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Making the WTO relevant to businesses and workers — the example of travel and tourism

Each of the eight candidates to become the next Director-General of the World Trade Organization correctly noted that the WTO’s relevance was at risk without significant reform and the ability to make the three pillars of the multilateral trading system function properly (negotiations, transparency/monitoring, dispute settlement). Some candidates talked about the need for the WTO to take actions that can be clearly seen by businesses, workers and consumers as being relevant to their lives. Most have also talked about the need for the WTO to review how it can provide greater resilience and predictability in the context of a pandemic like COVID-19. Some candidates were also asked questions about how the WTO can be more involved in helping the world achieve the sustainable development goals (SDGs) laid out by the UN in 2015 with a targeted completion date of 2030. Most candidates also commented on the need to improve coordination with other multilateral organizations to see that the capacity needs, financing and other elements often needed for progress on improving integration of smaller and less developed countries into the global trade system are met.

One issue that intersects all of the above needs/concerns is the travel and tourism sector. It is the third largest trade export sector, has been one of the hardest hit sectors globally by the fallout from the COVID-19 pandemic with some 100-120 million jobs at risk this year with the potential closure of hundreds of thousands or millions of businesses – most mciro-, small- and medium enterprises (MSMEs) — and a sector that directly or indirectly is relevant to most of the UN’s SDGs. It is also a sector where there has been a great deal of activity by other multilateral organizations and the U.N.

While travel and tourism is important for nearly all countries, it has an outsized importance for small island developing states (SIDS), least developed countries (LDCs) and many countries in Africa. Thus, an effort by the WTO to prioritize actions that would help restore the international trade dimension of the travel and tourism sector and in a way that is supportive of the actions of other international organizations would have meaningful effects for businesses, workers and consumers globally.

United Nations, Policy Brief: COVID-19 and Transforming Tourism

On August 25, 2020, UN Secretary-General Antonio Guterres released a policy brief entitled COVID-19 and Transforming Tourism. The video of his statement when releasing the study can be found here, https://www.unwto.org/news/un-secretary-general-it-is-imperative-that-we-rebuild-the-tourism-sector (news release with video of statement towards bottom). The press release from the UN World Tourism Organization is copied below (emphasis in original).

UN SECRETARY-GENERAL: ‘IT IS IMPERATIVE THAT WE REBUILD THE TOURISM SECTOR IN A SAFE, EQUITABLE AND CLIMATE FRIENDLY MANNER

“Madrid, Spain, 25 August 2020 – As part of the wider UN response to COVID-19, the UN Secretary-General António Guterres released today a thematic brief on the impact the pandemic has had on tourism. Drawing on the latest data from the World Tourism Organization (UNWTO), the lead author of the publication, it warns that as many as 100 million direct tourism jobs are at risk, and the massive drop in export revenues from tourism could reduce global GDP by as much as 2.8%. The brief stresses that tourism is an essential pillar of the SDGs and the most vulnerable workers and nations at greatest risk.

“Tourism has been among the hardest hit of all sectors by COVID-19 and no country has been unaffected, with restrictions on travel and a sudden drop in consumer demand leading to an unprecedented fall in international tourist numbers.

“The ‘COVID-19 and Transforming Tourism’ Policy Brief from the Secretary-General of the United Nations, António Guterres, makes clear the impact that the pandemic has had on global tourism and how this affects everything from jobs and economies to wildlife conservation and the protection of cultural heritage.

“Mr Guterres said: that ‘It is imperative that we rebuild the tourism sector‘ in a ‘safe, equitable and climate friendly’ manner and so ‘ensure tourism regains its position as a provider of decent jobs, stable incomes and the protection of our cultural and natural heritage’. The UN Secretary-General further underscored that tourism is one of the world’s most important economic sectors, providing ‘livelihoods to hundreds of millions more’, while it’“boosts economies and enables countries to thrive’, and at
the same time allowing ‘people to experience some of the world’s cultural and natural riches and brings people closer to each other, highlighting our common humanity’.

