- Email: [email protected]
The implications of free trade agreements for tourism in Canada
Introduction
to current issues
North American tourism and the NAFTA Following months of national debate, the North American Free Trade Agreement (NAnA) was passed by the US Congress and signed by the President in November 1993. In the same month. the Agreement passed the Mexican Senate by a wide margin. The Canadian Parliament had approved NAFTA earlier. On I January 1094. the IS-year process of gradually eliminating tariffs and other barriers to trade among the three North American countries began. NAFTA trade liberalization centers on manufacturinp. agriculture. investment, financial services and government procurement, while side agreements
deal with environmental and labor issues. While international travel and tourism were not specifically addressed in this extraordinary agreement. NAFTA does have implications for travel among the three North American nations and the industry that serves it. The following three articles address these implications from the perspectives of each of the signatory nations.
Current issues
The implications of Free Trade Agreements for tourism in Canada Gordon D Taylor
This article reviews the implications for tourism in and to Canada of NAFTA, the earlier Free Trade Agreement (ETA) with the USA and former bilateral agreements on tourism between Canada and Mexico. It examines impacts on tourism flows among the relevant countries and the likely effects on the Canadian tourism industry - eg lower import costs, leading to improved competitiveness. Such benefits could be undone by any depreciation of the Canadian dollar or by continued economic recession, which should not, however, be blamed on the FTA: the full impact of free trade agreements will only become apparent in the long term.
The move towards the reduction of trade barriers not only in North America but also around the world will impact on tourism in a wide variety of ways. The North American Free Trade Agreement (NAFTA)
03h1-5177/~~J/0.50315-~U 0 IVY4 Buttcrworth-Wcincm;InnLtd
that went into effect on I January 1994 is the most recent manifestation of this trend. It involves Canada. Mexico and the United States of America. It was preceded in North America by the Canada-USA
315
Current usues
Free Trade Agreement (ETA) that took effect on 1 January 19X9. The Uruguay Round of negotiations of the General Agreement on Tariffs and Trade (GATT) has world-wide impli~tions, while the development of the single European Community is a regional phenomenon. Bilateral agreements on tourism between Mexico and the USA and Mexico and Canada preceded both FTA and NAFTA. The Mexico-USA agreement was signed originally in 1983 with an expanded and new version being signed in 19X9. Comparable Mexico-Canada agreements were first signed in 1984 and again in 1990. The second Mexico-Canada agreement is for a period of five years and is renewable by tacit agreement of both parties. The objective of this paper is to review the implic~~tions of these North American agreements on tourism in and to Canada. While the primary focus is intended to be on the impacts of NAFTA it is necessary to look at the other two, FTA and Mexico-Canada bilateral agreement. in order to obtain as wide a perspective as possible.
The major difference between the two agreements is the presence of a clause relating to joint marketing in the US agreement and not in the Canadian one, and a clause on the exchange of tourism inf~~rmati~~n and statistical data in the Canadian agreement and not in the American one. Both agreements call for regular meetings between the parties. C. Cunudu-USA Free T&e Agreement (FTAI - this agreement marked the first time that tourism services had been spelled out in detail as part of international negotiations.’ The sectoral annex provided for: the promotion of tourism opportunities in the territory of the other country including joint promotions by national, provincial. state or local governments; the adoption and application of fees or other charges on the departure or arrival of tourists would be on the basis of national treatment and w~ulcl be limited to the approximate cost of the service rendered; the noun-irn~~siti~~n of restrictions on the value of tourism services that its residents or visitors to its territory may purchase from persons of the other Party, except in conformity with Article VIII of the Articles of Agreement of the International Monetary Fund; annual c~~nsultiiti~)n to identify and seek to eliminate impediments to trade in tourism services; and to identify ways to facilitate and incrcasc tourism between the Parties.
