agencies. The extent of the actual influence of these integrated or diversified
groups in the individual service segments, and beyond, has only been seen hitherto on the
basis of individual areas of conflict. There should be no question that the biggest Northern
The fol l owi ng restri cti ons are i mposed on the communi ti es: Cul ti vati on and keepi ng l ivestock are
not al l owed anymore; hunt i ng, di ggi ng borewel l s and renovati ng houses are al l prohi bited; a total
ban has been ordered on the col l ecti on of mi nor forest produce l i ke tubers, mushrooms and other
wi l d vegetabl es and f rui t whi ch are stapl e foods; entry to t hei r sacred si tes and buri al grounds has
been restri cted and a ban on t hei r tradi ti onal musi c and dance forms set i nto force.
tour operators have a defining influence on the development of tourism in some destinations.
What the consequences of such concentration will be is still an open question.
"Tourism is like a fire; you can use it to cook your soup, but it can also burn down your
house" (Scherer 1 995). Whether this is really an Asian proverb or only a platitude in the
critical tourism discussion, it in any event summarises the outcome of this stocktaking.
Whether tourism in developing countries really makes a substantial contribution to economic
development through multiplier effects in other industries, whether it contributes to
establishing a local provider structure, or generates noteworthy net foreign exchange
earnings, will largely depend on the conditions in the respective countries and on the con­
ditions in the international trade in services.
The partly concealed emergence of big tour operators may serve the dissemi nation and
implementation of ecological objectives. Yet it restricts the economic radius of smaller
service providers in the destinations. Transnational corporations could make a major
contribution to technology transfer. Yet whether they actually will is by no means certain.
Some countries already operate a pronounced tourist monoculture. Their economies depend
almost totally on the changeable tourism business. Even where this has not had serious con­
sequences, the other side of the tourism coin is clearly visible. The working conditions in core
service areas of the hotel and catering industry are unacceptable in many countries; the
exploitation of children is increasing along with sexual abuse, an area where there are no
exact statistics.
Hopes of positive ecological effects through tourism can be quickly scotched with reference
to the unbeatably negative ecological record of air traffic. Given that there is a considerable
and growing demand for long haul holiday trips, it is necessary to distinguish between
positive and negative environmental effects in order to achieve gradual improvements - with­
out taking a maximalist position. The increasing demand for natural tourist activities in a
delightful country atmosphere can certainly contribute to the preservation of protected areas
or the promotion of rural development. But whether it actually does, or whether other
envi ronmental consequences of the most diverse forms of ecotourism negate those positive
effects again depends on the respective conditions. The ongoing enormous consumpti on of
land and water for tourist estates gives room for scepticism.
It would be misleading to assume that all of these complex problems can be solved with the
instruments of international trade policy alone. The instruments available in trade policy can­
not replace a coherent national policy of tourism or a social and environmental policy.
However, conditions can be created at this level, making it possible for tourism development
to comply with the goal of sustainable development to which the treaties of the new world
trade order are committed.
I n economi cs, trade i n servi ces was for a l ong t i me a negl ected fi el d. Cl assi cal economi sts
regarded i t as unproducti ve and sti l l there are fewer stati sti cs about trade i n servi ces than
about t rade i n commoditi es. A l eadi ng German textbook on i nternati onal trade and f i nance
devotes as much as seven l i nes to trade i n servi ces ( Si ebert 1 994, 86) . Thi s si de-steppi ng of
the servi ce sector i n economi c theory i s i n contradi cti on with i ts outstandi ng i mportance for
t he growt h of worl d trade. Whi l e i n i ndustri al i sed countri es two t hi rds of GNP is produced i n
t he servi ce sector i t ' onl y' accounts f or a bare 30 percent of t he i nternati onal movement of
goods, worth approx. US$ 3680 bi l l i on (Wi ndf uhr 1 996) . Thi s di fference i ndi cates a consi der­
abl e growt h potenti al for i nternati onal trade. It contri buted to the i ndustri al i sed countri es
putt i ng "servi ce trade" at the bottom of the agenda i n the Uruguay Round. The USA i nsi sted
on i ncl udi ng servi ces as a condi ti on for t hei r remai ni ng i n GATT mai nl y because of the hope
that a far-reachi ng l i beral i sati on of the servi ce t rade woul d l ead to consi derabl e competi ti ve
advantages i n thi s sector and ease the bi g trade bal ance defi cit of the USA.
Di agram 3: The New Worl d Trade Order
WTO St r uct u re
Mi ni st er i al Confer ence
Tr ade Pol i cy Revi ew
Ge n er al Cou n c i l Di s put e Sett l emen t Body
Å06| | 8l 6 Û00y
Û000| l l 66 00 1| 806 800 l
I Û| 50ul 6 b6l l | 6060l
Û6v6l 00060l
|806| 5
Counci l f or Trade
Û000| l l 66 00 H60| 008| �
1| 806 Å0| 66060l 5 Counci l for Trade i n Counci l for Trade i n Rel ated Aspects of
Goods Servi ces I ntel l ect ual Property
� || u| | l 86l | 8| Û000| l l 66 0
Ri ght s
18k| 65 l 0 Û| v| l Å| | 0| 8Í l
Û0 00' ll 66 00 Û8l 88006· �
0Í · |8y060l 5�H65l | | 0l | 005
1 Û000' ll 666 00 Ûu006l , �
f- Mar ket Access
|| 08006 800
Å00| 0| 5l | 8l | 00
Sani t ary & Phyt osani t ary
Techni cal Bar r i ers t o
Meas u r es
T rade -
Agr i cul t ur e
An t l - Du mpl ng- _
Pr act i ces Tr ade- Rel at ed
f- I nvest ment Mea s u res
Cust oms Val uat i on
_ ( T R I Ms)
roups on: Worki ng G
t he r
bet ween
I n
t h e i nt er act l o
Tr ade and C
_ Ru l es of Or i gi n
el at i onshi p
Saf eguards
,, ,do oo d
� S"b;; d; ,; ,"d
vest men t ;
- . .
16 l

Cou nt er vai l i ng Measure s
n et ��en
00| l 0| | 00
o mpet l t l on
Û00 y · ·
Pol i cy;
I mport Li cenSi ng
Tr anspar ency I n
Gov er nement
Pr ocur ement
( TRI Ps)
|l u| | l 86l | 8| Û000| l l 66 0;1
L0v6| 006l || 00u| 6060l
� Speci f i c Co mmi t t ment s
Co mmi t t ee on T rade i n
Fi nanci al Ser vi ces
Worki ng Parti es on:
f- Pr of essi onal Ser vi ces
'- GATS Ru l es
Grafik: werkstatt ikonomie
GATS i s one of t he t hree branches of t he new worl d t rade order under t he aegi s of t he WTO­
OMC. The ori gi nal GATT has become part of t he more comprehensi ve General Agreement
on Tari ffs and Trade 1 994 (GATT 1 994) whi ch al ong wi th other agreements has become part
of t he Mult i l ateral Agreements on Trade i n Goods ( MATG) . These branches di ffer consi dera­
bl y i n t hei r f uncti oni ng and responsi bi l it i es. Whi l e t he di smant l i ng of tari ffs and non-tari ff
measures i n t he f i el d of t rade i n goods i s al ready advanced, no agreement was reached on a
mult i l ateral i nvestment agreement ( MI A) . I nvest ment-rel ated arrangements are, however,
i ncl uded i n GATS.
The f uncti oni ng of GATS i s based on t he i nterpl ay of f undamental standards i n commerci al
l aw, procedural regul ati ons for thei r i mpl ementat i on and speci fi c commi tments i n whi ch
member states document sector-speci fi c l i mi tat i ons or concessi ons

The most favoured nati on ( MFN) t reatment has been at t he heart of al l three branches of the
new worl d trade order (GATT 1 994 Art. 1 , GATS Art. 1 1 , TRI Ps Art. I V) . Fi rst appl i ed i n 1 860
as a basi s of the Angl o-French free trade agreement, the MFN cl ause pl edges each member
state, automat i cal l y and wi thout di sti nct i on, to grant t he part i es t o t he treaty al l benefi ts and
favours t hat t hey grant other countri es. MFN i s both the motor and the conveyor bel t of a
progressi ve l i beral i sati on process under t he WTO-OMC, whi ch member countri es can no
l onger escape. MFN treatment does, however, al l ow certai n except i ons (see bel ow) .
The second f undamental trade norm, nati onal treatment, means t hat servi ces and servi ce
suppl i ers from other member states must not be treated worse i n the si gnatory state than
nati onal provi ders ( GATS Art. XVI I ) . Si mi l ar regul at i ons appl y for goods and i ntel l ect ual
property ri ghts ( GATT 1 994 Art . I I I ; TRI Ps Art. I I I ) .
The commi tment to i mprovi ng market access (cf. Box 5, p. 27) by reduci ng trade barri ers i s
cl osel y rel ated to t he reci proci ty pri nci pl e whi ch entered GATT vi a Uni ted States trade l egi s­
l at i on i n t he 1 930s. I n t he ori gi nal versi on of t he GATT treaty, t he pri nci pl e of pol i ti cal
reci proci ty demanded t hat t he result of negot i at i ons shoul d be sol el y equi val ent and
bal anced concessi ons, "wi thout cal l i ng i nto quest i on the l evel of protect i on of a country"
(Senti 1 994a, 53) . I n GATS, t he contract i ng part i es go one step furt her. Wi th the demand for
an "overal l bal ance of ri ghts and obl i gati ons" i n t he GATS Preambl e (cf. Box 6, p. 28) t hey
pursue a strategy of "aggressi ve reci proci ty" ( Sent i 1 994b, 7f) whi ch is patterned on " super
301 " , Arti cl e 301 of t he Ameri can Trade Acts. I n t he past, thi s l ed to arbi trary trade measures
on the part of the Uni ted States (Sen 1 994) .
GATS is i ntended to l i beral i se al l i nternati onal l y t raded servi ces, i ndependentl y of how t hey
are performed and where t hey are consumed (total coverage pri nci pl e) . The agreement
therefore establ i shes four modes of suppl y. Out of these, the pri nci pl es of l i beral i sat i on of
market access and nat i onal treat ment (WTO-OMC 1 994, Vol . 28) are deri ved:
The GATS treaty and annexes are contai ned i n Vol ume 28 of the Legal I nstruments Embodyi ng the
Resul ts of t he Uruguay Round (WTO-OMC 1 995) . The speci fi c commi tments are i n Vol umes 28-
30. 32. They can al so be consul ted at the I nternati onal Trade Law Moni tor at the Law Facul ty of the
Uni versi ty of Tromso ( http://ra. i rv. ui t. no/trade-I aw/i tl p. html ) .

crss-border-supply: The possi bi l ity for non-resi dent servi ces suppl i ers to suppl y servi ces
cross-border i nto the member' s count ry: e. g. tour operati on;

consumpton abroad: The freedom for the member' s resi dents to purchase servi ces i n the
terri tory of another member: e. g. i nternati onal vi sitors;

commercial presence: The opport uni ti es for forei gn servi ce suppl i ers to establ i sh, operate
or expand a commerci al presence in the member' s terri tory, such as a branch, agency, or
subsi di ary i n f ul l ownershi p: e. g. i nternati onal hotel chai ns;

presence of natural persons: The possi bi l iti es offered to forei gn i ndi vi dual s to enter and
temporari l y stay i n the member' s terri tory i n order to suppl y a servi ce: e. g. forei gn tour
gui des or hotel managers.
Ari cl e 1 1 . 1 : Most-Favoured-Nati on Treatment
Wi th respect to any measure covered by thi s Agreement, each Member shal l accord i mmedi atel y and
uncondi ti onal l y to seri ces and seri ce suppl i ers of any other Member, treat ment no l ess favourabl e than t hat
it accords to l i ke servi ces and servi ce suppl i ers of any ot her country.
Arti cl e XVI . 1 : Market Access
Wi th respect to market access through the modes of suppl y i denti fi ed i n Arti cl e I, each Member shal l accord
serices and servi ce suppl i ers of any other Member treatment no l ess favourabl e than that provi ded for under
the terms, l i mitati ons and condi ti ons agreed and speci fi ed i n i ts schedul e.
Ari cl e XVI I . 1 : Nati onal Treatment
I n the sectors i nscri bed i n i ts schedul e, and subject to any condi ti ons and qual i fi cati ons set out therei n, each
Member shal l accord to services and service suppl i ers of any ot her Member, i n respect of al l measures
affect i ng the suppl y of servi ces, treat ment no l ess favourabl e than that it accords to its own l i ke servi ces and
servi ce suppl i ers.
WTO-OMC 1 994
As under the control of tari ff and non-tariff barri ers i n GAIT, the GATS si gnatori es
Appendi x 2: WTO/GATS member countri es) are bound by exi sti ng trade-restri cti ng
measures. These are speci fi c commi tments whi ch defi ne, for al l the four modes of every type
of servi ce, trade-rel ated measures that either contradi ct the pri nci pl es of free market access
and nati onal treatment or that requi re respect i n a certai n fi el d.
Additi onal l y, the commitments spel l out measures opposi ng the pri nci pl e of MFN treatment.
Al l trade-rel ated regul ati ons and l aws have to be documented and any change has to be
repored to member countri es (GATS Art. 1 1 1 . 1 ) .
Al l measures covered by schedul es of speci fi c commi tments are subject t o t he pri nci pl e of
progressi ve l i beral i sati on. At the l atest, fi ve years after the WTO-OMC agreement' s enteri ng
i nto force ( Le. at the l atest i n the year 2001 ) , new negoti ati ons for the gradual di smantl i ng of
trade-restricti ng measures have to be cal l ed and conducted regul arl y (Ar. XI X. 1 ) .
Al l WTO-OMC members are subj ect to GATS regul ati ons. In additi on , Congo, Al geri a and Chi na
have submitted commitments, even though they are onl y observers.
Recognizing the growi ng i mportance of t rade i n seri ces for t he growt h and devel opment of t he worl d
Wishing to establ i sh a mult i l ateral framework of pri nci pl es and rul es for t rade i n servi ces wi th a vi ew to t he
expansi on of such t rade under condi ti ons of t ransparency and progressi ve l i beral i zat i on and as a means of
promot i ng t he economi c growt h of al l t radi ng part ners and t he devel opment of devel opi ng countri es;
Desiring t he earl y achi evement of progressi vel y hi gher l evel s of l i beral i zati on of t rade i n seri ces through
successi ve rounds of mult i l ateral negot i ati ons ai med at promot i ng t he i nterests of al l parti ci pants on a mut ual l y
advantageous basi s and at securi ng an overal l bal ance of ri ghts and obl i gati ons, whi l e gi vi ng due respect to
nat i onal pol i cy obj ecti ves;
Recognizing t he ri ght of Members to regul ate, and to i nt roduce new regul ati ons, on t he suppl y of servi ces
wi thi n thei r terri tori es i n order to meet nati onal pol i cy objecti ves and, gi ven asymmetri es exi st i ng wi th respect
to t he degree of devel opment of servi ces regul ati ons in di fferent countri es, the parti cul ar need of devel opi ng
countri es to exerci se t hi s ri ght ;
Desiring to faci l i tate the i ncreasi ng parti ci pat i on of devel opi ng countri es in t rade in servi ces and t he expansi on
of t hei r servi ce exports i ncl udi ng, i nter al i a, t hrough the st rengt heni ng of thei r domesti c seri ces capaci ty and
i ts effi ci ency and competi ti veness;
Taking parti cul ar account of the seri ous di ffi cul ty of t he l east devel oped countri es i n vi ew of thei r speci al
economic si tuati on and thei r devel opment, trade and f i nanci al needs;
WO-OMC 1994
Cont rary to the ori gi nal i ntenti on of deal i ng wi th al l types of servi ces under GATS, no agree­
ment was reached in some servi ce areas. For the t i me bei ng, onl y negoti ati ng programmes
have been concl uded for ai r and mari t i me transport servi ces, (basi c) tel ecommuni cati ons,
movement of natural persons suppl yi ng servi ces under the GATS agreement and f i nanci al
servi ces. I n fact, l i beral i sati on i n t he l ast menti oned areas i s al ready much more advanced
than foreseen i n the GATS provi si ons. The Annex on Ai r Transport Servi ces i s of parti cul ar
i mporance f or the touri sm i ndustry, as i t excl udes traffi c ri ghts, however granted, and
servi ces di rectl y rel ated to the exerci se of traffi c ri ghts. GATS thus onl y appl i es to ai rcraft
repai r and mai ntenance servi ces, t he sel l i ng and marketi ng of ai r transport servi ces and CRS
servi ces.
Besi des temporary restri cti ons on pri nci pl es of f ree trade i n i ndi vi dual servi ces set out i n the
schedul es of speci fi c commit ments, GATS provi des for a restri cti on of the MFN treatment i n
four areas under cerai n condi ti ons:

when establ i shi ng economi c i ntegrati on (usual l y as free trade zones or customs uni ons)
under Art. V,
• when the state purchases servi ces for i ts own use (government procurement) under Art.
XI I I ,
• wi th the bi l ateral recogni ti on of forei gn trai ni ng courses, professi onal experi ence and
admi ssi on regul ati ons that , i n contrast to the MFN cl ause, do not need to be extended to
other contracti ng parti es (Art. VI I ) , and