“The Brief warns that the impacts of the pandemic on tourism are already placing conservation efforts in jeopardy. Citing case studies from around the world, it warns that the sudden fall in tourism revenues has cut off funding for biodiversity conservation and, with livelihoods at risk in and around protected areas, cases of poaching and looting are expected to rise. Again, the impact on biodiversity and ecosystems will be particularly critical in SIDS and LDCs. Furthermore, with 90% of World Heritages Sites having closed as a result of the pandemic, both tangible and intangible heritage is at risk in all parts of the world.


Five points priorities moving forward

“UNWTO Secretary-General Zurab Pololikashvili said: ‘Tourism touches on nearly every part of our societies and is a cornerstone of growth and employment, both in developed and developing economies. The United Nations Secretary-General echoes the five key priority areas that UNWTO has identified for tourism to return and drive wider recovery, and both governments and the private sector now have a duty to put this plan into
action.’

“The Policy Brief notes that women, youth and workers in the informal economy are most at risk from job losses and business closures across the tourism sector. At the same time, destinations most reliant on tourism for jobs and economic growth, including SIDS) and Least Developed Countries (LDCs) are likely to be hardest hit, including through an anticipated fall in foreign direct investment (FDI).

“In addition to calling for strong support for the sector in mitigating these massive impacts, the Brief stresses that this crisis represents an opportunity to rethink tourism, including how it contributes to the SDGs. To this end, the Policy Brief provides Five Priorities for the restart of tourism, all aimed at ensuring a more resilient, inclusive and carbon neutral sector. These priorities are:

“1. Mitigate socio-economic impacts on livelihoods, particularly women’s employment and economic security.

“2. Boost competitiveness and build resilience, including through economic
diversification and encouragement of MSMEs.

“3. Advance innovation and digital transformation of tourism

“4. Foster sustainability and green growth

“5. Enhanced focus on coordination, and responsible leadership

“Alongside penholder UNWTO, a further 11 United Nations agencies contributed to the Policy Brief, highlighting the sector’s unique importance and outreach.”

The policy brief is embedded below.

SG-Policy-Brief-on-COVID-and-Tourism

There are a set of slides that lay out what is at stake for the world from the impact of COVID-19 on tourism. International tourist arrivals are down 56% in the January – May time period for the world, with the range by region being between 47% (Americas and Africa) and 60% (Asia and the Pacific). The loss in revenue in five months was US$320 billion with an annual projection of lost revenue from US$910 billion to US$1.2 trillion. The most optimistic projection has international tourism revenues declining to a level last seen in 2003.

The small island developing states (SIDS) and least developed countries (LDCs) most at risk include 21 which have international tourism exports accounting for 50-90% of total exports of goods and services and an additional 20 countries where international tourism exports are between 30 and 50% of total exports of goods and services. Macao (China), Palau, Bahamas, Saint-Lucia, Maldives, Turks and Caicos, and Aruba are all 80% or higher; St. Maarteen and Anguila are 70-79%; Cabo Verde, Antigua & Barbuda, Sao Tome & Principe, Barbados, Vanuatu, and Samoa are all 60-69%; Jamaica, Montenegro, Gambia, Fiji, Comoros, and Dominica are all 50-59%; Tonga, Ethiopa, Belize, Lebanon, Montserrat, Georgia, French Polynesia, and Jordan are all 40-49%; and Mauritus, Seychelles, Haiti, Dominican Republic, Bermuda, Albania, St. Vincent & Grenadines, Croatia, Tanzania, Curacao, Grenada, and St. Kitts and Nevis are all 30-39%.

One of slides shows that women make up 54% of the workforce of accommodation and food services supporting the point that women are among the most vulnerable in terms of job security during the pandemic.

The slides are embedded below.

