RESTRICTEDWORLD TRADE
ORGANIZATIONS/C/W/149
23 May 2000
(00-2126)
Council for Trade in Services Original:  English
COMMUNICATION FROM THE DOMINICAN REPUBLIC
Conclusions and Recommendations of the Expert Meeting on Tourism
organized by UNCTAD
The attached communication has been received from the delegation of the Dominican
Republic on behalf of its delegation and the delegations of El Salvador, Guatemala, Honduras,
Nicaragua and Panama with the request that it be circulated to the Members of the Council for Tradein Services.
______________
As a follow-up action to the proposal for a Draft Annex on Tourism (S/C/W/127 and Corr.1),
I have been authorized by the Member Countries of the Paradisus Group (Dominican Republic, El
Salvador, Guatemala, Honduras, Nicaragua and Panama) to present to you the attached report, so that
it is circulated formally for the next meeting of the Special Session of the Council on Trade in
Services.
It presents the agreed conclusions and recommendations, as well as the Chairman’s Summary
of the Expert Meeting on Tourism organized by UNCTAD in June 1998.
Our delegations hope that its discussion may be of interest for the Special Session, since it
may serve the purpose of providing for some of the background to the elements we are proposing in
the Draft Annex.S/C/W/149
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ANNEX
UNITED
NATIONS  TD
    United Nations                                                 Distr.
Conference                                            GENERAL
on Trade and
Development                                                       TD/ B/ COM.1/17
                                                   TD/ B/ COM.1/EM.6/3
                                                                           7 July 1998
                                                                           Original: ENGLISH
TRADE AND DEVELOPMENT BOARD
Commission on Trade in Goods and Services, and Commodities
Expert Meeting on Strengthening the Capacity for Expanding
the Tourism Sector in Developing Countries, with Particular
Focus on Tour Operators, Travel Agencies and Other Suppliers
Geneva, 8-10 June 1998Item 4 of the provisional agenda
REPORT OF THE EXPERT MEETING ON STRENGTHENING THE CAPACITY FOR
EXPANDING THE TOURISM SECTOR IN DEVELOPING COUNTRIES, WITH
PARTICULAR FOCUS ON TOUR OPERATORS, TRAVEL AGENCIES AND OTHER
SUPPLIERS
Held at the Palais des Nations, Geneva,
from 8 to 10 June 1998
CONTENTS
Page
I.  Agreed conclusions ...................................…………………    2
II.  Chairperson's summary ................................……………….    5
III.  Organizational matters ..............................…………………   15
Annex
 Attendance ...........................................…………………….   17
GE. 98-51045S/C/W/149
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I. AGREED CONCLUSIONS1
The Expert Meeting examined ways and means of strengthening the capacity for expanding
the tourism sector in developing countries, with particular focus on tour operators, travel agencies and
other suppliers; it also considered the relation of air transport and global distribution systems to the
tourism sector.  The experts reached the following agreed conclusions and recommendations.
A. Addressed to the international community
1. An internationally agreed definition of the tourism sector should be universally applied; this
would facilitate the acceptance and implementation of a uniform system of tourism accounting
measures (" satellite accounts") which would provide a clear measurement of the role of the tourism
sector in economic development and trade. Such a system could then be used in international
negotiations on services, for which adequate statistics and policy analysis are a necessary prerequisite.
2. (a) Further liberalization commitments on trade in tourism should be negotiated under
the General Agreement on Trade and Services (GATS). An annex on tourism services may be
required, comprising, inter alia, regulatory issues such as definitions, competitive safeguards, access
to information, fair and transparent use of global distribution systems, linkages between tourism and
air transport, and security conditions for service contracts.
(b) The relevant provisions of GATS should be fully implemented, or, if necessary, new
provisions should be developed, to prevent unfair competition arising from discriminatory practices in
the issuance of visas to tourists which favour certain tour operators and travel agents.
(c) Articles IV and XIX of GATS should be effectively applied to the tourism sector, by
adopting measures which effectively foster greater participation by developing countries in
international trade in tourism services.
3. Effective mechanisms, including mechanisms fo r joint implementation, to deal with anti-
competitive practices in the tourism sector and related sectors should be identified, in order to deal
with the effects on trade of contractual practices relating to exclusive dealing, vertical integration and
the abuse of dominance, particularly as regards new entrants to the industry.
4. Multilateral and regional financing institutions should give priority to appropriate strategies
for the environmentally and financially sustainabl e development of tourism and related sectors, in
particular for financing infrastructure projects, the provision of modern telecommunications services
under pro-competitive regulatory regimes, and human resource development activities.
5. International organizations and donor countries should also increase their efforts in training
and capacity-building in the field of tourism in developing countries, including the effective use ofcomputer reservation systems, global distribution systems and the Internet to maximize their earnings
from tourism and to meet international standards.