non-di scri mi natory and non-arbi trary measures to protect publ i c moral s or to mai ntai n
publ i c order i n case of ser i ous threat to a fundamental i nterest of soci ety, to protect
human, ani mal or pl ant l ife or heal t h; to secure t he preventi on of decepti ve and fraudul ent
practi ces or of safety and other securi ty except i ons ( Art. XI V, XI Vbi s) .
I n keepi ng wi th Art . 5 of t he Preambl e (cf. Box 6) Art. I V. 1 desi gnates areas i n whi ch greater
part i ci pati on of devel opi ng countri es i n worl d t rade i s to be faci l i tated. Key areas i ncl ude " . . .
t he strengt heni ng of t hei r domesti c servi ces capaci ty and i ts effi ci ency and competi ti veness
i nter al i a t hrough access to technol ogy on a commerci al basi s; the i mprovement of t hei r
access to di st ri buti on channel s and i nformati on networks; ( and) . . . t he l i beral i sat i on of market
access i n sectors and modes of suppl y of export i nterest to t hem" . Furthermore, GATS cal l s
for i ndust ri al i sed countri es to establ i sh i nfor mat i on and contact poi nts for servi ce suppl i ers
from devel opi ng countri es (Art. I V. 2) and for speci al pri ori ty to be gi ven to i mpl ement i ng t he
provi si ons of Art . I V to t he benefi t of l east devel oped countri es ( LOCs) .
Fl exi bl e and more favourabl e treat ment ( Art . V. 3) i s granted t he countri es i nvol ved i n eco­
nomi c i ntegrat i on. They are al so accorded a l i mi ted choi ce of sectors and servi ce types to be
l i beral i sed and a sel ect i ve market access l i nked to t hei r l evel of devel opment, taki ng account
of t he goal s set out i n Art . I V ( see above) ( Art . XI X. 2) .
Accordi ng to t he objecti ves of Art . I V, devel opi ng countri es are al ways consi dered to be
servi ce suppl i ers whi ch must be gi ven easi er access to servi ce markets i n i ndustri al i sed
countri es. Thi s i s t he cl assi cal perspecti ve of tradi ng i n goods between South and North, and
i s al so j usti fi abl e.
Gi ven t he probl ems of t our i sm i n devel opi ng countri es outl i ned i n chapter 1 , t he questi on
ari ses as to how i t s consequences ar e to be handl ed i n terms of commerci al l aw. The GATS
t reaty does not attempt to cover t hi s.
Accordi ng to t he i nt ent i on of GATS, t he i nteract i on between general pri nci pl es and proce­
dural standards shoul d l ead to an ongoi ng process of progressi ve l i beral i sat i on i n al l
di mensi ons and i n al l ( sub-) sectors of trade i n servi ces. The cri ti cal factor i n between t hi s i n­
teract i on i s t he concept of speci fi c commi tments, as t he resul t of t hi s progressi ve mechani sm
depends to a very l arge extent on t hem. To understand and eval uate t he scope of l i beral i sa­
t i on, set up under GATS for a certai n sector, these commi tments need to be anal ysed i n
detai l , whi ch entai l s certai n di ffi cul t i es:
Sector-speci fi c commit ments requi re a common sectoral cl assi fi cati on framework to
di sti ngui sh each ( sub-) sector i n i ts scope. I n real ity, there mi ght be quite a cl ose i nterrel at i on
between di fferent sectors, whi ch i s evi dent especi al l y i n t he case of touri sm-rel ated servi ces.
The GATS commi tments are based on a speci al cl assi fi cat i on system devel oped by t he
Group of Negoti at i ons on Servi ces ( GNS) . Wi t h regard to touri sm, t he GNS system i s very
rest ri cti ve. I t i ncl udes onl y four sub-sectors i n Touri sm and Travel -Rel ated Servi ces (TTRS) :
( i ) hotel /restaurants, ( i i ) travel agenci es/tour operators ( i i i ) touri st gui des servi ces and ( i v)
others. Therefore, for every sector-speci fi c anal ysi s i t needs to be cl ari fi ed i n advance to
whi ch extent cross-sectoral rel at i ons have to be taken i nto consi derat i on.

Touri sm and Travel Rel ated Servi ces the Spectrum of GATS
Travel and Touris- Travel and T-
Reld Services
GATS Services Sectoral Cl assifi cati on
R Srvces
DOKK60|0Ç. DUOl|0Ç pr of essi onal servi ces
a - postal ser vi ces VCDl|O0|ª0ÇS60|C6S
|DC|||lr0D0DÇ600l comput er and r el at ed ser vi ces -
- cour i er servi ces
l O06l/B6D/C0 r esear ch an d de'el opment ser vi ces -
business communication �
t el ecommuni cat i on ser vi ces C6//8/VD||OW60. O||0656ßCB
|0C|e O60C|65f lO�D65 r eal est at e servi ces - serices serices
- audi Yi osual ser vi ces l/O0|0Çmo
/00l|0ÇC|l/Dh5D06Ql r ent al / l easi ng ser vi ces wi t hout operat or -
- ot her d 00Ol
DU0BCOD0Cr ot her
0Cl6ö. /0CKD|D0CCl06/ fi
DU/#|CDl|C0D|D0l 00DÇ600l sewage ser vi ces
construction D||t |DC|||l|B
ÇO CC||6Cl|C0 r el use di sposal servi ces
environmental and related
D||roi K|B
serices engineering
i nst al l at i on and assembl y wor k
D0C0C|00|0Ç sani t at i on and si mi l ar ser vi ces
serices a/ t |DC|l"|B
wCl0//65O/CB 0ODÇ6060l.D5 ot her
ot her
|0CO0ÇDÇ60l5 commi ssi on agent s' ser vi ces - - pr i mary educat i on ser vi ces
l/CV6|DCB .K0SB0l.5OV60|ß whol esal e t r ade ser vi ces - - secondar y educat i on ser vi ces
//DV0|OC0 /|65. K056DU|D00l.5OV60|ß r et ai l i ng ser vi ces
distibution educational
- hi gher educat i on ser vi ces 0Cl6|sho
serices serices
l0606D0CKlUD/C5. 0Cl65 f r anchi si ng - - adul t educat i on servi ces tn OÇ/66DC/D00
ot her - -
ot her t ÇU|O56CUCDlK0
l/DV6||6/ D|CÆß|C65 hospi tal servi ces
- - hot el s and r est aur ant s D50l|C06CDr GAT
||l0BC|UD5.CU/6 5ÐVK65 ot her human heal t h ser vi ces - health-related tourism and -
a 00l|C06CDrGAT
and social tavel-related
5DC|OÆ/V|C65|C/ 0D0DCD5C05 soci al ser vi ces -
services serices
- t our i st gui des servi ces o 00H CDrGAT
ot her
- -
ot her
- mar i l F me t ransport servi ces c, C|V|0Ç t, rDC0l|0Ç.RB
l/DV6|ia al l i nsur ance and i nsur ance- r el at ed servi ces

CU Cr00DÇ600l banki ng and ot her f i nanci al ser vi ces
fnancial transpor
air t ransport servi ces C0Ol0/a /6|Dl6CR 056/V|CB
serices serices
0U|l||Dl6/D|C6WlR0C ot her space t r anspor t
r ai l t r anspor t ser vi ces RC|D|/D|| lO/Æ/V|C6°
road t r anspor t servi ces lCU/DU
C6|M/Dl|C05.S ent er t ai nment ser vi ces pi pel i ne t r ansport ser vi ces 00CBwDl6/RD|r
6V60lC60O5. DOCl|O news agency ser vi ces recreational, CCl600Ç
0 00P06CDrGA T
cultural and
ot her
o 00l|C06CDrGAl spor t i ng and ot her r ecr eat i onal servi ces serices
a Dl|V|l|B ot her
Another problem that further complicates comparative analysis is that some member
countries differentiated the GNS classification. Their specific commitments refer to a combi­
nation of the GNS system and the corresponding Central Product Classification (CPG) which
offers a far more detailed classification of sub-sectors. That is why in the field of tourism,
some countries treating hotel and restaurant services as separate categories made different
commitments, while other countries referred to both sub-sectors as one.
Finally, it has to be taken into account that the scope of trade measures bound by commit­
ments includes a vast range of di fferent regulations, which, for the time being, are not
comparable to each other. Although GATS itself offers a kind of classification of these trade
1 0
, it has been proved in practice that a more differentiated system needs to be
1 1
used .
Although GATS mechanisms can be described precisely, it is quite debatable whether and
how they influence a certain sector. On the one hand, it has been stated, that " ... tourism is
indeed one of the most liberalised service sectors with commitments" (limam 1995) . On the
other hand, other sectors such as information technology and financial services seem to be
far more affected by GATS than tourism. Furthermore, there is controversy over the role of
GATS in the process of liberalisation: Is it a landmark or a failure in terms of promoting
The following chapter might seem to be very technical in content. However, it may assist the
reader in understanding the GATS mechanisms and their influence on a certain sector. First
of all , it will be explained using India's tourism commitments how specific commitments work.
Secondly, the focus will be on the tourism sector. Sub-sector-specific trends in commitments
of all signatory states will be identi fied in relation to certain types of trade measures, country
groupings and regions. Finally, it wi ll be examined to which extent the tourism industry is
really affected by GATS.
Sector-specific commitments contain all the trade measures affecting one of the three core
principles of liberalisation (Box 5, p. 27) which a signatory state is willing to make. The
country agrees not to step back behind this fixed limit in terms of liberalisation. First of all,
each country has to decide which sub-sectors will be ruled by the GATS principles of market
access and national treatment.
Next, it has to decide on those sector-related measures which shall remain in force even
though they violate these principles. The measures are listed along the four modes of supply
(ct. p. 26). For each sub-sector thi s procedure offers eight dimensions of restricted
liberalisation (four modes times two principles). Additionally, a country has to schedule all
measures separately which are violating the Most-Favoured Nation Treatment (MFN).
1 0
Art. XVI .2 takes the following restrictions into account: (i) limitations on the number of service
suppliers (numerical quotas, monopolies, exclusive service suppliers, requirements of an economic
needs test) ; (ii) limitations on the total val ue of service transactions; (iii) limitations on the total
number of service operations or on the total quantity of service; (iv) limitations on the total number
of natural persons that may be employed in a particular serice sector or that a service supplier
may employ; (v) measures which restrict or require specific types of l egal entity or joint venture
through which a service supplier may supply a service; and (vi) limitations on the participation of
foreign capital in terms of maximum percentage limit on foreign shareholding or the total value of
individual or aggregate foreign investment.
The set of administrative requirements in trade regulation, as for example licensing procedures or
residence requirements, is not properly covered by the classification offered in Art. XVI . 2.
Tabl e 3: I ndi a' s speci fi c commi tments to Touri sm and Travel Related Servi ces
Commi tment Mode of Market Access Nati onal Treatment
suppl y
HORI ZONTAL Cross-border
Consumpti on
Commerci al I n case of col l aborati on
presence wi th publ i c sector enter-
pri ses or government
undertaki ngs as j oi nt part-
ners, preference i n access
wi l l be gi ven to forei gn
servi ce suppl i ers/enti ti es
whi ch offer the best terms
for transfer of technol ogy
Presence of Unbound except for measures Unbound except for
natural per- affect i ng the entry and temporary measures referred to under
sons stay of nat ural persons who fal l i n Market Access
any of the fol l owi ng categori es:
Busi ness Vi si tors . . .
I ntra-corporate transferees . . .
Professi onal s . . ,
Hotel s and other Cross-border Unbound* Unbound*
l odgi ng servi ces suppl y
( CPC Ex. 641 ) Consumpti on Unbound Unbound
Commerci al Onl y through i ncorporati on wi th a None
presence forei gn equi ty cei l i ng of 51 percent
Presence of Unbound except as i ndi cated i n Unbound except as
natural per- the hori zontal secti on i ndi cated i n the hori zontal
sons secti on
Travel Agency and Cross-border Unbound Unbound
Tour Operator suppl y
servi ce
(CPC 747) Consumpti on Unbound Unbound
Commerci al Onl y through i ncorporati on wi th a None
presence forei gn equi ty cei l i ng of 51 percent
Presence of Unbound except as i ndi cated i n Unbound except as i ndi -
natural per- t he hori zontal secti on cated i n the hori zontal
sons secti on
Al l l i mitati ons whi ch mi ght exi st wi th regard to other categori es of busi ness vi si tors mi ght
change or be i ntroduced i n the future.
To understand t hi s approach of schedul i ng, one has to keep i n mi nd that it i s a ' hybri d' of a
posi ti ve and negati ve l i sti ng (ct . p. 32) : The I ndi an government is not al l owed to i ntroduce
any other di scri mi nati ve measures, for exampl e subsidies, i n favour of domesti c hotel owners
( negati ve l i st i ng concerni ng measures) whi ch woul d vi ol ate its commi tments to nati onal
t reatment concerni ng ' commerci al presence' . On t he other hand, t he I ndi an government i s
f ree to i ntroduce such a measure for touri st guide servi ces, as t hi s sub-sector has been l eft
asi de (posi ti ve l i sti ng concerni ng sectors) .
I t has al ready been menti oned t hat it has to be deci ded whi ch rel ated sub-sectors beyond
TTRS shoul d be taken i nto consi derati on i n anal ysi ng the i mpact of speci fi c commit ments. I n
t he case of touri sm, thi s deci si on i s arbi trary, as nearl y every sub-sector i n servi ces i s l i nked
to the touri sm sector. I n the fol l owi ng anal ysi s, any ki nd of ai r transpor servi ces and sporti ng
and other recreati onal servi ces have been i ncl uded as t hei r rel at i on to TTRS i s evi dent.
Ot her sectors, for exampl e constructi on, pl ay an i mportant rol e but cannot excl usi vel y be
attri buted to touri sm.
. � O N
It is worth menti oni ng that onl y ei ght si g­
natori es of GATS di d not make commit­
ments in thi s sUbsector
l 6
• Due to the fact
that product i on and del i very are t he key
di mensi ons in suppl yi ng 17 hotel and res­
taurant servi ces, 'crss-border supply'
(CBS) does not pl ay any rol e as a mode
of suppl y. Al though i t mi ght be techni cal l y
feasi bl e to take 'consumption abrad'
(CA) i nto account in these fi el ds, thi s
mode has been consi dered as negl i gi bl e
by the si gnatory states: Nearl y al l of them
commi tted themsel ves to "no restri cti ons".
'Commercial presence' (CP) and
'resence of natural persons' (PNP) are
the key areas for commi tments in thi s
sub-sector. Concerni ng ' commerci al
presence' , di agram 5 above shows that mostl y l ow and l ower-mi ddl e-i ncome economi es
' 8
i n
Afri ca and Lat i n Ameri ca have l i beral i sed market access for forei gn i nvestors: 64 percent of
al l si gnatory states bel ongi ng to the group of LI Es
1 6
1 7
1 8
The group whi ch di d not present any commi tments i n DRS i ncl udes Mozambi que, Brunei ,
Bahrai n, Madagascar, Barbados, Bel i ze, Cyprus and Mal di ves. Si gnifi cantl y, the l ast four countri es
bel ong to the group of so-cal l ed touri sm countri es: Thei r i nternati onal touri sm recei pts exceed 5
percent of GOP or 1 0 percent of export revenues.
By defi ni ti on "suppl y of a servi ce" i ncl udes n • • • the producti on, di stri buti on, marketi ng, sal e and
del i very of a servi ce" (GATS Art. XXVI I I ) .
The cl assi fi cati on fol l ows t he i ncome-ori entated country cl assi fi cati on i ntroduced i n t he Worl d
Devel opment Report 1 996 ( I BRD 1 996) :
Di agram 6: Types and Number of Commitments to Market Access:
1 5
1 0
Forei gn Di rect I nvestment (CP) i n Hotel s/Restaurants
GATS members
No restrictions
Other restri ctions
and 75 percent of LMI Es committed themselves to
no restrictions" in this mode of suppl y.
Significantl y, the group of high-income economies has not achieved such a high degree of
liberal isation of foreign direct investment. Onl y hal f of the group of HI Es (48 percent) has 'no
restrictions' in that mode. Eight member states of the European Union choose a very un­
common way by neither committing themselves 'unbound' nor specifying any trade measures
in that fiel d. African countri es seemed to have a preference for administrative measures
( l icensing procedures and approval requirements).
As the hotel and restaurant industry is l abour-intensive, it is not surprising that 'resence of
natural persons' (PNP) is the l east liberalised mode of supply. 117 out of 119 countries
signing commitments in DRS restrict the movement of hotel staff. 68 countries refer directl y
to their horizontal commitments (' unbound except as indicated in hori zontal commitments')
which mostly offer onl y temporary stay for business visitors, intra-corporate transferees
(managers, specialists and executives) and professional s.
This indicates, that more than hal f of al l signatory states restrict free movement of labour
across the scope of al l types of services.
Low-income economies (LI Es) : GNP p. c . . 725 US-$
Lower-middle-income economies (LMI Es) : 726 . GNP p. c . . 2. 895 US-$
Upper-middle-income economies (UMI Es) : 2. 896 . GNP p.c . . 8. 955 US-$
High-income economies ( HI Es) : GNP p. c. > 8. 955 US-$.
Nearl y al l European states (23 of 25 si gnatory states) choose to restri ct t hi s mode of suppl y
i n that way. 1 0 percent of al l countri es bel ongi ng to t he group of LI Es are offeri ng an un­
restri cted movement of nat ural persons, compared to LMI Es (3 percent) , UMI Es (6 percent)
and HI Es (3 percent) . 2 1 countri es, none of whi ch bel ongs to t he group of i ndustri al i sed
countri es,
1 9
l i mit market access wi th regard to the presence of nat ural persons.
Apart f r om thi s l i mi tati on, they ar e the onl y ones, however, who at the same t i me grant
nat i onal treat ment to both forei gn and nati onal qual i fi ed staff on t hei r domesti c markets.
Di agram 7: Types and Number of Commi tments to Market Access:
Presence of Natural Persons (PNP) i n Hotel s/Restaurants
GATS members
Onl y 37 out of 92 countri es, mai nl y LI Es ( 1 9 counts) and LMI Es (9 counts) , are commi tt i ng
themsel ves t o restri ct market access i n the mode of ' crossborder suppl y' of T AfO, mostl y
with unbound measures. Especi al l y those countri es i n whi ch t hi s servi ce sector generates a
maj or part of GDP
l i mi t market access for forei gn T MO.
1 9
Kenya, Cameroon, Central Afri can Republ i c, Chad, Nami bi a, Swazi l and, Beni n, Gui nea, Mal i ,
Anti gua/Barbuda, Domi ni ca, Grenada, Sai nt Luci a, Sai nt Vi ncent & G. , Tri ni dad/Tobago,
Phi l i ppi nes, Thai l and, Sri Lanka, Bangl adesh , Egypt, Mal ta.
To est i mate the degree of dependence of i ndi vi dual countri es on the touri sm sector, four groups
have been di fferenti ated i n the anal ysi s:
no dependence: touri sm recei pts i n percent 0 GOP < 1 percent,
l ow degree of dependence 1 <= touri sm recei pts i n percent of GOP < 3 percent
touri sm ori ented countri es 3 <= touri sm recei pts i n percent of GOP < 1 0 percent
countri es dependent on touri sm touri sm recei pts i n percent of GOP > 1 0 percent
Chances for consumers to use external travel agenci es or tour operators are far more l i ber­
al i sed, as 77 countri es present no restri cti on to ' consumpti on abroad' . Agai n, however,
' commerci al presence' and ' presence of nat ural persons' are the more deci si ve modes.

