The World Trade Organization and Ecotourism

presented by

Victor Menotti,

International Forum on Globalization

(www.ifg.org)

to the

First International Conference of Ecologist Mayors on Ecotourism

November 22-24, 2002 Cancun, Mexico

The WTO and Governance

When the World Trade Organization (WTO) meets in Cancun next September 2003 for its Fifth Ministerial, it will face heavy criticism for its democratic deficit that continues to exclude not only civil society but also many of its own Members nations.

Last weekend, I attended the initial planning meeting among Mexican and international civil society organizations to begin planning a popular mobilization for Cancun. You can be sure that there will be many ordinary people here in Cancun next September demanding change.

Also last weekend, the WTO began its preparation for Cancun at a so-called mini-ministerial in Sydney, Australia, but only 25 of 144 Member Countries were invited to participate. Developing nations have denounced the WTO’s decision-making process as having worsened since the collapse of talks in Seattle three years ago.

But there is yet another voice that is not sufficiently heard in the debate on global trade policy: elected officials, at all levels of government. Traditionally, democratic societies have used their elected governments as a mechanism to set limits on corporate behavior. Indeed, even the father of free trade, Adam Smith, understood that, for a market economy to work properly, an active state was necessary to limit the greed of people in their pursuit of profit.

The WTO reverses this traditional relationship between citizens, government, and business by restraining what the state can do to protect the public good. As one top advisor to European Trade Minister Pascal Lamy recently put it to me, "the WTO is for regulating the protections." It is precisely this hierarchy of commercial values over those of democratic participation and ecological balance that is uniting people across borders to transform global economic rules.

Remember that WTO is a binding international contract in which our trade ministers have obliged federal, state, and even municipal governments to NOT regulate their economies. For people working to transform industrial tourism into ecological tourism, the WTO represents a daunting set of challenges that have yet to be fully examined.

No doubt you have heard of the free market’s "invisible hand." WTO’s heavy intervention serves as a pair of invisible handcuffs, especially for elected officials see the need to use public policy to guide capital investment and entrepreneurial spirit toward sustainable tourism. WTO’s broad scope and powers of enforcement could undermine measures that ensure the gains from tourism stay in the local community.

In fact, WTO is now negotiating a binding new agreement on tourism that could exclude municipal elected officials, tourism commissioners, small businesses, and local communities from the process of determining what kind of tourism they will have in their own regions. WTO could become the new forum to decide global rules of the tourism industry. But more on this later.

First I want to call your attention to what many say could be the biggest decision to be taken when trade ministers meet here in Cancun. I bring these issues to your attention because expanding WTO’s powers into these unprecedented areas of public policy-making could reduce your authority as elected representatives and government officials to govern in your own jurisdictions. Not only in tourism but across all economic sectors.

What’s at stake when WTO meets in Cancun 2003?

WTO already has numerous rules in place that restrict the actions of governments at all levels, restraining what they can do, and how. The Cancun Ministerial will be the midway point of the so-called Doha Round of negotiations, which were launched in November 2001 in Doha, Qatar. They are to be concluded by January 2005.

Perhaps the biggest decision to be taken by trade ministers in Cancun will be whether to launch negotiations on a number of so-called New Issues, which would expand the WTO’s authority into even more areas of policy-making. Rich nations want to introduce these New Issues into the WTO’s mandate, which could restrain how all levels of government regulate foreign investors and spend their tax revenues. Currently, WTO’s mandate covers how governments can regulate goods, but expanding its powers into investment and government procurement could curtail two important powers of government officials that play an important role in what kind of tourism develops.