UN-Tourism-Policy-Brief-Visuals

Conclusion

As WTO Members look at their responses to the COVID-19 pandemic in general with a focus on export restraints and other restrictions, consider how trade can speed economic recovery and consider steps that should be taken to reduce the challenges should there be another health pandemic in the future, it is important that the Members consider the travel and tourism sector with a sense of urgency. Cooperation and coordination among WTO Members on when and how to reopen international travel and other needs of travelers, businesses, workers and host governments is obviously critical. Also coordination with the WHO, UNWTO, IMF, World Bank and regional development banks is critical to see that the special needs of SIDS, LDCs and the MSMEs are identified and addressed.

COVID-19, EU move to permit some international travel in addition to intra-EU travel, effects on tourism

Many countries have imposed travel restrictions on visitors from other countries during the COVID-19 pandemic. The International Air Transport Association (“IATA”) reports that there are 163 countries that have some travel restrictions and that 96 countries impose quarantine requirements. See IATA, COVID-19 Government Public Health Mitigation Measures, https://www.iata.org/en/programs/covid-19-resources-guidelines/covid-gov-mitigation/.

Travel and tourism is one of the most seriously harmed economic sectors from the global COVID-19 pandemic for many countries. The UN World Tourism Organization has created “the first global dashboard for tourism insights”. https://www.unwto.org/unwto-tourism-dashboard. The dashboard indicates that COVID-19 will result in the reduction of some 850 million to 1.1 billion tourists with a loss of US$ 910 billion to US $ 1.2 trillion in revenues from tourists with the potential loss of as many as 100-120 million jobs in the sector. These are obviously staggering figures for a sector that has contributed to global economic growth over recent decades. The dashboard has ten slides which shows data for tourism through April 2020 with some projected figures for full year 2020 under various assumptions. Data are presented both globally and for some slides by regions and in a few within regions by country. Thus, in slide 2, global tourism grew 2% in January 2020, declined 12% in February, declined 55% in March and declined 97% in April for a January-April total decline of 43.8%. By region, Europe declined 44%, Asia and the Pacific declined 51%, the Americas declined 36%, Africa declined 35%, and the Middle East declined 40%. While data for May and June are not yet available and may be less severe in terms of contraction than April, the decline in global tourism through June will likely exceed 50% and possibly be even more severe. For data through April 2020 see the link, https://www.unwto.org/international-tourism-and-covid-19.

In prior posts, I have provided background on the sector and the likely toll from the COVID-19 pandemic. See April 30, 2020, The collapse of tourism during the COVID-19 pandemic, https://currentthoughtsontrade.com/2020/04/30/the-collapse-of-tourism-during-the-covid-19-pandemic/; May 3, 2020, Update on the collapse of travel and tourism in response to COVID-19, https://currentthoughtsontrade.com/2020/05/03/update-on-the-collapse-of-travel-and-tourism-in-response-to-covid-19/.

As many countries in parts of Asia, Oceania, Europe and a few other countries have seen significant declines following first wave peaks of COVID-19 cases, restrictions within countries and increasingly on international travel are starting to be relaxed.

The European Union is a large tourist destination and on June 30 announced recommendations for member states to consider in opening up for tourists from both other EU countries and for travelers from outside of the area for nonessential travel. Specifically, the Council of the European Union adopted Council Recommendations on the temporary restriction on non-essential travel into the EU and the possible lifting of such restriction on 30 June 2020. See https://data.consilium.europa.eu/doc/document/ST-9208-2020-INIT/en/pdf. Intra EU travel, travel from Norway, Iceland, Switzerland, Liechtenstein and certain other countries is not part of the third country nonessential travel affected by the recommendations (to the extent adopted by EU members).

