The impact of Gats: a case study of tourism development in Egypt.

Abstract

Economic activity is becoming not only more internationalised, but, more significantly, it is becoming increasingly globalised. Globalisation is always regarded as a product of the liberalisation that has been the hallmark of economic policy throughout the world during the past two decades. Globalisation and liberalisation feed off each other and the former has certainly set in motion forces working to accelerate liberalisation. Both globalisation and liberalisation have increased the potential for international trade to further establish itself as an engine of growth and an important mechanism for integrating countries into the global economy. Tourism is not only the dominant service in world trade, it has also become one of the most important industries in the world and its economic impacts are vital for many countries. The tourism industry has long supported the idea of services agreements and has become a major force of the globalisation of international trade, particularly in services. The significance of tourism as a source of income and employment and as a major factor in the balance of payments for many countries has been attracting increasing attention. Governments, private sector entities, regional and local authorities, and others with an interest in international trade and economic development have recognised the role to be played by tourism. If the barriers to worldwide travel were eliminated or reduced substantially, international trade in tourism services is likely to increase dramatically. The globalisation of production and the liberalisation of trade offer opportunities for all countries and enable developing countries to play a more active role in the world economy. However, these newfound opportunities do not come without a price and this is to be found in the increasing complexity associated with interdependence including instability and marginalisation. Therefore, the net result is one of trade off between economic gains and costs. The World Trade Organisation (WTO) is the only international body dealing with the rules of trade between nations. At its heart are the WTO agreements, negotiated and signed by the bulk of the trading nations of the world. Its main functions, as defined in article III of the Agreement, are to facilitate the implementation, administration and operation of the Uruguay Round Agreements (GATT, GATS, TRIPS, act) and to provide a forum for negotiations among members. The WTO's overriding objective is to help trade flow smoothly, freely, fairly and predictably. There is no doubt that the WTO and the GATS have assisted the growth of international trade in goods and services. However, the success of such instruments relies upon markets behaving in a Ricardian manner incorporating the fluidity and transparency that form the substance of those markets. The purpose of this research is, through analysis, to gain insight into the impacts of liberalisation brought about by the GATS on tourism development in Egypt and to explore stakeholders' perceptions of tourism liberalisation. This research aims to analyse the terms, codes and practice of the WTO and the GATS and their implications for the tourism sector. This examination is intended to enhance understanding of how the General Agreement is intended to work and how it may help governments exploit the system to their own advantage, especially in the developing countries. The research has five broad objectives. The first is to evaluate the level of openness in Egypt's trade in services in general and tourism in particular. The second is to examine and display the main features of Egypt's GATS commitments. Third, is to explore whether the macroeconomic environment offers the necessary conditions for tourism liberalisation and for private business development (foreign and local alike). Fourth, to determine whether the institutional climate is amenable to the growth and competitiveness of private firms. Finally, to evaluate the potential impacts of GATS on tourism development in Egypt. This research also has the objective of developing policy options that embrace and reflect all the major relevant concepts of tourism liberalisation. There are likely to be transitional impacts of trade liberalisation through WTO and GATS. The World Bank (2000) states that globalisation and liberalisation do not benefit everyone equally. Developing countries and the least developing countries are always the least able to take advantage of the opportunities that GATS presents, and globalisation and liberalisation may lead to an increase in inequality in these countries. The future of tourism development in Egypt, as well as the ability of Egypt to integrate successfully into the global trading system will depend upon its ability to strengthen its capacity to produce internationally competitive services and upon the extent of liberalisation in the services sectors in general and the tourism sector in particular. In today's globalised market, a country competes with every other destination in the type and price of tourism it offers. The main findings of this research indicate that if Egypt is to be successful in competing in the international tourism market, standards of excellence must be introduced for its products, particularly for infrastructure and accommodation and services. Management and administration of the sector must improve. Governments must shift to policies that encourage tourism. For example, the sector cannot develop without improvements in public health and personal safety in tourist areas. Air policies that support ease of access and traffic growth are also critical. Governments must also invest in expanded human resource development and institutional capacity building, and improve environmental mitigation and protection. The value to the final consumer is determined by the quality of all these components of the tourism package. Given its cross-sectoral nature, tourism will only develop in a sustainable manner if it is integrated into the country's overall policies and economic and physical planning mechanisms and if linkages are created across the many sectors spanned by tourism. Partial policy measures will be inadequate to address vested interests, underlying economic relationships and generic social or physical constraints. The creation of highly competitive products through good management of natural and built tourist assets is most likely to convince the international industry to promote one country over another in the global market place. Countries can influence these external industry managers through an effective and continuing promotion and marketing campaign, but will be successful only if there is a highquality, competitive product to sell that competes in value and not just price. It is hoped that these findings, which offer an understanding of the impacts of GATS and WTO on tourism development, may help address national and regional tourism development policy-making and strategies in developing countries.