WORLD TRADE
ORGANIZATIONS/CSS/W/125
29 November 2001
(01-6104)
Council for Trade in Services
Special SessionOriginal:  Spanish
COMMUNICATION FROM MERCOSUR
Tourism Services
The following communication has been received from the delegations of Argentina, Brazil,
Paraguay and Uruguay, with the request that it be circulated to the Members of the Council for Tradein Services .
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1. The States parties to MERCOSUR (Argentina, Brazil, Paraguay and Uruguay) submit this
proposal
1 for consideration by Members. Without prejudging the position they will adopt with respect
to other negotiating proposals presented in the framework of the Special Session of the Council forTrade in Services, the purpose of this proposal is to promote the liberalisation of this important sector
in order to increase developing countries’ revenues from tourism services and to contribute to
increasing the participation of developing countries in trade in services. Article IV of the General
Agreement on Trade in Services (“Increasing Participation of Developing Countries”), states in
paragraph 1:
“The increasing participation of developing country Members in world trade shall be
facilitated through negotiated specific commitments, by different Members pursuantto Parts III and IV of this Agreement, relating to:
(c) the liberalisation of market access in sectors and modes of supply of export interest to
them.”
2. Also, the Guidelines and Procedures for the Negotiations on Trade in Services (S/L/93) adopted
on 28 March 2001, state, among other elements, that:
− the negotiations “... shall be conducted ... as a means of promoting ... the development
of developing countries” (paragraph 1),
− the negotiations “... shall aim to increase the participation of developing countries in
trade in services” (paragraph 2),
                                                     
1 This proposal is not a legal text. It is submitted solely for the purpose of negotiation and does not
prejudge the position of MERCOSUR or its States parties regarding the issues raised in it.  MERCOSUR and its
States parties reserve their rights to modify the contents of this proposal at a later stage.S/CSS/W/125
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− “... Due consideration should be given to the needs of small and medium-sized
services suppliers, particularly those of developing countries (paragraph 3) and
− “...Special attention shall be given to sectors and modes of supply of export interest to
developing countries” (paragraph 5).
I. INTRODUCTION
3. Tourism, broadly defined, is regarded as the world's largest industry and one of the fastest-
growing, accounting for over one-third of the value of total world-wide services trade. Highly labour-
intensive, it is a major source of employment generation, especially in remote and rural areas.2
4. The supply of tourism services is characterized primarily by the cross-border movement of
consumers -- i.e. the consumer coming to the supplier, rather than the opposite as is the case with
many other services.   The industry is highly infrastructure dependent, and relies upon various
transport services to deliver clients.  Immigration and entry/exit control regulations have a directinfluence on the supply of international tourism services.
II. DESCRIPTION OF THE SECTOR
5. Category 9 “Tourism and Travel Related services” of the Services Sectoral Classification List
(MTN.GNS/W/120) covers the following four sub-sectors (the first three of which have associated
listings under the United Nations' "Provisional Central Product Classification", CPC):
A. Hotels and restaurants (incl. catering) CPC 641-643
B. Travel agencies and tour operators services CPC 7471C. Tourist guides services  CPC 7472D. Other.
6. The World Tourism Organization has expressed that it is not satisfied with the current
classification and would like to have it revised in the current negotiations on trade in services. In thatrespect, the tourism satellite account attempts to measure tourism-related activity by determining what
percentage of each industry is accounted for by tourism. In accordance with the Tourism Satellite
Account (TSA) adopted by the United Nations Sta tistical Commission at its 31st session (New York,
29 February - 1 March 2000) “tourism characteristic products” are defined as those that (in the
majority of countries) would cease to exist in meaningful quantity or those for which the level ofconsumption would be significantly reduced in the absence of tourists, and for which statistical
information seems possible to obtain.
III. ECONOMIC IMPORTANCE OF THE SECTOR
7. International tourism has a very substantial impact on trade levels, as well as on foreign exchange
earnings.
8. Tourism ranks in the top five export categories for 83 per cent of countries, according to the
World Tourism Organization, notably in Europe, the Middle East and the Americas, and is the leadingsource of foreign exchange in many developing countries.
                                                     
