Liberalisation of Trade in Tourism Services in the Southern African Development Community

Liberalisation of Trade in Tourism Services in the Southern African Development Community Natasha Ward, Partner,

ACP International Trade Advisors

SADC Tourism Forum

Johannesburg, November 18, 2013

Structure of Presentation

Key Points

Definition of the sector

Review of Legal Restrictions

Key Points Commitments in tourism services could

provide a platform for increased regional and international trade in the sector

Commitments in complementary sectors may support the development of the national tourism industries

Where there are inconsistencies between the applied regime for tourism and GATS commitments, SADC member states could use the opportunity to eliminate such inconsistencies

SADC member states with no commitments could use the opportunity of the SADC TIS negotiations to make commitments

Key Points

Private sector input is important for gaining commercially meaningful access

SADC region stands to gain substantially from Trade in Services commitments IF it aggressively moves forward on implementing the Protocol on Tourism Development

Countries need to audit results of empowerment policies in tourism sector

More protection to domestic players does not necessarily equate to stronger or faster development of tourism sub-sectors

Definition of the Sector WTO W/120 Classification

Hotels and Restaurants

Travel Agency and Tour operator services

Tour guides

…….. But SADC member states have a far wider definition of the sector. It includes:

Attractions

Car rentals

Tourism training

Typology of restrictions identified

Restrictions controlling market entry

Restrictions which give domestic competitors an advantage over foreign entrants

Frequently encountered restrictions

Establishment of a business

Acquisition of real estate

Equity restrictions

Minimum capital requirements

Economic needs tests

Limitations on the size of assets

Reservation of activities for nationals

Discriminatory taxes and duties

Repatriation of profits and dividends

Frequently encountered restrictions

Temporary Movement and Stay of Natural Persons

Availability of licences for certain categories of activities to nationals only

Quotas on the number of foreign staff that may be employed

Economic needs tests

Differences in fees and criteria for licenses

Nationality and residency requirements

Applied regimes vs.GATS commitments

Caveats

Restrictions identified on best available information at time of study

While countries have made offers under the WTO’s Doha Development Round, these are conditional

Applied Regime - AngolaMarket Access National Treatment

Approval for opening additional branches Travel agency and tour operator bonds must be with a financial institution headquarted in or possessing a branch in Angola

Access for tour guides based on reciprocity

Repatriation of dividends and profits to be effected gradually and proportionally

Representative offices limited to 6 employees

Repatriation of dividends and profits, etc. guaranteed for investments of US$ 1 million

Approval required for increases of share capital

Licensing requirement and ministry authorisation for representative offices of foreign based tour operators

ENT for entry and stay of foreign employees

Foreign enterprises must use local accountants, auditors and legal counsel

Foreign enterprises must be represented by Angolan registered lawyers in domestic based arbitral proceedings

GATS Commitments - Angola9.TOURISM AND

TRAVEL RELATED SERVICES

A. Hotel and restaurant services (including catering)(CPC 64543)

Hotels (1)None (2)None (3)None (4)Unbound, except for measures

affecting senior managers and specialists with knowledge essential for the provision of the service.

(1)None (2)None (3)None (4)Unbound, except for measures

affecting senior managers and specialists with knowledge essential for the provision of the service.

Restaurants (1) None (2) None (3) None (4)Unbound, except for measures

affecting natural persons in the following categories: directors, senior managers and specialists with knowledge essential for the provision of the service.

(1) None (2) None (3) None (4)Unbound, except for measures

affecting natural persons in the following categories: directors, senior managers and specialists with knowledge essential for the provision of the service.

Applied Regime - BotswanaMarket Access National Treatment

Reservation of sectors for nationals under the Tourism Act and the Liquor Act

Foreign based operators licences valid for 12 months only and fees are significantly higher

No access for tour guides and hunters below the professional category level

Licences for foreign based tour operators do not permit them to enter national parks

ENT for the entry and stay of foreign staff

Different criteria, qualifications and licensing fees for professional hunters and guides

Residency requirements for directors

Discriminatory transfer duty and withholding tax

Restrictions on access to land

Minimum investment requirements for foreign investors

GATS Commitments - BotswanaSub-Sector Market Access National Treatment

Hotel and restaurants including catering (CPC 641-643)

1) None2) The amount of local and

foreign currency entitled to permanent residents is limited for each trip and for the whole year by the Bank of Botswana.