                                                     
1As adopted by the Expert Meeting at its closing plenary meeting on 10 June 1998.S/C/W/149
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6. The problems of air access of developing countries, particularly the least developed countries,
should be addressed with a view to preventing the marginalization of those countries.
B. Addressed to national Governments
7. Developing-country Governments are invited to foster cooperation and collaboration efforts
with the private sector and local communities in the development and management of the tourism
sector in order to study, identify and, where necessary, remove obstacles to its development, and inorder to better take advantage of the opportunities ar ising from the high level of growth foreseen for
the sector globally.
8. Governments are invited to adopt comprehensive policies to ensure environmental and
economic sustainability and to increase the attractiveness and quality of tourism services, including
such elements as exchange rates, improved image, human resource development, investment ininfrastructure and so on.
9. Developing countries are invited to consider the various options available for financing
tourism infrastructure projects, such as government outlays, financing by multilateral and regional
financial institutions, concession of services to the private sector through build-operate-transfer
schemes, and foreign direct investment. Investment  policies should encourage interlinkages between
small and medium-sized enterprises.
10. National Governments are invited to review the fiscal treatment of the tourism sector and take
the necessary fiscal measures to foster its growth and development, and avoid taxing exports.
11. Governments are invited to ensure that immigration regulations facilitate the movement of
tourists and natural persons involved in the supply of tourism services.
12. Governments are invited to develop and, wher e available, effectively apply competition
policy in the tourism and related sectors, by, inter alia, prohibiting anti-competitive clauses such as
exclusive dealing, import requirements in franchising contracts and the abuse of dominance in air
travel.
13. Developing-country Governments are invited to foster the development of regional tourism
within the context of regional and subregional agreements, including common tourism and air
transport policies.
14. Developed countries are invited to consider the adoption of mechanisms to encourage the
export of tourism services by developing countries, including by facilitating the establishment of
developing-country tourist offices, fiscal measures and so on.
15. Developing countries are invited to seek the collaboration of tourism authorities and of
private-sector experts in formulating their negotiat ing objectives in the tourism sector and following
through the complete process of negotiations, through their respective consultative procedures.S/C/W/149
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16. Tourism and transport policies should be consistent and mutually supportive. Developing
countries are invited to prepare themselves for effective participation in the future multilateral
negotiations under GATS and the possible revision of the GATS Annex on Air Transport Services.
17. Special attention should be paid to strengthening the bargaining positions of tourism-service
suppliers in developing countries; in particular, Governments are invited to lead efforts to develop
new model contracts to use in negotiations with tour operators and other suppliers, which may
include, inter alia, insurance against non-payment by intermediaries.
C. Addressed to UNCTAD
18. UNCTAD and the World Tourism Organization should continue their collaboration on all
aspects of tourism trade and development.
19. UNCTAD should cooperate with the World T ourism Organization and the Government of
Tunisia in the organization of an international conference which this country has offered to host, in
order to discuss concrete ways and measures to  improve the relationship between developing-country
tourism-service suppliers and agents operating in the main tourist originating markets, so as to achieve
better and more sustainable business operat ions in the international tourism industry.
20. UNCTAD, in collaboration with the World Tourism Organization and other relevant
organizations, should provide technical assistance to developing countries, particularly least
developed countries, both at the governmental and business levels, in preparing for negotiations in
several forums relating to trade and development in tourism and related services.
21. UNCTAD, in collaboration with the World Tourism Organization and other relevant
organizations, should conduct studies on specific issues of interest to developing countries, including:the issue of leakages from the sector; the impact of all-inclusive tours on the financial sustainability of
the tourism sector in developing countries; and the development of a model for integrating local
communities in the formulation, implementation and management of tourism projects.
22. UNCTAD, with the assistance of the appropriate international organizations, should conduct a
study on the feasibility of alternative modalities for including air transport services in plurilateral or
multilateral negotiations on services (including a possible revision of the GATS Annex on Air
Transport Services), considering, inter alia: the im plications of adopting trade disciplines partially or
completely; the incorporation of a sectoral protocol  with trade disciplines; regulatory commitments;
and other mechanisms of collective decision-making.
23. Given the importance of air transport services for tourism, and taking into account the
provisions of Article V of the GATS Annex on Air Transport Services, the Commission should
consider convening an expert meeting on air transport services.S/C/W/149
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II. CHAIRPERSON'S SUMMARY
A.  Formulation of tourism development policies and strategies
1. The importance of tourism can be measured by its share in employment, foreign exchange
earnings, investment and fiscal revenues, and by its overall contribution to development. Tourismcontributes to development through its spill-over effects on other areas of economic activity, whereby
it creates additional social and economic benefits for the tourist-receiving country.
