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Tourism and NAFTA: Towards a regional tourism policy
Tourism
Monugemenf
IWJ IS (5) 31%322
Current issues
Tourism and NAFTA: towards a regional tourism policy Manuel Rodriguez Etnu 107 CNSCIIO Coloniu Alps.
lklt*,qcrcirinAlwro
Ohregdn.
Mhico.
DF CP OIOIO. Mtkico
Julio Portales
This article discusses the implications of the North American Free Trade Agreement (NAFTA)* for the development of tourism in Mexico. Recognizing that tourism was not specifically addressed when considered hy itself, this article briefly reviews NAFTA’s contents and identifies issues that will impact on the organiaation and development of Mexican tourism activities and tourism policies. Regardless of the potential that NAFTA has for the growth of international tourism betwcvn Mexico and each of the other North American countries, the paper concludes with a discussion of the design and implementation of coordinated tourism policies among the three nations since NAFTA went into effect on 1 January 1994.
The North American Free Trade Agreement (NAFTA) is viewed by many sectors of the Mexican economy as an instrument of economic policy that will help to consolidate the structural reforms of the last IO years, including commercial liberalization, economic deregulation, privatization of formerly state-run firms, and other processes of modernization and liberalization in Mexico.+ Included in this process is the service sector of the Mexican economy which, in lYY2, contributed 62%
‘In Mexico the correct term to r&r to the topic is ‘Tratado’ - in English. ‘Treaty’ - for this is, according IO international law. an agrccmcnt which requires ratification by the Icgislaturcs of the countries which sign it. Bcsidcs. for semantic reasons. in the Public Administration of Mexico the concept ‘Acucrdo’ - in English. ‘Agrcemcnt’ - is used for resolutions of the Fcdcral Executive. ‘SW Presidcnci;l dc la Rcpuhlica. Plr~r Nuciomd dr Dcwrrrollo IYXY-IW4 ;Ind the Agrccmcnt’s tcxl in Sccrclarkc dc Comcrcio y Fomcnto lndust rid. Trcrtudo de Lihre Comcrcio Jr Amiriru drl Norre ( IYY2). See ;dso Solcd;d Loaczn. ‘Democracia o Lihcralizacicin’. Nt,.rm. lYY3 (No. IXX. August).
O~hl-Sl77/YJ/O.5O31Y-~U
@ IYYJ Butr~nvorth-Hcincm;Inn
Ltd
of the Mexican GNP, while hotels and restaurants alone contributed 3.1%. In 1903. tourism earned for Mexico more than US$4 billion in foreign exchange from more than 17.2 million international arrivals, which made it the fourth largest source of external receipts for the country. international tourism among Mexico, Canada and the United States represents 14.2% of world international tourism arrivals and IY% of international tourism receipts for 1902. Although these facts give a sense of the importance of this multinational regional tourism market, NAFTA did not include language specifically relating to tourism as the earlier trade agreement between the US and Canada did. Rather, several articles of NAFTA such as those concerning investmcnt and services* have significant implications for tourism between the three countries. Moreover, ‘See Sccretilria
Lihre Comercio
y Fomento Industrial. Trurado de de Amc+icu de1 Norrr Fifth Part. Chs XI-XVI
dc Comercio
(IYYZ).
319
Currenr
issues
tourism-related topics were not included in the side agreements to NAFTA. covering labor and the environment. * * Nevertheless. these provisions do not alter in a significant way the characteristics of international tourism markets in North America. Another factor necessary to consider in North American tourism development is the ongoing transformation of international tourism.++ Though the elimination of commercial barriers does facilitate tourism development. in the Mexican case new trends in tourism development are a more significant factor. These include new tourism products. better segmentation of the market, improved environmental quality. higher quality service and differentiation of the tourism product in international markets.
NAFTA and tourist A review of the Agreementrf finds that. of the 22 articles, those which will most affect tourism are article I relating to NAFTA’s objectives, article IX concerning investment, services and related topics. article XII which deals with the cross-border trade in services, and article XVI about the temporary entry of business people. In a minor Wily, article XIll c~?ncernin~ teleC~?mmUnici~ti~?ns and article XIV on finilncial
services
are illSo Of interest.