2 Background Note by the WTO Secretariat S/C/W/51S/CSS/W/125
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9. According to the World Travel and Tourism Counc il, tourism as a whole employed one in ten
workers world-wide,  making it the world’s largest employer.
10. UNCTAD notes that the tourism trade has traditionally been concentrated in developed countries
but the share of developing countries has been rising gradually, and now accounts for about one-third
of the total.
11. In 2000, world tourism grew by an estimated 7.4 pe r cent, its highest growth rate in nearly a
decade and almost double the increase of 1999. According to preliminary results, the total number of
international arrivals reached a record 698 million, nearly 50 million more arrivals than 1999. Also,
receipts from international tourism climbed to an estimated US$ 476 billion in 2000, an increase of
4.5 per cent over the previous year.3
IV. ANALYSIS OF THE SCHEDULES OF SPECIFIC COMMITMENTS
12. Even though tourism is the sector which has a substantial level of liberalisation in comparison
with any other GATS sector, with around 120 WTO Members (counting the European Communities
as one) having made commitments, the complete liberalization of the sector has still not been
achieved, even at the level of the limited classification W/120.4
13. In principle, it should be taken into account that today the WTO has 142 Members. Also, while
the Members with tourism commitments  have all made commitments under the Hotels andrestaurants sub-category, the number of commitments then begins to fall, with less than 100
commitments under Travel agencies and operators, less than 60 commitments under Tourist guides
services, and less than 20 commitments under the “Other” sub-category.
14. Of the 120 Members making tourism services commitments, only about one-half have made
commitments in three or more sub-sectors.
15. In regard to  the level of market access and national treatment provided within Member schedules,
commitments by the GATS four modes of supply vary widely for the tourism sector as a whole (see
Tables 1 and 2). The percentage of Members placing no restriction on market access is highest for
consumption abroad (mode 2) at 49 per cent, followed by lower levels for cross-border supply
(mode 1) and commercial presence (mode 3) with minimal levels for the movement of natural persons(mode 4) with only 1 per cent. Regarding national treatment, the pattern is similar, with the
percentage of Members having no restrictions on their commitments at 52 per cent for consumption
abroad (mode 2) and 11 percent for the presence of natural persons (mode 4).
                                                     
3 “Tourism Highlights 2001 (Preliminary results), Source: World Tourism Organization.
4“Overview of GATS Disciplines and Commitments”, Symposium on Tourism Services, 22-23
February 2001, WTO, Geneva.S/CSS/W/125
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Table 15:  Number of  WTO Members by Mode of Supply - Tourism and Travel-Related Services
Mode of Supply Market Access
Full Part No
1) Cross-border Supply 33 49 30
29% 44% 27%
2) Consumption Abroad 55 47 10
 49% 42% 9%
3) Commercial Presence 25 86 1
22% 77% 1%
4) Presence of Natural Persons 1 105 6
1% 94% 5%
Mode of Supply National Treatment
Full Part No
1) Cross-border Supply 37 48 27
 33% 43% 24%
2) Consumption Abroad 58 42 12
52% 38% 11%
3) Commercial Presence 49 61 2
44% 54% 2%
4) Presence of Natural Persons 12 90 10
11% 80% 9%
Table 26:  Percentage by Sector and Mode of Supply - Tourism and Travel-Related Services
(Percentages in each Activity)
I. MARKET ACCESS Cross-border  Consumption  abroad
Full Partial No Full Partial No
Hotels and Restaurants 31% 23% 46% 54% 37% 9%
Travel Agencies and Tour Operators Services 49% 19% 31% 65% 20% 15%
Tourist Guides Services 56% 7% 37% 78% 13% 9%
Other 38% 31%  31% 38% 54% 8%
I. MARKET ACCESS Commercial presence Natural Persons
Full Partial No Full Partial No
Hotels and Restaurants 27% 72% 1% 3% 91% 6%
Travel Agencies and Tour Operators Services 27% 67% 6% 1% 88% 11%
 Tourist Guides Services 41% 54% 6% 0% 85% 15%
Other 23% 69% 8% 0% 92% 8%
II. NATIONAL TREATMENT Cross-border Consumption abroad
Full Partial No Full Partial No
Hotels and Restaurants  37% 21% 42% 58% 30% 12%
Travel Agencies and Tour Operators Services 55% 15% 30% 70% 13% 17%
Tourist Guides Services 59% 4% 37% 85% 4% 11%
Other 54% 23% 23% 62% 38% 0%
II. NATIONAL TREATMENT Commercial presence Natural Persons
Full Partial No Full Partial No
Hotels and Restaurants 51% 46% 3% 11% 79% 10%
Travel Agencies and Tour Operators Services 64% 27% 9% 17% 69% 15%
Tourist Guides Services 76% 15% 9% 13% 67% 20%
Other 54% 46% 0% 23% 69% 8%
Note:  Percentages may not add up to 100 due to rounding.  Basis of total is listed sectors.
                                                     