Onl y ei ght out of 27 hi gh-i ncome economi es
( HI Es) commi ti ng themsel ves to TAO offer
compl etel y free market access concer ni ng
commercial presence. Compared to the
HI Es, devel opi ng countri es ( DCs) made
broader steps towards l i beral i sati on (cf. Di a­
gram 7) : 36 ( LI Es + LMI Es + UMI Es) of 68
countri es do not present any rest ri ct i ons.
Mai nl y devel opi ng countri es rest ri ct forei gn
di rect i nvestment ( FDI ) vi a l i censi ng re­
qui rements (9 countri es) or capi tal restri c­
t i ons (6) . Ei ght member countri es of the
European Uni on ( EU) , despi te thei r commit­
ment to T AOs, di d not fi l l t he form of
commi tments rel ated to restri ct i ons of
' commerci al presence' , whi ch makes i t
di ffi cul t to i nterpret t hei r posi ti on.
I t i s remarkabl e that al l HI Es regul at e the
' presence of natural persons' i n thei r hori zontal commitments, whi ch resul ts i n a hi gh l evel of
protect i on agai nst free movement of l abour . El even out of 68 devel opi ng countri es di d not
make t hi s choi ce. They ei ther di d not restri ct t hi s mode (5) or t hey bound admi ni strati ve and
l abour rel ated measures.
Onl y 22 HI Es and 31 DCs presented commi tments i n the sub-sector of touri st gui des
servi ces. Even though theoreti cal l y appl i cabl e, ' crossborder suppl y' and ' consumpti on
abroad' do not pl ay a si gni fi cant rol e i n t hi s context. Furhermore, the majori ty of countri es do
not consi der ' commerci al presence' as a mai n pl ayi ng ground for touri st gui des servi ces, as
1 9 HI Es and 2 1 DCs di d not restri ct market access. Most restri cti ons occur i n the mode of
' presence of nat ural persons' : Al l 22 HI Es rest ri ct t hi s mode by bi ndi ng i t vi a hori zontal com­
mit ments i n the wel l known way. I n DCs the si tuat i on i s not uni form: 1 9 countri es choose the
way al ong hori zontal commit ments, four commi tted themsel ves i n a si mi l ar way i n t hei r
speci fi c commitments, t hree bound some restri cti ve measures and si gned t he mode as un­
bound. Thi s l eads to the resul t t hat TGS is t he most protected sub-sector of TTRS.
Beyond TTRS, the sub-sector of spori ng and other recreati onal servi ces shows the hi ghest
degree of protecti on from the si de of i ndustri al i sed countri es, especi al l y i n the mode of
' presence of nat ural persons' . 1 9 out of 22 HI Es used hori zontal commit ments to restri ct the
movement of l abour . I n the group of DCs 1 1 out of 21 countri es fol l owed t hi s way, four coun­
tri es si gned ' no restri ct i ons' , four bound the demand for worki ng permi ts. Forei gn di rect i n­
vestment ( FDI ) is not seen as an i mportant domai n i n thi s sub-sector, as most of the
countri es commi tted themsel ves to ' no restri cti ons' .
Appendi x 1 gi ves an overvi ew about whi ch count ry bel ongs t o whi ch group.
Di agram 9: Types and Counts of Commi tments to Market Access:
1 5
1 0
o .
Commerci al Presence (CP) of Travel Agenci es/Tour Operators
T AO-si gners
No restri cti ons
Al though commi tments i n ai r transport do not i ncl ude the key sector of passenger transport
2 1
key segments of touri sm-rel ated transport are touched upon by them, especi al l y mai nte­
nance/repai r of ai rcraft servi ces, CRS and sal es/market i ng. I t is worth not i ng that frei ght and
rental of ai rcraft , whi ch are - besi des passenger transpor - other i mporant sub-sectors i n
terms of turnover, have al so been l eft asi de (ct. tabl e 4, p. 40: Regi onal trends i n ai r transport
commi tments) .
Mostl y Ameri can (7) and European countri es (21 ) i ntroduced commi tments i n t he fi el d of
CRS. These restri cti ons ( most of them by European cou ntri es) do not rel ate to market
access but to nati onal treatment in the mode of ' crossborder suppl y' . They focus especi al l y
on CRSs control l ed by an ai r carri er of one or more countri es, i n whi ch case no commi tment,
i . e. ' unbound' , has been entered. ' Commerci al presence' shows a correspondi ng pi cture,
al though the l evel of protecti on i n DCs seems to be very hi gh, too.
I n the fi el d of mai ntenance and repai r of ai rcraft, the presence of nat ural persons is of key
i mportance for servi ces to be del i vered. Except for Turkey, whi ch has al most compl etel y
l i beral i sed thi s type of servi ce, al l 42 countri es have marked thi s mode as ' unbound' .
Li mi tati ons t o l i beral i sati on i n t he servi ce area of sal es and market i ng of ai r transport are
mai nl y focussi ng on market access and nati onal treatment wi th regard to t he presence of
nat ural persons, as wel l as nati onal treatment of cross border suppl y and commerci al
2 1
At the end of the Uruguay- Round negot i at i ng parti es di d not reach t he poi nt of general agreement
on i ntroduci ng thi s sector i nto GATS. I t i s pl anned to i ncl ude i t i n the next round of negoti ati ons.
presence. European countri es, above al l those bel ongi ng to the European Uni on, l i mit sal es
and market i ng t hrough reservati on systems, t he key i nst rument of di stri buti on.
Restri ct i ons f or servi ces i n the fi el d of CRS are separatel y documented i n the commit ments.
Furthermore, the restri cti ons whi ch Si ngapore, Thai l and, Pol and, Switzerl and and Li echten­
stei n entered under exempti ons to the most favoured nati on pri nci pl e need to be consi dered.
It becomes cl ear that despite the fact that most countri es (32 out of 40) al l ow for free market
access, onl y 1 5 countri es grant equal t reat ment to forei gn and domesti c suppl i ers i n the
sense of nati onal t reatment i n cross border suppl y. There i s an anal ogous devel opment i n
t he restri ct i on of commerci al presence. 30 countri es al l ow for f ree market access; nati onal
treat ment, however, i s granted by onl y 1 5 countri es among whi ch t here i s no si ngl e Euro­
pean one. The presence of natural persons is compl etel y l i mi ted. Apart from Turkey, no other
count ry al l ows for free market access. Equal treatment of forei gn and domesti c suppl i ers i s
onl y granted by I cel and, Fi nl and and Romani a.
Tabl e 4: Regi onal trends i n ai r transport commitments
Sector Afri ca America/Car. Europe East Asi a IPac. Total
CRS 2 7 23 2 40
Frei ght 1 1 0 0 2
Mai ntenancel 2 1 1 23 6 42
Repai r
Rental of 2
2 1 0 5
ai rcrafts
Sal esl 1 4 20 5 30
Marketi ng
Supporti ng 2 2 0 1 5
servi ces
I t i s notewort hy that out of 1 27 GATS si gnatory states 1 1 9 countri es presented commi tments
i n Touri sm and Travel -Rel ated Servi ces. No other servi ce sector shows such a hi gh percent­
age of parti ci pat i on.
Commit ments i n Touri sm and Travel -Rel ated Servi ces have been used as a t i cket to enter
the Worl d Trade Organi zati on. When l ooki ng for an answer to the controversi al questi on
posed i n the headi ng, GATS has to be i nterpreted i n two di fferent ways: Fi rstl y, we have to
look on t he actual resul ts of the Uruguay-Round, i . e. the state of bound trade measures.
Secondl y, we have to i nterpret the scope of commit ments as the foundati on for future nego­
ti at i ons. Keepi ng i n mi nd the ' hybri d'-approach of t he commi tments mechani sm (cf. p. 32) , it
is obvi ous that 'commerci al presence' i n the fi el d of hotel and restaurant i ndustri es offers the
greatest potenti al for a f ar reachi ng process of l i beral i sati on.
' Presence of natural persons' as a mode of suppl y has the hi ghest degree of restri cti on i n al l
touri st servi ces. At the same t i me, however, t hi s mode i s therefore the key start i ng poi nt f or
future steps towards l i beral i sati on, as t he probl em no more consi sts i n defi ni ng i ndi vi dual re­
stri cti ve measures, but i n removi ng restri cti ons. Thi s devel opment wi l l equal l y take pl ace i n
t he area of ' hotel s/restaurants' and i n t he sub-sector 'travel agenci es/tour operators' .
The two sub-sectors ' touri st gui des servi ces' and ' sport i ng and other recreati onal servi ces'
have i n the past negoti ati ons hardl y been l i beral i sed. However, t hey rank second to the other
sectors i n t erms of t hei r economi c i mportance. What i s more i mportant i s the whol e spectrum
of ai r transport servi ces. I n t hi s area, too, there were onl y fi rst steps towards l i beral i sati on
taken i n t he Uruguay Round. I n the future, the focus i s l i kel y to be on passenger transport .
I n a nutshel l , i t can be sai d that t he current commi tments poi nt the way f or the f urther l i beral i ­
sati on of servi ces i n the areas of hotel s/restaurants and travel agenci es/tour operators. I n the
comi ng round of negoti at i ons, the sti l l exi st i ng restri cti ons wi l l be di smantl ed and the basi s for
t he l i beral i sati on of other t ravel and touri sm rel ated servi ces broadened.
I n practi ce the negoti ati ons of the Uruguay Round fol l owed the ' chi ef suppl i er rul e' . I n each
negoti at i ng group the most i mportant sector-speci fi c suppl i ers agreed on certai n l i beral i sati on
measures, to be extended to al l members. Thi s procedure - cl ai med to faci l i tate negoti ati ons
- act ual l y means that the domi nant countri es and i nterest groups can effecti vel y di ctate l i ber­
al i sat i on measures to t he weaker suppl i ers. I f fut ure rounds proceed in t he same way, onl y a
few countri es of t he Sout h, such as I ndi a, Thai l and and South Afri ca wi l l be abl e to exert
di rect i nf l uence on negoti ati ons i n the case of touri sm. The i nterests of a l arge number of
dest i nati on countri es, whi ch despite thei r hi gh touri st fl ows are not abl e to provi de a substan­
ti al share of touri st servi ces, wi l l probabl y hardl y count.
The present si tuati on regardi ng trade-rel evant measures does not i ndi cate whi ch of these
measures wi l l be di smantl ed i n the next few years, or whether f urt her areas, such as
passenger transpor, are goi ng to be i ncl uded. The effects outl i ned here can t herefore onl y
be general i n nat ure. The uncertai nt i es connected wi t h such an apprai sal can be i l l ustrated
by the promi ses to l i beral i se CRS usage.
1 . Provi ders of travel and touri sm-rel ated servi ces (TTRS) wi l l expand t hei r busi ness i n hol i ­
day desti nati ons and i ncreasi ngl y compete wi th l ocal provi ders. I f the l atter do not
succeed i n cl osi ng the technol ogy gap between t hem and the bi g i ntegrated tour opera­
tors, parti cul arl y i n the fi el d of I T, the share of l ocal servi ces in t hi s sector wi l l conti nue to
decl i ne.
2. The reducti on of the few l ocal equity requi rements wi l l promote f urther concentrati on and
i ntegrat i on. The anti ci pated growt h sti mul us and posi ti ve effects on forei gn exchange
bal ances wi l l be sl i ght and touri st numbers wi l l grow.
3. Treat i ng domesti c and forei gn suppl i ers equal l y (same nati onal treatment) means that
devel opi ng countri es wi l l l ose the i nstruments of sel ect i ve promoti on of domesti c i ndus­
t ri es ( subsi di es, tax rel i ef) , si nce forei gn suppl i ers wi l l be granted the same cl ai m to
i nvest ment i ncenti ves.
4. Through t he reducti on of exi st i ng restri cti ons regardi ng cross-border payments, countri es
are l i kel y to compl etel y l ose control over conceal ed profi t transfers. Thi s al so puts i nto
perspect i ve hopes that touri sm coul d tri gger maj or devel opment processes vi a i ncreased
tax revenues.
5. Commi tments so f ar i ndi cate that the f ree movement of qual i fi ed techni cal staff and
mi ddl e and top managers wi l l i ncrease i n al l areas of travel and touri sm-rel ated servi ces.
Thi s is l i nked wi th t he expectati on that these groups can make a cruci al contri buti on to
technol ogy transfer in the desti nati ons. As l ong as t hi s transfer is not i nstituti onal l y safe­
guarded by f urther measures, there are few i ncenti ves for compani es to bear the cost of
t hi s technol ogy transfer and to contri bute to the devel opment of human capi tal .
Tabl e 5: Li beral i sati on Effects - two CRS·Scenari os
Techni cal condi t i ons, the rel ati ve competi ti ve posi ti on of i ndi vi dual suppl i ers and the macro-economi c
context may compensate f or the expected posi ti ve effects of l i beral i sati on. The opt i mi sti c esti mate of
the Worl d Touri sm Organi sati on, appeari ng here in i tal i cs (WTO-OMT 1 995c, 1 8f) , has onl y l i mi ted
val i di ty agai nst the background of economi c condi ti ons i n devel opi ng countri es:
A developing countr may restrict the establishment of CRS, because it is perceived as putting its
national airline at a disadvantage. Under GA TS, Countr A where a CRS is based will be able to
apprach Countr B where it is restricted and ask that the restriction (e. g. commercial presence) be
lifted. Countr B will then decide what market liberalising measure it wants in retur frm Countr A or
from other countries in which CRSs are based and which may equally be interested in accessing its
market. In addition to fair access terms, the compensating measures sought by Country B could be in
the tourism sector or in another sector. Countries involved will then negotiate.
If the talks succeed in lifing the limitations and allowing the CRS into the new market, this market
opening will be available to CRSs from all countries and the following advantages could result:
I nvestment:
Trai ni ng
Empl oy­
Pri ces:
Benefits i n
servi ce
The CRS that is seeking to establish itself The techni cal i nfrast ruct ure and necessary com-
in Countr B will have to invest in Countr ponents are not avai l abl e in country B. The l ocal
B. This will have a positive result on the agency of CRS suppl i ers i n country B i mports t he
latter's balance of payments and econ- necessary components on a franchi se basi s.
omy. There is a gross outfl ow of forei gn exchange.
Countr B will be granted fair access Very few maj or l ocal suppl i ers in t he ci ti es can
terms in the CRS for its tourism serices parti ci pate in t he di stri but i on of t ouri st seri ces
suppliers. vi a CRS as t he i nfrast ruct ure is not yet avai l abl e
for nat i on-wi de communi cat i on.
Local Staf will have to be trained and The system i s set up as a cl i ent system of an i n-
employed because bringing in a full ex- ternati onal serer. Onl y a smal l number of exter-
patriate staf may be prohibitively expen- nal speci al i sts is requi red to mai nt ai n i t, who can
sive. This wil attract know-how and tech- t ravel to t he spot or gi ve external assist ance vi a a
nology and will create new jobs. hel p-desk system. The technol ogi cal di chotomy
between suppl i er and user remai ns.
Local telecommunication costs have t o be External sat el l ite systems are used t hat are not
paid, thus increasing countr's revenues. charged for by l ocal suppl i ers.
Payment of local taxes boosts revenues Conceal ed profit t ransfer takes pl ace t hrough
for national treasuries. pri ce-fi xi ng for external serices to mai ntai n t he
system. Tax revenues stagnate.
Declining prices for consumers and in- Scope for sett i ng pri ces i s not passed onto t he
creasing commissions for travel agents customers when t he market i s domi nated by
may result because of new competition. t ravel agenci es whi ch are part of a hol di ng wi th
CRS provi ders.
The negotiated compensations var and Country B has no seri ce areas i n whi ch it i s
could include, for example, increased competi ti ve in t he markets of i ndustri al i sed coun-
business serices opporunities for pro- tri es.
fessionals of Countr B in al other GA TS
I t has been stressed several t i mes that the actual effects of l i beral i sati on wi l l l argel y depend
on sector-speci fi c condi ti ons i n the i ndi vi dual countri es. Concentrati on on t he part of mul ti ­
nati onal travel congl omerates has al ready become a maj or factor. A compari son of two
scenari os in t he fi el d of gl obal di stri buti on via CRS shows (Tabl e 5) that opti mi sti c scenari os
tend to overl ook thi s factor. A more di fferenti at ed approach to l i beral i sat i on of travel and
t ouri sm-rel ated servi ces i s t herefore necessary.
As shown i n chapter one, no rel i abl e est i mates have yet been made of the macroeconomi c
effects of i nternati onal touri sm i n devel opi ng countri es, due to a l ack of appropri ate survey
procedures and a systemat i c assessment scheme. SI CTA i s an i mporant step i n the ri ght
di recti on, but i t i s i ncompl ete as i t does not take account of t he soci al and ecol ogi cal costs of
t he touri sm i ndustry - i nsofar as they can be recorded at al l . When i t comes to assessi ng
servi ce t rade i n thi s sector, t he WTO-OMC' s t rade pol i cy revi ew mechani sm l acks empi ri cal
foundati ons as does the revi val of mult i l ateral touri sm promot i on by t he Worl d Bank and
regi onal devel opment banks.
Recent approaches, e. g. to measuri ng gender-speci fi c d i spari ti es to suppl ement t he human
devel opment i ndex ( HOI ) , or t rade-rel ated nat ure consumpti on as part of ecol ogi cal nati onal
product account i ng, wi l l have to be consi dered i n t he assessment of t rade effects and wi l l
need to be devel oped.
As l ong as t here i s u ncerai nty i n thi s sector about t he soci o-economi c, ecol ogi cal and
cult ural effects of progressi ve l i beral i sat i on, t he conveni ng of a new l i beral i sat i on rou nd wi l l
have t o be postponed. Keepi ng i n mi nd t he di ffi cul ti es i n and opposi t i on t o i mpl ement i ng
reformed wel fare measurement and resou rce assessment, fi ve years wi l l hardl y suffi ce to put
new approaches i nto practi ce. Onl y on t he basi s of appropri ate mul t i di mensi onal eval uat i on
i nstruments and a reformed envi ronmental and natural resource account i ng can we j udge
whet her f urther steps towards f reer t rade wi l l real l y l ead to "sustai nabl e growth and devel op­
ment for t he common good" as decl ared i n t he Draft Si ngapore Mi ni steri al Decl arat i on (WTO­
OMC 1 996: draft Si ngapore mi ni steri al decl arat i on) . So far t hi s has not been shown to be the
GATS i s geared excl usi vel y at servi ce suppl i ers and nati onal governments. The touri sm
i ndust ry i l l ustrates, however, t hat there are popul at i on groups i n t he countri es concerned who
are not themsel ves pl ayers but are al l t he more affected by the repercussi ons of expandi ng
i nternati onal trade. One exampl e i s the forced rel ocati on of l ocal communi ti es for t he sake of
touri sm devel opment. The i nterests of such communiti es are frequentl y i gnored by nati onal
governments and onl y taken up by NGOs. As several NGOs have al ready been accepted as
pari ci pants i n negoti ati ons i n t he f ramework of t he UN-System, WTO-OMC shoul d establ i sh
mechani sms ensuri ng that t he representati ves of the i nterests of such communit i es are
Art. XI X. 2 GATS concedes, t hat t he " . . . process of l i beral i sati on shal l take pl ace wi th due
respect for nati onal pol i cy objecti ves and t he l evel of devel opment of i ndi vi dual members,
both overal l and i n i ndi vi dual sectors. There shal l be appropri ate fl exi bi l ity for i ndi vi dual
devel opi ng countri es for openi ng fewer sectors, l i beral i si ng fewer types of transact i ons, pro­
gressi vel y extendi ng market access in l i ne wi th t hei r devel opment sit uati on. " The deci si on on
how and to whi ch extent these concessi ons shoul d be used l i es with nat i onal governments.
As GATS i tsel f refers to " measures of central , regi onal or l ocal governments and authori ti es,
as wel l as measures of non-governmental bodi es i n the exerci se of powers del egated by
central , regi onal or l ocal governments or authori ti es" (Art 1 . 3) , the result i s quite unbal anced:
On the one hand, t rade- rel ated measures of al l admi ni st rati ve l evel s are pl aced under GATS;
on the ot her hand, most corporate bodi es have no chance to pari ci pate or ri ghts to i ntervene
i n negoti ati ons at al l .
Therefore, Art . XI X. 2 shoul d accordi ngl y be amended t o take account of t he general and
speci al needs of l ocal communi ti es and regi ons i n t he l i beral i sat i on process as wel l as of the
nati onal pol iti cal goal s and l evel of devel opment of the i ndi vi dual member states. Onl y under
t hi s condit i on, i f at al l , may a broad reach of GATS be acceptabl e.
Experi ence i n the fi el d of i nformati on technol ogy to date gi ves cause for concern that exten­
si vel y i ntegrated servi ce provi ders coul d assume a domi nant market posi ti on by usi ng
i nformati on systems i n an envi ronment wi t h a l ow l evel of technol ogi cal devel opment. I t wi l l
be hard t o strengt hen domesti c servi ce capaciti es i n t he economi cal l y di sadvantaged coun­
tri es i f access to technol ogy remai ns onl y on a commerci al basi s. Thi s is al l t he more so, as
the bul k of research and devel opment i n i ndustri al i sed nati ons is conducted by state-run
i nsti tuti ons, and parts of the techni cal i nf rastructure of new communi cati on systems enjoy
government subsi di es. Under these condi ti ons a one-si ded ori entati on to technol ogy t ransfer
on a commerci al basi s i s l i ke a promi se to reach or even overtake a trai n on a si ngl e track.
Contrary to t he i ntenti on of GATS, i t may be necessary f rom a devel opment poi nt of vi ew to
temporari l y cl ose markets i n order to l eave room for appropri ate technol ogi cal devel opment
accordi ng to t he speci fi c requi rements of the country concerned.
I n order to avert t he possi bl e expansi on of a strategi c trade pol i cy wi deni ng the technol ogy
gap, competi ti on regul ati on must be i ntroduced mul ti l ateral l y, ensuri ng t ransparency of
government pol i cy on competi ti on and i ndustry, and al l owi ng fai rer condi ti ons for competiti on
between i ndustri al i sed and devel opi ng countri es. Ori gi nal l y, t he pri nci pl e of reci proci ty
demanded t hat the result of negoti at i ons shoul d be sol el y equi val ent and bal anced conces­
si ons. Wi th the demand for an "overal l bal ance of ri ghts and obl i gati ons" i n the GATS
Preambl e; contract i ng parti es pursue a strategy of "aggressi ve reci proci ty" that is patterned
on " super 30 1 " , Art i cl e 301 of the Ameri can Trade Acts. I n the past t hi s l ed to arbitrary t rade
measures on t he part of the Uni ted States. The trend towards aggressi ve reci proci ty i n t he
f i el d of commit ments must therefore yi el d to a more sel ecti ve handl i ng of trade-expansi ve
and t rade- restri cti ve measures.
I n i ts charter WTO-OMC i s pl edged to the goal of sustai nabl e devel opment i n harmony wi th
growth and empl oyment . I n the ongoi ng negoti at i ng process i tsel f t hese goal s have no
correct i ve functi on . Sol el y t he overri di ng i dea of progressi ve trade l i beral i sati on i s l i nked wi th
operati ve procedures l i ke Most Favoured Nat i on and Nati onal Treatment. Si nce the
functi oni ng and l i beral i sat i on thrust of WTO-OMC are based on l egal standards, new
procedural standards have to be devel oped to ensure that t he stated goal s are bei ng met .
There are vari ous fi el ds i n touri sm where a di sregard for fundamental h uman ri ghts can be
observed. I t occurs