NAFTA Article X1. ‘Investment, Scrviccs and Rclatcd Thcmcs’. states that American and Canitdian investors in the Mexican tourist scctctr will rcccivo ‘national treatment’, that is, any investment or investor of those nationalities will rcccivc the same trcatmcnt as Mexican individuals and firms do in Mexico.*** While this will stimulate activities of Canadian and US cntitics in Mexico, it mity retard Mexico’s divcrsificntion into other tourism markets, such as Europe and Asia, where businesses arc now at a relative disadvantilge compared with the USA and Canada. The protections and assurances that NAFTA establishes enable one to forecast an increase in American and Canadian investment in Mexico. Of course, such growth will depend on other factors as well, such as macro-economic trends in Canada and the United States, international competition and the development of the Mexican internal market. Neverthciess, among all industries, we expect the
hs Purulhs (17 August WY3).
Mexican tourism sector to receive the major benefits of NAnA.+++ At the present time. total foreign investment from the USA and Canada in Mexican activities related to tourism is estimated to be US$3.5 billion and represents nearly 70% of the total of the tourism sector and about 10% of the total of direct foreign investment in Mexico. This suggests that, before the agreement. the flows of investment were already important. Though increases in the flows can be foreseen, these will be channeled towards new toursuch as the segmentation of ist market priorities.tis business tourism in large and medium-sized towns within the country. Article XII. ‘Crossborder Trade in Services’. states that trade and supply of services can be carried out by any Mexican. Canadian or American person or firm. it excludes only financial services and air services (including national and international sccondary activities such as aircraft repair and maintenance and related scrviccs). These providers of scrviccs will receive. according to NAFTA, ‘national trcatmcnt’ and will not be subject to requircmcnts such iIs the establishment of offices in the territory or town in which the service will be provided. For those activities for which the supply of a service is subject to a license or certification. the three countries agreed that the only requircmcnts now arc ‘the capacity and the aptitude’ to provide a scrvicc. What is more, NAFTA specifics that the dcgrces and certificates rcquircd in one country for suppliers of professional services of another country hc climinated within two years of the Agrccmcnt’s cffcctivc date. (NAFTA defines ‘professional scrviccs’ as those ‘scrviccs for which the supply requires superior spccializcd education or training or equivalent cxpcricnce and whose service is authorized or rcstrained’. It adds that thcsc ‘do not include the services provided by people who have a profession or by the crew of merchant boats and aircraft’). According to this article, services such as those by travel agencies or tour operators, rcscrvation services, informati(~n and c~~nsultation scrviccs, and in general all those that support activities related to tourism, can now be provided in Mexico by Americans and Canadians. Above all. major competition in areas where the technological advantage is obvious is included, such as airline rcscrvations or where the qualification of Mexican workers may be dcficicnt compared with those in Canada or the
.
“For further information see World Tourism Orannization. f.3 Turbmo en el utio 2000, Asppc*crc~ cuulirurivm que ufecrutt .su derurrttllo WTO Makid. “Sw SECUFl. Trutu[ift de t&e Cwnerrin de Atttiricu IId Nrtrte (WE). ***The New Law of Foreign lnvesrmcnt cnackd on 2X Dcccmhcr lY93 maintains restrictions on private foreign investment for rcsidcnccs on the co;Isb and in the horder arcas. although invcstmcnts of loll% for ccwporarians arc allawcd.
‘“See The Confcrcncc Hoard, North Attwricwti Ourlook. lW3/YJJ. Report No. Ill& USA (IW3). “‘The sfatistical criteria adopted by the Word Tourism Organization and the United Nations include husintss as nne of the mckvlGons for rourisl travel. From aur pcrspcctivc it is qucstianahlc to qualify rhis as a moGv;uion for tourist truvcl. See Rodriguct M&cl ef ul. Nwvo Titwrpo Lihre. Ed. Trillas. Mexico ( I9X3) and ;dso Rotlrigusz Monucl er (I/, Turiwm Alfcrttutir‘o. Ed. Nuszw Tismpo Lihrc, Mtixico (19X5).