5 S/C/W/51.
6 Idem.S/CSS/W/125
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V. TRADE RESTRICTIONS7
16. Even though the tourism sector –according to the schedules of commitments- is relatively liberal,
various barriers still exist, both in the Members which receive and those which generate tourists.
Some examples which could be mentioned of restrictions included in the current schedules of specific
commitments are those which follow below.
17. In regard to mode 1 , the limitations appearing in the schedules of commitments are  the
requirement of establishment/commercial presence in the country (in particular for tour operators), the
requirement of residency, etc.  Also, it could be me ntioned as a restriction the absence of bindings due
to a perceived lack of feasibility; however, the development of Internet and of e-commerce has
brought this into question, as these tools are increasingly used to make online bookings, enquiries and
marketing.
18. Mode 2  is essential for tourism services. Even though in mode 2 the tourism sector is particularly
liberal, some situations of absence of bindings and some restrictions or limitations still exist in the
schedules.
19. With respect to measures relating to establishment and investment , commercial presence is
required in some schedules for the provision of services. This restriction applies mainly to mode 1,
but is also present for other modes of supply. This condition sometimes applies in addition to therequirement that the service provider must be a company established in his home jurisdiction as well
as incorporating locally under specific types of legal entities (e.g. joint-ventures with national
persons). Also, commercial presence can be subject to foreign capital limitations.
20. Licensing, authorisation or permission can be preliminary requirements for the supply of services.
These requirements can be applied on a discretionary basis (when are based on an economic needstests) and they can also depend on other conditions (residency, citizenship, local incorporation, etc.).
21. Economic needs tests , that appear in a number of schedules of commitments, are required to open
bars or restaurants or for the supply of services related to travel agencies and tour operators.
Economic needs tests apply predominantly in mode 3. This restriction can be applied alone, or it can
be among the criteria for the granting of a licence. The conditions for its application are sometimesspecified, but in most cases the application of economic needs tests lacks transparency.
22. Requirements relating to nationality, citizenship and residency  also exist and these requirements
sometimes apply as a condition for the granting of a licence. They constitute a major limitation for
tourist guides.
23. In relation to barriers to the presence of natural persons , mode 4  is usually unbound except for
some cases.
24. Finally, there are other examples of limitations which appear in the schedules of specific
commitments, particularly with respect to modes 3 and 4.
VI. PROPOSAL
25. Without prejudice to their positive attitude towards the continuing analysis in the WTO of tourism
characteristic products, and without prejudging the position they will adopt on this during the current
negotiations, the States parties to MERCOSUR (Arg entina, Brazil, Paraguay and Uruguay) propose,
                                                     
7 TD/TC/WP(2000)10/REV1, OECDS/CSS/W/125
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as a first step towards the full liberalization of tourism sector in the four categories identified in the
Sectoral Classification W/120, the following:
(i) that WTO Members make specific commitments without limitations in the tourism services
sector in the subsectors included in the Sectoral Classification W/120:
W/120 Description CPC
A. Hotels and restaurants (incl.
Catering)641-643
B. Travel agencies and tour
operators services7471
C. Tourist guides services 7472
D. Other
and
(ii) that WTO Members eliminate the restrictions to market access and national treatment in
tourism services, making commitments “without limitations” (by entering “none” in themarket access and national treatment column s) in the above-mentioned subsectors.
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