This Week in Europe, 30 June 2000
Executive Director of the Caribbean Council for Europe
For the last five years the industries the Caribbean relies on have been under attack. First and most notably it was bananas, then rum, and more recently it has been the region’s valuable offshore financial services sector. Next in line it had seemed would be sugar, as a growing number of Governments and the European Commission (EC) begin to question quietly the sustainability of present arrangements under World Trade Organisation (WTO) rules.
Only tourism has been able to escape from those who would seek to complete the set of industries placed in crisis by organisations outside of the region. But read on.
In mid June the Caribbean Group for Co-operation and Economic Development (CGCED), which brings together all of the international donor agencies providing assistance to the Caribbean region, considered a paper. Produced by a number of World Bank officials with the support of the European Commission and it seems, with the tacit support of most of the other multilateral and national donor organisations, it is entitled ‘Tourism and the Environment in the Caribbean: an Economic Framework’.
The document proceeds from the perfectly reasonable premise that environmental problems can affect negatively, sustainable development in the tourism sector. It lists threats to specific resources such as coral reefs, cultural resources or the landscape and tries to establish a basis for assessing the magnitude of the environmental threat posed by tourism. But it then embarks on a much more controversial approach. It attempts to try to identify incentives and forms of intervention that might result in sums of money being raised by Governments to pay for the region's environmental management needs. It does so on the basis that the use of an attractive environment suggests that 'rents should accrue to the owners of the resource: the people of the Caribbean - and not the foreign tourists or tourism operators'. It attacks tax holidays offered by governments to encourage investment in the tourism sector and goes on to identify a new basis for taxing the industry, in part, it seems, on the mistaken assumption that the industry is dominated by foreign owned firms.
It concludes with a series of recommendations on taxing by ‘rents’ the tourism industry in a manner that one wonders whether any one connected with the study has ever had any practical experience in business or the tourist industry in their lives.
The paper fails totally to understand that much of the industry consists of small and large locally owned or managed hotels sometimes using international names for marketing purposes; that the industry is economically fragile and already the subject of a wide range of taxes which are making it less and less competitive with other destinations around the world; that countries compete to obtain tourism investment; that Governments will always use taxes to meet their broader objectives and will not attribute them to the industry on which they are levied; and that it is no longer possible to regulate one industry in isolation from the competitive situation in the rest of the world.
The paper is also illogical. In equity any environmental tax to be levied should include all and deal with both cause and effect. Why, therefore does the World Bank and the EC not produce papers seeking a tax on the banana farmer or those whose taxes pay for the for the EU supported pesticides placed on crops; the bauxite producers for environmental degradation; the rum producers for not being able to afford to deal effectively with effluent; or the cane farmers or any other industry that makes use of land in the Caribbean.
Worse still, why is there little more than one sentence on the easiest route to providing taxation to help manage the environment: a simple, region-wide levy on all cruise ship arrivals. The first world owned cruise ship industry is not only able to operate outside of all Caribbean tax jurisdictions, dump waste at will but is the cause of significantly greater environmental overload by the ever-increasing numbers they bring into islands in return for little or no investment and without any apparent concern about the consequences.
To add to the insult, nowhere does the paper suggest that this approach should be adopted anywhere other than in the Caribbean. If Caribbean hoteliers should pay for the use of their own environment and one in which they have heavily invested, then why not the US or French tourism industry?
That international institutions should attach their names to this discussion document is a further degradation of the region’s sovereignty.
Here are the masters of the universe once again seeking unilaterally to tell the region what it must do without any serious consultation or recognition of the consequences. No one in the public or private sectors in tourism in the region was involved in the writing of the paper. Instead they were ‘consulted’ in a process which public and private leaders of the industry believe is an attempt by first world development agencies to try to set a new development agenda for tourism, starting with for the Caribbean region. And if you do not think this is so let me direct you to another academic paper from the UK based Overseas Development Institute for Britain's Department for International Development, entitled: ‘Pro-poor tourism: putting poverty at the heart of the tourism agenda’ which seeks to make poverty the basis for development assistance for supporting tourism.
Tourism is the Caribbean’s most important industry. In 1999, 43 per cent of the regions gross domestic product came from tourism, 35 per cent of employment and 41 per cent of capital investment. It has the capacity to become more important still. If Governments and the industry recognise that by working together to create backward linkages into agriculture and a host of other sectors, it can create employment and real and rapid development on a scale few other industries can offer.
Despite this, Caribbean tourism, compared with other tourist industries in other parts of the world is in poor shape. As World Tourism Organisation figures indicate the growth in international tourism arrivals into the region between 1994 and 1998 were the lowest in the developing world.
No one pretends that all is well with the industry or that it does not create economic distortions, environmental problems and social difficulties. But these are issues to be resolved within the region in a creative and thoughtful manner. Misguided attempts to create externally a new international policy environment for tourism will kill the only serious long term economic hope that most of the region now has.