Currenf issues
USA. This last element enables us to forecast an increase in the supply of management consultation services from the United States and Canada for all tourism industry activities in Mexico, specifically in information processing. Article XVI. ‘Temporary Entry of Business People’. states that the NAFTA signatories will permit the temporary entry of people who for trade reasons move to any of the three countries. The document defines ‘temporary entry’ as the entry of a business person of one country into the territory of another country. without the intention of residing permanently. ‘Business people’ in tourism services who can now freely enter temporarily into Mexico fall into four catcpories according to the Agreement: those who assist or p~~rtici~Ite in conventi~~ns or excursions originating in one of the two other countries; tourist bus drivers originating in one of the two other countries; translators or intcrprcters who rent their services as cmployces of a company situated in one of the two other countries; h~~spitillity managers who have satisfied certain academic requircmcnts. The temporary entry of ‘husincss visitors’ has two implications. First, as thcsc visitors incrcasc in numher, they will require an increased supply of specializcd visitor scrviccs in Mexico, such as husincss scrviccs for hotel guests. Second. there must be incrcascd coordination of the definition of occuprttions and pr~jfcssi~)nitl standards among the three countries. This should stimulate improved scrviccs for the husincss visitor and incrcascd employee professionalism in Mexico.
Tourism policy and NAFTA An area that prcscnts certainly the major potential for development is the one related to the forms of ‘non-conventional’ tourism, such as adventure tourism, heritage tourism and so on. Some doubt that the ‘conventional’ international tourism market has much growth potential for Mexico. According to internati~~nal data, Mexico reccives at present nearly 3X’% of the US outbound market. Another 27% travel to Canada, while 16% are destined for Europe. Mexico does not appear to offer viable substitute destinations for these trips. Mexico receives only 2% of the outbound Canadian market. Nearly 90% of outbound Canadians travel to the USA (nearly 20 million annually). which also implies a limited potential market for Mexico. Thus the greatest potential for international tourism growth in North America will be among Mexicans who travel abroad, assuming the expected NAFTArelated expansion of the Mexican economy occurs.
Up to now, most of the tourism impact of NAFTA has been limited to development of cooperative arrangements among the Ministry of Tourism in Mexico. Tourism Canada and the United States Travel and Tourism Administration (USTTA). These cover a wide range of activities from the approval of criteria for the measurement of the international flows of people and currencies to the conduct of comparative studies on environmental matters. including joint studies on the implications of NAFTA for tourism in the signatory countries. With regard to the environment, within the WTO the three countries - together with France and Turkey - appointed a work team for the analysis and elaboration of criteria to establish environmental indicators which could be useful to the tourism sector, These indicators will serve to classify tourist areas on a world-wide basis depending on the quality of ecological preservation, and likewise to guide development policies which take into account the levels of ecological deterioration and conservation in a tourist zone. Despite these salutary effects of NAFTA on tourism flows among the three countries, Mexico is still wrestling with transportation issues that rcstrnin thcsc flows. For instance, the USA has not granted Mexican air carriers the so-called ‘fifth Freedom’ right to carry passengers hctwccn the USA and Canada. On land, a major remaining issue that restricts tourism Flows arn~)n~ the niIti~)ns is the rductance of US insurance cornpanics to extend policies to Mexican tour bus opcrittors operating in the USA and to US cornpanics operating similarly in Mexico. Regarding marketing issues, Mexico and the USA established in 1901 the ‘Two Nation Vacation’ program (‘Vacaciones en DOS Nacioncs’). This has SO Far produced Few real results from markets outside North America, but tour operators are beginning to offer such packages abroad. On the other hand, the ‘Two Nation Vacation’ program has stimulated tourism in US-Mexico border areas, and it is probably there that strategies to increase the services in quantity and quality of tourism experiences will develop most rapidly. The USA and Mexico have begun market studies and analyses that can be useful to both countries, along the lines of the three-nation studies that have already proved SUCCCSSFUI. On the basis of these studies we have discovered new trends, tastes, desires and needs of potential tourists to Mexico from the USA and Canada. One result is the two-pronged marketing program to promote Mexico’s beach resorts and extensive tours through the countryside.