2. Nevertheless, in many countries the tourism sector has not received the attention it deserves in
national development policies. The main reasons for tourism not receiving attention commensurate
with its economic importance, including in some international organizations, are:
(a) It is a relatively recent industry, as compared to manufacturing and more traditional
services;
(b) A common international definition of what constitutes the tourism industry has only
recently been adopted. However, there are as yet no internationally accepted
standards for measuring the economic impact of the sector. To rectify this, work hasbeen undertaken on the treatment of the tourism sectors in the system of national
accounts (through so-called "satellite accounts"). Once this common standard is not
only internationally agreed but also universally applied, it will be possible to assess
the overall economic importance of the tourism industry in different countries and to
draw international comparisons.
3. The formulation and implementation of national tourism development plans and programmes
should be undertaken by national Governments in close collaboration - at all stages of the process -
with private-sector representatives, as well as local communities and local authorities. Only in this
way can the views and priorities of all stakeholders be duly taken into account and the sustainability
of projects ensured. This approach also allows  for consideration of the interdependency between
tourism and the ecological, cultural and social dime nsions of countries. Moreover, such collaboration
should ensure that large companies support and cooperate with small and local businesses and act in atransparent way.
4. There are important differences in the nature of international tourism demand and tourism
flows between different destinations (e.g. business,  leisure, transboundary, expatriates, visits to
friends and family, religious, cultural, ecological). These differences have to be carefully analysed and
duly taken into account when formulating national tourism development strategies. Another factorthat has to be incorporated in these strategies is the concept of sustainability in two different
dimensions: the economic and the environmental.
5. If adequate tourism development policies and strategies are to be designed and implemented,
access to information on the international tourism market  and developments in it is essential. This also
includes access to information technology.S/C/W/149
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6. When designing tourism development policies, developing countries should identify and take
into account all the barriers which can potentially limit the expansion of their tourism sector. The
most important ones are: (i) restrictions on the movement of tourists; (ii) restrictions on the work of
professionals in the tourism sector; (iii) limitations to real-estate property rights; (iv) restrictions on
the right to manage tourism companies; (v) sector al regulatory restrictions; (vi) anti-competitive
practices stemming from the abuse of dominance by tour operators (including vertical integration,
exclusive dealing and refusal to deal); (vii) difficul ties associated with the delivery of visas; (viii)
limitations in access to and the use of global distribution systems; and (ix) insufficient availability or
inadequacy of air transport services to and from tourist-receiving countries.
7. Leakages of foreign exchange earnings are a major obstacle to the positive contribution of
tourism to development. Leakage is the process whereby part of the foreign exchange earnings
generated by tourism, rather than being retained by  tourist-receiving countries, is either retained by
tourist-generating countries or remitted back to them. It takes the form of profit, income and royalty
remittances; payments for the import of equipment, materials, and capital and consumer goods to
cater for the needs of international tourists; the payment of foreign loans; various mechanisms for tax
evasion; and overseas promotional expenditures. However, this phenomenon has not yet been
adequately studied, and further work needs to be done in order to assess its extent and to identify themechanisms through which it takes place, as well as to devise strategies to minimize its occurrence.
8. Countries must design policy packages to make themselves more attractive to tourists and to
improve the bargaining position of their tourism service suppliers. Tourism service suppliers should
adopt marketing strategies which we aimed at:
(a) Being pro-active , by identifying target markets and actions to capture them;
(b) Improving the marketing mix and diversifying the tourism product supply  -as the total
free time increases in developed countries (as a result of demographic and legislative
changes) and as developing countries and countries in transition become larger
tourist-generators, the demand for differentiated tourism products increases;
(c) Increasing the attractiveness of the product ;
(d) Capturing niche markets  -in order to do so, a careful analysis of specific customer
groups (e.g. by age or ethnic origin) in tourism-generating countries needs to be done.
The latter can then develop products which cater for the specific needs, demands and
lifestyles of these niche customers.
9. In order to increase average expenditure by tourists, countries, while taking into account their
religious and cultural traditions, may consider changing the opening times of shops, so as to facilitatethe access of tourists.S/C/W/149
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Moreover, they may considering developing the production of typical and differentiated products,
such as handicrafts.
10. One of the main ways to expand tourism in developing countries is through regional
cooperation mechanisms. Collaboration between neighbouring countries and regional partners in the
field of tourism has been undertaken in recent years, particularly in the context of regional trade
agreements. These initiatives enhance two types of tourism:
(a) Intra-regional tourism . Worldwide, the bulk of international tourism flows take place
within the same region. However, developing countries have traditionally
concentrated most of their efforts on the larger generating markets of developed
countries. Only recently have they realized the potential of developing regional
tourism and seriously targeted this market, with very positive results.