i n vi ol at i on of basi c l abour ri ghts as a consequence of worki ng condi ti ons i n t ravel and
t ouri sm-rel ated i ndustri es, e. g. wi t h respect to worki ng hours, worki ng condi ti ons, or
depri vati on of empl oyees' ri ghts;

i n di sregard for the ri ghts of l ocal i nhabi tants especi al l y i ndi genous communi t i es to
cult ural sel f-determi nat i on i n a sel f-chosen envi ronment, e. g. when peopl e are bei ng di s­
pl aced from thei r homes for the l and to be used for touri sm proj ects;

where women are bei ng di scri mi nated agai nst and sexual l y expl oited;

i n chi l d sexual expl oitati on, rangi ng from sexual harassment to forced prosti tut i on;

i n chi l d l abour and chi l d bonded l abour i n touri sm, cateri ng and entertai nment i ndust ri es
as i n rel ated servi ce areas.
It is cl ear that t hese probl ems do not accompany touri sm devel opment onl y i n devel opi ng
countri es. They are al so t o be found i n t he Norh, al bei t t o a l esser extent and maybe wi th
anot her focus. I n any case, thei r cl ose connecti on wi th i nternati onal touri sm precl udes any
moral i si ng stance towards t he countri es affected by t hese abuses.
The causes of human ri ghts vi ol ati ons i n touri sm are compl ex and cannot general l y be
attri buted to a si ngl e sector or to a mi sl ed trade pol i cy. Nor can we expect to sol ve t hese
probl ems by trade regul ati on al one. Under certai n condi ti ons, however, such measures may
pl ay a supporti ve rol e i n t he enforcement of soci al standards and human ri ghts.
Mi ni mum soci al standards can be i ncl uded at di fferent l evel s. They have l ong been part of
i mportant I LO convent i ons (ct. Box 9, p. 50) . Di scussi on about i mpl ementi ng codes of con­
duct i n transnati onal corporati ons (TNCs) has al so reveal ed empi ri cal evi dence. For
exampl e, worki ng condi ti ons i n t he South Afri can pl ants of i nternati onal compani es were i m­
proved under Apart hei d, and these l evel s mai ntai ned. I ncl udi ng mi ni mum soci al standards i n
t he European Uni on' s general system of preferences i s now bei ng di scussed as wel l .
The i ssue of mi ni mum soci al standards i s not ent i rel y forei gn t o t he WTO-OMC agreement
ei ther. Taki ng up Ar. XX of the former General Agreement on Tari ffs and Trade (GATT) ,
GATS and WTO-OMC foresee excepti ons to t he pri nci pl e of most favou red nat i on t reatment
( MFN) i n order to protect publ i c moral i ty and order, and al so human l i fe and heal th. Beyond
t hi s, GAT Art . XX al so i ncl udes the very concrete possi bi l ity of rej ect i ng goods produced by
pri son l abour and of protect i ng nati onal treasures of art i sti c, hi stori c or archaeol ogi cal val ue.
Even t hough t he i mportance of such excepti ons i s evi dent especi al l y i n t he touri sm sector,
t rade law practi ce has not taken up these possi bi l iti es, but has rat her more or l ess passed
them over them when draft i ng the new worl d trade order. Whi l e Ar. XI V GATS, l i ke Art . XX
GATT, does menti on excepti ons to the pri nci pl e of MFN treatment, i t does not - i nterest i ngl y
enough - t ake up t he concrete cases referred to i n Ar. XX GATT.
Subject to t he requi rement that such measures are not appl i ed i n a manner whi ch woul d consti tute a means of
arbit rary or unj usti fi abl e discri mi nati on between count ri es where t he same condi ti ons prevai l , or a di sgui sed re­
stri ct i on on i nternati onal trade, not hi ng in thi s Agreement shal l be construed to prevent t he adopt i on or
enforcement by any contract i ng pary of measures: . . .
(e) rel at i ng t o t he products of pri son l abour;
(f) i mposed for the protecti on of nat i onal treasures of art isti c, hi stori c or archaeologi cal val ue;
(g) rel ati ng to the conservati on of exhaust i bl e nat ural resources if such measures are made effecti ve i n
conj unct i on wi t h rest rict i ons on domesti c producti on or consumpti on.
I t i s a ' bl i nd date' that takes pl ace between earl y attempts to bi nd free trade to certai n mi ni ­
mum standards on the one hand and the actual probl ems of human ri ghts vi ol ati ons. There­
fore, t here is a need for sound regul ati ons ensuri ng the protecti on of these ri ghts i n the
sphere of t rade. The worl d has been observi ng wi th concern the i ncrease i n chi l d and
enforced l abour. Thi s has i ntensi fi ed the di scussi on about i ntroduci ng a ' soci al cl ause' i nto
exi sti ng trade agreements. Thi s means . . . "speci al provi si ons i nserted i nto i nternati onal t rade
agreements sett i ng out a number of mi ni mum soci al standards . . . I n the case of a negat i ve
cl ause the non-observance of the agreed standards i n manufacturi ng a product means that
the i mport i ng country shal l hi nder or total l y prohi bi t market access of thi s product. I n the case
of a posi ti ve cl ause the i mpori ng country shal l grant favourabl e market access conditi ons to
products manufactured i n countri es observi ng the agreed standards" ( Gsanger 1 994, 1 6) .
I n the case of negati ve cl auses there are t hree forms of trade restri cti ons whi ch coul d be
consi dered by the i mport i ng country ( Kul essa 1 995, 60f . ) :

prduct-related social clauses restri cti ng the i mport of goods manufactured under condi ­
ti ons vi ol ati ng offi ci al standards;

sector-related social clauses restri cti ng i mports of goods from a whol e sector;