The EU Council selected third countries whom the Council recommended have access based on criteria which “relate to the epidemiological situation and containment measures, including physical distancing, as well as economic and social considerations, and are applied cumulatively.” Page 6. The Council lists three critieria: (1) whether the number of new cases over the last 14 days per 100,000 inhabitants is close to or below the EU average (15 June 2020); (2) whether the trend of new cases over the prior 14 day period is stable or decreasing; and (3) considering “the overall response to COVID-19 taking into account available information aspects such as testing, surveillance, contact tracing, containment, treatment and reporting as well as the reliability of available information and data sources and, if needed, the total average score across all dimensions for International Health Regulations (IHR).” Page 6.

Based on these criteria, the EU Council recommends that 15 countries (with China being subject to confirmation of reciprocity by China to EU travelers) “whose residents should not be affected by temporary external borders restriction on non-essential travel into the EU” (Annex I, page 9): Algeria, Australia, Canada, Georgia, Japan, Montenegro, Morocco, New Zealand, Rwanda, Serbia, South Korea, Thailand, Tunisia, Uruguay and China. The Council may review every two weeks whether the list should be modified.

Annex II to the Council recommendations provides an identification of travelers with essential functions for whom the restrictions should not apply. These include healthcare professionals, health researchers, and elderly care professionals, frontier workers, seasonal workers in agriculture, transport personnel, diplomatic personnel, passengers in transit, passengers traveling for “imperative family reasons,” seafarers, third-country nationals traveling for the purpose of study and a few others. Annex II, page 10.

The EU Council Recommendations are embedded below as is a Council press release on the recommendations.

ST_9208_2020_INIT_EN

Council-agrees-to-start-lifting-travel-restrictions-for-residents-of-some-third-countries-Consilium

Obviously many countries are not included on the list of third countries where loosening of restrictions on travel is recommended. The United States, Argentina, Brazil, India, Indonesia, Malaysia, Nigeria, Russia, Saudi Arabia and South Africa are just a few for whom nonessential travel restrictions are not recommended to be lifted. For most of these countries, either the number of new cases has not peaked or has not receded significantly.

For the EU, getting agreement among its members to lift travel restrictions for other EU countries and to start lifting restrictions for travelers from thrid countries has been important as the summer holiday season of July-August arrives. Data from EU tourism statistics showed 710 million international visitors in 2018 (when there were 28 EU members, including the UK). 81% or 575 million visitors were intra-EU, that is traveling from one EU country to another. Thus, for the EU, the biggest return of tourism business involves reopening to travelers from other EU countries. By contrast, visitors from third countries in total were some 19% of the total or 135 million visitors. The US accounted for 11.6% of third country visitors in 2017, some 15.7 million in number. While an important source of third country tourists, The U.S. was just a little over 2.2 percent of total EU global visitors. See http://www.condorferries.co.uk (tourism in Europe statistics). Thus, for tourism, the EU’s reopening recommendations will not return travel and tourism to pre-COVID-19 levels. But the partial reopening could result in a significant rebound in its tourism sector which will be good news for EU businesses involved in the travel and tourism space. Time will tell just how much of a rebound actually occurs.

For other nations, the more countries who get COVID-19 under control and are thus able to open international travel and tourism responsibly, the greater the likely rebound in global travel and tourism will be. However, because many businesses in the travel and tourism space in any country are small businesses, the risk for many countries (whether in the EU or elsewhere) is that the rebound whenever it occurs will happen with a much smaller business base to serve customers. While governments can provide targeted assistance through legislative initiatives, operating conditions for many such businesses post opening do not permit profitable operation where social distancing and other important steps remain critical to safe functioning. So unlike other global crises in the past, there may be large and permanent job losses in the travel and tourism sector flowing from COVID-19.

The COVID-19 Pandemic – An Update on Shifting Patterns of Infections and Implications for Medical Goods Needs

Since late March there have been significant shifts in the number of COVID-19 cases being reported by countries and within countries. Many countries where the virus hit hardest in the first months of the year have been seeing steady progress in the reduction of cases. Some in Asia, Oceania and in Europe are close to no new cases. Others in Europe and some in Asia have seen significant contractions in the number of new cases. Other countries have seen a flattening of new cases and the beginnings of reductions (e.g., the U.S. and Canada). And, of course, other countries are caught up in a rapid increase of cases (e.g., Russia, Brazil, Ghana, Nigeria, India, Pakistan, Saudi Arabia).