(b) Extra-regional tourism . This type of tourist flow is enhanced by mechanisms adopted
jointly by regional partner countries, such as the development of joint regional
circuits, regional air passes and joint promotional activities.
11. The experience of Spain -one of the most su ccessful countries in international tourism
development -may provide guidance to developing countries, many of which are in a similar situation
to that of Spain 30 years ago. Spain's tourism de velopment basically underwent two phases. The first
phase relied on strong backing of the State, including through the creation of hotel and tourism
schools, investment in infrastructure, promotion of the destination abroad, the provision of credits for
tourism development projects and the establishment of the paradores network, which set an important
benchmark for quality standards in the hospitality sector. During this initial phase, Spain had to deal
with several of the problems which plague tourism suppliers from developing countries, such as the
bankruptcy of tour operators; in order to tackle this problem, the country set up a guaranty fund. The
second, and current, phase is characterized by a more focused role for the Government, the
deregulation of transport (including air transport) and of tour operators, and the rise of domestic
tourism, which has strengthened national tourism service suppliers and provided a counterweight to
the power of tour operators.
B. Ways to increase the bargaining power of developing-country
tourism service suppliers
12. The negotiating capacity of tourism service suppliers from developing countries is largely
determined by the following factors:
(a) Attractiveness of the country . The more attractive the country, the stronger its
negotiating capacity. The attractiveness of the country depends on the followingfactors:
(i) Relative prices :  these, in turn, are strongly influenced by macroeconomic
policy and fiscal policy. Macroeconomic policy (exchange rates and fiscal
policies) can have a very strong impact on tourist flows. Overvalued
exchange rates impair countries' competitiveness and reduce internationaltourist flows. This has been a particularly acute problem for many Latin
American countries recently. Fiscal policy in many developing countriesS/C/W/149
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places a heavy tax burden on tourism service suppliers (particularly small and
medium-sized enterprises). While most Governments provide for tax and duty
drawback paid by exporters of goods, this is usually not applied to exports of tourism
services.
(ii) Quality of tourism services : this is increasingly demanded by international
customers, so service suppliers in developing countries should pay attention
to this factor. Enhancing the quality of the tourism product is also a way to
improve its quality/ price ratio. Suppliers of tourism services have to ensurethe quality of all elements of the tourism product (including transportation,
accommodation, personal services, etc.). Ideally, policies to enhance the
quality of tourism services should be undertaken through cooperation between
the public and private sectors. Improving the quality of tourism services was
identified as a source of further growth  in the sector in developing countries,
enhancing their chances of achieving economic and environmental
sustainability.
(iii) Economic proximity vis-à-vis the main generating markets : this factor
includes the availability of transport (particularly air transport) to and from
the country and the conditions attached to the supply of such services. In thisrespect, developing-country Governments should carefully analyse the
relationship between tourism policies and transport policies, so as to ensure
that they are complementary and mutually supportive.
(iv) Image of the country : a country's image is negatively affected by natural and
man-made disasters. Travel warnings issued unilaterally by the Governmentsof the main generating markets, while aiming at the security of their nationals,
tend to overemphasize the risks of destination countries and often remain in
place after the causes that justified the warnings have been removed. Another
related problem for some developing countries is the unilateral certification of
airports in tourist-receiving countries, which may jeopardize air traffic to
these countries (and, consequently, its tourist flows) and eventually affect the
viability of these countries' airlines.
(v) Resources and infrastructure : these define the capacity of countries to absorb
increasing flows of visitors using various means of transportation. Inadequate
provision of these resources generates a poor first impression of tourist-
receiving countries and often leads to the emergence of a few transport
carriers in dominant positions in air and maritime services.S/C/W/149
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(b) Degree of dependence on the main tourist-generating markets . The promotion of both
domestic and regional tourism can result in a strengthened bargaining position for
tourism services suppliers from developing countries. Regional economic and trade
integration schemes provide the framewor k for enhancing regional tourist flows.
Experience has shown that international tourism development only becomes
sustainable when domestic tourism accompanies international tourist flows.
(c) Availability of information . The position of suppliers would be greatly strengthened if
they shared information on contractual conditions, given that there is often a situationin which a few organized buyers confront a large number of uncoordinated suppliers.
Suppliers' associations could play a useful role in spreading this type of information.
In other words, tourism service suppliers in developing countries should cooperate in
order to compete. Moreover, tourism service suppliers also need access to
information on the international market and the latest developments in it.
(d) Domestic regulation . This is necessary to prevent unfavourable clauses from being
included in contracts (franchising contracts with import requirements, exclusive
dealing, reservations without deposit, inadequate repayment periods and other
examples were cited by various speakers).