trade sanctions restricting the i mport of goods from a country i n whi ch certai n standards
are not bei ng met.
The measures cover penalty tari ffs ( or customs preferences i n the case of posi ti ve cl auses)
or a quantitati ve l i mi tati on of i mport quotas, up t o t he possi bi l ity of i mposi ng an i mport ban.
I n October 1 996, Burma' s mi l i tary j unta procl ai med t he "Vi sit Myanmar Year" . The i nter­
nati onal PR campai gn was expected to attract hal f a mi l l i on touri sts i nto t he South-Asi an
country. Wi th the creat i on of nati onal parks for eco-touri sm and of bi osphere reserves,
members of t he Karen popul at i on were expel l ed from t hei r homes, many were even exe­
cuted (Touri sm Concern 3/97) . Mi l itary units of t he State Law and Order Restorati on Counci l
( SLORC) forced thousands of men, women and chi ldren t o work wi t hout bei ng pai d wages to
bui ld touri sm i nf rastruct ure such as the rai l way between Rangun and Mandal ay. Those who
refused to work were put i n chai ns; pri soners were forced to work ( Ei ne Wel t 2/96) .
Forced l abour , chi l d l abour and sexual abuse of chi l dren need to be combated at the l egi sl a­
ti ve and executi ve l evel s as wel l as at t he j udi ci al . Co-operati on wi th the vari ous pl ayers i n
t he touri sm i ndustry ( hotel and t our operators, carri ers, touri st gui des) , rel evant authoriti es
and pari cul arl y wi th the touri sts themsel ves i s i ndi spensabl e. I n the f i ght agai nst commerci al
sexual expl oitati on of chi l dren, WTO-OMT i s promot i ng i nternati onal pol i ce co-operati on,
touri st educat i on, t he creati on of cri me report i ng systems and sel f-regul ati on in t he touri sm
i ndustry (codes of conduct, good pract i ces, trai ni ng programmes) and even t he creati on of an
i ndust ry-wi de Chi l d Protecti on Task Force ( Stabl er 1 996) . With respect to the worl d trade
order, the questi on is whether, i n addi ti on to t he measures al ready i ni ti ated, l aws and regul a­
t i ons shoul d be i ntroduced wi thi n WTO-OMT.
As the case of Burma shows, even nati onal authori ti es can use chi ld l abour and pri son
l abour and thus defy the rel evant I LO conventi ons. Onl y a few tour operators fol l owed the
Burmese opposi ti on' s cal l s for boycott . Trade sancti ons coul d not be i mposed on t he WTO­
OMC member Burma because GATS l acks both appl i cabl e standards and possi bi l iti es for
t hei r i mpl ementati on.
One of the most controversi al i ssues regardi ng t he worl d trade order is whether soci al mi ni ­
mum l abour standards or ecol ogi cal standards should be i ntroduced. I n the Si ngapore
Mi ni steri al Decl arati on of WTO-OMC al l WTO-OMC members pl edge to compl y wi th the "ob­
servance of i nternati onal l y recogni sed core l abour standards", but pass on its monitori ng to
the I LO:
,,4. We renew our commi tment to the observance of i nternati onal l y recogni sed core l abour
standards. The I nternati onal Labour Organi zati on ( I LO) i s the competent body to set and
deal wi th these standards, and we affi rm our suppor for i ts work i n promot i ng t hem. We
bel i eve that economi c growth and devel opment fostered by i ncreased trade and f urther t rade
l i beral i sati on contri bute to the promoti on of these standards. We rej ect the use of l abour
standards for protecti oni st purposes, and agree that t he comparati ve advantage of countri es,
parti cul arl y l ow-wage devel opi ng countri es, must i n no way be put i nto questi on. I n t hi s re­
gard, we note that the WTO and I LO Secretari ats wi l l cont i nue thei r exi sti ng col l aborat i on. "
(WTO Focus 1 5, January 1 997)
Over a l ong peri od of t i me, parti ci pants i n the debate on the i ntroducti on of soci al and eco­
l ogi cal mi ni mum standards i n the worl d trade order seemed to be cl earl y di vi ded i nto two
parti es: those in favour, i . e. several NGOs, trade uni ons, and representati ves of several
governments and pol i ti cal parti es from i ndustri al nat i ons, seemed to be opposed by a l arge
number of NGOs, governments and trade uni ons i n t he South.
Recent studi es i ndi cate that thi s seemi ngl y united opposi ti on of the South, whi ch govern­
mental representati ves l i ke to refer to, as di d the mi ni ster of trade i n Mal aysi a, has l ong been
repl aced by a more di fferenti ated debate ( Pi epel 1 995; Hensman 1 996) . There are mai nl y si x
arguments agai nst the i ntroducti on of soci al mi ni mum standards i n WTO-OMC agreements
( Hess 1 995; Hensman 1 996) .
(1) The new WO-OMC order gives uniateral preference to industrial nations' interests and
is par of an exploitative interational order. If ecological or social minimum standards are in­
trduced industral nations are given additional opporunities of interventon against third
world countries and diver attention frm the real prblems raised by the global economic
I t i s i ndi sputabl e that i ndustri al nati ons pl ayed a domi nant rol e i n the GATT negoti ati ons and
i n WTO-OMC. The new di spute sett l ement mechani sm, however, marked a t ur ni ng poi nt
from pri nci pl e of consensus of t he Uruguay-Round. Experi ence wi th t hi s mechani sm, e. g. i n
the tuna-dol phi n-confl i ct
, show that the panel i s ready t o take deci si ons whi ch are agai nst
I n 1 990 the USA i m
posed an embargo on tuna ex
orted from Mexi co. Mexi can tuna usual l y has
been harvested wi th nets l acki ng suffi ci ent dol
hi n
rotecti on measures, a
racti ce vi ol ati ng the
U. S. - Mari ne Mammal Protecti on Act whi ch asks for i m
ort restri cti ons. The USA was forced by
GA n to gi ve u
the ban as i t vi ol ates nati onal treatment: Accordi ng to the
anel , different
haresti ng
practi ces are not a suffi ci ent reason for di scri mi nati ng goods. In WTO-OMC
ecti ve
t he i nterests of the most i mportant tradi ng nati ons. I nt roducti on of ecol ogi cal or soci al mi ni ­
mum standards al so provi des devel opi ng countri es wi th opport uni ti es to demand that these
standards be compl i ed wi th i n i ndustri al nati ons as wel l . As the extent of chi l d prosti tuti on i n
the l arge ci ti es of t he Norh i ndi cates, there i s a substanti al need for i nterventi on. However
l egi t i mate the general criti ci sm agai nst the i nternati onal economi c (di s-) order, it shoul d not
l ead to pl ay one probl em agai nst another. Chi l d (bonded) l abour and commerci al expl oi tati on
of chi l dren and women, for exampl e, are cl osel y l i nked to t he gl obal economi c f ramework, at
l east i n t he export i ndustri es.
(2) When social minimum standards are included into trade agreements they can - at best -
bring about change within the expor industries of a specfic countr. They have no impact on
violations of these standards by other non expor oriented industries of the same countr, or
by countries with only loose foreign trade relations.
I ndeed, rel evant t rade restri ct i ng measures shoul d in the f i rst pl ace be product and i ndustr
focussed, i . e. effi ci ent onl y i n a l i mi ted area. However, experi ence wi th the fi ght agai nst chi l d
l abour i n I ndi a shows that the debate on potenti al t rade restri ct i ng measures t o be adopted
wi thi n the rel evant export ori ented i ndustri es, e. g. i n the carpet i ndustry, rai ses publ i c aware­
ness about the probl em of chi l d l abour. Even i ndustri es that mostl y produce goods and
servi ces for the domesti c market are i n t hi s way forced to conform to new requi rements.
Trade sanct i ons as ultima ratio woul d al so have an i mpact on countri es seeki ng onl y sel ec­
ti ve worl d market i ntegrat i on.
(3) The introduction of trade sanctions under WO-OMC rule would undermine implementa­
tion and furher development of ILO standards and of the ILO monitoring system. Developing
countries would necessariy refrain frm ratifying additional ILO standards, fearing automatic
sanctons whenever implementation of standards proves insufcient.
Whether a trade-off wi l l take pl ace between t he i ntroduct i on of sanct i ons and rati fi cati on of
t he rel evant standards wi l l mai nl y depend on what t he standards, t he monitori ng system and
t he future di vi si on of tasks between I LO and WTO-OMC wi l l be. Trade sanct i ons can onl y be
ultima rato. Both organi sati ons need to set up a procedure that woul d, as a f i rst step, al l ow
for i ndependent reports on vi ol at i ons of I LO standards by member or non-member states.
Negati ve sanct i ons woul d not necessari l y have to be appl i ed whenever a confl i ct ari ses. As
an al ternati ve posi ti ve i ncenti ves coul d be granted for the i mpl ementat i on of standards
accordi ng to i nternati onal l aw.
(4) I n the past, trade sanctions have been imposed or lfed mostly for strategic reasons or
motives relating either to defence polcy or economic polcy. A homogenous applcation of
sanctions is also being prevented by WO-OMC agreements themselves, as the GA I 1994
only prvides for the possibility not the obligation of intrducing trade measures protectng
health and environment.
The confl i ct between t he USA and the EU on "The Cuban Li berty and Democrati c Sol i dari ty
Act" ("Hel ms-Burton Act") shows that trade sanct i ons - l i ke i n t hi s case i mposed by the USA
on compani es wi th di rect i nvestments i n Cuba - are common practi ce amongst tradi ng
nat i ons, whi ch does not j usti fy t hei r arbi trary use. What i s therefore needed i s a set of rul es
governi ng the responsi bl e appl i cat i on of t rade sancti ons. There i s an urgent need for a more
detai l ed def i ni ti on of standards, whi ch shoul d be as bi ndi ng as possi bl e wi th respect to i nter­
nat i onal l aw.
si gnatori es are not al l owed to extend trade restri cti ons extraterritori al l y for the sake of
envi ronmental and resource protecti on.
(5) Trade sanctions are at least parialy destructive, in the sense that they afect those
whose lving and working conditions are to be imprved by complance with specific
As negati ve effects cannot be excl uded for these groups of persons, they shoul d be granted
a heari ng and t he ri ght to parti ci pate i n the deci si on maki ng process on potenti al sanct i ons.
(6) The introduction of sanctions in order to impose social and ecological minimum standards
leaves the door open to prtectionist abuse of al kinds. These standards could, above al, be
used to eliminate comparative cost advantages that developing countries have due to lower
The threat of protect i oni sm and t he l oss of comparati ve cost advantages are t he arguments
most often brought f orward agai nst the i nt roduct i on of soci al and ecol ogi cal mi ni mum
standards. Apar from t he fact that t he theorem of comparati ve cost advantages i s subj ect to
very restri ct i ve prerequi si tes t hat hardl y correspond to t he real ity of the worl d economy and
t hat comparati ve cost advantages onl y have a l i mited i nf l uence on forei gn t rade rel at i ons,
recent OECD studi es i ndi cated cl ear l i nks between soci al and ecol ogi cal standards on t he
one hand and t he dynami cs of trade and i t s struct ure wi t hi n a speci fi c country on the other
hand. Thorough checks i n t he di spute sett l ement mechani sm can ensure that soci al
standards cannot be abused for protecti oni sm.
I t may seem unori gi nal to demand that di fferi ng posit i ons of NGOs and Northern and
Southern governments be recogni sed. Thi s bears repeat i ng, however, i n vi ew of the
coverage of the WTO-OMC conference i n Si ngapore i n l ate 1 996. Otherwi se the voi ces of
NGOs cri ti cal of soci al cl auses wi l l be i nstrumental i sed by governments wi th l i ttl e i nterest i n
i mprovi ng t he si tuat i on of t hose who have t o work under i nhumane condi ti ons.
Soci al cl auses are not t he one and onl y way to enforce mi ni mum soci al standards. I n the
best case t hey support the efforts of soci al groups to create humane worki ng condi ti ons. The
di fferent vi ews on pri ori ti es and di fferent approaches concerni ng suitabl e i nstruments i n the
f i ght agai nst chi l d l abour shoul d be taken seri ousl y. I n current controversi es about t he i ntro­
ducti on of soci al standards, NGOs cri ti cal of touri sm are cal l ed upon to reach a consensus
on the probl ems where t he use of trade pol i cy i nstruments may i mprove the si tuati on for
peopl e standi ng outsi de of formal economi es.
To be real i sti c, t here wi l l probabl y be no consensus for a soci al cl ause coveri ng al l basi c I LO
standards i n the foreseeabl e f ut ure (cf. Core I LO Conventi ons concerni ng Mi ni mum Labour
Standards, p. 50). Moreover, a broadl y defi ned standard coul d pl ace undue strai n on t he
abi l i ty of some devel opi ng countri es t o observe adaptat i on deadl i nes. Thi s i s why we pro­
pose to begi n by focussi ng demands on the narrow fi el d i n whi ch t he worst human ri ghts
vi ol ati ons occur and whi ch seems best sui ted to obtai n the cri ti cal support of scepti cs. Once
NGOs have reached suffi ci ent agreement on thi s proposal , the fi rst step woul d be to i nt ro­
duce a sectoral negati ve cl ause i mposi ng sui tabl e sanct i ons on chi l d bonded l abour i n con­
necti on wi th chi l d prosti tut i on. Such a vol untary arrangement wou l d i ni ti al l y prevent objec­
t i ons that i ntroduci ng a case-speci fi c soci al cl ause meant t he l evel l i ng down of comparat i ve
cost advantages of devel opi ng countri es by i ndustri al i sed nat i ons. Thi s obj ecti on would be
unfounded for the very reason that i n t he case of sexual expl oitati on of chi l dren and bonded
l abour, t he economi c way of t hi nki ng has reached its l i mits. To exceed these l i mits woul d
mean to accept that human bei ngs have become a tradabl e good. Therefore, economi c
theory and pol i ti cs are not onl y chal l enged to recogni se l i mits to growt h, but certai n l i mits to
the appl i cati on of trade theory as wel l .
Si nce chi l d prosti tuti on i n many countri es i s substanti al l y sti mul ated by t he devel opment of
touri sm, i t woul d be hel pf ul to extend GATS Art. XI V al ong the l i nes of ori gi nal GATT Ar. XX.
However, t hi s cannot be a matter of a product-rel ated soci al cl ause, si nce there i s rarel y a
di rect connecti on between i nternati onal touri sm servi ce suppl i ers and the operators of chi l d
prost i tuti on networks. A sector-speci fi c cl ause woul d requi re governments to oppose the
vi ol ati on of chi l dren' s ri ghts and to provi de suffi ci ent l egi sl ati on and l aw enforcement
capaci ti es.
Each Member undertakes to suppress and not to make use of any f orm of forced or compul sory l abour and
secures t he i mmedi ate and compl ete abol it i on of forced or compul sory l abour.
Each Member for whi ch thi s Convent i on i s i n force undertakes t o pursue a nat i onal pol i cy desi gned t o ensure
t he effect i ve abol i ti on of chi l d l abour and to rai se progressi vel y t he mi ni mum age for admi ssi on to empl oyment
or work to a l evel consi stent wi th t he ful l est physi cal and mental devel opment of young persons ( Art. 1 ) .
Al l human bei ngs, i rrespect i ve of race, creed or sex, have t he ri ght t o pursue bot h t hei r materi al wel l-bei ng and
t hei r spi ri t ual devel opment i n condi ti ons of freedom and di gni t y, of economi c securi ty and equal opport uni ty.
Each Member decl ares to pursue a nat i onal pol i cy desi gned to promote equal i ty of opport unit y and t reat ment