Tuurism and international agreements In the bilateral agreements tourism is the sole concern, while in the broader ETA and NAFTA agrccments tourism is only one of ii multitude of trade concerns. ETA has a specific sectctral annex on tourism, while in NAFTA tourism is covered under such headings as trade in scrviccs. financial and telecommunications investments, and temporary entry. An examination of the two bilateral tourism agreements reveals a good deal of simil;irity. A. Metkw-USA both parties to:
(I%W~
-
the agreement
commits
* * *
facilitate travel between both countries; promote cultural exchange activities; cooperation in the area of tourism training and education; o consider joint marketing activities to promote tourism from third-party countries; l assist each other in achieving mutual goals in the World Tourism Organization.’
S. ~exic~Cu?ru~u both parties to:
(I~~~
- the agreement
commits
facilitate tourism exchange between the two countries; give priority to promoting cultural tourism reprcsentative of each country: enc~~urage co~~peration in training and education; exchange tourism informilti~~n and statistical data; support each other and work within the framework of the World Tourism Organization to develop and encourage adoption of uniform standards and practices.
316
D. North Amokwn Free Trude Agreement (NAFTA) - tourism is not specifically detailed in NAFTA as it is in FTA but it is covered in pertinent sections as noted above. Bilateral air agreements are not included in either NAFTA or ETA and they will continue to be negotiated as separate events.
impacts on tourism flaws The
impacts of these agreements
on tourism
flows
‘The specific tourism scrviccs rccognizcd in the tourism scctor;d annex include the tourism-rclatcd uctivitics of the following: travel agency ad rclatcd travel scrviccs including tours wholcd ing. travel counsclling. arranging and hooking: issuance of travel insurance; all modes of international Passenger tr~ns~~rt~ti~)n: hotel reservation scrviccs; terminal scrviccs for all mrtdcs of trimsport, including concessions; transportation catering scrviccs: airport tmnsfcr; lodging, including hotels. motels and rooming houses; local sightseeing. regardless of mode of transportation: intcrcity tour opcrutions; guide and intcrprcter scrviccs; automohitc rental: provision of resort facililics; rental of rccrcatiod rrquipmcnl: feed services; retail services; ~~r~;fni~~ti~~n~tl and support services f0r int~rn~ti~)n;ll c(~flv~ntit~n~~ m~Irin~-r~l~t~~ service* inchding the fueling. supply. and repair of. and provisirtn of docking spaceIO, plcasurc boats; rccrcational vchiclc rental: campground ilnd trailer park scrviccs: amusement park scrviccs; commcrcid tourist altrnctitrns; and tourist-rclatcd services Of ;1 financial noturc. (Extract& from Parqraph 1 of Article I. Annex
B.)
currentissues Tabk
t
Business travd: Canada-USA
Year
USA to Canada lOWk person trips)
lYx6 lYX7 IYXX 19x9 IWO IYYI IYY2 Change IYH64X Change IYYlL-02 Change 19X&Y?
f198692l Canada to USA (OlMlsperson trips) l-130 151 I 1741 I765 1972 1YYs ?I44 +21.7’!/0 + 9.0% +so .3’7D
between Canada and the USA and Canada and Mexico are likely to be more indirect than direct. In general, as the economies of all three countries grow, the amount of business and pleasure travel should increase. The reductions of tariffs over time should also work to increase travel and to reduce the costs of many imported goods used in the tourism industry in Canada. This reduction in costs of goods should assist the Canadian tourism industry to improve its competitive position. The removal of restrictions on the promotion and sale of tourism scrviccs should also bc bcncficial. Thcsc bcncfits may bc affected adversely by changes in exchange rates and by changes in internal taxation. One of the early impacts of the agrccmcnts was cxpcctcd to bc an incroasc in business travel. NAFTA has not been in cffcct long enough for any data on changes in the volume of business travel to bc available. FfA has been in cffcct for four years, howcvcr, and business travel data for travel bctwccn Canada and the USA arc available (SW Tctbk I). Business travel between Canada and the United States grew faster in the three years before FfA, 1986 to 1988, than it did in the three years after, 1990 to 1992. Over the longer period of 19X6 to 1992 business travel from the United States declined by 2.4%. It reached a peak in 1989 and has declined since. Business travel from Canada to the United States grew by 50.3% over the 1’386 to 1992 period. It grew by 21.7% in the pre-FTA period and by 9% in the post-FTA period. Until FTA came into force business travel from the USA to Canada exceeded that from Canada to the USA; since FTA the rcversc situation is true. It might be possible to conclude that FTA has not brought about the expcctcd change in business travel. Scvcral other factors, however, must be considered. The economic recession that arrived almost simultaneously with the advent of FTA has hurt business travel in both countries, domestically and internationally. The fact that Canadian outbound business travel has increased could be an indicator of a positive effect of Ff’A on the Canadian economy, in spite of some of the offsetting events. Total overnight travel between Canada and Mcx-
Tourism Monugenrenr 1994 Vvlurnr
15 Number S
ice has historically been very much in favour of Mexico. Mexico has long been a popular winter destination for Canadians with over half of the Canadian travel to Mexico occurring in the first three months of the year. Canada has not been as popular a destination for Mexicans: 50% of the travel that does occur takes place in the months of July, August and September (see Table 2). Business travel from Canada to Mexico accounts for just under 4% of the total movement. while from Mexico to Canada the figure is 16%. While the current numbers do not reflect any impact of NAFTA, there is a good basis for monitoring change in the future.