Future implications of NAFTA Major principles of international trade appear to have scant applicati~~n to tourism development. For
321
Current
is.v~es
example, the concept of comparative advantage. which relies on cheap and productive labor, is overshadowed by the presence of specific cultural and geographic characteristics of a country. A country’s technological superiority appears to have little relevance to international tourism flows. As for national competitive advantage. future international tourism may be swayed less by large multinational tourism enterprises and more by individual companies offering diverse activities, attractions. and services for an increasingly segmented tourism market. It can be deduced from this that the viability of future tourism development requires two fundamental factors: high-quality natural and social environments and the supply of services incorporating significant aspects of local culture to a substantial degree. Mexico will also have to develop tourist products that differentiate it from what is available in Canada and the USA. yet provide high-quality experiences to the tourist. We expect this will happen through the use of new technologies which will make the service more efficient, and by improving training to make employees more responsive to
tourists’ needs. Moreover, we must accelerate the processes of negotiation and coordination among the three countries beyond NAFTA. Barriers remaining in transportation have been mentioned above. We will also need to develop mechanisms for uncovering other remaining anti-competitive practices either sanctioned by national trade polices or practiced by individual tourism companies. In sum. the North America Free Trade Agreement is a significant starting point for developing international tourism markets and products to service them in the USA, Canada and Mexico. We look forward to intensifying the processes of regional integration now set in motion.
Acknowledgements The authors wish to thank. for discussions - and the information provided - Blair Stevens of Tourism Canada. and Colleen Flannery and Wanda Barquin of USTTA; also those who work with them at the Tourism Policy Office in the Tourism Ministry of the Mexican Government.
Monugemenf
IWJ IS (5) 31%322
Current issues
Tourism and NAFTA: towards a regional tourism policy Manuel Rodriguez Etnu 107 CNSCIIO Coloniu Alps.
lklt*,qcrcirinAlwro
Ohregdn.
Mhico.
DF CP OIOIO. Mtkico
Julio Portales
This article discusses the implications of the North American Free Trade Agreement (NAFTA)* for the development of tourism in Mexico. Recognizing that tourism was not specifically addressed when considered hy itself, this article briefly reviews NAFTA’s contents and identifies issues that will impact on the organiaation and development of Mexican tourism activities and tourism policies. Regardless of the potential that NAFTA has for the growth of international tourism betwcvn Mexico and each of the other North American countries, the paper concludes with a discussion of the design and implementation of coordinated tourism policies among the three nations since NAFTA went into effect on 1 January 1994.
The North American Free Trade Agreement (NAFTA) is viewed by many sectors of the Mexican economy as an instrument of economic policy that will help to consolidate the structural reforms of the last IO years, including commercial liberalization, economic deregulation, privatization of formerly state-run firms, and other processes of modernization and liberalization in Mexico.+ Included in this process is the service sector of the Mexican economy which, in lYY2, contributed 62%
‘In Mexico the correct term to r&r to the topic is ‘Tratado’ - in English. ‘Treaty’ - for this is, according IO international law. an agrccmcnt which requires ratification by the Icgislaturcs of the countries which sign it. Bcsidcs. for semantic reasons. in the Public Administration of Mexico the concept ‘Acucrdo’ - in English. ‘Agrcemcnt’ - is used for resolutions of the Fcdcral Executive. ‘SW Presidcnci;l dc la Rcpuhlica. Plr~r Nuciomd dr Dcwrrrollo IYXY-IW4 ;Ind the Agrccmcnt’s tcxl in Sccrclarkc dc Comcrcio y Fomcnto lndust rid. Trcrtudo de Lihre Comcrcio Jr Amiriru drl Norre ( IYY2). See ;dso Solcd;d Loaczn. ‘Democracia o Lihcralizacicin’. Nt,.rm. lYY3 (No. IXX. August).