(e) Operating and negotiating capacity of local suppliers . The negotiating power of local
suppliers can be enhanced by policies to develop human resources, including those
aimed at training in the use of new technologies.
C. Infrastructure
13. The availability of an infrastructure for tourism is an essential element of successful tourism
development strategies. However, it is frequently an impediment to tourism expansion in countries
where that infrastructure is deficient. This is part icularly true in the case of the transport, hotel and
telecommunications infrastructure. The main reason for deficiencies in infrastructure is the scarcity of
public funds to finance projects, given that infrastructure projects have traditionally been the
responsibility of the State. However, there are a number of ways to overcome the financing
constraints facing States:
(a) Financing by regional banks and by mu ltilateral financial institutions . Such financing
can be used in a number of ways, including: (i) financing of public-sector projects, as
has traditionally been the practice; (ii) provision of funds for private companies
which operate public concessions; (iii) direct financing of projects developed by the
private sector (though usually Governments are still required to provide guaranties).
(b) Concession of services to private-sector  operators, both domestic and international .
This option mobilizes private capital and therefore bypasses the issue of mobilization
of public funds;S/C/W/149
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however, the assistance of the international community may be required in
establishing the appropriate legal framework.
(c) Build-operate-transfer policies . Not only do these operations place no burden on
public budgets, but they may also foster the participation of local communities in
tourism flows and their benefits.
(d) Foreign direct investment . This can also be combined with some of the options
mentioned above (e. g. concessions, build-operate-transfer operations).
D. Human resource development
14. Given the importance of the quality aspect of the tourism product and its labour intensity, the
pool of human resources available for tourism in a given country is a fundamental factor in thesuccessful development of this industry. It requires, inter alia, managerial, technical and language
skills. Therefore, developing countries must mobilize and strongly develop their human resources in
order to expand their exports of tourism services. This includes the establishment of technical, middle
and higher-level schools of hotels, tourism operations and tourism management.
15. In order to develop their human resources for the tourism sectors, developing countries should
receive technical assistance from the relevant international organizations. Moreover, international
financial institutions should provide financing for human resource development and capacity-building
programmes.
E. International standards in the tourism sector
16. Standards, which have traditionally been applied to industrial goods, may also cover services
in general and tourism in particular. Consultations with the major stakeholders in the tourism sector
and with consumer associations have revealed strong support for the development of international
standards in this sector. They would offer a means of ensuring and assessing the quality of tourism
services. Given the growing importance of the quality aspect of tourism, standards will be
increasingly needed and applied by the industry.
17. The International Organization for Standardization (ISO) is in the process of developing
international standards for tourism for their volu ntary adoption by the international community. This
process needs to be approached with caution, so as to avoid setting standards which could become
barriers to trade in the tourism sector and impair the position of developing-country suppliers. To this
end, Article VI of the General Agreement on Trade in Services (GATS) on domestic regulation is
being fully taken into account.
F. Competition issues
18. Anti-competitive practices appear to have a major impact on trade in tourism services and on
the ability of developing countries to benefit from this trade. Therefore, they should be addressed by
the international community and by national Governments, which should cooperate to this end.S/C/W/149
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19. Privatization policies should give attention to competition aspects, so that privatization does
not result in the replacement of public monopolies by private ones engaging in anti-competitive
practices.
20. As well as drawing attention to potential anti-competitive practices in the operation of public
services, the experts repeatedly drew attention to several examples of private anti-competitive
conduct, such as: (i) exclusive dealing clauses inco rporated in contracts between tour operators and
hotels in developing countries; (ii) clauses on import and supply requirements in franchising
contracts; (iii) abuse of dominance resulting in significant entry barriers, such as the allocation ofairport slots.
21. Competition issues have to be looked into when analysing access to global distribution
systems and to air transport (e. g. the potential anti-competitive effects of the reduction in the number
of airlines as a result of the consolidation, concentration and privatization of the air transport
industry). National competition policies are needed and some multilateral mechanism is necessary tocounter the effects on trade of mergers, cartels and abuse of dominance. Several experts saw this as a
prerequisite for the further liberalization of air transport at the multilateral level.
G. The tourism sector in GATS
22. The tourism sector, as defined in the schedules of concessions incorporated into GATS, is
subject to a high degree of liberalization, particularly under the commercial-presence and
consumption-abroad modes of supply. Still, the coming round of multilateral negotiations will provide
an opportunity for the refinement of the offers, the expansion of market access under other modes of
supply and the incorporation of the necessary regulatory commitments.