As reviewed in a prior post, the shifting pattern of infections has implications for the needs for medical goods and open trade on those products. https://currentthoughtsontrade.com/2020/04/28/shifting-trade-needs-during-the-covid-19-pandemic/. As the growth in number of cases is seen in developing and least developed countries, it is important that countries who have gotten past the worst part of Phase 1 of the pandemic eliminate or reduce export restraints, if any, that were imposed to address medical needs in country during the crush of the pandemic in country. It is also critical that the global efforts to increase production of medical goods including test kits and personal protective equipment continue to eliminate the imbalance between global demand and global supply and to permit the restoration and/or creation of national and regional buffer stocks needed now and to address any second phase to the pandemic. And as tests for therapeutics and vaccines advance, it is critical that there be coordinated efforts to see that products are available to all populations with needs at affordable prices.

While there is some effort at greater coordination on research and development as reviewed in a post last week (https://currentthoughtsontrade.com/2020/05/06/covid-19-the-race-for-diagnostics-therapeutics-and-vaccines-and-availability-for-all/), concerns exist that as nations get past the first phase of the pandemic, countries will turn their focus to other needs and not in fact address the severe gaps between pandemic supply needs and existing capacity and inventories. Such an outcome would exacerbate the challenges the world is facing from the current pandemic and its likely phase 2 later this year.

The following table shows total cases as of May 11 and the number of cases over fourteen day periods ending April 11, April 27 and May 11 as reported by the European Center for Disease Prevention and Control. The data are self-explanatory but show generally sharply reduced rates of new infections in Europe and in a number of Asian countries, though there are increases in a few, including in India and Pakistan and in a number of countries in the Middle East, such as Saudi Arabia. North America has seen a flattening of the number of new infections in the U.S. and Canada with some small reductions in numbers while Mexico is seeing growth from currently relatively low levels. Central and South America have some countries with rapid increases (e.g., Brazil, Chile, Peru). The Russian Federation is going through a period of huge increases. While there are still relatively few cases in Africa, there are countries who are showing significant increases, albeit from small bases.