3) The service should be supplied through commercial presence.

4) Unbound except as indicated in the Horizontal Commitments.

1) None2) Unbound3) The service supplier should

meet all residency requirements.

4) Unbound except as indicated in the Horizontal Commitments.

Travel agencies and tour operators

1) None2) None3) None4) Unbound except as indicated

in the Horizontal Commitments.

1) Permanent residents should not purchase tickets to enable non-residents to visit Botswana and accept payment outside Botswana.

2) None3) None4) Unbound except as indicated

in the Horizontal Commitments

Applied Regime – D.R. Congo

Market Access National Treatment

Reservation of the operation of hotels of 10 rooms of less for nationals only

Foreign employees cannot exceed 15 per cent of the workforce

Limitations on the number of tour guides

GATS Commitments – D.R. Congo9.TOURISM AND TRAVEL

RELATED SERVICES Market Access National Treatment

A.Hotels and Restaurants

(including catering)(CPC 641-643)

(1)None (2)None (3)None (4)Unbound, except as indicated

in Part I

(1)None (2)None (3)None (4)Unbound, except as indicated in Part I

B.Travel Agencies and Tour Operators Services

(CPC 7471)


in Part I


C.Tourist Guide Services(CPC 7472)


in Part I


Applied Regime - Lesotho


ENTs for smaller hotels Limitations on access to land

Limitations on number/size of land holdings

Discriminatory withholding taxes

Reservation of some tourism oriented activities

Expatriates can form 5 per cent of an enterprises staff

ENTs for entry and stay of natural persons

GATS Commitments - LesothoSector or Subsector

Limitations on Market Access Limitations on National Treatment

9. TOURISM AND TRAVEL RELATED SERVICES

A. Hotels and

Restaurants (including catering)(CPC 643)

1) Unbound except for catering:

none2) None3) Unbound except as indicated in

the horizontal section4) Unbound except as indicated in

the horizontal section

1) Unbound2) None3) Unbound except as indicated in the

horizontal section4) Unbound except as indicated in the

horizontal section

B. Travel Agencies and Tour Operators Services (CPC 7471)

1) Unbound2) Unbound3) Unbound4) Unbound except as indicated in


1) Unbound2) Unbound3) Unbound4) Unbound except as indicated in the

horizontal section

C. Tourist Guide Services(CPC 7472)

1) Unbound*

2) None3) None4) Unbound except as indicated in


1) Unbound*

2) None3) None4) Unbound except as indicated in the

horizontal section

Applied Regime - MalawiMarket Access National Treatment

ENTs for the entry and temporary stay of foreign nationals


Nationality or residency requirement for tour guides

Residency requirements for directors

Remittance restrictions on expatriate individuals

Registration with Central Bank required for subsequent repatriation of profits, dividends or capital

Capital gains repatriation at discretion of Reserve Bank of Malawi

Approval required for foreign borrowing

GATS Commitments - Malawi

Sector or Subsector

Limitations on Market Access

Limitations on National Treatment


1) None2) None3) None4) Unbound except as

indicated in the horizontal section



Applied Regime - MauritiusMarket Access National Treatment

Possibility to limit the number of licences for tourism enterprises, pleasure craft and canvassers

Foreign travel agencies must work through an agent established in Mauritius

Reservation of some tourism services for nationals only- tour guides. Reservation of tourism related sectors for nationals only - car hire, yacht and cruise services

Restrictions on the acquisition of real estate such as leases only available from the Government and a minimum of 10 acres per project

New hotels cannot exceed 200 rooms Minimum foreign investment in tour operator business is MUR 5 million

Maximum of 49 per cent foreign equity permitted in hotels of less than 100 rooms

Minimum foreign investment in restaurant projects is in excess of MUR 10 million

Maximum of 30 per cent foreign equity permitted in diving centres and duty-free shops

Minimum foreign investment in commercial presences offering yacht chartering and cruise services is MUR 10 million

Foreign hotel and restaurant operations must be staffed predominantly by Mauritians

GATS Commitments - Mauritius

A. TOURISM SERVICES

(1)Hotel Operators

1) Unbound*The operator has to incorporate a Company (Hotel Management Act 1982)

2) None3) The operator has to

incorporate a company None except foreign participation in hotels with less than 100 rooms limited to 49 per cent. In hotels with more than 100 rooms full foreign participation is allowed.Foreign establishments must be staffed predominantly by Mauritians.