23. The trend towards overall trade liberalization, including the liberalization of investment
regimes, has been followed by increasing restrictions on the movement of people. The GATS
schedules on tourism services contain many commitments on commercial presence, but less on the
other modes of supply. The next round of multilateral negotiations on trade in services under GATS
should aim at a comprehensive liberalization of all aspects of tourism services. This could be
incorporated into a sectoral annex which would also provide disciplines on anti-competitive practices
(access to information, fair and transparent use of global distribution systems, linkages between
tourism and air transport, and security conditions for service contracts).
24. It is essential that international trade negotiators from developing countries, in formulating
their negotiating positions, should collaborate closel y with officials from national tourist authorities
and experts from the private sector, so that the latter can provide them with a clear vision of tourism
priorities and ensure the follow-up to the negotiating process.
25. At the international level, UNCTAD, the World Tourism Organization, the International Civil
Aviation Organization and other relevant organizations have a crucial role to play in carrying out
studies on the above-mentioned issues and in helping developing countries to prepare their negotiating
position and participate effectively in the international negotiations on trade in tourism services. They
should work in close collaboration, so as to ensure complementarity and avoid overlap.S/C/W/149
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H. Air transport
26. Air transport plays a crucial role in the development of tourism in developing countries, since
it accounts for approximately 80 per cent of their tourist arrivals. In most cases there is no alternative
to air transport to reach tourist destinations in de veloping countries. However, the lack of coherence
between air transport and tourism policies can seriously erode the potential of those countries' tourism
sectors.
27. The air transport industry is undergoing structural changes due to the processes of
liberalization, privatization, internationalization, consolidation and concentration of air carriers. Many
developing-country airlines are striving to adapt to this trend.
28. Liberalization is taking place at the bilateral and regional levels (including through "open
skies" agreements). The fact that liberalization initiatives have taken place in the context of
multilateral and regional agreements implies that it is restricted to certain areas and that a country mayoffer completely different conditions to other countries depending on the kind of agreement it has
with each of them. The possibility of a multilateral liberalization of air transport has been studied, but
no initiative has been taken to carry it through. Moreover, there appears to be little chance of progress
in this direction in the near future.
29. With regard to the eventual liberalization of international air traffic, there is a divergent trend
to restrict market access in domestic services (including cabotage), which creates an unfair
competitive advantage for carriers from countries with large domestic markets. These carriers have
often pursued international liberalization through the bilateral or regional route. Having increased
their market access to international routes, while benefiting from protection in the domestic market,
these countries' large carriers cross-subsidize their international operations through high air-fares inthe domestic market. Such practices further increase their monopoly power, to the detriment of other
competitors, and reduce the chances for the competitive development of internal tourism.
30. For developing countries facing the structural changes in the international air transport
industry, the issue at stake is not whether they should or should not have national carriers, but rather
whether it is in the interest of developing countries' Governments to keep subsidizing national carriers
and be involved in their management. Developing countries could choose policy options to ensure an
adequate density of air traffic as an alternative to protecting national carriers. These options includeregional alliances, associations with major airline alliances, code-sharing, leasing, franchising, and
contractual arrangements with other airlines.
31. There is a risk that air carriers which have acquired a dominant position in the market as a
result of ongoing structural change will abuse their position. This may happen, for instance, when an
airline or an alliance of carriers achieves a monopoly situation on given routes. To limit this risk, thedevelopment and enforcement of competition rules must accompany liberalization. The relationship
between air transport and competition policy requires that developed countries should eliminateS/C/W/149
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sectoral exemptions to air transport and that adequate multilateral mechanisms should be in place to
deal with the effects of abuse of dominance beyond the borders of the country in which airlines have
their major place of business. Countries have to be vigilant in this respect.
32. The GATS Annex on Air Transport Services is due to be examined and possibly revised in
the year 2000. Developing countries have to consider carefully all possible options, which may not all
involve the full incorporation of the air transport sector into GATS, bearing in mind that the revision
may deal with issues such as subsidies and anti-competitive practices. To develop a sound position, all
domestic authorities with an interest in the issue (e. g. ministries of tourism, trade and finance, as wellas air transport regulators) should be consulted, as well as the private sector, which is playing an
increasingly crucial role in air transport. UNCTAD and the World Tourism Organization should assist
developing countries in analysing the prevailing market and regulatory situation and in devising a
range of options to be considered when formulatin g negotiating positions. This applies both to the
forthcoming revision of the GATS Annex on Air Transport Services and to negotiations in otherinternational forums.
33. Safety and security are a key issue. All efforts should be made to ensure that the new trends
towards privatization and liberalization do not compromise safety and security.
34. In order to harness the forces driving the growth of tourism in developing countries, these
countries should address the need to upgrade their infrastructure; develop their human resources in thefield of air transport; initiate the deregulation and pro-competitive re-regulation of air transport, with
the emphasis on the participation of the private sector and competition; and achieve economic and
environmental sustainability by minimizing leakages and implementing quality standards at all levels
of the supply chain.