• Investment

US, European, and Japanese investors want to use WTO to "discipline" the way governments regulate foreign investment. Global corporations are bothered by laws that require them to, for example, partner with a local company; to transfer technology and skills; to source their purchases of food, goods, and services locally; or to hire local labor, including managers. While these policies may make things harder for foreign investors, they are also the basic policy tools of governments, especially in the developing world, to ensure that some benefits from foreign investment accrue locally. Even measures that require businesses to reinvest a portion of profits, or limit the full repatriation of profits, are being targeted. In Mexico, many elements of this investment regime already exist under the North American Free Trade Agreement (NAFTA), which in turn allowed to US companies to buy up more than half of Mexican hotel acquisitions in the late nineties once NAFTA was implemented. The Cancun meeting will determine if these investors’ rights will be expanded further, as well as universalized via the WTO. Such a decision would afford the global chains even stronger protections at the expense of local communities trying to promote ecotourism.

• Government Procurement

WTO also wants to set new rules on how governments spend their tax revenue. WTO won’t try to tell you how much you can spend, they already know that’s the job if the IMF. Instead, they want to tell you "how" you spend it, what things you can and can not buy, and most importantly, from whom you buy it. In some counties, especially in the global south, government purchases of goods and services represent over half the GDP. Many governments pursue larger social goals by favoring contracts with domestic, small and medium businesses, or women and minority-owned businesses. But big companies view these programs as discriminating unfairly against them. They view government procurement as a multi-billion dollar global market to penetrate, and WTO is their vehicle of choice to remove government’s authority to decide how to spend tax revenues.

How might WTO cover tourism?

The WTO already has very limited rules on services, under its existing General Agreement on Trade in Services (GATS). As part of the last round of negotiations that was concluded in 1994, trade ministers agreed to liberalize services industries more. GATS currently includes limited coverage of "tourism services." But now there is a proposal to develop a separate "Annex" specifically on tourism (See www.wto.org). An annex would have the same legal personality as any WTO "Agreement" and governments would be subject to the WTO’s same Dispute Resolution Mechanism, and the penalties it imposes against governments who violate the rules.

If one is interested in promoting ecotourism, some of the key questions to ask about the WTO negotiations are: Who is writing the rules? What values will they reflect? Will they respect ecological limits? Will they include, or exclude, local communities in decision-making? Will they ensure that the gains from tourism increase the standards of living in the host communities?

Many of the proposals for tourism being submitted to WTO say they must support sustainable development, but looking at three of the main negotiating principles that guide the expansion of GATS, one must ask how the core values of ecotourism can possibly be built in?

1. National Treatment: This principle requires treating foreign tourism service providers no less favorably than domestic ones, which can undermine attempts to ensure that the gains from tourism benefit local people. When considering the disparities that exist in financing, marketing and management resources between many small businesses and the transnationals with whom they must compete, there is no way this principle creates a "level playing field" where local businesses can compete fairly.
2. Market Access: Widening market access can mean many things, but when it comes to a sector as sensitive as tourism, expansion for the purpose of supplying whatever the market can consume inevitably results in transgressing social and ecological limits. Are restrictions on the number of boats that visit a marine reserve a market access barrier that should be eliminated? Is the limit on how many boats can visit the marine reserve at one time a barrier to market access that should be eliminated? These are the kinds of questions that GATS could answer.
3. Domestic Regulation: GATS aims to establish general rules that discipline how governments develop and implement domestic regulations. It is hard to imagine how a top-down process of global rule making can respect local conditions and sensibilities that are so central to shaping responsible tourism. GATS’ one-size-fits-all rules could set uniform limits on how governments from Alaska to Zanzibar regulate, ignoring their cultural and ecological diversity as well as their right to choose their own protections.

The scope of tourist services being proposed for liberalization is broad and deep, taking the list from the United Nations Central Product Classification, which covers almost everything imaginable (www.wto.org). Here are some of the services where, if liberalized, mayors, state legislators, and even national tourism ministers could lose power to new WTO rules:

What does the US want?