O~hl-Sl77/YJ/O.5O31Y-~U
@ IYYJ Butr~nvorth-Hcincm;Inn
Ltd
of the Mexican GNP, while hotels and restaurants alone contributed 3.1%. In 1903. tourism earned for Mexico more than US$4 billion in foreign exchange from more than 17.2 million international arrivals, which made it the fourth largest source of external receipts for the country. international tourism among Mexico, Canada and the United States represents 14.2% of world international tourism arrivals and IY% of international tourism receipts for 1902. Although these facts give a sense of the importance of this multinational regional tourism market, NAFTA did not include language specifically relating to tourism as the earlier trade agreement between the US and Canada did. Rather, several articles of NAFTA such as those concerning investmcnt and services* have significant implications for tourism between the three countries. Moreover, ‘See Sccretilria
Lihre Comercio
y Fomento Industrial. Trurado de de Amc+icu de1 Norrr Fifth Part. Chs XI-XVI
dc Comercio
(IYYZ).
319
Currenr
issues
tourism-related topics were not included in the side agreements to NAFTA. covering labor and the environment. * * Nevertheless. these provisions do not alter in a significant way the characteristics of international tourism markets in North America. Another factor necessary to consider in North American tourism development is the ongoing transformation of international tourism.++ Though the elimination of commercial barriers does facilitate tourism development. in the Mexican case new trends in tourism development are a more significant factor. These include new tourism products. better segmentation of the market, improved environmental quality. higher quality service and differentiation of the tourism product in international markets.
NAFTA and tourist A review of the Agreementrf finds that. of the 22 articles, those which will most affect tourism are article I relating to NAFTA’s objectives, article IX concerning investment, services and related topics. article XII which deals with the cross-border trade in services, and article XVI about the temporary entry of business people. In a minor Wily, article XIll c~?ncernin~ teleC~?mmUnici~ti~?ns and article XIV on finilncial
services
are illSo Of interest.
NAFTA Article X1. ‘Investment, Scrviccs and Rclatcd Thcmcs’. states that American and Canitdian investors in the Mexican tourist scctctr will rcccivo ‘national treatment’, that is, any investment or investor of those nationalities will rcccivc the same trcatmcnt as Mexican individuals and firms do in Mexico.*** While this will stimulate activities of Canadian and US cntitics in Mexico, it mity retard Mexico’s divcrsificntion into other tourism markets, such as Europe and Asia, where businesses arc now at a relative disadvantilge compared with the USA and Canada. The protections and assurances that NAFTA establishes enable one to forecast an increase in American and Canadian investment in Mexico. Of course, such growth will depend on other factors as well, such as macro-economic trends in Canada and the United States, international competition and the development of the Mexican internal market. Neverthciess, among all industries, we expect the
hs Purulhs (17 August WY3).
Mexican tourism sector to receive the major benefits of NAnA.+++ At the present time. total foreign investment from the USA and Canada in Mexican activities related to tourism is estimated to be US$3.5 billion and represents nearly 70% of the total of the tourism sector and about 10% of the total of direct foreign investment in Mexico. This suggests that, before the agreement. the flows of investment were already important. Though increases in the flows can be foreseen, these will be channeled towards new toursuch as the segmentation of ist market priorities.tis business tourism in large and medium-sized towns within the country. Article XII. ‘Crossborder Trade in Services’. states that trade and supply of services can be carried out by any Mexican. Canadian or American person or firm. it excludes only financial services and air services (including national and international sccondary activities such as aircraft repair and maintenance and related scrviccs). These providers of scrviccs will receive. according to NAFTA, ‘national trcatmcnt’ and will not be subject to requircmcnts such iIs the establishment of offices in the territory or town in which the service will be provided. For those activities for which the supply of a service is subject to a license or certification. the three countries agreed that the only requircmcnts now arc ‘the capacity and the aptitude’ to provide a scrvicc. What is more, NAFTA specifics that the dcgrces and certificates rcquircd in one country for suppliers of professional services of another country hc climinated within two years of the Agrccmcnt’s cffcctivc date. (NAFTA defines ‘professional scrviccs’ as those ‘scrviccs for which the supply requires superior spccializcd education or training or equivalent cxpcricnce and whose service is authorized or rcstrained’. It adds that thcsc ‘do not include the services provided by people who have a profession or by the crew of merchant boats and aircraft’). According to this article, services such as those by travel agencies or tour operators, rcscrvation services, informati(~n and c~~nsultation scrviccs, and in general all those that support activities related to tourism, can now be provided in Mexico by Americans and Canadians. Above all. major competition in areas where the technological advantage is obvious is included, such as airline rcscrvations or where the qualification of Mexican workers may be dcficicnt compared with those in Canada or the
.