I. Global distribution systems / Computer
reservation systems (CRS)
35. Global distribution systems/ computer reservat ion systems (GDS/ CRS) have become crucial
in international tourism because of their increasing use as a distribution channel and marketing tool
for tourism products. They cater for the needs of different segments of the market, including the
management of air and land transport services, the hospitality sector and entertainment services, as
well as other ancillary services which make the commercial transactions and risk coverage feasible.As a result, they have become increasingly important and are extensively used by all suppliers of
tourism services, such as tour operators, travel agencies, restaurants, hotel chains and car rentals,
small and medium-sized enterprises, and independent consumers of tourism products. GDS, however,
are not the only way to enhance tourism promotion through electronic means. At the level of product
and market analysis, for instance, local suppliers may find that marketing through the Internet mayprove to be more effective in reaching their own markets than connecting to GDS.
36. Access to GDS is a critical variable in the business operations of developing-country tourism
service suppliers. A study should be prepared on how to promote access to these systems and on the
competition issues raised by access to them. Multilateral regulation of these matters should be
considered, maybe as part of the sectoral annex on tourism.S/C/W/149
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37. There has been an enormous and increasing mass of electronic economic transactions as a
result of the interface between GDS/ CRS and other suppliers of tourism services and the Internet.
Web sites are increasingly used to provide a virtual market place allowing independent travellers and
suppliers to interact on-line to complete their tran sactions and payments for services, in many cases
without intermediaries. The share of on-line income generated by electronic transactions will increase
dramatically in the major originating countries. Fore casts point to a growth in the number of potential
buyers from 25.3 million in 1996 to 71.9 million in 2002. As a result, it is expected that on-line
income will increase from US$ 276 million to US$ 8.9 billion over the same period. It is predictedthat 8.8 per cent of buyers of tourism will make their purchases on-line by 2002.
38. In the light of the increasing importance of GDS/CRS as a tool for marketing and trade
efficiency, its development is a crucial element in the implementation of policies and strategies for
tourism development. Efforts should be made to provide developing countries with effective and
lower-cost access to them and to infrastructure, equipment and on-line services. Developing countriesrely on the support of the international community for such access.
39. As has been said of the tourism sector in general and air transport in particular, human
resources are extremely important in the operation of GDS and other electronic media. If full use is to
be made of modern technology, people must be trained to master them and their application to
marketing. Specific training programmes need to be provided by the public and private sectors, withthe backing of the international community.
40. Some GDS owners and integrated suppliers still pursue some unfair practices, particularly
with regard to the following: the neutrality of screen displays, which are sometimes biased in favour
of integrated suppliers; restrictions in access to encryption algorithms for reasons of national security;
and network facilities and the incompatibility of systems and technologies. Submitting GDSoperations to effective multilateral disciplines and dispute-settlement mechanisms (e. g. during the
next round of GATS negotiations) would have a substantial effect on trade and anti-competitive
practices.
41. There have been examples of GDS/CRS being used to improve efficiency in the
administrative procedures of immigration authorities. In Australia, for instance, an electronic travel
authority system (allowing entry visas to be issued electronically by travel agents or airlines) and an
advanced passenger processing system (to allow pre-clearance of passengers) have been developed.
These systems are based upon an existing CRS and airline system interface, and when connected to a
national immigration system they enable the immigration authority to speed up immigration-
processing and reduce the cost of processing visas, while still maintaining border security.S/C/W/149
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III. ORGANIZATIONAL MATTERS
A. Convening of the Expert Meeting
1. In accordance with the recommendation made by the Commission on Trade in Goods and
Services, and Commodities at the closing meeting of its second session on 21 November 1997,2 the
Expert Meeting on Strengthening the Capacity for Expanding the Tourism Sector in Developing
Countries, with Particular Focus on Tour Operators, Travel Agencies and Other Suppliers was held at
the Palais des Nations, Geneva, from 8 to 10 June 1998. The meeting was opened on 8 June 1998 by
Mr. Rubens Ricupero, Secr etary-General of UNCTAD.