Countrycases
through 5-11
14 days
to 4-11
14 days
to 4-27
14 days
to 5-11
Austria15,7875,8631,252598
Belgium53,08119,38316,4876,947
Bulgaria1,965342625665
Croatia2,187909430157
Cyprus89843318481
Czechia8,1233,4531,413719
Denmark10,4293,7732,4011,854
Estonia1,73968333496
Finland5,9621,7441,6021,386
France139,06357,71229,17214,488
Germany169,57569,07632,17714,382
Greece2,7161,045392210
Hungary3,2849671,125701
Ireland22,9965,9689,6073,734
Italy219,07061,07941,31221,395
Latvia939332161127
Lithuania1,47964138730
Luxembourg3,8861,618442163
Malta4962117048
Netherlands42,62714,49412,2584,782
Poland15,9964,5664,9434,379
Portugal27,58111,2047,2793,717
Romania15,3624,1754,7364,326
Slovakia1,45742063778
Slovenia1,45752820250
Spain224,39092,96343,04516,756
Sweden26,3226,6398,1577,682
EU271,018,867370,221220,830109,551
United Kingdom219,18355,72968,56166,343
EU27 + UK1,238,050425,950289,391175,894
United States1,329,799396,874408,339363,889
Canada68,84817,45822,51921,964
Mexico35,0223,12710,01620,345
North America1,433,669417,459440,874406,198
Japan15,7983,8486,1302,413
South Korea10,909972201171
Singapore23,3361,17711,0929,712
Australia6,9412,860391228
New Zealand 1,1476195825
Subtotal58,1319,47617,87212,549
China84,0101,058990-189
India67,1526,57418,74039,260
Indonesia14,0322,4664,6415,150
Iran107,60335,86018,79517,122
Turkey138,65741,33153,17428,527
Israel16,4777,3734,2531,079
Bangladesh14,6573764,7959,241
Kazakhstan5,1266471,7562,409
Krygyzstan1,016281276321
Malaysia6,6562,1851,097876
Pakistan30,9413,5917,95417,613
Saudi Arabia39,0482,54713,06021,526
Taiwan4401134111
Thailand3,0151,38234393
Vietnam2888660
Sri Lanka86391313340
Subtotal529,981105,961130,234143,397
Russian Federation209,68810,88165,179128,739
Ukraine15,2321,9856,2326,223
Belarus22,9731,8877,88512,510
Georgia635153229149
Subtotal248,52814,90679,525147,621
South Africa10,0158332,3735,469
Egypt9,4001,2992,2545,081
Morocco6,0631,1032,4041,998
Algeria5,7231,4561,4682,341
Burkina Faso751302135119
Cameroon2,579715801958
Cote d’Ivoire1,700379576550
D.R. of the Congo1,024165225565
Djibouti1,280137809187
Ghana4,2632419842,713
Guinea2,1462078441,052
Kenya672158158317
Mali70483273315
Mauritius33222480
Niger821428167125
Nigeria4,3992249503,126
Senegal1,7091463911,038
Somalia1,05418411618
Sudan1,363122181,126
Tunisia1,03244424283
U.R. of Tanzania50919268209
subtotal57,4698,59315,95927,990
Switzerland30,22212,1243,7581,244
Liechtenstein832030
Norway8,0992,6631,090594
Iceland1,801785919
Subtotal40,20515,5924,9421,847
Argentina5,7761,2851,5642,009
Brazil162,69916,22139,719100,811
Chile28,8661,9346,11815,535
Colombia11,0631,9342,6035,684
Dominican Republic10,3472,0393,1684,212
Ecuador29,5595,53415,2536,840
Panama8,4482,1882,3792,669
Peru67,3075,26219,99839,790
Costa Rica79229510097
El Salvador958105173660
Subtotal325,81536,79791,075178,307
All Other Countries131,67726,78038,80955,215
Total of all countries4,063,5251,061,5141,108,6811,149,018

The WTO maintains a data base of actions by WTO members in response to the COVID-19 pandemic which either restrict medical goods exports or which liberalize and expedite imports of such products. As of May 8, the WTO showed 173 measures that the WTO Secretariat had been able to confirm, with many countries having temporary export restrictions on medical goods, some restraints on exports of food products, and a variety of measures to reduce tariffs on imported medical goods or expedite their entry. https://www.wto.org/english/tratop_e/covid19_e/trade_related_goods_measure_e.htm. Some WTO Members other than those included in the list have had and may still have informal restrictions.

The EU and its member states are presumably in a position now or should be soon to eliminate any export restrictions based on the sharp contraction of cases in the EU as a whole over the last six weeks – last 14 days are roughly 59% lower than the 14 days ending on April 11. Similarly, countries with small numbers of cases and rates of growth which seem small may be candidates for eliminating export restrictions. Costa Rica, Kyrgyzstan, Taiwan, Thailand, Vietnam, Malaysia, Georgia, Norway and Switzerland would appear to fit into this latter category. Most other countries with restrictions notified to the WTO appear to be either in stages where cases continue at very high levels (e.g., United States) or where the number of cases is growing rapidly (e.g., Russia, Belarus, Saudi Arabia, Ecuador, Bangladesh, India, Pakistan). Time will tell whether the WTO obligation of such measures being “temporary” is honored by those who have imposed restrictions. Failure to do so will complicate the efforts to see that medical goods including medicines are available to all on an equitable basis and at affordable prices.