“For further information see World Tourism Orannization. f.3 Turbmo en el utio 2000, Asppc*crc~ cuulirurivm que ufecrutt .su derurrttllo WTO Makid. “Sw SECUFl. Trutu[ift de t&e Cwnerrin de Atttiricu IId Nrtrte (WE). ***The New Law of Foreign lnvesrmcnt cnackd on 2X Dcccmhcr lY93 maintains restrictions on private foreign investment for rcsidcnccs on the co;Isb and in the horder arcas. although invcstmcnts of loll% for ccwporarians arc allawcd.
‘“See The Confcrcncc Hoard, North Attwricwti Ourlook. lW3/YJJ. Report No. Ill& USA (IW3). “‘The sfatistical criteria adopted by the Word Tourism Organization and the United Nations include husintss as nne of the mckvlGons for rourisl travel. From aur pcrspcctivc it is qucstianahlc to qualify rhis as a moGv;uion for tourist truvcl. See Rodriguct M&cl ef ul. Nwvo Titwrpo Lihre. Ed. Trillas. Mexico ( I9X3) and ;dso Rotlrigusz Monucl er (I/, Turiwm Alfcrttutir‘o. Ed. Nuszw Tismpo Lihrc, Mtixico (19X5).
Currenf issues
USA. This last element enables us to forecast an increase in the supply of management consultation services from the United States and Canada for all tourism industry activities in Mexico, specifically in information processing. Article XVI. ‘Temporary Entry of Business People’. states that the NAFTA signatories will permit the temporary entry of people who for trade reasons move to any of the three countries. The document defines ‘temporary entry’ as the entry of a business person of one country into the territory of another country. without the intention of residing permanently. ‘Business people’ in tourism services who can now freely enter temporarily into Mexico fall into four catcpories according to the Agreement: those who assist or p~~rtici~Ite in conventi~~ns or excursions originating in one of the two other countries; tourist bus drivers originating in one of the two other countries; translators or intcrprcters who rent their services as cmployces of a company situated in one of the two other countries; h~~spitillity managers who have satisfied certain academic requircmcnts. The temporary entry of ‘husincss visitors’ has two implications. First, as thcsc visitors incrcasc in numher, they will require an increased supply of specializcd visitor scrviccs in Mexico, such as husincss scrviccs for hotel guests. Second. there must be incrcascd coordination of the definition of occuprttions and pr~jfcssi~)nitl standards among the three countries. This should stimulate improved scrviccs for the husincss visitor and incrcascd employee professionalism in Mexico.
Tourism policy and NAFTA An area that prcscnts certainly the major potential for development is the one related to the forms of ‘non-conventional’ tourism, such as adventure tourism, heritage tourism and so on. Some doubt that the ‘conventional’ international tourism market has much growth potential for Mexico. According to internati~~nal data, Mexico reccives at present nearly 3X’% of the US outbound market. Another 27% travel to Canada, while 16% are destined for Europe. Mexico does not appear to offer viable substitute destinations for these trips. Mexico receives only 2% of the outbound Canadian market. Nearly 90% of outbound Canadians travel to the USA (nearly 20 million annually). which also implies a limited potential market for Mexico. Thus the greatest potential for international tourism growth in North America will be among Mexicans who travel abroad, assuming the expected NAFTArelated expansion of the Mexican economy occurs.