Impacts on the Canadian tourism industry The planned gradual removal of all bilateral tariffs on all goods over a IO-year period will have a positive impact on any tourism business that regularly buys goods from the USA. Items such as furniture, motor boats. snow-milking equipment and tractors are all used in some aspects of tourism, and at least part of the supply required comes from the United States. Restaurants and bars should bcncfit from the proposed removal of discriminat~~ry pricing of wine and distilled spirits. A substantial proportion of food used in Canada is imported from the United States. In the cast of food, the period for the gradual removal of tariffs is spread over 20 years. If these rcduccd tariffs bring about lower costs for the tourism industry in Canada, then the profit picture and the competitive position will improve. The bcncfits of reduced tariffs could be offset by any depreciation of the Canadian dollar. In fact, the bcncfits could be wiped out under certain extreme cases of depreciation. Changes to the Canadian tax structure, such as the introduction of the Goods and Services Tax, could also work to undo the benefits that could accrue under FTA and NAFTA.”
Temporary entry into Canada and the USA of business persons FTA ensures that the immigration regulations complement the rules governing the movement of goods,
Table 2
Total overnight travel: Canada-Mexico (198692)
Year
Mexico to Canada (OOOsperwn trips)
Canada to Mexico wo.5 person wipsl
IYXh 19x7 lY!iX IYXY IYW IYYI IYY?. Change IYX*_YT!
4l.Y 57.3 57.7 63.2 63.9 6S.l 6S.I +SS.J’%
277.0 338.0 332.0 374.0 433.0 3X0.0 3x5.0 +tiY.f%
317
Currenr issues
services and investments. The agreement does not compromise the ability of either country to determine who may gain entry. Three requirements have been identified for a business person to claim entry under this part of the accord: they must: meet the general requirements for entry (eg public health. safety and national security requirements); be either a Canadian or United States citizen; qualify in one of the following categories of business persons: (a) business visitor; (b) professional; (c) intra-company transferee; (d) trade and investor. Each of these categories is carefully defined within the agreement. This easing of entry requirements for business people should increase cross-border business travel and as a result create additional business for firms such as hotels. restaurants, air carriers. car rental agencies and others who cater to the business travcller.
Summary of benefits This article has conccntratcd on FTA to a grcatcr extent than it has on NAFTA. The new agrcemcnt extends much that was included in the ETA to Mexico, and it has not changed the basic relationship bctwccn Canada and the USA that was established with ETA. The impacts of the inclusion of Mexico into the North American free trade zone are not as immediate for Canada as they are for the United States. The distance from Canada to Mexico and the fact that this space is occupied by the United States are sufficient reasons for the lessened impacts and they will also take longer to be noticed. Canada and Mexico have worked together on tourism for the past dccadc on the basis of the bilateral agreements on tourism. This type of agreement is, however, very limited in scope and cannot have the long-term impact of the major trade agreement. NAFTA is an engine for economic growth, so tourism between Canada and Mexico will grow as a result of the strengthened economies in both countries. The more immediate impacts for Canada will come from the American part of both agreements. On the tourism flow side, the basic thesis is that as
318
the economies of the two countries grow and prosper as a result of free trade more people will be able to travel. The encouragement for the improved flow of promotions etc will goods. services, investments, foster a healthier and more competitive tourism industry in both countries with concomitant gains in domestic and cross-border travel as well as in the broader international travel markets.