i n respect of empl oyment and occupat i on, wi th a vi ew to el i mi nati ng any di scri mi nat i on, di sti nct i on, excl usi on or
preference made on t he basi s of race, col our, sex, rel i gi on, pol i ti cal opi ni on, nat i onal ext ract i on or soci al
ori gi any di scri mi nat i on i n respect t hereof.
Workers shal l enjoy adequate protect i on agai nst acts of ant i-uni on di scri mi nat i on in respect of t hei r empl oy­
ment (Art. 1 ) .
Workers and empl oyers, wi thout di sti ncti on whatsoever, shal l have t he ri ght to establ i sh and, subj ect onl y t o
t he r ul es of t he organi zat i on concerned, to j oi n organi zat i ons of t hei r own choosi ng wit hout previ ous aut horiza­
t i on ( Art . 2) .
. . . secures t he pri nci pl e of equal ordi nary, basi c or mi ni mum wage or sal ary and any addi t i onal emol uments for
men and women workers for work of equal val ue.
Besi des a sector-speci fi c soci al cl ause, appropri ate i nter-l i nked report i ng systems shoul d be
set up both by WTO-OMC and I LO to ensure t he parti ci pati on of t he chi l dren affected by
sexual expl oi tati on and forced l abour, al ong wi th representati ves of t hei r i nterests and ot her
pl ayers. Consi derati on shoul d be gi ven to i ntroduci ng country-speci fi c adaptati on deadl i nes
as wel l as assi stance, and to the demand for customs preferences as posi ti ve i ncenti ves for
change. Such a ' soft' system is preferabl e to an automat i c sancti oni ng procedure. It would
i nst it uti onal i se co-operati on between I LO and WTO-OMC whi l e ensuri ng t hei r i ndependent
operat i ons. I n addit i on, it wi l l provi de a basi s for country-speci fi c suppor i n i mpl ementi ng t he
new trade standard.
Such a vol untary arrangement mi ght be cri ti ci sed for i ni ti al l y i gnori ng t he broader scope of
mi ni mum soci al standards. Experi ence based on t hi s narrower approach, however, coul d
promote the di scussi on of trade-rel evant i ssues i n t he other areas of mi ni mum soci al
standards. These spread effects shoul d be used i n devel opment pol i cy i n order to achi eve a
breakhrough i n other areas of h uman ri ghts' vi ol at i on.
Exampl es ar e l egi on t hat envi ronmental damage has become a touri st' s compani on. The
touri sm i ndustry act ual l y i s i n the di l emma of overusi ng t he resources on whi ch i t depends,
as t hey are one of i ts key l ocati onal factors. Effors whi ch are bei ng made to appear more
sustai nabl e by i ntroduci ng eco-touri sm concepts are sti l l i n t hei r i nfancy and have not yet
devel oped beyond a ni che exi stence.
Al t hough the WTO-OMC i s committed to the goal of sustai nabl e devel opment and use of
resources (cf. Agreement Establ i shi ng t he Worl d Trade Organi zat i on) , and GATS al l ows
excepti ons to t he pr i nci pl e of most favoured nati on treat ment, t he worl d t rade order cl earl y
fal l s short i n t hi s fi el d i n three ways:
1 . Despi te t he fact t hat at t he UN l evel t he connect i on between trade and envi ronmental
costs has l ong been taken i nto consi derati on when reformi ng envi ronmental and nat ural
resource account i ng, i t does not pl ay any parti cul ar rol e i n t he assessment of wel fare
benefi ts t hrough l i beral i sati on under WTO-OMC and the reform of cal cul at i ng a cross­
sectoral touri st val ue added. Were i t to be consi stentl y taken i nto account , the posi ti vi st
equati on of free trade wi th wel fare benefi ts woul d no l onger be tenabl e.
2. I ndi vi dual WTO-OMC agreements have so far merel y consi dered the protecti on of terri to­
ri al envi ronmental goods. It is not yet cl ear what such protecti on mi ght be l i ke, what
t rade-rel evant measures woul d cause l ast i ng vi ol ati ons and how t he observance of t hi s
standard coul d be moni tored. I mportant extraterri tori al goods, such as t he atmosphere
and seas, whi ch are permanentl y damaged by tou ri sm, are not taken i nto account.
3. I n t he case of vi ol ati on of standards, other i nternati onal envi ronmental agreements pro­
vi de for trade-restri cti ve measures that confl ict wi th , or are not covered by WTO-OMC
agreements. Fut ure confl i cts mi ght occur especi al l y i n rel at i on t o t he Conventi on on
I nternati onal Trade i n Endangered Speci es of Wi l d Fauna and Fl ora ( CI TES 1 973) , the
Basel Conventi on on t he Control of Transboundary Movement s of Hazardous Wastes
and Thei r Di sposal ( 1 989) and t he Montreal Protocol on Substances t hat Depl ete t he
Ozone Layer ( 1 990/92) .
The j oi nt decl arat i on of t he f i rst mi ni steri al conference of t he WTO-OMC member states i n
Si ngapore ( 9- 1 3. 1 2. 96) gl osses over t he potenti al confl i cts between trade l i beral i sat i on,
devel opment and envi ronmental protect i on, t ur ni ng t hem upsi de down:
"The Commi ttee ( on Trade and Envi ronment) has been exami ni ng and wi l l conti nue to
exami ne, inter ala, t he scope of compl ementari ti es between trade l i beral i sat i on, economi c
devel opment and envi ronmental protect i on. Ful l i mpl ementati on of t he WTO-OMC Agree­
ments wi l l make an i mportant contri buti on to achi evi ng t he obj ecti ve of sustai nabl e devel op­
ment" ( Si ngapore Mi ni steri al Decl arat i on 1 3. 1 2. 96) . However, i n contrast to al l di pl omati c
opt i mi sm and bl i nkered theory , no cl ear posi ti ve connecti on can be observed between free
trade and devel opment or between free trade and envi ronmental protecti on.
Box 1 0: Ri cardo' s theorem of comparative cost advantages
Devel opment theori es on forei gn trade are al l based on the t heorem of comparat i ve costs,
establ i shed i n 1 81 7 by Davi d Ri cardo. I n essence, t hi s t heorem says that each of two
countri es shoul d speci al i se i n t he producti on of those goods i n t he producti on of whi ch it
has comparati ve cost advantages, i . e. t he greatest rel ati ve effi ci ency or t he rel ati vel y better
condi ti ons compared to t he other country. Thi s can be i l l ustrated by a si mpl e exampl e.
Suppose that Brazi l and Germany ar e i n a posi ti on to produce t wo equal commoditi es,
machi nes and computers. Wi th the same l i mited resources, Germany can produce ei ther
20 machi nes or 1 2 computers and Brazi l 1 0 machi nes or 9 computers. I n thi s si tuati on
Brazi l has an absol ute product i on di sadvantage regardi ng both products. I n t he case of
computer producti on thi s i s rel ati vel y smal l er than i n t he case of machi nes ( 1 2/9 vs. 20/ 1 0)
and consti tutes a comparati ve producti on advantage. Thi s woul d become effecti ve i f the
two countri es l i mited themsel ves to produci ng t he commodi ty i n t he product i on of whi ch
they had comparati ve producti on advantages and i f t hey traded amongst themsel ves.
Domesti c exchange rel ati ons for the product woul d i mprove i n both countri es and t hey
woul d achi eve an i mprovement of t hei r i ncome si tuati on i n terms of suppl y of goods.
Before enteri ng i nto trade, ei t her 20 machi nes or 1 2 computers are produced i n Germany,
the exchange rat i o amounti ng to one machi ne per 0. 6 computers. I n Brazi l t hi s rat i o i s one
machi ne to 0. 9 computers, as t he producti on of the l atter seems to be rel ati vel y cheaper.
Assumi ng t hat havi ng started tradi ng, t he worl d market pri ce must l i e between these two
exchange rati os - otherwi se t rade woul d not make sense - e. g. around 0. 75, Brazi l woul d
recei ve 1 . 2 machi nes on the worl d market i nstead of one machi ne on t he domesti c market ,
forgoi ng 0. 9 computers. I n thi s case, Germany woul d recei ve 0. 75 i nstead of 0. 6
computers, forgoi ng one machi ne.
The theorem of comparati ve costs serves t o expl ai n and j usti fy the cl assi cal and new
i nternati onal di vi si on of l abour from an economic perspecti ve, si nce i t shows that i n t he
case of free pri ce fi xi ng on the worl d market, i . e. free trade, countri es wi t h absol ute pro­
ducti on di sadvantages but comparati ve cost advantages can achi eve wel fare gai ns in the
form of a hi gher suppl y of goods. Thi s theorem has entered GA n and WTO-OMC i n t he
f orm of t he l i beral i sat i on pri nci pl e and provi des the t heoreti cal foundat i on for worl d wi de
effors to l i beral i se trade.
Economi sts j ust i fy the necessi ty for free trade wi th Ri cardo' s t heorem of comparati ve cost
(cf. Box 1 0) . The Worl d Trade Organi zati on i l l ust rates i ts i mportance wi th an
anecdote :
' Nobel l aureate Paul Samuel son ( 1 969) was once chal l enged by t he mathemati ci an
Stani sl aw Ul am to "name me one proposi ti on i n al l of the soci al sci ences whi ch i s both true
and non-tri vi aL" I t was several years l ater that he thought of t he correct response: compara­
ti ve advantage. "That it is l ogi cal l y true need not be argued before a mathemati ci an; that i t i s
Ri cardo' s theorem was el aborated upon i n t hi s century. The devel opment l i ne extends vi a
Heckscher-Ohl i n' s vari abl e-proporti ons factor endowment theory to t he neo-factor endowment
t heory. The weaknesses i n Ri cardo' s t heorem set out bel ow al so appl y to i ts theoreti cal
Thi s anecdote was publ i shed by the WTO-OMC i n the I nternet ( http: //www. uni cc. org/wto) . The
quote i s from P. A. Samuel son ( 1 969) , "The Way of an Economi st" , i n P. A. Samuel son, ed. ,
I nternati onal Economi c Rel ati ons: Proceedi ngs of t he Thi rd Congress of the I nternat i onal Economi c
Associ ati on, Macmi l l an : London, pp. 1 -1 1 .
not tri vi al is attested by the thousands of i mportant and i ntel l i gent men who have never
been abl e to grasp the doctri ne for t hemsel ves or to bel i eve i t after i t was expl ai ned to t hem. "
The t heorem i s real l y t r ue and non-tri vi al . Yet , t he assumpt i ons on whi ch i t i s based ar e so
restri cti ve t hat i t was onl y of l i mi ted appl i cabi l i ty at the t i me of Ri cardo ( 1 772- 1 823) . The
weaknesses of thi s theory are wel l known (Todaro 1 994, 426ff; Eki ns/Fol ke/Constanza 1 994,
4f) . I n vi ew of t he i nteracti on between trade, envi ronment and devel opment, the fol l owi ng
four weaknesses of t he t heorem are of parti cul ar i mportance:
( 1 ) I n Ri cardo' s worl d, producti on technol ogy i s unchangi ng and avai l abl e to al l nat i ons.
(2) There i s no i nternati onal mobi l ity of producti on factors. Labour and capi tal remai n i n the
countri es engaged i n trade and are mobi l e merel y wi t hi n these countri es.
(3) Pri ces remai n stabl e and are not subj ect to t he market power of the pl ayers i n t rade.
(4) There are no external i ti es
, pri ces do not properl y refl ect the real costs of producti on.
The real i ty of many devel opi ng countri es i s i n conr J i ct wi th t he fi rst t hree poi nts. Ri cardo' s
theorem l eaves no room for forei gn di rect i nvest ments, ol i gopol i es and technol ogy parks.
There is a cl ear connecti on between i nternati onal trade and t he damagi ng of envi ronmental
goods: i nternati onal t rade i s responsi bl e for about an ei ghth of gl obal oi l consumpti on
( Eki ns/Fol ke/Constanza 1 994, 7f) . Yet, thi s connecti on i s a matter of di spute. I n t he spi ri t of
Ri cardo' s f ourh weak poi nt, economi sts poi nt to the fact that the " . . . pri mary cause of
envi ronmental degradat i on i s market fai l ure, not trade l i beral i sat i on" ( Wi l son 1 994, 1 ) . Propo­
nents of t hi s argument consequentl y expect an i nternal i si ng of these envi ronmental costs,
e. g. t hrough an appropri ate fi scal pol i cy, eco-bal ance sheets ( l i fe-cycl e assessment) and
contri buti on systems ( French 1 994; Di eren 1 995) .
An effecti ve envi ronmental protect i on pol i cy wi l l never wi n t he day wi thout i nternal i si ng
envi ronmental user costs. These efforts meet wi t h i nherent l i mi ts, however. The use of
envi ronmental goods i n product i on and t rade can onl y be consi dered i n pri ci ng when t hi s use
can be quanti fi ed i n monetary units, i . e. when t he val ue of t hese goods can be determi ned.
That t hi s is vi rtual l y i mpossi bl e may be i l l ust rated by the questi on about t he "worth of a song­
bi rd" ( Funtowi cz/Ravetz 1 994) , to whi ch no sat i sfactory answer can be gi ven.
There i s another l i mit t o t he i dea of i nternal i si ng external i ti es. Pri ces f or t he use of envi ron­
mental goods suggest that nat ural capi tal can be repl aced by ( produced) capi tal , whi ch i s
onl y possi bl e to a l i mited degree. Damagi ng bi ol ogi cal di versi ty by bui l di ng a hotel i n a nature
reserve may (cerai nl y onl y i nadequatel y) be assessed in monetary uni ts. As a rul e, thi s
di versi ty cannot be restored even wi th t he ai d of compensat i on payments. Starti ng f rom a
detai l ed gri d of the envi ronmental funct i ons t hat ecosystems f ul f i l for human bei ngs al one
( Groot 1 992) , i t turns out that very few of them, such as i ndi vi dual producti ve or regul ati ve
f unct i ons, are the subj ect of a market-based assessment i n monetary uni ts. The external
effects of extensi ve use of these funct i ons are not consi dered i n pri ci ng at al l .
The wi despread i dea that t he pri mary cause of envi ronmental degradat i on i s market fai l ure,
not trade l i beral i sat i on, i s based on t he erroneous i dea that al l use of t he envi ronment can
somehow be compensated f or i n monetary t er ms and can t hen be consi dered i n i nternati onal
pri ci ng. From t hi s perspecti ve, t he pri ce of envi ronmental use i ncl udi ng envi ronmental
damage woul d possi bl y be so hi gh that the l atter woul d not take pl ace at al l . However, no
market wi l l ever devel op for most t rade-rel ated envi ronmental damage, such as the l oss of
bi ol ogi cal di versi ty or habitats for t he sake of cult ural enjoyment, as t hei r val ue cannot be
A negati ve external i ty, al so cal l ed external effect or spi l l -over, occurs i n a si tuati on of market
fai l ure. Then pri ces no l onger refl ect al l costs of producti on; pri vate and soci al costs of producti on
di verge. An exampl e of an external i ty i s when ri vers are pol l uted by compani es wi thout t hi s
pol l uti on bei ng consi dered i n cost cal cul ati on and product pri ces.
measured i n monetary terms. I nternal i si ng external effects is a necessary but i nsuffi ci ent
condi ti on for def usi ng t he confl i ct between t he expansi on of i nternati onal trade and the pro­
tect i on of t he envi ronment. Suppl ementary mul ti l ateral protecti ve mechani sms are requi red i n
order t o protect those envi ronmental goods for whi ch i t i s i mpossi bl e t o i nternal i se t hei r use.
Al though t here have so far been no confl i cts of standards between t he WTO-OMC regi me
and t he mult i l ateral envi ronmental agreements ( MEAs) , potenti al confl i cts do exi st between
the two. The arrangements of i ndi vi dual agreements rel at i ng to t rade, such as the UN
Framework Conventi on on Cl i mate Change ( FCCC, 1 992) , t he Conventi on on I nternati onal
Trade i n Endangered Speci es ( CI TES, 1 992) or t he Conventi on on t he Prevent i on of Mari ne
Pol l ut i on by Dumpi ng of Wastes and Other Matter ( London Conventi on, 1 972) are not
necessari l y compat i bl e wi th the WTO-OMC treaty ( Gol dberg et al . 1 995) . However, t hese
confl i cts pri mari l y rel ate to trade i n servi ces. Merel y from appl yi ng t he London Convent i on,
confl i cts wi t h GATS regul ati ons coul d ari se wi t h regard to t he t rade i n waste