Up to now, most of the tourism impact of NAFTA has been limited to development of cooperative arrangements among the Ministry of Tourism in Mexico. Tourism Canada and the United States Travel and Tourism Administration (USTTA). These cover a wide range of activities from the approval of criteria for the measurement of the international flows of people and currencies to the conduct of comparative studies on environmental matters. including joint studies on the implications of NAFTA for tourism in the signatory countries. With regard to the environment, within the WTO the three countries - together with France and Turkey - appointed a work team for the analysis and elaboration of criteria to establish environmental indicators which could be useful to the tourism sector, These indicators will serve to classify tourist areas on a world-wide basis depending on the quality of ecological preservation, and likewise to guide development policies which take into account the levels of ecological deterioration and conservation in a tourist zone. Despite these salutary effects of NAFTA on tourism flows among the three countries, Mexico is still wrestling with transportation issues that rcstrnin thcsc flows. For instance, the USA has not granted Mexican air carriers the so-called ‘fifth Freedom’ right to carry passengers hctwccn the USA and Canada. On land, a major remaining issue that restricts tourism Flows arn~)n~ the niIti~)ns is the rductance of US insurance cornpanics to extend policies to Mexican tour bus opcrittors operating in the USA and to US cornpanics operating similarly in Mexico. Regarding marketing issues, Mexico and the USA established in 1901 the ‘Two Nation Vacation’ program (‘Vacaciones en DOS Nacioncs’). This has SO Far produced Few real results from markets outside North America, but tour operators are beginning to offer such packages abroad. On the other hand, the ‘Two Nation Vacation’ program has stimulated tourism in US-Mexico border areas, and it is probably there that strategies to increase the services in quantity and quality of tourism experiences will develop most rapidly. The USA and Mexico have begun market studies and analyses that can be useful to both countries, along the lines of the three-nation studies that have already proved SUCCCSSFUI. On the basis of these studies we have discovered new trends, tastes, desires and needs of potential tourists to Mexico from the USA and Canada. One result is the two-pronged marketing program to promote Mexico’s beach resorts and extensive tours through the countryside.
Future implications of NAFTA Major principles of international trade appear to have scant applicati~~n to tourism development. For
321
Current
is.v~es
example, the concept of comparative advantage. which relies on cheap and productive labor, is overshadowed by the presence of specific cultural and geographic characteristics of a country. A country’s technological superiority appears to have little relevance to international tourism flows. As for national competitive advantage. future international tourism may be swayed less by large multinational tourism enterprises and more by individual companies offering diverse activities, attractions. and services for an increasingly segmented tourism market. It can be deduced from this that the viability of future tourism development requires two fundamental factors: high-quality natural and social environments and the supply of services incorporating significant aspects of local culture to a substantial degree. Mexico will also have to develop tourist products that differentiate it from what is available in Canada and the USA. yet provide high-quality experiences to the tourist. We expect this will happen through the use of new technologies which will make the service more efficient, and by improving training to make employees more responsive to
tourists’ needs. Moreover, we must accelerate the processes of negotiation and coordination among the three countries beyond NAFTA. Barriers remaining in transportation have been mentioned above. We will also need to develop mechanisms for uncovering other remaining anti-competitive practices either sanctioned by national trade polices or practiced by individual tourism companies. In sum. the North America Free Trade Agreement is a significant starting point for developing international tourism markets and products to service them in the USA, Canada and Mexico. We look forward to intensifying the processes of regional integration now set in motion.
Acknowledgements The authors wish to thank. for discussions - and the information provided - Blair Stevens of Tourism Canada. and Colleen Flannery and Wanda Barquin of USTTA; also those who work with them at the Tourism Policy Office in the Tourism Ministry of the Mexican Government.