A cautionary note Both agreements face the possibility of being blamed for everything that goes wrong in the Canadian economy in general and in tourism in particular. The current economic recession in Canada. with its plant closures and high unemployment rates, is blamed on FTA in some quarters. A recent headline in the Canadian Travel Press read ‘Canadian tourism put at risk by Nafta’. The story that followed the headline quoted a senior tourism executive in Canada to the effect that Canada’s tourism business was under attack from its NAFTA ncighbours. He claimed that Mexico and the United States were both eating into Canada’s traditional travel markets.’ Good aggrcssivc competition was being blamed on the trade agreement.
Free trade agrcemsnts are long term by nature. The full impact of their provisions on tourism or on any other sector of the economy will only bc known with the passage of time. Even in the long run it may bc difficult to identify a clear relationship bctwccn an agrcemcnt and a sector of the economy and to dctcrminc how it has been affected, if indeed it has. The workings of an economy are very complex; to single out the ramifications of any set of changes and to assign a cause to them will require a good deal of study and analysis. At this time the impacts can only be prcscntcd as possibilities. Sudden, dramatic changes should not be expected, nor should the agreements be bhmcd if they do not occur.
References ‘Zall, M ‘Public international law trends in tourism: current dcvclopmcnts’ Touriwt Policy Forum Brief I9X9 I (3) ‘Beckman. C C The Effix~ 01 Frw 7rucfe on r/w 7ourbn /trclu.srr~ Can;di;m Tourism Rcscarch Institute (Novcmhcr 19X7) ‘Dunhar. M ‘Candian tourism indusfry pub at risk by NAFTA’. C’unudiurr Truvel Prr.ss 1994 26 (3) I. 25
to current issues
North American tourism and the NAFTA Following months of national debate, the North American Free Trade Agreement (NAnA) was passed by the US Congress and signed by the President in November 1993. In the same month. the Agreement passed the Mexican Senate by a wide margin. The Canadian Parliament had approved NAFTA earlier. On I January 1094. the IS-year process of gradually eliminating tariffs and other barriers to trade among the three North American countries began. NAFTA trade liberalization centers on manufacturinp. agriculture. investment, financial services and government procurement, while side agreements
deal with environmental and labor issues. While international travel and tourism were not specifically addressed in this extraordinary agreement. NAFTA does have implications for travel among the three North American nations and the industry that serves it. The following three articles address these implications from the perspectives of each of the signatory nations.
Current issues
The implications of Free Trade Agreements for tourism in Canada Gordon D Taylor
This article reviews the implications for tourism in and to Canada of NAFTA, the earlier Free Trade Agreement (ETA) with the USA and former bilateral agreements on tourism between Canada and Mexico. It examines impacts on tourism flows among the relevant countries and the likely effects on the Canadian tourism industry - eg lower import costs, leading to improved competitiveness. Such benefits could be undone by any depreciation of the Canadian dollar or by continued economic recession, which should not, however, be blamed on the FTA: the full impact of free trade agreements will only become apparent in the long term.
The move towards the reduction of trade barriers not only in North America but also around the world will impact on tourism in a wide variety of ways. The North American Free Trade Agreement (NAFTA)
03h1-5177/~~J/0.50315-~U 0 IVY4 Buttcrworth-Wcincm;InnLtd
that went into effect on I January 1994 is the most recent manifestation of this trend. It involves Canada. Mexico and the United States of America. It was preceded in North America by the Canada-USA
315
Current usues
Free Trade Agreement (ETA) that took effect on 1 January 19X9. The Uruguay Round of negotiations of the General Agreement on Tariffs and Trade (GATT) has world-wide impli~tions, while the development of the single European Community is a regional phenomenon. Bilateral agreements on tourism between Mexico and the USA and Mexico and Canada preceded both FTA and NAFTA. The Mexico-USA agreement was signed originally in 1983 with an expanded and new version being signed in 19X9. Comparable Mexico-Canada agreements were first signed in 1984 and again in 1990. The second Mexico-Canada agreement is for a period of five years and is renewable by tacit agreement of both parties. The objective of this paper is to review the implic~~tions of these North American agreements on tourism in and to Canada. While the primary focus is intended to be on the impacts of NAFTA it is necessary to look at the other two, FTA and Mexico-Canada bilateral agreement. in order to obtain as wide a perspective as possible.