B. Election of officers
(Agenda item 1)
2. At its opening meeting, the Expert Meeting elected the following officers to serve on its
Bureau:
Chairperson: Mr. Federico Cuello (Dominican Republic)
Vice-Chairperson-
cum-Rapporteur: Mr. Joaquín de Arcenegui (Spain)
C. Adoption of the agenda
(Agenda item 2)
3. At the same meeting, the Expert Meeting adopted the provisional agenda circulated in
TD/ B/ COM. 1/ EM. 6/ 1. Accordingly, the agenda for the Meeting was as follows:
1.  Election of officers
2.  Adoption of the agenda
3. Strengthening the capacity for expanding the tourism sector in
developing countries
4. Adoption of the outcome of the Meeting
                                                     
2 See Report of the Commission on Trade in Goods and Services, and 2/ Commodities on its second
session (TD/ B/ 45/ 2-TD/ B/ COM. 1/ 15), paragraph 33.S/C/W/149
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D. Documentation
4. For its consideration of the substantive agenda item (item 3), the Expert Meeting had before it
a report by the UNCTAD secretariat entitled "International trade in tourism-related services: issues
and options for developing countries" (TD/ B/ COM. 1/ EM. 6/ 2).
E. Adoption of the outcome of the Meeting
(Agenda item 4)
5. At its closing meeting, on 8 June 1998, the Expert Meeting adopted the agreed conclusions
reproduced in section I above, and authorized the Chairperson to prepare a summary of the Meeting
(see section II above).S/C/W/149
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Annex
ATTENDANCE1
1. Experts from the following States members of UNCTAD attended the meeting:
Algeria Madagascar
Argentina Malaysia
Austria Mexico
Bangladesh Mongolia
Botswana MoroccoBrazil Nepal
Burkina Faso Nigeria
Burundi Peru
Cambodia Philippines
China PolandCosta Rica Romania
Côte d'Ivoire Russian Federation
Cuba Saudi Arabia
Cyprus Slovakia
Czech Republic South AfricaDemocratic Republic Spain
 of the Congo Sudan
Dominican Republic Switzerland
Egypt Syrian Arab Republic
Ethiopia ThailandFrance The Former Yugoslav
Germany  Republic of Macedonia
Ghana Trinidad and Tobago
Guatemala Tunisia
Guinea Turkey
Guinea-Bissau Uganda
Honduras United Kingdom of Great BritainIndia  and Northern Ireland
Indonesia United States of America
Iran (Islamic Republic of) Uruguay
Italy Venezuela
Japan YemenKenya Zambia
Lao People's Zimbabwe
 Democratic Republic
2. The following intergovernmental organizations were represented at the meeting:
European Community
Latin American Economic System
Organization of African Unity
Permanent Secretariat of the General Treaty on Central American Economic Integration
World Tourism Organization
                                                     
1 For the list of participants, see TD/B/COM.1/EM.6/INF.1.S/C/W/149
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3. The following specialized agencies and related organizations were represented at the meeting:
International Labour Organisation
International Civil Aviation Organization
World Trade Organization
4. The International Trade Centre UNCTAD/ WTO was represented at the meeting.
5. The following non-governmental organizations were represented at the meeting:
General Category
World Confederation of Labour
World Federation of United Nations Associations
Panellists, resource persons and specially invited participants
Panellists
Mr. Luis Abugattás, Advisor, Chambe r of Commerce and Industry, Lima, Peru
Mr. Charles Dudley, Economist, Economic Policy Section, Air Transport Bureau,
International Civil Aviation Organization, Montreal, Canada
Mr. Francesco Frangialli, Secretary General, World Tourism Organization
Mr. Filipe Gonzales Abad, Director Ge neral, Savia Amadeus, Madrid, Spain
Mr. Geoffrey Lipman, President, World Trav el and Tourism Council, London, United Kingdom
H. E. Mr. Slaheddine Mâaoui, Minister of Tourism of TunisiaMr. Roger J. Payne, Market Sector Manager,  Travel Distribution and Government, Airlines
Worldwide Telecommunications and Information Services, London, United Kingdom
M. François Vellas, Professor, University of Toulouse, France
Mr. Dawid de Villiers, Deputy Secretary General,  World Tourism Organization and former Minister
of Tourism of South Africa
Mr. Stephen Wheatcroft, Director, Aviation and Tourism International, London, United Kingdom
Resource persons
Mr. Henryk Handszuh, Chief, Quality of Touris m Development, World Tourism Organization
Mr. Roger Withers, Director, Tourism Partnership, United Kingdom
Mrs. Sophie Clivio, International Organization for Standardization, Geneva, Switzerland
Specially invited participants
Mr. Erye Edinval, Université Antilles Guyane, France
Mr. Alain Maurin, Université Antilles Guyane, FranceMr. Bernard Poirine, Professeur, Université Française du Pacifique, Tahiti
Mr. Carlos Santos, Professeur, Universidade dos Açores, Portugal
Mrs. Lucky Rochoux, Assistante, Université de la Réunion-France, St. Denis, Réunion
Mr. Jean-Yves Rochoux, Université de la  Réunion-France, St. Denis, Réunion
Mr. François Ullmann, Consultant, HEXA, Geneva, Switzerland
__________