4) Unbound except as indicated in the horizontal section.

1) Unbound*Free repatriation of profit governed by Bank of Mauritius Act and Income Tax Act.

2) None3) None

Foreign establishments must be staffed predominantly by Mauritians.

4) Unbound except as indicated

in the horizontal section.

GATS Commitments - Mauritius(2)Restaurant Operators

1) NoneForeign participation is allowed in projects of more than Rs 10 million.

2) None3) The project must not be

less than Rs 10 million.None except that foreign participation is allowed in Projects of more than Rs 10 Million.Foreign establishments must be staffed predominantly by Mauritians except for scarcity areas.


1) None Free repatriation of profit governed by Bank of Mauritius Act and Income Tax Act.

2) None3) None

Foreign establishments must be Staffed predominantly by Mauritians.

4) Unbound except as indicated in

the horizontal section.


(3) Travel Agencies

1) Travel agencies established outside of Mauritius must work through an agency established in Mauritius

2) None3) Requires bank guarantee

and licence. Clearance to be obtained from the Ministry of Tourism and Ministry of Internal and External Communications


1) None 2) None3) None 4) Unbound except as indicated in

the horizontal section.

(4) Tour Operators

1) NoneRestricted to Mauritian nationals

2) None 3) Permit requirement from the

Ministry of Tourism, Ministry of Finance and Prime Minister’s Office.


1) NoneRestricted to Mauritian nationals

2) None 3) To comply with the regulations of

the National Transport AuthorityNone



(5) Tourist guides services

1) NoneLimited to Mauritian Nationals – Exception made for languages not spoken by Mauritian.

2) None3) Exception made for

languages not spoken by Mauritians.Allowed only in linguistic-scarcity areas


1) NoneGoverned by Immigration Laws

2) None3) None

Governed by Income Tax Laws

4) Unbound except as

indicated in the horizontal section.

Applied Regime - MozambiqueMarket Access National TreatmentENT and quotas on the entry and temporary stay of foreign nations

Hunting guide licences subject to nationality and residency requirements

ENT for travel agency and tour operator providers


Discriminatory regime for access to land

Recognition of qualifications of foreign tourism information professionals

Approval required for remittance of dividends and profits

Conditions on the repatriation of profits and re-export of invested capital

GATS Commitments - Mozambique

No commitments

Applied Regime - Namibia Market Access National Treatment

Entry and temporary stay of natural persons governed by ENT

Residency requirement or work permit for managers of regulated tourism activities

Potential limits on equity, the number of foreign directors and foreign senior managers under the New Equitable Economic Empowerment Framework

Work permit or residency requirement for tour guides

Work permit required for staff of foreign tour operators

Citizenship or residency requirement for liquor licensees

Withholding taxes on non-residents

GATS Commitments - Namibia Sector or Sub-sector Limitations on Market

AccessLimitations on

National Treatment9. TOURISM AND TRAVEL

RELATED SERVICES A. Hotels and Restaurants

(CPC 641-643)

1) None 2) None 3) None 4) None


B.Travel Agencies and Tour Operators Services(CPC 7471)



Applied Regime - SeychellesMarket Access National TreatmentReservation of some tourism activities for nationals only- diving centres, tour guides, small hotels, small luxury villa projects, small boat operations

Foreign owned proprietary companies require the approval of the Ministry of Economic Planning

Limitation on the total number of assets in some sectors- car hire, boat charters or maximum limitation on the total number of operators in a sector- yachts

Approval required for the acquisition of real estate

Limitations on the number of operations in which an investor may be involved in some sectors

Foreign operators may be required to pay licence fees in foreign currency

Foreign equity limitations on small yacht fleets

For investments below SR 150,000, there is a requirement for project memorandum to be submitted where foreign investment is involved