The major difference between the two agreements is the presence of a clause relating to joint marketing in the US agreement and not in the Canadian one, and a clause on the exchange of tourism inf~~rmati~~n and statistical data in the Canadian agreement and not in the American one. Both agreements call for regular meetings between the parties. C. Cunudu-USA Free T&e Agreement (FTAI - this agreement marked the first time that tourism services had been spelled out in detail as part of international negotiations.’ The sectoral annex provided for: the promotion of tourism opportunities in the territory of the other country including joint promotions by national, provincial. state or local governments; the adoption and application of fees or other charges on the departure or arrival of tourists would be on the basis of national treatment and w~ulcl be limited to the approximate cost of the service rendered; the noun-irn~~siti~~n of restrictions on the value of tourism services that its residents or visitors to its territory may purchase from persons of the other Party, except in conformity with Article VIII of the Articles of Agreement of the International Monetary Fund; annual c~~nsultiiti~)n to identify and seek to eliminate impediments to trade in tourism services; and to identify ways to facilitate and incrcasc tourism between the Parties.
Tuurism and international agreements In the bilateral agreements tourism is the sole concern, while in the broader ETA and NAFTA agrccments tourism is only one of ii multitude of trade concerns. ETA has a specific sectctral annex on tourism, while in NAFTA tourism is covered under such headings as trade in scrviccs. financial and telecommunications investments, and temporary entry. An examination of the two bilateral tourism agreements reveals a good deal of simil;irity. A. Metkw-USA both parties to:
(I%W~
-
the agreement
commits
* * *
facilitate travel between both countries; promote cultural exchange activities; cooperation in the area of tourism training and education; o consider joint marketing activities to promote tourism from third-party countries; l assist each other in achieving mutual goals in the World Tourism Organization.’
S. ~exic~Cu?ru~u both parties to:
(I~~~
- the agreement
commits
facilitate tourism exchange between the two countries; give priority to promoting cultural tourism reprcsentative of each country: enc~~urage co~~peration in training and education; exchange tourism informilti~~n and statistical data; support each other and work within the framework of the World Tourism Organization to develop and encourage adoption of uniform standards and practices.
316
D. North Amokwn Free Trude Agreement (NAFTA) - tourism is not specifically detailed in NAFTA as it is in FTA but it is covered in pertinent sections as noted above. Bilateral air agreements are not included in either NAFTA or ETA and they will continue to be negotiated as separate events.
impacts on tourism flaws The
impacts of these agreements
on tourism
flows
‘The specific tourism scrviccs rccognizcd in the tourism scctor;d annex include the tourism-rclatcd uctivitics of the following: travel agency ad rclatcd travel scrviccs including tours wholcd ing. travel counsclling. arranging and hooking: issuance of travel insurance; all modes of international Passenger tr~ns~~rt~ti~)n: hotel reservation scrviccs; terminal scrviccs for all mrtdcs of trimsport, including concessions; transportation catering scrviccs: airport tmnsfcr; lodging, including hotels. motels and rooming houses; local sightseeing. regardless of mode of transportation: intcrcity tour opcrutions; guide and intcrprcter scrviccs; automohitc rental: provision of resort facililics; rental of rccrcatiod rrquipmcnl: feed services; retail services; ~~r~;fni~~ti~~n~tl and support services f0r int~rn~ti~)n;ll c(~flv~ntit~n~~ m~Irin~-r~l~t~~ service* inchding the fueling. supply. and repair of. and provisirtn of docking spaceIO, plcasurc boats; rccrcational vchiclc rental: campground ilnd trailer park scrviccs: amusement park scrviccs; commcrcid tourist altrnctitrns; and tourist-rclatcd services Of ;1 financial noturc. (Extract& from Parqraph 1 of Article I. Annex
B.)