The WTO-OMC Commi ttee on Trade and Envi ronment (CTE) was aware of t he need for
cl ari fi cati on wi th regard to the rel at i onshi p of GATS and di fferent MEAs (CTE 1 996, i tem 9) .
I n t he di scussi ons t he demand was formul ated " . . . to i denti fy t he envi ronmental i mpact of t he
l i beral i sat i on of trade i n servi ces ( e. g. transport and touri sm) and t he i mpact that cert ai n envi ­
ronmental l egi sl at i on mi ght have on trade l i beral i sati on ( e. g. condi ti ons appl i cabl e to servi ces
suppl i ers i n the fi el d of waste management) " (CTE 1 996, i tem 9) .
Furt hermore, Art . XI V (b) GATS was seen as a possi bl e source of probl ems. The appl i cati on
of t hi s arti cl e coul d subsequentl y force i ndi vi dual provi ders out of servi ce markets. I n vi ew of
t hi s danger i t seems al l t he more di st urbi ng t hat t he Commi ttee was not abl e to agree on a
practi cal programme of work for t he fi el d of ' Envi ronment and Servi ces' , regardi ng t he scope
of Art. XI V (b) as suffi ci entl y broad.
Fut ure confl i ct coul d al so ari se f rom t he i mpl ementat i on of t he Berl i n Decl arat i on on Bi ol ogi ­
cal Di versity and Sustai nabl e Touri sm ( 1 997) , whi ch i s i ntended as a basi s for a future
conventi on ( or protocol to a convent i on) on sustai nabl e touri sm. I t states:
" 1 5. Touri sm shoul d be devel oped i n a way t hat benefi ts t he l ocal communi ti es, strengthens
t he l ocal economy, empl oys l ocal workforce and wherever ecol ogi cal l y sustai nabl e, uses
l ocal materi al , l ocal agri cul tural products and tradi ti onal ski l l s. Mechani sms i ncl udi ng pol i ci es
and l egi sl at i on shoul d be i ntroduced to ensure t he f l ow of benefi ts to l ocal communi t i es. "
Whi l e GATS foresees i n Art . XV a fl exi bl e handl i ng of subsi di es i n t he case of devel opi ng
countri es
, i t i s ul t i matel y t he speci fi c commi tments of each country whi ch shoul d deter mi ne
whether i t can real l y pursue a pol i cy of speci fi c promot i on of domesti c provi ders. The far­
reachi ng concessi ons i n t he hotel sector, i n parti cul ar, l eave l i ttl e room for t he measures
foreseen i n t he Berl i n Decl arat i on.
1 t i s sti l l uncl ear whether t he Conventi on rel ates to trade i n waste as a product or trade i n waste
removal as a seri ce (Gol dberg 1 995, 60) .
l t says: "Members recogni se that , i n cerai n ci rcumstances, subsi di es may have di storti ng effects on
trade i n seri ces. Members shal l enter i nto negot i ati ons wi th a vi ew to devel opi ng the necessary
mul ti l ateral di sci pl i nes to avoi d such trade di stori ng effects. The negoti ati ons shal l al so address the
appropri ateness of counterai l i ng procedures. Such negoti at i ons shal l recogni se the rol e of
subsi di es i n rel ati on to t he devel opment programmes of devel opi ng countri es and take i nto account
the needs of Members, parti cul arl y devel opi ng country Members, for fl exi bi l i ty i n t hi s area. "
demand for each sector be adequatel y measured, compared and documented i n t he
nat i onal account i ng system? - These are t he questi ons whi ch current l y determi ne the
di scussi on of touri sm stat i sti cs.
I n bot h t he recommendati ons on touri sm stati sti cs j Oi nt l y publ i shed by WTO-OMT and t he
United Nati ons stati sti cs offi ce and i n the Standard I nternati onal Cl assi fi cat i on System of
Touri sm Acti viti es ( SI CTA) the economi c effects caused by touri sm-rel ated consumpt i on of
nat ural assets are l eft out of consi derat i on. Thi s l ed to the draft of a satel l i te account system
(2nd draft of WTO-OMT' s Touri sm Satel l ite Account) to be used for measuri ng t he economi c
effects of t he touri sm sector whi ch does not consi der touri sm-i nduced changes i n t he val ue
of natural assets.
A test of the f i rst draft of the account system (1 st draft of WTO-OMT' s Touri sm Satel l ite
Account) came to t he concl usi on " . . . that t rue contri but i on of touri sm to the Domi ni can
economy i n 1 991 was 1 8. 7 percent of GOP [i nstead of 4. 5 percent convent i onal l y measured] "
(WTO news May 1 997) . Thi s resul t, however, is mi sl eadi ng. From a comprehensi ve poi nt of
vi ew, t he actual ("true") contri buti on of touri sm can be determi ned onl y if the touri sm-i nduced
physi cal changes of nat ural assets are bei ng consi dered and val ued, and i f the sector
speci fi c contri buti on to the GOP or NDP is correspondi ngl y corrected.
The consequences of the one-si ded WTO-OMT approach are obvi ous. On the one hand, the
val ue added of the touri sm sector woul d i n t he future be accounted f or i n a more comprehen­
si ve way. On the other hand, the envi ronmental costs associ ated wi th thi s val ue added woul d
cont i nue to be l eft out of consi derat i on. Thi s l eads to wrong deci si on maki ng and coul d not
be compensated even i f envi ronmental i ndi cators were defi ned i n some dest i nat i ons i n order
to determi ne carryi ng capacity. These i ndi cators are f i rst of al l f ar l ess bi ndi ng than a uni ver­
sal , i nternati onal l y recogni sed satel l ite account system. Secondl y, the proposed i ndi cators
( Manni ng 1 996 i n WTO News May-June 1 996) are of a purel y descri pti ve nature. For
exampl e, a "use i ntensi ty i ndi cator" has been proposed as one of t he core i ndi cators of sus­
tai nabl e touri sm. It woul d be measured as " i nt ensi ty of use - peak peri od ( person/hectares) " .
Furt hermore, there coul d be speci fi c "ecosystem i ndi cators" , for i nstance for coastal areas
("degradati on (% of beach degraded, eroded) ") . These types of i ndi cators, however, merel y
present t he actual si tuat i on and do not gi ve any i nformat i on on cri ti cal threshol d val ues.
Thi rdl y, they gi ve no i ndi cati on on how to val ue t he consumpt i on of natural assets .
I n order to appl y sustai nabi l ity cri teri a in touri sm pl anni ng, the sector speci fi c val ue added
and t he consumpt i on of nat ural assets have to be l i nked. The contri buti on of the touri sm
sector to t he GOP or NDP as currentl y measured i s not a suffi ci ent i ndi cator for economi c
The pl anned one-si ded expansi on of t he stati st i cal documentati on of the envi ronmental l y
rel evant touri sm sector i s unacceptabl e, especi al l y as t he United Nati ons revi si on of t he
Syst em of Nati onal Accounts ( UN-SNA 1 994) al ready contai ns fi rst starti ng poi nts for a
val uati on of natural assets. What is more i mportant, however, is that al ready i n 1 993 a hand­
book on the i ntegrated United Nati ons System of Envi ronmental and Economi c Account i ng
( SEEA) had been submi tted. SEEA i s t he conceptual framework on t he basi s of whi ch
nati onal stati sti cs authori ti es can devi se t hei r envi ronmental repori ng systems. The purpose
of SEEA i s to bui l d up an i ntegrated report i ng system, usi ng satel l i te systems to combi ne the
di verse methods of envi ronmental and resource accounti ng wi th t he accounti ng system of
the revi sed System of Nati onal Account s.
Three i mportant areas of report i ng exempl i fy t he way i n whi ch t he i nterrel ati on between
envi ronment and economy expands the conventi onal System of Nati onal Accounts ( Stahmer
1 993; Di eren 1 995) :
At report i ng l evel A, envi ronmental protecti on rel ated defensi ve acti vit i es ( e. g. water treat­
ment pl ants, waste di sposal ) wi l l not be accounted for in t he conventi onal SNA, but are
separatel y bei ng represented as monetary aggregates. Thi s mai nl y appl i es to t he envi ron­
ment rel ated defensi ve costs actual l y i ncurred i n t he nati onal economy.
Report i ng l evel A+B contai ns addi ti onal quanti tati ve i nformati on on the wi t hdrawal of raw
materi al s due to economi c acti vi ti es, on l and use and on t he pol l utant refl ux caused.
Report i ng l evel A+B+C shows t he actual costs of measures taken ( or t he potenti al costs of
avoi di ng pol l uti on i n order to mai ntai n a gi ven envi ronmental standard) i n order to avoi d t he
envi ronmental i mpact of the consumpt i on of resources and nat ural assets accounted f or at
l evel A+B.
SEEA offers di fferent val uat i on methods for these di fferent l evel s. The met hods are partl y
compet i ng and partl y excl udi ng each other. The chal l enge i n the i mpl ementati on of SEEA
fi rst consi sts i n fi ndi ng an approach suitabl e for a sectoral st ruct ure ( i mpact rel ated versus
pol l uter rel ated costs of envi ronmental use) and i n i denti fyi ng methodol ogi cal el ements.
Secondl y, possi bi l iti es for the i mpl ementati on wi thi n the framework of satel l ite accounts need
to be worked out.
Determi ni ng the physi cal and monetary resource use of touri sm was i denti fi ed i n SEEA as a
pri ori ty for both devel opi ng and i ndustri al i sed countri es ( UN 1 993, 1 33) . Thi s pri ori ty, how­
ever, was nei ther deal t wi th by WTO-OMT nor by t he UN Depart ment f or Economi c and
Soci al I nformat i on and Pol i cy Anal ysi s. For t he reform of touri sm stati sti cs thi s means t hat
t he i mmi nent i ntroduct i on of a broad satel l i te account system for recordi ng t he val ue added i n
touri sm needs t o be compl emented - on t he basi s of SI CTA - by an envi ronmental report i ng
system i n l i ne wi th t hi s account system. I f t hi s cannot be achi eved, t he reform of touri sm
stati st i cs woul d l ead to a bookkeepi ng i n whi ch bal ance forgery by obscuri ng costs becomes
a method.
The i mmi nent changes i n t he stati sti cal documentat i on system have so far hardl y been taken
up i n the cri ti cal touri sm debate. SEEA got attent i on by t he Cl ub of Rome i n its 1 995 report .
The aut hors of the report urged for a fast i mpl ementati on of SEEA to be supported by i nter­
nati onal organi sati ons ( Di eren 1 995, 281 ) . Up to now, nei ther t he Worl d Touri sm Organi za­
t i on nor t he United Nati ons stat i sti cal department fol l owed t hi s recommendat i on.
I t woul d be fatal i f the reform of the documentati on system of such an envi ronmental l y
rel evant sector woul d take pl ace wi thout usi ng t hi s i mportant i nst r ument of envi ronmental
pol iti cs. Therefore, the I nternati onal Conference on Touri sm Economi c Stat i sti cs 1 998 shoul d
consi der combi ni ng SEEA and t he Touri sm Satel l i te Account System. Thi s requi res t he
fol l owi ng steps:
I n t he process of devel opi ng an i ntegrated account system whi ch takes account of both t he
di fferent touri sm acti vi ti es and t hei r envi ronmental effect s, the pri nci pl es whi ch gui de
envi ronmental cost accounti ng f i rst need to be i denti fi ed. The sel ect i on of sui tabl e pri nci pl es
determi nes t he choi ce of the account i ng methods. For exampl e, i t woul d have to be deci ded
whether to appl y the pri nci pl e of i mpact rel ated or of pol l uter rel ated costs of envi ronmental
use. I mpact rel ated costs consi der t he i mpact on the nat ural envi ronment to be born by
domesti c economi c agents (for exampl e, i ndi vi dual s, househol ds or f i rms) . They fol l ow
spati al cri teri a. Pol l uter rel ated envi ronmental costs are attri buted to the economi c agents
whi ch caused t hem. I n the case of i nternati onal touri sm, t he questi on therefore ari ses
whether the envi ronmental costs i ncurred have to be accounted for i n the country of ori gi n
( pol l uter rel ated) or t he desti nati on ( i mpact rel ated) . SEEA offers sui tabl e methods for both
approaches, wi thout, however, combi ni ng the two.
Furthermore, consi derat i ons must be made wi th regard to the compl eteness and scope of
the envi ronmental i mpacts that are to be i ncl uded. There exi sts a trade-off between the
pri nci pl e of comprehensi ve i ntegrati on on the one hand and that of practi cabi l i ty on the other.
SI CTA i n i ts present form ( UN-WTO 1 994) al ready contai ns a f i rst approach of eval uati ng
economi c acti vi ti es wi th regard to t hei r i mportance f or touri sm suppl y and demand. Compl e­
menti ng t hi s, a framework of possi bl e envi ronmental i mpacts needs to be devel oped i n order
to record t he respecti ve envi ronmental i mpacts of touri sm acti vi ti es. The sel ecti on of
envi ronmental i mpacts to be consi dered and of suitabl e account i ng systems as outl i ned i n
SEEA woul d then be based on the pri nci pl es i denti fi ed above.
The effect of al ternati ve val uati on approaches coul d most convi nci ngl y be i l l ustrated by usi ng
a sui tabl e case study. Provi ded that suitabl e data records deri ved from an eval uati on of
envi ronmental functi ons are avai l abl e f or a chosen geographi c area ( nat ure park, regi on or
country) , thi s case study coul d refer t o t he real worl d. I f there are no such data avai l abl e, the
effects of the di fferent val uati on approaches coul d al so be i l l ust rated i n di fferent scenari os,
usi ng a hypotheti cal exampl e.
On the basi s of these scenari os, pri ori ti es can be i denti fi ed for adapti ng touri sm stati sti cs to
i ncl ude envi ronmental aspects. These pri ori ti es woul d need to fi nd entry, for exampl e, i nto
the process of i nformati on exchange on sustai nabl e touri sm i ntroduced by the Conference of
the Parti es to the Conventi on on Bi ol ogi cal Di versity ( CBD/COP I V, Brati sl ava, May 1 998) .
Thi s process mi ght eventual l y l ead to gl obal gui del i nes or even a l egal l y bi ndi ng protocol on
sustai nabl e touri sm and bi ol ogi cal di versi ty. I t i s, t herefore, urgent to push al l preparatory
efforts towards envi ronmental l y ' sensi ti ve' touri sm stati sti cs i n order to i ncrease t he chance of
i ncl udi ng operati onal standards wi t hi n thi s framework.
The restri cti on of f urt her devel opment of l and for touri sm may, i n borderl i ne cases, vi ol ate
free market access and nati onal treatment. Authori ti es coul d al l ow l ocal communiti es, e. g.
i ndi genous groups, a l i mi ted expl oi tati on for touri sm and refuse i t t o others. I n terms of trade
l aw, such excl usi ve (al so non-touri st) usage ri ghts ought to be consi dered as not i n confor­
mi ty wi th GATS, and abol i shed. Thi s confl ict coul d be sol ved by referri ng to GATT Art. XX.
on t he protecti on of nati onal cul t ural goods. Any effecti ve protect i on nat ural l y requi res
appropri ate process standards and monitori ng i nstruments.
The current efforts i n adj usti ng touri sm stati sti cs to i ncl ude envi ronmental aspects must not
be h i ndered by t he possi bl e obj ect i on t hat one mi ght f i rst have to concentrate on t he reform
of narrow economi c report i ng. I t i s most unl i kel y t hat once a revi sed touri sm satel l ite account
system i s adopted, an envi ronment-rel ated reform woul d soon fol l ow. The data to be re­
corded woul d need to be re-adapted. Therefore, an i ntegrated sol uti on shoul d be sought,
rat her than a two-stage i mpl ementat i on. Onl y by consi deri ng carryi ng capaci ty and envi ron­
ment-rel ated costs wit hi n t he framework of an i ntegrated repori ng system can the objecti ve
of sustai nabi l ity i n the context of tou ri sm be achi eved.
As l ong as t he pri ces of touri st servi ces do not properl y refl ect envi ronmental user and
damage costs, t here wi l l be no rel i abl e basi s at al l for opti mi sm regardi ng the economi c
effects of cont i nui ng l i beral i sati on. Establ i shi ng sui tabl e account i ng systems takes prece­
dence over f urther negoti at i ons on di smant l i ng exi st i ng trade barri ers i n t hi s sector. The
Standard I nternati onal Cl assi fi cat i on of Touri sm ( SI CTA) proposed by t he WTO-OMT and t he
UN covers t he val ue added of al most al l backard and forward l i nkages of t he touri sm
i ndust ry, but not t hei r envi ronmental and resource use, not t o menti on t hei r harmful effects.
SI CTA must t herefore be connected wi th account i ng and assessment schemes as al ready
foreseen by the UN System of Envi ronmental and Economi c Account i ng ( SEEA) .
Box 1 1 : MAASTRI CHT Treaty Ari cl e 1 30r (2)
2. Community pol i cy on the envi ronment shal l aim at a hi gh l evel of protecti on taki ng into account the di versity
of si t uati ons i n the vari ous regi ons of the Community. I t shal l be based on the precauti onary pri nci pl e and on
the pri nci pl es that preventati ve act i on shoul d be taken, t hat envi ronmental damage shoul d as a pri ori ty be
recti fi ed at source and t hat t he pol l uter shoul d pay.
Envi ronmental protecti on requi rements must be i ntegrated i nt o the defi ni ti on and i mpl ementat i on of ot her
Communi ty pol i ci es. I n t hi s context , harmonizat i on measures answeri ng t hese requi rements shal l i ncl ude,
where appropri at e, a safeguard cl ause al l owi ng Member States to take provi si onal measures, f or non­
economi c envi ronmental reasons, subj ect to a Community i nspecti on procedure.
Exi st i ng i nternati onal envi ronmental standards, e. g. the Convent i on on Bi ol ogi cal Di versi ty,
shoul d not be undermi ned by the WTO-OMC agreement. The commit ment of WTO-OMC to
envi ronmental and resource protecti on shoul d be suppl emented by process standards wi th
the same status as market access and nat i onal t reat ment . By anal ogy wi th Art . 1 30r (2) of t he
Maastri cht Treaty t hi s can happen t hrough addi ng another t rade standard i n connecti on wi th
a f urther excepti on to the MFN pri nci pl e i n accordance wi t h Art. XX GATT. I t shoul d be
guaranteed t hat t hese changes take effect i n al l t hree areas of negoti at i on (goods, servi ces,
i ntel l ectual property ri ghts) .
Addi ti onal l y, standards have to be devel oped safeguardi ng extraterri tori al goods adversel y
affected by cross border trade. Experi ences wi th recent confl i cts between t rade and
envi ronment managed by the di spute sett l ement mechani sm show t hat the i mpl ementati on of
t rade rel ated envi ronmental standards may fai l onl y for the reason that there was not
suffi ci ent proof that t hese standards wi l l work i n a non-di scri mi nati ve manner. To secure
effi ci ent envi ronmental protecti on i n t he sphere of trade t he burden of proof t herefore has to
be reversed.
Envi ronmental and resource protect i on affects parti cul arl y the needs, ri ghts and i nterests of
peopl e i n t he dest i nat i on areas. As cal l ed for i n connecti on wi th mi ni mum soci al standards,
and i n l i ne wi th Agenda 21 , parti ci patory st ruct ures and mechani sms al so need to be set up
i n t hi s fi el d, ensur i ng t he t ransfer of i nformat i on and a say f or groups whose i nterests are
di rectl y or i ndi rectl y affected.
The need for fai r t rade i n goods and servi ces i s j usti fi ed by the i ncrease i n consumer wel fare
t hat a broader range of goods at l ower pri ces represents. I n t he case of the i nternati onal
touri sm i ndustry, t hi ngs are somewhat di fferent. Servi ces i n t he touri sm i ndustry are bei ng
offered cross border. Consumpti on of these servi ces i s then al so cross border. I n pl aces
where a substanti al number of touri st arri val s i n devel opi ng count ri es are i nternati onal
touri sts, nati onal consumers woul d have no reason to l i beral i se touri sm servi ces, as the
gai ns of l i beral i sati on woul d be expected to benefi t forei gn consumers i n t he fi rst pl ace. Con­
sumpti on of key servi ces of a pari cul ar dest i nat i on, i . e. the nat ural , cul t ural or ' exoti c'
surroundi ngs, i s usual l y not at al l or i nsuffi ci entl y pai d for. Those who promote the devel op­
ment of touri sm i n these countri es therefore poi nt to t he posi ti ve effects of expandi ng t hi s
i ndustry. I n t he fi rst part of t hi s study, some of t he expectat i ons are bei ng vi ewed wi t h scepti ­
ci sm wi th regard to the exi st i ng competi ti ve framework i n the touri sm market. I n no other
i ndustry has a si mi l ar degree of l i beral i sati on been achi eved. Thi s i s mai nl y due to the fact
that government expectati ons towards t he touri sm i ndust ry remai n unchanged and that i m­
porant steps for l i beral i sati on had al ready been undertaken - part i cul arl y i n t he hotel i ndustry
- before GATS came i nto force. Numerous count ri es are bound to sti l l exi st i ng t rade restri c­
ti ons i n t he touri sm i ndustry, whi ch t hey have used as a vehi cl e for f ul l WTO-OMC member­
shi p.
Some cri ti cs regard l i beral i sati on of t rade i n servi ces as achi eved under GATS as i nsuffi ci ent.
They see the agreement as mai nl y re-enforci ng exi sti ng trade regi mes and not promot i ng
progressi ve l i beral i sat i on f or t he future. Those who share t hi s opi ni on underesti mate the
potenti al i mpact of i ndustry speci fi c regul at i ons, whi ch provi de t he ' raw materi al ' for future,
more extensi ve l i beral i sati on efforts. The next round of negot i at i ons wi l l be marked by t hree
ori entat i ons:

Fi rstl y, future del egati ons parti ci pat i ng i n t he negoti ati ons wi l l try to i ncl ude i ndustri es i n
t he agreement t hat have been l eft out so far. Efforts wi l l concentrate on i ntegrat i ng cargo
and passenger ai r t raffi c.

Secondl y, attempts wi l l be made at reduci ng exi sti ng trade restri cti ons. Thi s mi ght easi est
be achi eved t hrough i ndustry speci fi c commit ments. Negoti at i ons on hori zontal commit­
ments are expected to be di ffi cul t, as t hese commi tments appl y to al l t he servi ces of a
country. They mostl y refer to t he free movement of nat ural persons, a mode of suppl y
mai nl y subj ect to hori zontal commit ments. I n t he cateri ng i ndustry, l i beral i sati on of di rect
i nvestments mi ght precede l i beral i sati on of movement of nat ural persons.

Fi nal l y, effors wi l l be undertaken to convi nce more gover nments to promi se l i beral i sati on
i n speci fi c i ndustri es. I n touri sm-rel ated servi ces thi s wi l l be t he case especi al l y for tour
operators and touri st gui des servi ces as wel l as compl ementary servi ces i n sports and
cul t ure.
For many governments the very fi rst areas of negot i at i ons wi l l be chal l engi ng. Deci si ons on
t he pri ori ti es i n ai r traffi c pl anni ng have to be taken now. I f thi s does not happen, far reachi ng
l i beral i sat i on of ai r traffi c coul d result i n forei gn carri ers coveri ng mai nl y l ucrati ve desti na­
ti ons, whereas domesti c carri ers woul d be l i mited to l ess attracti ve domesti c routes.
At t he i nternati onal l evel , NGOs worki ng on touri sm wi l l have to agree on a common agenda
for reformi ng GATS. The fi rst questi on wi l l be whether ( and whi ch) t rade pol i cy measures
shoul d be taken to enforce mi ni mum l abour standards and human ri ghts and how such
measures coul d be i ntegrated i nto the WTO-OMC. The debate rel ated to the subordi nat i on of
the WTO-OMC regi me under exi st i ng mul t i l ateral envi ronmental agreements shoul d not be
too much of a probl em. However, shapi ng future agreements whi ch woul d hel p i n speci fyi ng
t he Agenda 2 1 f or touri sm and woul d be of l egal l y bi ndi ng character ( such as a conventi on or
a protocol to a convent i on) , mi ght prove consi derabl y more di fficul t . The danger i s that - i n
anti ci pati on of al ready exi sti ng WTO-OMC rul es comi ng i nto effect - regul at i ons t o promote
soci al l y and ecol ogi cal l y sustai nabl e touri sm mi ght not be considered at al l .
More than ever before, t he doctri ne of free trade i s currentl y i n a weak posi ti on. Anal ysi s
t ryi ng to measure wel fare costs of protect i oni sm i n the servi ce sector wi l l be a waste as l ong
as pri ces for these servi ces do not refl ect t he soci al and ecol ogi cal cost of t hei r avai l abi l ity
and t hei r consumpti on. The essenti al chal l enge for NGOs wi l l be to take a new positi on that
woul d repl ace t he one di mensi onal opposi t i on of l i beral i sat i on and protect i oni sm and woul d
l ead to the creat i on of new procedures and monitori ng i nstruments for shapi ng worl d trade.
Thi s should happen at vari ous l evel s:
Fi rst of al l , NGOs woul d have to exerci se stronger i nf l uence on devel opi ng suitabl e systems
of i ndi cators. As l ong as t he actual soci al and ecol ogi cal costs of the touri sm sector remai n
unaccounted f or, t he opti mi sti c assumpt i on that progressi ve l i beral i sat i on l eads to an i n­
crease i n wel fare i n t he dest i nat i on countri es remai ns wit hout foundat i on. Currentl y there is a
danger that exi st i ng systems of i ndi cators to measure t he economi c i mportance of touri sm
wi l l be i mproved onl y i n a one si ded way. Suggesti ons whi ch t he Worl d Touri sm Organ i zati on
currentl y presents for di scussi on do provi de a better basi s for assessi ng t he contri buti on of
t ouri sm t o nati onal i ncome. However, they do not assess t he costs i ncurred by t he negati ve
i mpacts of touri sm. The chal l enge for NGOs consi sts i n l obbyi ng for t he f urther i mprovement
of exi st i ng systems of measurement, whi ch wi l l have to adequatel y refl ect the compl ex
causes and effects. Another maj or chal l enge for NGOs consi sts i n exerci si ng di rect i nf l uence
on the upcomi ng WTO-OMC negoti ati ons whi ch are expected to be opened wi th the 3
Mi ni steri al Conference i n November 1 999. Condi ti ons are favourabl e, si nce i ni ti al "offi ci al "
worki ng contacts between NGOs and WTO-OMC al ready exi st. Furthermore, a consensus
about the pri ori ti es from a ci vi l soci ety perspecti ve has to be agreed upon. GATS wi l l pl ay an
i mportant rol e. After the negoti ati ons on the Mult i l ateral Agreement on I nvest ment ( MAl ) , wi th
OECD i n charge fai l ed, GATS i s the onl y agreement whi ch al ready i ncl udes regul ati ons
about the protect i on of i nvest ments. These are l i kel y to be expanded. Therefore, t he comi ng
negot i at i ons requi re t he speci al attenti on of NGOs, even more so si nce GATS has i n t hei r
focus so f ar been rather negl ected.
I t has repeatedl y been i ndi cated that those who woul d be di rectl y affected by uncontrol l ed
l i beral i sat i on of the touri sm i ndustry have no opport unity to parti ci pate i n t he debate.
Especi al l y the broad defi niti on of trade-rel ated measures i n art i cl e 1 . 3 GATS needs to be
amended to al l ow for communi ti es, regi ons and federal states to have t hei r own i ndependent
touri sm pol i ci es. Such an amendment coul d be gui ded by the pri nci pl e of subsi di ari ty whi ch
t he European Uni on refers to i n i ts charter. Ori gi nal l y, thi s pri nci pl e was meant to safeguard
t he autonomy of communi t i es in a hi erarchy. I t safeguards responsi bi l it i es of communi ti es or
groups i n a l egal system agai nst erosi on t hrough corporate bodi es on a hi gher l evel . Thi s
pri nci pl e coul d be devel oped to appl y to groups affected by the deci si ons taken wit hi n the
WTO-OMC who woul d then be al l owed to parti ci pate i n t he process. Thi s woul d hel p devel ­
opi ng procedures that woul d take i nto account the ri ght of communi ti es to sel f-determi nati on.
Madel ey, John 1 996: Forei gn expl oits: Transnati onal s and Touri sm. UK-London: Cat hol i c
I nsti tute for I nternati onal Rel ati on.
Mal i k, Satyender Si ngh 1 997, "Ethi cal , Legal and Regul atory Aspects of Touri sm Busi ness,
Rahul Publ i shi ng House, Del hi , I ndi a.
Mart i n, Wi l l and Wi nt ers, L. Al an 1 996: For Servi ces, Rul es but Few Reducti ons i n Protec­
t i on, DEC notes Research Fi ndi ngs No. 1 1 , May 1 996.
Mayer , Rai ner 1 996: Der Ei nsatz von I nternet und Onl i ne-Di ensten i m Touri smus, i n:
Ki rstges 1 996, 229-246.
Paci , Enzo 1 998: What i s a Touri sm Satel l ite Account? WTO[-OMT News Septern ber­
October-November 1 998.
Pi epel , Kl aus Ed. 1 995: Sozi al kl ausel n i m Wel thandel - ei n I nstr ument zur Fbrderung der
Menschenrechte? Dokumentati on ei nes St udi entages und Stel l ungnahmen aus der
Dri tten Wel t, D-Aachen: Mi sereor-Beri chte und Dokumente 1 D.
Pl uss, Chri st i ne 1 996: Wenn ei ner ei ne Rei se tut . . . haben andere vi el zu tun. Di e
Touri smsusforschung entdeckt Frauen und Ki nder, i n: bl atter des i z3w, Nr. 21 4,
Juni/Jul i 1 996, 26f.
Poon, Aul i ana 1 993: Touri sm, Technol ogy, and Competi ti ve Strategi es, UK-Wal l i ngford: CAB
I nternat i onal .
Prasad, Ashok Chandra. H, and Raj endar Kapoor, ( ed) , 1 996, "Trade i n I nvi si bl es: The I ndi an
Perspecti ve", Common Weal th Publ i shers, Del hi , I ndi a.
Ratandeep Si ngh, 1 996: " I nfrastruct ure of Touri sm i n I ndi a" , Touri sm Today Seri es - 2,
Kani shka Publ i shers, Del hi , I ndi a.
Ratandeep Si ngh, 1 996: "Touri st I ndi a, Hospital i ty Servi ces", Kani shka Publ i shers, Del hi ,
I ndi a.
Scherer, Bri gi tte 1 995: rororo speci al : Touri smus, D- Rei nbeck.
Schi rmer, Ul ri ch 1 995: Di skussi onsstand zur Frage der Sozi al kl ausen i m Bundesmi ni ster i um
f Or Wi rtschaft, i n der Wel thandel sorgani sati on ( WTO) und i n der Organi sat i on f Ur
wi rtschaft l i che Zusammenarbei t und Entwi ckl ung (OECD) , i n: Pi epel Ed. 1 995, 36-
Sen, S. R. 1 994: GATT & TNCs, i n: Economi c and Pol i ti cal Weekl y, 22. 1 0. 1 994, i n: Contours
1 995.
Sent i , Ri chard 1 994a: GA TI-WTO. Di e neue Wel thandel sordnung nach der Uruguay- Runde,
CH-Zuri ch: I nsti tut f Ur Wi rtschaftsforschung der ETH Zuri ch.
Sent i , Ri chard 1 994b: Di e neue Wel thandel sordnung f Or Di enst l ei stungen, Materi al i en 94/2,
CH-Zuri ch: I nsti tut f Or Wi rtschaftsforschung der ETH Zuri ch.
Si eber, Horst 1 994: AuBenwi rtschaft , 6. compl etel y revi sed edi ti on, D-Stuttgart : G. Fi scher.
Stabl er, Mart i n 1 996: Touri sm and Chi l dren i n Prosti tut i on, Paper submi tted by ECPAT for
t he Worl d Congress agai nst Commerci al Sexual Expl oitat i on of Chi l dren, Stockhol m,
Sweden 27-31 August 1 996.
Stock, Chri sti an 1 996: Tropi cal Techno. Kl ei nunternehmer i nnen i m sudi ndi schen Koval am,
i n: bl atter des i z3w, Nr. 21 4, Juni /Jul i 1 996, 28f.
Surendra, J Patel 1 991 , "The South and t he GATT negot i at i ons on Servi ces Sector" Eco­
nomi c and Pol iti cal Weekl y, Vol . xxvi No. 48, Nov. 3D, 1 991 , p. 2732.
Todaro, Mi chael P. 1 994: Economi c Devel opment 5th Ed. , US-New-York: Longman.
UNITO-OMT United Nati ons and Worl d Touri sm Organi zati on 1 994: Recommendat i ons
on Touri sm Stat i sti cs, Stat i st i cal Papers Seri es M No. 83, USA-New York: Uni ted
Nat i ons.
UNDP 1 996: Beri cht Ober di e menschl i che Entwi ckl ung, ed. Deutsche Gesel l schaft fUr di e
Verei nten Nati onen e. V. , D-Bonn: UNO-Verl ag.
Vorl aufer, Karl 1 996: Tour i smus i n Entwi ckl ungsl andern. Mbgl i chkei ten und Grenzen ei ner
nachhalti gen Entwi ckl ung durch Fremdenverkehr, D-Darmstadt: Wi ssenschaft l i che
Buchgesel l schaft .
Vyasul u, Vi nod 1 996, "Cri si s and Response: an assessment of economi c reforms": Madhyam
Books, Del hi , I ndi a.
Wi l son, Arl ene 1 994: GATT, Trade Li beral i zat i on, and t he Envi ronment: An Economi c
Anal ysi s, Congressi onal Research Servi ce Report for Congress, US-Washi ngton:
Commi ttee for t he Nat i onal I nst it ute for t he Envi ronment.
Wi ndfuhr, Mi chael 1 996: Neue Regel f Ur den Wel thandel , i n: Forum Umwel t & Entwi ckl ung
Rundbri ef 4/ 1 996, 4f.
WTO-OMC 1 995: Ur uguay- Round of Mul t i l ateral Trade Negoti at i ons. Legal I nstruments
Embodyi ng the Resul ts of the Uruguay-Round of Mult i l ateral Trade Negot i at i ons
done at Marrakech on 1 5 Apri l 1 994, Vol . 28-30. 32, CH-Geneva: WTO-OMC.
WTO-OMC 1 996: Draft Si ngapore Mi ni steri al Decl arat i on, i n: http: //www. wt o. org/.
WTO-OMT Worl d Touri sm Organi zat i on 1 994: Touri sm and the General Agreement on Trade
i n Servi ces (GATS) , E-Madri d: WTO/OMT.
WTO-OMT Worl d Touri sm Organi zati on 1 995a: Col l ecti on and Compi l ati on of Touri sm
Stat i sti cs. Recommendati ons on Touri sm Stati sti cs WTO/ United Nat i ons Seri es M
No. 83- 1 994 Fol l ow-up seri es, E-Madri d: WTO/OMT.
WTO-OMT Worl d Touri sm Organi zat i on 1 995b: GATS I mpl i cat i ons f or Touri sm. The General
Agreement on Trade i n Servi ces and Touri sm. Semi nar on GATS I mpl i cat i ons for
Touri sm, Mi l an, I tal y, 2-3 December 1 994, WTO Semi nar & Conference Proceed­
i ngs, E-Madri d: WTO-OMT.
WTO-OMT Worl d Touri sm Organi zati on 1 995c: GATS & Touri sm. Agreei ng on Trade and
Touri sm. I mpl i cati ons of the General Agreements on Trade i n Servi ces, E-Madri d:
WTO-OMT Worl d Touri sm Organi zati on 1 996a: News from t he Worl d Touri sm Organi zati on
6/ 1 /96.
WTO-OMT Worl d Touri sm Organi zati on 1 996b: Yearbook of Touri sm Stati sti cs, 48 ed. Vol .
1 +1 1 , E-Madri d: WTO-OMT.
GATT 1 994
p. c.
Computer Reservati on Systems
Framework Convent i on on Cl i mate Change
General Agreement on Trade i n Servi ces
General Agreement on Tari ffs and Trade 1 947 as amended t hrough 1 966
General Agreement on Tari ffs and Trade 1 994
Gross Domesti c Product
Gl obal Di stri buti on System
Gross Nati onal Product
Hotel s and Restaurants
Hi gh-I ncome Economi es
I nternat i onal Bank for Reconst ructi on and Devel opment
I nternati onal Labour Offi ce; I nternati onal Labour Organi zat i on
I nternati onal Uni on for Conservat i on of Nat ure and Nat ural Resources
Least- Devel oped Countri es
Low- I ncome Economi es
Lower-Mi ddl e- I ncome Economi es
Mul t i l ateral Agreements on Trade i n Goods
Mul t i l ateral Envi ronmental Agreements
Mul t i l ateral I nvest ment Agreement
Newl y I ndustri al i zed Economi es
Organi zat i on for Economi c Cooperat i on an Devel opment
per capit um
Sport i ng and ot her Recreati onal Servi ces
Travel Agenci eslTour Operators
Touri st Gui des Servi ces
Trade rel ated Aspects of I nt el l ect ual Property Ri ghts
Touri sm and Travel - Rel ated Servi ces
Upper-Mi ddl e- I ncome Economi es
Uni ted Nat i ons
Worl d Trade Organi zat i on
Worl d Touri sm Organi zati on
Worl d Travel and Touri sm Counci l
Worl d Wi de Fund for Nat ure
Worl d Wi de Web

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epd-Entwi ckl ungspol it i k is a speci al i sed German l anguage i nformati on resource of t he
Ger man Protestant News Agency (epd) . I t monitors gl obal trends and gi ves a voi ce t o t he
' Sout h' . Central t opi cs of anal ysi s i ncl ude not onl y poi nts of confl i ct i n North-South rel at i ons
and possi bl e sol uti ons, but al so how f ar the North can cope wi t h devel opmental change.
The bi weekl y magazi ne on devel opment i ssues ' epd-Entwi ckl ungspol it i k' contai ns approx.
60 pages of current i nformat i on, background reports, anal ysi s and commentary, pol i ti cal
caroons, as wel l as a detai l ed documentat i on sect i on. Speci al i sed j ournal i sts and experts
in t he f i el ds of devel opment ai d, pol iti cs, sci ence, cul t ure and educati on contri bute to t hi s
magazi ne. Authors from t he South al so have t hei r say.
Emi-von-8ehrng-Str. 3
0-60394 FrankurMain
Phone +49 / 69 / 5 80 98- 1 38
Fa: +49 / 69/ 5 80 98- 139
Touri sm Watch is a speci al desk of t he Devel opment Servi ce of t he Protestant church i n
Germany. I t was founded i n 1 975 agai nst t he backdrop of negati ve experi ences wi th
touri sm i n devel opi ng countri es. Quest i oni ng t he equat i on that touri sm means devel op­
ment, Touri sm Watch is engaged i n i nformati on and educati on on t he i mpacts of touri sm i n
Germany. The Ecumeni cal Coal iti on on Thi rd Worl d Touri sm i s an i mportant parner i n
i nternat i onal co-operati on. Touri sm Watch part i ci pates i n campai gns such as ECPAT ( End
Chi l d Prosti t uti on, Chi l d Pornography and the Traffi cki ng of Chi l dren for Sexual Purposes) .
I t is t he co-ordi nati ng offi ce of t he Thi rd Worl d Touri sm European Ecumeni cal Net (TEN) .
Touri sm Watch promotes al ternati ves whi ch maxi mi se t he posi ti ve aspects of touri sm and
mi ni mi se i ts adverse effects. Exampl es are the ecumeni cal study tours supported by the
Protestant Church i n Germany and the ToDo! Contest for Soci al l y Responsi bl e Touri sm
organi sed by t he Study Group on Touri sm and Devel opment whi ch i s supported by
Touri sm Watch. The offi ce publ i shes a quarterl y ' Touri smWatch' i nformati on servi ce.
Tourism Watch
NikoJaus-Otto-Str. 13
0-70771 Leinfelden-Echterdingen
Phone +49-7 1 1 -79 89 -281
Fa +49-7 1 1-79 89-283
E-mai: tourism-watch@due. org
Interet: www. tourism-watch. org
Equati ons i s a non-profi t organi sat i on establ i shed f or research, trai ni ng and promoti on of
hol i sti c touri sm. I t works towards transformi ng the i nherentl y expl oi tati ve nat ure of mass
commerci al touri sm by questi oni ng t he real benefi ts of touri sm to the host communiti es as
wel l as i ts soci al -cul tural and economi c i mpacts. Equati ons acti vi ti es i ncl ude documenta­
t i on, publ i cati on, research, semi nars, and t he i nvesti gati on of al ternati ve touri sm pol i ci es
and struct ures.
198, lind Crss Church Road
New Thippasandra
Bangalore 560 075
Phone +91 / 80 / 528-2313, -2905
Fax +91 / 80 / 528-2313
E-mail: AOMIN@equations. iban. ereUn
The Werkstatt
konomi e conducts research and advi ses on acti on i n t he f i el d of economi c
and devel opment pol i cy. I t i s commi tted to more j usti ce i n t he gl obal economy and i n the
fi el d of l abour. I t usual l y works on temporary projects, ei ther on demand or on i ts own
i ni ti ati ve.
To the Werkstatt
konomi e consul tancy means empoweri ng peopl e for acti on. I t advi ses
organi sati ons and groups, devel ops materi al s for educati onal and medi a work, pl ans cam­
pai gns, engages i n l obbyi ng and hel ps others bui l d al l i ances. Studi es affected by the
konomi e are cl osel y l i nked to subsequent acti on. The Werkstat
konomi e
researches background i nformati on and t hen makes i t avai l abl e poi nti ng out t he connected
soci al and economi c probl ems pl aci ng them i nto t hei r context and offeri ng pol i ti cal
sol uti ons.
Werkstatt Okonomie
Obere Seegasse 18
0-69124 Heidelberg
Phone +49 / 62 21 / 72 02 96
Fax +49 / 62 21 / 78 1 1 83
E-mai: werkstatLoekonomie@t-onlne. de
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