A single hotel may not own more than 15 per cent of the total room stock

Residency requirement for tour operators

ENTs and quotas on the entry and temporary stay of natural persons

GATS Commitments - Seychelles

In process of WTO accession

Applied Regime – South Africa


Potential limitation of foreign equity and numbers of foreigners holding strategic management positions and directorships

Work permit or residency requirement for tour guides

Local borrowing restrictions

Prior approval required for the repayment of foreign loans

Foreign companies are required to register as external companies in order to acquire real estate

Withholding tax on sales of real estate beyond a specific threshold by foreign investors

GATS Commitments – South AfricaSector or Subsector Limitations on Market Access Limitations on National

Treatment9. TOURISM AND

TRAVEL RELATED SERVICES

A. Hotels and Restaurants(including catering)(CPC 641)

1) Unbound except for catering: None

2) None3) None4) Unbound except as indicated




B. Travel Agencies and Tour Operators Services(CPC 7471)





C. Tourist Guide Services(CPC 7472)

1) Unbound*2) None3) None4) Unbound except as indicated


1) Unbound*2) None3) None4) Unbound except as indicated


Applied Regime - SwazilandMarket Access National Treatment

Possible reservation of sectors Limitations on access to land

Possible joint venture requirements Discriminatory withholding taxes

Possible limitations on the number of foreign nationals

GATS Commitments – Swaziland

Sector or Subsector




A. Hotel and Restaurant Services(CPC 64110 and 64210)

1) Unbound*2) None3) None4) Unbound except for chief

executives, senior managers and chef cooks in the case of hotels and chef cooks in the case of restaurants

1) None2) None3) None4) None

Applied Regime - Tanzania


Reservation of some tourism activities for nationals only

Discriminatory procedure for maintaining hunting licences

Hunting companies required to employ 50 per cent nationals

Minimum investment requirements

ENT concerning entry and stay of foreign nationals beyond quota

Limit on access to land

Limit on domestic borrowing

GATS Commitments - Tanzania

Sector or Subsector



9. TOURISM AND TRAVEL RELATED SERVICESHotels of four stars and above (CPC 641-643)

1) None2) None3) Acquisitions of domestic

firms and mergers by foreigners are subject to approvalThe acquisition of land by foreigners or domestic companies which are deemed foreign because of foreign equity ownership is subject to approval

4) Unbound except for measures concerning senior managers that possess skills not available in Tanzania

1) None2) None3) Unbound4)Unbound

Applied Regime - Zambia


Joint ventures and reservation of activities under Citizen Economic Empowerment Act

Ministerial approval for licences for non-residents under Liquor Act

Minimum capital requirements Discriminatory licensing fees for professional hunters and guides

ENT under in Immigration and Deportation Act

Residency requirement for directors under Companies Act

Discriminatory withholding taxes

GATS Commitments - Zambia

Sector or Subsector








Applied Regime - Zimbabwe

Market Access National TreatmentPossibility of numerical limitations on liquor licences

Residency requirement for managers of liquor establishments

Citizenship requirement for liquor licensees

Residency requirement for directors

Foreign equity limits under Indigenisation Act and Foreign Exchange Act

Possibility of different incentives for foreign and domestic investors under the Investment Act

Reservation of sectors under the Indigenisation Act and the Investment Authority Act

Prior approval is required for foreign investors to acquire shares in existing companies

ENTs for foreign staff

GATS Commitments - Zimbabwe

Sector or Subsector




A. Hotels and restaurants

1) None2) None3) None4) Unbound, except as


1) None2) None3) None4) Unbound, except as indicated

in the horizontal section

B. Travel agencies and tour operators

C. Tourist guide

services

1) None2) None3) Tour operators operating a

vehicle of over three tonnes or using more than 20 vehicles must pay an annual levy for each park

4) Unbound, except as


1) None2) None3) Foreign-based tour operators

must pay park entry fees in foreign currency. Only locally registered Safari operators may obtain concessions to offer hunts through "leasing"; or auctions by which hunting areas are leased out.

4) Unbound, except as indicated in the horizontal section

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Liberalisation of Trade in Tourism Services in the Southern African Development Community