currentissues Tabk
t
Business travd: Canada-USA
Year
USA to Canada lOWk person trips)
lYx6 lYX7 IYXX 19x9 IWO IYYI IYY2 Change IYH64X Change IYYlL-02 Change 19X&Y?
f198692l Canada to USA (OlMlsperson trips) l-130 151 I 1741 I765 1972 1YYs ?I44 +21.7’!/0 + 9.0% +so .3’7D
between Canada and the USA and Canada and Mexico are likely to be more indirect than direct. In general, as the economies of all three countries grow, the amount of business and pleasure travel should increase. The reductions of tariffs over time should also work to increase travel and to reduce the costs of many imported goods used in the tourism industry in Canada. This reduction in costs of goods should assist the Canadian tourism industry to improve its competitive position. The removal of restrictions on the promotion and sale of tourism scrviccs should also bc bcncficial. Thcsc bcncfits may bc affected adversely by changes in exchange rates and by changes in internal taxation. One of the early impacts of the agrccmcnts was cxpcctcd to bc an incroasc in business travel. NAFTA has not been in cffcct long enough for any data on changes in the volume of business travel to bc available. FfA has been in cffcct for four years, howcvcr, and business travel data for travel bctwccn Canada and the USA arc available (SW Tctbk I). Business travel between Canada and the United States grew faster in the three years before FfA, 1986 to 1988, than it did in the three years after, 1990 to 1992. Over the longer period of 19X6 to 1992 business travel from the United States declined by 2.4%. It reached a peak in 1989 and has declined since. Business travel from Canada to the United States grew by 50.3% over the 1’386 to 1992 period. It grew by 21.7% in the pre-FTA period and by 9% in the post-FTA period. Until FTA came into force business travel from the USA to Canada exceeded that from Canada to the USA; since FTA the rcversc situation is true. It might be possible to conclude that FTA has not brought about the expcctcd change in business travel. Scvcral other factors, however, must be considered. The economic recession that arrived almost simultaneously with the advent of FTA has hurt business travel in both countries, domestically and internationally. The fact that Canadian outbound business travel has increased could be an indicator of a positive effect of Ff’A on the Canadian economy, in spite of some of the offsetting events. Total overnight travel between Canada and Mcx-
Tourism Monugenrenr 1994 Vvlurnr
15 Number S
ice has historically been very much in favour of Mexico. Mexico has long been a popular winter destination for Canadians with over half of the Canadian travel to Mexico occurring in the first three months of the year. Canada has not been as popular a destination for Mexicans: 50% of the travel that does occur takes place in the months of July, August and September (see Table 2). Business travel from Canada to Mexico accounts for just under 4% of the total movement. while from Mexico to Canada the figure is 16%. While the current numbers do not reflect any impact of NAFTA, there is a good basis for monitoring change in the future.
Impacts on the Canadian tourism industry The planned gradual removal of all bilateral tariffs on all goods over a IO-year period will have a positive impact on any tourism business that regularly buys goods from the USA. Items such as furniture, motor boats. snow-milking equipment and tractors are all used in some aspects of tourism, and at least part of the supply required comes from the United States. Restaurants and bars should bcncfit from the proposed removal of discriminat~~ry pricing of wine and distilled spirits. A substantial proportion of food used in Canada is imported from the United States. In the cast of food, the period for the gradual removal of tariffs is spread over 20 years. If these rcduccd tariffs bring about lower costs for the tourism industry in Canada, then the profit picture and the competitive position will improve. The bcncfits of reduced tariffs could be offset by any depreciation of the Canadian dollar. In fact, the bcncfits could be wiped out under certain extreme cases of depreciation. Changes to the Canadian tax structure, such as the introduction of the Goods and Services Tax, could also work to undo the benefits that could accrue under FTA and NAFTA.”