The United States Trade Representative (USTR) has submitted a proposal to WTO listing a number of things it considers to be "obstacles" to its hotel industry’s overseas expansion (www.ustr.gov). The American Hotel and Lodging Industry (AHLA), which is the main lobby group in Washington D.C. for hotels, has played a central role in shaping USTR’s proposal. Indeed, AHLA is Vice-Chair of the Industry Sector Advisory Committee that formally advises US trade negotiators on services talks (www.ahla.com). The list of obstacles is too long to read here, but it includes:

• Fees on departing travelers;
• Limitations on the participation of foreign capital;
• Measures that restrict or require certain types of business structure (Mexico’s requirement to establish a fideocomiso could be one example);
• Limitations on the purchase of real estate;
• Economic needs tests on suppliers of hotel and lodging services;
• Measures that require the use of a local partner to establish in the market;
• Lack of National Treatment for financing construction and operation of hotels;
• Lack of National Treatment and access to public services;
• Lack of National Treatment for foreign franchises;
• Lack of available information on zoning and lack of meetings with local officials to discuss location of facilities.

I encourage you to view the entire list at USTR’s website; I’m sure you’ll find some of your current policies, or maybe some you are trying to put in place, on their "hit list." The point here is that while we are trying to implement ecotourism locally, as we should be doing, we must also be aware that power is shifting to institutions that want to manage everything globally. So we must work at both levels.

What does the European Community want?

Sustainable tourism means that local communities determine what gets built where and how big it will be. Environmentalists on Mexico’s Caribbean coast have made real advances toward this goal by instituting the requirement for new developments to follow local zoning laws and conduct environmental impact assessments before receiving a permit. Recent victories have protected critical habitat for endangered ecosystems and traditional community rights.

Foreign investors complain that obtaining such permits can be "burdensome" especially if it is revealed that their proposed project would violate restrictions on, say, the number of hotel rooms or their proximity to sea turtles habitat. Big tourism companies want to use WTO to undo these local laws. The European Community, in a formal request to Mexico under GATS "Tourism and Travel Related Services," wants Mexico to remove the need to hold a license to establish new:

• hotels
• restaurants
• travel agencies
• tour operators
• tour guides

Notice that the EC does not ask to modify the existing process for obtaining a license, but rather to eliminate it entirely. Not only would its elimination undermine recent environmental victories near Cancun, but it would destroy the very legal mechanism that empowers Mexicans to determine what kind of tourism will develop in their own country. Europe’s request exposes the true intentions of WTO tourism services talks: to shift power over decision making from local community’s to global corporations.

What should an international agreement on tourism do?

Some developing countries are proposing new international rules to prevent anti-competitive practices. They would like to see safeguards against the discriminatory use of information networks, such as excessive access charges to web sites that keep small companies out of the view of people making their travel arrangements via the internet; this is a "market access" barrier for them. They also want to stop abuses through exclusivity clauses and vertical integration. Multilateral agreements for international travel and tourism should empower local citizens and their businesses, not take away their rights so transnationals can takeover.

What other WTO negotiations might impact tourism?

Several other service sectors currently being negotiated for liberalization under GATS are currently public services. Often, that’s because citizens and their governments believe certain things need to be managed by public entitites, as opposed to profit-driven decisions of private companies. Among these include:

What to do?

If tourism differs from other economic sectors because it "moves people to the product rather than transporting the product to the people," then WTO can be viewed as limiting the ability of governments to ensure quality control over their product. Here are a few suggestions for what can be done to focus the spotlight on WTO tourism negotiations, and begin a real conversation about how international agreements can accelerate ecotourism:

• Initiate consultations with national trade ministries;
• Link up with other elected officials;
• Undertake official assessments of potential local impacts;
• Pass local governments resolutions to send a message to trade negotiators;
• Send a letter from this conference to WTO.

If people who care about responsible tourism do not get involved in WTO negotiations, we will not have an agreement that is responsible. Remember, he who writes the rules gets to rule.

WTO’s Ministerial in Cancun needs to allow space for real alternatives to emerge. My organization, the International Forum on Globalization, plans to make alternatives the main thrust of our message for September 2003. The Green Party internationally, together with the broader civil society here locally and globally that is already preparing for the Cancun Ministerial, can play a key role in putting forward concrete proposals that embody our principles of participatory democracy, social justice, and ecological sustainability. Let us begin at this conference to create that space and discuss what the real alternatives can be.