Temporary entry into Canada and the USA of business persons FTA ensures that the immigration regulations complement the rules governing the movement of goods,
Table 2
Total overnight travel: Canada-Mexico (198692)
Year
Mexico to Canada (OOOsperwn trips)
Canada to Mexico wo.5 person wipsl
IYXh 19x7 lY!iX IYXY IYW IYYI IYY?. Change IYX*_YT!
4l.Y 57.3 57.7 63.2 63.9 6S.l 6S.I +SS.J’%
277.0 338.0 332.0 374.0 433.0 3X0.0 3x5.0 +tiY.f%
317
Currenr issues
services and investments. The agreement does not compromise the ability of either country to determine who may gain entry. Three requirements have been identified for a business person to claim entry under this part of the accord: they must: meet the general requirements for entry (eg public health. safety and national security requirements); be either a Canadian or United States citizen; qualify in one of the following categories of business persons: (a) business visitor; (b) professional; (c) intra-company transferee; (d) trade and investor. Each of these categories is carefully defined within the agreement. This easing of entry requirements for business people should increase cross-border business travel and as a result create additional business for firms such as hotels. restaurants, air carriers. car rental agencies and others who cater to the business travcller.
Summary of benefits This article has conccntratcd on FTA to a grcatcr extent than it has on NAFTA. The new agrcemcnt extends much that was included in the ETA to Mexico, and it has not changed the basic relationship bctwccn Canada and the USA that was established with ETA. The impacts of the inclusion of Mexico into the North American free trade zone are not as immediate for Canada as they are for the United States. The distance from Canada to Mexico and the fact that this space is occupied by the United States are sufficient reasons for the lessened impacts and they will also take longer to be noticed. Canada and Mexico have worked together on tourism for the past dccadc on the basis of the bilateral agreements on tourism. This type of agreement is, however, very limited in scope and cannot have the long-term impact of the major trade agreement. NAFTA is an engine for economic growth, so tourism between Canada and Mexico will grow as a result of the strengthened economies in both countries. The more immediate impacts for Canada will come from the American part of both agreements. On the tourism flow side, the basic thesis is that as
318
the economies of the two countries grow and prosper as a result of free trade more people will be able to travel. The encouragement for the improved flow of promotions etc will goods. services, investments, foster a healthier and more competitive tourism industry in both countries with concomitant gains in domestic and cross-border travel as well as in the broader international travel markets.
A cautionary note Both agreements face the possibility of being blamed for everything that goes wrong in the Canadian economy in general and in tourism in particular. The current economic recession in Canada. with its plant closures and high unemployment rates, is blamed on FTA in some quarters. A recent headline in the Canadian Travel Press read ‘Canadian tourism put at risk by Nafta’. The story that followed the headline quoted a senior tourism executive in Canada to the effect that Canada’s tourism business was under attack from its NAFTA ncighbours. He claimed that Mexico and the United States were both eating into Canada’s traditional travel markets.’ Good aggrcssivc competition was being blamed on the trade agreement.
Free trade agrcemsnts are long term by nature. The full impact of their provisions on tourism or on any other sector of the economy will only bc known with the passage of time. Even in the long run it may bc difficult to identify a clear relationship bctwccn an agrcemcnt and a sector of the economy and to dctcrminc how it has been affected, if indeed it has. The workings of an economy are very complex; to single out the ramifications of any set of changes and to assign a cause to them will require a good deal of study and analysis. At this time the impacts can only be prcscntcd as possibilities. Sudden, dramatic changes should not be expected, nor should the agreements be bhmcd if they do not occur.
References ‘Zall, M ‘Public international law trends in tourism: current dcvclopmcnts’ Touriwt Policy Forum Brief I9X9 I (3) ‘Beckman. C C The Effix~ 01 Frw 7rucfe on r/w 7ourbn /trclu.srr~ Can;di;m Tourism Rcscarch Institute (Novcmhcr 19X7) ‘Dunhar. M ‘Candian tourism indusfry pub at risk by NAFTA’. C’unudiurr Truvel Prr.ss 1994 26 (3) I. 25